QUALIFI Strategic Management and Leadership 7

24/02/2021
Setting Performance
Targets to Teams
Level 7 Diploma in Strategic Management and Leadership
Module: Manage Team Performance to Support Strategy
www.chestnuteducationgroup.com
Introduction
In this lesson we will be closely looking at setting performance targets to teams. The link between team performance and
strategic objectives will be looked at while evaluating tools and techniques available to set team performance targets. The
value of team performance tools in measuring future team performance too will be looked at towards the end of the lesson.
Level 7 Diploma in Strategic Management and Leadership 2
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Learning Outcomes
In this lesson you will be covering the following learning outcomes:
1. Be able to set performance targets for teams to meet strategic objectives
1.1 Critically assess the links between team performance and strategic objectives
1.2 Critically evaluate tools and techniques available to set team performance targets
1.3 Critically evaluate the value of team performance tools to measure future team performance
Lesson Objectives
In this lesson you will be covering the following key objectives:
1. Understand the terms strategy, strategic objectives and performance
2. Discuss the link between team performance and strategic objectives
3. Understand performance targets
4. Discuss tools and techniques for setting team performance targets
5. Discuss the value of team performance tools to measure future performance
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Strategy, Strategic Objectives and

Performance
Strategy
Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing
environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations
(Johnson, Scholes and Whittington, 2011).
The key levels of strategy are corporate level, business level and operational level.
Corporate level
► Determine overall scope of the organisation
► Add value to the different business units
► Meet expectations of stakeholders

Performance
Business level (Strategic Business Unit)
► How to compete successfully in particular markets
Operational
► How different parts of organisation deliver strategy
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Performance
The strategic decisions are;
► The long-term direction of the organisation
► The scope of an organisation’s activities
► Gaining advantage over competitors
► Addressing changes in the business environment
► Building on resources and competences (capability)
► Values and expectations of stakeholders which affect operational decisions

Performance
The strategic decisions are likely to:
► Be complex in nature
► Be made in situations of uncertainty
► Affect operational decisions
► Require an integrated approach (both inside and outside an organisation)
► Involve considerable change
Strategic Objectives
Objectives are statements of specific outcomes that are to be achieved (Johnson, Scholes and Whittington, 2011).
Objectives – both at the corporate and business unit level – are often expressed in financial terms. They could be the expression of
desired sales or profit levels, rates of growth, dividend levels or share valuations
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Performance
The organisations also have market based objectives, many of which are quantified as targets such as market share, customer
service, repeat business and so on.
The hierarchy of objectives are:
► Corporate Objectives
► Business / Strategic Objectives
► Functional Objectives
► Tactical Objectives
Corporate Objectives derive the main scope and direction of the organisation. If the organisation has been divided into several
business units, each business unit would develop separate objectives for themselves based on the corporate objectives.
Thereafter, business and functional objectives would have to be developed in order to specify the scope and direction of the
main functional activities leading to tactical objectives in the operational level.

Performance
The functional objectives should follow the SMART criteria. It stands for:
Specific – The objective should be simple and clear. It should include precise terms. If the objective is more complex it
may cost you in time and money or sometime people may misuse it to justify some of their activities.
Measurable – The objective to be achieved must be numerically measured. Without numeric measurement it is
impossible to identify how much has already been achieved from the objectives.
Achievable – The Company or the staff should be well aware of the resources or capabilities they posses to reach a
certain level. If it seems to be unachievable it should simply be ignored, or the company should strive to allocate
the necessary resources.
Realistic – The objectives that have been set need to match with the organisational values and beliefs . Achieving the
objective must contribute to the company’s success.
Time bound – Without a time frame, no task can be effectively completed. If there is no time scale, achieving
the objective can continue indefinitely and there will be no way of measuring success.
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Performance
Performance
Performance management is posited as a strategic management technique that supports the overall business goals of the firm
through linking each individual’s work goals to the overall mission of the firm (Costello, 1994; Sparrow and Hiltrop, 1994).
“A process for establishing shared understanding about what is to be achieved, and an approach to managing and developing
people in a way which increases the probability that it will be achieved in the short and longer term” Armstrong and Baron (1998)
It is further hypothesized as an integrated system where management and employees work together in setting objectives,
assessing and reviewing how these are being met and rewarding good performance.
This requires ‘the ability to interpret the more abstract goals and objectives at board level into more practical operational goals
and objectives at employee level to meet them’.
The Team Performance and Strategic

Objectives
There is a clear link between the team performance and the strategic objectives because if the organisational teams made up
of employees work and perform well only the tactical objectives will be achieved leading to functional objectives
achievement and finally the strategic objectives could be achieved.
There are four principal normative concerns of performance management such as:
1. First, it aims to improve performance.
2. Second, it endeavours to develop employees.
3. Third, it seeks to satisfy the expectations of the various organisational stakeholders.
4. Fourth, it is communication and involvement to agree goals and objectives jointly.
In other words performance management seeks management by agreement rather than dictation. The top management
will unilaterally agree the strategic objectives and then attempt to cascade these down the line and translate them into
individual performance targets (Armstrong, 1999).
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Objectives
The link between team performance and strategic objectives can be evaluated using the Congruence Model. It is based on the
principle that a team or organisation can only succeed when the work, the people who do it, the organisational structure, and
the culture all "fit" together – or, in other words, when they are "congruent"

Objectives
The first step to conducting an analysis using the congruence model is to identify its main components.
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Objectives
Next step is to analyse the relationship between the elements. For example:
• Work and People: is the work being done by the most able and skilled people? Does the work meet individuals' needs?
• People and Culture: are the people working within a culture that best suits them? Does the culture make use of people's own
resources?
• Structure and People: does the formal organisation structure allow the people to work together effectively? Does it meet
people’s needs? Are people's perceptions of the formal structure clear or distorted?
Outcome of the congruence analysis
• Analysing the relationship between the elements will help identify areas of congruence and incongruence and set appropriate
performance measures.
• According to the Congruence Model, the best strategies for fixing incongruence will be those that reflect the unique character
of your team, and the environment that you operate in. This is why one organisation can thrive on a certain structure or type
of work, while another apparently similar one struggles to make a profit.
Understanding Performance Targets

Setting a target is not about guessing what you can achieve. It involves knowing where you are now, what you are trying to achieve, and
determining challenging but realistic amounts of improvement needed to get there.
A target is the desired level of performance you want to see, as measured by indicators, that represents success at achieving your
outcome. A Stretch Target is a target that is challenging but realistic and should be able to reach with some effort.
Scenario: Enrollment in your program has increased an average of 4% over the past three years
Possible Targets for next year:

5% increase might be a Minimal Target
6% increase might be a Moderate Target
7% increase might be a Stretch Target
10% increase might be an Unrealistic Target
The targets too have the key characteristics of being Specific, Measurable, Achievable, Rigorous and Time bound. If a target does not
fulfill these key characteristics it is incomplete and will not be clear enough to achieve. Targets are generally set to provide indicators
to employees in terms of their required level of performance. Key Performance Indicators (KPIs), Performance Indicators are another
names for targets.
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Tools and Techniques for setting Performance

Targets
The successful performance of teams is based on basic principles:
► Understanding the strengths and weaknesses of individual team members - When you understand the skills of every team member and his/her
personal perspective you can use this to successfully combine these and setup the team.
► Fair remuneration - When there is a transparent and fair pay structure within a team and people are rewarded for their efforts and success, this will
then build credibility and trust within the team.
► Match individual skills - It is important for every individual team member feels that he/she is capable to carry out the work asked for within their
potential.
► People relationship - When people are surrounded by people where they have a good relationship with, this will increase morale and productivity.
► Setting targets - By setting goals (quantifiable targets) for the team you can boost performance and increase productivity.
► Shared space - To foster a sense of cooperation and solidarity between individuals it is useful to put them in a shared space, the best way to do this is
to put them in one physical location, but virtual is also possible.
► Belief, trust and credibility - When all team members share the same beliefs, trust and credibility this will relate to the ‘team feeling’.

Targets
Five key techniques to set performance targets are;
1. Quality: doing things right
2. Speed: doing things fast
3. Dependability: doing things on time
4. Flexibility: being able to change what you do
5. Cost: doing things cheaply
(Slack, Chambers, & Johnson, 2001)
Some examples for setting performance targets are:
► All the policies have the right name, the right tariff, etc. (considers quality aspect)
► All new contracts are set in force 15 days after receiving the application (Considers Speed/dependability aspect)
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Targets
Two key bases that could be considered when setting performance targets or KPIS to team are;
Using historical data - It can be helpful to use data that your unit has already gathered to establish a baseline, or starting point, for your
target. It's important to carefully evaluate the historical data you're considering using as your target baseline. Look at how the data
for a particular period and see whether there has been an abrupt change in performance. If there has been, investigate the reasons
for the change. If there were unusual circumstances during that period (such as a recession), the figure may not be a good reference
point and you may want to consider using data from a different period to inform your target.
Examples:
► 50% of the students who enter ABC as a freshman will graduate within six year.
► Within three years ABC will decrease by 40% the number of undeclared students.

Targets
Use External Sources - When you do not have historical data, you might consider using information from outside data sources to
benchmark, or compare your performance data with those of other comparable organisations / departments / programs (an
accrediting agency’s standards, etc). Then set targets that seem reasonable in light of the benchmarking information you've
gathered.
Example:
► Within the next year the XYZ Department will increase by 25% the number of students who pass the Introduction to XYX
course.
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Targets
An example of the link between the strategic objectives and team performance
The strategic goal of an insurance company: S-Goal 1: deliver high-quality, cost-effective pension plan for company pensions
Annual performance plan goals that cascade from S-Goal 1:
PS-Goal 1: maintain at previous year’s levels, customer satisfaction, processing times, and accuracy rates pertinent to processing new
contracts for company pensions
PS-Goal 2: maintain at previous year’s levels, customer satisfaction with the service team and the timelines of written responses to
inquiries
Team goals:
T-Goal 1: continue to streamline work processes when such opportunities occur in order to reduce new contracts processing times and
improve processing accuracy (PS-Goal 1)
T-Goal 2: reduce new contracts processing error rates by providing increased training in workplace competencies (PS-Goal 1)

Targets
T-Goal 3: improve the accuracy and professional appearance of complex correspondence while reducing staff effort by developing
additional ‘smart-template-letters’ that can be tailored to meet different fact patterns and can be personalised (PS-Goal 2)
Team performance:
TP-1: accurately settled contracts (T-Goal 1)
TP-2: competent, well-trained employees (T-Goal 2)
TP-3: accurate and professional written correspondence (T-Goal 3)
A way of setting goals with teams or individual employees can be done by defining key performance indicators (KPI). When
team/employee goals are defined in terms of the companies KPIs this will ensure that what they are doing is aligned with the goals
of the organisation.
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Targets
Some examples are :
► Organisational / strategic
Vision: known by our customers for our superior service
Objective: reduce dissatisfied customers by 20%
KPI: customer complaints unresolved each week
► Team
Goal: increase complaint resolutions by 10% in period X
KPI: satisfactory complaints resolutions per period
► Team member
KPI: weekly satisfactory complaints resolutions versus unsatisfied complaints resolutions. KPIs should be measurable and
SMART.

Targets
The Benefits of Setting Targets
• If you've identified the key areas that drive your business performance and found a way to measure them, then a natural next step is
to start setting performance targets to give everyone in your business a clear sense of what they should be aiming for. Strategic
visions can be difficult to communicate, but by breaking your top level objectives down into smaller concrete targets you’ll make it
easier to manage the process of delivering them. In this way, targets form a crucial link between strategy and day-to-day operations.
Setting Targets
• Setting targets for team performance not only motivate the team to work harder, but also ensures there is proper goal congruence.
• Some of the main tools and techniques that can be used to set team performance targets include:
 Management by Objective (MBO) method
 Balanced scorecard
 Key performance indicators (KPIs)
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Targets
Management by Objectives (MBO)
• Setting performance targets is a key component of Management by Objectives (MBO), a personnel management technique where managers
and employees work together to set, record and monitor goals for a specific period of time. The technique was first championed by
management expert Peter Drucker and became commonly used in the 1960s. It emphasizes that organisational goals and planning flow top-
down through the organisation and are translated into personal goals for organisational members.
Six stages of Management by Objectives (MBO)
• Define corporate objectives at board level
• Analyse management tasks and devise formal job specifications.
• Set performance standards
• Agree and set specific objectives
• Align individual targets with corporate objectives
• Establish a management information system to monitor achievements against objectives

Targets
Key Performance Indicators (KPI)
• Organsations can set goals for teams or individual employees by defining key performance indicators (KPI).
• When team/employee goals are defined in terms of the companies KPIs this will ensure that what they are doing is aligned with the
goals of the organisation.
A good KPI should be:
• Specific: objectives should outline clearly and precisely what is required.
• Measurable: so that an objective judgment can be made of how well the individual has performed against the objective.
• Achievable: objectives should be designed to stretch the individual, but it’s important that failure is not built into objectives.
• Results: it is important to focus on outcomes rather than the means of achieving them.
• Time bound: by what date must the outcome be achieved?
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Targets
Balanced Scorecard
• The Balanced Scorecard is a strategic planning and reporting methodology that takes a company’s objectives and splits
them between 4 equally important perspectives: Financial, Customer, Operational, People.
• Organisations can utilise this model to set performance targets based on how teams and individuals contribute to
each element of the scorecard.
Value of Team Performance

Team performance management is important to the success of a company. Without it, it is difficult to determine whether a team is
headed in the right direction. A project’s success is largely based on a team’s efficiency. Getting people to focus on the right things
to accomplish drives good business results.
Effective team management motivates workers to take responsibility for their job performance and produce superior outputs. In
most cases, a consistent demand for a quality performance yields the best results. Managing the performance of a team is a real
challenge because it requires a lot of diplomacy, tact, and discipline. For instance, negative feedback should always be paired with
motivation and should not be given too frequently.
A team should work in harmony – in any organisation, two or more people working together harmoniously is a major factor towards
achieving success. It is the duty of a leader to monitor the performance of his or her team; bring out the best among his or her
subordinates; and determine the weaknesses, strengths, and potential development of each team member. Team performance
management is the major key in increasing productivity within a group.
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Value of Team Performance

Performance management centers on allowing an individual to perform to the best of his or her ability. This enables the employee to
meet or exceed expectations and develop efficient communication with his or her fellow employees and leaders. The leader, in turn,
should give feedback for continuing improvements and for skills to be nurtured and developed.
Emery joins Brumback (2003) in calling for further developments in team performance management, arguing that essential elements
in this are:
► A clear definition of team mission
► The negotiation of team goals and their understanding by all team members
► An assessment of team performance, combining self-assessment by the team members and assessment by a competent authority
Measuring Future Performance

A team needs to know how its results will help the organisation. Individuals on the team need to know what the team requires of them
to reach the team’s goal. The seven-step processes for measuring team performance are:
► Terminology
► Seven-Step Process
► Measurement Points
Terminology - the terms “performance standards,” “goals,” and “objectives” are used interchangeably and sees them as descriptions of
some future, desirable state that the team is trying to achieve. The performance below the standard is considered unacceptable,
and performance exceeding the standard is considered exceptional.
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Seven-Step Process
1. Review existing organisational measures. Ensure that the measures above and around the team are known and linked to the team’s
measures.
2. Define what’s going to be measured. Selecting the best alternatives and using them to identify the team’s key accomplishments
provide the basis for all further measurement.
3. Identify individual team member accomplishments that support the team. Identify the results each team member must produce to
support the team’s results or work processes.
4. Weight the accomplishments. Discuss and agree upon the relative importance of each accomplishment.
5. Develop team and individual performance measures. Identify the measurement (either numeric or descriptive) that will be used to
gauge how well the results have been achieved.
6. Develop team and individual performance standards. Define how well the team and individuals have to perform to meet
expectations.
7. Decide how to track performance. Identify how the data for each performance standard will be collected and fed back to team
members

Measurement Points
► Elaborating on step two of his seven-step process, Zigong describes four ways to identify what should be measured. These
methods can be used singly or in combination:
► If the team exists to satisfy the requirements of its customers, the measurement point(s) should be the product or service
the team provides to the customer.
► If the team exists to help the organisation make an improvement in a specific measurable goal, the measurement points
should be determined by asking, “What value-added results does the team produce that can help the organisation achieve its
goal?”
► If the team exists to support the organisation’s function, the measurement point(s) are determined by identifying the
hierarchy of results that the organisation must produce and selecting those that link the team to the organisation’s results.
► If the team is used to support a work process, the measurement points are found by mapping the process and using the map
to identify what’s worth measuring.
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Performance Management System / Cycle

Performance management evolved from the management by objectives (MBO) approach, first popularized by Peter Drucker
(1954). MBO was a scientific type approach with an emphasis on achieving results that were linked to established targets. It
involved management focusing on achievable objectives to produce the best possible results using available resources. Both MBO
and performance management hold a number of similarities, including the requirement for distinguishable job based goals and
development objectives to be achieved (Fowler, 1990).
Many of the pertinent models on performance management involve a simple four or five step process. These models tend to be
based on the assertion that all work performance stems from and is driven by the corporate objectives. These are then broken
into functional/departmental objectives. Individual objectives shoot out from these and all are monitored and reviewed on an
ongoing basis with a formal review or appraisal conducted at least annually. The results of this may or may not be linked to pay. A
body of work has taken place arguing for and against linking appraisals to pay.
Performance Management System / Cycle

The key steps of the Performance Management Cycle are:
1. Define business role
2. Planning performance
3. Delivering and monitoring
4. Formal assessment and reward
Torrington et al. (2008: 299)
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Lesson Summary
In this lesson you have covered the key objectives areas by first discussing the definitions for key terms strategy, objectives and
performance and then considering the link between the team performance and strategic objectives of the organisation.
The understanding performance targets, discussing tools and techniques for setting team performance targets and discussing the
value of team performance tools to measure future performance were discussed towards the latter part of the lesson.
Finally, the value of team performance, future performance measurement and performance management cycle have been
discussed.
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Lesson 2:
Performance Targets
Contributing to
Strategic Objectives
Introduction
► In this lesson we will be closely looking at analysing how to determine required performance targets within teams against
current performance, addressing the need for individual commitment to team performance in achievement of strategic
objectives, critically evaluating the application of delegation, mentoring and coaching to the achievement of the strategic
objectives. Finally the evaluation of team performance plan to meet strategic objectives will be looked at.
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Learning Outcomes
2. Be able to agree team performance targets to contribute to meeting strategic objectives
2.1 Analyse how to determine required performance targets within teams against current performance
2.2 Address the need for individual commitment to team performance in achievement of strategic objectives
2.3 Critically evaluate the application of delegation, mentoring and coaching to the achievement of the strategic
objectives
2.4 Critically evaluate a team performance plan to meet strategic objectives
Lesson Objectives
1. Understand performance targets and achievement of strategic objectives
2. Analyse setting performance targets within teams
3. Discuss motivation models and Concepts
4. Determining performance targets for teams to measure current performance
5. Understand the individual commitment for team performance
6. Discuss importance of delegation to achieve strategic objectives
7. Evaluate mentoring and coaching to achieve strategic objectives
8. Discuss a team performance plan to meet strategic objectives
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Performance targets and achievement of

strategic objectives
"A mere 7% of employees today fully understand their company's business strategies and what's expected of them in order to help
achieve company goals.“
Robert S. Kaplan and David P. Norton, "The Strategy-Focused organisation," Harvard Business School Press, 2001
The researchers found a strong correlation between a company's financial performance and an effective performance target
setting process. The companies that are more closely aligned the performance targets of employees across their organisation
enjoyed much higher levels of strategic objectives leading to financial success.
The study also found that the employees in the weakest-performing companies did not clearly understand the connection
between their individual efforts and the overall goals of their employers. These same people also reported feeling confused as to
their roles at the company, which naturally resulted in unfocused-and therefore less productive-work activity.
"How Smart HCM Drives Financial Performance," Workforce Intelligence Institute & SuccessFactors, 2006.
Performance targets and achievement of

strategic objectives
Hence making a clear link between the performance targets and the organisation strategic objectives is very important for
organisational success.
These findings underscore the critical importance of effectively setting and closely aligning employee and business goals to
drive the success of an organisation. In addition to feeling fairly compensated for their efforts, the employees must clearly
understand how their work connects to and serves both the short- and long-term goals of the business.
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Analyse setting performance targets within teams

A successful organisation and its leadership must have the ability to meet financial and customer expectations in a changing global
economy.
To win customer confidence and meet business plan objectives, the leadership team must not only develop a winning strategy, but
drive results by turning the strategy into a reality through communication and a fact-based performance measurement system
leading the performance targets. Easily said, but turning the business strategy is into actionable items is a difficult undertaking.
Business leaders should be able to answer the question with confidence:
Does every employee in the organisation understand the business strategy and how he/she can contribute to the success of the
strategy?
By utilizing a performance measurement system, such as a balanced scorecard, an organisation commits to assessing performance,
monitoring performance, course-correcting performance and aligning all employees with key objectives.

Therefore, whether an accountable leader or a staff member who performs the work, all the employees have a method to
assess progress, ascertain the improvement and make changes if required to set performance targets within individual
departmental teams.
In addition, leaders and staff can be assured of being headed in the same direction when the organisation’s strategy is aligned
with:
► Key projects or program areas that link to personal and team accountability.
► Business process with key program areas that link to personal and team accountability.
► Business plan objectives with key indicators that link to personal and team accountability.
There are several team development and team performance management theories which are useful to be applied in the
business context in analysing the teams and to build up effective teams to achieve strategic goals of organisations.
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The Theory of Goal Setting & Task Performance
According to the theory of goal setting and task performance, people are more likely to achieve difficult yet
attainable goals than they are to achieve less difficult goals. In addition, the theory proposed by Prof. Edwin Locke
of the University of Maryland and Prof. Gary Latham of the University of Toronto in 1990 establishes an intimate
link between goal setting and positive workplace performance. The organisations wanting to increase efficiency
and productivity can benefit from fully understanding the theory and its underlying principles.
There are four key areas to be focused under the theory:
► SMART Goal Foundation
► Clarity and Challenge
► Commitment and Feedback
► Task Complexity

SMART Goal Foundation
To begin with, the theory of goal setting advocates creating S.M.A.R.T. goals, an acronym for specific, measurable,
achievable, relevant and time-bound. According to the theory, deciding what you will accomplish by setting and
committing to clear, challenging goals and setting a time frame for achieving these goals significantly increases chances for
meeting expectations and improving on-the-job performance. The ability to set and achieve goals is crucial to business
success. After developing a full understanding of both its concepts and practices, a team leader can become a role model
and provide instruction to team members through transference and individual or group coaching.
Clarity and Challenge
The theory of goal setting and task performance is based on five underlying principles, which are the precursors to
S.M.A.R.T. Goals. The first two principles say that goals must have clarity and challenge. Clarity focuses on creating clear
and specific goals with a definite timeline for completion. For example, with a goal such as “Respond to customer
questions within 15 minutes” or “Produce and distribute the security policy manual, error free, to all employees by
November 1, 2013,” you know exactly what's expected and what the intended outcome is. You can use the intended
outcome as a basis of motivation. Challenge increases the significance of achieving a chosen goal. Relevancy also plays a
role in this principle, as relevant goals not only move the business forward but often are those with the highest reward.
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Commitment and Feedback
Commitment signifies the degree of motivation you have for achieving a goal. While it might not always be possible, be
mindful that when it comes to employees, a higher level of commitment often comes when employees are part of the
goal-setting process. Because it’s important to encourage employees to set goals for themselves as well as the business,
relevancy also plays a role in this principle. Making sure employees fully understand business goals can help them create
personal goals in line with your vision for the business. Regular, constructive feedback is crucial to measuring progress,
clarifying expectations and for recognising to-date accomplishments. The longer the timeline for achieving a specific goal,
the more important it is to provide regular feedback.
Task Complexity
Task complexity affects task performance and can affect motivation. According to the theory, task performance can be
optimized by first considering task complexity when setting a timeline. A person must be allowed enough time to meet a
goal expectation. In addition, the goal timeline should include a learning curve allowance when necessary. The objective
of the goal setting and task performance theory is to facilitate success. Ensuring the tasks and conditions surrounding the
goals don't frustrate or prevent people from accomplishing their objectives reinforces goal achievability and attainability.

John Adair’s Action- Centred Leadership Model
The Action-Centred Leadership model revolves around three key areas, and leaders and managers should be able to pick and
choose from each area according to changing needs and situations. If you’re able to balance all these things, you should be able to
build team morale, achieve strong results, improve work quality, develop strong teams, improve productivity.
The three parts of Adair’s Action-Centred Leadership model are:
► Achieving the Task
► Managing the Team or Group
► Managing Individuals
These areas are commonly represented by three
overlapping circles. In fact, this is a trademarked image belonging to John Adair, and it’s one of the most instantly
recognisable symbols within management theory.
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The achievement of a goal or task - This may be the completion of a very practical activity or it may be a less tangible
goal. We know that effective teams have clear goals shared by all members. Often the task is what brings the team
together in the first place.
The group of people performing the task - It is likely that the task will only be achieved if all members of the team
work together to the common good. Therefore, the team itself has to be understood as an entity in its own right.
Each individual member of the team involved in the task - While the team will take on a life of its own, individuals do
not lose their own identity. Their needs as people must continue to be met if their allegiance to the team, and their
motivation to achieve the task, is to be sustained.
The leader has to balance the needs from each of the three elements. The effective leader is the one who keeps all
three in balance. If any one element is ignored, the others are unlikely to succeed.
At the same time, the three elements can conflict with each other. For example, pressure on time and resources
often increases pressure on a team to concentrate on the task, to the possible detriment of the people involved. If
team and individual needs are forgotten, much of the effort spent on task may be lost.

Similarly, taking time creating a positive team spirit without applying effort to the tasks likely to mean that the team will lose its
focus through lack of achievement.
Task Functions
• Define the task.
• Devise a workable plan.
• Brief team members on the task and their role.
• Delegate work to team members.
• Allocate resources.
• Check the quality of the work.
• Control the pace of work.
• Keep the team focused on the plan.
• Evaluate progress and modify the plan accordingly.
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Team Functions
• Set standards and an example.
• Maintain performance levels
• Build team spirit.
• Maintain morale.
• Give encouragement.
• Motivate members to achieve success.
• Keep open communication.
• Deal constructively to resolve conflicts.
• Appoint sub-leaders where appropriate.

Individual Functions
• Involve all team members in discussions and activity.
• Seek out and use individuals' abilities.
• Bring in the quieter members.
• Control overactive members
• Train in appropriate skills.
• Use specialist skills.
• Establish previous experience.
• Offer constructive feedback.
• Praise, support and encourage.
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Stages in team development by Tuckman
Tuckman has identified five stages of team development which occur in an order. They are:
1. Forming – This is the stage where the team members get together and the team is initiated. The team members are quite
independent and feel uncertain and anxious as roles and relationships within the team are established. The team or project
manager must bring the team together in order to build trust and working relationships.
2. Storming – This is where the team members’ ideas and perspectives compete with each other. In other words, conflict occurs
due to disagreement over goals, expectations, roles and responsibilities. The team or project manager needs to guide the team
through this stage.
3. Norming – The stage where group harmony increases. The members adjust their behaviour to each other as they understand
each other better. Motivation levels also increase. The manager allows the team to be more autonomous, i.e. participative style.
4. Performing – The stage where the group starts working well with each other. They are able to make decisions themselves and
carry out the tasks without supervision. The manager allows the team to make most of the decisions. Hence a delegating style.
5. Adjourning – The task is completed and the team is dispersed. Motivation levels decrease at this stage as uncertainty about the
future begins to set in. This is a good stage for the project manager to introduce a new project

Belbin Team Roles
Research showed that the most successful teams were made up of a diverse mix of behaviours. They discovered that there are nine
clusters of behaviour - these were called 'Team Roles'. Each team needs access to each of the nine Team Role behaviours to become
a high performing team.
However, this doesn't mean that every team requires nine people! Most people will have two or three Team Roles that they are
most comfortable with, and this can change over time. Each Team Role has it's strengths and weaknesses, and each has equal
importance.
However, not all are always required at the same time - it is important to first look at the team objectives, and work out which tasks
need to be undertaken. Once this has been done, discussions can take place regarding which and when each Team Role behaviour
should be utilised.
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Resource Investigator -Uses their inquisitive nature to find ideas to bring back to the team.
► Strengths: Outgoing, enthusiastic. Explores opportunities and develops contacts.
► Allowable weaknesses: Might be over-optimistic, and can lose interest once the initial enthusiasm has passed.
Team worker- Helps the team to gel, using their versatility to identify the work required and complete it on behalf of the team.
► Strengths: Co-operative, perceptive and diplomatic. Listens and averts friction.
► Allowable weaknesses: Can be indecisive in crunch situations and tends to avoid confrontation.
Coordinator - Needed to focus on the team's objectives, draw out team members and delegate work appropriately.
► Strengths: Mature, confident, identifies talent. Clarifies goals.
► Allowable weaknesses: Can be seen as manipulative and might offload their own share of the work.

Plant - Tends to be highly creative and good at solving problems in unconventional ways.
► Strengths: Creative, imaginative, free-thinking, generates ideas and solves difficult problems.
► Allowable weaknesses: Might ignore incidentals, and may be too preoccupied to communicate effectively.
Monitor Evaluator - Provides a logical eye, making impartial judgments where required and weighs up the team's options in
a dispassionate way.
► Strengths: Sober, strategic and discerning. Sees all options and judges accurately.
► Allowable weaknesses: Sometimes lacks the drive and ability to inspire others and can be overly critical.
Specialist - Brings in-depth knowledge of a key area to the team.
► Strengths: Single-minded, self-starting and dedicated. They provide specialist knowledge and skills.
► Allowable weaknesses: Tends to contribute on a narrow front and can dwell on the technicalities.
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Shaper - Provides the necessary drive to ensure that the team keeps moving and does not lose focus or momentum.
► Strengths: Challenging, dynamic, thrives on pressure. Has the drive and courage to overcome obstacles.
► Allowable weaknesses: Can be prone to provocation, and may sometimes offend people's feelings.
Implementer - Needed to plan a workable strategy and carry it out as efficiently as possible.
► Strengths: Practical, reliable, efficient. Turns ideas into actions and organises work that needs to be done.
► Allowable weaknesses: Can be a bit inflexible and slow to respond to new possibilities.
Completer Finisher - Most effectively used at the end of tasks to polish and scrutinise the work for errors, subjecting it to
the highest standards of quality control.
► Strengths: Painstaking, conscientious, anxious. Searches out errors. Polishes and perfects.
► Allowable weaknesses: Can be inclined to worry unduly, and reluctant to delegate.
Discuss Motivation Models and Concepts

McGregor’s Theory X/Y
Douglas McGregor divided managers into two categories. Theory X managers who believe that their staff are lazy and will do as little
as they can get away with, and Theory Y managers who believe that their people really want to do their best in their work.
Theory X
► The average person dislikes work and will avoid it if he/she can.
► Therefore most people must be forced with the threat of punishment to work towards organisational objectives.
► The average person prefers to be directed; to avoid responsibility; is relatively un-ambitious, and wants security above all else.
Theory Y
► Effort in work is as natural as work and play.
► People will apply self-control and self-direction in the pursuit of organisational objectives, without external control or the
threat of punishment.
► Commitment to objectives is a function of rewards associated with their achievement.
► People usually accept and often seek responsibility.
► The capacity to use a high degree of imagination, ingenuity and creativity in solving organisational problems is widely, not
narrowly, distributed in the population.
► In industry the intellectual potential of the average person is only partly utilised.
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Maslow’s Hierarchy of Needs
Maslow’s Hierarchy of Needs is a theory in psychology. Maslow's ideas surrounding the

hierarchy of needs can be used to examine the responsibility of employers to provide a
workplace environment that encourages and enables employees to fulfill their own
unique potential.
• Basic needs – Breathing, food, water, sex, sleep, homeostasis, excretion.
• Safety – Security of body, of employment, of resources, of morality, of family, of health,

of property.
• Love/belonging – Friendship, family, sexual intimacy.
• Esteem – Self-esteem, confidence, achievement, respect of others, respect by others.
• Self-actualization – Personal growth and fulfillment; morality, creativity, spontaneity,

problem solving, lack of prejudice, acceptance of facts.

Herzberg’s Motivation-Hygiene Theory
Herzberg constructed a two-dimensional paradigm of factors affecting people’s attitudes about work. He concluded that factors
such as company policy, supervision, interpersonal relations, working conditions and salary are hygiene factors rather than
motivators. According to the theory, the absence of hygiene factors can create job dissatisfaction, but their presence does not
motivate or create satisfaction.
In contrast, motivators are elements that enrich a person’s job. The factors that make people motivated are achievement,
recognition, work itself, responsibility, advancement and growth.
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Herzberg’s motivational theory can also be illustrated as below.
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Adam’s Equity Theory
Adams’ Equity Theory calls for a fair balance to be struck
between an employee’s inputs (hard work, skill level,
tolerance, enthusiasm, etc.) and an employee’s outputs
(salary, benefits, intangibles such as recognition, etc.). It
believes that individuals want a fair balance between the
inputs, or what they give to their job, and the outputs, or
what they get from it.
Otherwise people become de-motivated, reduce their
inputs and/or seek change/ improvement whenever they
feel that their inputs are not being fairly rewarded.
Therefore companies need to ensure they reward their
employees properly. Having appropriate performance
evaluation systems will facilitate this. Fairness that
employees seek is based on perceived market norms.

Vroom’s Expectancy Theory
The expectancy theory of motivation is suggested by Victor Vroom. Unlike Maslow and Herzberg, Vroom does not concentrate on
needs, but rather focuses on outcomes.
Whereas Maslow and Herzberg look at the relationship between internal needs and the resulting effort expended to fulfill them,
Vroom separates effort (which arises from motivation), performance, and outcomes.
Expectancy is the belief that increased effort will lead to increased performance, i.e. if I work harder then this will be better. This is
affected by such things as having the right resources available (e.g. raw materials, time), having the right skills to do the job and
having the necessary support to get the job done (e.g. supervisor support, or correct information on the job).
Instrumentality is the belief that if you perform well a valued outcome will be received. Clear understanding of the relationship
between performance and outcomes – e.g. the rules of the reward ‘game’. Trust in the people who will take the decisions - who
gets what outcome. Transparency of the process that decides who gets what outcome.
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McClelland's Human Motivation Theory
Mc Clelland’s theory of needs is one such theory that explains this process of motivation by breaking down what and how needs
are and how they have to be approached. This theory was developed in the 1960’s and McClelland’s points out that regardless of
our age, sex, race or culture, all of us possess one of these needs and are driven by it. This theory is also known as the Acquired
Needs as McClelland put forth that the specific needs of an individual are acquired and shaped over time through the experiences
he has had in life.
Psychologist David McClelland advocated Need theory, also popular as Three Needs Theory. This motivational theory states that
the needs for achievement, power, and affiliation significantly influence the behavior of an individual, which is useful to understand
from a managerial context.
This theory can be considered an extension to Maslow’s Hierarchy of needs. Per McClelland, every individual has these three types
of motivational needs irrespective of their demography, culture or wealth. These motivation types are driven from real life
experiences and the views of their ethos.
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Need for Achievement
The need for achievement as the name itself suggests is the urge to achieve something in what you do. If you are a lawyer it is the
need to win cases and be recognized, if you are a painter it is the need to paint a famous painting. It is the need that drives a
person to work and even struggle for the objective that he wants to achieve. People who possess high achievement needs are
people who always work to excel by particularly avoiding low reward low risk situations and difficult to achieve high risk situations.
Such people avoid low risk situations because of the lack of a real challenge and their understanding that such achievement is not
genuine. They also avoid high risk situations because they perceive and understand it to be more about luck and chance and not
about one’s own effort. The more the achievements they make the higher their performance because of higher levels of
motivation. These people find innovative clever ways to achieve goals and consider their achievement a better reward than
financial ones. They take calculated decision and always appreciate feedback and usually works alone.
The individuals motivated by needs for achievement usually have a strong desire of setting up difficult objectives and
accomplishing them. Their preference is to work in the result oriented work environment and always appreciate any feedback on
their work. Achievement based individuals take calculated risks to reach their goals and may circumvent both high-risk and low-
risk situations. They often prefer working alone. This personality type believes in a hierarchical structure derived primarily by work
based achievements.

