Discipline Leader, Management Swinburne University of Technology What is management? It is a process A series of activities: planning, deciding & evaluating
Of assembling and using sets of resources Physical, financial & Human
In a goal directed manner to accomplish tasks A purposeful activity
In an organisational setting intentionally structured and coordinated to achieve common purposes I m p o r t a n c e
High Low Front line Managers Mid-level Managers Top-level Managers Interpersonal skills Technical skills Conceptual skills Managerial Skills at Different Organisational Levels Instructions: Rate each questions (1-18) according to the scale Subtract your score for questions 6,10,14 & 17 from number 6: Q.6 = (6- 4(q.6 score))= 2 Q.10 = (6- 2)(q.10 score))=4 Q.14 = (6- 3)(q.14 score))=3 Q.17 = (6- 5)(q.17 score))=1
Conceptual Skills = Q1+Q3+Q6+Q9+Q12+Q15= (____) Human Skills = Q2+Q5+Q8+Q10+Q14+Q17 = (____) Technical Skills = Q4+Q7+Q11+Q13+Q16+Q18) = (___) Exercise 1: Management in Practice Rate each questions (0-4) according to the scale Very accurate description of me = 4 Moderately accurate = 3 Neither accurate nor inaccurate = 2 Moderately inaccurate = 1 Very inaccurate description of me = 0 Need achievement: _____ + _____ + _____ + _____ + _____ + _____ + _____ = (Q.2) (Q. 3) (Q.6) (Q.7) (Q.9) (Q.12) (Q14)
Exercise 2: Need strength Score Interpretation in Achievement Interpretation in social approval 28-32 High level of need High need 20-27 Above average level of need Above average need 12-19 Average level of need Average need 6-11 Below Average level of need Below average need 0-5 Low level of need Low need What is Strategy Plan of action Resource allocation Activities for dealing with the environment Achieving competitive advantage ..a pattern in a stream of decisions ..the long-term direction of an organisation Vision Mission Objectives External audit Internal audit Past successful strategies Strategies derive from or influenced by: What is Strategy Continued.. Plan should have a Vision Now Future What is Strategy Continued.. Resources and Capabilities: fundamental building blocks of strategy The tangible and intangible inputs that firms use to deliver services A firms skill in using its resources to deliver services. Strategy Component of Strategic capabilities Exercise 3: Innkeepers America Innkeepers of America's position in the economy segment of the lodging industry. Locating properties next to a restaurant rather than having food and beverage in-house. Price of rooms lowered further to meet competition. New advertising campaign with discount coupons for weekend stays Three new customer service positions. Shares of company stock issued for employee bonuses. Providing continental breakfast in the lobby. Room service (for continental breakfast only). Computerized reservation system. Training program for front-desk employees. Web site where reservations can be booked online. New hotel properties built with additional features to appeal to an upscale market. Merger with Economy Lodge, Inc. Rewrite mission statement. Contracting cleaning and landscaping services. s s/o o o o o o o s/o o o o s s s Strategic Analysis: Why?? Generating Alternatives Participation in generating alternative strategies should be as broad as possible Establishing long-term objectives Generating alternative strategies Selecting strategies to pursue Develop Best alternatives Ensures effective use of resources Provides base to measure progress Builds strong teams Purpose of Strategic Analysis Strategys three branches CONTEXT internal and external. CONTENT strategic options. PROCESS formation and implementation. Strategic planning systems Strategic planning systems take the form of systematised & step-by-step procedures to develop an organisations strategy. Managerial equivalent of scientific analysis The role of strategic planning Strategic planning play several roles within an organisation: Formulating strategy - managers can understand strategic issues and involve in developing alternative Learning questioning and challenging the taken-for- granted. Co-ordinating - business-level strategies within an overall corporate strategy. Communicating - providing agreed objectives or strategic milestones. Strategic Planning Process Benefits of strategic planning There are psychological benefits of planning: can provide opportunities for involvement, leading to a sense of ownership, provides security to managers and re-assures managers that the strategy is logical. Perceptions of strategy development Strategy will be seen differently by different people: Senior executives: see strategy in terms of intended, rational, analytic planned processes Middle managers: see strategy as the result of cultural and political processes. Managers in public-sector organisations: see strategy as externally imposed. People who work in family businesses see strategy as the influence of powerful individuals (owners of the businesses). Develop vision and mission statements Perform Internal Analysis Perform external analysis Establish long term objectives Generate evaluate & select Strategy Implement Strategy Management issues Implement Strategy Marketing, finance, Accounting, MIS issues Measure and evaluate performance Strategy formulation Strategy Implementation Strategy Evaluation Comprehensive Strategic Management Model STAGE 1: THE INPUT STAGE
