Unit 10 Flashcards
Managing strategic change
What is strategic drift?
Occurs when a business’ strategy is no longer appropriate for its business environment ( because it’s changing).
What causes strategic drift?
PESTLEC.
What is the model used for strategic drift?
Johnson and Scholes model.
- Shows the amount of environmental change (Y-axis) to time (X-axis).
- The bigger gap between the environmental change and business change the bigger the strategic drift.
What are the four phases of the Strategic Drift model?
Phase 1: Incremental changes
Phase 2: Strategic drift (environmental change has increased)
Phase 3: Flux - The business has recognised the issue but has no solution to solve it. This leads to loss of competitive advantage due to failure to keep up with trends.
Phase 4: Either transformational change or demise. Business either finds a solution or goes out of business. E.g Blockbuster, Nokia, Kodac.
Or Netflix.
What is Handy’s organisational culture model and what are the types?
It’s a way to understand and categorise the different types of culture that can exist within an organisation.
- Power Culture
- Role culture
- Task Culture
- Person culture
What is power culture?
- A centralised culture, decisions made by a select few
- Employees seek guidance and report to them
- Quick decision-making
- In a fast-growing business communication may breakdown
What is role culture?
- A hierarchal structure
- Formalised roles, jobs and procedures
- People in a role culture have specific roles and responsibilities, and there are clear expectations and job descriptions. It’s about following procedures and getting things done systematically.
- Medium/large businesses with a stable environment may benefit
What is task culture?
A matrix structure
- Focus on specific tasks/projects
- Individuals are brought in to solve issues in different departments
A task culture is focused on getting the job done. It’s more team-oriented, with people working together in groups to solve specific problems. There’s an emphasis on expertise and competence rather than hierarchy or rigid roles.
- E.g in advertising agencies
- May be a good response to strategic drift
What is internal change?
Factors within a business that have caused a change in the business, e.g a new manager has new ideas
What is external change?
Pressures on business from outside the company for example ; PESTLEC factors
(if interest rates rise then the cost of borrowing rises and customers may prefer to save instead of spend) linked to strategic drift
What is incremental change?
(Kaizen)
Small changes that aim to modify, improve, adjust and refine existing practices and processes
What is disruptive change?
irreversible changes that may alter the future of the business
e.g the introduction of smartphones has changed the way we consume media
- however disruption opens up opportunities to create massive new markets
What is Lewin’s force field analysis?
2 opposing forces, one FOR change and one AGAINST
- change will happen if the driving forces for change are stronger than the obstacles
- change will also happen if the restraining forces are reduced, like if new production technology has become available to improve quality issues
What are Kotter and Schlesinger’s 6 ways of overcoming resistance to change?
Education - can help them see the logic involved or the need for change.
Support - Help them cope with change.
Participation - Involving the resisters in the process of change, seeking and often acting on their advice.
Manipulation and co-option - Selective use of information and careful structuring of events; giving one or more leading resisters a key role in implementing change.
Negotiation and bargaining - Incentives such as higher pay rates for productivity are offered to resisters. Easy but expensive.
Coercion - Workforce is forced to accept change because of e.g threat of job losses, transfer or dismissal.
Why do businesses change?
Flexibility
Progress
Opportunities
Customer needs
Challenging current practices
What is the value of a flexible business?
Competitiveness - the business is able to respond more easily to change as it recognises it as inevitable and uses it to maximise competitiveness.
Efficiency - new approaches are likely to be developed, causing efficiency to improve.
Teambuilding - where a culture of change exists employees are likely to be more engaged and motivated
What is restructuring?
Making significant changes to a company’s structure, operations, or finances in order to improve its performance, reduce costs, or respond to changes in the market. This can involve reorganising teams, altering financial strategies, or changing business processes to make the company more efficient or competitive.
What is an organic structure?
A decentralised structure, wider span of control. Likely to be more flexible and more suited to organisations that operate in unstable, dynamic environments that need to adapt quickly to change.
e.g creative and design firms, tech companies
What is a mechanistic structure?
A centralised structure, well defined hierarchy, narrow spans of control, communication is top down. (role culture)
Why is organisational culture important?
Identity - culture defines an organisations identity and the way it is perceived by employees and stakeholders.
Direction - Culture provides a set go guidelines, roles and responsibilities.
Loyalty
Competition
Attitude to change
What are influences on organisational culture?
Leadership style - Role of a leader is to direct, motivate and inspire employees. An autocratic and laissez-faire approach are likely to lead very different cultures.
Objectives of organisation
Nature of the business- industries in creativity and innovation likely to have power culture and an industry that values economies of scale likely to use a role culture.
Employees - age, sex and attitudes of employee can have an impact on the culture.
What are some reasons for changing organisational culture?
Toxic culture
Change of leader
Change of ownership - may occur during a takeover.
Changing market conditions - may be the result of moving into international markets.
What are some problems with changing organisational culture?
Could be difficult due to tradition and attitude of employees.
- They may not accept the need for change (Kotter and Schlesinger reason for change)
- Could also present a problem if it involves a large numbers of people.
What are the benefits of network analysis in strategic implementation?
- Encourages managers to undertake strategic planning, which helps reduce risk of delays and other problems
- Resources needed for each activity can be made available at appropriate time, reducing costs and improving cash flow
- Time can be saved by operating activities simultaneously - vital in industries where time is a competitive advantage
What does a network analysis do?
Breaks down complex projects into component parts and plots them on a network diagram to show their connection and relations. It can help with preparation of schedules, resource planning and monitoring progress.
What does a network analysis show?
The sequence in which actives should be undertaken (the critical path)
The length of time taken by each activity
The earliest start time at which each activity can commence
The latest finish time at which each activity must be completed to avoid delaying other activities
What are some drawbacks of using a network analysis?
Depends on how accurately the durations of the activities are estimated. Can be difficult to forecast and if wrong the whole process may be of little value
Complex activités may be difficult to represent on the diagram
External factors
What are the failure rates of most strategies?
Between 60-90%.
What are some difficulties of strategic decision making?
Overall goals not understood by workforce, or wrong targets have been set because of insufficient data analysis
Lack of capability of employees, training and instruction inadequate.
Leadership may have failed to provide adequate direction
Unforeseen events, unanticipated problems
What is a planned strategy?
The strategy managers intend to implement.
- Assumes smooth change between current position and new position.
- Does not address the continuous need for structural adaptation and employee flexibility.
What is an emergent strategy?
Instead of following a fixed, long-term plan (planned strategy), an emergent strategy is flexible and evolves as a business reacts to real-world situations.
What is contingency planning?
Planning for the unexpected. Aka a plan be to handle emergencies and unexpected problems.
Benefits of contingency planning?
Minimises disruptions, ensure business continuity
Provides a clear action plan, so employees know what to do instead of reacting in confusion.
Helps leaders make quick, informed decisions under pressure.
What are the benefits or strategic planning?
What is a strategy evaluation?
The process of determining the effectiveness of a given strategy on achieving the organisation objectives and taking corrective actions where required.
What is corporate governance?
A set of systems, processes and principles that ensures and organisation is governed in the best interest of all its stakeholders.
What is a divorce of ownership and control?
The separation of ownership (shareholders) and control (elected board of directors) in a PLC.
Why does divorce of ownership and control happen?
When a business grows the owners can no longer make all decisions themselves, or owners may no longer have the expertise so hire specialists.
