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CIMA E2 Enterprise Management Tuition Notes
E2 - Enterprise Management _____________________________________________________________________
E2 - Enterprise Management _____________________________________________________________________
Contents Contents ........................................................................................ 3 LEARNING OUTCOMES GRID ..................................................... 5 Paper Information .......................................................................... 8 How to Pass .................................................................................. 9 The Verb Hierarchy...................................................................... 10 Strategic Management & Assessing the Competitive Environment. (A)12 A2 (c) Explain the relationship between different levels of strategy. 12 A2 (b) Compare and Contrast Approaches to Strategy Formulation 15 A1 (a) Discuss the nature of competitive environments ............ 15 A1 (b) Distinguish between different types of competitive environments ............................................................................ 15 A2(b) Compare and contrast approaches to strategy formulation39 A2(a) discuss concepts in established and emergent thinking in strategic management .............................................................. 55 C1 (b) demonstrate the importance of organisational culture .... 88 C2 (g) Analyse issues of business ethics and corporate governance ............................................................................................... 113 Management of Relationships (C)................................................ 66 C2 (a) Analyse the relationship between managers and their subordinates, including legal aspects affecting work and employment ............................................................................................... 104 C1 (a) discuss the concepts of power, bureaucracy, authority, responsibility, leadership and delegation .................................. 66 C2 (b) Discuss the roles of negotiation and communication in the management process, both within an organisation and with external bodies ....................................................................................... 82 C2 (d) Identify tools for managing and controlling individuals, teams and networks, and for managing group conflict......................... 97 C1 (c) identify the nature and causes of conflict ....................... 97 C1 (d) discuss alternative approaches to the management of conflict ................................................................................................. 97
...................................................................... 87 C2 (c) discuss the effectiveness of relationships between the finance function and other parts of the organisation and with external stakeholders .............................................. 138 B1 (h) Compare and contrast project control systems .... incorporating strategies for dealing with this uncertainty....... in the context of a simple project128 B1 (e) Apply tools and techniques that would need to be applied in the project process........... 116 B1 (d) Identify the characteristics of each phase in the project process .......... including the evaluation of proposals ............................... a programme and their attributes .......................................................................................................................................... 126 B1 (c) Construct an outline of the process of project management ....................... 119 B2 (a) Produce a strategy for a project ......................................E2 ..... 147 B1 (i) discuss the value of a post-completion audit ........... 106 C2 (f) Explain the process and importance of mentoring junior colleagues ................................................................. 119 B2 (c) Explain the roles of key players in a project organisation124 B2 (b) Recommend strategies for the management of stakeholder perceptions and expectations ............... 149 B1 (j) Apply a process of continuous improvement to projects151 -4- .. 127 B1 (f) Produce a basic project plan........................... 116 B1 (a) Identify a project....... 111 Project Management (B) .......................Enterprise Management _____________________________________________________________________ C2 (e) Compare and contrast ways to deal effectively with discipline problems.................... 128 B1 (g) Identify structural and leadership issues that will be faced in managing a project team .......................................................................................................................... 117 B1 (b) Apply suitable structures and frameworks to projects to identify common project management issues ........................................
2. (b) distinguish between different types of competitive environments. (c) explain the relationship between different levels of strategy in organisations.E2 . Discuss developments in strategic management (a) discuss concepts in established and emergent thinking in strategic management. Discuss different competitive environments and key external characteristics of these environments Component (a) discuss the nature of competitive environments.Enterprise Management _____________________________________________________________________ LEARNING OUTCOMES GRID A – Strategic Management and Assessing the Competitive Environment – 30% Lead 1. (b) compare and contrast approaches to strategy formulation. -5- .
(f) produce a basic project plan incorporating strategies for dealing with uncertainty. (j) apply a process of continuous improvements to projects. evaluate the relationship of the project manager to the external environment (a) produce a strategy for a project. (c) explain the roles of key players in a project organisation -6- . in the context of a simple project.Enterprise Management _____________________________________________________________________ B– Project Management – 40% Lead 1. including the evaluation of proposals. (d) identify the characteristics of each phase in the project process. 2. (i) discuss the value of post-completion audit. (b) recommend strategies for the management of stakeholder perceptions and expectations. (b) apply suitable structures and frameworks to projects to identify common project management issues. (g) identify structural and leadership issues that will be faced in managing a project team (h) compare and contrast project control systems. a programme and their attributes. discuss tools and techniques of product management Component (a) identify a project. (c) construct an outline of the process of project management. (e) apply key tools and techniques.E2 .
Enterprise Management _____________________________________________________________________ C– Management of Relationships – 30% Lead 1. (d) discuss alternative approaches to the management of conflict.E2 . authority. (e) Compare and contrast ways to deal effectively with discipline problems. bureaucracy. and for managing group conflict. responsibility. both within an organisation and techniques external bodies. (d) Identify tools for managing and controlling individuals. leadership and delegation. (c) Discuss the effectiveness of relationships between the finance function and other parts of the organisation and external stakeholders. teams and networks. (f) Explain the process and importance of mentoring junior colleagues. -7- . (c) identify the nature and causes of conflict. including legal aspects affecting work and associated with employment. discuss concepts associated with the effective operation of an organisation Component (a) discuss the concepts of power. Discuss the activities managers and their subordinates. (g) Analyse issues of business ethics and corporate governance. (b) demonstrate the importance of organisational culture. managing people (b) Discuss the roles of negotiation and and their communication in the management associated process. (a) Analyse the relationship between 2.
each worth 10 marks. Short scenarios may be given. -8- .E2 . C. Project Management Management of Relationships 40% 30% Format of the Paper Section A – 50 Marks Five compulsory questions.Enterprise Management _____________________________________________________________________ Paper Information THE EXAM Syllabus topics and weightings A. to which questions relate. Short scenarios may be given. to which some or all questions relate Section B – 50 Marks One or two compulsory questions. Strategic Management & Assessing the Competitive Environment 30% B.
Enterprise Management _____________________________________________________________________ How to Pass Have sound theoretical knowledge (Attend Tuition Classes) Practice application skills (Question Practice) Be prepared! (Attend Revision & QBR) Read the question requirements ‘Add value’ to the scenario material -9- .E2 .
10 - .E2 .Enterprise Management _____________________________________________________________________ The Verb Hierarchy .
11 - .Enterprise Management _____________________________________________________________________ Overview of Paper .E2 .
(A) A2 (c) Explain the relationship between different levels of strategy. including the specification of resources. • Emphasis on external factors – strategic planning requires the external environment to be taken into account when formulating strategies. • Resource analysis – strategic planning involves analysing an organisation’s resources to determine resource requirements. • Objectives – strategic planning requires the establishment of organisation objectives which are achievable given the external factors and realistic given the internal resource availability.E2 . The concept of strategy • A ‘strategy’ is something that an organisation implements to take it from where it is now to where it wants to be at some point in the future.12 - . Characteristics of strategic planning Strategic planning is characterised by the following factors: • Long-term planning – strategic planning looks at the longerterm strategy of the organisation. • A course of action. . to achieve a specific objective.Enterprise Management _____________________________________________________________________ Strategic Management & Assessing the Competitive Environment.
• Without the appropriate resource. product and/or business unit strategies could not be successfully undertaken.13 - . .Enterprise Management _____________________________________________________________________ Levels of strategy There are basically three levels of strategy: corporate strategy.E2 . policy on corporate social responsibility) • The extent to which the SBU’s are free to make strategic decision (centralised or decentralised approach) Business strategy – set within the broad framework of the corporate strategy • How the SBU approaches a particular market • Winning customers and beating rivals – competitive strategy can be formulated depending on the degree of autonomy allowed • Marketing issues (segmentation & marketing mix) Functional level strategies • Dealt with at the departmental level within the SBU such as marketing. business strategy and functional level strategies: Corporate strategy • Overall purpose and scope • Decisions on acquisitions. mergers and sell offs • Decisions to enter new markets • Embracing new technologies • Development of corporate policies (i. • These strategies are to ensure that there is a ‘balanced portfolio’ of resources for business and corporate strategy implementation. finance and production.e.
It has a range of different ventures worldwide including fitness centres. each of which operates as a separate business Required Distinguish between the different levels at which strategy should exist in V plc. (10 Marks) .Enterprise Management _____________________________________________________________________ Corporate Strategy Head Office Business Strategy SBU SBU Functional Strategy Financial Operations Human Resources SBU SBU Question V plc operates in the leisure and entertainment industry. cinemas and sports bars.14 - .E2 . Casinos.
strategic choice and strategic implementation.Enterprise Management _____________________________________________________________________ A2 (b) Compare and Contrast Approaches to Strategy Formulation A1 (a) Discuss the nature of competitive environments A1 (b) Distinguish between different types of competitive environments The strategy formulation process According to Johnson and Scholes. there are three stages in the process of strategy formulation: strategic analysis. which will need to be managed. Strategic evaluation & choice requires management to identify strategies to take advantage of strengths and opportunities and strategies to minimise weaknesses and threats. . A corporate appraisal (or SWOT analysis) is undertaken to ascertain the internal strengths and weaknesses and the external opportunities and threats.E2 . Strategic implementation (Review & Control) requires organisational change.15 - . Strategic analysis requires the analysis of the internal and external environments.
• The information from the external environment helps to analyse potential opportunities and threats and the competition it faces. • The information from the internal audit helps to analyse the organisation’s strengths and weaknesses.Enterprise Management _____________________________________________________________________ Strategic Analysis and Competitive Analysis • The strategy of an organisation must allow it to achieve “a good fit” with its environment and internal resources. (There are various levels within the environment) o Nature of the environment Degree of turbulence and uncertainty • Organisations need to be flexible (E1) o Macro-environment PEST • Create opportunities or threats o Micro-environment 5 Forces • Competitive pressures .16 - . External/Environmental Analysis • All of the factors outside of management control which can affect the performance of the business and the success of its strategies.E2 .
amongst other things. shortening product life cycles and swifter communications (the diffusion of knowledge) . Our assumptions are soon out of date.E2 .’ • Uncertainty can also be defined as ‘the difficulty in making reliable assumptions about the future’ Causes of Environmental Uncertainty • Complexity – the increasing number of variables that impact upon the firm (and how difficult they are to understand)(the use of the rational planning model to generate a single scenario strategic plan ignores this – scenario planning would allow if a “what if” approach) • Interaction of the variable – the idea of complex adaptive systems (carrying out the strategic planning process annually means that any changes in the business environment during the year cannot be incorporated into the strategic plan – planning should be carried out on a continuous basis) • Dynamism – the rate of change in the variable that impact upon the firm.Enterprise Management _____________________________________________________________________ Environmental uncertainty Uncertainty is: • ‘The inability to predict the outcome from an activity. This has occurred because of. or about the environment within which the activity takes place.17 - . due to a lack of information about the required input/output relationships.
Enterprise Management _____________________________________________________________________ Impact of uncertainty • Reduces planning horizon • Encourages emergent strategies • Increases information needs and perceived information needs • Can lead to conservative strategies .18 - .E2 .
what impact do they have on the organisation) PEST(LE) Analysis Benefits Identify and capitalise on opportunities Obtain objective qualitative information giving a deeper understanding of its markets More sensitive to changing needs of customer Improve the quality of strategy formulation and reduce risk Education and awareness of the industry which should reduce surprises Political Analysis • Stability of political system • Availability of tax incentives • Government intervention in the market • etc Economic Analysis • Interest rates • Exchange rate • Inflation rate • Fund movement control • etc .Enterprise Management _____________________________________________________________________ PEST/PESTEL framework (Key drivers of change) • Political/legal influences • Economic factors and influences • Social values and demographic factors • Technological change and factors Again.e.E2 . if you are asked to apply the PEST model to an organisation.19 - . (i. simply look for the things that might affect the organisation and put each of them under the most appropriate heading with an explanation as to why you feel each activity is an opportunity or a threat.