Need for power
The need for power is the desire within a person to hold control and authority over another person and influence and change
their decision in accordance with his own needs or desires. The need to enhance their self esteem and reputation drives these
people and they desire their views and ideas to be accepted and implemented over the views and ideas over others. These
people are strong leaders and can be best suited to leading positions. They either belong to Personal or Institutional power
motivator groups. If they are a personal power motivator they would have the need to control others and a institutional power
motivator seeks to lead and coordinate a team towards an end.
The individuals motivated by needs for power have a desire to control and influence others. Competition motivates them and
they enjoy winning arguments. Status and recognition is something they aspire for and do not like being on the losing side. They
are self-disciplined and expect the same from their peers and teams. The do not mind playing a zero-sum game, where, for one
person to win, another must lose and collaboration is not an option. This motivational type is accompanied by needs for personal
prestige, and a better personal status.
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Need for Affiliation
The need for affiliation is urge of a person to have interpersonal and social relationships with others or a particular set of people.
They seek to work in groups by creating friendly and lasting relationships and has the urge to be liked by others. They tend to like
collaborating with others to competing with them and usually avoids high risk situations and uncertainty
The individuals motivated by needs for affiliation prefer being part of a group. They like spending their time socializing and
maintaining relationships and possess strong desire to be loved and accepted. These individuals stick to basics and play by the
books without feeling a need to change things, primarily due to a fear of being rejected. People in this group tend to adhere to the
norms of the culture in that workplace and typically do not change the norms of the workplace for fear of rejection. Collaboration
is the way to work for them competition remains secondary. They are not risk seekers and are more cautious in their approach.
These individuals work effectively in roles based on social interactions, for instance, client service and other customer interaction
positions.
Determining performance targets within teams

Performance measurement is primarily managing outcome, and one of its main purposes is to reduce or eliminate overall
variation in the work product or process. The goal is to arrive at sound decisions about actions affecting the product or process
and its output.
Performance measures quantitatively tell us something important about our products, services, and the processes that produce
them. They are a tool to help us understand, manage, and improve what our organisation is doing. Performance measures let
us know:
► How well we are doing
► If we are meeting our goals
► If our customers are satisfied
► If our processes are in statistical control
► If and where improvements are necessary.
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Determining performance targets within teams

They provide us with the information necessary to make intelligent decisions about what we do.
A performance measure is composed of a number and a unit of measure. The number gives us a magnitude (how much) and the
unit gives the number a meaning (what). Performance measures are always tied to a goal or an objective (the target).
Performance measures can be represented by single dimensional units like hours, meters, nanoseconds, dollars, number of
reports, number of errors, number of CPR-certified employees, length of time to design hardware, etc. They can show the
variation in a process or deviation from design specifications. Single-dimensional units of measure usually represent very basic
and fundamental measures of some process or product.
Measuring Current Performance

Employee performance metrics are key to tracking how well employees are performing. Implementing them the right way is
difficult. However, when done right, employee performance metrics benefit both the organisation and the employee. There
are various kinds of employee performance metrics. They could be broadly categorised into four main categories such as:
1. Work quality metrics
2. Work quantity metrics
3. Work efficiency metrics
4. Organisational performance metrics
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Work Quality Employee Performance Metrics
Management by objectives - A way to structure the subjective appraisal of a manager is to use management by objectives.
Management by objectives is a management model aimed at improving the performance of an organisation by translating
organisational goals into specific individual goals. These goals often take the form of objectives that are set by the employee
and the manager.
The employee works towards these goals and reports back to the manager on their progress. These goals can even be given a
certain weight (a number of points). Upon successful completion of these goals, points are awarded to the employee. In turn,
managers are able to make goals more tangible and make performance reviews more data-driven.
Subjective appraisal by manager - In most companies, performance is assessed several times a year during (bi-)annual
performance reviews. Employees are assessed on several criteria, the quality of their work being the most common. An
adaption of this scheme is the so-called 9-box grid. The 9-box grid is based on a 3×3 table in which the employee is assessed
on performance and potential. Employees with high performance but low potential are perfect for their current function.

Employees in the top right corner, those who score high on both
performance and potential, are often designated to quickly advance
through the organisational ranks as they can add more value higher up the
ladder. This 9-box grid is an easy way to assess the current and future value
of employees and is a helpful tool for succession management (i.e. you
want to promote your high potentials).
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Product defects - It is tricky to measure (production) quality objectively. An approach often seen by more traditional
manufacturing industries would be to calculate the number of product defects. Defect, or incorrectly produced products, are an
indication of low work quality and should be kept as low as possible. If increased standardization of production processes has
rendered this metric is almost useless, the approach to measuring employee performance can be applied to other areas.
Number of errors - The number of input errors could act as an alternative to the previously mentioned product defects. The
same goes for the number of corrections in written work or the number of bugs in software code. Especially in computer
programming, a single error can stop an entire program from working. This can have a major impact on the business, especially
for companies who release weekly or monthly new software versions.
The conciseness of a piece of code is another important quality factor. If ten lines of code can produce the same computational
result as 100 lines of code, the former is an indication of better quality.

Net promoter score - Net promoter score (NPS) can act as an indicator of employee performance. NPS is a number (usually
between 1 and 10) which represents the willingness of a client to recommend a company’s service to other potential clients.
Clients who score a 9 or 10 are likely to be highly satisfied and will act as promoters for the company. This score is used
regularly to assess sales employees, e.g. in car sales, where it is included in the final form customers need to sign.
The advantage of NPS is its simplicity. The disadvantage is that it is not uncommon for employees to instruct customers to give
a certain rating (i.e. 9 or 10).
360-degree feedback - 360-degree feedback is another tool to measure employee performance. To assess an employee’s
score, his peers, subordinates, customers, and manager are asked to provide feedback on specific topics. This feedback often
represents an accurate and multi-perspective view of an employee’s performance, skill level and points of improvement.
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Work Quantity Employee Performance Metrics
As quantity is often easier to measure than quality, there are multiple ways to measure this employee performance metric.
Number of sales - The number of sales is a particularly easy way to pinpoint a sales employee’s output. This holds especially
true with ‘simple sales’. This means that, for example, organized street vendors only steer on the number of sales, because,
when given sufficient time, the people with the best skills will sell the most in an hour on the same location. This is an
example of an outcome metric.
However, when sales are more complex (i.e. a longer sales cycle), the number of sales becomes less reliable because lower
frequency and randomness/luck will play a larger role in the successful outcome of the sale. Complex sales cycles, like
software solution sales (which can have a sales cycle of up to 1.5 years) are best measured by other metrics. These are so-
called process metrics, as they represent the actions one needs to do that increase the chance of a successful sale. For
example, the person who calls the most customers has, in the end, the best shot at making a successful sale. In this case, the
number of phone calls would be a more reliable metric of long-term sales success.

Employee performance metrics like this include:
► the number of (potential) client contacts one has
► the number of phone calls one makes
► the number of company visits
► the number of active leads
Number of units produced - Different industries have different ways to express their quantitative output. In traditional
manufacturing, the number of units produced was often a reliable quantitative metric. In modern (service) organisations, similar
metrics are still being used. For example, Bloomberg tracks the number of keys that their 2,400 journalists hit per minute when
they are typing on their keyboard.
Another way to measure quantitative production is to track the number of lines of code that programmers produce. There are
some obvious disadvantages to using a purely quantitative metric of production. Like in the previous example, only when one’s
output is very simple and straightforward should such an output metric be used. An example would be the number of Rubik’s Cubes
one can solve in an hour, as skilled Rubik’s Cubes solvers can solve over a hundred per hour.
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Handling time, first-call resolution, contact quality. - Call centers are one of the most employee performance metrics driven
places. Metrics like average handling time, which is the average time the customer is on the phone including when they are on
hold, first-call resolution, which is the number of callers whose problem is resolved the first time they called, contact quality,
which is the rating a customer can give on the call and service level, which is a measure of how many calls are answered in
what time (e.g. 90% of calls are answered in 25 seconds).
Work Efficiency Employee Performance Metrics
The difficulty of both qualitative and quantitative employee performance metrics is that they do not say much on their own.
When a programmer writes 40 lines of code an hour, he produces a lot of code, but that says nothing about the code’s quality.
There should always be a balance between quantity and quality. This balance is measured in ‘work efficiency’, as this metric
considers the resources (e.g. time and money: quantity) needed to produce a certain output (quality). It is hard to achieve this
balance, which is one of the reasons a lot of companies struggle with rating employees and with the performance review
practice itself. Companies like Deloitte, GE, and Adobe scrapped performance reviews mainly because of this reason. However,
solid performance data will help organisations to predict future performance.

Organisation Level Employee Performance Metrics
Organisations can also use employee performance
metrics to assess their own competitiveness.
Revenue per employee - Revenue per FTE = Total
revenue / FTE
This function calculates the revenue per FTE (Full-time

equivalent). This metric gives a ball-park estimate of
how much an individual employee brings in. Low
revenue and many employees give a lower rating than
the combination of high revenue and fewer employees.
This metric can also be used to benchmark companies. A
famous example is the following infographic by Expert
Market:
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The linear organisations have a linear function of employees and profit, while exponential organisations have an
exponential function of employees and profit. That’s one of the reasons why these organisations grow much faster.
Profit per FTE

Profit per FTE = Total profit / FTE
Profit per FTE is a similar metric to the previous one (17) but focuses on profit instead of revenue. A company’s profit is its
total revenue minus expenses. A high profit per employee is a solid metric of an organisation’s financial healthiness.
Human Capital ROI - The human capital ROI is a metric that assesses the value of human capital (i.e. knowledge, habits, and
social and personal attributes). By calculating the company’s revenue (minus operating expenses and compensation and
benefit cost) and dividing this number by the total compensation and benefit cost that the company pays its employees,
you can calculate a human capital ROI.

Absenteeism Rate - Absenteeism and performance are two highly correlated constructs. Highly motivated and engaged
employees take in general fewer sick days (up to 37% less). Additionally, absent employees are less productive and high absence
rates throughout an organisation is a key indicator of lower organisational performance.
Overtime per Employee
Overtime per FTE = Total hours of overtime / FTE
The average overtime per FTE is a final employee performance metrics. Employees who are willing to put in the extra effort are
generally more motivated and produce more (in terms of work quantity).
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Individual commitment for team performance

Individual understand how their work fits into corporate objectives and they agree that their team’s goals are achievable and aligned
with corporate mission and values. Team ground rules are set with consideration for both company and individual values. When
conflict arises, the team uses alignment with purpose, values, and goals as important criteria for acceptable solutions.
To enhance team commitment leaders might consider inviting each work team to develop team mission, vision, and values statements
that are in alignment with those of the corporation but reflect the individuality of each team. These statements should be visible and
“walked” every day. Once a shared purpose is agreed upon, each team can develop goals and measures, focus on continuous
improvement, and celebrate team success at important milestones. The time spent up front getting all team members on the same
track will greatly reduce the number of derailments or emergency rerouting later.
Leaders can facilitate cooperation by highlighting the impact of individual members on team productivity and clarifying valued team
member behaviors. The F.A.C.T.S. model of effective team member behaviors has 5 key elements such as :
• Follow-through
• Accuracy
• Timeliness
• Creativity
• Spirit
This model will serve as a guide for helping teams identify behaviors that support synergy within the work team.
Importance of delegation to achieve strategic

objectives
The delegation is the transfer of decision making authority from a manger to a subordinate or a team at a lower level of the
organisation. The delegation gives the manager more time to spend on the most important tasks and decision making.
Another reason to delegate is that it teaches subordinates how to make their own decisions and to deal with consequences of those
decisions. The task of delegation will lead to higher quality decisions that result in greater customer satisfaction because lower level
employees are closer to actual customers and therefore are more aware of their needs.
Steps in effective delegation:
1. Determine what you want done. Writing it down can be helpful.
2. Match the desired task with the most appropriate employee.
3. Be sure you communicate clearly when assigning the task. Follow up to make sure the task is fully understood. Set clear
deadlines.
4. Keep communication channels open. Make it clear that you are available for consultation and discussion
5. Allow employees to do the task the way they feel comfortable doing it
6. Trust employees’ capabilities. Do not hold such high expectations that they can only fail
7. Check on the progress of the assignment, but do not rush to rescue the employee at the first sign of failure
8. Hold the employee responsible for the work and any difficulties that may emerge, but do so as a teacher, not a police officer.
9. Recognise what the employee has done, and show appropriate appreciation
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Mentoring and Coaching to achieve strategic

objectives
What is Mentoring?
• A mentoring relationship is usually where one wiser and more experienced person assists another person to grow and learn.
• It is not a new management technique. Since humans have lived in social groups we have learnt our norms, values and behaviours
by the example and coaching of others.
• The business world has adopted the tradition of an older and wiser person fostering the growth and development of the younger
generation.
• This has sometimes resulted in perpetuation of old ways at the expense of diversity and development.
Modern world mentoring

• New adaptations of mentoring allowing individuals to interact as colleagues in a helping relationship, on a more equal basis, can
cultivate growth and learning to mutual benefit.
• Experience, skills and a genuine desire to help are more valuable assets in a mentoring relationship than age or position.
• Open and assertive communication and the trust of both parties are essential for mentoring to work.

objectives
Benefits of Mentoring
Both partners in the mentoring relationship benefit.

• Learning must be a lifelong process and one of the most effective ways to learn is to assist in the development of others.
• The best teachers learn much from their students, counselors constantly learn from clients and partners in any successful
relationship grow and develop along the way.
What is Coaching
• Coaching is suitable for the successful achievement of many different objectives in working life.
• What is essential is the importance of the objectives for both the person being coached and the organisation.
• Motivation from the person to be coached is required for the coaching process to be successful, and without organizational
objectives coaching will not result in real success at work.
• The main focus of coaching is on the development of managerial work and leadership competence, and on the coaching of key
persons. Persons on different organisational levels have different objectives, but some challenges are shared by all.
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objectives
Coaching can take many forms, life coaching, business coaching, performance coaching etc. As with mentoring and counselling it is
about helping the individual to gain self awareness, but it is goal focused and action is required so that the individual can move
forward. The goal setting process has two components:
• Skill development
• Psychological development
The outcome sought is that the “coachee” will achieve the goals set, and will thereafter feel able and confident to set personal
goals for themselves.
Developing a person’s skills and knowledge is good since their job performance improves, hopefully leading to the achievement of
organisational objectives. It targets high performance and improvement at work, although it may also have an impact on an
individual’s private life.
Mentoring happens in all organisations whether it is fostered as a development strategy; allowed or encouraged as an informal
process; or is an activity that occurs below the consciousness of individuals. People are learning from others, adopting modeled
behaviours and attitudes and absorbing the culture and perceived values of the organisation through their personal interactions
with co-workers.

objectives
What is Delegation?
• Delegation requires the leader to turn the right tasks over to the correct people, at the right time, with the necessary
resources, skills, and authority to complete the job effectively.
• Delegation also involves setting performance measures, monitoring progress, and providing feedback to team
members.
• It is no wonder why so many people are hesitant to delegate tasks because it requires a great deal of effort upfront
and throughout a project's lifecycle.
Why is Delegation Important?
• Perhaps one of the most important tasks any team leader will need to tackle is assigning responsibilities to individual
team members.
• These responsibilities not only need to work towards the larger group goal, but they also need to align with the
individual’s strengths.
• Even better, the delegated tasks will offer the team member an opportunity for learning and growth.
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objectives
How and when to delegate
1. Outline each task that needs to be completed and provide a clear description of that task including the
requirements, purpose of work, scope of authority, deadline and potential challenges.
2. Assess which tasks should be completed by the leader and which tasks should be delegated. For example: tasks that
do not require a leader's expertise; tasks that would take more time than the leader has to give; tasks that would
involve skills the leader has mastered but that another team member could benefit from learning; tasks that a specific
team member is more specialized in; or tasks that a team member has a particular interest in.
3. Assign tasks to individual team members
Team performance plan to meet strategic

objectives
Team performance working involves the development of a number of interrelated processes that together make an impact on
the performance of the firm through its people in such areas as productivity, quality, and levels of customer service, growth,
profits, and ultimately the delivery of increased shareholder value. This is achieved by enhancing the skills and engaging the
enthusiasm of employees. The starting point is leadership, vision and benchmarking to create a sense of momentum and
direction.
Team Performance Management is focused directly on the achievement of the team’s key business objectives. It bridges the gap
between the team building ‘enablers’ and business performance results. It removes the reliance on ‘faith’ – the need to believe
that team building works before investing in it – and establishes a direct connection between collective behaviors and team
performance.
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objectives
A team leader will be required to ensure that Performance Plans are created for the team and its members. He or she should also
ensure that you are involved in developing your own Performance Plan in conjunction with the Manager. The Performance Plan
ensures that you are clear on the levels of leadership and management performance that are expected of you and helps you to
develop new skills as required.
Performance planning should occur as:
• An Initial Performance Plan
• A Performance Improvement Plan
Initial performance plan - An Initial Performance Plan is a detailed plan for either an individual or a team and is used to:
• Identify the desired performance levels
• Identify how these performance levels will be achieved
• Provide guidance and direction
• Measure progress towards the desired performance levels

objectives
Although there are no strict rules as to the format of a Performance Plan they normally contain the following information:
• Specific goals for development
• Performance measures
• Actions required to achieve goals
• An indication of how long goals will take to achieve
Individual and team Performance Plans should align with the organisation’s overall objectives. This can be achieved by aligning
the:
• Performance Plans with the Team Operational Plan
• Team Operational Plan with the Team Purpose
• Team Purpose with the organisation’s Strategic Plan
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objectives
Performance Plans might include the following types of goals:
• Key Performance Indicators (KPIs)
• Goals to improve competency levels
• Team building goals
Whenever the performance levels of an individual or team are found to be below the levels indicated in the Performance Plan
then a planning process to improve performance should be undertaken.
Performance improvement plan - When a performance deficiency is noted, it should be dealt with as quickly as possible. The
following steps outline a process for handling poor performance.
• Collate the information regarding poor performance - This information may be in the form of feedback, customer complaints,
error rates, statistics and/or informal observation.
• Meet with the relevant team member(s) and discuss the issues - During this meeting you will need to discuss the deficiency
or inappropriate behaviour and identify the causes.
Inadequate performance does not always indicate a problem on the part of the individual. Key Performance Indicators (KPIs)
may be unrealistic or the resources required to achieve the performance standard may not be available.

objectives
Components of a Team Performance plan
• Specific goals for team development (competency goals, KPIs, team building goals)
• Performance measures
• Actions required to achieve goals
• An indication of how long goals will take to achieve
Identifying poor performance

Performance = Ability x Motivation
Where:
• Ability is the person’s aptitude, as well as the training and resources supplied by the organisation
• Motivation is the product of desire and commitment
Someone with 100% motivation and 75% ability can often achieve above-average performance. But a worker with only 25%
ability won’t be able to achieve the type of performance you expect, regardless of his or her level of motivation.
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objectives
Creating a Performance Improvement Plan
The following steps should be followed when creating a performance improvement plan:
1. Evaluate the performance issue
2. Discuss and agree upon a plan for improving performance with the employee
3. Recognize that the actions needed to close ability gaps need high motivation on the employee’s part to be
successful.
A Performance Improvement Plan should clearly convey:

• The area of performance that requires improvement or development
• The action(s) to be taken
• Any parties required to assist in the achievement of the set actions
• The timeframe for achieving each action
Lesson Summary
In this lesson you have covered the key objective areas of understanding performance targets and achievement of strategic
objectives, analysing and setting performance targets within teams, discussing the motivation models and concepts that are
useful to create employee motivation and commitment towards work.
Determining performance targets for teams to measure current performance, understanding the individual commitment for team
performance and discussing the importance of delegation to achieve strategic objectives are other key areas that you have looked
at closely under the lesson.
Towards the latter part of the lesson, the evaluation, mentoring and coaching to achieve strategic objectives and the discussion of
a team performance plan to meet strategic objectives were covered.
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Monitoring Activities
Set to Improve Team
Performance
Introduction
In this lesson we will be closely looking at identifying tools and methodologies to assess the process for monitoring team
performance and initiate changes where necessary, evaluate team performance against agreed objectives of the plan and
address problematic performances. Finally the critical evaluation of the impact of the team performance in contributing to
meeting strategy will be looked at.
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Learning Outcomes
3. Be able to monitor actions and activities defined to improve team performance
3.1 Identify tools and methodologies to assess the process for monitoring team performance and initiate changes where
necessary
3.2 Evaluate team performance against agreed objectives of the plan and address problematic performances
3.3 Critically evaluate the impact of the team performance in contributing to meeting strategy.
Lesson Objectives
1. Identify tools and methods of assessing team performance monitoring
2. Identifying and suggesting constructive changes to team performance
3. Evaluate team performance against the plan
4. Suggest a range of recommendations to address problematic performances
5. Impact of team performance in meeting organisational strategy
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Identify tools and methods of assessing team performance

monitoring
Team performance evaluation serves several purposes for teams. Uses of team performance in evaluation for training,
assessment, and program evaluation are important.
First, it provides a mechanism to guide learning through systematic and developmental feedback. To meaningfully reflect and
integrate learning experiences, learners must be provided with explicit, constructive feedback detailing their current
performance levels and strategies for improvement. Team members need to understand their performance level relative to
expectations or standards before they can address how to improve.
Secondly, team performance evaluation enables summative assessment; that is, it allows trainers and team members
themselves to obtain a snapshot of a team’s development at a particular time. Such assessments may help determine whether
trainees possess the requisite team competencies for effective on the job performance upon the completion of training.
Summative assessment may also be used to match current trainee skill mastery level to training objectives in order to create a
more targeted and efficient training program.
For example, team members may complete an initial simulation scenario to determine those team competencies most in need
of refinement. In this light, team performance evaluation provides a mechanism for “individualizing” training to particular
teams or constellations of potential team members, resulting in a more focused use of training time.

monitoring
Successful teams measure accomplishments, identify issues, and correct internal problems. Performance assessments ensure
equitable contributions and identify areas for individual/ collective improvements
Strategies for assessing performance:
►Generate clear and understandable team goals
►Identify examples of quality work and successful standards
►Use team discussion and reflection to compare team performance to goals
►Identify strategies needed to close performance gaps
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monitoring
The benefits of assessing teams are:
► Improves goal attainment
► Strengthens commitment to common goals and priorities
► Helps team members scrutinize objectives to identify misunderstandings or thinking gaps
► Encourages leveraging of team members’ differences to accomplish goals
► Enriches relationships
► Improves team’s cohesiveness and morale
► Enhances communication among team members
► Increases role clarity and utilization of team member’s strengths
► Reduce performance barriers and conflicts
► Enhances team performance
► Streamlines team processes
► Increases team members’ confidence
► Improves quality of learning output

monitoring
Performance management methods
• Graphic rating scales • MBO method
• Checklist method • Behaviorally Anchored Rating Scales
• Balance scorecard • Behavioral Observation Scales (BOS)
• Personal development plans • 360 degrees evaluation
• Self evaluation and discussion method
• Stakeholder approach
• Paired comparison method
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Identifying and suggesting constructive changes to team

performance
How do we initiate change - Often it is easier to carry out a job if there is a specific plan to follow. When major changes are to be installed, careful
planning and preparation are necessary. Strengthening the forces promoting the change and weakening resistance to it are the main tasks.
Create a climate for change - How people react to proposed changes is greatly influenced by the kind of climate for change that the
manager/supervisor has created in the department.
How is the right kind of climate created? - Supervisors and managers who have enthusiasm for progress and change build a healthy climate. Creating
the right climate is more than just passing on changes. It involves encouraging employees to seek ways of improving their jobs.
Seeking suggestions and ideas from employees - This requires the manager/supervisor to listen and seriously consider suggestions. It is easy to see
that there is a great deal of ego involvement in coming forth with an idea for improvement. Change can become an exciting and dynamic way of life.
Get ready to sell - Much of the difficulty in getting co-operation stems from the employees lack of understanding of how the change will affect them.
With a little effort, managers/supervisors can find most of the answers to employees’ questions before they are even asked. Answers to these
questions would be useful.
What is the reason for the change?
Whom will it benefit and how?
Will it inconvenience anyone, if so, for how long?
Armed with the answers to these questions a manager/supervisor can head off many objections and can develop a plan to present the change.

performance
As many companies enter 2020 in full-blown transformation mode, the value of leadership lies within the outcomes of reinventing the ways
teams think, act and innovate. Leaders must become change agents and must teach their teams to do the same to assure circumstances don’t
force their hand and to create and sustain the required momentum to win.
Leaders must maximize the performance of their teams, but doing so without disruption during times of uncertainty can be a challenge. Five
things that the effective leaders teach their teams to prepare for and manage change are:
1. Clarity of the Issues - Teams learn how to embrace change when leaders take the time to clarify the issues at hand. This requires leaders
to make sure their teams understand the changes they are faced with – and what they potentially mean to the organisation, its supply
chain, and its clients. Clarity is the foundation for understanding the “what-if” scenarios around which the team can plan and take action.
Clarity of the issues allows the team to objectively break down the risk factors, anticipate potential outcomes with a clear line of sight,
and identify a path towards the real issues they should be really solving for.
Clarity eliminates the guesswork and makes change management less about dealing with potential adversity and more about seeing and
seizing the opportunities that are right in front of you. When teams don’t have clarity of the issues, they complicate matters by making
false assumptions, and quickly lose sight of the opportunities at hand. The companies such as Kodak, Blackberry and Blockbuster lost
clarity when they didn’t see through the right lens of opportunity.
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performance
2. Embrace Diversity of Thought - True collaboration means embracing diversity of thought, and the different ways people think, act
and innovate. Collaboration is just an overused word when the intention behind the action is not fully leveraged. Collaboration
done rightly means not just working closely with and learning from each other – but cultivating a treasure hunt of ideas. Great
teams know how to collaborate not only amongst themselves, but with other teams as well. Collaboration is about creating a
serendipitous environment where the interconnectivity of people creates momentum that drives everyone closer towards the end
game. Collaboration that embraces diversity of thought amplifies the discovery of knowledge – especially when you can align your
proficiency in opportunity management with those who may have complementary or compatible skill-sets. For example, are you a
seer, sower, grower and/or sharer of opportunity? When these four skills are brought together as one, they produce an optimal
collaborative environment that breeds the most successful teams and a workplace culture that continuously propels innovation and
initiative:
► Seeing opportunities with broadened observation
► Sowing opportunities with extensive innovation
► Growing the seeds of opportunity of greatest potential
► Sharing the opportunities you create and sustain with others


performance
3. Strengthen Your Ecosystem - An ecosystem can only be designed and subsequently strengthened when teams have clarity about
the change they are solving for and have fully mastered and leveraged the ability to collaborate by embracing diversity of thought.
When an ecosystem is built, your team can begin to integrate and multiply its know-how and insights with other teams whose
functional competencies can further stretch your team’s thinking and providing inputs that can strengthen its outputs. Ecosystem
design can be challenging when teams are not willing to be open-minded enough to accept that there are better ways of doing
things. They must be willing to accept and embrace a transformative environment that can be cultivated from within the
ecosystem.
Ecosystems are created to help transform organisations, change the status quo and lead new paradigms. Leading the development
of organisational ecosystems requires a deep understanding of what each team brings to the table – the value they can contribute,
their willingness to learn, the desire to reach a higher level of performance through the sharing of best practices, etc. – all for the
betterment of a healthier whole.
Though they may experience some constructive disruption along the way, with proper strategic focus, teams that are stitched
together into an ecosystem in the right combinations will be geared for success and are aligned to have the most effective change
management results. Opportunities are everywhere, but few have the eyes to see them. Within the right ecosystem, one can see
what others don’t, do what others won’t, and keep pushing when prudence says quit.
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performance
4. Create Competitive Advantage - With an environment that embraces clarity around the issues, collaboration to produce new ideas, strategic focus to
build solid ecosystems that challenge the old ways of doing things – teams are now ready to create competitive advantage. Creating competitive advantage
means more than teams making the ecosystem that they are assigned to stronger – it means creating distinction for themselves throughout the
organisation at-large. Leaders must view their department and/or functional areas as “mini-organisations” within the organisation – especially after
experiencing the role the team played in strengthening the ecosystem.
Every department (“mini-organisation”) leader must want for their team to set-forth the example for other departments to follow. For example, there is a
department leader that everyone wants to work for. This leader’s goal is to maximize the performance potential of each team and the employees on the
teams. By setting the right tone, this leader allows employees to discover their full potential – and their performance heavily influences their salary
increases – not once, but twice a year. But people throughout the larger organisation want to work for this leader – not because of the money – but
because this leader has made the department much more entrepreneurial and a lot more fun. Job descriptions have been thrown out the door in support
of a boundary-less environment which incentivizes both purpose and performance.
Creating competitive advantage is about course correction and being adaptive throughout the journey; finding what your team is best at doing and then
keep improving upon it. This requires teams to think critically about what they must keep doing, start doing and stop doing – taking a more mindful and
purposeful approach to reach their full potential. These are simple questions that we don’t ask ourselves often enough and that we must hold ourselves
accountable to answer.

performance
5. Encourage Critical and Strategic Thinking - We all recognize that we must create a strategy for change. Most teams don’t take
enough time to define their strategy, since this is the basis for accountability. Unfortunately, many teams fall into the trap of
wanting to be accountable more for what others want them to be, rather than what they seek to be themselves.
Sustaining the outcomes associated with steps 1 – 4 requires a team to think courageously and their leaders to encourage it at all
times. Thinking courageously creates and sustains the momentum during change management efforts. It demands that each
member of the team challenge each other to think more critically and see through a lens of continuous improvement by:
► Seeing opportunity in everything

► Anticipating the unexpected
► Unleashing their passionate pursuit of excellence
► Living with an entrepreneurial spirit
► Working with a generous purpose
► Leading to leave a legacy together
Success comes most to those teams that are surrounded by other teams that want their success to continue. Thinking
courageously as a team and inspiring the other teams within your ecosystem to do the same will bring sustainable success and
significance.
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Evaluate team performance against the plan

Scope and Objectives of Change
The organisations implement the action plans and take corrective action when required to ensure the attainment of objectives.
Periodically review performance against established goals and objectives to appraise overall performance, reinforce behavior, and
strengthen motivation.
To begin the cycle again supervisors need to ensure that appraisal processes are congruent with objectives and goals. An *MBO
rating form needs to provide space to list staff member objectives in order of importance, as well as space for the evaluator to
describe staff member performance using a mutually agreed upon scale.
Categories of performance can include:
►Distinguished performance
►Competent performance
►Provisional performance
►Inadequate performance
Accountabilities and Measures approaches involve the supervisor and staff member agreeing on accountability and performance
factors and including them in the job description. Performance is then forecast for each factor to enable quantifiable measures for
each factor. An ‘Accountabilities and Measures’ form can be created, with performance factor categories.

Evaluate the impact of the team performance in contributing to meeting strategic objectives
Clear Expectations: Expectations for the team’s performance and expected outcomes are clearly known and understand why
the team was created. The organisation demonstrating constancy of purpose in supporting the team with resources of
people, time and money. It works if the team receive sufficient emphasis as a priority in terms of the time, discussion,
attention and interest directed its way by executive leaders.
Commitment: Team members feel the team mission is important. Members are committed to accomplishing the team
mission and expected the outcomes. The team members perceive their service as valuable to the organisation and to their
own careers. The team members anticipate recognition for their contributions and the team members expect their skills to
grow and develop on the team. The team members are excited and challenged by the team opportunity.
Competence: The team feels that its members have the knowledge, skill and capability to address the issues for which the
team was formed. The team feel it has the resources, strategies and support needed to accomplish its mission.
Charter: The team taken its assigned area of responsibility and designed its own mission, vision and strategies to accomplish
the mission. The team defined and communicated its goals; its anticipated outcomes and contributions; its timelines; and
how it will measure both the outcomes of its work and the process which the team followed to accomplish their task.
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Control: Team has enough freedom and empowerment to feel the ownership necessary to accomplish its charter and at the same time, the team
members clearly understand their boundaries. The limitations (i.e. monetary and time resources) defined at the beginning of the project before the team
experiences barriers and rework.
The team’s reporting relationship and accountability should be understood by all members of the organisation. There is a defined review process so both
the team and the organisation are consistently aligned in direction and purpose. The team members hold each other accountable for project timelines,
commitments and results. The organisation should have a plan to increase opportunities for self-management among organisation members.
Communication: The team members should be clear about the priority of their tasks and an established method for the teams to give feedback and
receive honest performance feedback. The organisation should provide important business information regularly and the teams understand the complete
context for their existence. The team members should communicate clearly and honestly with each other and the team members should bring diverse
opinions to the table and all the necessary conflicts raised and addressed.
Creative Innovation: It reward people who take reasonable risks to make improvements or does it reward the people who fit in and maintain the status
quo. It provides the training, education, access to books and films, and field trips necessary to stimulate new thinking. The team members feel
responsible and accountable for team achievements and are rewards and recognition supplied when teams are successful. A reasonable risk should be
respected and encouraged in the organisation. Team members fear reprisal. The team members spend their time finger pointing rather than resolving
problems and the organisation should design reward systems that recognise both team and individual performance. The organisation should plan to share
gains and increased profitability with team and individual contributors.

Coordination: The teams should be coordinated by a central leadership team that assists the groups to obtain what they need for success. The
priorities and resource allocation should be planned across departments. The teams understand the concept of the internal customer—the next
process, anyone to whom they provide a product or a service. The cross-functional and multi-department teams are common and working together
effectively. The organisation could develop a customer-focused and process-focused orientation and move away from traditional departmental
thinking.
Cultural Change: The organisation should recognise that the team-based, collaborative, empowering, enabling organisational culture of the future is
different than the traditional, hierarchical organisation. The organisation may be currently planning to or in the process of changing how it rewards,
recognizes, appraises, hires, develops, plans with, motivates and manages the people it employs.
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Organisational Change
In carrying out their responsibilities, managers deal with change on a day-to-day basis, which raises an interesting question: when
does management become ‘change management’? Is this purely an academic question (it will be for many managers), or is it helpful
from a management and organisational perspective to understand what, if anything, differentiates the two?
Change may be defined simplistically as making things different, but needs to make explicit mention of actual and perceived changes.
Fincham and Rhodes (2005, p525) define change management as ‘the leadership and direction of the process of organisational
transformation – especially with regard to human aspects and overcoming resistance to change’.
The Society for Human Resource Management defines change management as: The systematic approach and application of
knowledge, tools and resources to deal with change. Change management means defining and adopting corporate strategies,
structures, procedures and technologies to deal with changes in external conditions and the business environment. Therefore,
managing change or ‘change management’ is a form of management control through the application of systematic management
interventions that involve people to achieve a desired future state with defined performance outcomes in line with the organisational
strategy.
From this definition, it is clear that there is a strong and inextricable link between organisational change, performance and strategy.
Carnall (2003) suggests that there are three levels of strategic change. Firstly, organisation-specific changes, such as a new
information system. Secondly, generic organisation-wide change programmes, such as business process engineering (BPR). Thirdly,
generic multi-organisational change programmes, for example, mergers and acquisitions.

Change momentum: Magnitude and Speed
The momentum of change, that is the combination of speed and magnitude of change, is a useful concept to analyse and
characterise different types of change. As we have seen, change momentum is not always easy to predict, but if it can be anticipated
(which is often the case) interventions to manage change may be considered from the options available. In other words, if managers
are able to characterise the type of change an organisation will experience, this can be helpful in considering appropriate
interventions to manage change in an effective way.
‘Smooth’ and ‘bumpy’ change are both characterised by relatively small

(and less complex) change, but differ in speed of implementation,
with ‘smooth’ change happening over a longer period of time than the latter.
Smooth change happens in small steps and is often described as being
‘incremental’, being barely noticeable in the day-to-day business of an
organisation. Relatively minor changes to policies and procedures would
be examples of this type of change. It is typically driven by internal factors.
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‘Bumpy’ change is more noticeable, as the speed of change is fast and therefore requires a quicker response time by managers and employees in dealing
with it. It is typically driven by external factors which require an organisation to move quickly to respond. Examples of this would include organisations
responding to crisis, which require significant investment and/or changes in practice, for example, health, safety and the environment, regulatory reform
or legal proceedings. Companies involved in fast-moving markets often have to manage this type of change as consumer opinion and tastes quickly
change.
Grundy (1993) describes three types of change related to speed of change. The first is ‘smooth incremental change’ as change that evolves slowly in a
systematic and predictable way. He also describes ‘bumpy incremental change’ as periods of relative calm, that is, little or no change that is punctuated by
accelerated change. The third type of change described by Grundy is ‘discontinuous’ change, which he defines as ‘change which is marked by rapid shifts
in strategy, structure or culture, or in all three’ (Grundy 1993, p26). This equates closely to ‘Big Bang’ change in terms of change momentum.
Grundy’s ‘discontinuous change’ and ‘Big Bang’ change describes many of the characteristics of what has become known as ‘transformational’ change – a
type of change that involves the values, attitudes and behaviours of people that contribute towards shaping the culture of an organisation. This form of
complex change focuses on the motivation and commitment of employees and their contribution towards performance outcomes. Leadership which
emphasises these employee attributes in managing change is described as ‘transformational leadership’ (Bass 1985).
A range of differing variables have been used to examine the different types of change. However, there may be other more relevant comparators than the
ones presented. It is necessary to examine the context of change as well in order to assess whether the most appropriate comparators have been used.

