Corporate Planning and Implementation Flashcards
corporate plan
plan containing details of a business’ central objectives and the strategies to achieve them, possibly including contingency plans
objectives + strategies and contingency plan
corporate planning
benefits of corporate planning = benefits of corporate plan
process of: situational analysis, objectives, strategy, implementation, review and control
pros of corporate plan
- review and control process
- sense of purpose - motivate + committed to meeting goal
- sense of direction helps to coordinate all departments - reduces RISK
- benefits of contingency planning - deal with adverse events quickly to minimise damage to rep/costs/[profits
3 - what by when - they can communicate to manage PR and media attention thus maintain loyal customer relationships and lower cost of lost sales in the LT
cons of corporate plans
see doc
eval for corporate plan
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what are the main internal influences on a corporate plan?
CC-RE think email!
- Resources - financial; employees numbers and skills; mgmt expertise
- Capacity of operations
- Experience with similar strategies
- Culture of rog
CC-RE
what are the main external influences on a corporate plan?
PESTLE+C
- macroeconomic conditions - e.g. delay an expansion during recession
- govt policy
- tech changes
- competitor actions
PESTLE FACTORS!!!!!!! + COMPETITION
the most important influence on a corporate plan…
depends on the business! e.g. if company produces income-elastic luxury cars, may find that its plan is most influence by economic forecasts
if large MNC, strategy depends on macro conditions and legal restrictions
if a small company, may be internal financial resource constraints
corporate culture
values, attitudes and beliefs of people working in an org that affect the way they behave and make decisions
main types of corporate culture
- power culture
- role culture
- person culture
- task culture
- entrepreneurial culture
try to identify what kind of a culture the business has based on clues from the case, and use it to evaluate how it may have contributed to the success/failure of a past strategy, or will impact the success of a future strategy
link between culture and org structure
the type of org structure that a business has will promote a certain type of culture in the org
- power = centralised
- role = hierarchy
- task = matrix
- person/entrepreneurial = autonomy
on questions about org structure, make sure you link to the type of culture it might be promoting and then explain the pros/cons of that culture
power culture
decisions made by select few or even one person in business, and other employees report to them and seek guidance from them
PRO: quick decision making - responsive
CON: demotivating; not suitable in growing business that requires delegation. AND if trust in those in power breaks down, fragmented cultures may take prevalence and prevent business from meeting objectives
role culture
authority of employees depends solely on their role - formalised roles, jobs and procedures
PRO: suits medium and large businesses with STABLE environments as little flexibility is required from employee roles
CON: silo mentality - excessive focus on role in your particular department without collaborating with other departments; less flexible; bureaurcracy may demotivate; if trust in those at top breaks down, fragmented cultures
pros and cons of tall hierarchical structure
task culture
focus on specific projects and tasks where individuals are brought together from different departments. Power is based on the skills you can contribute
PRO: cross-functional communication improves efficiency
CON: cons of matrix e.g. confusion
person culture
workers have freedom to act idependenty as they may have specialist skills; do not work within confines of hierarchy
PRO: specialist skills will increase efficiency; expertise lowers risk
CON: may lack wider view of organisation
the most appropriate culture for a business depends on…
- beliefs of managers - e.g. Theory X or Y
- type of business and market - e.g. a hospital needs more of a role/power culture to support rapid decision making and compliance, while very competitive market might require a more creative culture to develop new USPs and selling tactics
- type of strategy - e.g. if trying to increase sales with more innovative products and marketing, a task culture is better
reasons to change business culture
pogis
- new strategy - e.g. moving from cost focus to product differentiation requires more creative culture like task/entrepreneurial - if other way around may need power to control costs
- new objectives - e.g. privatised firm wants more profits so creative culture needed to add value
- fast growth/retrenchment - less centralised but more formal roles, so switch from power to role
- merge/takeover - new organisational culture required
- poor performance - e.g. dclining profits and market share - poorly motivated employees, and a person based culture may help
POGIS!!!!!!!!! performance, objectives, growth, integration, strategy
what are the approaches to changing corporate culture?
they must directly target sources of resistance to change
- build on positives
- committed senior mgmt team
- communication w and involvement of employees
- training
problems of changing culture
- cost - training
- time - to change mindsets and attitudes, especially if previous culture was very strong
- resistance to change
- existence of INFORMAL CULTURES - this can undermine the influence of the new culture, e.g. departmental
- international cultural differences for an MNC need to be accounted for
types of change
internal, external, incremental and disruptive
these all change the business’ overall strategy and hence the business’ departmental strategies
evaluate by identifying what kind of change is taking place then suggesting the impact of it!
internal change
- change in mgmt - leads to new org structure and culture
- changes from expansion - may need product or regional structure, may need to adapt marketing mix, may need a taller hierarchy and role structure
external change
- interest rates - may need to reduce gearing; may look to issue equity instead
- legal changes - e.g. less free trade means you have to change your supplier or switch from JIT to JIC; alter HRM strategy due to employment law
incremental change
small but frequent change over a long period of time, e.g. Kaizen!
may help to reduce resistance to change
what is the link between corporate culture and decision making?