E2 .20 - .Enterprise Management _____________________________________________________________________ Social Analysis • Gender • Age of population • Birth growth rate • Changing tastes and fashions • etc Technology Analysis • R&D national expenditure • Types of technology available • Usage of technology • etc Legal Analysis • Intellectual property legislation • Minimum wage regulation • Pricing regulation • Competition regulation • etc Ecological Analysis • Pollution regulation • Environmental protection legislation • etc Sources of information • industry analysis • regulatory and professional bodies • press • government • suppliers • watchdog groups • trade associations • consultants .
21 - . • It is the collective strength of these forces that will determine the profit potential. Threat of New Entrants Bargaining Power of suppliers Competitive Rivalry Bargaining Power of Buyers Threat of Substitutes • Threat of new entrants .Enterprise Management _____________________________________________________________________ The Competitive environment – five forces model • Porter identified five competitive forces that provide a useful framework for assessing the competitive forces at work in an industry /market • It can be used to determine whether that industry/market is an attractive one to enter.E2 .
E2 .Enterprise Management _____________________________________________________________________ • Threat of substitute products or services • Bargaining power of buyers • Bargaining power of suppliers • Rivalry amongst existing firms .22 - .
23 - .E2 .Enterprise Management _____________________________________________________________________ Evaluation of Environmental Models Benefits Limitations Consider a wide range × They can distort reality of potential impacts (the real business world does not fall into neat segments) They allow for division × They present the of work environment as external (the boundary between internal and external is blurred) They provide a common × Networks and language interdependencies are overlooked They provide an insight × They overload into key strategic issues management (should only a small number of factors be monitored?) .
It has achieved this through being at the forefront of product innovation. Over the years the company has been market leader in its field. T has decided to undertake a strategic review.Enterprise Management _____________________________________________________________________ Question T is the CEO of S Company. S Company has invested heavily in research and development.E2 .24 - . Required Explain what would be involved in undertaking an appraisal of S Company’s external environment. this has meant that the cost of operations has spiralled. and how the information could be used to help T in his review. which has enabled it to be the first in the market to introduce new variants of the product range. It would seem that supermarket “own brand” products are stealing market share and T is worried about the future ability of the company to meet its objectives for continual growth. However. (10 Marks) . a manufacturer of hair and body care products. leading to an increase in the price of the company’s products. Up until last year. the most recent performance indicators show that sales are down. the company has been very successful in increasing its market share. However. the first stage of which will involve conducting an appraisal of its external environment.
) on the activities of competitors in order to gain a competitive advantage’ • The Purpose of competitor analysis is: o To help understand our competitive advantage/disadvantage relative to competition o To forecast competitors’ future strategies and how to counteract them o To give an informed basis for the construction of the firm’s strategies. to gain or sustain competitive advantage o To assist with the forecasting of the returns on strategic investments when deciding between alternative options o To forecast competitors’ likely reactions to the firm’s strategic decisions . etc. promotion. financial.Enterprise Management _____________________________________________________________________ Competitor Analysis ‘The systematic review of all available information (marketing.E2 .25 - .
E2 .26 - .Enterprise Management _____________________________________________________________________ Levels of Competitors • Brand • Industry • Form • Generic .
E2 .27 - .Enterprise Management _____________________________________________________________________ The following process can be used for gathering competitive intelligence: • Identify competitors’ current strategy • Identify competitors’ objectives • Identify competitors’ assumptions about the industry/market • Identify competitors’ resources and capabilities • Information that should be gathered: o o o o o o o o o o o o Products and services Marketing Human resources Operations Management profiles Socio-political information Technology Organisational structure Competitive intelligence capacity Strategy Customer value analysis Financial information and Cost structures Sources of data • • • • • • • • • • • • • • From partnership Physical analysis of competitors’ products Banks and financial markets Ex-employees of competitors Generalisation from own cost base Industrial experts and consultants Physical observations of their operations Published financial statements Competitor press releases Trade and financial media coverage Inspection of wage rates in job adverts Availability of the market segments they serve The work methods they employ Competitor threat .
Enterprise Management _____________________________________________________________________ ______________________________________________________ _______________ • We can link this back to Five Forces Analysis and the extent to which competitors are a threat depends upon: • Number of rivals and the extent of differentiation in the market – a market for commodity products is always more fiercely competitive • Entry and mobility barriers • Cost structure – anything that makes it harder to make a profit will make it more fiercely competitive • Degree of vertical integration – vertical integration gives power – but removes flexibility .E2 .28 - .
including the sources you would use tailored to the scenario of the question .29 - . therefore. you should be looking for clues to the industry structure and.E2 . the nature of the competition that a firm in likely to experience in that industry. • you should also be able to describe a process for gathering competitive intelligence.Enterprise Management _____________________________________________________________________ Strategies that can be used against competitors and potential new entrants • • • • • • • • Attack competition Market segmentation Occupy new territory Block first mover advantage Rewrite the rules of the game Technical innovation Higher levels of service Co-operation Competitor Accounting • Evaluation of barriers to entry • Estimate the present value of the costs that an entrant will incur to overcome barriers • Compare with present value of returns • Estimate competitors costs Regarding competitor analysis • you should make sure that you are able to discuss the role of competitor analysis – do not forget that it is strongly linked to Five Forces Analysis. • in scenario questions.
What are the implications for competitive strategy (home and overseas)? Firm strategy.E2 . Where should an organisation locate to gain a competitive advantage? 2. Where should an organisation locate part of its operations (e. structure and rivalry Factor conditions Demand conditions Related and supporting industries • The four elements on the diamond that need to be analysed are. . 1 Demand conditions o The demand conditions in the home market are important because: If the demand in terms of volume is substantial. Why certain organisations are successful international firms and how they sustain superior performance? 3.30 - . production) to take advantage of what a country offers? 4.g. it enables the firm to obtain the economies of scale and ‘experience effects’ it will need to compete internationally.Enterprise Management _____________________________________________________________________ National Competitive Advantage Porter’s Diamond • This model can be used to answer questions such as: 1.
R & D experience. training and skill. etc. Moreover.Enterprise Management _____________________________________________________________________ The experience the firm gets from supplying domestic consumers will give it an information advantage in international markets. which promote domination in worldwide markets. .31 - . Factors may be of two sorts: (i) Basic factors such as raw materials. strategy and rivalry Intense rivalry can lead to emergence of firms with strong competitive characteristics. are a matter of strategy.E2 . 4 Firm structure. (ii) Advanced factors such as infrastructure. (ii) 2 Related and supporting industries o The internationally competitive firm must have enjoyed the support of world-class producers of components and related products. These are largely ‘natural’ and not created as a matter of policy or strategy. Search for competitive advantage within a nation uses competitive skills. 3 Factor conditions These are the basic factor of production referred to in economic theory. provided that: (i) its customers are critical and demanding enough to force the firm to produce at worldclass levels of quality in its chosen products and its customers encourage the firm to develop new and sophisticated products. semiskilled or unskilled labour and initial capital availability. success in a related industry may be due to expertise accumulated elsewhere.
encouraging enterprise. The role of government . eg through staff movement and contracts (ii) concentration of advanced factors telecommunications. The role of chance events – can change the other elements on the diamond such as war. City of London) 2 Expertise in key industry (eg Sweden in timber. training. Clustering allows for the development of competitive advantage for the following reasons: (i) transfer of expertise. Clustering may take place in two ways: 1 Common geographical location (eg Silicon Valley. wood-handling machinery).subsidies. legislation and education all impact on firms. terrorism and national discoveries.32 - .Enterprise Management _____________________________________________________________________ The model also includes ‘Government’ and ‘Chance Events’. 1. infrastructure building. workforce) (eg . wood pulp.E2 . a phenomenon that Porter calls clustering. Gaining a national advantage Successful firms from a particular country tend to have linkages between the four factors. 2.
E2 .33 - .Enterprise Management _____________________________________________________________________ Sources of Information for Environmental Analysis. .
packaging and assembly etc. According to Porter there are five primary activities and four support activities. The primary activities: 1 2 3 4 5 Inbound logistics of raw materials and input components eg. storage. Outbound logistics of the finished goods eg. . Marketing and sales. inventory control. repairs and customer training etc.Enterprise Management _____________________________________________________________________ Internal Analysis • Appraising internal resources and capabilities • Identification of those things the organisation is good at in comparison to the competition Position Audit – Value Chain Value Chain • Possibly one the most powerful techniques for analysing the strengths and weaknesses of an organisation and it’s component functions.34 - . • The model looks at the functions within the organisation to determine where value is added. manufacturing. Customer service.E2 . materials handling etc. transport and distribution etc. installation. eg sales administration receiving orders etc. which includes after sales activities. Operations that transform inputs into products eg. either by cost leadership or differentiation – the only two routes to competitive advantage (according to Porter).
35 - . This is shared between the firms at the various stages of the value system. Human resource management – how people are organised and managed within the organisation. Technology development – how systems and technology assist the firm. .Enterprise Management _____________________________________________________________________ The support activities: 1 2 3 4 Procurement – how the resources are purchased for the organisation. Firm infrastructure – how the firm is organised. Linkages among primary and support activities need to be examined in order to identify areas of competitive strengths and any possible synergies from the sharing of value chain activities. decentralised. eg centralised. product based etc.E2 . Firm infrastructure M Technology development Human resource management Procurement Inbound logistics Operations Outbound logistics Marketing and sales A R G IN Service G IN M A R Customer’s value chain Suppliers value chain Firm’s value chain Competitors value chain Channels value chain The value added by the entire system is the difference between the revenue received by the last time buyer and the costs generated in the system.
E2 .Enterprise Management _____________________________________________________________________ The SWOT analysis . in order to establish its condition prior to the preparation of the long term plan’ SWOT forces management to focus on the big issues. . opportunities and threats (SWOT analysis) in relation to the internal and environmental factors affecting and entity.36 - .Corporate appraisal SWOT ‘A critical assessment of the strengths and weaknesses.
Stakeholders exert powerful influences on a business and management must balance the returns to various stakeholder groups • Internal stakeholders – employees and management • Connected stakeholders – shareholders. customers and suppliers • External stakeholders – governments. can be affected by or can affect the outcome of the strategy.Enterprise Management _____________________________________________________________________ The Use of Stakeholder Mapping Stakeholder analysis Stakeholders are ‘those individuals or groups who have an interest in. claim on resources.37 - . local pressure groups The Mendelow Matrix – assessing power and interest of stakeholders A useful checklist for the management of stakeholders is as follows: • Identify the key stakeholders • Determine vested interests • Identify the specific stake • Evaluate stakeholder influence – status. community. formal representation in decision making process • Modify project strategy .E2 .