It is important to differentiate between external and internal factors when considering change, with the key
difference being that organisations and managers may have little, if any, control over the external factors.
However, internal factors are typically management decisions which are designed to exert some form of
control aimed at achieving certain performance outcomes.
Lewin’s three-phase change model
One of the earliest known models applied to managing change is a three-phase model by Kurt Lewin (1951)
which focuses on the psychological aspects of behaviour modification:
►Unfreezing – lowering resistance to change by recognising and accepting the need for change.
►Movement – developing new attitudes to encourage behaviours necessary for change to occur.
►Refreezing – stabilising, supporting and reinforcing the new change conditions.
This model presents a systematic approach to change management, describing a sequence of well-defined
and interrelated processes. The premise for this model is that by identifying and understanding the key
stages involved in the change process, the likelihood of effective change management is increased – by
managers making better informed decisions about which interventions to use in managing change.
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Force Field Analysis
Lewin (1947) was also responsible for developing the Force-field analysis, a diagnostic technique which considered the forces
or ‘drivers’ for and against change. At any time, there will be a number of forces in play that resist change and support the
status quo, and forces that encourage change. These can be internal or external forces, or, as is usually the case, a
combination of both.
When the sum of the forces ‘for’ and ‘against’ change are equal, they cancel each other out, resulting in equilibrium, that is,
a steady state. However, when the forces driving change are greater than the forces of resistance (either by the driving
forces increasing or the restraining forces decreasing)
then change will occur, and the organisation will
inevitably change and move to a new state.

Kotter’s eight-stage change model
John Kotter (1996) described an eight-stage change process for managing change in large organisations following his research
into US organisations who had failed to manage change effectively:
1. Establish a sense of urgency – the need to change.
2. Create a guiding coalition – with authority and credibility.
3. Develop a vision and strategy – a clear aim and way forward.
4. Communicate the change vision – promote understanding and commitment.
5. Empower broad-based action – enable people to act and overcome barriers.
6. Generate short-term wins – to motivate and ensure further support.
7. Consolidate gains and produce more change – maintain change momentum.
8. Anchor new approaches in the culture – new values, attitudes and behaviours.
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This model appears to be a linear and sequential set of processes, and has been criticised for these reasons. However, in the
final two steps, Kotter attempts to address the problem of the ‘refreezing’ stage in Lewin’s model by encouraging
organisations and their employees to develop attitudes and values which help to promote the behaviours required to
encourage and support further change. Developing an organisational culture that is proactive to change helps to create a
feedback mechanism which transforms a linear change model into a continuous process.
Many change management programmes applied in organisations are based on systematic change management models
comprising sequential processes similar to the examples outlined above. However, a common modification to these models
in practice is to introduce an additional process at the end, which provides a feedback step from the final to the initiating
stage. With this modification, these models describe a cyclical and continuous change management system.
A significant feature of Kotter’s model is the role of leadership, particularly in developing and communicating the vision for
change, which is critical to effective transformational leadership, and management of change in large-scale organisations
(Bass 1985).

The Performance Appraisal Context
The more recent literature (for example, Aguinis 2009), calls for a wide view of Performance Management, including performance
planning, assessment and review, identifying that it is more than simply appraisal. But some form of performance appraisal is nearly
always incorporated with the aim of improving performance, motivating employees and/or allocating rewards.
An honest and accurate assessment of current performance can be a strong driver for further learning, development and performance
improvement. As discussed earlier, feedback and the setting of improvement targets can itself be a strong motivator (Locke and
Latham 1990), and for there to be equitable distribution of rewards some fair method of comparing contributions between individuals
is required.
The whole Performance Management system should therefore ensure that employees perceive equity of treatment and fairness, none
more so than in the appraisal process and distribution of rewards. This supports the argument that PM and reward policies need to be
transparent. The role of perception means that extra attention must be paid to how the process is communicated so as to ensure that
the message is clear and universally understood.
However, there is a wealth of evidence that points to negative aspects of performance appraisal and at least three recent books that
have called for an end to them (Bouskila-Yam and Kluger 2011). Very careful consideration is therefore needed when choosing a
performance appraisal process and planning its implementation.
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Different types of appraisal include: top-down, self-appraisal, peer appraisal, bottom-up and multi-rater, such as 360-degree and
720-degree feedback. The most common is a top-down approach with the inclusion of self-appraisal, usually as a preparatory
activity for the employee. There are many benefits of a multi-rater approach, which in theory will produce a more rounded
outcome, but the time and expense involved often rules this out as an option.
Appraisal methods can be divided into two main approaches:
1. Those oriented towards results (outputs)
2. Those oriented towards competencies (inputs)
Results-oriented appraisal is based on the setting of quantifiable, achievable and time-bounded objectives, most often agreed
between manager and subordinate, and geared towards achieving organisational objectives. Competency-oriented appraisal is
based on the demonstration of certain key skills and behaviours thought to be associated with high performance. These skills and
behaviours, agreed by manager and employee, may also include the use of multi-rater instruments. The trend in recent years is
towards combining both results and competency-based approaches in an attempt to deliver the dual benefits of achieving
immediate performance targets and supporting longer-term development of key skills and capabilities.

The Performance Appraisal Cycle
The performance appraisal is essentially a formal mechanism of reviewing individual employee performance. Fletcher (2001:
pg473) defines it as the ‘activities through which organisations seek to assess employees and develop their competence,
enhance performance and distribute rewards’. It generally involves line managers appraising their subordinate’s performance,
often on an annual basis. In terms of the content of appraisals, there is no definite ‘one best’ prescribed approach. For
example, job performance will nearly always be reviewed, whilst personality and behaviour may or may not. Performance
management is often conflated with performance appraisal and vice versa.
Performance appraisals are concerned with individual performance, whereas performance management looks at individual,
team, and organisational performance. The appraisal may be just another HR technique used by an organisation, while
performance management attempts to link the appraisal process to the wider values and objectives of the firm (Foot and
Hook, 2008). However, appraisals constitute an integral part of the performance management process.
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This process is continuous and you can join it at any stage, which you may need to do if you take on a new role or join
another organisation. You may join halfway through an appraisal cycle or you may take on a team that has never had a formal
appraisal before.
If the latter is the case then you will need to define

and agree SMART goals before you can begin. You may
need to adapt the stages somewhat to suit the culture
and ethos of your organisation.

Stage 1 - Conduct appraisal meeting
In selecting this activity as the first stage of the appraisal cycle it is assumed that each individual whose performance you are
appraising has committed to the goals specified on the appraisal form. It also assumes that you have all the performance data
necessary to make an objective decision on how well these goals have been met.
There are several tasks to perform prior to and during the actual meeting. You need to ensure that predetermined standards
have been defined using the job description. The job description identifies the essential functions of, plus qualifications for,
the job, provides a means to measure performance, and clarifies what your team members are expected to accomplish.
You need to create a secure environment during your appraisals that allows for full and open discussions to take place
between you and the individual concerned. By developing this degree of trust you will engage the individual, who will accept
the written summary of their performance as an accurate and true record of what took place. Finally, you will also receive the
person's agreement of their new performance targets.
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Stage 2 - Define & agree SMART goals
As part of your preparation for the appraisal meeting you will need to produce a first draft of individual goals for each team
member. This may be the first thing you do if your team is new to the appraisals process.
Whatever goals you set your team members you should make sure that they are SMART goals that relate to how the
individual contributes to the success of the organisation. The goals you set and the measures that relate to them should be
based on criteria that are directly related to the primary duties and level of responsibility that is appropriate.
Each of these goals needs to clearly state what is required, be easily measured, be a task that is attainable not impossible, be
relevant to the individual's role, and have a defined timeframe for the goal to be achieved by. A key aspect of defining each
goal is to assess and schedule any training that may be required to attain it.

Stage 3 - Describe role competencies
Within your team you will find that the ways in which people set about achieving their goals are as diverse as the individuals
themselves. As part of the appraisal cycle you must ensure that each team member exhibits the 'appropriate competencies' that are
described in the role specification and description.
The way you assess an individual's competencies is based on the behaviors they display whilst performing their role and how these
relate to those expected and defined in the role description. It is essential that you communicate what is expected of the individual in
their role and outline how they will be measured in this area.
During each appraisal you can explain that you will assess and measure the person's behaviors by subdividing them into Knowledge,
Skills, and Attitudes (KSAs). These three separate components together make up a particular behavior and individually are easier to
measure than the behavior itself. For example, knowledge can be measured in terms of what someone has learnt. This can be
through formal courses and qualifications or by performing the role. A person's skill can be assessed by how well they perform a task
compared to the role description. You will have to judge this component in the light of your organisation's culture.
The final measure is that of an individual's attitude toward their role or task. This is especially important because attitude affects how
that person interacts with others, and how they, and by extension the organisation, are perceived. For example, you will find that
many of your customers are more tolerant if they feel that their problem has been truly appreciated even if it cannot easily be
resolved.
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Stage 4 - Person agrees & commits to goals
Once you and your team member have agreed both the goals and the competencies they need to display, you need to finalize
exactly what you want this person to accomplish before their next appraisal meeting.
The meeting also gives you the opportunity to explain the type of reporting you expect to receive from them so that performance
progress can be monitored and assessed. The frequency of this reporting will vary according to the nature of the team - for
example, a monthly sales report from a sales person or a weekly incident report from a technical support team member.
You should engage the individual in an open and honest discussion about the exact wording and measures they will be judged on.
At the end of these discussions you should both agree on exactly what the goals are for the coming year. You should always be
willing to negotiate and compromise your first draft of their goals if you want to gain their full commitment.

Stage 5 - Agree & conduct review sessions
You should agree the frequency of the review sessions you wish to have with the individual throughout the year. This offers you
the opportunity to remind the person of what you expect to be achieved and by when in order to keep them on track. These
review sessions also enable you to update or amend goals if external factors change sufficiently to cause the original goal to be no
longer attainable.
You can use these regular reviews to monitor progress and give constructive feedback on how well the team member is
performing. At these meetings you can discuss the reported data highlighting any issues or problems that have come to light and
how these might affect the team member's goals.
You can also use these meetings to bring attention to significant incidents that the individual has played a role in. Discuss with
them how they felt about the situation and ask them to reflect on what they might do differently if faced with the same situation
again.
These sessions provide you with an ideal opportunity to keep each of your team members on target and show your support and
recognition of their efforts and commitment. You can also offer guidance to anyone falling behind or when you see someone
struggling. These sessions should prevent either you or the individual from having any unpleasant surprises when the formal
appraisal meeting comes around.
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Stage 6 - Gather performance data
Within this process you have already (as part of Stage 4) defined and gained agreement for the type of reporting you require the
individual to send you, but this should not be your only source of performance data.
For example, even though a marketing executive will report on progress against the marketing project plan, you should also take
steps to record details of any significant incidents that have occurred that are not formally documented. Perhaps poor handling of a
journalist's call into the organisation has resulted in some negative press appearing and as the manager you need to understand
what happened and why. In this example it could be that the call from the press was forwarded to the marketing team but not to
those in your team trained to deal with the press. So the journalist was able to ask what appeared to be innocent questions in order
to get the detail that they then turned into negative press. The fault in this instance lies in the process for handling this type of call
rather than in the way any individual team member behaved. It suggests that additional training for everyone involved is required.
In a similar way you should always be on the look out for instances of 'exceptional or desired' behavior that you see displayed by
your team as they go about their daily routine. This can be formally observed in a team or department meeting, or it can be seen
informally by observing how a person resolved an issue in their day-to-day work.
You also need to adopt the habit of regularly recording this type of data both from within your team and as a result of external
interactions. The types of data you are able to collect will vary according to the roles your team are responsible for.

Stage 7 - Write your performance summary for person
Each organisation has their own style of appraisal form but usually there is a section provided for you as the manager to write your
formal assessment of an individual's performance over the period against their goals.
The majority of forms you are likely to use will have three areas for feedback:
1. Manager Feedback - this is where you as manager present your assessment of the person's performance against their goals for
the year or period assigned to the appraisal cycle.
2. Employee Response - this allows the person to respond to your assessment of their performance.
3. Agreed Assessment of Performance - this area is completed at the end of the part of the appraisal meeting that deals with the
review and assessment of the current year, prior to defining and agreeing the next year's goals.
If your form does not have such a section, attach a separate sheet to the formal appraisal form so that there is a formal record of
your assessment included in the individual's personnel file.
You should complete this part of the cycle at least two weeks before the annual appraisal meeting so that you have sufficient time to
copy it to the individual concerned, allowing them the opportunity to respond to your comments on their performance. Complete
your summary of the individual's performance against their goals and give a copy to them to review.
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Stage 8 - Person comments on your summary
You must ensure that you provide your team members with your own summary on their year's performance with sufficient
time for them to read, assimilate, and respond to your assessment of their performance.
It is important for your team members' morale and motivation that they perceive this as a 'real' part of the process. They
must feel that they can honestly question and contradict your assessment of their performance and be taken seriously if they
can support this with evidence. This meeting is extremely important to the individual because they see it as the only formal
influence they have on their reward or recognition.
The response they make to your assessment should be returned to you at least a week before the appraisal meeting, so that
you have time to consider it and prepare for the meeting.
Once you have conducted the appraisal meeting the whole cycle begins again with any relevant decisions made at the
meeting being fed into the performance plan for the coming year.

The GROW model and coaching
The GROW coaching model is a tried and tested coaching model to structure coaching sessions.
The power of the GROW coaching model is that it leads to a clearly defined end result through four phases. The coachee is
personally active in identifying problems and generating ideas for solutions. The means that anything that comes out of the
coaching session has a lot of chance to stick.
The GROW coaching model stands for learning through experience: reflection, insight, making choices and pursuing them. The
success of a coaching trajectory with the GROW coaching model also depends on the time and energy invested into the process by
the client.
The GROW coaching model consists of four steps. The word GROW is actually an acronym for Goal – Reality – Options – Will. To put
it metaphorically, the GROW coaching model is what you need to plan a journey. You start with the map: where are you going
(Goal) and where are you coming from (Reality)? It then charts the different routes and modes of transportation (Options). At last,
it helps you pick the option that suits you best while still considering the obstacles on the way. You then chart out the process and
make sure that your motivation for the trip is maximised.
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GROW coaching model - Step 1: Goal - The first step in the GROW coaching model is defining the goal of the coaching trajectory.
That includes long term (the central theme of the trajectory) and short term (the goal for every session).
Goals need to be SMART: Specific, Measurable, Acceptable, Realistic and Timely.
Example questions to identify the goal:
► What's important to you when it comes to [theme]?
► What will reaching the goal give you?
► What do you want to achieve in [theme]?
► How will you know you've reached your goal?
► How will you know the problem has been solved?
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GROW coaching model - Step 2: Reality - Step two of the GROW coaching model is becoming aware of the actual situation the
coachee is in. The coache's role here is to stimulate self-evaluation with his client, and to identify the obstacles that have been
holding the client back. It's important to not lose oneself in this phase; people have patterns and stories they can repeat and
expand on endlessly. Keep on summarising and repeating what you understand from the coachee. Often, this phase of the
GROW coaching model reveals underlying fears and convictions that can be worked on during or in between coaching sessions.
Example questions to discover the reality of one's client:
► What's happening to you now?
► What, when, with whom and how often?
► What is the result of that?
► Why is this theme a problem?
► What are concrete examples of this problem?
► What's been going wrong so far?
► How do you manage to fail? Teach me how to do it.
► What went well?
► Is this always a problem or are there situations in which it isn't?
► What are the defining factors? What can make the difference?
► What have you done so far?

GROW coaching model - Step 3: Options - Step three of the GROW coaching model is to generate ideas that can contribute to the
solution of the problem. Try to start a creative brainstorming process without censure or conditionality. Generate solutions, then
structure it to evaluate every option. If needed, you can also offer some suggestions.
Example questions to generate options:
► What else could you do?
► What would you do if [obstacle] didn't stop you?
► Imagine you already reached your goal. How did you do it?
► What if this obstacle wasn't there anymore?
► What else do you need to reach your goal? Where can you get it?
► Which criteria will you use to evaluate this option?
► What are the pros and cons of this option?
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GROW coaching model - Step 4: Will - The fourth and last step of the GROW coaching model is the choice of one option. This
is converted into a concrete plan of action. Then the coachee's motivation to follow this plan is maximised.
Example questions to maximise the will:
► What exactly will you do to reach your goal, and when?
► Which of these options will you take?
► What concrete step can you take NOW?
► What steps come after?
► Are all obstacles taken into account?
► How will you overcome your obstacles?
► How motivated are you, on a scale from 1 to 10, to go for this option?
► What do you need to have a 10? Where can you get it?
► How can your surroundings support you?
► Will this plan get you to your goal?
► Will it solve the underlying problem, too?
Suggest a range of recommendations to address

problematic performances
Some key ways for addressing employee performance problems resulting a productive and helpful meeting, instead of stressful and emotional
discussion are:
1) Keep it specific, factual and unemotional. Explain the goal or standard the person was expected to meet, and discuss the action that actually occurred.
The difference between the two can speak for itself.
2) Be thorough but don’t embellish. If you tend to stress on the “too nice” side, make sure you discuss the entirety of the problem. You don’t want the
performer leaving your office thinking you just had a friendly gab session. But, make sure you aren’t making things sound worse than they are. That can
hurt your credibility.
3) Don’t make it personal. You may be upset or offended or disappointed that the person is not meeting expectations, but your feelings are not the reason
for the meeting, the person’s performance (or lack of performance) is. If you need to throw a warning before or after in private, go for it! Then pull yourself
together and move on.
4) Be prepared to listen to and consider valid excuses. If someone is falling short of key indicators, make sure the goals are realistic given the person’s
training and time on the job. Is there a learning curve you need to respect? You may need to offer additional coaching and mentoring.
5) Outline an action plan: You’ve pointed out the problem, now give the person the steps to fix it. What specifically do you need to see to know the issue is
improving? Give clearly defined actions and set a follow-up date (or dates).
6) The documentation is everything, therefore it is a very good practice to keep the discussions and important decisions documented for future reference.
7) Follow through: Check in when you said you were going to, and (if necessary) take the action you said you were going to take.
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Impact of team performance in meeting organisational

strategy
Building Blocks of Highly Effective Teams
The Patrick Lencioni connected productive teamwork to trust In his bestselling book - The 5 Dysfunctions of a Team. In his bestselling
book The Speed of Trust, author Stephen Covey linked trust to credibility. This model has multiple layers that build on each other. Here
are those elements and layers that lead to effective and creative teamwork.
1. Competence - At the lower foundation are two elements. The first is competence. Competence includes two of Covey's credibility core
elements: capabilities and results. The relevant type of competence is technical competence. This includes a person's talents, attitudes,
skills, knowledge, and style, but also track record, performance, and ability to get things done. You will never respect someone who
doesn't know what he or she is doing, or that doesn't get things done. Competence can also include their creativity, as they developed it
themselves.
2. Shared Values - The second element in the lowest foundation is Shared Values, which includes Covey's other two cores of credibility.
It's "walking the talk," being congruent, inside and out. It includes the motives, agendas, and the behaviors that result from them. Some
values are universally wrong (at the extreme: disregard for human lives). However, others are simply different between people (for
example, the importance of being on time). We may not share values, yet still hold valid values separately. To the extent our values are
shared--respect can evolve. However, if our values collide, as valid as they might be individually, so will our personalities and interactions.
3. Respect - Respect is built upon those first two elements, competence and shared values. Those are the things we must respect in each
other for trust to eventually emerge.

strategy
4. Time together- Respect will develop into trust, but not instantly. When others are not predictable, you can't trust them.
Predictability comes with time spent together. A formula has been created for the amount of time required to develop predictability
and trust. It is based on the amount of time spent on interaction, multiplied by the intensity (face-to-face is the most intense,
followed by conference calls, and finally by email)," multiplied by the type of experiences shared (positive vs. negative). The higher
those are, the shortest time is required to increase that predictability, and inherently trust.
5. Team-building - Sharing life-altering events does a lot to build trust. The closest alternative is in the form of team-building activities.
The more intense those activities are, and the more trust they require, the more effective they are in building day-to-day trust among
team members otherwise. With increased emphasis on cost-cutting, team-building activities is frowned upon. It is considered a waste
of time and money. It is not. The impact of shortening time-to-trust and thus time-to-productivity is significant.
6. Trust - Trust is defined as "the safety in relationships." Lencioni wonderfully described it as what will allow you to be vulnerable
with other team members, be willing to ask stupid questions, and be willing to be told that they are such. It also includes the
confidence in providing such feedback to other team members. Finally, trust allows you to use humor and sarcasm in meetings, and
science shows that those help increase your creativity as well.
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strategy
7. Constructive Conflict - There are three possible types of conflict. One end of the spectrum has Conflict Avoidance. That's
when we hold a politically-correct debate. We avoid controversial issues. We focus on saying the right things over reaching
the right conclusions or making the right decisions. We hold "the meeting after the meeting." Decisions are made outside of
the meeting room. That is what happens when there is lack of trust, and we don't know how debating an issue would be
perceived by the other side, so we would rather avoid it altogether.
On the other end of the spectrum is the Destructive Conflict. This is when everything turns from being issue-based to
emotional and personal. We look at each other as extensions of inflexible positions rather than rational human beings that
could be persuaded to change their minds. And we are not willing to change our own minds. That happens, too, as the result
of lack of trust, and typically lack of respect. When you don't respect your counterpart to an argument--it doesn't matter
what they say. They simply can't convince you.
Finally, in between the two, is the Constructive Conflict. It is when you trust the others enough to be vulnerable and
confident at the same time. Constructive Conflict allows for an issue (not the people) to be "attacked" from multiple
directions, and to reach the most creative and productive solution or decision.

strategy
The above discussion in summary is provided below;
►Competence + Shared Values = Respect
►Respect + Time = Trust
►Time = Amount, Intensity, Type of interactions
►Time can be shortened through team-building activities
►Trust leads to the selection of Constructive Conflict over Conflict Avoidance and Destructive Conflict
►Constructive Conflict leads to Creative and Productive Teamwork.
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Lesson Summary
In this lesson you have Identified tools and methods of assessing team performance monitoring through understanding strategies
for assessing performance and by understanding the benefits of assessing teams at the beginning of the lesson.
The suggestions for constructive changes to team performance too have been looked at together with evaluation of team
performance against plans. In understanding the evaluation of team performance you have studied key models related to
organisational change such as Change Momentum, Lewin’s three-phase change model, Force field analysis and Kotter’s eight stage
change model.
Further the performance appraisal methods and performance appraisal cycle and the key stages of it have been discussed in detail.
The GROW model and coaching has been looked at in terms of structuring coaching sessions.
Finally a range of recommendations to address problematic performances have been looked at while considering the building blocks
of highly effective teams leading to close evaluating the impact of team performance in meeting organisational strategy.
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Influencing Skills to
Respond to Dynamics
and Organisational
Politics
Introduction
In this lesson we will be closely looking at determining influencing methodologies that can gain the commitment of
individuals to strategy and critically discuss the impact of individual dynamics, interests and organisational politics on
securing the commitment of individuals to strategy.

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Learning Outcomes
4. Be able to apply influencing skills to respond to the dynamics and politics of personal interactions
4.1 Determine influencing methodologies that can gain the commitment of individuals to strategy
4.2 Critically discuss the impact of individual dynamics, interests and organisational politics on securing the commitment
of individuals to strategy
Lesson Objectives
► Identify and understand importance of influencing methodologies
► To understand the concept of Employee engagement
► Obtain individual commitment towards achievement of organisational strategy
► Understand the factors affecting individual commitment towards organisational strategy
► Current issues in performance management
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Identify and understand importance of influencing

methodologies
This is a unique approach to team leadership that is aimed at action orientated environments where effective functional
leadership is required to achieve critical or reactive tasks by small teams deployed into the field. In other words leadership of
small groups often created to respond to a situation or critical incident.
The individuals should have the knowledge, skills and values required for today’s and tomorrow’s jobs. One company clarified
the usual definition of competence and framed it as “right skills, right place, right job.”
Competence clearly matters because incompetence leads to poor decision-making. But without commitment, competence
doesn’t count for much. Highly competent employees who are not committed are smart, but don’t work very hard.
Committed or engaged employees work hard, put in their time to do what they are asked to do. In the past decade,
commitment and competence have been the domain for talent.

methodologies
However, the next-generation leaders for an organisation may be competent (able to do the work) and committed (willing to
do the work), but unless they are making a real contribution through the work (finding meaning and purpose in their work),
then their interest in what they are doing diminishes and their willingness to harness their talent in the organisation wanes.
Contribution occurs when employees feel that their personal needs are being met through their participation in their
organisation.
In almost every role and walk of life there is a need to influence other people. From direct sales to advertising to interviews,
influence is everywhere. Influence, though, is an art, and one that needs to be understood. What works in one situation may
not work in another. In other words, the effectiveness of any influence technique can be situational. These six research-
backed principles, noted in his book - Influence: The Psychology of Persuasion by Robert Cialdini, the "father of influence,"
area quite useful in learning the art of influencing.
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methodologies
Reciprocity - This is based on the idea of "matching" what others have done for you. If you do a favor for someone, that person is
more likely to help you if asked. Most people don't like to feel in debt to others, and will look to restore equilibrium. Booths in stores
with sample food and giveaways at conventions are intended to make people more susceptible to buy after taking something.
Social obligations - Humans inherently dislike being indebted to someone, so much so that often a small gift or favour will lead to a
larger reciprocal response. This fact is exploited
worldwide, e.g. Hare Krishna’s who offer a ‘gift’ of a flower when soliciting for
Donations (which they refuse to take back). As the receiver cannot unburden
themselves from the subconscious debt, the social pressure to donate leads to a
higher donation rate than merely soliciting alone. An Indian supermarket sold
£1000 of cheese in a few hours by inviting customers to slice their own free
samples.

methodologies
Reject & Retreat – This technique consists of first demanding a high price (or a large favour), then waiting for it to be rejected, only to follow this demand
up with a smaller one, (that you really wanted all along). Quote from a child: ‘If you want a kitten, first ask for a pony’.
Commitment (and Consistency) - If you can get someone to verbally--or better yet, publically--commit to something, they are more likely to follow through
with it. If you leave a meeting without agreeing to a course of action, less is likely to happen than if each person states their commitments out loud.
Consistency is also important for two reasons. First, people that are consistent are more trustworthy, leading others to lend their support more readily.
Second, people have an innate pull to remain aligned with what they have said or agreed to previously.
Social Proof - In game shows, if the audience is polled they are often quite accurate based on the pooled knowledge they have. People also look to others
for validation. Watch kids sometime to see this in action. Once the damn breaks and one kid tries something, the others are likely to think it is okay and
start doing the same thing. Testimonials and the use of "experts" and doctors (think, "9 out of 10 doctors recommend...") are all examples of using social
proof to influence others.
Liking - There is perhaps nothing better for influence than being liked, which is related to being trusted. We also like people more who are similar to us and
attractive people are typically found to be more likable. Likability is so important that it can often tip the scales in presidential elections. If someone likes
you they will be more inclined to say yes to you.
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methodologies
Joe Girard won for twelve years straight the title of ‘Number one salesman’, selling on average five cars or trucks a day. His formula
behind his success was simple; he provided a fair price, and someone they like to buy from. One of his key tactics however was to
employ the use of compliments. Every month he sent every one of his 13,000 former customers a holiday greeting card containing a
personal message. The holiday greeting changed from month to month (Happy New Year, Happy Easter etc.), but the message printed
on the face of the card never varied. It only read ‘I like you’.
Authority - This is one of the most dangerous types of influence. It can be the absolute most powerful, but it can also be the most
corrupting if used to the extreme. Stanley Milgram showed the great lengths people will go to in order to obey authority. In some
cases, participants in his experiment delivered what they thought was a crippling shock to another person, simply because they were
told they had to do so by a person in the study that they thought was a real doctor. These titles, uniforms, and other visual displays of
authority go a long way towards influencing people.
Scarcity - Think of all the commercials you have seen where you must "act now" or "time is running out" for a certain product. These
commercials use scarcity to make people believe that a product has limited supply and that they must buy right away. If you can
create urgency around something people will be more likely to act upon it or buy. The high pressure environment, like an auction can
lead an item being sold for an elevated price as the buyers fear losing out to another person.

methodologies
As it has been explained in the previous slides, the employees too could be influenced through those methodologies to
create motivation towards gaining commitment towards strategy.
Being able to successfully influence someone is a challenge in itself, but there are proven influencing tactics that we can
all use, which tap into our natural behaviours as individuals and therefore help persuade others into ‘complying’ with
what we want them to do. Influencing people can come from many needs.
Some key reasons in the business context are:
►Process Improvements and changes in working practices
►Organisational cultural change
►Enticing more customers to buy from you
►Encouraging team members to learn new skills and work towards goals
Whatever it is, a requisite of successful leadership is to be able to communicate effectively and influence stakeholders to
enact the desired outcomes.
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methodologies
Motivation
Motivation can be defined as the psychological force that determines the direction of a person’s behaviour in an
organisation, level of effort and persistence to face obstacles.
Theories of Motivation

methodologies
Theories of Motivation
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Employee engagement
The management of the employment relationship characterised by an ‘investment orientation’ towards employees is designed to elicit their commitment to
the organisation. Where managers are able to achieve an engaged workforce it is claimed that this can lead to both organisational success and employee
well-being (MacLeod and Clark 2009). Indeed, there is now a substantial body of literature that supports this view, with practitioners and academics agreeing
that the consequences of employee engagement are positive; however, there is little agreement on a definition. A CIPD-commissioned research report (Alfes
et al 2010, p5) identified engagement as having three dimensions:
►Intellectual engagement – thinking about the job and how it might be done better
►Affective engagement – positive feelings about doing a job well
►Social engagement – actively seeking opportunities to discuss work-related issues.
Where organisations are able to effectively engage their employees on these dimensions, the authors claim that three important outcomes can be identified
which can assist organisations in the achievement of their objectives. Firstly, engaged employees are likely to perform better than those who are not.
Respondents in the survey claimed to have good levels of job and social skills, were willing to take on extra work and tended to have high ratings in their
performance appraisal. Secondly, engaged employees are more likely to be innovative at work. This might include searching out new methods of working,
generating enthusiasm for innovative ideas and transforming such ideas into meaningful applications. Thirdly, engaged employees are more likely to want to
stay with their employer.
Employee engagement
Then, how can organisations generate employee engagement? Holbeche and Matthews (2012) suggest four ‘drivers’ of
engagement:
►Connection - Employees need a sense of identification with, and pride in working for, the employing organisation; there has to be
a common purpose and shared values.
►Voice - Managers need to keep employees informed of the organisation’s progress and of organisational change, and listen to
employees’ views so that they feel involved in the business.
►Support - Employees need to be treated as individuals and enabled to do their job; they should feel they are valued and receive a
fair deal from their employer, and believe their employer is concerned with their well-being.
►Scope - Work should be purposeful and provide employees with the opportunity for growth and accomplishment; it should allow
for autonomy and be underpinned by mutual trust.
Alfes et al (2010) came to similar conclusions and highlighted the importance of meaningful work and employee voice to creating an
engaged workforce. Employee voice is the foundation of sustainable business performance increasing engagement which enables
effective decision-making and drives innovation. To do this organisations need to create a climate of trust in engagement that
fosters opportunities for both collective and individual voice to be heard, or more simply put, talking and listening to their
employees (Rees et al 2013).
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Employee engagement
Management style is instrumental in fostering employee engagement and employee voice. Through communication,
managers can help employees place their own work in the context of the organisation’s objectives. Similarly, establishing and
maintaining effective communication and consultation channels can both reinforce employees’ view of the value of their
work and enhance social engagement. It is perhaps no surprise then that they emphasise the importance of line
management style in creating employee engagement.
Line managers, it is suggested, are the crucial link between the employer and employees, and their behaviour is central to
levels of engagement. Their key tasks in this respect are selecting the correct people for the job, regular communication with
their staff, relevant training and development, and ensuring reciprocity of effort and reward.
Employee engagement
Managing the Psychological Contract
The psychological contract (TPC) was first coined by Argyris (1960), who observed an unwritten agreement existed between employer
and employee, summarising that staff performed to a higher level if they received fair wages and had a degree of autonomy in the
manner in which they worked. TPC consists of expectations, beliefs and implied obligations; none of which are written in the tangible
contract between the employer and employee (Schein, 1985). Rousseau (1995, P.9) developed this idea and defined TPC as ‘individual
beliefs, shaped by the organisation, regarding the terms of an exchange agreement between the individual and their organisation’.
The importance of managing the Psychological Contract (TPC)
Fulfilment of TPC from employers has been proven to result in reciprocation from employees, leading to positive organisational
attitudes, affective commitment (Tekleab & Taylor, 2000) and reduced turnover intention (Montes & Zweig, 2009), which lowers an
organisations recruitment and training costs, therefore it increases its efficiency (Wilton, 2013). A balanced PC is linked with
organisational citizenship behaviour (Decktop, Mangel and Cirka, 1999) and high employee engagement – meaning the employee
has a high level of commitment to the organisation and its values, and exhibits willingness to help their colleagues (CIPD, 2009).
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Employee engagement
Due to TPC consisting of unarticulated beliefs, expectations and perceived obligations breaches are not uncommon (Wilton, 2013)
as neither party can ever fully know what the other expects of them (Cullinane and Dundon, 2006). Social Exchange theory
undergirds TPC postulating that employees and employers engage in exchanges with each reciprocating the contribution of the
other (Blau, 1964). In line with the theory of reciprocity (Gouldner, 1960), when employers do not fullfil their implied or
understood obligations a breach of TPC can occur, resulting in the employee reciprocating by withholding their effort from work
(Bal, Chiaburu, & Jansen, 2010), negative organisational attitudes (Piccoli and De Witte, 2015), reduced performance (Restubog,
Bordia, & Bordia, 2011) and workplace deviance (Bordia, Restubog, & Tang, 2008). Many organisations attempt to manage TPC in
order to mitigate these potentially harmful effects.
A breach of TPC can occur for reasons such as implementation of large scale organisational change often without employee
consultation (Gerber et al, 2012). Resistance to change can be extremely problematic for organisations, and the adjustment period
to such change can cause vast decreases in efficiency leading to loss of competitive advantage (Dawson and Andriopoulos, 2014).
Heuvel, Schalk and Assen (2015) found organisations which communicated their full intentions of change with employees
implemented large scale organisational change with lower levels of resistance, due to perceived fulfilment of TPC. This suggests
balancing TPC can reduce the resistance to change many employees experience and help to mitigate the potential for loss of
competitive advantage.
Employee engagement
A study by Atkinson (2007) discovered the expectations within TPC widely vary between individuals and organisations,
Restubog et al, (2015) found that an aggressive and competitive culture within an organisation exacerbated any breach of TPC
and increased the likelihood of employees actively seeking revenge. This suggests that organisations requiring their employees
to behave in a highly competitive manner are at greater risk of negative effects from TPC breach and should take necessary
measures to minimise the likelihood of this occurrence (Bankins, 2015), as the effects on the organisation will likely be more
damaging than if the employee were to simply withhold their effort or decide to leave the firm.
Rousseau (1995) implied that within TPC the employer was the independent variable and the employee the dependant
variable, believing the employment relationship to be dependant on the actions of the employer and their ability to recognise
and meet the expectations of the employee, however this proved contentious. Theorists such as Guest and Conway (2002)
advance that TPC is subject to both parties meeting the others expectations rather than just the employer meeting the
employee’s, and concluded that the state of TPC is dependent on mutual trust, fairness and delivery of the deal.
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Employee engagement
Expectancy Theory of Motivation
The expectancy theory was proposed by Victor Vroom of Yale School of Management in 1964. Vroom stresses and focuses on
outcomes, and not on needs unlike Maslow and Herzberg. The theory states that the intensity of a tendency to perform in a
particular manner is dependent on the intensity of an expectation that the performance will be followed by a definite outcome
and on the appeal of the outcome to the individual.
The Expectancy theory states that employee’s motivation is an outcome of how much an individual wants a reward (Valence),
the assessment that the likelihood that the effort will lead to expected performance (Expectancy) and the belief that the
performance will lead to reward (Instrumentality).
This is commonly accepted theory for explaining how individuals make decisions regarding various behavioural alternatives. It
offer the following propositions:
1. When deciding among the behavioural options individuals select the option with the greatest motivation forces (MF).
2. The motivation force for a behaviour, action or task is a function of three distinct perceptions: Expectancy, Instrumentality
and Valence. The motivation force is the product of the three perceptions.
Employee engagement
MF = Expectancy x Instrumentality x Valence
Expectancy Probability - based on the perceived effort performance relationship. It is the expectancy that one’s effort will lead to the
desired performance and is based on past experience, self-confidence and the perceived difficulty of the performance goal. Example: If I
work harder than everyone else in the plant will I produce more?
Instrumentality Probability – Based on the perceived performance reward-relationship. The instrumentality is the belief that if one does
meet performance expectations, he or she will receive a greater reward. Example: If I produce more than anyone else in the plant, will I
get a bigger raise or a faster promotion?
Valence – Refers to the value the individual personally places on the rewards. This is a unction of his or her needs, goals and values.
Example: Do I need a bigger raise? Is it worth the extra effort? Do I need a promotion?
Because the motivational force if the product of the three perceptions, if any one of the value is zero, the whole equation becomes zero.
The expectancy theory generally is supported by empirical evidence and is one of the more widely accepted theories of motivation.
(refer slides 29 and 30 under LN 02)
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Individual commitment towards achievement of

organisational strategy
Organisational behavior scientists study four primary areas of behavioral science: individual behavior, group behavior,
organisational structure, and organisational processes. They investigate many facets of these areas like personality and
perception, attitudes and job satisfaction, group dynamics, politics and the role of leadership in the organisation, job design,
the impact of stress on work, decision-making processes, the communications chain, and company cultures and climates.
They use a variety of techniques and approaches to evaluate each of these elements and its impact on individuals, groups,
and organisational efficiency and effectiveness.
Groups of individuals gathered together to achieve a goal or objective, either as a committee or some other grouping, go
through several predictable stages before useful work can be done. These stages are a function of a number of variables, not
the least of which is the self-identification of the role each member will tend to play, and the emergence of natural leaders
and individuals who will serve as sources of information. Any individual in a leadership position whose responsibilities involve
getting groups of individuals to work together should both be conversant with the phases of the group process and possess
the skills necessary to capitalize on these stages to accomplish the objective of forming a productive, cohesive team.
Factors affecting individual commitment towards

Current research concerning employee commitment highlights the pitfalls of viewing commitment as a one-dimensional construct that can
be enhanced by a particular human resource policy. This assumes that a particular practice, for example offering flexible working
arrangements or more training, will have a significant and beneficial effect on employee commitment. Unfortunately, in practice it is not
that simple because there is no single solution. All employees’ wants and needs cannot be addressed by a single policy.
The effective functioning of an organisation highly depends on the commitment of its employees. In fact, the commitment of employees
may be a key factor that determines the success of a company in the modern world since, in the situation of the growing competition and
the constant implementation of new technologies a company needs to have well-qualified and reliable personnel to maintain its position
in the market. At the same time, the effectiveness and productivity of work of employees still remain the major factors that can contribute
to the progress of the company.
On the other hand, nowadays it is obvious that financial stimuli solely can hardly motivate employees to work more effectively and
productively. In such a situation, employees commitment turns to be of a paramount importance since it is due to the high commitment of
employees they can perform positive results of their work, increase its effectiveness and productivity, while low commitment leads, as a
rule, to poor results of the functioning of the entire organisation.
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Commitment - Meyer & Allen 2001 define commitment as is a stabilizing force that acts to maintain behavioural direction when
expectancy/equity conditions are not met and do not function. They further state that the commitment is a psychological state
that binds the individual to the organisation.
According to Salancik (1977) commitment is a state of being in which an individual becomes bound by his action to beliefs that
sustain his activities and his own involvement.
Employee Commitment - It is the psychological bond of an employee to an organisation, the strength of which depends on the
degree of employee involvement, employee loyalty and belief in the values of the organisation.
As defined by Poter (1974) Employee commitment is the relative strength of the individual’s identification with and involvement
in a particular organisation. It consists of three factors: A strong desire to remain a member of the organisation; A strong belief
in, and acceptance of, the values and goals of the organisation A readiness to exert considerable effort on behalf of the
organisation.