Basic input information for the formulation & decision stage matrices Requires strategists to quantify subjectivity early in the process Good intuitive judgment always needed
Strategy-Formulation Analytical Framework GAP Analysis SWOT Matrix SPACE Matrix BCG Matrix Stage 2: The Formulation Stage Stage 2: The Formulation Stage
Match between organisation's internal resources & skills and the opportunities & risks created by its external factors
Stage 2: Gap analysis Assesses the fit between an organisations strategy and: its environment (external) its capabilities (internal) Assesses fit between strategy, performance and stakeholder expectations Aims to ensure that all elements of strategic analysis are considered Both positive and negative gaps can be revealed Stage 2: Gap analysis Environmentbusiness strategy gaps Macro-environment Identify the growth trends Estimate when these trends take effect Establish whether business strategy will fit new environment (match / mismatch)
Industry environment Compares consistency between business strategy and industry environment e.g. business strategy & expected profitability Key competitor gaps The organisations performance relative to competitors financial performance market position and performance technological performance service performance
Analyse inconsistencies for possible danger signals e.g. good financial performance but lagging in service or technology
Environmentbusiness strategy gaps Assess how well existing capabilities match business strategy (comparative analysis) What may affect competitive strengths? e.g. legal or economic barriers, complacency, regulators role, changes in competitor strategy, changes in technology, Key goals or objectives are compared with actual results (under / over performance) Compare performance with stakeholder expectations Gaps identified should influence future strategy choices Large gaps = New business strategy Small gaps = Focus on implementation (functional strategies)
Business strategy: current to future options Gap analysis summary How does strategy match the macro-environment? How does strategy match the industry environment? How does strategy match performance? How does strategy match capabilities and those of competitors? (Now and in the future) To be able to answer these, must identify current business strategy. Strategy-Formulation Analytical Framework SWOT Matrix GAP Analysis SPACE Matrix BCG Matrix Stage 2: The Formulation Stage Strengths Weaknesses Opportunities Threats SWOT Matrix Stage 2: The Formulation Stage SWOT Matrix Strengths-Opportunities (SO) Weaknesses-Opportunities (WO) Strengths-Threats (ST) Weaknesses-Threats (WT) Four Types of Strategies SO Strategies Use a firms internal strengths to take advantage of external opportunities SO Strategies Strengths Weaknesses Opportunities Threats
SWOT WO Strategies Improving internal weaknesses by taking advantage of external opportunities WO Strategies Strengths Weaknesses Opportunities Threats
SWOT ST Strategies Use a firms strengths to avoid or reduce the impact of external threats ST Strategies Strengths Weaknesses Opportunities Threats
Use strengths to take advantage of opportunities WO Strategies
Overcoming weaknesses by taking advantage of opportunities Threats T
List Threats ST Strategies
Use strengths to avoid threats WT Strategies
Minimize weaknesses and avoid threats Exercise 4: Robin Hood Limitations with SWOT Matrix Does not show how to achieve a competitive advantage Provides a static assessment in time May lead the firm to overemphasise a single internal or external factor in formulating strategies Strategy-Formulation Analytical Framework SPACE Matrix SWOT Matrix GAP Analysis BCG Matrix Stage 2: The Formulation Stage SPACE Matrix Strategic Position & Action Evaluation Matrix Aggressive Conservative Defensive Competitive SPACE Matrix Two Internal Dimensions Financial Strength (FS) Competitive Advantage (CA) Two External Dimensions Environmental Stability (ES) Industry Strength (IS) SPACE Factors Environmental Stability (ES)
Technological changes Rate of inflation Demand variability Price range of competing products Barriers to entry Competitive pressure Price elasticity of demand Ease of exit from market Risk involved in business Financial Strength (FS)
Return on investment Leverage Liquidity Working capital Cash flow Earnings per share Price earnings ratio
External Strategic Position Internal Strategic Position SPACE Factors Industry Strength (IS)
Market share Product quality Product life cycle Customer loyalty Competitions capacity utilization Technological know-how Control over suppliers & distributors