Education & Communication Power Mendelow's power-interest matrix Keep Satisfied Intervention High Key Players .Participation Resolving Competing Objectives (Cyert & March) • Satisfying • Sequential attention • Side payments • Exercise of power Handling Conflict (Thomas) • Avoidance – avoid. suppress.38 - . it creates winners and losers and can prove damaging to the organisation • Collaboration – differences are confronted and jointly resolved so that a win: win outcome is achieved .Direction Keep Informed . ignore.E2 . • Compromise – each party gives something up if both parties see this as losing something it may not be ideal • Competition – parties seek to maximise their own interests and goals. This is not recommended as it does not resolve the conflict which may break out again when the parties meet in the future • Accommodation – one party putting the other’s interest first.Enterprise Management _____________________________________________________________________ Interest Low High Minimal Effort .
strategic choice and strategic implementation. Strategic implementation (Review & Control) requires organisational change. there are three stages in the process of strategy formulation: strategic analysis. Strategic evaluation & choice requires management to identify strategies to take advantage of strengths and opportunities and strategies to minimise weaknesses and threats.Enterprise Management _____________________________________________________________________ A2(b) Compare and contrast approaches to strategy formulation A2(a) Discuss concepts in established and emergent thinking in strategic management The strategy formulation process According to Johnson and Scholes. Strategic analysis requires the analysis of the internal and external environments.E2 . . A corporate appraisal (or SWOT analysis) is undertaken to ascertain the internal strengths and weaknesses and the external opportunities and threats. which will need to be managed.39 - .
Enterprise Management _____________________________________________________________________ Rational Strategy Process Position Audit Internal Analysis Mission & Objectives Corporate Appraisal (SWOT) Strategic Option Generation Review & Control Strategy Evaluation & Choice Strategy Implementation Environmental Analysis External Analysis Competitor Analysis .E2 .40 - .
E2 . • Then a plan is prepared to assist in the implementation of the chosen strategy and then evaluating performance to determine whether or not goals have been achieved.Enterprise Management _____________________________________________________________________ • This approach generally involves a deliberate step by step approach. • The company will start with the existing strategy of the organisation • The current strategy is then evaluated using information from the internal and external environment • The information from the external environment helps to analyse potential opportunities and threats • The information from the internal audit helps to analyse the organisation’s strengths and weaknesses. • Strategic alternatives are evaluated to determine which strategy will best “position” the organisation’s strengths while minimising threats and weaknesses.41 - . . • The organisation can then determine if the organisation should continue with its existing strategy or formulate a new strategy in order to compete more effectively.
Organisational objectives when set by managers should be S M A R T . • A definition of the industry the organization competes in S C O P E Organisational goals and objectives • General statement of aim or purpose – may be qualitative in nature • A goal is a target such as ‘we want to increase our market share’. • An objective is a quantification of a goal.Enterprise Management _____________________________________________________________________ Mission A mission is an open-ended statement of the firm’s purposes and strategies.E2 . ways of doing business and social responsibilities.42 - . • A statement of the purpose of the business • A statement of its products and markets • A statement of its competitive strategy or positioning • A statement of its principles.
Planning 2.E2 .Enterprise Management _____________________________________________________________________ The goal structure is the hierarchy of objectives in the organisation. Evaluation . Integration 4.43 - . Motivation 5. Responsibility 3. Mission Statement is translated into Strategic Tactical Opertaional Individual Objectives perform five functions 1.
If the company has a clear idea of where it is going then the stakeholders perceptions of the business should be improved. A formal approach does not encourage the development of more radical and innovative strategies and often results in the loss of entrepreneurial spirit since it encourages rewards to be given to managers who carry out their part of the strategy sticking to the conventional way of doing business.Enterprise Management _____________________________________________________________________ Approaches to formulating business strategy Typical features of the process ~ A designated team for strategy development ~ Formal collection of information for strategy purposes ~ Collective decision making by the senior management team ~ A process of communicating and implementing the strategy ~ Regular review and control of the strategy Benefits Avoids short term behavior by considering the nature of the environment. Targets set at different levels with enable the strategy to be implemented and reviewed. Anticipating competitor actions is about being proactive in planning in order to keep ahead. . Investors may be more confident of higher returns which could lead to a higher share price. Goal congruence – providing direction for the different areas of the business.44 - . Does not encourage contributions from staff who are lower down the hierarchy. Yet it is often these staff who are most in touch with the customer and can see the impact of competitor activity.E2 . Drawbacks Can be too infrequent to allow the business to be dynamic. If the business environment changes unexpectedly then the company’s performance may deteriorate further.
45 - .Enterprise Management _____________________________________________________________________ It assumes that the strategist can make reliable business assumptions about the future and particularly about the opportunities and threats that face the company. Too expensive & complicated for small businesses .E2 .
Enterprise Management _____________________________________________________________________ ______________________________________________________ _______________ Strategy and Small Business Business goal aligned with owner manager Limited number of options Limited resources Expensive and time consuming Could get in the way of creativity & innovation .46 - .E2 .
E2 .Enterprise Management _____________________________________________________________________ Alternatives to the rational approach to Strategy There is a need to question some of the assumptions of the rational approach People not organizations have objectives – peoples beliefs are partially irrational therefore any strategy based on them would not be completely rational Senior management should not be the only people involved in setting the strategy The process is not a simple step-by –step process Actual strategies often need to be adapted Strategies are often adaptive – the organization adapts to the circumstances around it .47 - .
E2 .48 - . Planned or Intended Strategy Deliberate Strategies Unrealised Strategies Realised Strategies Emergent Strategies .Enterprise Management _____________________________________________________________________ Emergent strategies Strategy is best constructed as an emergent process. Mintzberg suggested that few strategies are consciously planned but are the results of ‘patterns of behaviour’ and ‘emerge’ through the ways in which people do things. it is better that the organization retains flexibility and be ready to adapt strategy as its competitive environment changes. The totality of an organisation’s strategies can be seen as a combination of planned and emergent strategies. In a rapidly changing and dynamic environment Mintzberg contends that formal planning is inadequate and rather.
49 - . systems) • Most real world strategies are balanced between the two (incremental – taking small steps and testing strategies as they go) .E2 .Enterprise Management _____________________________________________________________________ Evaluation of approaches to strategy • A rational approach is usually used as the basic framework (evolutionary) • Strategies can be influenced by irrational factors (adaptive.
Modern strategy formulation is tending towards the resource based view for the following reasons: Strategic management should focus on developing core competencies. ie what market it is in. The sensible path open to management is to develop key competitive strengths that will sustain the business in the uncertain times ahead. It is sometimes called an outside-in view because it is concerned with adapting the organisation to fit its environment. This is an inside-out view of strategy because the firm must go in search of environments that enable it to harness its internal competencies. . Therefore identify the competencies first and develop objectives aimed at exploiting and maintaining them. It places the customer and market at the centre of strategy Resource based view – the principle of the resource based view is that management should identify which of the activities carried out by the firm are not easily copied or improved on by competitors. customers or stakeholders.Enterprise Management _____________________________________________________________________ Resource Based versus Positioning Views on strategy formulation: Positioning view – competitive advantage stems from the firm’s position in relation to its competitors. Positioning based view – strategy should start with the setting of a mission and strategic objectives.E2 .50 - . Assessing resources and competencies should be undertaken in terms of how they affect the ability of the business to serve this market and to identify where improvements in these will be needed. These should be expressed in terms of the customers the firm seeks to serve and the needs it seeks to satisfy. Management should make these activities the core competencies of the business and then develop products and services based upon them.
Enterprise Management _____________________________________________________________________ It will avoid the firm losing sight of what it is good at. capabilities.51 - . Consequently railways found themselves in the ‘transportation business’ which led to unsuccessful diversification into road services where the firms could not compete. Some early ‘objectives-led’ views insisted that missions be formulated in terms of the needs that the firm satisfied. Underlying Principles of the Resource Based Approach • Sustainable competitive advantage depends on the organisation’s possession of unique resources or distinctive capabilities that cannot be easily replicated by its competitors • Resources include all assets. Attention to core competencies means firms will ‘stick to the knitting’. information and knowledge controlled by a firm that enable it to create and pursue effective strategies Writers views on the resource based approach • Barney o Valuable o Rare o Difficult to imitate o No freely available substitutes • Kay o o o o Competitive architecture Reputation Innovation Ownership of strategic assets . organisational processes.E2 .
CSFs relate to those product or service features that are particularly valued by a group of customers. Identify the CSFs 2. In other words.52 - . the things that the business must do well and be difficult for competitors to imitate in order to deliver on the critical success factors that will give it competitive advantage. In summary.Enterprise Management _____________________________________________________________________ Critical Success Factors The identification of critical success factors is a key part of the strategy development process since they will help to determine the resources and competences needed to achieve competitive advantage. The things the company has to do well in order to outperform the competition (usually customer focused) 1. They are important in establishing where a business must excel to outperform thecompetition and as such CSFs are crucial elements of the firm’s business strategy. and can be used to distinguish between the offerings of potential providers. Core competences are closely related to CSFs since they are the distinctive group of skills and technologies that enable an organisation to provide a particular set of benefits to customers.E2 . Monitor competitors . Customers will value product/service features to a greater or lesser extent and so it will be critical to the development of a business idea to understand which features are of particular importance. Identify the underpinning competences 3. Ensure advantages are sustainable 5. CSFs are those factors where performance requirements will be fundamental to the competitive success and identifying the skills processes and technologies that support them. Identify performance measures 4.
This is a major new project for the PAX Company. However.53 - . PAX’s Board has made the strategic decision to enter into a new market in Country Y. The location selected for the first supermarket is in the suburbs of a growing city where groceries. planning permission has been granted. Acting partly on the advice of the central government’s Overseas Advisory Board. its use of the latest technology and its strong customer focus has enabled it to gain the largest share of the market in Country S. The shopkeepers are fearful about the impact of the new supermarket on their future business prospects. and using its own research team.E2 . D has been appointed as project manager and is already facing significant challenges in terms of the reactions to the project from different stakeholders. Residents are concerned about the potential increase in traffic and the danger it poses to the children at the local school. PAX Company’s ability to provide value for money through the efficient use of operations. The land on which the supermarket will be built has been purchased and following a series of negotiations with state and local government officials. local residents and shopkeepers who are located near to the proposed development. It has a strong reputation for innovation with its successful launch of internet shopping and clothes ranges.Enterprise Management _____________________________________________________________________ Question The PAX company is a successful supermarket chain. clothing and the other non-food products that PAX intends to supply are currently provided by a large number of small shops. there have been strong protests from a number of groups including the City’s Civic Society. and as such requires strong project management skills. . Following detailed analysis. the senior management of PAX Company has concluded that the market in Country S has reached saturation point and that the only opportunity for significant growth is to develop activities in new markets abroad. The Civic Society is concerned about the detrimental impact on the local environment.
54 - . Required (a) Explain how the project team should manage the different stakeholders who threaten the future of PAX Company’s project to open a supermarket in Country Y. making reference to the resources and competences that appear to give PAX Company competitive advantage. radio and newspaper have publicised the fears of the local residents and shopkeepers and these two groups. (12 Marks) (Total for Question 25 Marks) . together with the City’s Civic Society have formed a coalition to attempt to prevent the development.Enterprise Management _____________________________________________________________________ The media including television.E2 . (13 Marks) (b) Discuss the Resource Based approach to strategic management.
E2 .55 - .Enterprise Management _____________________________________________________________________ ______________________________________________________ _______________ A2(a) discuss concepts in established and emergent thinking in strategic management Changes in the business environment – have occurred due to the following: • • • • • • Saturated home markets Trade barriers coming down Improved communications technology Access to cheaper resources Increasing competition Fast changing In today’s business environment organisations need to be flexible so that they can be more responsive to change. The Flexible Firm • Structure Handy – The Shamrock Organisation CORE PERIPHERAL OUTSOURCING .