The Three Model Conceptualization of Organisation Commitment
This model of organisational commitment model was developed by Meyer and Allen. According to the model, organisational
commitment reflects at least three general themes.
Affective commitment - It’s the employees emotional attachment to, identification with and involvement in the organisation.
Employees with a strong affective commitment continue employment with the organisation because they want to.
Continuance Commitment – The perceived cost associated with leaving it. The individual commits to the organisation because he/she
perceives high costs of losing organisational membership including economic costs (such as pension accruals) and social costs
(friendship ties with co-workers) that could be incurred.
The employee remains with the organisation because he/she “has to”. It refers to an awareness of the costs associated with leaving
the organisation. The potential cost of leaving an organisation include the threat of wasting the time and effort spent acquiring non
transferable skills, losing attractive benefits, giving up seniority – based privileges or having to uproot family and disrupt personal
relationships.
It also develops as a result of lack of alternative employment opportunities. Employees in this category remain because they need to.
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Normative Commitments - The obligation to remain with it. Refers to a feeling of obligation to continue employment . Employees in
this category remain in the organisation because they feel they ought to.
Organisation can develop normative commitment by providing reward in advance e.g. paying college tuition. Normative pressures
may also make an individual feel that they ought to remain within the organisation.
Acknowledging these investments makes employees feel a sense of obligation to reciprocate by committing themselves to the
organisation until the debt has been paid .
One important point is that not all forms of employee commitment are positively associated with superior performance (Meyer &
Allen, 1997). For example, an employee who has low affective and normative commitment, but who has high continuance
commitment is unlikely to yield performance benefits. The main reason such an employee remains with an organisation is for the
negative reason that the costs associated with leaving are too great.
Current issues in performance management

There are a number of challenges that can prove to be an obstacle to effective performance
management. Obstacles can include but are not limited to:
►writing a poorly structured strategy
►failure to communicate the strategy to stakeholders/staff
►failure to achieve buy-in of the strategy
►not measuring progress
►not holding at least quarterly strategy review sessions
►not taking the time to define success and celebrate it along the way
►not adapting to changing circumstances
►not giving your team the necessary authority or tools to accomplish their jobs
It’s vitally important to steer the strategic planning process effectively to avoid those common pitfalls.
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Lesson Summary
In this lesson you have covered the key objective areas such as identifying and understand importance of influencing
methodologies, the employee engagement discussing the the importance of managing the Psychological Contract with
employees and it’s key types together with the Expectancy Theory of motivation.
Further the importance of obtaining individual commitment towards achievement of organisational strategy and understanding
the factors affecting individual commitment towards organisational strategy have been closely looked at with key types of
commitment.
Moreover, the current issues in performance management too have been discussed under the lesson.
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Management
information on
strategic decisions
Module: Information Management and Strategic Decision
Taking
Introduction
► In this lesson we will be closely looking at data and information along with different types of information systems. You will
also be learning about management information system and its impact to an organisation The link between information
system, knowledge management and operations of an organisation will be looked at whilst discussing various types of
information and knowledge management.
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Learning Outcomes
1. Be able to understand the importance of management information on strategic decisions
1.1 Critically identify the features of data and information
1.2 Determine the criteria to be applied when selecting appropriate data and information to support strategic decisions
1.3 Critically evaluate the impact of a management information system to an organisation
Lesson Objectives
1. Introduction to information systems
2. Data selection criteria
3. Importance of information systems
4. Identifying different types of information systems
5. Soft systems methodology
6. SSM in analysing and defining business success
7. Identifying different types of operations systems
8. Tacit and explicit knowledge
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Introduction to information systems

Data:
► Data is defined as the collection of facts about events. This collection of facts is in raw form means that an unorganised and
unprocessed form, which cannot be use for meaningful purpose for example Name, Age, Price etc.
Information:
► Information is defined as a well-organised, well-processed and meaningful form of data generated from raw data. The end
users utilises this meaningful data for making a decision easily for example Employees Records, Sale Report etc.
Introduction to information systems

► Data is the raw figures appertaining to the routine activities of the organisation. These figures in themselves do not enable
decisions of any consequence to be taken, and in order for data to be more useful they need to be ‘processed’ to provide
information.
► Processing is a broad-term but essentially can be taken as meaning the conversion of data into information.
► The computerised systems which carry out this data processing are information systems.
► An information system is any combination of information technology and people’s activities that support operations,
management and decision making.
► Accessibility, Relevance, comprehensibility, timeliness and accuracy:
► In any organisation it is important that accessibility to information must be provided to all departments employees it
means that availability of information to the management and other staff. The accessible information must be relevant to
the processes, functionality and operations of that department. The information must be comprehensible i.e. clear, well
organised and structured, must be timelines i.e. suitable to complete related task and must be accurate to generate the
expected result properly.
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Data selection criteria

► In business environment data is a valuable asset for any organisation. The data must be collected carefully because
organisation decision-making processes are based on the generated information from this data. While selecting data and
information for decision-making we must apply some criteria to this selection such as,
► Accuracy
► Validity
► Clarity
► Completeness
► Consistency
Information selection criteria:
► Data quality, definition clarity, relevance, presentation, timeliness, availability

► Accuracy: Data accuracy is vital role in management information because an accurate data can generate highly valuable
results. For data accuracy timeliness is important otherwise there will be errors in the result.
► Completeness: The completeness of the data means the availability of latest data for decision-maker. The incomplete data can
lead to poor decision-making management information.
► Validity: The validity of data mean data must be collected carefully and from an authentic source. The source of data must be
known and verified.
► Consistency: The consistency of data is key role in good management information because it generates reliable, steady, well-
organised and well-structured information.
► Information selection criteria: Data quality, definition clarity, relevance, presentation, timeliness, availability
► Data quality: To generate highly valuable and standard information data must be according to certain quality standards such as
data must be in the appropriate format, well structure, well-organised and standard transferring method must be used.
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► Definition clarity: The generated Information must be clearly and easily understandable, this will allow organisation
employees to use the right information in the right place.
► Relevance: Information must be relevant to a task that it can be examined and packaged into an effective format. This is
helpful that the management information is having to the point information but the information must not be incomplete.
► Presentation: The management information must be able to present information in the right format, order, well-structured
and attractive design. This will describe a clearer picture of the organisation.
► Timeliness: The information must not take longer time i.e. must be concise and to the point that the management
information can quickly response.
► Availability: The regular availability of information must be guaranteed to the management information that all tasks can
run smoothly and the management information is able to generate up to date results.
Importance of information systems

► Improves efficiency and productivity in business operations
Information systems are important tools that are available to help achieve a higher level of efficiency and productivity in
business operations. With the use of information systems, organisation will be able to coordinate different divisions/
departments effectively. Example: Wal-Mart that uses a Retail Link system, which digitally links its suppliers to every one of
Wal-Mart's stores as soon as a customer purchases an item, the supplier is monitoring the item and knows to ship a
replacement to the shelf.
► Encourages innovation in a process
Information systems helps firms to create new products, services and also entirely new business models. A well integrated
information system will ensure that employees in an organisation sees the overall picture of a process. This would encourage
innovation to a greater level. Example: Apple transformed an old business model based on its iPod technology platform, that
included iPod, the iTunes music service, and the iPhone.
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► Increases customer/supplier intimacy
The more a business engages in customers the better an organisation recognises the nature and behaviour of its customers.
Information systems help increase customer/supplier intimacy by providing different analytical tools to record and evaluate
such information. Example: The Mandarin Oriental in Manhattan and other high-end hotels exemplify the use of information
systems and technology to achieve customer intimacy. They use computers to keep track of guests' preferences, such as their
preferred room temperature, check-in time, television programs etc.
► Availability of real-time data enhances the quality of decisions
Information systems have the ability to submit real-time data from the marketplace to managers when making decisions. It
also has the ability to store the same real-time data in a back-up server which eliminates the fear of loss of information. This
improves decision making and the quality of decisions made. Example: Verizon Corporation uses a Web-based digital
dashboard to provide managers with precise real-time information on customer complaints, network performance etc. Using
this information managers can immediately allocate repair resources to affected areas, inform customers of repair efforts and
restore service fast.

► Helps to create a competitive advantage
All of the above benefits derived from information systems will help an organisation to perform better than its competitors. It
will keep the decision makers up to date with the market as well as the organisation operations. Doing things better than
your competitors, charging less for superior products, and responding to customers and suppliers in real-time all add up to
higher sales, and higher profits. This would also help create a competitive advantage for the organisation in the long-run.
Example: Toyota Production System focuses on organising work to eliminate waste, making continues improvements, TPS is
based on what customers have actually ordered (Wang, 2010).
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Different types of information systems

► Personal Information Systems – This is the first class of information systems. Such an information system can manage and
store information for a private person. Examples are an address book or address database and an audio CD collection.
► Enterprise (or organisational) information systems – These are the second class of information systems. An enterprise
information system is tailored toward the support of an organisation.
► Public information systems – this is the third class of information systems that can manage and store information accessed
by a community. Public libraries, information systems for museums, Web-based community information systems, and
Web-based stock-portfolio information systems are examples of public information systems
(Laudon, and Laudon, 2010)

The main types of information systems are:
► Executive information systems
This is designed to help senior management make strategic decisions. Therefore this should be systematic
and structured to provide high quality information. This system analyses and summarises the key internal
and external information used in the entire organisation. EIS also facilitates ‘exception reporting’. This is
reporting on demand by data analysis and modelling tools such as "what-if" analysis to help strategic
decision-making. d
► Management information systems
MIS reports tend to be used by middle management and operational supervisors. This is mainly concerned
with internal sources of information and follows a process of collecting, processing, storing and transmitting
relevant information to support the management operations in any organisation. MIS reports tend to be
used by middle management and operational supervisors.
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► Decision support systems
The objective of decision support systems is to provide more specific information with regard to a specific business unit or a
department. These are designed to help management make decisions in situations where there is uncertainty about the
possible outcomes. DSS comprises tools and techniques such as budgeting, variance analysis etc to help gather relevant
information and analyse the options and alternatives.
► Knowledge management systems
This system is developed by a specialist for the use of a non-specialist. These exist to help businesses create and share
information. These are typically used in a business where employees create new knowledge and expertise which can then be
shared by other people in the organisation. Therefore this will enable the top management to obtain comprehensive
knowledge and guidelines on a specific area prior to decision making. Examples include firms of lawyers, accountants and
management consultants.

► Transaction processing systems
These are systems developed to provide basic information records on the day-to-day transactions as a form of data
input (data processing). This will enable an organisation to obtain input regarding every transaction more efficiently
and accurately;
 Billing systems to send invoices to customers

 Systems to calculate the weekly and monthly payroll and tax payments
 Production and purchasing systems to calculate raw material requirements
 Stock control systems to process all movements into, within and out of the business
► Office automation systems
Are systems that try to improve the productivity of employees who need to process data and information. Perhaps the
best example is the wide range of software systems that exist to improve the productivity of employees working in an
office.
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Information systems based on different levels of hierarchy in the organisation
The diagram explains the use of information systems in an

organisations hierarchy. Executive information systems are
used at the top for executive level decisions to be made. As
the hierarchy of the positions decreases the level of
information made available to relevant users also decreases
and so does the importance of decisions made.
This could be further explained by a three level approach as

follows;
• Strategic decisions - Executive information systems

• Tactical decisions - Management information systems
• Operational decisions - Transaction processing systems
Soft system methodology (SSM)

► Recent years have seen a growing interest in the use of soft systems methodology (SSM) in work related to computer-
based information systems (IS). Against this background, this paper seeks to identify and define, more fully than previous, a
role for SSM in information systems development which stems from its fundamental principles. Since SSM sees computer-
based information systems as systems which serve purposeful human action, the notion of ‘information system’ in SSM is
one that necessarily involves two systems, a ‘serving’ system (the information system) and a ‘served’ system of purposeful
action. This notion of ‘information system’ leads to certain principles for IS development. These are expressed in the form
of a model, referred to as the ‘information system/information system development model’ (IS/ISDM). This model is used
to examine several conventional approaches to information systems development including the widely used UK
government method SSADM, in order to identify where, in IS work, soft systems ideas might best make a contribution.
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► Soft systems methodology (SSM), developed by Prof. Peter Checkland in late 60’s at the university of Lancester in the UK,
is an approach for tackling problematical, messy situations of all kinds.
► It is an action-oriented process of inquiry into problematic situations in which users learn their way from finding out
about the situation, to taking action to improve it.
► The learning emerges via an organised process in which the situation is explored using a set of models of purposeful
action as intellectual devices, or tools, to inform and structure discussion about a situation and how it might be
improved.
Overall the aim of SSM is to take seriously the subjectivity which is the crucial characteristics of human affairs and to
treat this subjectivity, if not scientifically at least in a way characterised by intellectual rigor.
Wang, J. (2010)

The seven stages of SSM are;
1. Entering the problem situation
2. Expressing the problem situation
3. Formulating root definitions of relevant systems
4. Building conceptual models of human activity systems
5. Comparing the models with the real world
6. Defining changes that are desirable and feasible
7. Taking actions to improve the real world situations
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► Stage one – Entering the problem situation
At this stage an organisation decides what it is actually exploring. SSM doesn’t define the problem but assess the general
areas that interests an organisation in solving the problem. This is an arbitrary starting point and it may shift.
Stage one is a bit like goal free evaluation, we are not particularly constrained by any formal definitions or organisational
boundaries. We collect as much data as we can, qualitative, quantitative, by whatever method seems appropriate - survey,
observation, measurement.
► Stage two – Expressing the problem situation.
At this point the issue is ‘expressed’ in some way. The situation needs to be expressed in all its richness. The guidelines
provided to do so are, based on structures, processes, climate, people, issues expressed by people and conflicts.
In stage two the evaluation questions can be created based on what are the key: Structures, Processes, Climate, People,
Issues expressed by people, Conflicts. How can the situation be expressed in an ‘unstructured form’? The best form is to
have pictures as they say pictures speak more than words.

► Stage three – Formulating root definitions of relevant systems.
Stage three moves out of the “real” world and into the world of systems. This is the stage out of which everything else
grows, hence called the ‘root definition’ stage and is the unique and most challenging part of the methodology.
The first step in stage three is to understand the concept of different perspectives that are possible to draw out of the
overall picture. These are called holons - plausible relevant purposeful perspectives that can describe the real world
activities. Each holon provides a separate value base on by which to evaluate the situation.
To ensure that a given ‘root definition’ is rigorous and comprehensive several criteria have been proposed which should be
specified. These criteria have been summarised in the mnemonic CATWOE.
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► CATWOE
Clients – Who are the beneficiaries or victims of this particular system? (Who would benefit or suffer from its operations?)
Actors – Who are responsible for implementing this system? (Who would carry out the activities which make this system work?)
Transformation – What transformation does this system bring about? (What are the inputs and what transformation do they go through to become the outputs?)
Weltanschauung (or Worldview) – What particular worldview justifies the existence of this system? (What point of view makes this system meaningful?)
Owner – Who has the authority to abolish this system or change its measure of performance?
Environmental constraints – Which external constraints does this system take as a given?
► The basis of SSM is that trying to address all these perspectives as a whole is too complex an endeavour. Clarity is gained by addressing key perspectives separately,
understanding their implications and then using those understandings when seeking to reintegrate these perspectives into a set of evaluative conclusions and
suggestions for future action.

► Stage four – Building conceptual models of human activity systems
Once the root definition for a system has been established then stage 4
requires the construction of a conceptual model which describes the
activities that must take place in order to achieve the transformation and
also how the operation of the system is to be monitored and controlled.
Conceptual models take the form of bubble diagrams in which

descriptions of activities are enclosed in bubbles and the bubbles linked
to each other by arrows. The arrows are intended to represent logical
dependency.
Conceptual models are generated with reference only to the root definition
and not to activities taking place in the real world. They are then, theoretical
models of systems that can bring about the stated transitions and their value
lies in comparison with the real world activities.
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► SSM conceptual models of human activity systems (conceptual models) are notional, they are not intended to represent what
exists but to represent a stakeholder viewpoint. This is often misunderstood. The example above is not intended to represent
how rice is cooked; but how the stakeholders think it is cooked or how they think it should be cooked or how they would like it
cooked.
► In addition, the conceptual model should also contain a monitoring and controlling subsystem to monitor:
• The effectiveness of the system (Is this the right thing to do?)
• The efficacy of the system (Does it work?)
• The efficiency of the system (Does it use the minimum resources necessary?)

► Stage five – Comparing models with the real world
Now the model is compared with reality, insights are drawn from that comparison and ideas for improvements are
determined. This is the real powerhouse of the methodology. In stage five, comparing models with the real world can be
done in four ways.
- Unstructured discussions
- Structured questioning of the model using a matrix approach
- Scenario or dynamic modelling
- Trying to model the real world using the same structure as the conceptual model
Structured questioning of the model using a matrix is the most common – often using a matrix that looks at each
component of the model and asks :
• Does it exist in the real world ?
• How does it behave ?
• How is its performance identified and measured ?
• Is this process any good ?
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• Stage six – Defining changes that are desirable and feasible
This stage defines the desirable and feasible changes based on the analysis in previous stages. In the ideal situation, the
changes should cover all aspects of the system being analysed and the viewpoints of all participants.
In stage six, when defining changes the projects in the real world are always subject to schedule and resource constraints.
As a result, system analysts have to make decisions to prioritise the various requirements.
• Stage seven – Taking action to improve the real world situation
This final stage involves implementation of the changes identified. This is where the methodology comes full circle, and
maybe starts a new cycle.
SSM in analysing and defining business success

► SSM provides a mechanism to evaluate complex organisational problems which deal with human, social, political and
cultural factors - People involved in the information systems are viewed as stable elements who always react to the system
in a ‘predictable’ and rational manner. However, these technology-centred methodologies are insufficient in real world
problem situations, especially when the relevant situation is messy and ill-structured or when political and cultural factors
are prevalent in the organisation. As a reaction to these perceived inadequacies SSM provides a mechanism to allow
relevant human, social, political and cultural factors to form structures and act as explicit entities in the system analysis.
► Vigorous exploration of the problem helps to meet diverse needs of various stakeholders - SSM views system analysis as “a
process of inquiry into problem situations of human affairs” and explicitly recognises the multidimensional nature of
information system rationality. It aims to better meet the diverse needs of various stakeholders by exploring the problem in
a forum that encourages discussion and debate among all the parties. This would improve the quality of decision making.
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SSM in analysing and defining business success

► Flexibility of the system makes the decision making process more appealing - It is important to note that the SSM sequence
is not imposed upon the practitioner; a study can commence at any stage, with iteration and backtracking as essential
components. This unique quality of SSM welcomes new thinking into the whole decision making process. An organisation
will be able to define a problem in so many different ways and have many perspectives on how to solve it.
► SSM encourages group learning it is ideal as a group decision making approach. It is strengthened by the active
participation by different participants and stakeholders and encourages joint ownership of the problem solving process.
Managing Information Systems

► Management Information Systems (MIS) is the study of people, technology, organizations, and the relationships among
them. MIS professionals help firms realize maximum benefit from investment in personnel, equipment, and business
processes
► Businesses use information systems at all levels of operation to collect, process, and store data. Management aggregates
and disseminates this data in the form of information needed to carry out the daily operations of business.
► MIS professionals create information systems for data management (i.e., storing, searching, and analysing data). In
addition, they manage various information systems to meet the needs of managers, staff and customers
(Laudon, K. C. and Laudon, J., 2010)
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Identifying different types of operations systems

Types of Enterprise Information Systems
► Enterprise Resource Planning Systems
► Procurement Systems
► Manufacturing Systems
► Sales and Marketing Systems
► Delivery Systems
► Finance Systems
► Product Design Systems
► Workflow Management Systems
► Data Warehouse
► Business Intelligence Systems
Identifying different types of operations systems

Benefits of ERP Systems
► This integration can replace functionally oriented and often poorly connected legacy software, resulting in savings in
infrastructure support costs
► Improvements in operational integration enabled by ES can affect the entire organisation and therefore can positively
impact firm performance
► ERP systems also provide benefits in the area of transaction automation, ERP systems such as SCM systems provide more
sophisticated planning capabilities, and CRM systems facilitate customer relationship management
► ERP systems is that all enterprise data is collected once during the initial transaction, stored centrally, and updated in real
time
(Hencricks, et al. 2007)
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Understanding CRM and KMS

What is Customer Relationship Management?
CRM can be defined as an organisational approach that seeks to understand and influence customer behaviour through
meaningful communications in order to improve customer acquisition, retention, loyalty and profitability.
A technology-related perspective of CRM is described as the process of storing and analysing of large amounts of data that
provides insight into customer behaviour. This in turn enables the organisation to treat customers differently based on the
exhibited behaviour.

The image
shows the
importance of
ERP and other
systems to
support CRM
(Mishra and
Mishra, 2009)
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What is Knowledge Management?
► Knowledge management is described as a systematic process of finding, selecting, organizing, distilling and presenting
information in a way that improves an employee's comprehension in a specific area of interest.
► Knowledge management helps an organisation to gain insight and understanding from its own experience.
► Specific knowledge management activities help focus the organisation on acquiring, storing and utilizing knowledge for
such things as problem solving, dynamic learning, strategic planning and decision making
(Maier, 2007)

What is Knowledge Management Systems?
► Knowledge management systems refer to any kind of IT system that stores and retrieves knowledge, improves
collaboration, locates knowledge sources, mines repositories for hidden knowledge, captures and uses knowledge, or in
some other way enhances the KM process.
► Knowledge management systems are thought of in terms of their ability to help process and organize textual information
and data so as to enhance search capabilities and to garner meaning and assess relevance so as to help answer questions,
realize new opportunities and solve current problems.
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Knowledge Management and Business Intelligence
► Business intelligence concerns itself with decision making using data warehousing and online analytical processing (OLAP)
techniques. Data warehousing collects relevant data into a repository, where it is organized and validated so it can serve
decision-making objectives.
► Knowledge management is viewed as an element of business intelligence. It can be argued that KM is internal-facing BI,
sharing the intelligence amongst employees about how to effectively perform the variety of functions required to make the
organisation go.
► BI activities should provide knowledge improvement. This means that the effectiveness of business intelligence should
measured based on how well it promotes and enhances knowledge, how well it improves the mental model(s) and
understanding of the decision maker(s), and how well it improves decision making and, hence, firm performance. Business
intelligence should therefore be viewed as an integral part of KM.

For a traditional BI system to fully support a
knowledge management environment, it
must provide, or work in conjunction with,
capabilities like business process
management, business planning software,
collaborative software, portals, content
management systems and be able to
support more timely data feeds. (Maier,
2007)
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Factors that cause failure of KMS
► Inadequate support: managerial and technical, during both implementation and use.
► Expecting that the technology is a KM solution in itself.
► Failure to understand exactly what the firm needs (whether technologically or otherwise).
► Not understanding the specific function and limitation of each individual system.
► Lack of organizational acceptance, and assuming that if you build it, they will come – lack of appropriate organisational culture.
► Inadequate quality measures (e.g. lack of content management).
► Lack of organizational/departmental/etc fit - does it make working in the organisation easier? Is a system appropriate in one
area of the firm but not another? Does it actually disrupt existing processes?
► Lack of understanding of knowledge dynamics and the inherent difficulty in transferring tacit knowledge with IT based systems
(see segment on tacit knowledge under knowledge sharing).
► Lack of a separate budget.
Level 7 Diploma in Strategic Management and Leadership (Becerra-Fernandez, 2014) 39

Promoting acceptance and assimilation of KMS in an organization:
The process of successful implementation has three stages:
Stage 1: adoption
 Influenced by design: Innovation characteristics, fit, expected results, communication characteristics.
 Not influenced by design: Environment, technological infrastructure, resources, organizational characteristics.
Stage 2: acceptance
 Influenced by design: Effort expectancy, performance expectancy.
 Not influenced by design: Social influences, attitude towards technology use.
Stage 3: assimilation
 Influenced by design: social system characteristics, process characteristics.
 Not influenced by design: Management characteristics, institutional characteristics.
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The Ackoff Pyramid

► According to Nikhil Sharma, Zeleny has argued for a tier to the model beyond wisdom, termed
"enlightenment". Ackoff refers to understanding as an "appreciation of 'why'", and wisdom as "evaluated understanding",
where understanding is posited as a discrete layer between knowledge and wisdom (Rowley 2007; Sharma 2008;
Cleveland 1982; Lambe 2011; Williams 2014).
The Ackoff Pyramid

► The DIKW pyramid, also known variously as the DIKW hierarchy, wisdom hierarchy, knowledge hierarchy, information
hierarchy, and the data pyramid, refers loosely to a class of models for representing purported structural and/or
functional relationships between data, information, knowledge, and wisdom. "Typically information is defined in terms of
data, knowledge in terms of information, and wisdom in terms of knowledge".
► Not all versions of the DIKW model reference all four components (earlier versions not including data, later versions
omitting or downplaying wisdom), and some include additional components. In addition to a hierarchy and a pyramid, the
DIKW model has also been characterized as a chain, as a framework, as a series of graphs, and as a continuum.
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Tacit and explicit knowledge

The distinction between tacit and explicit knowledge is perhaps the most fundamental concept of knowledge management.
Such a distinction was first made by Michael Polyani in the 1960s, but it forms one of the central planks of Nonaka and
Takeuchi's book The Knowledge-Creating Company (1995)
Tacit knowledge (knowing-how): knowledge embedded in the human mind through experience and jobs. Know-how and
learning embedded within the minds of people. Personal wisdom and experience, context-specific, more difficult to extract
and codify. Tacit knowledge Includes insights, intuitions.
Explicit knowledge (knowing-that): knowledge codified and digitized in books, documents, reports, memos, etc. Documented
information that can facilitate action. Knowledge what is easily identified, articulated, shared and employed.
However, Dalkir (2005, p.8) notes that tacit knowledge is quite a relative concept: - what is easily articulated by one person
may be very difficult to externalize by another. Thus, the same content may be explicit for one person and tacit for another.
The terms ‘tacit knowledge’ and ‘implicit knowledge’ are sometimes used as synonyms. “Implicit” means that which is
implied in a statement, but is not explicitly said. The term could refer to things that are contextual to a statement - that is,
further statements that are connected with it in socially understandable manners.
Organisational Knowledge and Individual Knowledge

Business knowledge can exist on several different levels:
► Individual: Personal, often tacit knowledge /know-how of some sort. It can also be explicit, but it must be individual in
nature, e.g. a private notebook.
► Groups/community: Knowledge held in groups but not shared with the rest of the organisation Companies usually consist
of communities (most often informally created) which are linked together by common practice. These communities of
practice (Lave & Wenger 1991) may share common values, language, procedures, know-how, etc. They are a source of
learning and a repository for tacit, explicit, and embedded knowledge.
► Structural: Embedded knowledge found in processes, culture, etc. This may be understood by many or very few members
of the organisation E.g. the knowledge embedded in the routines used by the army may not be known by the soldiers
who follow these routines. At times, structural knowledge may be the remnant of past, otherwise long forgotten lessons,
where the knowledge of this lesson exists exclusively in the process itself.
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► Organisational: The definition of organizational knowledge is yet another concept that has very little consensus within
literature. Variations include the extent to which the knowledge is spread within the organization, as well as the actual
make-up of this knowledge. Hatch (2010) defines it as: "When group knowledge from several subunits or groups is
combined and used to create new knowledge, the resulting tacit and explicit knowledge can be called organizational
knowledge.
► Others present a broader perspective: "individual knowledge, shared knowledge, and objectified knowledge are different
aspects or views of organizational knowledge" (Ekinge & Lennartsson 2000). As always, texts emphasizing an IT based
outlook once again offer shallower, information-based definitions, e.g. Virvou & Nakamura 2008, "Information internalized
by means of research, study or experience that has value to the organization".
► For the purpose of this site I will adopt a broad, knowledge-based perspective. Organizational knowledge is therefore
defined as: all the knowledge resources within an organisation that can be realistically tapped by that organisation It can
therefore reside in individuals and groups, or exist at the organizational level.

► Extra-organizational: Defined here as: Knowledge resources existing outside the organisation which could be used to
enhance the performance of the organisation They include explicit elements like publications, as well as tacit elements
found in communities of practice that span beyond the organization's borders.
Implications for KM
► In order to enhance organisational knowledge, KM must therefore be involved across the entire knowledge spectrum. It
must help knowledge development at all levels and facilitate & promote its diffusion to individuals, groups, and/or across
the entire firm, in accordance with the organization's requirements. KM must manage organizational knowledge storage
and retrieval capabilities, and create an environment conducive to learning and knowledge sharing. Similarly it must be
involved in tapping external sources of knowledge whenever these are necessary for the development of the
organizational knowledge resources.
► To a large degree, KM is therefore dependent on the understanding and management of organizational learning,
organisational memory, knowledge sharing, knowledge creation, and organizational culture
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Individual Knowledge Management
Learning and Knowledge sharing in any organisation starts with individuals. Personal capacities, skills, learning and
communication preferences as well as work patterns all influence how an individual engages with their work context. The
work culture influences hugely how effective individual efforts at learning and knowledge sharing can be, especially in
motivating staff. Further, establishing as well as supporting a minimum standard in communication and other competencies
relevant to learning requires commitment of resources and leadership from the top. But individuals have a range of choices
on a daily basis, for example:
1. what to prioritise;
2. how much to question assumptions and current practices – be critically reflective;
3. whether to seek out learning from outside the immediate context
4. whether to make the effort to share ideas, innovations and lessons more widely.
Lesson Summary
► In this lesson you have covered the key objectives areas by first discussing the definitions for key terms such as
data and information. Next, data and information selection criteria have been discussed.
► This lesson aims to secure a sound knowledge in the levels of enterprise systems and critically evaluates the types
of systems used in an organisation and its integration. It also analyses how to manage these systems in the
business environment. You have also provided with key information on different types of systems and knowledge
management. The lesson is designed in a way to understand how knowledge management systems are linked with
customer relationship management and various business operations. Therefore, it is helpful to understand how
data and information are useful to support strategic decisions in an organisation.
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Critical aspects of
information sharing
within an
organisation
Taking
Introduction
► In this lesson we will be analyzing the information sharing within the organisation which makes employees as a team
allowing them to put forward their ideas, inspiration, new creations, discuss different matters and find solution for critical
issues. You will understand the importance of data privacy, challenges in storing information and data governance. You will
also learn the formats in which information can be provided and the impact of using various formats which will improve
the overall efficiency of the organisation in terms of employees, products, policies, customers and competitors.
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Learning Outcomes
2. Be able to understand the importance of information sharing within an organisation
2.1 Determine the legal responsibilities in sourcing, sharing and storing information
2.2 Critically discuss when information should be offered and access allowed
2.3 Critically evaluate the formats in which information can be provided and the impact of using various formats
Lesson Objectives
1. Capture, Store and Share Knowledge
2. Legal responsibilities in sourcing, sharing and storing information
3. Data Protection act 1998
4. Intellectual Property
5. Information Sharing
6. Data protection policies
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Capture, Store and Share Knowledge

► Capturing, storing and sharing knowledge is critical to any KMS. This starts with identifying where the organisation's knowledge is
located. This procedure is sometimes referred to as a knowledge map.
► Creating a knowledge map typically involves documenting the workflows and decision-making processes to identify key knowledge
workers in the organisation. Simply put, knowledge workers are people who create, use and disseminate knowledge. This typically
includes scientists, engineers, writers, educators, designers and other professionals.
Whether you are collecting new data or accessing existing data, you need to consider:
► how data will be stored;
► who will have access to the data; and
► how they will be able to access data.
► Remember, research ethics is all about unanticipated events - so you need to plan for unexpected and undesirable events (like
leaving a bag on a train, or losing a USB stick). What systems can you put in place to protect your participants, yourself and your
institution if something like that happens?