External Strategic Position Internal Strategic Position Exercise 5: Winter Survival Item Expert ranking Ball of steel wool 2 Newspaper 8 Compass 12 Hand Axe 6 Cigarette lighter 1 45 calibre pistol 9 Section air map 11 Canvas 5 Shirt and Pants 3 Can of shortening 4 Whisky 10 Chocolate bar 7 Strategy-Formulation Analytical Framework BCG Matrix SWOT Matrix SPACE Matrix GAP Analysis Stage 2: The Formulation Stage BCG Matrix Boston Consulting Group Matrix Enhances multidivisional firm in formulating strategies Autonomous divisions = business portfolio Divisions may compete in different industries Focus on market-share position & industry growth rate BCG Matrix BCG Matrix Question Marks Low relative market share, competes in high-growth industry Cash needs are high Case generation is low Decision to strengthen (intensive strategies) or divest BCG Matrix Stars High relative market share and high growth rate Best long-run opportunities for growth & profitability Substantial investment to maintain or strengthen dominant position Integration strategies, intensive strategies, joint ventures BCG Matrix Cash Cows High relative market share, competes in low- growth industry Generate cash in excess of their needs Milked for other purposes Maintain strong position as long as possible Product development, concentric diversification If weakens retrenchment or divestiture BCG Matrix Dogs Low relative market share, competes in slow or no market growth Weak internal & external position Liquidation, divestiture, retrenchment BCG Matrix Stage 3: The Decision Stage Quantitative Strategic Planning Matrix (QSPM) Strategy-Formulation Analytical Framework QSPM Technique designed to determine the relative attractiveness of feasible alternative actions Quantitative Strategic Planning Matrix QSPM Key Internal Factors Management Marketing Finance/Accounting Production/Operations Research and Development Computer Information Systems Strategy 3 Strategy 2 Strategy 1 Weight Key External Factors Economy Political/Legal/Governmental Social/Cultural/Demographic/ Environmental Technological Competitive Strategic Alternatives Steps to Develop a QSPM 1. Make a list of the firms key external opportunities/ threats and internal strengths/weaknesses in the left column. 2. Assign weights to each key external and internal factor. 3. Examine the Stage 2 (formulation) matrices, and identify alternative strategies that the organisation should consider implementing. 4. Determine the Attractiveness Scores. 5. Compare the Total Attractiveness Scores. 6. Compute the Sum Total Attractiveness Score. Steps to Develop a QSPM QSPM Requires intuitive judgments & educated assumptions Only as good as the prerequisite inputs Limitations Cultural Aspects of Strategy Choice Successful strategies depend on the degree of consistency with the firms culture Organisational Culture ? Politics of Strategy Choice Management hierarchy Career aspirations Allocation of scarce resources Politics in Organisations Satisfying Generalisation Higher-order issues Political access on important issues Political Tactics for Strategists Politics of Strategy Choice Governance & Strategy Choice Control & oversight over management Adherence to legal prescriptions Consideration of stakeholder interests Advancement of stockholder rights Board of Directors Roles & Responsibilities Principles of Good Governance Governance & Strategy Choice 1. No more than 2 directors are current or former company executives 2. No directors do business with the company 3. Audit, compensation, and nominating committees made up of outside directors 4. Each director owns a large equity stake in the company 5. At least one outside director with extensive experience 6. Fully employed directors sit on no more than 4 boards, retirees on no more than 7 7. Each director attends at least 75% of all meetings Principles of good governance 8. Board meets regularly without management present 9. Audit committee meets at least four times a year 10. Board is frugal on executive pay, diligent in CEO succession, and prompt to act when trouble arises 11. CEO is not also the chairperson of the board 12. Shareholders have considerable power and information to choose & replace directors 13. Stock options are considered a corporate expense 14. No interlocking directorships Governance & Strategy Choice Yielding: _____ + _____ + _____ + _____ = _______ (Q.1) (Q. 6) (Q.11) (Q.16) Compromising: _____ + _____ + _____ + _____ = ______ (Q.2) (Q. 7) (Q.12) (Q.17) Forcing: _____ + _____ + _____ + _____ = _______ (Q.3) (Q. 8) (Q.13) (Q.18) Problem solving: _____ + _____ + _____ + _____ = _______ (Q.4) (Q. 9) (Q.14) (Q.19) Avoiding: _____ + _____ + _____ + _____ = _______ (Q.5) (Q. 10) (Q.15) (Q.20)
Manpower Planning or Human Resource Planning is the Process of Systematically Forecasting the Future Demand and Supply for Employees and the Deployment of Their Skills Within the Strategic Objectives of the Organization