56 - .Enterprise Management _____________________________________________________________________ • Employment Functional Numerical Temporal Financial .E2 .
Eg Amazon. Efficiency (doing things right) and effectiveness (doing the right things) must be pursued simultaneously in today’s competitive environment. partnerships and alliances. Network Organisations Network organisations rely on relationships with other organisations in order to carry out their work.Enterprise Management _____________________________________________________________________ Complex organisational forms Remember. an organisation’s strategy should focus management on being both efficient and effective. In this way it is possible to have a market penetration at lowest cost and internally reduce overheads by outsourcing activities considered ‘non-core’ into the market. UK hospitals. This drive has widened some organisational structures to include external groupings such as franchised firms. resellers who are allowed to sell other products. joint ventures.57 - .E2 . Airlines Network organisations can choose to ‘buy in’ a range of valuecreating activities: • • • • Contract staffing Use of specific capital assets Outsourcing elements of production or service provision Reliance on outside organisations for referral of business .
E2 . Williamson suggests two methods of controlling resources and deciding how to manage transaction costs to ‘buy in’ (market solutions) and which to own and operate directly (hierarchy solutions) Transaction cost theory states that companies exist because they can conduct ‘transactions’ internally more cheaply than they can with external companies. Transaction Costs are concerned with the costs of control specifically related to the delivery of a product or provision of a service • Transaction Cost = Unit Cost + Cost of Control . .Enterprise Management _____________________________________________________________________ Transaction cost theory Purpose of transaction cost analysis • To identify the most economically viable solution • Identification of unique competences • To support organisational restructuring • Information technology has helped companies to lower transaction costs making it worthwhile to contract with external suppliers.58 - .
. Another and the most important reason for bringing the transaction in-house is due to asset specificity. Consideration of the decision (in-house or external) If these transaction costs become too high the organisation may reduce its costs by taking the supply inhouse (hierarchy solution). • Bounded rationality – neither party can completely anticipate the future • Opportunistic behaviour. and it increases their empire.each party seeks to pursue their own economic self interest.E2 .59 - .Enterprise Management _____________________________________________________________________ When the organisation relies on outside suppliers for an input or service (market solution) in addition to the price for the bought-in service it will incur the following transaction costs: • • • negotiation and drafting of the contract Monitoring the suppliers compliance Penalty payments if the contract needs to change • Pursuing legal actions for redress due to non performance These costs arise because both the firm and the supplier wish to be protected and use the contract to define the risks that each are taking on. Managers will often suggest an internal solution in order to make their life’s easier in terms of control and certainty.
e. • Asset specificity can force the buyer into long term contracts with the sole supplier. or encourage an in-house supply as the high asset specificity may result in no suppliers coming forward on the market o Site o Physical o Human • The asset specific concept of Williamson suggests that corporations reduce transactions costs by vertically integrating which creates a more complex internal environment.E2 .Enterprise Management _____________________________________________________________________ • Asset specificity – cost of an external solution is low when specificity of the assets are low i. (a company ends up operating in more than one market with more than one product) To-day this concept is challenged and organisations will consider the external market place • Due to realisation that internal costs can be undervalued • Due to the fact that technology lowers the cost of searching & maintaining the supplier relationship The conclusion that should be drawn is that the decision should be based on the most economically viable solution for the company (i.e. . the assets required to fulfil the contract are readily transferable to other transactions. the shareholders).60 - .
Issues commonly associated with social responsibility include: • • • . Social responsibility can be defined as accepting responsibilities over and above legal responsibilities.Enterprise Management _____________________________________________________________________ A Wider Stakeholder /Ecological perspective Shareholder Perspective (Friedman) – the primary purpose of an organisation is to make as much money as it can. Stakeholder Perspective – accepts that organisations should have a duty towards the wider community and society.E2 . maximising wealth for its owners and that it is the role of the state to regulate organisational activities from a social perspective.61 - .
62 - .Enterprise Management _____________________________________________________________________ How does social responsibility conflict with benefiting shareholders? × Extra cost involved in implementing socially responsible strategies o Cost of treating emissions and waste × Reduced revenues o Refusing to do business in certain countries × Management time should be about “running the business” × Funds that may otherwise have been paid out in dividends are instead being used to make charitable donations Can social responsibility improve shareholders returns? Any strategy that conflicts with the needs and values of society is unlikely to survive in the long term o Negative publicity McDonalds received Reducing waste and pollution and saving energy and recycling resources may lead to lower overheads. Could attract socially conscious consumers Increase corporate image and have a positive effect on share price . which in turn can help to improve profits.E2 .
E2 - Enterprise Management _____________________________________________________________________
Ecological Perspective • Closely aligned with social responsibility • Concerned with relationship of the organisation & its natural environment • Company’s need to monitor their impact on the environment Areas that might be considered will include • Carbon emissions • Energy reduction • Treatment of waste • Compliance with environmental legislation • Continuous improvement • Triple bottom line accounting (financial/social/environmental)
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Ethics is the code of moral principles and values that govern behaviours with respect to what is right or wrong. “good ethics is good business” – this imposes on the business the duties of being a “good corporate citizen” The importance of ethics Ethical issues are important for a number of reasons: • Some organisations have incomes larger than those of many nation states. How these companies use their wealth has numerous implications for the well-being of the countries in which they operate. • Typically, senior managers in big firms occupy positions where they can hurt or promote the interests of large numbers of employees, and might take decisions affecting entire communities. • Consumers increasingly judge the worth of a company in terms of how it deals with ethical and environmental problems. Certain business practices are considered unethical throughout the world. Examples are: • The ‘dumping’ of products, ie selling them at less than cost price in order to drive competing firms out of business; • Covert involvement in the political affairs of a country; • Knowingly breaking the law on consumer protection, health and safety of employees, equal opportunities, pollution of the physical environment, etc.
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Professional ethics are principles that guide the decisions and behaviours of managers with regard to whether they are right or wrong in a moral sense. CIMAs ethical guideline’s: remember COPPI Confidentiality Objectivity Professional competence and due care Professional behaviour Integrity
Encouraging ethical behaviour • Codes of practice A code of practice is a document published by a government agency, professional body, trade association or other relevant authority outlining model procedures for good practice in a particular field. Some large organisations issue their own in-house codes of practice on particular matters. Codes give examples of excellent and bad behaviour, and recommendations regarding how things should be done. Government codes of practice (eg those issued by the Equal Opportunities Commission) are not legally binding, but will be looked at by the courts when adjudicating cases. • Role of the professional bodies/organisations in regulating members’ behavior o Education and communication o Training o Punishment
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Management of Relationships (C)
C1 (a) discuss the concepts of power, bureaucracy, authority, responsibility, leadership and delegation
Power is the possession of a controlling influence. Power is the ability to exert influence. To have power is to be able to change the behaviour or attitudes of other individuals. The sources of power Power does not simply derive from an individual’s level in the organisational hierarchy. John French and Bertram Raven have identified five sources or bases of power. Each may occur at all levels. Reward power is based on one person having the ability to reward another person for carrying out orders or meeting other requirements. Coercive power, based on one person’s ability to punish another for not meeting requirements, is the negative side of reward power. Legitimate power exists when a subordinate acknowledges that a manager has a ‘right’ or is lawfully entitled to exert influence – within certain bounds. Expert power is based on the perception or belief that a person has some relevant expertise or special knowledge that others do not. Referent power, which may be held by a person or a group, is based on one person’s desire to identify with or imitate another. For example, popular, conscientious managers will have referent power if subordinates are motivated to emulate their work habits.
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E2 . Weber suggests eight characteristics • Specialisation • Hierarchy • Rules and regulations • Impersonality • Appointed officials • Career officials • Fulltime officials • Public/private division .67 - .Enterprise Management _____________________________________________________________________ Bureaucracy is based on authority derived from the law and written rules.
E2 .68 - .Enterprise Management _____________________________________________________________________ Authority is the right to do or act (to take actions and make decisions) Weber defined three bases for authority • Charismatic – derived from the personality of the leader • Traditional – derived from custom and practice • Rational-legal .
Consequently nothing much would ever get done. Because management is the act of getting things done (accomplishing objectives) through the work of other people.E2 . Reasons for Delegation • Effective time management – routine task are reduced so that time can be spent on strategic decisions • Effective stress management – staff have physical and mental limitations this reduces personal job overload • Speeds up decision making and implementation (decentralisation allows managers to react quicker to local changes) • Assists with progression succession planning and career development • Increases the job satisfaction of employee . Delegation is the process whereby a manger or supervisor transfers part of his or her authority to a subordinate. formal organisations could not exist. Responsibility cannot be delegated.Enterprise Management _____________________________________________________________________ Responsibility involves obligation (accountability). it is obvious that management could not succeed without delegation. If there were no delegation the chief executive would be responsible for everything and would be the only person with the authority to do anything. Without delegation. Delegation is an important aspect of organisation and effective management. to put it simply.69 - .increase motivation (unless delegation only of mundane tasks without satisfaction to the subordinate) • Effective deployment of resources – employee has the expertise . the “buck” should stop with the responsible manager.
. give constructive feedback and be available for help and advice if requested Action (appropriate) • Frequent review allows action to be taken if the task is not being completed as required (accountability remains with the superior it is important to keep the task on track) Why is there a reluctance to delegate? • Lack of confidence in the abilities of subordinates • Fear of releasing so many duties that the manager eventually becomes redundant • Organisational culture may not encourage delegation (delegation is seen as avoiding ones own duties) • Desire of managers to keep control • Manager not trained in delegation • Seen as ineffective time management (quicker to complete the job yourself than spend the time explaining it to someone else) • Ineffective stress management – the manager should not delegate so much as to overload a subordinate totally.70 - .Enterprise Management _____________________________________________________________________ Process of Delegation (TARA) Targets / Standards • Set the targets/performance levels required (individual chosen should be capable of reaching the standards) • Set the levels of authority • Set the level of resources to be made available in order to complete the task (ensure these are made available) Actual Performance • Ensure that there is a mechanism for measuring actual performance – this should be achievable if SMART objectives were set Regular Review • Maintain frequent contact to review progress made.E2 .
The firm has recently invested in new technology which will improve the effectiveness of its office systems. he is also well liked and respected for his enthusiastic approach. He knows that the project will be meet with some resistance from some members of staff and he will need to draw on various sources of power to ensure the changes are successfully implemented. over the years G has become known for his fairness in how he manages staff. has worked for L for over twenty years and has a sound knowledge and understanding of the different activities of the firm’s business. a medium sized accounting firm. but will mean that the roles and responsibilities of the support staff will change. G has taken on the difficult role of leading the project to introduce the technology and new working practices.E2 .Enterprise Management _____________________________________________________________________ Question G. the senior partner of L. Required Describe the different sources of power that G has and which will help him in introducing the changes (10 Marks) .71 - . He always has time to encourage and mentor younger members of staff.