► Your planning should take account of what you need to do with hard copies (such as paper notes of interviews), computer files
with anonymised data that are not identifiable, and computer files with personal or identifiable data.
► Hard copies such as interview notes, prints of photographs, or video or audio tapes need to be kept securely locked away - for
example in a locked filing cabinet that can only be accessed by agreed members of the research team. Ask yourself:
► Who needs to have access to hard data?
► Will these data be anonymised before they are stored? If not, why not?
► Will these data be stored separately from personally identifying data?
► Where will the key be stored?
► Could any one find it and access the data who should not?
► How will you deal with hard copies in the period between data collection and data storage?
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Files - including computer files - that contain personal or identifiable data (such as names) come under the terms of the
Data protection Act. These files need to be encrypted or password protected, and only accessed by agreed members of the
team. Particular care needs to be taken if you are sharing files within the research team - e.g. on shared computer drives, or
by email - or if you are transferring personal data beyond the research team (e.g. if a gatekeeper is giving you a list of
contacts).
Computer files including anonymised still need to be held securely, and can only be shared according to the terms of your
consent from participants. Thus - for example - you need to get prior consent from participants if you plan to archive data for
use by other researchers. Anonymising data is more complicated than simply assigning an ID number or pseudonym -
see our section on anonymising data.
Legal responsibilities in sourcing, sharing and

storing information
 Confidentiality and privacy:
Special care must be taken when sourcing, sharing and storing information such that this must fully compliance with the Data Protection Act.
Information about organisation and employee must not be disclosed with out their consent.
► Copyright and software protection
Any type of data, information and software must be used under copyright and software protection Act. This means that using someone work must
be authorised by that person or any organisation to which it belongs.
► Contractual obligations
In case of conditional agreement information sourcing, sharing and storing must not breach the conditions i.e. all these operations must be
according to the terms and conditions of contract.
► IS and Crime (criminal not civil law)
This includes frauds i.e. dishonestly use of information, infringement i.e. violation of rules and regulation, miss used of information i.e. for the
purpose of making organisation or individual unpopular.
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Data Protection act 1998

► This act is being framed by the UK government on processing the data or information of the identifiable living people (Luftman,
Bullen and Neumann, 2004). This act also focuses on protecting the personal data of individual in the UK. This act defines eight
principles that require companies to keep the personal information with themselves. The basis eight principles that need to be
followed by companies are:
 Information should be used fairly and lawfully
 Data should be used for the specific purposes
 Data or information should be used adequately not excessively
 Information should be accurate
 Unnecessary information or data should not being kept with the organisation
 Company should handled the personal information properly
 Company or individual should keep information or data securely or safely
 Company should not transfer the information outside the UK region
Intellectual Property
► One of the domains that have been deeply impacted by digital technologies is the domain of intellectual property. Digital
technologies have driven a rise in new intellectual property claims and made it much more difficult to defend intellectual
property.
► Intellectual property is defined as “property (as an idea, invention, or process) that derives from the work of the mind or
intellect.” This could include creations such as song lyrics, a computer program, a new type of toaster, or even a sculpture.
► Practically speaking, it is very difficult to protect an idea. Instead, intellectual property laws are written to protect the
tangible results of an idea. In other words, just coming up with a song in your head is not protected, but if you write it
down it can be protected.
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Copyright
► Copyright is the protection given to songs, computer programs, books, and other creative works; any work that has an “author”
can be copyrighted. Under the terms of copyright, the author of a work controls what can be done with the work, including:
► Who can make copies of the work.
► Who can make derivative works from the original work.
► Who can perform the work publicly.
► Who can display the work publicly.
► Who can distribute the work.
► Many times, a work is not owned by an individual but is instead owned by a publisher with whom the original author has an
agreement. In return for the rights to the work, the publisher will market and distribute the work and then pay the original
author a portion of the proceeds.
► Copyright protection lasts for the life of the original author plus seventy years. In the case of a copyrighted work owned by a
publisher or another third party, the protection lasts for ninety-five years from the original creation date
Copyright
► Obtaining Copyright Protection
In the United Kingdom, a copyright is obtained by the simple act of creating the original work. In other words, when an
author writes down that song, makes that film, or designs that program, he or she automatically has the copyright. However,
for a work that will be used commercially, it is advisable to register for a copyright with the UK Copyright Office. A registered
copyright is needed in order to bring legal action against someone who has used a work without permission.
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Fair Use
► Another important provision within copyright law is that of fair use. Fair use is a limitation on copyright law that allows for the use of
protected works without prior authorization in specific cases. For example, if a teacher wanted to discuss a current event in her class, she
could pass out copies of a copyrighted news story to her students without first getting permission. Fair use is also what allows a student to
quote a small portion of a copyrighted work in a research paper.
► Unfortunately, the specific guidelines for what is considered fair use and what constitutes copyright violation are not well defined. Fair use
is a well-known and respected concept and will only be challenged when copyright holders feel that the integrity or market value of their
work is being threatened. The following four factors are considered when determining if something constitutes fair use:
► The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes;
► The nature of the copyrighted work;
► The amount and substantiality of the portion used in relation to the copyrighted work as a whole;
► The effect of the use upon the potential market for, or value of, the copyrighted work.
► If you are ever considering using a copyrighted work as part of something you are creating, you may be able to do so under fair use.
However, it is always best to check with the copyright owner to be sure you are staying within your rights and not infringing upon theirs.
Patent
Another important form of intellectual property protection is the patent. A patent creates protection for someone who invents a new
product or process. The definition of invention is quite broad and covers many different fields. Here are some examples of items
receiving patents:
► circuit designs in semiconductors;
► Software and applications;
► prescription drug formulas;
► firearms;
► locks;
► plumbing;
► engines;
► coating processes; and
► business processes.
Once a patent is granted, it provides the inventor with protection from others infringing on his or her patent. A patent holder has the
right to “exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the
invention into the United States for a limited time in exchange for public disclosure of the invention when the patent is granted.” As
with copyright, patent protection lasts for a limited period of time before the invention or process enters the public domain. In the
US, a patent lasts twenty years. This is why generic drugs are available to replace brand-name drugs after twenty years.
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Trademark
► A trademark is a word, phrase, logo, shape or sound that identifies a source of goods or services. For example, the Nike
“Swoosh,” the Facebook “f”, and Apple’s apple (with a bite taken out of it) are all trademarked. The concept behind
trademarks is to protect the consumer. Imagine going to the local shopping center to purchase a specific item from a
specific store and finding that there are several stores all with the same name!
► Two types of trademarks exist – a common-law trademark and a registered trademark. As with copyright, an organisation
will automatically receive a trademark if a word, phrase, or logo is being used in the normal course of business (subject to
some restrictions, discussed below). A common-law trademark is designated by placing “TM” next to the trademark. A
registered trademark is one that has been examined, approved, and registered with the trademark office, such as the
Patent and Trademark Office in the US. A registered trademark has the circle-R (®) placed next to the trademark.
Trademark
► While most any word, phrase, logo, shape, or sound can be trademarked, there are a few limitations. A trademark will not
hold up legally if it meets one or more of the following conditions:
► The trademark is likely to cause confusion with a mark in a registration or prior application.
► The trademark is merely descriptive for the goods/services. For example, trying to register the trademark “blue” for a blue
product you are selling will not pass muster.
► The trademark is a geographic term.
► The trademark is a surname. You will not be allowed to trademark “Smith’s Bookstore.”
► The trademark is ornamental as applied to the goods. For example, a repeating flower pattern that is a design on a plate
cannot be trademarked.
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Privacy
The term privacy has many definitions, but for our purposes, privacy will mean the ability to control information about
oneself. Our ability to maintain our privacy has eroded substantially in the past decades, due to information systems.
Personally Identifiable Information
► Information about a person that can be used to uniquely establish that person’s identify is called personally identifiable
information, or PII. This is a broad category that includes information such as:
► name;
► social security number;
► date of birth;
► place of birth;
► mother‘s maiden name;
► biometric records (fingerprint, face, etc.);
► medical records;
► educational records;
► financial information; and
► employment information.
Privacy
► Organisations that collect PII are responsible to protect it. The Department of Commerce recommends that “organisations
minimize the use, collection, and retention of PII to what is strictly necessary to accomplish their business purpose and
mission.” They go on to state that “the likelihood of harm caused by a breach involving PII is greatly reduced if an
organisation minimizes the amount of PII it uses, collects, and stores.” organisations that do not protect PII can face
penalties, lawsuits, and loss of business. In the US, most states now have laws in place requiring organisations that have
had security breaches related to PII to notify potential victims, as does the European Union.
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Non-Obvious Relationship Awareness

Digital technologies have given us many new capabilities that simplify and expedite the collection of personal information.
Every time we come into contact with digital technologies, information about us is being made available. From our location
to our web-surfing habits, our criminal record to our credit report, we are constantly being monitored. This information can
then be aggregated to create profiles of each and every one of us. While much of the information collected was available in
the past, collecting it and combining it took time and effort. Today, detailed information about us is available for purchase
from different companies. Even information not categorized as PII can be aggregated in such a way that an individual can be
identified.
This process of collecting large quantities of a variety of information and then combining it to create profiles of individuals is
known as non-obvious relationship awareness, or NORA. First commercialized by big casinos looking to find cheaters, NORA
is used by both government agencies and private organisations, and it is big business.
Slack, N., Brandon-Jones, A. and Johnston, R. 2011
Non-Obvious Relationship Awareness

In some settings, NORA can bring many
benefits, such as in law enforcement. By being
able to identify potential criminals more
quickly, crimes can be solved more quickly or
even prevented before they happen. But
these advantages come at a price: our privacy.
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Information Sharing
► Information obtaining, accessing and processing must be according to the Data Protection Act, which gives the right to
individuals Person, organisation etc to know what information is held about them, the purpose of information holding as
well ensures them that personal information is handled properly.
► Anyone who is processing someone personal information must comply with the eight principles of Data Protection Act,
which are explained below.
Fairly and lawful process:
► According to 1st principle, Personal data must be processed fairly and lawfully. This means that the data subject i.e. person,
organisation permitted the processing of their personal information for any legal and legitimate purposes such as
employment, justice, health and safety etc.
Process for limited purpose:
► According to 2nd principle, Personal data must be obtained and process for a limited purpose only i.e. one or more
particular and lawful purposes. If the further processing of personal information is required for other purposes than the
specified then the data subject must be informed and further processing should be according to the data object consent.
Information Sharing
► Adequate, relevant and not excessive:
According to 3rd principle, Personal data must be adequate, relevant and not excessive in relation to the purpose it is
obtained and processed. This must ensure the data subject that the processing of personal data is relevant to the specified
purpose and is not unnecessary.
► Accurate and up to date:
According to 4th principle, Personal data must be accurate and up to date if necessary. This means that the accuracy of the
data must be ensure whatever it is directly obtained from the data subject or it is through third party. It is the responsibility
of the data object to inform the about any changes or inaccuracy in the data.
► Not kept for longer than is necessary:
According to 5th principle, Personal data must not be kept longer than is required for the purpose or purposes after it is
processed.
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Information Sharing
► Process in line with a person’s right:
According to 6th principle, Personal data shall be processed with the data subject rights under the Data Protection act. This means
the data subject has the right to request for the correction, blocking and deleting of their personal data after processing.
► Secure:
According to 7th principle, the security of personal data must be ensures. This means that in case of unauthorised or unlawful
processing, accidental loss and destruction to the personal data appropriate technical and organisational measures should be taken to
prevent such incidents.
► Data Transfer:
According to 8th principle, Personal data must not be transferred outside the European Economic Area i.e. to outside countries. If the
outside countries can ensures that personal data will have adequate level of protection and will be processed with the consent of
data object and for the specified purpose, then in such situation data can be transferred.
Data protection policies

► An organisation’s policies are at the heart of its business operations. They detail exactly how employees should handle
certain issues, ensuring that everybody is on the same page and following agreed best practices.
Encryption policies
► According to Rickard (2007), most companies lack policies around data encryption. That will need to change with the
GDPR, because a key tenet of the Regulation is that organisations should secure data with “appropriate technical and
organisational measures”. Current guidance states that encryption is central to this.
► Although encryption won’t stop malicious actors accessing an organisation’s information, it will prevent them from being
able to use it. It works by obscuring information and replacing identifiers with something else, meaning it is only accessible
or comprehensible to approved users.
► Organisations might also choose to pseudonymise data, either instead of or alongside encryption.
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Acceptable use policies
► If you don’t want employees spending all day on non-work-related websites, you ought to put in place an acceptable use
policy. This outlines any activities that are outright prohibited (you will probably include visiting certain websites or
downloading applications), as well as stating limits on the amount of time employees can spend pursuing non-work
activities.
► Be careful when writing your acceptable use policy. Remember, it’s about keeping your employees away from malware
and viruses as much as it is about preventing them from slacking off.
► Your acceptable use policy should also tell employees how the organisation monitors them to ensure the policy is being
followed. Under no circumstances should organisations use exhaustive or automated measures, such as spyware, nor
should they use any method that leaves no trace of the monitoring.

Password policies
► There is so much advice on creating strong passwords, and so many warnings about the perils of weak ones, that there is
simply no excuse for employees to use combinations such as “password1” or “0123456”.
► Policies should outline guidance for what a password should look like (e.g. a combination of letters, numbers and special
characters) and require staff to use different passwords for each account. They should also implement systems that
prompt staff to change their password at least every six months.
► Rickard adds that password policies should also warn employees about writing their passwords down. “One of the easiest
ways to breach a company is to put somebody on the janitorial staff and go looking at desks. People often have Post-it
notes on monitors with passwords on them.”
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Email policies
► IT should have a policy in place that hardens systems and detects spam and viruses. “The kind of information that can be
disclosed via email should be spelled out very clearly,” said Rickard.
► One of the biggest email-based threats is phishing, which can be mitigated by technology only to some extent. Scam
emails often look legitimate enough to bypass spam filters, meaning the only thing standing between an organisation and
a data breach is the employee’s ability to recognise the threat.
► Email policies should therefore mandate that employees take regular staff awareness courses to stay up to date with the
threat of email-based fraud.

Data processing policies
► Organisations should map the way data flows through their organisation to see what data is being processed, how it’s
being used and who is receiving it, said Rickard, so a policy is required to ensure this happens. It enables organisations to
account for all their data and provide the necessary information to individuals who submit data subject access requests.
Mintzberg,H. et. al, 2003
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The formats to be used

Organisation must monitor and control the way in which information are offered within the company. Below are some
methods to be used to offer information:
► Electronic/manual:
In Electronic format information are provided through electronic means computer generated such as E-mail, Ms Word file,
Excel sheet, Data Bases etc. while manual information are almost are provided on papers i.e. printed or handwritten such as
log books, manual order book, letters, books, reports etc.
► Lists of Individuals
List of individual could be computer generated or manual, which contains details about organisation employees, managerial
stop and other staff responsible for different task. Usually this contains names, designation, contact etc.

► Libraries:
Libraries are well organized and well-structured data storage system used in computer to holds data files, folders, records, pictures, and videos
in a proper order etc. now days there are many electronic libraries holding e-book, e-journal etc. not only electronic libraries are used still most
organisation using large number of manual libraries contains books, journal, research papers, reports etc.
► Folders
Folder is container used by computer system for organizing folders, programs and files on a disk in graphical user interfaces mostly represented
with a graphical image (icon) of file folder on the screen. Manual folders normally used for holding papers i.e. invoices, report, expenses etc.
► Documents
Computer generated document is any self-contained piece of work created with help of any application program is saved with a unique file
name. This unique name is used to retrieve that document. While manual documents are hard copies or handwritten records, personal detail,
manual etc.
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► List items inside the lists
This is heretical or tree structure, similar items are list under single category the inside list are known as sub categories of the
main category. This keeps items in an organized structure and it is easy to find and locate a specific item.
► List items present in the libraries
In the libraries all items are divided in categories, each category contains a list of interrelated items as well sub items, this
categorization helps in searching and locating items within the vast amount of the available items.
Slack, N., Chambers, S., Johnston, R., 2010
Lesson Summary
In this lesson you have covered the key objectives areas by first discussing the importance of capturing, storing and
sharing knowledge and information. Subsequently, legal requirements in sourcing, sharing and storing information
have been critically discussed. You are able comprehensively understand the importance of data protection and
policies to implement in an organisation in terms of information sharing.
The lesson also aims to provide you a comprehensive knowledge on how to store information safely in an organisation
in a way to retrieve them when required. Overall, you were able to understand the ethics of information sharing,
storing and information cultures.
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Information
management to
support strategic
decision making
Taking
Introduction
► In this lesson we will be analyzing the importance of having information to identify patterns, trends and their impact on
decision strategic decision making. Therefore, you will be learning on tools and techniques required for decision making.
However, based on the module requirement, this is will only be related to internal audit and tools and techniques related
to internal information of organisations. You will also learn on data mining and understand data and information sources
available to assist in strategic decision taking.
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Learning Outcomes
3. Be able to use information to support strategic decision making
3.1 Critically analyse information to identify patterns, trends and impacts on strategic decision making
3.2 Critically evaluate a range of decision making tools and techniques available to support strategic decision making
3.3 Determine data and information sources available to assist in strategic decision taking
Lesson Objectives
1. Analyse information to identify patterns and trends

2. Decision making tools and techniques - SWOT Analysis
3. TWOS Matrix
4. Internal Environment Audit
5. Key Success Factors(KSF’s) and Critical Success Factors (CSF’s)
6. Internal Analysis Tools and techniques - Activity Maps
7. Innovation Audit
8. Data Mining
9. Using information to support business processes
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Analyse information to identify patterns and

trends
With the help of information system, organisations can identify and predict the patterns and trends in all aspect of the
business such as market, competition, customer demands etc and based on the information analysis they can make good
strategic decisions.
The market
► The Information system analyses the data collected from the market and based on the analysis the organisation can decide
about the product quality improvement, increase productivity, adjust product price and can decide about the launching of
new products and organisation future plans.
The competition
► Based on the Information system analysis of the market data, organisation can decide about the product price reduction,
improves quality, improve advertising campaign, more facilities to customer and shareholder; as competition with other
organisation.

trends
The state of economy
► Based on the Information system analysis, organisation can manufacture economical product with low cost and can utilise
available resources efficiently i.e. reduction in manufacturing time, proper use of material, required amount of product,
reduction in manufacturing defects etc.
Legislative development
► Information system improves the legislative system of the organisation. They are fully compliance with the data protection
act, international laws and standards, legal rights. Based on the information analysis, the organisations can take legal steps
to attract customers, compete with their competitors, can utilise information resources, shares information, utilise
hardware and software etc.
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trends
Customer demands
► Based on the Information system analyses of the collected data from the market organisation can predict the customer
demands such as what customer wants, is their need of improvement in products, is there a possibility to launch new
product, are products easily available to customer, is there a need of change in the policy and legislation, are customers
able to commits complains and advices etc, are they happy with prices etc.
Johnson, G, K. et. al, 2011
Decision making tools and techniques

SWOT Analysis
SWOT analysis is a simple but powerful tool for
sizing up a company’s resource capabilities, and
deficiencies, its market opportunities, and the
external threats to its future growth and
survival.
A SWOT analysis provides a good overview of

whether a firm’s overall position is
fundamentally healthy or unhealthy and
provides a basis for crafting strategy that
capitalise on the firm’s strategic capabilities.
Moreover, the analysis helps the firm identify
opportunities that can maximize profitable
growth and threats that the company needs to
defend itself against. (Johnson, G, Whittington,
R. and Scholes, K.,2011)
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SWOT Analysis
A Strength is something the company is good at doing or an attribute that enhances its competitiveness. Potential
Resource strengths and capabilities of a firm may include one or more of the following internal strategic factors.
 Economies of scale and/or learning and experience
 A powerful strategy curve advantages
 Distinctive and Core competencies  Proprietary technologies, superior technological
 A product that is strongly differentiated from competitors skills and important patents
 Competencies and capabilities that are well matched to  Superior intellectual capital relative to key
industry key success factors competitors
 A strong financial condition-ample financial resources to  Wide Geographic Coverage and strong distribution
grow the business capability
 Strong brand name, image/company reputation  Strong advertising and promotion
 An attractive customer base  Product innovation capabilities
 Proven capabilities in improving production
processes
 Good supply chain management capabilities
 Better product quality relative to competitors

SWOT Analysis
A Weakness, or competitive deficiency, is something a company lacks or does poorly in comparison to other firms in the industry or
a condition that puts it at a disadvantage in the market place. Potential resource weaknesses and strategic deficiencies of a firm can
be one or more of the following factors ;
 No clear strategic direction, mission and values  Weak brand image or reputation
 Resources that are not well matched with industry  Weaker dealer network than key competitors and/or
success factors lack of adequate global distribution capability
 No well-developed or proven competencies  Behind on product quality, R&D and/or technological
 A weak balance sheet with high level of liabilities know-how.
 Weak or unproven product innovation capabilities  In the wrong strategic group
 Narrow product line relative to competitors  Inferior intellectual capital and e-commerce
capabilities
 Short of financial funds to grow the business and
pursue promising initiatives
 Too much under-utilised plant capacity
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SWOT Analysis
An Opportunity is a potentially favorable condition in which a business can capitalise on a changing trend or an increasing demand
for a product by a demographic group that has yet to be recognised by its competitors. For a market opportunity to exist, a
company must be able to identify who are their potential customers , the specific needs that needs to be met, the size of the
market, and its capacity to capture market share. Potential Opportunities of a firm may include the following external strategic
factors.
 Openings to win market share from rivals  Utilising existing company skills-technological
 Sharply rising buyer demands for the industry’s know-how to enter new product lines or new
product businesses like Online sales
 Expanding into new geographic markets and/or  Backward and forward integration
serving new market segments  Falling trade barriers in attractive foreign markets
 Expanding the company’s product line to meet a  Acquiring rival firms or companies with attractive
broader range of customer needs technological expertise or capabilities

SWOT Analysis
A Threat is an Agent, factor, or force in an organisation’s external environment that is out of its control, and can directly or
indirectly affects its chances of success or failure. Potential External Threats would include ;
 Increasing intensity of competition among rivals

 Slowdown in market growth
 Likely entry of potent new competitors
 Loss of sales to substitute products
 Growing bargaining power of customers and suppliers
 Adverse demographic changes or shift in buyer needs or tastes away from the industry’
 Restrictive trade policies, imposed by foreign governments
 Costly new regulatory requirements
A SWOT analysis benefits the organisation and managers by identifying the key environmental impacts influencing the
organisation's business environment by identifying the key strengths and weaknesses It also helps to generate Strategic Factors
Analysis Summary Matrix by scoring the importance and impact of each of the factors +5 to -5 in order to assess the inter-
relationships between environmental impacts and strengths and weaknesses. This summary facilitate the comparisons with
competitors. Finally, the SWOT analysis helps the firm to generate alternative strategies through the TWOS matrix. (Johnson, G,
Whittington, R. and Scholes, K.,2011)
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TWOS Matrix

TWOS Matrix
A TOWS matrix illustrates how the external opportunities and threats facing a particular corporation can be
matched with that company’s internal strengths and weaknesses to result in four sets of possible strategic
alternatives.
A TOWS analysis involves the same basic process of listing strengths, weaknesses, opportunities and threats
as a SWOT analysis, but with a TOWS analysis, threats and opportunities are examined first and weaknesses
and strengths are examined last.
TOWS analysis is a useful brainstorming tool for strategic managers to create various growth and
retrenchment strategies for the organisation as a whole or specific SBU’s . For Example ,
S-O strategies-pursue opportunities that fit well with the company’s strengths
W-O strategies overcome weaknesses to pursue opportunities
S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats
W-T strategies make a defensive plan to prevent the firm’s weaknesses from making it susceptible to
external threats
(Johnson, Scholes and Whittington, 2008)
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Internal Environment Audit
The purpose of an Internal environmental audit is to regularly examine the firm’s plans and policies, human
resource, financial resource, corporate image, plant and machinery, labour-management relationship, vision ,
mission etc. to assess their effectiveness in achieving company’s strategy and the goals.
Managers conduct Internal audits to achieve are several key purposes. For example, the Internal Audit helps
to identify
 Whether the internal processes and systems in the organisation are working well
 What are the areas that need to be improved
 Are there any new potential environmental risks
 Have clear objectives and targets been set and are they been met
 Are adequate monitoring and control systems and procedures are in place
 Do the employees, contractors and suppliers have the necessary skills to carry out the given tasks and is
given appropriate training
Internal audits also act as a valuable tool for getting the commitment within the different parts of the
organisation.

The frequency of audits will depend on the significance and impact of the external environmental forces. However, it is
important that managers audit their internal strategic factors at least once a year.
The following techniques and frameworks are useful in conducting a successful Internal Environment Audit. They are;
 Value Chain Analysis

 Value Network
 Benchmarking
 Activity Maps
 Innovation Audit
 Product Life Cycle
 McKinsey’s 7 S framework
 Portfolio Analysis
Johnson, Scholes and Whittington (2008)
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Key Success Factors(KSF’s) and Critical Success Factors

(CSF’s)
Key Success Factors are the external competitive factors the organisation must satisfy to be successful. It is important for
managers to understand that competitive strategies will only be effective if they are focused on what is important in the market
or the industry’s Key Success Factors (KSF) . The organisation must satisfy these external competitive factors if they want to be
successful. The Key Success Factors of an industry are identified through the existing supply and demand conditions, the wide
technological and socio-cultural aspects and the legal and regulatory framework of the industry. KSF’s are applicable to all
companies in the industry because all competitors in that market must satisfy the same competitive factors.
Identifying Key Success Factors can be tricky. For example, in the e-commerce industry having a transactional website is not
necessarily an industry Key Success Factor because it is part of the nature of the business. However, having a website that is
quick to download, effectively designed to support easy navigation, and is secure to make transactions does satisfy Key Success
Factors because it ensures effectiveness and competitive performance. Also a large retailer in addition to product choice and
product availability at competitive prices, ensuring easy access, parking facilities and providing extra services such as food and
beverage and a crèche is a relevant Key Success Factor to be competitive in the Retail Industry.

(CSF’s)
To summarise anything that offers higher quality, good service, better accessibility, customer convenience and value for money
can qualify for industry KSF’s. Similarly, adopting ethical approaches to business transactions and embracing ecological and
environmental requirements also satisfies KSF’s because the company is seen as a good corporate citizen and is more attractive
to customers. Managers need to identify the KSF’s and develop more suitable strategies according to the existing conditions of
the business environment. Johnson, G., Whittington, R. and Scholes, K. (2011)
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(CSF’s)
Critical Success Factors are internal to the organisation and is important to achieve operational success. According to Johnson et al.
in 2011 Critical Success Factors (CSF) are the product features valued by a group of customers and are, therefore, where the
organisation must excel to outperform competitors.
There are five types of critical success factors They are;

 the structure of the particular industry or the industry CSFs
 competitive strategy, industry position, and geographical location or the strategy CSFs
 the macro environment or the environmental CSFs)
 problems or challenges to the organisation or the temporal CSFs
 management perspective or the management CSFs

(CSF’s)
Critical success factors (CSFs) define the key areas of performance that are essential for the organisation to achieve its mission.
Managers must know and consider these key areas when they set goals and direct day-to-day operations and tasks that are
important to achieving goals. When these key areas of performance are made explicit, they provide a common point of reference
for the entire organisation. Therefore, any activity or initiative that the organisation undertakes must ensure consistently high
performance in these key areas.Otherwise, the organisation may not be able to achieve its goals and consequently may fail to
accomplish its mission. Johnson, G., Whittington, R. and Scholes, K. (2011)
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Internal Analysis Tools and techniques -

Activity Maps
Another Internal analysis tool

available for managers is the
Activity Maps.
An Activity map is a diagnostic
tool to identify the organisations
competitive advantage. It
connects the organisation’s value
proposition to the activities of
the organisation and enable the
company to deliver this value
proposition better than the
competitors.

Activity Maps
Developing an Activity map involves several steps.
 First step is to Brainstorm a long list of unique or special aspects of the company. This includes many different things such as assets,
resources, policies, culture and processes.
 Second step is to identify the most important differentiated benefit of the Value Proposition
 Thirdly raise the question on “How do we deliver this benefit?” and draw the cause and effect tree by identifying several layers of cause
and effect. Follow the same process for each differentiated benefit from the Value Proposition and note the common causes
 Fourthly combine the cause and effect trees to one map, linked by the common causes
 Brainstorm the links further by bringing in people from diverse parts of the company.
 Sense check by asking the following questions:
a. From your brainstorm – is there anything important missing from your map?
b. Can you explain the business logic behind every cause and effect relationship?
c. Does it fit with your intuition?
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Activity Maps
The above diagram shows the Activity Map done for Southwest Airlines. Southwest Airlines has a very robust strategy and
this is one of the reasons it has been the most consistently profitable airline in the US. Its activity map shows great fit –
everything that it does is tailored to delivering its low cost, convenience, on time, friendly but limited customer service which
are the key aspects of its value proposition. The inter linkages indicate that it is very hard for competitors to copy their
strategy because a competitor would have to match them on multiple different areas at the same time. Johnson, G.,
Whittington, R. and Scholes, K. (2011)

Innovation Audit
An Innovation Audit is also an important tool used in the Internal Analysis.
Innovation Audit is an in-depth analysis of different aspects of an organisation’s

current innovation capabilities, procedures and processes. They are
determined by examining key indicators to identify the strengths and
weaknesses. The results of the audit will highlight what are the barriers to
innovation, as well as the improvements or new methods that is needed to
maximise the organisation’s innovation capabilities.
The purpose of carrying out an Innovation audit is to enhance the

organisation’s innovation capability by identifying opportunities to enhance
innovation and clarify where the organisation needs to focus to maximise their
innovation success. It embeds innovation as part of the organisation culture.
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Innovation Audit
Now let’s look at the key benefits of conducting an innovation audit.
 Firstly the audit helps to build innovation and creativity in individuals

 Secondly it can identify and control the barriers that hinder creativity and innovation in the organisation
 Thirdly it fosters innovation in the organisation’s culture
 Fourthly it can align the organisation in common purpose and action to achieve its strategic goals
Tidd, Bessant, and Pavitt in their book “Managing Innovation” has developed a innovation audit framework for an organisation that
reviews five main areas:
First dimension is Strategy .In this the dimension, the audit takes a look at three major areas. First is whether the company has a
well-managed strategic planning process in place. Second is whether innovation is appreciated by the entire organisation and is
incorporated within the corporate strategy. Third is whether the company has put in place mechanisms that will effectively
implement the corporate strategy.
The second dimension is the Process This dimension examines the robustness and flexibility of the organisation’s new product
development process and whether it brings the attention of everyone involved to the customer’s need as opposed to only the
marketing department focusing on the customer’s need. In this dimension, we also take a look at the organisation’s ability to
manage its internal processes. Specifically, we examine the health of the process that manages all other processes.

Innovation Audit
The third dimension is Organisation. In this dimension, we examine two major areas. The first would be whether the
organisational structure encourages, rather than stifle innovation through effective top-down, bottom-up approach and lateral
communication and coordination within the firm. Second, and just as important, is whether the management has put in place a
system that encourages employees to bring forth new ideas.
Fourth dimension is Linkages .In this dimension we focus on the firm’s ability to create healthy relationships with external entities
such as suppliers, customers, the firms from other industries, specialist individuals, as well as competitors. Specifically, we take a
look at the potential of these links to provide knowledge/information to the firm. Likewise, we also investigate the firm’s ability to
provide feedback to these entities.
The fifth dimension is Learning . In this the audit takes a look at four major areas in this dimension. First, it tries to gauge the
organisation’s commitment to the training and development of its employees. Second, the audit examines the organisation’s
ability to gather knowledge and information from its linkages. Third, the audit takes a look at the firm’s ability to learn from its
successes and failures. Finally, the audit examines the firm’s ability to share these learnings to the entire organisation.
Once all five dimensions have been measured, we then use the numbers to plot the firm’s innovativeness profile. The diagram
here is an example of an innovation profile done for an organisation. The organisation needs a major overhaul to improve its
innovativeness as it has indicated a low score on a index of 0-7 on four dimensions of the framework which are strategy, learning,
linkages and organisation. Particularly, we might suggest that it revisit its strategic planning process to ensure that it is well
developed and that it incorporates innovation. Johnson, G., Whittington, R. and Scholes, K. (2011)
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McKinsey’s 7 S Framework
McKinsey 7s model was developed in 1980s by McKinsey
consultants Tom Peters, Robert Waterman and Julien Philips.
Since the introduction, the model has been widely used by
academics and practitioners as a popular Internal Analysis and
strategic planning tools. It presents an emphasis on human
resources or the Soft S, rather than the traditional production
tangibles of capital, infrastructure and equipment, as a key to
higher organisational performance and competitive advantage.
The model shows how 7 elements of the company: Structure,

Strategy, Skills, Staff, Style, Systems, and Shared values, can be
aligned together to achieve effectiveness in a company. The key
point of the model is that all the seven areas are interconnected
and a change in one area requires change in the rest of a firm for
it to function effectively.

In McKinsey model, the seven areas of organisation are divided into the ‘soft’ and ‘hard’ areas. strategy, structure and systems
are hard elements that are much easier to identify and manage when compared to the soft elements of skills, staff, style and
shared values. On the other hand, soft areas, although harder to manage, are the foundation of the organisation and are more
likely to create the sustained competitive advantage.
Now let us look at each of these 7 elements in detail .

Strategy is a plan developed by a firm to achieve sustained competitive advantage and successfully compete in the market. So
what does a well-aligned strategy mean in the 7s model? In general, a sound strategy is the one that’s clearly articulated, is long-
term, helps to achieve competitive advantage and is reinforced by strong vision, mission and values. But it’s hard to tell if such
strategy is well-aligned with other elements when analyzed alone. So in the 7s model it looks at the strategy to see if its aligned
with other elements. For example, short-term strategy is usually a poor choice for a company but if its aligned with other 6
elements, then it may provide strong results.
Structure is the way business divisions and units are organized and includes the information of who is accountable to whom. In
other words, structure is the organisational chart of the firm. It is also one of the most visible and easy to change elements of
the framework.
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Systems are the processes and procedures of the company, which reveal business’ daily activities and how decisions are made.
Systems are the area of the firm that determines how business is done and it should be the main focus for managers during
organisational change.
Skills are the abilities that firm’s employees perform very well. They also include capabilities and competences. During
organisational change, the question often arises of what skills the company will really need to reinforce its new strategy or
new structure.
Staff element is concerned with what type and how many employees an organisation will need and how they will be recruited,
trained, motivated and rewarded.
Style represents the way the company is managed by the leaders and the top-level managers, how they interact, what actions
do they take and their symbolic value. In other words, it is the management style of company’s leaders.