- Different cultures will change the way businesses make decisions and introduce changes
E.g. power culture will not involve employees in major strategic changes, creating resistance to chang - business decision making will be impacted by whether the culture is strong or weak
A strong culture will promote and facilitate successful strategic decision making because there is a very widespread sharing of common beliefs and norms
disruptive change
extreme and permanent change to products and processes, e.g. airbnb, uber, netflix. May require extreme changes to business which face more resistance
transformational leadership
- help teams to identify the need for change by clearly communicating the business’ vision and showing them how it will benefit them
- demonstrates concern for the needs and feelings of employees and provides stimulating challenges for self-actualisation (Maslow)
- must set the right example with their own behaviour
this will inspire people to accept and cooperate with the implementation of the change
importance of transformational leadership
- reduce resistance to change by altering employees’ mindsets
- improve motivation and performance
- increase flexibility and adaptability to change - crucial in increasingly dynamic world
impact of change (in general) may depend on…
whether it is incremental (e.g. announced govt policy change) or dramatic (e.g. war, pandemic), and anticipated or unanticipated
main causes of change
PESTLE + competitive changes
to reduce employee resistance to change…
- clearly communicate need for change, plans and benefit to them
- involve them and get their input to increase commitment
- value their feelings and ensure motivation is high
- train them to work aligning with the change
project champion
someone appointed to support a project and drive it forward by explaining the benefits of change and ensureing sufficient resources are available
seek to remove obstacles the team faces and champion the changes being suggested by the team to senior mgmt
they demonstrate transformational leadership
project groups/teams
Groups created by an org to address a problem hindering change implementation, which requires input from different specialists
will work with manager in charge to decide an appropriate action plan
6 sources of resistance to change
- Poor communication of impacts of change - what will happen to an employee’s job and the future of the business?
- Fear of failure - change may require skills and abilities that might be beyond a worker’s capabilities
- Lack of trust - may not believe the reason for change or the impact on their jobs and future due to past incidents
- Inertia - change requires considerable effort, and people may now want to work harder or learn new skills
- Self interest - bothered only about personal impact and not the impact on biz
- Disagreement with methods of change
NOTE: link these factors to the culture and management style being used. E.g. autocratic management is more likely to lead to fear of the unknown and mistrust
identify the source of resistance to decide how to overcome them e.g., if the issue is the fear of the unknown, effective communication and employee involvement will be needed. If fear of working harder is the problem, incentives may be needed to motivate
6 solutions to resistance to change - depends on the source of resistance
- lack of trust/fear - better** communication** about need for change BUT LT solution
- fear of failure and inertia - training and support BUT costs? What about automation?
- self interest and disagreement - involvement and provide incentives! BUT (1) slows process down so only involve high power, high interest stakeholders and (2) COST!
- disagreement - negotiate and compromise BUT may lead to slightly different outcomes!
- if 1-4 don’t work, COERCION - force it through and in the LT people might change their attitude and behaviour
CITINC
communication, training, inventives, involvement, negotiation, coercion - 6 SOLUTIONS
contingency plan
prepares an organisation’s resources for unexpected and unwanted events.
aim: managers prevent the occurrence of disasters, or minimise their impact to allow normal operations to resume ASAP
steps of contingency planning
- Identify potential disasters that could affect that particular business
- Assess the likelihood of them occurring
- Minimise their potential impact
- Plan for continued operations
pros of contingency planning
- Reassures employees that safety is a priority - may feel more secure in their jobs thus more motivated, leading to lower turnover and recruitment costs
- minimise production disruption - e.g. using generators or alternative factory, can resume supplying customers as soon as possible, which should minimise customer dissatisfaction OR if large factory, then can maintain high capacity utilisation which minimises the increase in unit fixed costs
- Protect reputation - plan outlines what to do and by when so managers can communicate this with PR, which increases customer trust hence strengthens loyal relationships and prevents LT loss of sales
cons of contingency planning
- Training costs (high levels of skills for process and preparations e.g. backup equipment) - will reduce profits thus leaving less available to reinvest in x/dividends
- Time-consuming (planning and practice) - less time for handling other strategic issues/production thus (impact of ignoring the other issue)/higher unit costs and prices
- employees may become complacent and take more risks knowing there is backup in place - may make disasters more likely to happen thus increasing costs
contingency planning eval
- does not guarantee that disasters won’t occur, only reduces the chance and prepares the business to minimise their impact.
- employees must not become complacent knowing that there is a contingency plan
- costs of productivity loss and lower profits only SR and outweighed - helps prevent much larger and LT financial and reputational costs of a crisis
- Must be constantly updated to reflect changes in the range of risks
- Planning may be more important in some industries that are particularly dynamic or unpredictable, e.g. the travel industry/airlines
- strike a balance between planning for the most common disasters and less likely ones - less likely ones might have the greatest impact on business
importance of flexibility
- adapt to changes in customer needs or market conditions to capitalise on new opportunities (e.g. cost/sales) and retain competitive edge
- increase operational efficiency - can reallocate resources quickly as needed which reduces waste of idle resources thus minimises costs
- could promote greater innovation - employees more encouraged to propose new ideas if they know they can be implemented easily