Enterprise Management _____________________________________________________________________ Management Leadership • Classical o Scientific (Taylor) o Functions (Fayol) o Bureaucracy • Human Relations o Mayo o Herzberg • Systems o Trist & Bamforth • Contingency o No one best approach • • • • • • Direction Vision Influencing others Achieving goals Foresight empowerment .E2 .72 - .
and the ability to communicate that vision. Can leaders be trained or is someone born a leader? Robert Blake and Jane Mouton Blake and Mouton argued that managerial competence can be taught and learned. Their managerial grid provides a framework for understanding and applying effective management.Enterprise Management _____________________________________________________________________ Leadership – getting people to do things willingly Leadership involves possessing vision.73 - . High 9 country club management team management CONCERN FOR PEOPLE Middle-of-theroad management 1 Low impoverished management authority-compliance management Low 1 9 high CONCERN FOR PRODUCTION .E2 .
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John Adair Effective leadership requires a bringing together of task, team and individual needs.
Concern for task
Concern for team
Concern for individuals
McGregor (assumed knowledge from P4) • Theory X • Theory Y Kurt Lewin • Democratic • Laissez-Faire • Authoritarian
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Likert – identified four basic leadership styles (Tannenbaum & Schmidt) Exploitative Authoritative (Tells) Decisions Imposed Benevolent Consultative Authoritative (Sells) (Consults) Increasing trust in subordinates ability Participative (Joins/ Abdicates) Complete trust and discussion
Motivated by threats
More participative motivational style
Motivated by rewards – goals agreed High degree of delegation
Centralised decision making Increasing delegation Rare supervisor/ subordinate communication Superior and subordinate act as individuals
Frequent communication Increasing communication Superior and subordinates act as a team
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Leadership style will depend on • Task o Simple/complex o Structured/unstructured o Significance o Innovation required • Individual o Motivation • Theory X and Y • Maslow’s hierarchy of needs • Herzberg o Maturity (Hersey & Blanchard) • Willingness • Ability • Knowledge of task – have they carried out the task before? • Leader/subordinate relationship (Fiedler) o Militant – low relationship o Co-operative – high relationship • Leader position/power – high/low (Fiedler) • Group needs/organisational needs Types of groups A group is defined as two or more people who interact with and influence each other toward a common purpose. Formal groups Formal groups are created deliberately by managers and charged with carrying out specific tasks to help the organisation achieve its goals. The most common type of formal group in organisations is the command group, which includes a manager and his subordinates. Permanent formal groups include command groups and permanent committees. Temporary formal groups include task forces and project groups that are created to deal with a particular problem and are disbanded once the problem is solved.
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77 - . Forming (ie getting to know each other) – This is the initial period when the individual members of the project team come together. finding out about each others’ attitudes.E2 . so they present their different views on the best way of achieving the project objectives and different approaches to working on the project. Members of informal groups tend to subordinate some of their individual needs to those of the group as a whole. such as high performance standards. will be determined by the project scope. In return. They may also oppose organisational objectives. when these are considered harmful to the group. may strengthen the player’s ties to the organisation. As members of the team begin to work together and get to know each other. Storming (initial conflict as individuals compete for leadership positions and to influence the direction taken by the group). Informal groups may further the interests of the organisation – Saturday morning football games. Tuckman on groups Tuckman suggested that groups go through four stages of development. acceptable behaviours and codes of conduct.Enterprise Management _____________________________________________________________________ Informal groups Informal groups emerge whenever people come together and interact regularly. abilities and characters. the group supports and protects them. arguments and high emotion. Relationships. in this case. It is at this stage that individuals will work out initial roles. The initial objectives and parameters of the team work are established which. . for example. It is only when these stages have been successfully completed that the group can concentrate on the attainment of its purpose. This stage can be characterized as a period of disagreements.
It is important that team members reach agreement over any issues through negotiation.Enterprise Management _____________________________________________________________________ Norming (the establishment of shared values) – It is important that conflicts at the storming stage are resolved. .E2 . are established. This is something referred to as mourning. compromise and finding areas of commonality. At this stage the team will finally be able to concentrate on the achievement of project objectives and it will be at its most efficient because all energies are focused on the project task. There is a further stage. Performing (where the group utilises its strengths to perform desired activities). and project team members return to their normal duties. when the project team disbands. adjourning.78 - . which in turn will govern individual members’ behavior whilst on the project. Team cohesion develops during this stage and norms of what is acceptable behavior. rather than conflicts within the group. This stage is important in agreeing procedures and standards of performance. – When the group has successfully progressed through the three earlier stages it will have created cohesiveness to operate effectively as a team while working on the project. which will happen when the project comes to an end.
Team-building exercises. to encourage group cohesion.79 - .Enterprise Management _____________________________________________________________________ Belbin on groups Many groups find difficulty in moving beyond the second and third stages. Company Worker (organising the group). The most damaging of these is groupthink. and that in some cases they are effective whilst in others they are not. Expert (technical person). Team Worker (maintaining group cohesion). Resource Investigator (seeking out resources). Whilst team working is generally thought to be a useful approach to achieving organisational goals. where pressures towards group conformity stifle creativity. Monitor/Evaluator (evaluating ideas). Plant (generating ideas). On the basis of research of this type managers have attempted to influence group performance by selecting appropriate team members.E2 . are an attempt to solve such problems. Finisher (ensuring deadlines are kept). Research has shown that individual contributions to groups differ. . Belbin has argued that each individual has a preferred team role and a secondary role which he adopts if unable to occupy his preferred role. Shaper (defining the task). it can have negative effects. These roles are: • • • • • • • • • Chairman (setting the agenda).
management will establish higher standards or lower rates.E2 . These findings are important for managers because cohesive groups commonly set their own production standards. If this approach fails. of a group is an important indicator of how much influence the group has over its individual members. they are likely to increase the pressure. the other members of the group will initially try to persuade the deviant to conform. When an individual does not conform to group norms. They exert pressure on one another to ensure that these expectations are met. they are not likely to violate its norms.Enterprise Management _____________________________________________________________________ Group norms and conformity Over time. the greater its influence. sarcasm. They will try to reason with him or make pointed jokes at his expense. Groups that are hostile to management may restrict their output to levels well below management standards. The more cohesive the group is. This sort of restriction often occurs among factory work groups paid by piece rates because they may believe that if they reach or surpass management standards. .80 - . Cohesiveness and performance Studies have found that the output of members of cohesive groups tends to be more uniform than that of members of less cohesive groups. If the members of a group feel strongly attached to it. Group cohesiveness The cohesiveness. ridicule and finally ostracism – total rejection of the individual through the ‘silent treatment’. the more strongly members feel about belonging to it. group members form expectations about how they and the other members of the group will behave. If the norm being violated is considered important. The anticipation of rejection or acceptance by the group is usually enough to ensure that members conform to their group’s expectations in advance. they will use criticism.
Potential resources increase as group size increases.E2 . Several formal procedures are useful in helping groups operate effectively: • The group goals should be clearly defined.) • The group need to consider the implications of any decision and assess the acceptability of any associated risk. • Individual members need to participate. Making formal groups effective Because formal groups are vital to successful organisations. the advantages of group work may be diminished.Enterprise Management _____________________________________________________________________ • Project objectives need to be clear and accepted by members of the team • Objectives need to be reinforced throughout the project. using team briefings • Team building exercise are helpful when there is a diversity of views and attitudes. advise and recommend. (the opposite would be the concept of “groupthink” when members agree with a decision which they know is wrong or where the group fail to examine all of the options available or the “Abilene paradox” when no-one wants to disturb the consensus. divergent views need to be encouraged. This will focus the group’s activities and reduce discussion of what the group is supposed to do. the emphasis being on a carefully considered decision making process. managers must learn to use them effectively. . (Risky shift phenomenon is where groups are prepared to take riskier decisions than would be taken by any one individual member of the group). With fewer than five members. or is it authorised to implement decisions? • The optimum size of the group should be determined. preferably in writing. • The group’s authority should be specified. Can the group merely investigate.81 - .
• It occurs when there is no established set of rules for resolving the conflict and parties are committed to search for an agreement rather than fighting openly.Enterprise Management _____________________________________________________________________ C2 (b) Discuss the roles of negotiation and communication in the management process. • Negotiation is often necessary within organisations to resolve conflicts of interest between two or more parties which have arisen because the parties have different objectives. overtime.82 - . • These conflicts may be resolved through negotiation between management and the unions who are representing employees. • It has. both within an organisation and with external bodies Negotiation • Preparation • Opening – both sides present their position • Bargaining – persuade the other side that your case is strong • Closing – reach agreement (win: win) • Negotiation involves argument and persuasion in order to strengthen one’s own case by undermining the opposition. • The process of negotiation between employers and trade unions is often referred to as ‘collective bargaining’ and involves at least two parties with a defined interest.E2 . become a useful and civilised way of settling disputes. . • It is likely that conflicts will arise as a result of the restructuring proposals which will involve the need for the relocation of staff and possible redundancies. In earlier times industrial disputes often resulted in industrial sabotage by workers and sometimes physical violence between workers and their employers.
• However. whilst the organisation may see no alternative to job cuts if it is to survive in the long term.Enterprise Management _____________________________________________________________________ • Without any negotiation the result could be that the union calls for industrial or strike action which could have a detrimental impact on the company’s future survival. rather than becoming distracted by minor negotiating points at an early stage. • It is important to listen to what the other side wants and to make an effort to compromise so that both sides can attain their goals. this is often where negotiation can fail because of the tensions between the different objectives that can never coincide.E2 . trading-off wins and losses so that each side get something in return for everything it concedes on. It is likely that in the first stages of negotiation that the union will reject the proposals as unacceptable and will prepare it’s negotiation strategy. • • The ideal will be to achieve a win-win outcome where both sides achieve enough of their objectives to be satisfied with the end result. Winlose or lose-lose outcomes are in no ones best long term interest. • Approaches to the negotiation process can be through focussing initially on each side’s primaryobjectives.83 - . While the union will not want to agree to job losses it might recognise that they are inevitable and concentrate instead on persuading management to provide generous severance pay above the legal minimum. . • It is necessary to maintain some flexibility within the negotiation process and for both parties to be prepared to settle for what is ‘fair’. • This could occur since the union’s main objective will be to keep jobs.
The outcomes from the agreement should be publicised and implemented. • The closing phase of negotiation represents the opportunity to capitalise on the work that has been done at the earlier phases. • The opening phase of negotiation involves both sides presenting their starting positions to one another. It is at this stage that the greatest opportunity is present to influence the other side. • The bargaining phase is where both parties will aim to narrow the gap between the two initial positions to persuade the other party that its case is so strong that the other must accept less than it had planned. Who is involved in the negotiation. . It is at this stage that agreement is reached. what the concerns of each party are and what the goal of the negotiation is will need to be determined.Enterprise Management _____________________________________________________________________ It is suggested that effective negotiation between should go through the following four stages: • Preparation which involves both parties gathering information and insight to the problems in order to understand the constraints acting on the negotiating parties.84 - .E2 . Another key feature at this stage is to determine the time for negotiation.
Should impose order on the meeting and manage conflict should it arise. all members participate equally • Secretary/Administrator – takes minutes and distributes them (timely • Protagonists – positive supporters • Antagonists – disagreement and a negative attitude to team members . o Purpose – clear objectives o Who needs to attend o When and where o Agenda & Papers – allowing for a focus for discussion and preparation time o Effective Chairperson .timely • Telephone conversations • Videoconferencing • Written communication – memos & e-mails The Role of Team Members in Meetings • Facilitator – set the agenda.Enterprise Management _____________________________________________________________________ Communication • Meetings – should always be seen to benefit those who attend but often people leave meetings feeling frustrated at the time spent without any useful outcomes.85 - . note actions that need to be taken and by whom. make sure the objectives of the meeting are being met • Chair – ensure agenda is being followed. Summarise points. o Publish minutes .Facilitate discussion – silent attendees.E2 . dominating characters.