Shared Values are at the core of McKinsey 7s model. They are the norms and standards that guide employee behavior and
company actions and is the foundation of every organisation.
The model can be applied to many situations and is a valuable tool ;

 To facilitate organisational change
 To help implement new strategy
 To identify how each area may change in a future and
 To facilitate the merger of organisations.
Stoner, J.A.F., Freeman, R.E. and Gilbert, D.R. (2007)
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Model Driven DSS

► Model-driven is a complex Decision Support System (DSS) system helping in analysing decisions or choosing different
options between the available. This type of system is used by the organisation / Business managers and staff members, or
by other peoples usually interact with the organisation. The use of the system is for a number of purposes, which is
depending on the setup of the model such as scheduling, decision analyses etc. There are a number of ways for the
deployment of Model Driven DSS system such as in stand alone PCs through hardware and software in, through client /
server systems, or through the web.
Stoner, J.A.F. et. al(2007)
Data Driven DSS

► The organisation manager mostly uses the Data Driven Decision Support System (DSS) system as well staff and the
product/service suppliers used it. The use of the system is for a specific need by sending query to a database or data
warehouse, which then returns the requested specific information. This type of system is mostly deployed through a
mainframe system, client/server system and through the web. Computer-based databases are the example such system,
having the capability to response to query and valuable results value from existing databases.
Stoner, J.A.F. et. al(2007)
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Data Mining
► Data Mining is the data analysing process from different perspectives and after processing generation of useful
information summary. This summary information are utilised by the organisations to increase revenue, cuts costs etc. Data
mining software is one of the analytical tools available to analyse data. This tool allows users to do analysis of the data
from different angles, categorise data, and finally identification of the relationships in a summarised data.
► Data mining, popularly known as Knowledge Discovery in Databases (KDD), it is the nontrivial extraction of implicit,
previously unknown and potentially useful information from data in databases. Knowledge discovery is needed to make
sense and use of data. Though, data mining and knowledge discovery in databases (or KDD) are frequently treated as
synonyms, data mining is actually part of the knowledge discovery process.
Wilson, R. M. S. and Gilligan, C., 2005
► Data mining is the process of discovering interesting patterns and knowledge from large amounts of data
► Data mining has been successfully applied to many domains, such as business intelligence, Web search, scientific
discovery, digital libraries, etc.
Issues in Data Mining

► One of the key issues raised by data mining technology is not a business or technological one, but a social one. It is the
issue of individual privacy. Data mining makes it possible to analyse routine business transactions and glean a significant
amount of information about individuals buying habits and preferences. Another issue is that of data integrity. Clearly,
data analysis can only be as good as the data that is being analysed. A key implementation challenge is integrating
conflicting or redundant data from different sources. For example, a bank may maintain credit cards accounts on several
different databases. The addresses (or even the names) of a single cardholder may be different in each. Software must
translate data from one system to another and select the address most recently entered.
Wilson, R. M. S. and Gilligan, C., 2005
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Issues in Data Mining

► Individual's privacy may be violated due to the unauthorised access to personal data.
► To deal with the privacy issues in data mining, a sub-field of data mining, referred to as privacy preserving data mining
(PPDM) .
► The aim of PPDM is to safeguard sensitive information from unsanctioned disclosure, and preserve the utility of the data.
► The 4 type of users in Data Mining process- • Data Provider: the user who owns some data that are desired by the data
mining task. • Data Collector: the user who collects data from data providers and then publish the data to the data miner.
• Data Miner: the user who performs data mining tasks on the data. • Decision Maker: the user who makes decisions
based on the data mining results in order to achieve certain goals
► DATA PROVIDER - The major concern of a data provider is whether he can control the sensitivity of the data he provides to
others. On one hand, the provider should be able to make his very private data, inaccessible to the data collector. On the
other hand, if the provider has to provide some data to the data collector, he wants to hide his sensitive information as
much as possible and get enough compensations for the possible loss in privacy.
Using information to support business

processes
Types of information Sources
► Management information comes from multiple sources. The challenge for a business is to capture and use relevant and
reliable information and the benefit of such information must exceed the cost of obtaining this information.
► Modern IT systems have reduced these costs significantly but skilled highly-paid staff is required to run these information
systems.
Internal Sources
► Accounting records are a prime source of internal information. They detail the transactions of the business in the past, which
may be used as the basis for planning for the future (e.g. preparing a financial budget or forecast).
► Daily books such as sales day book, purchase day book and cashbook can provide useful information to management.
► The accounting records are primarily used to record what happens to the financial resources of a business. For example, how
cash is obtained and spent; what assets are acquired; what profits or losses are made on the activities of the business.
► However, accounting records can provide much more than financial information. For e.g., details of the products
manufactured and delivered from a factory can provide useful information about whether quality standards are being met.
► Data analysed from customer sales invoices provides a profile of what and to whom products are being sold.
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processes
External Sources
► This is information that is obtained from outside the business. Such external information tends to be more relevant to
strategic and tactical decisions rather than to operational decisions.
Sources of external information
► Government publications such as monetary and fiscal policies,
► Press releases such as newspapers, technical magazines, journals which provide information about share price,
technological developments and information on competitors and their products.
► Banks can provide information on potential customers and on nation markets.
► Financial statements of other businesses provide useful information to the company.
► Correspondence received from suppliers, customers and tax authorities etc.
► Internet websites, social networking sites, forums etc.
► Databases held by public bodies and businesses e.g. providing online information on money market interest rates and
foreign exchange rates.
► Data warehouses which contain data from both internal and external sources. They store current as well as historical data
and are used for creating trending reports for senior management reporting such as annual and quarterly comparisons.

processes
Information supports the following business process.
Market and customer information
► Using Market information organisation can learn about the competitors in the market allowing them to improve product
quality, increase productivity etc. Using customer information organisation will have a better understanding of customer
needs and choices.
Product information
► Using product information organisation can improve products quality, increase production, price comparison and easily
availability.
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processes
Specialist knowledge
► Using specialist knowledge, organisation can manufacture new innovative products, add new customer to business,
reduced cost and expenditure.
Business process information
► Business process information supports the internal information about the performance of the organisation such as
Finances, Customer, internal process and learning and growth.
Management information and plans
► Management information and plans supports the developing policies, future planes, and improvement of services of the
organisation.

processes
Human resource information
► Human resource information is essential for organisations reputation, product support, future planes and innovations.
Supplier information
► The Supplier information allows the organisations to choose from a large number of suppliers offers affordable price, best
quality and quick service.
Johnson, G, Whittington, et. al, 2011
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Source available to assist in analysing data

information
Information resources such as Data, Information and knowledge

information
Information resources such as Data, Information and knowledge
► In business environment information resources are the most valuable assets for any organisation. The information i.e.
data, information or knowledge must be collected carefully and with authenticity because the organisation decision-
making processes are based on these information. These sources of these information resources could be organisation
employees, customer and other organisations but there must be some criteria for using these resources such as accuracy,
validity, clarity etc.
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information
Technology resources such as hardware and software
► For the processing of organisation data and information such as products detail, employee’s details, manufacturing, stock
and accounts information appropriate technology resources such hardware i.e. computer systems, printers etc and
software database system, data analysis tools etc must be available to managers and staffs of the organisation. Using such
resources reduces production time, cost, improves communication within the organisation and with the customers.
Source available to assist in analyzing data

information
People resources such as employee and managers in organisations
► Organisation employees and managers are the vital part in analysing data because they provides the organisation internal
data such as manufactured quantity, cost, stock etc and as well they are operating the available equipments, computer
systems and software. In organisation mostly there are people specially trained for operating specialised hardware and
software for information processing, analysing, report generation.
Johnson, G, Whittington, et. al, 2011
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Lesson Summary
In this lesson you have covered the key objectives areas by first discussing the types of information required to
understand patterns and trends in businesses. Then, different decision making tools and techniques have been
covered. Internal audit tools and techniques such as SWOT, TOWS, Key success factors, Critical success factors, activity
maps, innovation audit and Mc Kinsey’s 7S framework are some of them. Additionally, you have also given a brief
amount of information on Decision support system and Data driver decision support system that helps to make
strategic decisions using internal audit.
This lesson also aims to provide a clear understanding on Data mining. At the end, it has been discussed how these
information can help to make business decisions and strategic decision making along with sources to assist the
information analysis.
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Monitor and review

management
information
Taking
Introduction
► In this lesson we will be analysing the importance of management information. Data governance and importance of
quality data will be discussed. Furthermore, you will understand the value of management information and its role in
decision making. You will also be exposed to certain processes and methodologies such as DIKAR and ASHEN models.
Subsequently, you will determine methods of developing information capture to inform and support strategic decision
making. This lesson will explore different decision making considering information systems for each level at the
organisation whilst bringing in the value of business intelligence.
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Learning Outcomes
4. Be able to monitor and review management information
4.1 Critically identify methods of evaluating management information within an organisation
4.2 Formulate processes and methodologies for analysing the impact of information on the strategic decisions made
4.3 Determine methods of developing information capture to inform and support strategic decision making
Lesson Objectives
1. Data governance
2. Management information value
3. Types of decision making
4. Decision Support for Operational and Middle Management
5. Decision Support for Senior Management
6. Group Decision Support System (GDSS)
7. Business Intelligence
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Data governance
► Data governance (DG) is the overall management of the data employed in the enterprise. The Data governance ensures the
availability, usability, integrity, and security of the employed data. A governing body or council runs a well-organized data
governance program with a well-defined set of procedures and plans for the execution of defined procedures in the right
direction. The followings are the three key elements of the successful data governance in an organisation.
Johnson, G. Whittington, et. al, 2011
The ability to use timely, reliable, trusted information to drive the business
► The data governance program must be able to ensure the information availability within the prescribed time frame to the
recipients that it can be processed at in early stage. This information must be reliable i.e. consistent that execution of different
processes can be performed in proper order and in the right direction. As well the information must be trusted i.e. accurate,
update and must be gathered from the trusted source otherwise it will lead to program failure.
Data governance
Improving the quality of business decision- making
► The data governance programme must be able to utilise certain standard decision support systems for the achievement of
high quality of business decision-making such as Model Driven DSS (Decision Support System), Data Driven DSS etc. The
available data for decision-making must be according to certain quality standard, appropriate format, well structured and
well organised.
Ensuring consistent use of information
► The data governance program must ensure the consistent use of information in organisation for reliability and smooth
flow of business different process. The information flow must be regular to different component of the overall system that
the system can generate reliable, trusted and high quality of result otherwise inconsistency will generate incorrect result
and will lead to system failure.
Johnson, G. Whittington, et. al, 2011
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Management information value

Timeliness
► Timeliness is a high importance in management information, which means that the recipients must receive information
within the prescribed time frame. The timeliness can ensure an early stage information execution, which generates the
accurate information result. The characteristic of timeliness of information must be effective as well must includes the
current up to date information.
Content
► Management information system provides valuable contents for organisation internal and external process support. These
contents support business different process such as contents for decision making process, for manufacturing process, for
marketing process, financial process, customer and services support etc.
Management information value

Format
► Management information system provides information in an appropriate and clear format, which is easily understandable.
The provided information clearly describe the need, the purpose and place where it can be used such as market related
information clearly describes the value of the organisation and its product that can be used to improve quality and
services.
Cost
► Management information systems help organisations in cost reduction in the overall business i.e. internally and externally.
It allows organisations to deliver their products and services to customers at lower price than their competitors.
Therefore, due to information system organisations can survive in difficult situations and can grow rapidly.
Haberberg.A. and Rieple.A., 2001
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Types of decision making

Each organisation levels has different information requirements for decision support and responsibility for different types of
decisions. Decisions are classified as structured, semistructured, and unstructured.

Each organisation levels has different information requirements for decision support and responsibility for
different types of decisions. Decisions are classified as structured, semi-structured, and unstructured.
► Unstructured decisions are those in which the decision maker must provide judgment, evaluation, and
insight to solve the problem. Each of these decisions is novel, important, and non-routine, and there is no
well-understood or agreed-on procedure for making them.
► Structured decisions, by contrast, are repetitive and routine, and they involve a definite procedure for
handling them so that they do not have to be treated each time as if they were new. Many decisions have
elements of both types of decisions and are semi-structured, where only part of the problem has a clear-cut
answer provided by an accepted procedure. In general, structured decisions are more prevalent at lower
organisational levels, whereas unstructured problems are more common at higher levels of the firm. Senior
executives face many unstructured decision situations, such as establishing the firm’s 5- or 10-year goals or
deciding new markets to enter. Answering the question “Should we enter a new market?” would require
access to news, government reports, and industry views as well as high-level summaries of firm
performance. However, the answer would also require senior managers to use their own best judgment and
poll other managers for their opinions.
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► Middle management faces more structured decision scenarios but their decisions may include unstructured
components. A typical middle-level management decision might be “Why is the reported order fulfillment,
report showing a decline over the past six months at a distribution center in Minneapolis?” This middle manager
will obtain a report from the firm’s enterprise system or distribution management system on order activity and
operational efficiency at the Minneapolis distribution center. This is the structured part of the decision. But
before arriving at an answer, this middle manager will have to interview employees and gather more
unstructured information from external sources about local economic conditions or sales trends.
► Operational management and rank-and-file employees tend to make more structured decisions. For example, a
supervisor on an assembly line has to decide whether an hourly paid worker is entitled to overtime pay. If the
employee worked more than eight hours on a particular day, the supervisor would routinely grant overtime pay
for any time beyond eight hours that was clocked on that day.
► A sales account representative often has to make decisions about extending credit to customers by consulting
the firm’s customer database that contains credit information. If the customer met the firm’s pre-specified
criteria for granting credit, the account representative would grant that customer credit to make a purchase. In
both instances, the decisions are highly structured and are routinely made thousands of times each day in most
large firms. The answer has been preprogrammed into the firm’s payroll and accounts receivable systems.
Decision Support for Operational and Middle

Management
► Operational and middle management are generally charged with monitoring the performance of key aspects
of the business, ranging from the down-time of machines on a factory floor, to the daily or even hourly sales
at franchise food stores, to the daily traffic at a company’s Web site. Most of the decisions they make are
fairly structured. Management information systems (MIS) are typically used by middle managers to support
this type of decision making, and their primary output is a set of routine production reports based on data
extracted and summarized from the firm’s underlying transaction processing systems (TPS).
► Increasingly, middle managers receive these reports online on the company portal, and are able to
interactively query the data to find out why events are happening. To save even more analysis time,
managers turn to exception reports, which highlight only exceptional conditions, such as when the sales
quotas for a specific territory fall below an anticipated level or employees have exceeded their spending
limits in a dental care plan.
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Decision Support for Operational and Middle

Management
Support for Semi-structured Decisions
► Some managers are “super users” and keen business analysts who want to create their own reports, and use
more sophisticated analytics and models to find patterns in data, to model alternative business scenarios, or
to test specific hypotheses. Decision-support systems (DSS) are the Business Intelligence delivery platform
for this category of users, with the ability to support semi-structured decision making.
► DSS rely more heavily on modeling than MIS, using mathematical or analytical models to perform what-if or
other kinds of analysis. “What-if” analysis, working forward from known or assumed conditions, allows the
user to vary certain values to test results to predict outcomes if changes occur in those values. In the past,
much of this modeling was done with spreadsheets and small stand-alone databases. Today these
capabilities are incorporated into large enterprise Business Intelligent systems where they are able to
analyze data from large corporate databases. Business Intelligent analytics include tools for intensive
modeling. Such capabilities help Progressive Insurance identify the best customers for its products.
Decision Support for Senior Management

► The purpose of executive support systems (ESS), is to help first level executive managers focus on the really
important performance information that affect the overall profitability and success of the firm. There are
two parts to developing ESS. First, you will need a methodology for understanding exactly what is “the really
important performance information” for a specific firm that executives need, and second, you will need to
develop systems capable of delivering this information to the right people in a timely manner.
► Currently, the leading methodology for understanding the really important information needed by a firm’s
executives is called the balanced scorecard method (Kaplan and Norton, 2004; Kaplan and Norton, 1992).
The balanced score card is a framework for operationalizing a firm’s strategic plan by focusing on measurable
outcomes on four dimensions of firm performance: financial, business process, customer, and learning and
growth. Performance on each dimension is measured using key performance indicators (KPIs), which are the
measures proposed by senior management for understanding how well the firm is performing along any
given dimension. For instance, one key indicator of how well an online retail firm is meeting its customer
performance objectives is the average length of time required to deliver a package to a consumer. If your
firm is a bank, one KPI of business process performance is the length of time required to perform a basic
function like creating a new customer account.
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Balance scorecard Framework
In the below balanced scorecard framework, the firm’s strategic objectives are operationalised along four dimensions:
financial, business process, customer, and learning and growth. Each dimension is measured using several KPIs.

► The balanced scorecard framework is thought to be “balanced” because it causes managers to focus on
more than just financial performance. In this view, financial performance is past history—the result of past
actions—and managers should focus on the things they are able to influence today, such as business process
efficiency, customer satisfaction, and employee training. Once a scorecard is developed by consultants and
senior executives, the next step is automating a flow of information to executives and other managers for
each of the key performance indicators. Once these systems are implemented, they are often referred to as
ESS.
► Another closely related popular management methodology is business performance management (BPM).
Originally defined by an industry group in 2004 (led by the same companies that sell enterprise and
database systems like Oracle, SAP, and IBM), BPM attempts to systematically translate a firm’s strategies
(e.g., differentiation, low-cost producer, market share growth, and scope of operation) into operational
targets. Once the strategies and targets are identified, a set of KPIs are developed that measure progress
towards the targets. The firm’s performance is then measured with information drawn from the firm’s
enterprise database systems. BPM uses the same ideas as balanced scorecard but with a stronger strategy
flavor (BPM Working Group, 2004).
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► Corporate data for contemporary ESS are supplied by the firm’s existing enterprise applications (enterprise
resource planning, supply chain management, and customer relationship management). ESS also provide
access to news services, financial market databases, economic information, and whatever other external
data senior executives require. ESS also have significant drilldown capabilities if managers need more
detailed views of data.
► Well-designed ESS help senior executives monitor organisational performance, track activities of
competitors, recognize changing market conditions, and identify problems and opportunities. Employees
lower down in the corporate hierarchy also use these systems to monitor and measure business
performance in their areas of responsibility. For these and other business intelligence systems to be truly
useful, the information must be “actionable”—it must be readily available and also easy to use when making
decisions. If users have difficulty identifying critical metrics within the reports they receive, employee
productivity and business performance will suffer.
Group Decision Support System (GDSS)

► The DSS we have just described focus primarily on individual decision making. However, so much work is
accomplished in groups within firms that a special category of systems called group decision-support
systems (GDSS) has been developed to support group and organisational decision making. A GDSS is an
interactive computer-based system for facilitating the solution of unstructured problems by a set of decision
makers working together as a group in the same location or in different locations. Collaboration systems and
Web-based tools for videoconferencing and electronic meetings described earlier in this text support some
group decision processes, but their focus is primarily on communication. GDSS, however, provide tools and
technologies geared explicitly toward group decision making. GDSS-guided meetings take place in
conference rooms with special hardware and software tools to facilitate group decision making.
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Impact of information on strategic decision

made
Set objective of process or organisation
► The information analysis allows the decision-maker in the organisation to develop and set objectives and allocates
resources required for the achievement of these objectives. Thus the organisation top-level management is benefiting
from information analysis in making strategic planning.
Evaluate weather goals achieved
► The information system allows the organisation to evaluate weather the desired goals are achieved from the information
analysis or not. In case of failure the process is refined with utilising more resources, expertise, care and thoroughly
investigation to make sure a quality of result achieves. Gap analysis is used for the evaluation of weather goals achieved or
not.
 Note - A gap analysis is a method of assessing the differences in performance between a business' information systems or
software applications to determine whether business requirements are being met and, if not, what steps should be taken
to ensure they are met successfully.
Impact of information on strategic decision

made
Assess reasons for variance from target to actual
► The performance diagnosis is done by applying knowledge to performance to check weather the processes, operations
and functions are generating the quality results or not. Each process is judged thoroughly weather the overall process is
running smoothly and will complete successfully.
Revise and implement new approaches or modify goals
► If there is any mistake in the process it is revised and retest. Some times the achievement of the desired resulted new
approaches is implemented and some time the difficulties in achieving result can lead to modification in goals.
Johnson, Scholes and Whittington (2008)
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Methods of developing information capture

to inform and support strategic decision-
making
DIKAR: Data Information Knowledge Action Result
► The DIKAR model is used for information quality, which is very helpful in understanding the attributes of management
information quality. The diagram below is the description of the overall model.
Methods of developing information capture

to inform and support strategic decision-
making
► Advances in technology have offered businesses world wide a range of options in regards to sourcing and interpreting
data, allowing many companies to collect large quantities of information about their specific markets. This development
makes it imperative that all information is managed, processed, and used as efficiently as possible. With plenty of methods
available, it comes down to picking a strategy that is focused more on implementation rather than selection. This is where
the DIKAR model becomes useful.
► The DIKAR model (data, information, knowledge, action and result) model came as a solution to bridge the gaps between
information becoming knowledge and knowledge translating into action. With DIKAR, it now becomes easier for
businesses to know exactly what to do with their data.
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DIKAR
The DIKAR model can be expounded as follows:
Data
► Data is the very first thing that IT and tech often encounters. On a regular basis, plenty of data is held in storage centers
within a business including survey questions, feedback and tracking. Data in this stage represents numbers: stored,
qualitated, but not managed in a way that can make them easily processed.
► Think of it as a jumble of receipts that you have yet to enter into your accounting logbook. While the information is there,
you need to organise it. Sort them by date, by purchase, or even by amount spent.
Information
► Information is what comes from data - once processed, data becomes a form that is easily understood. This is the next stage
of DIKAR. Information gleaned from data becomes much more malleable to handle when it comes to aligning strategies for
your business.
► From the example above, information might be sorting all the receipts by date. By documenting entries into the logbook,
you will notice that your purchases usually spike at a certain date of the month, or a time of the year.
DIKAR
Knowledge
► Understanding information converts it into knowledge - something that managers must automatically be able to do in the DIKAR
process. This level calls for a mastery of transitioning from what you hear to what you make out of it.
► It’s looking at the logbook you’ve made and making connections between different information sets. What did you buy on the days
that your expenses spiked? Could you buy them on other days? What other expenses are there? Knowing all of this information
gives you a certain advantage when it comes to your next move.
Action
► Action is then building on what you know in order to execute a sound decision. The best business decisions are the ones that are
most informed, however actually doing it requires an inherent understanding of your processes and a strategy for execution.
► This can take the form of deciding exactly how you will manage your finances with the information you have. Do you cut down on
the most expensive items or find alternatives? How about spacing out your purchases so the flow of your funds has more stability?
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DIKAR
Result
► Finally, a meaningful result is the ultimate goal of the DIKAR model. Built upon a solid foundation of knowledge and an
inherent understanding of the decisions made based on that, it’s expected that your end result will bring meaningful
conclusions to the process. It gives a strong clue as to the layers involved in aligning technology and organisational
strategies, and it can be seen as a pivotal moment in changing attitudes to information management. The recognition that
information management is an investment that must deliver meaningful results is important to all modern organisations
that depend on information and good decision making for their success.
► The DIKAR model is a useful tool in any business that wants to efficiently manage their resources. Making sure that the
information you have is useful and making sound decisions based on that is the cornerstone to your success. Aside from
being a breakthrough in information management, the DIKAR model is a marriage of the two biggest assets any business
can have: information and strategy.
DIKAR
A downside of immediately starting with the DIKAR method is that the desired result is not yet known, which makes it
difficult to design a way to transform data into the required information. In most cases the designers will have some kind of
implicit result in mind, which is not yet explicit. This can be solved by first of all using the DIKAR method the other way
around as RAKID. This result driven approach has already been explained by Murray (2000) and also later by Chaffey and
White (2010). RAKID starts with a decent analysis of what the desired result is, who is responsible for taking the decision, and
what this user needs to know before he/she can make the decision.
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DIKAR
► As shown in the diagram the DIKAR model is based on the attributes of the Data, Information, Knowledge, Action and
results. These attributes ensure the quality of the each component of the DIKAR model as from the start to the end quality
is maintained in all processes. The table below explains the attributes of each component.
Data Quality
► The provided data must be accurate i.e. up to date, the whole data to complete that task i.e. completeness, collected from
authentic and trusted source i.e. validity and regularly available for smooth flow i.e. consistency.
Information Quality
► Information must be generated from a quality data, all definition must clearly describe the purpose, only relevant
information should be used related to a task, the presentation of information should be in the proper order and right
format, information must be provided to the recipient in the prescribed time frame and finally availability of information
must be ensure to the end user related to that task. Evans, C. (2003).
DIKAR
Knowledge Quality
► For knowledge quality the information quality must be maintained as described in the previous section, ASHEN factors (is
explained in the next section) must be taken into account, the end user must be experienced in using such knowledge i.e.
prior experience, knowledge must be clear and easily understandable i.e. explicit knowledge and finally must be
understood clearly by the end user i.e. tacit knowledge.
Action Quality
► An appropriate action must be taken for the solution of the task, this action must be with in the prescribed time frame and
must generate results with clarity that end user can utilise results in the right place and in the right direction.
Result Quality
► The generated output must clearly state the achieved objectives and consistency of results. The achieved result must be
the right and desired and efficient for the task.
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ASHEN: Artefacts Skills Heuristics Experience

Natural talent
Artefacts, Skills, Heuristics, Experience and Natural Talent are the five perspectives which comprise the ASHEN model. ASHEN
is a way to ask a meaningful question in the context of mapping the knowledge assets of an organisation: What artefacts
were used when making that decision? What skills were needed; how were they acquired? What heuristics were used to
make such decisions quickly; what is the range of applicability? What experience is had, and possessed by respected
members of the field? What natural talent is necessary; how exclusive is it and who else has it? This provides a contextually
rich way of collecting perspective that informs the interviewers of the knowledge assets within the organisation and
increases the cognitive load on the respondent so they dig deeper into their memories. Ideally ASHEN questioning should be
combined with a disclosure technique which generates decision points (For example, The Future Backwards, along with field
observation, narrative circles and the like) to create a meaningful context for the ASHEN. Evans, C. (2003).

Natural talent
► Both ASHEN and the process of identifying Key Disclosure Points (KDPs) from the stories of current and past experience are means by which
we can gain new perspective on the issue. It is important to emphasise that ASHEN is not a set of categories into which knowledge can be
allocated, but a means of gaining perspective; the questions get the interviewee to see things from different perspectives and is more likely
to stimulate them into remembrance.
► This type of work results in the collection of stories from which is it is possible to extract evidence of knowledge use through the
identification of Knowledge Disclosure Points (KDPs) in the form of decisions, judgements, problem resolution, learning points and the like.
► Most importantly ASHEN helps create a key shift in organisational thinking from key-person dependency to knowledge dependency. This
essential step of depersonalisation is critical to effective knowledge practice. It is the shift from Only Linda can do X to X requires this
combination of artefacts, skills, heuristics, experience and natural talent and at the moment, only Linda has them. The former statement has
only crude solutions, the latter permits greater sophistication and the potential for long-lasting solutions and sustainable management
action. It achieves this by using language that describes the situation at the right level of granularity to permit action without excessive
analysis
Evans, C. (2003).
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Natural talent
► Critically, the nature of the language we use determines the actions that we can take. The crude description of knowledge
as either tacit or explicit encourages the tendency to focus on codification of knowledge. The language represents thinking
of knowledge as a ‘thing’ that can be either tacit or explicit, and thus the presumption, all too common in knowledge
management, that tacit knowledge can, and should be made explicit before it can be regarded as an organisational asset.
The ASHEN model on the other hand can encourage the creation of explicit knowledge for artefacts, skills and, to a degree
heuristics but not in the case of experience and natural talent. This is not to say that the tacit and explicit words are not
useful, but they are a secondary description of knowledge assets as shown in Figure shown in next slide. Once we have
used the ASHEN model to give us a perspective on the nature of knowledge, and remember that this is not a
categorisation model, and then it is legitimate to take the tacit–explicit perspective Evans, C. (2003).

Natural talent
► This links to key questions about the need for, or desirability of, codification. In practice for any asset, we have two
questions that need to be asked:
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Natural talent
1. Is this knowledge, in whole or in part, capable of codification?
2. If it is capable of codification then is it desirable to do so.
The second question is important, and the answer relates to the degree to which the knowledge is dynamic in
nature and the levels of uncertainty in the surrounding environment. Generally the more dynamic and/or the
more uncertain the knowledge the more likely it is that the balance will shift towards tacit at the expense of
explicit; to context and narrative rather than content. The cost of codification is also a factor that links the
codification decision to the time value of the knowledge. Partial codification can also be useful but is too rarely
considered in many knowledge programmes where the desire for completeness tends to override common
sense.
Another way of looking at the tacit–explicit balance in knowledge is to think of knowledge as being both
a flow and a thing, rather like electrons are simultaneously and paradoxically waves and particles. Things are
capable of codification as is, for flows we can structure and influence the channels through which the flow can
take place, but the knowledge itself is too ephemeral to be codified as such, indeed (to pursue the metaphor)
the attempt at codification may change the nature of the original for the worse (Christina Evans, 2003).
Business Intelligence
► “Business intelligence (BI)” is a term used by hardware and software vendors and information technology consultants to
describe the infrastructure for warehousing, integrating, reporting, and analysing data that comes from the business
environment, including big data. The foundation infrastructure collects, stores, cleans, and makes relevant information
available to managers. “Business analytics (BA)” is also a vendor defined term that focuses more on tools and techniques
for analysing and understanding data. Think online analytical processing (OLAP), statistics, models, and data mining.
► So, stripped to its essentials, business intelligence and analytics are about integrating all the information streams produced
by a firm into a single, coherent enterprise-wide set of data, and then, using modeling, statistical analysis tools (like normal
distributions, correlation and regression analysis, Chi square analysis, forecasting, and cluster analysis), and data mining
tools (pattern discovery and machine learning), to make sense out of all these data so managers can make better decisions
and better plans, or at least know quickly when their firms are failing to meet planned targets.
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High- Velocity Automated Decision Making

► Today, many decisions made by organisations are not made by managers, or any humans. For instance, when you enter a
query into Google’s search engine, Google has to decide which URLs to display in about half a second on average (500
milliseconds). Google indexes over 50 billion Web pages, although it does not search the entire index for every query it
receives. The same is true of other search engines.
► The New York Stock Exchange spent over $450 million in 2010–2011 to build a trading platform that executes incoming
orders in less than 50 milliseconds. High frequency traders at electronic stock exchanges execute their trades in under 30
milliseconds. The class of decisions that are highly structured and automated is growing rapidly. What makes this kind of
automated high-speed decision making possible are computer algorithms that precisely define the steps to be followed to
produce a decision, very large databases, very high-speed processors, and software optimized to the task. In these
situations, humans (including managers) are eliminated from the decision chain because they are too slow.
High- Velocity Automated Decision Making

► This also means organisations in these areas are making decisions faster than what managers can monitor or control. Inability to control
automated decisions was a major factor in the “Flash Crash” experienced by U.S. stock markets on May 6, 2010, when the Dow Jones
Industrial Average fell over 600 points in a matter of minutes before rebounding later that day. The stock market was overwhelmed by a
huge wave of sell orders triggered primarily by high-speed computerized trading programs within a few seconds, causing shares of some
companies like Procter & Gamble to sell for pennies. The past few years have seen a series of similar breakdowns in computerized trading
systems, including one on August 1, 2012 when a software error caused Knight Capital to enter millions of faulty trades in less than an hour.
The trading glitch created wild surges and plunges in nearly 150 stocks and left Knight with $440 million in losses.
► Essentially, the intelligence, design, choice, and implementation parts of the decision-making process are captured by the software’s
algorithms. The humans who wrote the software have already identified the problem, designed a method for finding a solution, defined a
range of acceptable solutions, and implemented the solution.
► Obviously, with humans out of the loop, great care needs to be taken to ensure the proper operation of these systems lest they do
significant harm to organisation and humans. And even then additional safeguards are wise to observe the behavior of these systems,
regulate their performance, and if necessary, turn them off.
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Lesson Summary
In this lesson you have covered the key objectives areas by first discussing the data governance within an
organisation. This lesson critically analyses the importance of having quality data for strategic and effective decision
making. You will learn how to evaluate management information by using the available quality data. You will have
better control of data once you learn this lesson. Now you will understand the processes and methodologies to
analyse the information within an organisation, therefore, you have learnt DIKAR model and ASHEN model. You have
also learnt different information systems and decision making at each level in the organisation.
By end of this lesson, you should be able to understand the importance of management information and make better
strategic decision within an organisation. You will also understand the role of business intelligence and business
analytics to make effective strategic decisions.
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Lesson 1: Identifying
a Strategic
Investigative Project
Module: Leading a Strategic Management Project
Introduction
► In this lesson we will be closely looking at the types of investigative projects, how to determining the topic for a project
and setting scope and boundaries and topic justification.
The areas such as project initiation, project planning, critical success factors and assumptions, evolving project charters,
project structures and formulating research methodology will also be looked at under the second half of the lesson.
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Learning Outcomes
1. Be able to identify and justify a strategic investigative project
1.1 Determine a strategic topic to investigate that has significant implications for the organisation
1.2 Discuss the aim, scope and objectives of the project
1.3 Take responsibility for and justify the topic of investigation and its aim, scope and objectives
1.4 Formulate the project research methodology, including the project structure and research base
Lesson Objectives
1. Types of investigative projects
2. Determining the topic and justification
3. Setting Scope and Boundaries
4. Project Planning
5. Critical Success Factors and assumptions
6. Project Initiation and Project Charters
7. Project Phases
8. Research Methodology
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Types of Investigative Projects

A research is known as “Something that people undertake in order to find things out in a systematic way, thereby increasing their
knowledge” Saunders et al. (2009)
The research has key characteristics as:
►Data are collected systematically
►Data are interpreted systematically
►There is a clear purpose to find things out
“systematic” suggests that research is based on logical relationships and not just beliefs. “to find out things” suggests there are
a multiplicity of possible purposes of your research. These may include describing, explaining, understanding, criticizing, and
analyzing.

All business and management research projects can be placed on a continuum according to their purpose and context. At
one extreme of the continuum is research that is undertaken purely to understand the processes of business and
management and their outcomes. Such research is undertaken largely in universities and largely as the result of an
academic agenda. It’s key consumer is the academic community, with relatively little attention being given to its practical
applications. This is often termed basic, fundamental or pure research.
At the other end of the continuum of research is of direct and immediate relevance to managers, addresses issues that
they see as important, and is presented in ways that they understand and can act on. This is termed applied research. The
applied research is very similar to consultancy in many cases, particularly when the latter is conducted in a thorough
manner. (Saunders et al.,2009)
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(Saunders et al.,2009)
Determining the topic and justification

The important steps to go through in determining a good topic are:
► Identifying the attributes of a good research topic
► Generating ideas that help you select a suitable topic
► Turning ideas into clear research questions and objectives
► Writing your research / project proposal
The key attributes of a good research topic are Capability, Appropriateness and Relevance. Capability: is it feasible?
► Are you fascinated by the topic?
► Do you have the necessary research / project skills?
► Can you complete the project in the time available?
► Will the research still be current when you finish?
► Do you have sufficient financial and other resources?
► Will you be able to gain access to data?
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Appropriateness: is it worthwhile?
► Will the examining institute's standards be met?
► Does the topic contain issues with clear links to theory?
► Are the research questions and objectives clearly stated?
► Will the proposed research provide fresh insights into the topic?
► Are the findings likely to be symmetrical?
► Does the research topic match your career goals?
Relevance
Does the topic relate clearly to an idea you were given - possibly by your organisation ?

Some useful techniques to generate research ideas are:
1. Rational thinking
2. Creative thinking
3. Searching the literature
4. Scanning the media
5. Brainstorming
6. Relevance Trees
7. Exploring past projects
8. Discussion
9. Keeping an ideas notebook
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The research ideas could be refined with the use of below methods:
► Using the Dlphi Technique
► Conducting a preliminary study
► Continually testing out your ideas
► Integrating ideas
► Refining topics given to you by your organisation

The Delphi Technique
This involves using a group of people who are either involved or interested in the research idea to generate and choose a
more specific research idea. To use this technique you need:
1. To brief the members of the group about the research idea
2. At the end of the briefing to encourage group members to seek clarification and more information as appropriate
3. To ask each member of the group including the originator of the research ideas based on the idea that has been described
(justification)
4. To collect the research ideas in unedited and non-attributable form and to distribute them to all members of the group
5. A second cycle of the process (steps 2 to 4) in which comment on the research ideas and revise their own contributions in
the light of what others have said
6. Subsequence cycles of the process until a consensus is reached. These either follow a similar pattern (steps 2 to 4) in or
use discussion. Voting or some other method.
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The best research topics:
► Formulate and clarify the topic
► Meet the requirements of the examining body
► Use a variety of techniques when generating research ideas
► Are focused on clear questions based on relevant literature
► Are theory dependent
► Adds value in theoretical or practical sense
Tell the reader:
► What will be done and why
► How it will be achieved
► Reflect the 'scope' of the study

Setting Scope and Boundaries

Project scope is the part of project planning that involves determining and documenting a list of specific project goals,
deliverables, tasks, costs and deadlines. The documentation of a project's scope, which is called a scope statement, terms
of reference or statement of work, explains the boundaries of the project, establishes responsibilities for each team
member and sets up procedures for how completed work will be verified and approved.
During the project, this documentation helps the project team remain focused and on task. The scope statement also
provides the project team with guidelines for making decisions about change requests during the project.
When you define the scope of a project, you set the 'boundaries' – specifying what is included and what is excluded.
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To help you scope your project, ask yourself some questions, for example:
► What is the project responsible for delivering (what is in scope)?
► What is the project not going to deliver (what is out of scope)?
► What are the main objectives? Why are you doing it?
► What needs to change in order to achieve these objectives?
► What will the effect of those changes be?
► What will stay the same?
► Which stakeholders will be affected and how?
► What other work or projects are there which might impact on this? You must agree boundaries, avoid duplication or
omission of tasks or deliverables.
The answers to these questions will help you define the scope of the project. Knowing what is included and what is
excluded is fundamental for planning a project.

Setting the scope and boundaries are important parts of a research project. It should tell the reader why you feel the
research that you are planning is worth the effort. This may be expressed in the form of a problem that needs solving or
something that you find exciting and has aroused your curiosity. The reader will be looking for evidence here that there is
sufficient interest from you to sustain you over the long months (or years) ahead.
This is also the section where you will demonstrate your knowledge of the relevant literature. Moreover, it will clarify
where your topic and project fit into the debate in the literature. You will be expected to show a clear link between the
previous work that has been done in your field of research interest. This will just provide an overview of the key literature
sources from which you intend to draw.
The definition of project aim and key objectives will further support in providing the project scope and boundaries of a
project.
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Research Aim
The research aim can be described as “what you want to achieve through your research”. This should be concise and in
line with research title and scope.
For example if the research topic is “Impact of advertising on customer purchasing decisions: Flora Butter, Unilever, UK”
the aim for this research project should be - To investigate the relationship between advertising on customer purchase
decision, in the context of Flora Butter, Unilever, UK.
Research Questions
Your research may begin with a general focus research question that then generates more detailed research questions, or
you may use your general focus research question as a base from which you write a set of research objectives.

