Business Acumen & Consultation Flashcards
Value
- The benefit created when an organization meets its strategic goals
- Is a measure of usefulness, worth, or importance.
- Not the same as values (principles and beliefs)
Critical aim for all organizations and business units to function is to
- Protect and enhance the value of the organization’s assets
- Financial, people, technological, and physical
- Add new value where possible
Assumption behind strategic planning and management
Purposeful activity will yield greater value
Before strategic planning can begin, organization needs to consider what regarding value
- How it creates value
- What activities are critical to the creation, retention, and increase of value
Influences on value
- Organization’s mission
- Culture at organizational, global and workplace level
Value chain
- Also called business model
- The process that an organization creates the product or service it offers to the customer
- Involves every activity required to make a good or service and then sell or deliver it
Value chain is described as chain because
- It represents the sequential and simultaneous contributions of a number of internal and external participants.
- Each participant adds an eliment of value and the total value is more than the sum of the parts and shows the interconnections of various partipants in delivering value to the end customer
Primary Activities in Value Chain
- May vary due to enterprise’s activity and contribute to the value created.
- May be part of the organization or external. (ex: distributor or retailer)
Secondary Activities in Value Chain
- Provide essential services to line functions
- Ex: HR
HR Contribution to Value Chain
- Quality and avaliability of talent pools
- Managing labor supply for productivity.
- Leader and performance development processes.
Competitive Advantages through Value Chain
Enterprise can achieve competitive advantage by either
- Being superior in one functional area of value chain
- Through effective coordination amoung various functions
Global Value Chain
- Consists of multiple organizations producting parts of a good or service across geographical regions, with each link on the value chain adding value.
- More integrated than those who outsource production or supply from other countries.
- They must maintain good governance of all chain participants
Organizational/Product Life Cycle Stages
- Introduction
- Growth
- Maturity
- Renewal/no growth/ decline
Organizational/Product Life Cycle Outcomes
- Success through renewal
- No-growth existence
- Decline
Introduction Stage of Organizational/Product Life Cycle
- Revenue (vertical) is low
- Little market awareness
- Market’s resistance to change
- Entrants must create an identity with customers and develop a value proposition (take imagination, business acumen and leadership)
Growth Stage Stage of Organizational/Product Life Cycle
- Time proceeds (horizontal access)
- Revenue increases
- Rate of growth (steepness of curve) will vary by industry, enterprise or product
- Focus shifts to creating processes that will increase efficiency without stifling innovation
Maturity Stage Stage of Organizational/Product Life Cycle
- Market is saturated with competitors
- Growth only occurs through introduction of new products or customer groups (starts new cycle for those entrants) or acquistions
- Profit margins become narrower
- Efficiency becomes important.
- Greater formalization and perhaps bureauracy
Renewal/no growth/decline Stage Stage of Organizational/Product Life Cycle
Eventually demand decreases, either because need no longer exists or it is satisfied more effectively by something or someone new
Renewal Stage of of Organizational/Product Life Cycle
- Renew themselves completely done by changing their offerings, where they compete or how they compete If they succeed, revenues rise
- Organizations must return to innovative roots
No growth Stage Stage of Organizational/Product Life Cycle
- Take no action and accept continued low revenue
- As time goes on, organizations and products have few resources to take advantage of opportunities that might deliver growth
Decline Stage Stage of Organizational/Product Life
Take no action and experience a decline in revenue that will make it impossible to compete or operate
Characteristics of the Introduction Stage of the Organizational/Product Life Cycle
- Vision, innovation, and energy are critical.
- Little structure and no formal policies.
- There may not be a dedicated HR function
- Could be outsourced or performed by a top manager.
Introduction Stage of the Organizational/Product Life Cycle Impact on HR Strategy
- Talent acquisition
- Helping to define and create a culture in keeping with the founders’ values.
- Controlling risks associated with human resources
- Ex: Compliance with laws, stress management
Characteristics of the Growth Stage of the Organizational/Product Life Cycle
- Keen awareness of markets and customers make the difference.
- Managers must be strategically disciplined and maintain focus.
- There are competing demands for innovation and efficiency.
- Requires some degree of formalization of structure and processes without affecting the vibrant culture that brought the organization out of the start-up phase
Growth Stage of the Organizational/Product Life Cycle Impact on HR Strategy
- Tactical buildup of talent.
- The right talent must be acquired and/or built in-house.
- Tactical increase in complexity of structure and policies.
- Changes must weigh improvements in efficiency against impact on culture
- Helping leaders redefine their roles and share leadership with others.
- Formalization of job descriptions.
- Managing changes caused by the organization’s growth and increased formalization.
Characteristics of the Maturity Stage of the Organizational/Product Life Cycle
- Need for greater control emerges.
- This often results in more formalization and complex reporting and decision-making structures.
- Top management plans; lower-level management implements.
- There can be a loss of connection with the organization’s strategy.
Maturity Stage of the Organizational/Product Life Cycle Impact on HR Strategy
- Building and retaining a productive workforce to meet a high level of demand.
- Establishing stable leadership through succession planning.
- Implementing policies.
- Communicating and reinforcing organizational culture in policies and practices.
- Improving channels of communication so that strategy can be understood and aligned at all levels and in all areas.
- Making sure that formalization does not make the organization less agile and innovative.
- Consulting to other parts of the organization to solve problems that affect productivity
- Modeling awareness of external influences. HR can be a champion of environmental scanning.
Characteristics of the Renewal Stage of the Organizational/Product Life Cycle
- The organization attempts to reconnect with or find new customers or missions.
- If the organization has become slowed by its size and held back by complex structures and too many policies, it will need to restructure.
- Vision and innovation, strong leadership, motivation, and communication are vital.
Renewal Stage of the Organizational/Product Life Cycle Impact on HR Strategy
- Reductions in workforce to right-size the organization as it rebuilds.
- A change in leadership and workforce requirements.
- A streamlining of structures and policies.
- Added responsibilities to job descriptions and remaining staff.
Characteristics of the No Growth Stage of the Organizational/Product Life Cycle
- Revenue and workforce remain static or decline.
- Fewer opportunities for employee advancement arise.
- Compensation is static.
No Growth Stage of the Organizational/Product Life Cycle Impact on HR Strategy
- Maintaining engaged workforce with fewer resources.
- Dealing with increased turnover rate.
- Delivering HR services with shrinking budget.
Characteristics of the Decline Stage of the Organizational/Product Life Cycle
- The organization shrinks in size and assets.
- In-fighting increases.
- There may be a swing back to more autocratic control by leaders.
Decline Stage of the Organizational/Product Life Cycle Impact on HR Strategy
- Reducing the workforce size.
- Helping the organization’s members manage constant stress and workplace changes necessary to survive.
- Attracting necessary talent. Reduced assets and prospects demand greater creativity in talent acquisition.
Macroenvironment
All the factors that exist outside the organization that could influence the organization’s strategic decision
Macroenvironmental Factors Include
- Industry and market conditions and behaviors that shape the organization’s competitive environment
- Factors that directly affect the core competencies the organization needs to compete
- HR needs to provide the right number of workers with the right kinds of skills
- Events and trends that may affect the present and future availability of talent, compliance requirements and employee needs.
Michael Porter’s “Five Forces” Framework Purpose
- Was designed to identify industries that were more likely to be profitable and provide a return on investment
- Based on the premise that every industry (including those in nonprofit and not-for-profit) sectors and its members face similar competitive challenges.
Applying Michael Porter’s “Five Forces” Framework
- Reveals subtle information about the dynamic forces within industries.
- Analysis can be used to identify opportunities and threats, foresee possible changes in competitive landscape and plan strategy