Enterprise Management _____________________________________________________________________ Problems with meetings • Poor preparation o Agenda/papers o Inappropriate chair • Lack of enthusiasm/interest o Right people o Take a break • Too much talk.E2 .86 - . not structured • Cannot reach agreement • Hostility between attendees • Action points from previous meeting not carried out • Minutes too long/ too brief. not sent out on time .
supportive feedback & guidance • help build network of contacts and exposure in the organization .Enterprise Management _____________________________________________________________________ C2 (f) Explain the process and importance of mentoring junior colleagues A mentor is a guide. Mentoring works alongside more formal control mechanisms. tutor or trainer. In modern business a mentor tends to be a senior colleague who acts as a guide and advisor on any aspect of a junior colleagues development. and is intended to • provide the employee with a forum to discuss development issues that is relaxed and supportive. • Mentors often discuss issues such as training. The purpose of mentoring is to put an additional form of control into the organisation. counselor. choice of qualification and career goals. It is normal for the mentor to be from the same function (eg finance) but unusual for the mentor to be a direct or indirect line manager to the subordinate. • encourage & assist – identify strengths and weaknesses • provide honest.E2 . such as appraisal.87 - .
E2 . structure) Some aspects of the organisation’s culture will be hidden. (attitudes. personality conflict) .Enterprise Management _____________________________________________________________________ C1 (b) demonstrate the importance of organisational culture Organisational Culture . beliefs. technology. The organizational iceberg Some aspects of the organisation’s culture will be visible (goals.‘the way we do things around here’ (Handy) Culture can influence the behaviour and actions of employees which can be a powerful force on how well the organisation performs. and norms shared by employees. understandings.88 - . communication patterns. An organisation’s culture is the underlying set of key values.
Enterprise Management _____________________________________________________________________ ______________________________________________________ _______________ McKinsey Hard (above the surface) • Strategy • Systems • Structure Soft (below the surface) • Skills • Style • Staff • Shared values EDGAR SCHEIN – THREE LEVELS OF CULTURE Artefacts Expoused values Basic underlying assumptions .89 - .E2 .
90 - .Enterprise Management _____________________________________________________________________ Cultural Web – (CORPSS) Stories Symbols Control Systems The Cultural Web Power Structures Organisational Structures Routines & Rituals .E2 .
E2 . and ‘for the benefit of members’. based on friendship. bureaucratic and standardised decision making. • Power culture – based on a few powerful individuals. motivate by fear. eg colleges. based on individual expertise. eg social clubs. . • People (support) culture – two types: constellation of stars. make little use of rules • Role culture – impersonal.Enterprise Management _____________________________________________________________________ Handy/Harrison identified four types of culture.91 - . flexibility and commitment to the achievement of objectives. • Task culture – teamwork. belonging and consensus. no formal hierarchy of authority. rely on rules and procedure.
. • • • • Tough-guy macho – high risk.92 - . play-hard – few risks taken Bet your company – high risk but slow feedback Process – no feedback.E2 . Changing the culture of an organisation To alter an existing culture the following steps may be required: • Injection of new staff into the organisation • Introduction of incentive schemes to encourage the acceptance of new approaches and working methods • Emphatic managerial endorsement of new ideas. bureaucratic Deal and Kennedy suggested that ‘companies with very strong cultures……. plus an increase in the flow of information between management and workers • Deliberate promotion of individuals who possess flexible and appropriate cultural attitudes. William Ouchi Theory A – American approach Theory J – Japanese approach Theory Z – How American Business can meet the Japanese challenge.Enterprise Management _____________________________________________________________________ Deal and Kennedy Deal and Kennedy suggested a typology which categorized cultural types by two variables – risk taking and feedback of results.perform well when the environment around them changes’. quick feedback Work-hard. Referring to strong as the degree to which members subscribe to the norms and values taken up by management.
93 - . Thus. . Their work began with a study in the early 1980s of 43 US organisations that the authors considered ‘excellent’. • A business’s primary concern should be the improvement of quality and service to customers. • Firms must continuously monitor consumer attitudes and respond immediately to alterations in consumer demand. The eight key characteristics of excellent organisations are as follows: • Bias for action • Close to the customer • Autonomy and entrepreneurship • Productivity through people • Hands on value driven • Stick to the knitting • Simple form.E2 . • Managers must be encouraged to innovate and to assume risk. lean staff • Simultaneous loose-tight properties Thriving on chaos Peters developed his own work in a book entitled Thriving on Chaos in which he made the following points: • Changes in market demand and production methods are today so frequent that it is no longer possible to predict the future environments in which an organisation will operate. • Organisation structures should be basic and simple with a minimum of bureaucratic control. flexibility and total acceptance of the need for change are required.Enterprise Management _____________________________________________________________________ Tom J Peters and Robert H Waterman • Peters and Waterman challenged the usefulness of traditional line and staff organisation systems and attacked western industry for its lack of concern for customer care. in an attempt to discover the root causes of their success.
Enterprise Management _____________________________________________________________________ Improving Effectiveness • Balance autonomy with control • New venturing o Empowerment o Innovation (Kanter) A N I T A • Organisational learning and knowledge management .94 - .E2 .
E2 . High Uncertainty Avoidance means people are uncomfortable with uncertainty and ambiguity b. Power Distance a. Low Uncertainty Avoidance means people have high tolerance for the unstructured and unpredictable High UA • Formalised organisational structures • Depend heavily on rules and regulations • Do not like anything that deviates from accepted norms 3. Individualism and Collectivism a. High Power Distance means people accept inequality in power b. Individualism – individuals are expected to take care of themselves b.Enterprise Management _____________________________________________________________________ National Cultures Hofstede suggests that the national culture of different countries can be classified according to five “dimensions of culture” 1. Uncertainty Avoidance a. Collectivism – individuals look after one another and organisations protect their members interests Individualism emphasise • Self reliance • Autonomy • Individual achievement not the achievement of the group or community . Low Power Distance means people expect equality in power High PD • Managers make autocratic decisions • Structures tend to be tall • Status differences between managers and subordinates 2.95 - .
Masculinity / Femininity a.Enterprise Management _____________________________________________________________________ 4. Masculine – value achievement. heroism. Time Orientation • Short-term orientation – rapid feedback from decisions – quick solutions – quick profit . Feminine – value relationships.E2 . assertiveness and material success important b. caring for the weak and quality of life. Masculinity places importance on • Earnings • Advancement • Challenge 5.96 - .
whereas others may be informal (or managerial). Strategic control operates at board level and largely consists of setting the control environment. teams and networks. such as those over contracts and dismissal.97 - .E2 . Levels of Control There are three levels of management decision making and. It has been defined by the Auditing Practices Committee as ‘the whole system of controls. ensure adherence to management policies. and for managing group conflict C1 (c) identify the nature and causes of conflict C1 (d) discuss alternative approaches to the management of conflict Internal Control Systems Internal control systems exist to enhance the achievement of organisational objectives. It will include: • • . therefore.Enterprise Management _____________________________________________________________________ C2 (d) Identify tools for managing and controlling individuals. The individual components of the control system are known as controls or internal controls’. safeguard the assets and secure as far as possible the completeness and accuracy of the records. established by the management in order to carry on the business of the enterprise in an orderly and efficient manner. may be formal (or legal) in nature. three levels of control. Some of the controls. financial and otherwise.
Enterprise Management _____________________________________________________________________ Tactical control operates at middle management level and largely consists of setting the controls to implement the decisions and policies of the board. It will include: • Performance appraisals Question Explain what needs to be considered in the design and implementation of an effective staff performance appraisal system (10 Marks) .98 - .E2 .
E2 . (10 Marks) .99 - . Explain the key areas that should be covered in the seminar.Enterprise Management _____________________________________________________________________ • Health & Safety Question You have been asked to deliver a seminar on the importance of health and safety at work.
valid and reliable. . comparing one period’s performance with that of the previous period or of the same period the previous year. • They should provide succinct explanations of any deviations from plan.100 - . for example. • They should analyse trends.Enterprise Management _____________________________________________________________________ Operational control operates at the lower levels of the organisation and largely consists of setting controls for structured and repetitive tasks using preset rules.E2 . Permit a direct and easy comparison between planned and actual performance with each function. • They should be given to the person who is responsible for the activity concerned within the function. • They should arrive in time to allow the necessary action to be taken. It will include: • • Control Reports A basic requirement is reports that clearly identify areas of good and bad performance so that appropriate action can be taken. Control reports should show the following features: • They should contain measurements which are accurate.
101 - . improved services. trying to see everyone’s point of view o Reward for achieving individual goals – should be based on overall company goals not departmental goal . expectations o Conflicting objectives should not be set o Individuals may have different beliefs.Enterprise Management _____________________________________________________________________ Conflict Horizontal – at the same level Vertical – at different levels. values.E2 . values – open communication about differences is required. manger: subordinate Causes • Competition for scarce resources o Availability of staff. power and differences between them • Differences in goals. better quality. equipment – priorities need to be established o External environment – demands for lower prices. causing greater conflict internally • Competition for power and influence o Where employees are competing for one position o Where power is exercised over individuals and there is no formal authority o Size – as companies increase in size divisionalisation occurs and individual SBU’s think of themselves as separate divisions.
for several goals simultaneously • Sequential attention .E2 . suppress. • Compromise – each party gives something up if both parties see this as losing something it may not be ideal • Competition – parties seek to maximise their own interests and goals. ignore.stakeholder are kept happy by taking turns to get their objectives realised. it creates winners and losers and can prove damaging to the organisation • Collaboration – differences are confronted and jointly resolved so that a win: win outcome is achieved Handling Conflict with Different Goals • Bargaining .102 - . when a crisis a goal will be given attention until the crisis has been resolved • Priority setting – top management define a preference .Enterprise Management _____________________________________________________________________ Handling Conflict (Thomas) • Avoidance – avoid.negotiation • Satisfying – satisfying performance across several criteria. This is not recommended as it does not resolve the conflict which may break out again when the parties meet in the future • Accommodation – one party putting the other’s interest first.
103 - .E2 . The strength of each of these in a particular situation produce the 5 conflict handling strategies below: ASSERTIVE COMPETING COLLABORATING COMPROMISING AVOIDING ACCOMODATING COOPERATIVE . These consist of (i) the degree of assertiveness in pursuit of one’s interests and (ii) the level of cooperation in attempting to satisfy others’ interests.Enterprise Management _____________________________________________________________________ A useful framework for classifying different ways of handling conflict has been developed based on 2 conflict management dimensions.
Enterprise Management _____________________________________________________________________ C2 (a) Analyse the relationship between managers and their subordinates.E2 . including legal aspects affecting work and employment Industrial relations and conflict • Vertical conflict has been discussed in the previous learning outcome – the most common form is between managers and subordinates. • Negotiation is about looking for a win-win attitude to benefit both company and employees . • This conflict is often more visible when workers join a union and this provides their mechanism for resolving the conflict.104 - .