To add further clarity and direction for the research, it’s always good to have research questions. They can be a detailed form of
research objectives presented specifically for the chosen product/service/company /industry. A common mistake of students is
the tendency to repeat research objectives and present them in the form of questions. Therefore, I urge you to refrain from
doing so.
The research questions are a set of questions that will guide your research. They frame the study and put it into perspective
with other research. They should also convey all the intended areas that you wish to answer from your study.
A good research question must:
► State the topic of the study; i.e. the main idea
► Clearly show the purpose of the study
► Be interesting, with good style
► Clearly show the direction of your argument
► Be written in focused, specific language
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Research Objectives
Objectives are more generally acceptable to the research community as evidence of the researcher’s clear sense of purpose
and direction. The research objectives are likely to lead to greater specificity than research or investigative questions. The
objectives of a project should be written in line with the SMART criteria.
SMART Criteria
Specific: What precisely do you hope to achieve from undertaking the research?
Measurable: What measures will you use to determine whether you have achieved your objectives? Objective must be
measurable
Achievable: Are the targets you have set for yourself achievable given all the possible constraints? Objective must be achievable
during a set time period
Realistic: Given all other demands upon your time, will you have the time and energy to complete the research on time? The
objectives must be something that could be possibly done
Timely: Will you have time to accomplish all your objectives? Objective must be time bound
Project Planning
The project planning stage requires several inputs, including conceptual proposals, project schedules, resource requirements/limitations and success
metrics. Project planning begins by setting the scope of a project and eventually working through each level of dependent actions, tasks, checkpoints
and deadlines.
All of this information is integrated into Gantt charts, or other types of scheduling charts, to provide a project overview for all involved parties.
Project planning is at the heart of the project life cycle, and tells everyone involved where you’re going and how you’re going to get there. The planning
phase is when the project plans are documented, the project deliverables and requirements are defined, and the project schedule is created. It involves
creating a set of plans to help guide your team through the implementation and closure phases of the project. The plans created during this phase will
help you manage time, cost, quality, changes, risk, and related issues. They will also help you control staff and external suppliers to ensure that you
deliver the project on time, within budget, and within schedule.
The project planning phase is often the most challenging phase for a project manager, as you need to make an educated guess about the staff,
resources, and equipment needed to complete your project. You may also need to plan your communications and procurement activities, as well as
contract any third-party suppliers.
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Project Planning
The purpose of the project planning phase is to:
► Establish business requirements
► Establish cost, schedule, list of deliverables, and delivery dates
► Establish resources plans
► Obtain management approval and proceed to the next phase
The basic processes of project planning are:
► Scope planning – specifying the in-scope requirements for the project to facilitate creating the work breakdown structure
► Preparation of the work breakdown structure – spelling out the breakdown of the project into tasks and sub-tasks
► Project schedule development – listing the entire schedule of the activities and detailing their sequence of implementation
► Resource planning – indicating who will do what work, at which time, and if any special skills are needed to accomplish the
project tasks
► Budget planning – specifying the budgeted cost to be incurred at the completion of the project
► Procurement planning – focusing on vendors outside your company and subcontracting
► Risk management – planning for possible risks and considering optional contingency plans and mitigation strategies
► Quality planning – assessing quality criteria to be used for the project
► Communication planning – designing the communication strategy with all project stakeholders
Project Planning
The culmination of the project planning stage identifies:
► Road blocks in the project
► Work required for project completion
► People involved in the project and their key responsibilities
► Minimum project completion time
► Major project deliverables
► Required project milestones
Project planning is never truly finished until a project is completed. The project plan may return to the planning stage
multiple times prior to project completion, or even abandoned. Generally, project complexity determines the length of
the project planning stage.
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Critical Success Factors and Assumptions

A Critical Success Factor (CSF) also known as Key Results Areas (KRAs), refer to the activities that must be completed to a
high standard of quality in order to achieve the goals of your project.
CSFs are a way to prioritise certain tasks as the project plan is being executed. Having clear CSFs helps the project team
clarify what needs to be worked on first or needs special attention, allowing people to work together to achieve the
project’s main objectives.
Assumption is a factor in the planning process that is considered to be true, real, or certain, without proof
ordemonstration (Project Management Institute., 2013). Also describes the potential impact of those factors if they prove
to be false. Project teams frequently identify, document, and validate assumptions as part of their planning process.
Information on assumptions may be listed in the project scope statement or in a separate log.
A technique that explores the accuracy of assumptions and identifies risks to the project from inaccuracy, inconsistency, or
incompleteness of assumptions is known as Assumption analysis.
Project Initiation and Project Charters

Project initiation is the first phase of a project’s life cycle. It is at this point where the opportunity or reason for the project
is identified and a project is developed to take advantage of that opportunity. It is during this phase of the project that a
team is assembled, and a business case is created to define the project in detail. It is also known as launching a process
that can result in the authorization of a new project. (Project Management Institute., 2013)
The initiation phase encompasses all the steps you must take before a project is approved and any planning begins. The
goal is to define your project at a high level and tie it into the business case you wish to solve.
You should be able to answer two questions: why are you doing this project and what is the business value you expect to
deliver? Consider the feasibility of your project and all of the stakeholders that may be affected or require involvement.
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Once the initiation phase is underway and you’ve been given the green light, you need to create your project charter, or
project initiation document (PID). The project charter outlines the purpose and requirements of the project.
A project charter is the statement of scope, objectives and people who are participating in a project. It begins the process
of defining the roles and responsibilities of those participants and outlines the objectives and goals of the project. The
charter also identifies the main stakeholders and defines the authority of the project manager. It is a typically short
document and it is a crucial ingredient in planning out the project because it is used throughout the project lifecycle.
A project charter document details the below:
• What are the reasons for undertaking the project? Those are noted at this point for everyone to be clear about why they
are doing what they are doing.
• What are the objectives and constraints of the project? This is the part of why you’re undertaking the project. If you don’t
have a clear target your project is going to miss the mark.

• What are the directions concerning the solution to any constraints listed above? You want to have at least an outline of how
you’re going to deal with project constraints. If you don’t cover it now, you’ll have to play catch-up later.
• Who are the main stakeholders? It’s always crucial to note the stakeholders in any project for they’re the ones who you’ll be
reporting to and, in a sense, managing their expectations. The sooner you know who they are, the sooner you can build a
productive relationship with them.
• What are the in-scope and out-of-scope items? Scope is the boundaries of your project, such as its start date and when it
concludes. So, what are the in-scope items, such those parts of the project process as opposed to tasks or actions that lay
outside the step-by-step process of the project?
• What are the potential risks in the project? Identify all risks that could arise in the project so you’re not taken by surprise. This
should be followed up by a risk register and risk management plan in your project plan, where you detail how you’ll resolve
those risks and who on the team is responsible for catching and fixing them.
• What are the project benefits? A good way to sell the project is to have a sense of what good the project will bring to
sponsors and stakeholders. Figure out what those benefits are and list them at this stage.
• What are the project costs? While you’ll go into greater detail when you create the project budget, here is where you want to
get a ballpark figure on what you expect the budget for the project to be and who will have spending authority.
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Project Phases
Every project has a beginning, a middle period during which activities move the project toward completion, and an ending
(either successful or unsuccessful). A standard project typically has the following four major phases (each with its own
agenda of tasks and issues): initiation, planning, implementation, and closure. Taken together, these phases represent the
path a project takes from the beginning to its end and are generally referred to as the project “life cycle.”
The 4 Phases of the Project Management Life Cycle are:
1. Initiation
2. Planning
3. Execution
4. Closure
(Project Management Methodology, 2019)
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Project Phases
Project Initiation: Project Initiation is the first phase in the Project Life Cycle and essentially involves starting up the
project. You initiate a project by defining its purpose and scope, the justification for initiating it and the solution to be
implemented. You will also need to recruit a suitably skilled project team, set up a Project Office and perform an end of
Phase Review. The Project Initiation phase involves the following six key steps:
Project Phases
Project Planning: After defining the project and appointing the project team, you're ready to enter the detailed Project
Planning phase. This involves creating a suite of planning documents to help guide the team throughout the project
delivery. The Planning Phase involves completing the following 10 key steps:
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Project Phases
Project Execution: With a clear definition of the
project and a suite of detailed project plans, you
are now ready to enter the Execution phase of the
project. This is the phase in which the deliverables
are physically built and presented to the customer
for acceptance. While each deliverable is being
constructed, a suite of management processes are
undertaken to monitor and control the
deliverables being output by the project. These
processes include managing time, cost, quality,
change, risks, issues, suppliers, customers and
communication. Once all the deliverables have
been produced and the customer has accepted
the final solution, the project is ready for closure.
Project Phases
Project Closure: Project Closure involves releasing the final deliverables to the customer, handing over project
documentation to the business, terminating supplier contracts, releasing project resources and communicating project
closure to all stakeholders. The last remaining step is to undertake a Post Implementation Review to identify the level of
project success and note any lessons learned for future projects.
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Project Phases
In the context of a research project the key phases of the project will be slightly different however covering the key stages detailed in the previous slides.
They are:
• Introduction – Under the introduction, you need to project whether there is a clear purpose and a rationale for the study and whether there are a clear set
of objectives and research questions.
• Literature Review – In this section you are required to use a range of literature sources covering past research findings, books, online sources etc. suitable
and adequate to cover the research scope producing a sound literature review.
• Methodology - The process used to collect information and data for the purpose of making business decisions. The methodology may include publication
research, interviews, surveys and other research techniques, and could include both present and historical information.
• Data analysis – This is the process of systematically applying statistical and/or logical techniques to describe and illustrate, condense and recap, and
evaluate data. This is an essential component of ensuring data integrity and brings accurate and appropriate analysis of research findings.
• Conclusions and Recommendations – The conclusions have to be presented with clear justifications for the concluding remarks provided for the project.
Proper and valid recommendations then should be provided followed by the conclusions.
Research Methodology
The Methodology is a system of practices, techniques, procedures, and rules used by those who work in a discipline. When
it comes to research projects the methodology phase should provide a detailed rationale of how you intend to achieve
your research objectives. You are expected to address the following areas mainly:
► Research Paradigm / philosophy – E.g. Interpretivism and positivism
► Research Approach – E.g. Deductive Research and Inductive Research
► Research Purpose – E.g. Exploratory, Explanatory & Analytical
► Research Strategy / Design – E.g. Experiment, Survey, Case Study etc
Students are required to explain each method theoretically. Then separately mention what you have selected and justify
your selection.
The lesson two will bring out a detailed discussion on Research Methodology area.
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Lesson Summary
In this lesson you have covered the key objective areas such as determine a strategic topic to investigate that has significant
implications for the organisation and discuss the meaning and purpose of an aim, scope and objectives for a project.
Further, taking responsibility for and justifying the topic of investigation and its aim, scope and objectives and then
formulating the project research methodology, including the project structure and research base have been covered
throughout the lesson.
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Lesson 2: Conducting
Research
Introduction
► In this lesson we will be closely looking at how a research could be conducted using different data sources and synthesise
data and options.
Under the first half of the lesson methodology and information towards the topic of the research will be focused. The
types of researches, philosophies, approaches, purpose and strategies will be closely looked at. The critical evaluation of
an option that is capable of supporting project’s strategic aims will be considered too.
Towards the second half, the sources of gathering data, the synthesis of data towards options or alternatives will be looked
at. The data collection methods and project techniques will be discussed in detail under this section.
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Learning Outcomes
2. Be able to conduct research using different data sources, and synthesise data and options
2.1 Assess sources of data and information that will support the aim of the project
2.2 Synthesise the data and information for options or alternatives that support the project aims
2.3Critically evaluate and determine an option that supports the project’s strategic aims
Lesson Objectives
1. Differences between data, information and knowledge

2. Different Types of Research
3. Research Philosophies
4. Inductive / Deductive Research
5. Research Purpose
6. Research Strategy
7. Methods and Techniques for collecting Data
8. Quantitative and Qualitative Research
9. Project techniques
10. Trade off models
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Differences between data, information and

knowledge
The words Data, Information and Knowledge are been heard frequently and used as if they are the same thing. However they are not
the same and it is important to understand the differences between them before anything else in order to understand this lesson.
Data
Data is/are the facts of the World. For example, take yourself. You may be 5ft tall, have brown hair and blue eyes. All of this is
“data”. You have brown hair whether this is written down somewhere or not.
In many ways, data can be thought of as a description of the World. We can perceive this data with our senses, and then the brain
can process this. Human beings have used data as long as they’ve existed to form knowledge of the world.
Until the world started using information, all that could use was data directly. If you wanted to know how tall another person was,
you would have to go and look at that person. Hence the knowledge was limited by peoples’ direct experiences.

knowledge
The data could be defined as facts and statistics collected together for reference or analysis. Data comes in many forms -
numbers, words, symbols. Data relates to transactions, events and facts. On its own - it is not very useful. At its simplest, this
data needs processing at the point of sale in order for the customer to receive a valid receipt. So the data about the
transaction is processed to create "information" - in this case a receipt. You can imagine that the same data would also be
useful to the manager of the retail store. For example, a report showing total sales in the day, or which are the best-selling
products. So the data concerning all shop transactions in the day needs to be captured, and then processed into a
management report.
Therefore, the data is considered as raw materials that is going into a process for data processing and then the ‘Information’
comes out.
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knowledge
Information
Information allows you to expand your knowledge beyond the range of your senses. You can capture data in information,
then move it about so that other people can access it at different times.
Here is a simple analogy for you;
If a picture is taken of you, the photograph is information. But what you look like is data. Anyone can move the photo of
you around, send it to other people via e-mail etc. However, they are not actually moving you around – or what you look
like. They are simply allowing other people who can’t directly see you from where they are to know what you look like. If
they lose or destroy the photo, this doesn’t change how you look! Hence, at this point the information is lost, but the data
isn’t.

knowledge
Information is knowledge about a particular subject, issue, event or process. Information can be obtained from various sources:
you can be told information, for example through a lecture or a television programme, or you can find information through your
own research.(Glasgow Caledonian University,2019).
Information is data that has been processed in such a way as to be meaningful to the person who receives it. It is not enough for
data simply to be processed. it has to be of use to someone – otherwise it is meaningless.
Knowledge
Knowledge is what we know. Think of this as the map of the World we build inside your brains. Like a physical map, it helps you
know where things are – but it contains more than that. It also contains your beliefs and expectations. “If I do this, I will probably
get that.” Crucially, the brain links all these things together into a giant network of ideas, memories, predictions, beliefs, etc.
It is from this “map” that you base your decisions, not the real world itself. Your brains constantly update this map from the
signals coming through your eyes, ears, nose, mouth and skin.
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knowledge
You can’t currently store knowledge in anything other than a brain, because a brain connects it all together. Everything is inter-
connected in the brain. Computers are not artificial brains. They don’t understand what they are processing, and can’t
make independent decisions based upon what you tell them.
There are two sources that the brain uses to build this knowledge – information and data. This is where information and date
together becomes important – that is to build knowledge inside a brain.
Examples of Data and Information:
► The history of temperature readings all over the world for the past 100 years is data. If this data is organized and analysed to find
that global temperature is rising, then that is information.
► The number of visitors to a website by country is an example of data. Finding out that traffic from the U.S. is increasing while
that from Australia is decreasing is meaningful information.

knowledge
See the Infogineering model provided. It brings out how the Data, Information and Knowledge
interact with each other.
When people confuse data with information, they can make critical mistakes. Data is always
correct (I can’t be 29 years old and 62 years old at the same time) but information can be
wrong (there could be two files on me, one saying I was born in 1981, and one saying I was
born in 1948). Information captures data at a single point. The data changes over time. The
mistake people make is thinking that the information they are looking at is always an accurate
reflection of the data.
By understanding the differences between these, you can better understand how to make
better decisions based on the accurate facts.
The data and information that have been gathered through various source to make use within
the business are helpful in terms of important business decisions. These business decisions are
helpful in achieving strategic aims of various projects that are running within the business and
ultimately to achieve the overall strategic goals of the business organisation.
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Different Types of Research

There are several basic types of researches such as:
• Descriptive and Analytical - Descriptive studies provide information on the frequency of occurrence of a particular condition
and on patterns of occurrence according to such attributes as person, place, and time. Routinely collected statistics from such
sources as mortality data, hospital discharge records, general health surveys, and disease surveillance programs are used for
most descriptive studies. Analytic studies measure the association between exposure and outcome and also include a
comparison group.
• Applied and Basic - Refer lesson 01 for detailed information.
• Quantitative and Qualitative – These types of researches will be discussed in depth in future slides
• Conceptual and Empirical - Conceptual research is related to some abstract idea or theory. It is generally used by philosophers
and thinkers to develop new concept or to reinterpret existing ones. On the other hand, empirical research relies on experience
or observation alone. It is data-based research coming up with conclusions which are capable of being verified by observation
or experiment. You can also call it as experimental type of research.
• Other types of research – this will be detailed next two slides.

All other types of research are variations of one or more of the above stated approaches, based on either the purpose
of research, or the time required to accomplish research, on the environment in which research is done, or on the basis
of some other similar factor.
Form the point of view of time, we can think of research either as one-time research or longitudinal research. In the
former case the research is confined to a single time-period, whereas in the latter case the research is carried on over
several time-periods.
Research can be field-setting research or laboratory research or simulation research, depending upon the environment
in which it is to be carried out.
Research can as well be understood as clinical or diagnostic research. Such research follow case-study methods or in-
depth approaches to reach the basic causal relations. Such studies usually go deep into the causes of things or events
that interest us, using very small samples and very deep probing data gathering devices.
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The research may be exploratory or it may be formalized. The objective of exploratory research is the development of
hypotheses rather than their testing, whereas formalized research studies are those with substantial structure and
with specific hypotheses to be tested.
Historical research is that which utilizes historical sources like documents, remains, etc. to study events or ideas of the
past, including the philosophy of persons and groups at any remote point of time.
Research can also be classified as conclusion-oriented and decision oriented. While doing conclusion oriented
research, a researcher is free to pick up a problem, redesign the enquiry as he proceeds and is prepared to
conceptualize as he wishes. Decision-oriented research is always for the need of a decision maker and the researcher
in this case is not free to embark upon research according to his own inclination. Operations research is an example of
decision oriented research since it is a scientific method of providing executive departments with a quantitative basis
for decisions regarding operations under their control.
Research Philosophies
Research Onion
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Research philosophy is an over-arching term relating to the development of knowledge and the nature of that knowledge.
Adapted from Saunders et al, (2009)
The philosophy you adopt will be influenced by practical considerations. However, the main influence is likely to be your
particular view of the relationship between knowledge and the process by which it is developed. The researcher who is
concerned with facts, such as the resources needed in a manufacturing process, is likely to have a very different view on the
way research should be conducted from the researcher concerned with the feelings and attitudes of the workers towards
their managers in that same manufacturing process. Not only will their strategies and methods probably differ considerably,
but so will their views on what is important and, perhaps more significantly, what is useful.
Three major ways of thinking about research philosophy are:
1. Ontology
2. Epistemology
3. Axiology
Ontology – Ontology is concerned with nature of reality. This raises questions of the assumptions researchers have about the way
the world operates and the commitment held to particular views. Both aspects of ontology which are Objectivism and Subjectivism
have their devotees among business and management researchers.
Objectivism portrays the position that social entities exist in reality external to social actors concerned with their existence.
Subjectivism, holds that social phenomena are created from the perceptions and consequent actions of those social actors
concerned with their existence. An example of this may be management itself . You may argue that management is an objective
entity and decide to adopt an objectivist stance to the study of particular aspects of management in a specific organisation. In order
to substantiate your view you would say that the managers in your organisation have job descriptions which prescribe their duties,
there are operating procedures to which they are supposed to adhere, they are part of a formal structure which locates them in a
hierarchy with people reporting to them and they in turn report to more senior managers. This view emphasises the structural
aspects of management and assumes that management is similar in all organisations.
Aspects of the structure in which management operates may differ but the essence of the function is very much the same in all
organisations. Insofar as management does differ in organisations it is a function of the different objective aspects of management.
However, if someone has the view that the objective aspects of management are less important than the way in which the
managers themselves attach their own individual meanings to their jobs and the way they think that those jobs should be
performed, that is called a subjectivism and the person has a subjectivist view.
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Epistemology – Epistemology concerns what constitutes acceptable knowledge in a field of study. The researcher (the
‘resources’ researcher) who considers data on resources needed is likely to be more akin to the position of the natural scientist.
This may be the position of the operations management specialist who is comfortable with the collection and analysis of ‘facts’.
For that researcher, reality is represented by objects that are considered to be ‘real’, such as computers, trucks and machines.
These objects have a separate existence to that of the researcher and for that reason, this researcher would argue that the data
collected are far less open to bias and therefore more ‘objective’.
The ‘resources’ researcher would place much less authority on the data collected by the ‘feelings’ researcher, who is concerned
with the feelings and attitudes of the workers towards their managers in that same manufacturing process. The ‘resources’
researcher would view the objects studied by the ‘feelings’ researcher – feelings and attitudes – as social phenomena which
have no external reality.
They cannot be seen, measured and modified like computers, trucks and machines. You may argue, of course, that human
feelings can be, and frequently are, measured. Indeed, the ‘resources’ researcher may place more authority on such data were it
to be presented in the form of a table of statistical data. This would lend the data more objectivity in the view of the ‘resources’
researcher. But this raises the question of whether those data presented in statistical form are any more deserving of authority
than those presented in a narrative, which may be the choice of the ‘feelings’ researcher. The ‘resources’ researcher is
embracing what is called the Positivist philosophy to the development of knowledge whereas the ‘feelings’ researcher is
adopting the Interpretivist philosophy. (The positivism and Interpretivism will be detailed by future slides)
Axiology - Axiology is a branch of philosophy that studies judgements about value. Although this may include values that are being
posessed in the fields of aesthetics and ethics, it is the process of social enquiry with which is concerned here. The role that your
own values play in all stages of the research process is of great importance if you wish your research results to be credible.
Researchers demonstrate axiological skill by being able to articulate their values as a basis for making judgements about what
research they are conducting and how they go about doing it. After all, at all stages in the research process you will be
demonstrating your values.
Choosing one topic rather than another suggests that you think one of the topics is more important. Your choice of philosophical
approach is a reflection of your values, as is your choice of data collection techniques. For example, to conduct a study where you
place great importance on data collected through interview work suggests that you value personal interaction with your
respondents more highly than their views expressed through an anonymous questionnaire.
An interesting idea which comes from Heron’s (1996) discussion of axiology is the possibility of writing your own statement of
personal values in relation to the topic you are studying. This may be more evidently applicable to some research topics than
others.
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Those topics concerned with personal career development, for example, may be obvious candidates for this process. For
example, it would be an issue of personal value that it is the responsibility of the individual to take charge of their own career
development. In areas of finance it may be a strongly held value of the researcher that as much information as possible
should be available to as many stakeholders as possible.
A statement of values may be of use both to you as the researcher and those parties with whom you have contact in your
research. The use to you would be a result of your ‘being honest with yourself’ about quite what your values are. This would,
for example, heighten your awareness of value judgements you are making in drawing conclusions from your data. These
value judgements may lead to the drawing of conclusions which may be different from those drawn by researchers with
other values.
Other relevant parties connected with your research may include any fellow researchers, your supervisor and the university
research ethics committee. This latter body may be of particular relevance to thoughts about the role of values in research
topic choice and ways of pursuing research. Being clear about your own value position may help you in deciding what is
appropriate ethically and arguing your position in the event of queries about decisions you have made.
The key aspects of philosophy are:
1. Positivism
2. Interpretivism
3. Realism
4. Pragmatism
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Positivism
If your research reflects the philosophy of positivism then you will probably adopt the philosophical stance of the natural
scientist. You will prefer ‘working with an observable social reality and that the end product of such research can be law-like
generalisations similar to those produced by the physical and natural scientists’ (Remenyi et al. 1998).
Like the ‘resources’ researcher earlier, only phenomena that you can observe will lead to the production of credible data. To
generate a research strategy to collect these data you are likely to use existing theory to develop hypotheses. These hypotheses
will be tested and confirmed, in whole or part, or refuted, leading to the further development of theory which then may be
tested by further research.
Another important component of the positivist approach to research is that the research is undertaken, as far as possible, in a
value-free way. The ‘resources’ researcher would claim to be external to the process of data collection in the sense that there is
little that can be done to alter the substance of the data collected. The assumption is that ‘the researcher is independent of and
neither affects nor is affected by the subject of the research’ (Remenyi et al. 1998).
The ‘resources’ researcher’s claim to be value free is, on the face of it, rather stronger than that of the ‘feelings’ researcher. It
may be argued that the ‘feelings’ researcher is part of the data collection process. It would be normal for at least part of the
process of data collection on the feelings and attitudes of the workers towards their managers to include the personal
involvement of the ‘feelings’ researcher with those workers. A personal interview, for example, will involve the ‘feelings’
researcher framing the questions to ask and interpreting the respondent’s examples. It is hard to imagine that the ‘feelings’
researcher would ask every respondent exactly the same question in exactly the same way and interpret every response with
computer-like consistency.
It is frequently advocated that the positivist researcher will be likely to use a highly structured methodology in order to facilitate
replication (Gill and Johnson 2002). Furthermore, the emphasis will be on quantifiable observations that lend themselves to
statistical analysis. However in certain instances, hypothesis testing, using data originally collected in in-depth interviews also
could take place.
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Interpretivism
Interpretivism advocates that it is necessary for the researcher to understand differences between humans in our role as
social actors. This emphasises the difference between conducting research among people rather than objects such as trucks
and computers. The term ‘social actors’ is quite significant here. The metaphor of the theatre suggests that as humans we play
a part on the stage of human life. In theatrical productions, actors play a part which they interpret in a particular way (which
may be their own or that of the director) and act out their part in accordance with this interpretation. In the same way
everyday social roles could be interpreted in accordance with the meaning given to these roles. In addition, the social roles of
others could be interpreted in accordance with someone’s own set of meanings.
Crucial to the interpretivist philosophy is that the researcher has to adopt an empathetic stance. The challenge here is to enter
the social world of our research subjects and understand respondents’ world from their point of view.
Some would argue that an interpretivist perspective is highly appropriate in the case of business and management research,
particularly in such fields as organisational behaviour, marketing and human resource management. Not only are business
situations complex, they are also unique. They are a function of a particular set of circumstances and individuals coming
together at a specific time.
Realism
Realism is another philosophical position which relates to scientific enquiry. The essence of realism is that what the senses show as reality is the
truth: that objects have an existence independent of the human mind.
The philosophy of realism is that there is a reality quite independent of the mind. In this sense, realism is opposed to idealism, the theory that only
the mind and its contents exist. Realism is a branch of epistemology which is similar to positivism in that it assumes a scientific approach to the
development of knowledge.
This assumption underpins the collection of data and the understanding of those data. This meaning (and in particular the relevance of realism for
business and management research) becomes clearer when two forms of realism are contrasted.
The first type of realism is Direct Realism. Direct realism says that what you see is what you get: what we experience through our senses portrays the
world accurately. The second kind of realism is called Critical Realism. Critical realists argue that what we experience are sensations, the images of
the things in the real world, not the things directly. Critical realists point out how often our senses deceive us. For example, when you next watch an
international rugby or cricket match on television you are likely to see an advertisement for the sponsor in a prominent position on the actual playing
surface. This looks like it is standing upright on the field. However, this is an illusion. It is in fact painted on the grass. So what you really see are
sensations, which are representations of what is real.
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A simple way to think about the difference between direct and critical realism is as follows. Critical realism claims that there are
two steps to experiencing the world. First, there is the thing itself and the sensations it conveys. Second, there is the mental
processing that goes on sometime after that sensation meets our senses. Direct realism says that the first step is enough. To pursue
our cricket (or rugby) example, the umpire who is the critical realist would say about his umpiring decisions: ‘I give them as I see
them!’ The umpire who is a direct realist would say ‘I give them as they are!’.
A further important point needs to be made about the distinction between direct and critical realism, both of which are important
in relation to the pursuit of business and management research. The first relates the capacity of research to change the world
which it studies. The direct realist perspective would suggest the world is relatively unchanging: that it operates, in the business
context, at one level (the individual, the group or the organisation).
The critical realist, on the other hand, would recognise the importance of multi-level study (e.g. at the level of the individual, the
group and the organisation). Each of these levels has the capacity to change the researcher’s understanding of that which is being
studied. This would be the consequence of the existence of a greater variety of structures, procedures and processes and the
capacity that these structures, procedures and processes have to interact with one another. We, therefore, would argue that the
critical realist’s position that the social world is constantly changing is much more in line with the purpose of business and
management research which is too often to understand the reason for phenomena as a precursor to recommending change.
Pragmatism
Pragmatism argues that the most important determinant of the epistemology, ontology and axiology you adopt is the research
question – one may be more appropriate than the other for answering particular questions. Moreover, if the research question
does not suggest unambiguously that either a positivist or interpretivist philosophy is adopted, this confirms the pragmatist’s
view that it is perfectly possible to work with variations in your epistemology, ontology and axiology.
This mirrors a theme which recurs – that mixed methods, both qualitative and quantitative, are possible, and possibly highly
appropriate, within one study.
Tashakkori and Teddlie (1998) suggest that it is more appropriate for the researcher in a particular study to think of the
philosophy adopted as a continuum rather than opposite positions. They note that ‘at some points the knower and the known
must be interactive, while at others, one may more easily stand apart from what one is studying’.
The pragmatism is intuitively appealing, largely because it avoids the researcher engaging in what they see as rather pointless
debates about such concepts as truth and reality. In their view you should ‘study what interests you and is of value to you,
study in the different ways in which you deem appropriate, and use the results in ways that can bring about positive
consequences within your value system’.
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Inductive / Deductive Research

The extent to which you are clear about the theory at the beginning of your research raises an important question
concerning the design of your research project. This is whether your research should use the deductive approach, in which
you develop a theory and hypothesis (or hypotheses) and design a research strategy to test the hypothesis, or the
inductive approach, in which you would collect data and develop theory as a result of your data analysis.
Insofar as it is useful to attach these research approaches to the different research philosophies, deduction owes more to
positivism and induction to interpretivism, although such labelling is potentially misleading and of no real practical value.

Inductive Approach
In an inductive approach to research, a researcher begins by collecting data that is relevant to his or her topic of interest.
Once a substantial amount of data have been collected, the researcher will then take a breather from data collection,
stepping back to get a bird’s eye view of her data.
At this stage, the researcher looks for patterns in the data, working to develop a theory that could explain those patterns.
Thus when researchers take an inductive approach, they start with a set of observations and then they move from those
particular experiences to a more general set of propositions about those experiences. In other words, they move from
data to theory, or from the specific to the general.
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Inductive Approach
One fascinating recent study in which the researchers took an inductive approach was “How boys and young men learn
about menstruation” (Journal of Family Issues, 32, 129–156).
To understand this process, the researcher and her colleagues analyzed the written narratives of 23 young men in which
the men described how they learned about menstruation, what they thought of it when they first learned about it, and
what they think of it now. By looking for patterns across all 23 men’s narratives, the researchers were able to develop a
general theory of how boys and young men learn about this aspect of girls’ and women’s biology.
They conclude that sisters play an important role in boys’ early understanding of menstruation, that menstruation makes
boys feel somewhat separated from girls, and that as they enter young adulthood and form romantic relationships, young
men develop more mature attitudes about menstruation.

Deductive Approach
Researchers taking a deductive approach take the steps described earlier for inductive research and reverse their order.
They start with a social theory that they find compelling and then test its implications with data. That is, they move from a
more general level to a more specific one. A deductive approach to research is the one that people typically associate with
scientific investigation.
The researcher studies what others have done, reads existing theories of whatever phenomenon he or she is studying, and
then tests hypotheses that emerge from those theories.
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Deductive Approach
In a recent deductive study, Melissa Milkie and Catharine Warner (2011) researched about classroom learning
environments and the mental health of first grade children(Journal of Health and Social Behavior, 52, 4–22). They studied
the effects of different classroom environments on first graders’ mental health. Based on prior research and theory, Milkie
and Warner hypothesized that negative classroom features, such as a lack of basic supplies and even heat, would be
associated with emotional and behavioral problems in children.
The researchers found support for their hypothesis, demonstrating that policymakers should probably be paying more
attention to the mental health outcomes of children’s school experiences, just as they track academic outcomes (American
Sociological Association, 2011).The American Sociological Association wrote a press release on Milkie and Warner’s
findings under the heading ‘Negative classroom environment adversely affects children’s mental health’.

Major differences between these approaches
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Research Purpose
With the way in which you ask your research question, the research could be categorised in different ways. In thinking
about your research question, you inevitably have begun to think about the purpose of your research.
The classification of research purpose most often used in the research methods’ literature is the threefold one of
exploratory, descriptive and explanatory. However, in the same way as your research question can be both descriptive
and explanatory, so your research project may have more than one purpose. Indeed, as Robson (2002) points out, the
purpose of your enquiry may change over time.
Exploratory - An exploratory study is a valuable means of finding out ‘what is happening; to seek new insights; to ask
questions and to assess phenomena in a new light’ (Robson 2002:59). It is particularly useful if you wish to clarify your
understanding of a problem, such as if you are unsure of the precise nature of the problem. There are three principal ways
of conducting exploratory research such as search of the literature, interviewing ‘experts’ in the subject and conducting
focus group interviews.
Research Purpose
Descriptive – The object of descriptive research is ‘to portray an accurate profile of persons, events or situations’ (Robson 2002:59). This
may be an extension of, or a forerunner to, a piece of exploratory research or, more often, a piece of explanatory research. It is necessary to
have a clear picture of the phenomena on which you wish to collect data prior to the collection of the data.
Often project tutors are rather wary of work that is too descriptive. There is a danger of their saying ‘That’s very interesting . . . but so
what?’ They will want you to go further and draw conclusions from the data you are describing. They will encourage you to develop the
skills of evaluating data and synthesising ideas. These are higher-order skills than those of accurate description. Description in management
and business research has a very clear place.
Explanatory - Studies that establish causal relationships between variables may be termed explanatory research. The emphasis here is on
studying a situation or a problem in order to explain the relationships between variables. You may find, for example, that a cursory analysis
of quantitative data on manufacturing scrap rates shows a relationship between scrap rates and the age of the machine being operated. You
could go ahead and subject the data to statistical tests such as correlation in order to get a clearer view of the relationship. Alternatively, or
in addition to, you might collect qualitative data to explain the reasons why customers of your company rarely pay their bills according to
the prescribed payment terms.
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Research Strategy
The research strategy is the general plan of how the researcher will go about answering the research questions” (Saunders et al.
2009; p. 90). Each strategy can be used for exploratory, descriptive and explanatory research (Yin 2003). Some of these clearly
belong to the deductive approach, others to the inductive approach. However, often allocating strategies to one approach or the
other is unduly simplistic. In addition, that no research strategy is inherently superior or inferior to any other. Consequently, what
is most important is not the label that is attached to a particular strategy, but whether it will enable you to answer your particular
research question(s) and meet your objectives.
The key research strategies are:
• Experiment
• Survey
• Case study
• Action research
• Grounded theory
• Ethnography
• Archival research
Research Strategy
Experiment - Experiment is a form of research that owes much to the natural sciences, although it features strongly in much social science
research, particularly psychology. The purpose of an experiment is to study causal links; whether a change in one independent variable
produces a change in another dependent variable (Hakim 2000). The simplest experiments are concerned with whether there is a link
between two variables. More complex experiments also consider the size of the change and the relative importance of two or more
independent variables. Experiments therefore tend to be used in exploratory and explanatory research to answer ‘how’ and ‘why’
questions.
Survey - The survey strategy is usually associated with the deductive approach. It is a popular and common strategy in business and
management research and is most frequently used to answer who, what, where, how much and how many questions. It therefore tends to
be used for exploratory and descriptive research. Surveys are popular as they allow the collection of a large amount of data from a sizeable
population in a highly economical way. Often obtained by using a questionnaire administered to a sample, these data are standardised,
allowing easy comparison. In addition, the survey strategy is perceived as authoritative by people in general and is both comparatively easy
to explain and to understand. The survey strategy allows you to collect quantitative data which you can analyse quantitatively using
descriptive and inferential statistics (Sections 12.4 and 12.5). In addition, the data collected using a survey strategy can be used to suggest
possible reasons for particular relationships between variables and to produce models of these relationships.
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Research Strategy
Case study - Robson (2002:178) defines case study as ‘a strategy for doing research which involves an empirical investigation of
a particular contemporary phenomenon within its real life context using multiple sources of evidence’. Yin (2003) also highlights
the importance of context, adding that, within a case study, the boundaries between the phenomenon being studied and the
context within which it is being studied are not clearly evident.
This is the complete opposite of the experimental strategy we outlined earlier, where the research is undertaken within a highly
controlled context. It also differs from the survey strategy where, although the research is undertaken in context, the ability to
explore and understand this context is limited by the number of variables for which data can be collected.
The case study strategy will be of particular interest to you if you wish to gain a rich understanding of the context of the
research and the processes being enacted (Morris and Wood 1991). The case study strategy also has considerable ability to
generate answers to the question ‘why?’ as well as the ‘what?’ and ‘how?’ questions, although ‘what?’ and ‘how?’ questions
tend to be more the concern of the survey strategy. For this reason the case study strategy is most often used in explanatory
and exploratory research. The data collection techniques employed may be various and are likely to be used in combination.
They may include, for example, interviews, observation, documentary analysis and (as if to emphasise the dangers of
constructing neat boxes in which to categorise approaches, strategies and techniques) questionnaires.
Research Strategy
Action research – Action Research is a method of systematic enquiry that people undertake as researchers of their own
practice. The enquiry involved in Action Research is often visualised as a cyclical process.
The start of the process is usually an issue or situation that, as a teacher, you want to change. You will be supported in
turning this 'interesting problem' into a 'researchable question' and then developing actions to try out. You will draw on
the findings of other researchers to help develop actions and interpret the consequences.
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Research Strategy
Grounded theory - All research is "grounded" in data, but few studies produce a "grounded theory." Grounded Theory is an
inductive methodology. Although many call Grounded Theory a qualitative method, it is not. It is a general method. It is the
systematic generation of theory from systematic research. It is a set of rigorous research procedures leading to the emergence of
conceptual categories. These concepts/categories are related to each other as a theoretical explanation of the action(s) that
continually resolves the main concern of the participants in a substantive area. Grounded Theory can be used with either
qualitative or quantitative data.
Ethnography - Ethnography is rooted firmly in the inductive approach. It emanates from the field of anthropology. The purpose is
to describe and explain the social world the research subjects inhabit in the way in which they would describe and explain it. This
is obviously a research strategy that is very time consuming and takes place over an extended time period as the researcher needs
to immerse herself or himself in the social world being researched as completely as possible. The research process needs to be
flexible and responsive to change since the researcher will constantly be developing new patterns of thought about what is being
observed. Most books you read on ethnography emphasise that an ethnographic strategy is naturalistic. This means that in
adopting an ethnographic strategy, you will be researching the phenomenon within the context in which it occurs and, in addition,
not using data collection techniques that oversimplify the complexities of everyday life.
Research Strategy
Archival research - The archival research, makes use of administrative records and documents as the principal source of
data. Although the term archival has historical connotations, it can refer to recent as well as historical documents (Bryman
1989). It is important that an archival research strategy is not conflated with secondary data analysis. All research that
makes use of data contained in administrative records is inevitably secondary data analysis. This is because these data
were originally collected for a different purpose, the administration of the organisation. However, when these data are
used in an archival research strategy they are analysed because they are a product of day-to-day activities (Hakim 2000).
They are, therefore, part of the reality being studied rather than having been collected originally as data for research
purposes.
Your choice of research strategy will be guided by your research question(s) and objectives, the extent of existing
knowledge, the amount of time and other resources you have available, as well as your own philosophical underpinnings.
Finally, it must be remembered that these strategies should not be thought of as being mutually exclusive. For example, it
is quite possible to use the survey strategy as part of a case study.
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Methods and Techniques for collecting Data