105 - .E2 .Enterprise Management _____________________________________________________________________ Company approaches • Union-avoidance strategies • Individualistic approaches • Collective bargaining • Partnership agreements • Gain sharing • Labour-management teams • Employment security .
for reasons of hygiene with potential damage to output • Poor work performance. It should then state the penalty for each of these categories. rather than to punish it. which delays any tasks done on a team basis or in the provision of a service for a customer • Failure to wear correct clothing. it is likely that the employee concerned will be dismissed.106 - . In cases of less serious misconduct. which adversely affect performance at work In addition to the use of motivators to control discipline (see earlier notes) a model disciplinary procedure should aim to correct unsatisfactory behaviour. followed by dismissal. the most likely consequence is that a formal warning will be given. It should specify as fully as possible what constitutes ‘misconduct’ and what constitutes ‘gross misconduct’. For repeated acts of misconduct. a model procedure should aim to ensure that these are dealt with quickly. So far as appeals are concerned. so that the employee involved can be informed of the final decision without undue delay. In cases of proven ‘gross misconduct’.E2 . .Enterprise Management _____________________________________________________________________ C2 (e) Compare and contrast ways to deal effectively with discipline problems Typical disciplinary problems are as follows: • Excessive lateness in arriving at work. due to lack of care with shoddy work or a large number of rejects • Involvement with competition or undertaking private work to the detriment of the employer • Personal abuse of alcohol or drugs. this is most likely to be immediate (or summary) dismissal. or suspension.
Enterprise Management _____________________________________________________________________ ACAS Code of Practice Be in writing Specify to whom they apply Provide for matters to be dealt with quickly Indicate the disciplinary actions which may be taken Provide for individuals to be informed of the complaints against them and be given the opportunity to reply • Give individuals the opportunity to be accompanied by a trade union representative or a fellow employee • Ensure the disciplinary action is not taken until the case has been fully investigated Progressive Steps in the Disciplinary Process • • • • • • Informal Talk • Oral Writing • Written or official warning • Layoffs or suspension • Demotion or transfer .107 - .E2 .
E2 .Enterprise Management _____________________________________________________________________ Disciplinary Interview Preparation Stage • Gather the facts (do the homework on the case) • Understand the company procedures (as above) • Give notice of the interview and the complaint • Make sure the right to be accompanied is also explained During the interview • Explain clearly the reason for the company taking action • Company expectations need to be made clear (future behaviour) • Explain the penalties • Record the interview (needs to be kept on file) • Appeals procedures should be explained Post Interview • Follow up on whether company expectations have been met • Take any further action required Grievance Procedures • Who can pursue a grievance • Understand the rights of employees for each type of grievance • Set a procedure for pursuing a grievance o Discuss the grievance with staff/union representative o If case exits take it to higher authority and inform personnel o Allow for representation o State time limits for initiating procedure .108 - .
it may or may not also be unfair dismissal. Typical disputes that would be taken to the tribunal include. Unfair dismissal Dismissal Under UK law dismissal is described as termination of employment with or without notice by the employer.E2 . 1. Dismissal without notice is usually wrongful dismissal and in breach of the contract of employment. The following five reasons are capable of providing fair grounds for dismissal: • • • • • The employee’s lack of capability The employee’s misconduct Redundancy of the employee Inability to pursue duties without breaking the law Some other substantial reason Redundancy A dismissal on the grounds of redundancy may be justified on any of the following grounds: • Cessation of business • Cessation of business in the place where the employee was employed • Cessation of the type of work for which he or she was employed .109 - .Enterprise Management _____________________________________________________________________ Tribunal Applications If an employee is unhappy with the outcome of the grievance procedure they may want to an independent body like an industrial tribunal.
Enterprise Management _____________________________________________________________________ 2.110 - . Achieving fairness and commitment in the workplace Arbitration .E2 .
111 - .E2 .Enterprise Management _____________________________________________________________________ Conciliation C2 (c) discuss the effectiveness of relationships between the finance function and other parts of the organisation and with external stakeholders Gaining competitive advantage from the finance function .
Enterprise Management _____________________________________________________________________ • efficient service • value for money • effective contribution to the strategic decision making process Outsourcing? Shared Services? Business Partner? The Finance Function and External Stakeholders .112 - .E2 .
113 - .E2 .Enterprise Management _____________________________________________________________________ C2 (g) Analyse issues of business ethics and corporate governance Business Ethics .
• The company should develop a code of conduct that sets the norms of behaviour by which people will abide.114 - . .E2 .Enterprise Management _____________________________________________________________________ • The standards of conduct that an organisation sets itself in its dealings with different stakeholders both within the organisation and outside with its environment. • How do we choose the “right” behaviour The purpose of corporate governance is to control the board of a listed company to ensure that they act in the best interests of that company.
Enterprise Management _____________________________________________________________________ Corporate governance is the system by which companies are directed and controlled.E2 .115 - . • Directors remuneration • Accountability and audit . Combined Code (UK) The combined code comprises ‘principles of good governance’ and ‘a code of best practice’ which sets out code provisions for each of these principles. These broad areas are listed below: • Directors.
116 - .E2 .Enterprise Management _____________________________________________________________________ • Relations with shareholders Benefits of corporate governance Reduces risk Stimulates performance Improves access to capital markets Enhances the marketability of goods and services Improves leadership Demonstrates transparency and social accountability Project Management (B) B1 (a) Identify a project. a programme and their attributes .
Enterprise Management _____________________________________________________________________ A unique undertaking to achieve a specific objective that requires resources and activities.E2 .117 - . Characteristics of a project Projects have: • Stakeholders • Uniqueness • Objectives • Resources • Schedules • Quality • Uncertainty • Finiteness • Change B1 (d) Identify the characteristics of each phase in the project process The project lifecycle .
This is known as the iterative approach. revised and the cycle repeated until agreement is reached. The four phases are: • Identify a need • Develop a proposed solution • Perform the project • Terminate the project For smaller projects and those whose requirements are uncertain the life cycle may be repeated several times before a solution is agreed. ideas may be combined with customer input into a prototype. which occur in sequence. This prototype can be implemented in a trial operational environment.118 - .Enterprise Management _____________________________________________________________________ Large scale projects usually follow separate phases. . For example.E2 .
Enterprise Management _____________________________________________________________________ B1 (b) Apply suitable structures and frameworks to projects to identify common project management issues B1 (g) Identify structural and leadership issues that will be faced in managing a project team General Project Structure .119 - .E2 .
E2 . responsibilities. Why some projects fail Time/resource estimates unrealistic Objectives not clearly defined or measurable Project manager – poor communication skills Objectives changed during project Project manager – poor leadership skills Senior management not showing strong support Stakeholders not taking ownership of the project Role and responsibilities of the project team not defined Resources not identified/made available at the start Project team did not work as a team Structural Issues – a structure is required in order to understand the roles. teams of people working together in order to complete the task in hand.120 - . Role/Responsibilities • Successful delivery of project objectives (strategic management0 • Selection and development of the project team (relationship management) . A matrix structure is often used to complete projects.Enterprise Management _____________________________________________________________________ Whichever life cycle is used. a project may adopt a particular method or approach to identify all of the tasks that will need to be completed in order to achieve the project objectives. tasks required in order to complete the project.
5. • • • • • N P T P F • P • C • C • D • L There are many frameworks: 4.121 - . monitor & control The Skills of the project manager The project manager needs a set of skills that will encourage and lead the project team to succeed and to create customer confidence in the project team. “Not preparing the projects financial plan could cause disastrous losses”.Enterprise Management _____________________________________________________________________ • Organisation.E2 . 7 or 9? • The 4 D model ~ Discover . planning.
Enterprise Management _____________________________________________________________________ ~ Dream ~ Design ~ Deliver • The 5 project management process areas ~ Initiate ~ Plan ~ Execute ~ Control ~ Close • The 7 S model ~ Systems ~ Structure ~ Style ~ Strategy ~ Staff ~ Skills ~ Shared values • The 9 project management knowledge areas ~ Integration management .E2 .122 - .
E2 .Enterprise Management _____________________________________________________________________ ~ Scope management ~ Time management ~ Cost management ~ Quality management ~ Resource management ~ Communications management ~ Risk management ~ Procurement management .123 - .
allocation of funds. .E2 .124 - . terms of reference Project owner Project customer Project proposals.Enterprise Management _____________________________________________________________________ B2 (c) Explain the roles of key players in a project organisation Project sponsor Project brief. schedules and status reports Project manager Project team You should make sure you are aware of the needs of each stakeholder in respect of a project. and the conflicts between those needs.
E2 . they are interested in the end result being achieved and their needs being met Project Manager – responsible for the successful delivery of project objectives Project Team – will be given individual responsibility for parts of the project Project Customers/Users – will use the final output . provides resources Project Owner – the person for whom the project is being carried out.125 - .Enterprise Management _____________________________________________________________________ Project Sponsor – Makes Yes/No Decision.
E2 . (see Strategic Management) . past behaviour towards projects. and indicate where attention needs to be focused. a list can be drawn up which identifies each stakeholders goals. this will allow the project manager to assess the risks associated with the various stakeholder groups.Enterprise Management _____________________________________________________________________ B2 (b) Recommend strategies for the management of stakeholder perceptions and expectations Once the project manager has established the key stakeholder groups. You may choose to use Mendelow’s matrix.126 - . what can be expected of their future behaviour and how they may react to future changes.
127 - .E2 .Enterprise Management _____________________________________________________________________ B1 (c) Construct an outline of the process of project management The project management process can be represented by a 5 stage process covering the project lifecycle. • Initiate • Plan • Execute • Control • Completion .
including the specification of resources. incorporating strategies for dealing with this uncertainty.128 - .Enterprise Management _____________________________________________________________________ B1 (f) Produce a basic project plan.E2 . Sometimes the potential project manager is involved in the feasibility study stage. A feasibility study will establish whether a project can achieve its objective in a cost effective manner. Projects should fit in with the strategies of the organisation. A course of action. in the context of a simple project B2 (a) Produce a strategy for a project A ‘strategy’ is something that an organisation implements to take it from where it is now to where it wants to be at some point in the future. Setting Project Objectives Once a need or objective is identified a project becomes the strategy to achieve that objective. to achieve a specific objective. . but not always. It is likely that an organisation will have a number of strategic options so the next stage is to examine their feasibility. a project may be the means by which an objective is achieved.
129 - .Enterprise Management _____________________________________________________________________ The Feasibility Study The purpose of project feasibility is to establish if the proposed project can achieve its objective in a cost effective manner. • Technical feasibility o Is the technology available or is sufficient innovation needed? o Is the technology tried and tested o Performance standards – can the required performance be achieved from the available technology. is the expertise to make use of it readily available • Social feasibility o Can the required performance be achieved from the people available o Company Image • Ecological feasibility o Health & safety requirements o Environmental concerns o Planning permissions • Financial feasibility (cost:benefit) o Capital – acquisition of assets plus any other costs of installation and maintenance o Revenue – any other project costs other than acquisition of assets o Finance – funds required to deliver the project and cost of funding o Tangible and Intangible o Financial Evaluation – NPV etc. .E2 .
Enterprise Management _____________________________________________________________________ • Business o Does the project fit with the business goals of the company.130 - . • Time o o o o Key milestones – key events Duration of each Dependencies and parallel activities Minimum completion time • Quality o Conformance Measures o Zero defects o Satisfy a need • Risk Assessment/Risk Management Risk Assessment .E2 .
Action is taken to mitigate (reduce) the risk likelihood or impact. This is often through internal controls.E2 .Enterprise Management _____________________________________________________________________ Risk Management Risk Treatment (also called risk response) Avoidance Action is taken to exit the activities giving rise to risk. Changing or abandoning goals or objectives specifically associated with the risk in question.131 - . outsourcing. hedging) No action is taken to affect the likelihood or impact Reduction Sharing Acceptance . or choosing alternative approaches or processes that remove the risk. Action is taken to transfer a portion of the risk (insurance.
Enterprise Management _____________________________________________________________________ SWOT Analysis SWOT is an analytical tool that can be used in 2 ways: • Applied to a whole company. weaknesses.132 - .E2 . • Strengths • Weaknesses • Opportunities • Threats . it can be used to identify strategies needed by the business based on its current position • Applied to a specific project. opportunities and threats. it can be used to check the feasibility of a project SWOT stands for strengths.
The contingency plan may never be used but if we wait for the uncertain event before doing any planning.E2 . . The purpose of contingency planning is to speed up the planning process if the uncertain event occurs.133 - . instead we must use contingency planning to construct a series of action plans to be implemented if it does occur.Enterprise Management _____________________________________________________________________ Uncertainty We cannot reduce the possibility of uncertain events occurring by putting in place management controls. the project may be delayed further.
E2 . or which activities in the project carry the highest risks. in obtaining cost estimates from specialists the WBS enables the project manager to build up a more detailed picture of the overall cost and also a picture of where the major costs of the project will fall. including support and other tasks . For example. .134 - . Performing risk analysis The use of the WBS can also help identify which part. It is generally expressed as a list of tasks taken from the work breakdown structure. Displaying the interrelationships of the various jobs (work packages) to each other and to the total project.Enterprise Management _____________________________________________________________________ Project Planning The scope of a project is the extent of work needed to produce the projects deliverables. A WBS enables the project manager to think of the totality of all the activities comprising the project. The benefits of using a WBS are numerous and include the following: Summarising all the activities comprising the project. Establishing the authority and responsibility for each part of the project This would involve establishing who was responsible for each activity and how has the authority to make decisions. Estimating project cost The breaking down of the overall project into activities or work packages makes it easier to estimate the cost of each activity and also the overall cost of the project. Unless the specialist activities are co-ordinated with each other the outcome of the whole project would be jeopardised. provides a picture of how the various activities are related to each other.
Providing a basis for controlling the application of resources to the project The WBS assists in the overall monitoring and control of the project because it provides information on all the tasks to be carried out and the materials needed for each.135 - . .Enterprise Management _____________________________________________________________________ Scheduling jobs (work packages) The WBS will enable the project manager to arrange for work to be carried out in a sequence that ensures that jobs that must be completed first are scheduled as a priority. The activities outstanding are more easily identified and arrangements made for their completion.E2 . In its simplest form it provides a check list of tasks that must be completed in order for the project to be successful. These can be ticked off as they are completed.
Enterprise Management _____________________________________________________________________ A major responsibility of the project manager is the initial planning of the project.136 - .E2 . establishing a baseline plan that provides a clear definition of how the project scope will be accomplished on time. Depending on the size of the project the baseline plan will comprise some or all of the following separate plans: Time Resources Project Planning Cost Quality . to budget and using available resources.
E2 .Enterprise Management _____________________________________________________________________ Creating the plan ESTABLISH PROJECT GOALS • Work Breakdown Structure o Clear definition of the project scope Work package • Who – define key roles and decision making responsibilities • What – define the exact deliverables to allow quality to be measured • When – estimate timings for each activity o Estimate resources .137 - .need to mange any limited resource o Make a cost estimate – used to create a budget for the project and help with cash flow projections o Carry out risk analysis IN SIMPLE TERMS THE PLANNING STAGE IS ABOUT • WHAT NEEDS TO BE DONE • WHO NEEDS TO DO IT • HOW LONG WILL IT TAKE • HOW MUCH WILL IT COST .
A simple look at a Gantt chart should enable its user to determine which tasks take the longest time to complete. Time Activity A Planned A Actual B Planned B Actual C Planned C Actual D Planned D Actual 1 2 Days 3 4 5 6 . In its simplest form. Gantt Chart A Gantt Chart is a horizontal bar chart which graphically represents the schedule of activities or tasks required to complete the project. which tasks are overlapping with each other. etc.Enterprise Management _____________________________________________________________________ B1 (e) Apply tools and techniques that would need to be applied in the project process.E2 . including the evaluation of proposals By converting complex projects into a graphical picture the project manager can more easily communicate the project activities to the project team and the project sponsors.138 - . the Gantt Chart consists of: • A horizontal timescale • A vertical list of tasks • A horizontal line or bar drawn to scale to represent the time needed to complete the activity.
4) managing inter-dependencies among the various activities or tasks. 3) laying out the order in which the activities or tasks will be carried out. 2) assessing how long it takes to complete a project and its component activities.139 - . Gantt charts are used for: 1) planning and scheduling projects. In conducting the analysis the project manager will need to answer the following questions for each activity: 1. It will identify the activities that are critical. What activities can be done at the same time as this activity? The answers to these questions will help to determine the dependencies between different activities and will also help the project manager determine the project duration. It may also incorporate a 'Budget' section. which shows a vertical bar chart presenting the target budget and actual costs incurred in implementing the project.E2 . 6) monitoring the progress of each activity. which is simply an additional column that identifies the people responsible for each activity. The chart may also incorporate a 'Resources' column. Network Analysis Critical path analysis is a technique that can be used to assist in the time planning for project management. What can be done once this activity finishes? 3. . 5) managing the resources (including manpower) needed to complete simultaneous activities.Enterprise Management _____________________________________________________________________ A separate task bar may be drawn to represent the proportion of work actually complete or the task bar may filled with a different colour. What must be done before this activity can start? 2. It will help to identify the sequential relationship between the various activities that need to be undertaken in planning the project. in other words the activities where any delay will lead to a delay in the project overall and in also whether the project actually going ahead. and 7) facilitating recovery actions to get delayed activities back on track.
1. 2. The main aim of network analysis (critical path analysis) is to analyse activities that occur in parallel in order to identify start and finish times for each activity and the project as a whole.E2 . and to identify the start and finish times for each activity. and latest event time (LET) which is the latest time at which all previous activities must have been completed to prevent the whole project being delayed.Enterprise Management _____________________________________________________________________ Undertaking the analysis should assist the project manager in deciding when to start working on the arrangements for the project.140 - . Thiswill involve calculating the earliest event time (EET) which is the earliest time at which any subsequent activity can start. Each dot becomes a node when you draw the final diagram Node Identifier Earliest Event Time (EET) Latest Event Time (LET) . First draw a dot – to –dot diagram – this can be completed quickly and allows the student to test the logic of the diagram before you spend the time drawing the neat version of the critical path. Critical path analysis will identify those activities that are critical (activities where any delay in the activity will lead to a delay in the overall project).
E2 . Events are labelled with numbers in the nodes and activities are labelled with letters above the arrow and the duration of the activity below the arrow. and the nodes represent events.Enterprise Management _____________________________________________________________________ Node Identifier = unique number given to each node Earliest event time = earliest time the next event can start given the dependencies given ( it is the largest number when you take a forward pass through the diagram) Latest event time = the latest time the activity can be completed in order to complete the project in the minimum completion time The arrows represent activities or tasks. The events are therefore start and finish points for the activities.141 - . . Dummy activities (shown as broken lines) do not consume any time they are simply included to maintain project logic.
Enterprise Management _____________________________________________________________________ Example Activity Description A B C D E Dig Trench Lay Pipework Lay electrical cabling Fill in trench Connect cable to equipment Dependency Duration A A B&C C 2 days 3 days 1 day 1 day 2 days .E2 .142 - .
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PERT (Project Evaluation and Review Technique) Network analysis is often complicated by uncertainty of events so that a single time given for an event is likely to have a degree of error. To overcome this uncertainty PERT uses 3 time estimates for each activity in the network: • An optimistic estimate (o) • A probable estimate (m) • A pessimistic estimate (p) The expected duration is then calculated as follows: o + 4m + p 6 Contingency allowance o + 4m + p 6
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Identify methodologies and systems used by professional project managers PM Software Functions that would commonly be found within a standard project management software package such as Microsoft Project are: • Budgeting and cost control
• Calendars • Graphics • Multiple project handling • Planning • Scheduling • Resource planning • Resource histograms • Reporting Advantages Accuracy Affordability Ease of use Ability to handle complexity “what if “ Drawbacks Emphasis on plan not project Still only estimates It matters which person performs the task
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146 - .Enterprise Management _____________________________________________________________________ Question Explain how the work breakdown structure (WBS) technique and Gantt charts can assist in the project management process.E2 . (10 Marks) .
Progress reports are needed to understand the current status of the project in terms of • Time • Cost • Quality The information in the report will need to enable the project manager to see whether the project is progressing as expected towards the final objectives.E2 . The PRINCE 2 (PRojects IN Controlled Environments version 2) methodology contains a large number of control elements to ensure successful delivery of a project: • delivery of the agreed outcomes • on time • within budget • conforming to the required quality standards . (TARA) Control in this context is any mechanism designed to ensure that a project achieves its objectives.Enterprise Management _____________________________________________________________________ B1 (h) Compare and contrast project control systems In order to effectively monitor and control a project a continuous flow of information about the progress of work is required. Any deviations need to be reported so that corrective action can be taken on a timely basis.147 - .
E2 .Enterprise Management _____________________________________________________________________ ______________________________________________________ _______________ Features of PRINCE 2 business Case • to justify the undertaking of the project • enforces a clear structure of authority and responsibility • associated with the management and control of the project • risk management • contains several quality controls • risk assessment and risk management regularly structure products Risk Quality Change .148 - .
E2 . The main purpose is to evaluate the overall project and learn from the experiences gained. Activities would include the following: project documentation continuous improvement Project Closure final payments project objectives .149 - .Enterprise Management _____________________________________________________________________ B1 (i) discuss the value of a post-completion audit Project Closure The final stage of the project lifecycle is the closure of the project once the work is finished.
150 - . An evaluation from the customer perspective is important in determining whether the project was successful in satisfying the customers requirements and again obtaining feedback to improve future projects. Project manager business case Review Project team tools and techniques used .E2 .Enterprise Management _____________________________________________________________________ Post Completion Review Meetings Evaluation meetings should be carried out with the project team members and with the customer. A review meeting with the project team is an opportunity to discuss the successes and failures of the project process so that lessons can be learnt for future projects. It is also an opportunity for the project manager to discuss individual team member performance.
Enterprise Management _____________________________________________________________________ ______________________________________________________ _______________ B1 (j) Apply a process of continuous improvement to projects Many organisations view project management as a strategic competence from which they can gain competitive advantage. Excellence in project management management requires the development of a methodology. particularly those based in project based industries such as construction or consultancy.E2 . The PMMM consists of 5 levels and each level represents a different degree of maturity in project management: Common Knowledge • Training and education on project management Common processes • Common processes need to be defined • all corporate methodologies should be combined into a singular methodology. One such approach is the Project Management Maturity Model (PMMM). the centre of which is project management • process improvement is necessary to maintain a competitive advantage • continuous improvement and feedback singular methodology Benchmarking Continuous Improvement .151 - . For these organisations project management without continuous improvement to the methodology used means that mistakes and poor practices will be repeated. a culture that believes in that methodology and continues improvements to that methodology.
Enterprise Management _____________________________________________________________________ .152 - .E2 .
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