In choosing your research methods you will therefore either use a single data collection technique and corresponding analysis
procedures (mono method) or use more than one data collection technique and analysis procedures to answer your research
question (multiple methods). This choice is increasingly advocated within business and management research (Curran and
Blackburn 2001), where a single research study may use quantitative and qualitative techniques and procedures in combination as
well as use primary and secondary data.
Data collection is a process of collecting information from all the relevant sources to find answers to the research problem, test the
hypothesis and evaluate the outcomes. The majority of data collection will be undertaken by interview. Data collection methods
can be divided into two categories: Primary methods of data collection and Secondary methods of data collection.
Primary Data Collection Method - When the data are collected directly by the researcher for the first time is called as Primary
Data. It is original in nature and is specific to a research problem under study. Primary data collection methods can be divided into
two groups: quantitative and qualitative.
Secondary Data Collection Method - Secondary data is a type of data that has already been published in books, newspapers,
magazines, journals, online portals etc. There is an abundance of data available in these sources about your research area in
business studies, almost regardless of the nature of the research area. Therefore, application of appropriate set of criteria to select
secondary data to be used in the study plays an important role in terms of increasing the levels of research validity and reliability.
Quantitative and Qualitative Research

Quantitative data collection methods are based in mathematical calculations in various formats. Methods of quantitative data
collection and analysis include questionnaires with closed-ended questions, face to face and telephone interviews, methods of
correlation and regression, mean, mode and median and others.
Quantitative methods are cheaper to apply and they can be applied within shorter duration of time compared to qualitative
methods. Moreover, due to a high level of standardisation of quantitative methods, it is easy to make comparisons of findings.
Qualitative data collection methods, on the contrary, do not involve numbers or mathematical calculations. Qualitative research
is closely associated with words, sounds, feeling, emotions, colours and other elements that are non-quantifiable.
Qualitative studies aim to ensure greater level of depth of understanding and qualitative data collection methods include in-
depth interviews, questionnaires with open-ended questions, focus groups, observation, game or role-playing, case studies,
document reiew etc.
Your choice between quantitative or qualitative methods of data collection depends on the area of your research and the nature
of research aims and objectives.
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Generation and evaluation of options

When it comes to your own research with the knowledge you have gained on the philosophies, approaches, purpose and strategies
and data collection methods, depending on the nature of the research and the way you need to conduct it, you could select the
suitable options in the context of your own research under each and every section.
Points worth considering before selecting the options under each area are:
• The nature of the research topic
• The time available
• The extent of risk
• The research audience – managers/ markers/ authorities
The right choice of approach will help you with making more informed decisions about the research design and think about which
strategies will work for your research topic and supports you adapting your design to cater for any constraints.
Further the choice of appropriate data collection methods will be helpful in data gathering for the project in order to carry out
analysis successfully and finally bring out useful results and conclusions which will enable achieving the strategic aim of the project
and the business as a whole.
Project Techniques
When it comes to any research / project the management of time, scope, quality and costs are important as those are the
primary building blocks of success for a project.
Scope: The tasks required to fulfill the project’s goals
Time: The schedule for the project to reach completion
Cost: The financial constraints of a project, also known as the project budget
Quality: The level of process and output standard required to achieve by the end of the project
Scope Management Techniques
► Defining the scope clearly and to the point to make it concise for everyone
► Freezing scope change requests once agreed with all the parties without allowing ay amendments
► Keeping the project scope document unaltered once finalised
► Using and following work break down structures to progress with project activities
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Project Techniques
Time Management Techniques
• Starting the day with a clear focus on day’s activities that are to be completed
• Having a dynamic task list that will support completing core tasks without leaving half done.
• Focusing on High-Value activities such as making important decisions, monitoring quality that affect the quality of the project
• Minimizing Interruptions to project work which have been scheduled
• Stopping Procrastinating of the planned work and make sure that project is progressing well in par with agreed deadlines
• Limiting Multi Tasking and focusing on one task at a time and completing them one by one achieving greater productivity
• Reviewing the day with the team and make plans for the next day to accommodate anything that is left behind
Cost Management Techniques
• Effective Time Management in order to finish the project on time. That way extra costs will not be incurred
• Sticking to the decided budget without letting any overruns and making sure the resources are utilised maximum
• Utilising all the tools and resources to make sure the resources such as people, raw material, machines, space and funds are not
idle
• Keeping a track of costs to make sure that the budgets are not running over than agreed
• Calculating earned value to make sure that the project is progressing in a positive direction increasing it’s value
Project Techniques
Quality Management Techniques
• Validating the deliverables on a continuous basis in order to make sure the quality levels have not been dropped
• Identifying causes of poor project quality and eliminating them
• Eliminating problems related to quality by bringing in right measurements and monitoring tools
• Using quality metrics, check lists to make sure the quality is consistent across the project
• Having quality control measurements in place to measure quality stage by stage and ensure that the require level of
quality is been achieved
• Usage of cause and effect diagrams, control charts, flow charts, pareto charts, histograms to monitor levels o quality of the
project
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Trade off models

The conventional trade-off model states that unless there is some slack in the system, improving any one of the four basic
manufacturing capabilities - Quality, Dependability, Speed and Cost - must necessarily be at the expense of one or more of
the other three. In the short term this seems to be the case. The picture often used is of a balance or a see-saw.
Professor Nigel Slack (of Warwick Business School) has pointed out that there is an alternative to disturbing the balance
and that is to raise the fulcrum or balance point, thus (in the example above) simultaneously reducing cost and increasing
speed. In this example the fulcrum would be either Quality or Dependability.
Earned Value Management Formulation

Earned value management is a systematic process used by project managers to determine project performance and forecast project
completion schedules and budgets.
Earned value management (EVM) is a systematic process used to measure project performance at various times throughout a project
life cycle. EVM helps project managers to determine whether a project is over or under budget, or if the project is on schedule.
Project managers can also use EVM to compare the actual work performed to the work that was originally planned for the project at
a specific period, and to forecast project performance.
With EVM, the project manager will know exactly whether the project is:
• ahead of / on / behind schedule
• under / on / over budget
Earned value management bases on the concept that
i) work completed will deliver value and
ii) the value delivered equals the budget put into the work.
The value gained can be assessed along the progression of the project. In reality, earned value management is very complicated as
value usually cannot simply be assessed based on the percentage of completion.
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The basic EVM Formulas are:
(Consider the context of building 10 houses each has a value of US$1000 expected to be completed in 10 weeks in proportion )
Planned Value (PV) — The budgeted value of the work completed so far at a specific date
example: at end of week 4, altogether 4 houses should be completed, the PV is US$4000
Earned Value (EV) — The actual value of the work completed so far at a specific date
example: by end of week 4, only 3 houses are completed, the EV is US$3000
Actual Cost (AC) — The total expenditure for the work so far at a specific date
example: by end of week 4, US$4000 was spend, the AC is US$4000
EVM is based on monitoring these three aspects along the project in order to reveal the health of the project together with the
following indices:
• Schedule Variance (SV)
• Schedule Performance Index (SPI)
• Cost Variance (CV)
• Cost Performance Index (CPI)

Schedule Variance (SV) — difference between PV and EV, to tell whether the project work is ahead of / on / behind schedule
(SV = EV – PV)
Schedule Performance Index (SPI) — ratio between EV and PV, to reflect whether the project work is ahead of / on /
behind schedule in relative terms (SPI = EV/PV)
Cost Variance (CV) — difference between EV and AC, to tell whether the project work is under / on / over budget (CV = EV –
AC)
Cost Performance Index (CPI) — ratio between EV and AC, to reflect whether the project work is under / on / over budget in
relative terms (CPI = EV/AC)
Note: both SV and SPI / CV and CPI give similar information on schedule / budget but the indices will give more insights into
the actual performance with a meaning comparison.
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Lesson Summary
In this lesson you have discussed the core areas related to a research / project in detail and gained the knowledge of different
options that are available to choose when undertaking a research.
The differences between data, information and knowledge was discussed first and then different types of researches, Research
Philosophies, Inductive / Deductive Research, Research Purpose, Research Strategy were explored while understanding the
evaluation of options in carrying out a research/ project.
Under the second half of the lesson the Methods and Techniques for collecting Data, Quantitative and Qualitative Research,
Project techniques for managing Time, Scope, Quality and Costs were discussed together with Trade off models and Earned Value
Management Formulation set for understanding the variances of the core components of a project.
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Lesson 1: Drawing
Conclusions and
Making
Recommendations
Introduction
In this lesson we will be closely looking at the key stages, formalities and steps involved towards the end of a project. In
learning the last lesson of the module you will be studying and discussing the key areas such as drawing research
conclusions, providing recommendations, investigating the impact of the recommendations, how to present research
results, the wider impact of the project, implementation of recommendations and the development it would bring out
and finally the evaluation of success of the project.
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Learning Outcomes
3. Be able to draw conclusions and make recommendations that achieve the project aim
3.1 Critically evaluate the research to enable conclusions to be made
3.2 Recommend a course of action that achieves the strategic aims of the project
3.3 Critically analyse the impact of the recommendations
4. Be able to develop and review the results of the investigative project
4.1 Determine the medium to present the result of the project and its contribution to strategic objectives
4.2 Take responsibility for the results of the investigative project and the substantial changes and developments it
brings about
4.3 Critically evaluate the impact and success of the investigative project
Lesson Objectives
1. Drawing research conclusions
2. Providing recommendations
3. Impact of the recommendations
4. Presenting research results
5. Implementation of recommendations and it’s impact
6. Evaluation of success of the project
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Drawing research conclusions

The project usually has a properly sequenced structure with a logical flow. Your readers should know the journey on which they
are being taken, and should know at all times the point in the journey that has been reached. Above all, the structure you adopt
should enable your reader, having read the report, to identify the storyline clearly. Most writers agree with Robson (2002) on
the general structure to adopt for a project report that is the end product of your research. The key sections are:
• Abstract
• Introduction
• Literature review
• Method
• Results
• Analysis / Discussion
• Conclusions & Recommendations
• References
• Appendices

Answering the research question(s), meeting the objectives and, if appropriate, supporting or otherwise the research hypotheses is the main
purpose of the conclusions section / chapter. This is where you will consider the findings presented in the previous section. You should also
return to your literature review and ask yourself ‘What do my conclusions add to the understanding of the topic displayed in the literature?’
It may be that there are practical implications of your findings. In a management report this would normally form the content of a chapter
specifically devoted to recommendations. In the reports that students are required to prepare on some professional courses this is an
important requirement.
Research Conclusions
Even if you do not specify any practical implications of your research you may comment in the conclusions section on what your research
implies for any future research. This is a logical extension of a section in the conclusions chapter that should be devoted to the limitations of
your research. These limitations may be the assumptions that you have made, the limitations of data collection, the snapshot nature of the
project, or the restriction to one geographical area of an organisation. Virtually all research has its limitations. This section should not be seen
as a confession of your weaknesses, but as a mature reflection on the degree to which your findings and conclusions can be said to be the
‘truth’.
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You may find that the clearest way to present your conclusions is to follow a similar structure to the one used in your
‘findings’ section. If that structure reflects the research objectives then it should make certain that your conclusions would
address them. Drawing up a matrix may help you in structuring your findings and conclusions. The result should be a clear
statement of conclusions.

An alternative approach to the matrix is to draw a ‘mind map’, which places the findings randomly on a blank page and links
conclusions to these findings by way of lines and arrows. This may be a more creative approach, which enables you to
associate groups of findings with conclusions and vice versa.
You may also have a final section in your conclusion chapter(s) called ‘discussion’. Alternatively, you may make this a separate
chapter with this general heading. Here you would turn to your conclusions and ask such questions as: ‘What does this
mean?’ ‘What are the implications for organisations?’ ‘What are the implications for the current state of knowledge of the
topic?’ ‘How does it add to the literature?’ ‘What are the implications for future research?’ The conclusions chapter should
not include new material but the discussion may do so, as long as it is relevant to the point you are making about your
conclusions.
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Providing recommendations
When preparing the recommendations section, remember that you must show how your results support the recommendations /
suggestions. A recommendation for a preferred alternative should include:
•Specifically stating what should be done, the steps required to implement the policy, and the resources needed
•Discussion of the benefits to the organisation and what problems would be corrected or avoided
•Discussion of the feasibility of the proposed policy
•General statement about the nature and timing of an evaluation plan that would be used to determine the effectiveness of the
proposed policy
The recommendations for a project could be derived out of the conclusions and provided in line with the aims and strategic
objectives as well because eventually the recommendations suggest improvements or remedies to bring about the change or the
achievement expected with the strategic objectives.
When the project manager or the researcher conducting the project is focused throughout all the key sections it positively affects
the project. Then the recommendations are being brought out while being focused on the set objectives hence, it will be
supportive in terms of realising the strategic objectives of the organisation.
Providing recommendations
The recommendation in research paper can be defined as a critical suggestion regarding the best course of action in a certain
situation (Saunders et al, 2008). The whole idea of a recommendation is to provide a beneficial guide that will not only
resolve certain issues, but result in a beneficial outcome. Recommendations can be different and are heavily dependent on
the situation that arose. Thus, it is clear that example of recommendation in research paper is always based on certain data
and can not be speculated due to the fact that it is not a hypothesis. It always addresses limitations and suggest how they
might be overcome in future work.
In providing recommendations for future work / research, you finally have the opportunity to present and discuss the actions
that future researchers / project managers should take as a result of your Project. A well-thought-out set of
recommendations makes it more likely that the organisation will take your recommendations seriously. Ideally you should be
able to make a formal recommendation regarding the alternative that is best supported by the study. The kinds of additional
research suggested by the Project could be discussed. If the preferred alternative is implemented, what additional research
might be needed too could be discussed under this section.
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Impact of the recommendations

The recommendations provided by a project should be justified in terms of their suitability, feasibility and adaptability in the
suggested context. Once the recommendations are implemented it will have many advantages over the chosen context and
on the wider society. Some of the widely accepted impacts of the project recommendations are;
1. A tool for building knowledge and for facilitating learning
2. Means to understand various issues and increase public awareness on an important area
3. An aid to business success by understanding various important remedies
4. A way to prove lies and to support truths with facts and figures
5. Means to find, gauge, and seize opportunities in the markets
6. A seed to love reading, writing, analysing, and sharing valuable information among people
7. Nourishment and exercise for the mind and knowledge.
Presenting research results

The presentation of your project work or the research results could be done both in writing and verbally through a presentation.
When it comes to writing ideally a project report or a research report could be written in order to present the research results and
the conclusions to the audience.
Written Reports
Many researchers of management topics face the dilemma of having to write for more than one audience. In addition to the
academic audience, who possibly will mark and grade the report for a degree or a diploma, it may be necessary to prepare a report
for the management of the employing organisation, or, indeed, a non-employing organisation or the client who will be interested
in the practical benefit that the report promises. This raises the thorny question, ‘For whom should the report be written?’
Many people have resolved this dilemma by writing two reports: one for each audience. The academic report will usually be much
longer and contain contextual description that the organisational audience does not require. Similarly, those managers reading the
report will probably be less interested in the literature review and the development of theory than the academic audience. If the
research question did not imply the necessity for recommendations for future action, these may need to be written for the
organisational version. A report written for the organisational context or for the management could be identified as a ‘Consultancy
Report’.
Fortunately, the advent of word processing makes the job of compiling more than one report quite easy. Some careful cutting and
pasting will be necessary. However, what should always be kept in mind is the audience that each specific report is addressing. Take
care not to fall between two stools. Write each report for its audience in style and content.
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The Consultancy Report
The report that you write for the management of the employing organisation, or a non-employing organisation or your client could
be called as a Consultancy Report.
Advice from the Institute of Management Consultancy (now the Institute of Business Consulting) suggests that a number of key
questions need to be asked before the consultancy report is planned. Among these are: what information does management
expect?; with what level of detail?; how much knowledge does management already have?; for what purpose will the report be
used?; who will read it?
Another fundamental question is: what key messages and recommendations do you want to impart? The report structure could be
out lined as:
• Executive summary
• Introduction
• Results
• Conclusions
• Recommendations

There is, however, an alternative structure which, arguably, is simpler and delivers the message more forcibly. In this you start with
your main message and then provide the information that supports it. This second structure, will, however, involve you in more
alteration of the academic report you have written.
The key points be mindful in writing and presenting the content of the report are;
•Decisions about what to include in (and, just as importantly, to exclude from) the report requires ruthlessness. Only information
that is essential to management should go in the main body of the report; any information that is ‘important’ or ‘of interest’
should be relegated to appendices.
•Additional detail, for example figures, references or diagrams are all examples of ‘important’ information.
•The Institute of Management Consultancy suggests that you should put yourself in the reader’s shoes. The management reader
will be short of time and want only essential detail.
•That said, the management reader will be interested in the background to the project and in how you carried out the research.
But the main purpose of the report will be to tell management your recommendations.
•As with the academic report, division of the report content into logical sections with clear sub-headings will lead management
through the report and show them where to find specific topics.
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The executive summary is likely to be the part of the report on which managers will concentrate. It is important that it can
stand alone and that it contains real information, including hard facts and figures. If your report includes recommendations,
the executive summary should make it clear what these are and include their implications, values and costs. As with the
abstract, the executive summary should be short (no more than two pages) and designed to get your main message across.
Two final points about the writing style of the consultancy report. The reader will not appreciate long words, complicated
language, ‘management speak’ or a multitude of acronyms and abbreviations. If it is necessary to use complex technical
terms, make sure you provide a glossary in the appendix.
Finally, it is more appropriate to use the first person in the consultancy report. Language like ‘it was found’, ‘it is estimated’, ‘it
is recommended’ does not sound more professional; it simply depersonalises your report and makes it less accessible. Be
bold and put yourself at the heart of your writing! (Saunders et al., 2008)
As well as presenting two written reports you may have to present your report orally or verbally.

Oral / Verbal Presentation
Many students, particularly on professional courses, have to present their project report orally as part of the assessment
process. The skills required here are quite different from those involved with writing. The verbal presentation could be
discussed under three headings: planning and preparation; the use of visual aids; and presenting.
Planning & Preparation
The trainer’s old adage saying is ‘Failing to prepare is preparing to fail’. Your assessors will forgive any inadequacies that stem
from inexperience, but they will be much less forgiving of students who have paid little attention to preparation. You can be
sure of one thing about insufficient preparation: it shows, particularly to the experienced tutor.
All presentations should have clear aims and objectives. Suffice to say that your aim should be to give the audience members
an overview of your report in such a way that it will capture their interest. Keep it clear and simple. By doing so you will meet
the most basic assessment criterion: that some time later the tutor in the audience can remember clearly your main project
storyline.
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Your objectives should be more specific. They should start you thinking about the interests of your audience. These should
be phrased in terms of what it is you want your audience members to be able to do after your presentation. Since your
presentation will usually be confined to the imparting of knowledge, it is sufficient to phrase your objectives in terms of the
audience members being able, for example, to define, describe, explain or clarify. It is a good idea to share the objectives
with your audience members so they know about the journey on which they are being taken.
Setting clear objectives for your presentation leads you neatly to deciding the content. This should be straightforward
because your abstract should serve as your guide to the content. After all, the purpose of the abstract is to give the reader a
brief overview of the report, which is precisely the same purpose as the presentation. How much detail you go into on each
point will be determined largely by the time at your disposal. But the audience member who wants more detail can always
ask you to elaborate, or read it in the report.

Delivering the Presentation
The final point to note here is to think about the general approach you will adopt in delivering your presentation. It is a good
idea to involve the audience members rather than simply tell them what it is you want them to know. Thirty minutes of you
talking at the audience members can seem like an age, for you and sometimes for them! Asking them to ask questions
throughout the presentation is a good way of ensuring that the talk is not all in one direction.
The tutors and audience will ask questions however, you must be careful to ensure that you do not let questions and answers
run away with time. The more you open up your presentation to debate, the less control you have of time.
Sometimes the students set the audience mini-exercises to get them involved, but often these tend to fall flat. Play to your
strengths and enjoy the opportunity to share your detailed knowledge with an interested audience.
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Using Visual Aids
‘I hear and I forget, I see and I remember’ (Rawlins 1999:37)
The use of visual aids will do more than enhance the understanding of your audience. It will help you to look better prepared
and therefore more professional. It is unlikely that you will have the time to use elaborate media such as video or
photographic slides, and often your subject matter will not lend itself to their use.
A simple set of slides will perform the same function as a set of notes, in that it will ensure that you do not forget key points,
and will help you to keep your presentation on track. You will know the material so well that a key point noted on the
presentation slide will be enough to trigger your thought process and focus the attention of the audience. Key points will also
ensure that you are not tempted to read a script for your presentation, something that will not sustain the attention of your
audience for very long.

The use of presentation software such as Prezi, Zoho Show , Google Slides, Keynote, Haiku Deck, Slidedog, Visme, Slidebean and
emaze have revolutionised the preparation of overhead projector transparencies and the basic Microsoft Powerpoint presentations.
It is now easy to produce a highly professional presentation, which can include simple illustrations to reinforce a point or add a little
humour.
You may have the facility to project the slides direct to a screen using a computer, which clearly adds to the degree of
professionalism. This allows you electronically to reveal each point as you talk about it while concealing forthcoming points.
Alternatively, you may need to print the slides from the presentation software and copy these to handouts if you want to give any to
the audience.
You may want to supplement your pre-prepared slides with the use of the whiteboard. This may be useful for explaining points in
relation to questions you receive. A word of warning here: ensure that you use dry markers that can be wiped from the board. A vain
attempt to erase the results of a permanent pen in front of your audience will do nothing to enhance your confidence. Ensuring that
you have dry wipe markers (use only black and blue pens – red and green are too faint), and checking computers and ,multimedia
projectors before the presentation, serve to emphasise the need for careful preparation.
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Making the presentation
The first thing to say here is: don’t worry about nerves. As Janner (1984:15) says: ‘Confidence comes with preparation, practice and training.’
Your audience will expect you to be a little nervous. Indeed, without some nervous tension before your presentation it is unlikely you will do
yourself justice. Be positive about your presentation and your report.
Trial your presentation on a friend to ensure that it flows logically and smoothly and that you can deliver it in the allotted time. In our
experience most students put too much material in their presentations, although they worry beforehand that they have not got enough.
It is important that your presentation has a clear structure. The famous words of an evangelist when asked how he held the attention of his
audience, he replied ‘First I tell them what I’m going to say, then I say it, then I tell them what I’ve said’ (Parry 1991:17).
Parry (1991) notes that audiences like to know where they are going, they like to know how they are progressing on the journey, and they like
to know when they have arrived.

Finally some practical points to keep in mind are:
• Think about whether you would prefer to sit or stand at the presentation. The former may be better to foster debate, the
latter is likely to give you a sense of ‘control’ (Rawlins 1999). Which one you choose may depend upon the circumstances of
the presentation, including the approach you wish to adopt, the room layout, the equipment you are using and your
preferred style.
• Consider how you will deal with difficult questions. Rehearse these and your answers in your mind so that you can deal
with them confidently during the presentation.
• Avoid jargon.
• Check the room before the presentation to ensure you have everything you need, you are happy and familiar with the
layout, and all your equipment is working.
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Evaluation of success of the project

Measuring the success of a project once it’s brought to completion is a valuable practice. It provides a learning opportunity
for future undertakings, and, the opportunity to assess the true effectiveness of the project. In order to have a holistic view,
objective and subjective criteria need to be considered.
Project managers often wonder if they are measuring the right things on a project. It’s difficult to know how much time to
spend evaluating past performance and how much time to spend on keeping the work moving forward. Of course there are
many indicators of project success, but what do you need to be measuring while the project is in motion?
At various points during the project you want to evaluate five points: schedule, quality, cost, stakeholder satisfaction and
performance against the business case. You should be doing this informally anyway. A formal project evaluation is of use
during the end of a phase or stage as it can give you a clear indication of how the project is performing against the original
estimates. This information can then be used to grant (or withhold) approval from moving on with the next part of work.

Let’s look at the five items you should be evaluating.
1. Schedule
Project management success is often determined by whether or not you kept to the original timeline. Experienced project
managers know how hard that is, but it’s a little bit easier if you continually evaluate your progress as you go.
You’ll update your schedule regularly – recommended at least weekly. The schedule evaluation is something you can do more
formally at the end of the stage or phase, or as part of a monthly report to your senior stakeholder group or Project Board.
Look at your major milestones and check they still fall on the same dates as you originally agreed. Work out the slippage, if
any, and how much of an impact this will have on your overall project timescales.
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2. Quality
The end of a project phase is a good time for a quality review. You can check both the quality of your project management practices – are you
following the change management process every time and so on – and also the deliverables.
A quality review can evaluate whether what you are doing meets the standards set out in your quality plans. Best find out now before the
project goes too far, as it might be too late to do anything about it then.
3. Cost
Many executives would rate cost management as one of their highest priorities on a project, so evaluating how the project is performing
financially is crucial. Compare your current actual spend to what you had budgeted at this point. If there are variances, look to explain them.
You’ll also want to look forward and re-forecast the budget to the end of the project. Compare that to your original estimate too and make sure
it is close enough for your management team to feel that the work is on track. If your forecasts go up too much it is a sign that your spending
will be out of control by the end of the project – again, something it is better to know about now.

4. Stakeholder Satisfaction
Your wider team – your stakeholders – are essential in getting much of the work done so it’s worth checking in with them. Find
out how they are feeling about the project right now and what you could be doing differently. This is a difficult measure to
document statistically, although there’s nothing to stop you asking them for a rating out of 10. Even if you are evaluating their
satisfaction subjectively, it is still a useful exercise. If you notice that stakeholders are not fully supportive, you can put plans in
place to engage them thoroughly to try to influence their behavior.
5. Performance to Business Case
Finally, you’ll want to go back to the business case and see what you originally agreed. How is your project shaping up? Check
that the benefits are still realistic and that the business problem this project was designed to solve does still exist. It happens –
project teams work on initiatives that sound great but by the time they are finished the business environment has moved on and
the project is redundant. No one bothered to check the business case during the project’s life cycle and so no one realized that
the work was no longer needed.
Don’t work on something that nobody wants! Check the business case regularly and evaluate it in light of the current business
objectives. You can add other items to this list. In fact, it should reflect what is important to you and your team – you should be
evaluating things that matter, so feel free to add extra elements or drop some of the ones that you are less worried about.
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When your project is over you’ll want to carry out a full and final evaluation. This could be as part of a lessons learned review,
but typically it is different. A lessons learned review is where all the project stakeholders comment on what worked and what
didn’t. You take away key messages and tasks to improve how projects are delivered in the future. It’s an essential part of
project closure, but it isn’t a formal evaluation. You get a lot of feedback, anecdotes and stories but even the most structured
lessons learned workshop generally gives you narrative rather than statistics.
A project evaluation is about figures. The stories form part of it too, but a smaller part. During a project evaluation you look
at:
•Schedule
•Quality
•Cost
•Stakeholder satisfaction
•Performance to business case

Yes, it’s the same list of topics that you evaluate as you go through the project. Anything that you are going to be evaluating
at the end should also be assessed during the project’s life cycle, or your risk not hitting the targets you have set for yourself.
You can include your final end-of-project evaluation in your Project Closure Document and note down how close you were to
your original timescales, budget and quality targets. Add a few sentences to describe whether your evaluations showed that
stakeholders were satisfied with the end result and also if the project met the needs described in the business case.
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Lesson Summary
In this lesson you have covered the key areas of learning being able to draw conclusions and make recommendations that
achieve the project strategic aims and reviewing and developing the results of an investigative project.
Under those core areas, bringing out appropriate conclusions, bringing out recommendations the achieves strategic
objectives of the project and considering the impact of the recommendations on target audience and wider society have
been looked at through the first half of the lesson.
Under the second half of the lesson, the results presentation both in writing and verbally have been discussed , bringing out
the importance of taking responsibility for the results and recommendations suggested and the developments those bring
out. Further, the evaluation of the project both while it’s been conducted and towards the end were discussed with a set of
clear parameters.
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Determine the
organisation’s
strategic aims and
objectives
Module: Strategic Direction
Introduction
► In this lesson we will be closely looking at organisational aim, objectives and strategies. You will also learn about the
factors affecting the strategic aims of organisational strategy over the short and medium term. This lesson makes you
understand the base of strategic planning and strategy development by understanding the macro and micro environments.
These strategic elements help to look at where you are now and where will you be in the future where you want to be
how you will get there, mission, vision and its values. This lesson is important for you to understand the basics of strategic
direction of the organisations.
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Learning Outcomes
1. Be able to review and determine the organisation’s strategic aims and objectives
1.1 Critically analyse the existing strategic aims and objectives of the organisation
1.2 Undertake a critical evaluation of the components of current organisational strategy
1.3 Critically analyse the factors affecting the strategic aims of organisational strategy over the short and medium term
Lesson Objectives
1. Strategic Aim and Objectives
2. Types of Strategies
3. Strategic Management Process
4. Strategic Planning
5. Strategy maps
6. Industries and Sectors Analysis
7. External Environment
8. Porter's five forces framework
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Strategic Aim and Objectives

Objectives are statements of specific outcomes that are to be achieved (Johnson, Scholes and Whittington,
2011).
The aims and objectives – both at the corporate and strategic business unit level – are often expressed in
financial terms. They could be the expression of desired sales or profit levels, rates of growth, dividend levels
or share valuations.
The organisations also have market based objectives, many of which are quantified as targets such as market
share, customer service, repeat business and so on.

Corporate Objectives derive the main scope and direction of the organisation. If the organisation has been divided into
several business units, each business unit would develop separate strategic objectives for themselves based on the corporate
objectives. Thereafter, business and functional objectives would have to be developed in order to specify the scope and
direction of the main functional activities leading to tactical objectives in the operational level.
Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing
environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.
(Johnson, G, Whittington, R and Scholes, K., 2013)
Every organisation has a mission statement setting out its aims and objectives and strategy can be defined as “The
determination of the basic long-term goals and objective of an enterprise and the adoption of courses of action and the
allocation of resources necessary for carrying out these goals” (Alfred Chandler, 1963). Johnson and Scholes (2002 p13)
suggested that a company needs a mission and mission statements; a vision or strategic intent; goals; objectives; unique
resources and core competences, strategies and control.
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Strategy was ‘the direction and scope of an organisation over the long term: ideally which matches its resources to its
changing environment, and in particular to its markets, customers or clients, so as to meet stakeholder expectations. To
continue in business and be profitable every business needs a strategy and according to McGee et al (2005)strategy is the
ability of a company’ to thrive and survive’. The report will outline the stages, steps and procedures that should be
implemented to carryout a strategic analysis as part of the strategic management process. The New Vintage Car Company is a
specialist organisation which has a small niche in the specialist car market and a mission statement, objectives and strategic
intent.
Each and every organisation has certain aims and objectives that they wish to achieve, they might be overall goals and
purposes that the business was set up to fulfil. Aims and objectives is clear direction for an organisation to move ahead, it
helps to organisation to grow. It is used as guideline, a plan and a goal. In an organisation, many people are working from
diversified culture with different views on a certain aspect. Aims and objective is used to help these different people focus on
one organisational view on the aspect which seems either right or is right.

For example an organisation can have below strategic objectives;
► To roll out proven new store formats across the estate over a period of five years.
► To exit the Board wear market in full
► To continue the rapid growth of our internet business.
► To invest in system this will enable us to make further reduction in working capital.
► Once a business is on a sound footing to review the opportunities for market consolidation.
By summarising above objective, this company aiming to capture more market share and to get rid of loss by restructuring
stores, adopting new technologies as well as reducing operation costs. The organisation focuses on maximum utilisation of
technology such as online business and cut down the working capital to increase liquidity position.
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► Business activity is focused around the achievement of business aims and business objectives.
► A business aim is the goal a business wants to achieve. A primary aim for all business organisations is to add value and in the
private sector this involves making a profit. More strategic aims include expansion, market leadership and brand building.
► A business objective is a detailed picture of a step you plan to take in order to achieve a stated aim. These need to be SMART in
order for the business to know what progress it has made towards achieving the objective:
► Specific - clear and easy to understand.
► Measurable - i.e. able to be quantified.
► Achievable - possible to be attained.
► Realistic - not 'pie in the sky'.
► Time bound - associated with a specific time period.

► Public sector organisations like the Inland Revenue set objectives for service, such as processing customers' tax returns
within a given time period.
► Private sector organisations like Kelloggs might set objectives for customer satisfaction, and effectiveness in handling
customer orders within a given time period.
► Objectives within an organisation are established at a number of levels from top level corporate objectives, down to team
objectives and individual objectives that create a framework for operational activities. These are often translated into
targets which help to motivate staff in reaching short-term goals.
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► Objectives therefore provide a clear structure for all of the various activities that an organisation carries out. By measuring
how well an objective has or has not been achieved, managers can make necessary changes to their activities to ensure
progress and achievement of the stated objectives are made within the timescale allocated.
Types of Strategies
The word “strategy” means different things to different people, much of which isn’t really strategy at all, A Strategy by Any Other
Name, more on this topic.
Within the domain of well-defined strategy there are three types of strategies:
 Corporate strategy
 Business strategy
 Marketing strategy
Corporate strategy
Corporate Strategy is the overall direction of the company, defined by senior management, that takes into consideration an
assessment of the existing capabilities of the company and external opportunities and threats. It usually coincides with the
immediate future fiscal period or it could be developed with a longer-term view, such as a three-year plan.
It is important to understand the overall Corporate Strategy and its relationship to sales and marketing. The Marketing Strategy
works within the direction provided by the overall Corporate Strategy of the company and also interacts with other elements of
the Corporate Strategy.
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Types of Strategies
Corporate Strategy is a combination of the following:
► Senior Management Direction and Insights: This is provided by senior management based on their experiences and insights
related to the business.
► Corporate Product Strategy: This defines the products or services the company offers and the research and development
efforts required to create them.
► Corporate Marketing Strategy: This defines how the company will target, position, market and sell the planned products and
defines metrics, targets and budgets for all marketing activities.
► Corporate Operations Strategy: This defines how the company will manage operational activities, manufacture its products
and provide the corresponding customer support and warranty.
► Corporate Finance Strategy: This defines how the company will manage its finances, attain funding and financially sustain its
operations. The Finance Strategy should include forecasts and projections and summarize costs, income and investments.
► Corporate Human Resource Strategy: This maps the human resource capabilities within the company and considers talent
management and acquisition needs to sustain growth.
Types of Strategies
Importance of Corporate strategy
A corporate strategy both names the outcomes a company intends to achieve and devises the means for it to do so. More
directly, a corporate strategy determines the scope of a company’s activities and the manner in which a company’s business
processes support company goals. In doing so, strategic management limits a company’s authorized initiatives, which leaders
select based on the company’s resources and the external environment in which it competes.
The importance of a corporate strategy hinges on its being an effective means to allocate a company’s resources, establish
business expectations and improve a company’s competitive position, as well as increase shareholder value to something
beyond the sum of its physical assets.
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Types of Strategies
► Allocates Company Resources
A corporate strategy is a tool a company uses to limit the allocation of its resources to the best available business investment
opportunities. During strategic planning and budgeting processes, a company assesses the performance of each business
unit. Based on its findings, the company acquires and divests assets and revises resource allocations. Leaders allocate
company resources according to the desirability of each business unit’s market opportunities, which determines its planning
priorities.
► Establishes Expectations
A company conveys its corporate strategy to individual business units to drive performance and establishes the expectations
of internal and external stakeholders, or those with an interest in the success of a company. Corporate objectives focus on
key areas, such as market standing, productivity and profitability, for which measurable objectives are set, such as achieving a
particular market share or financial return on investments. It’s through expectations that stakeholders align their activities
with strategic goals and assume particular roles to ensure a corporate strategy is carried out successfully.
Types of Strategies
► Improves Competitive Position
The corporate strategy is concerned with a company’s growth and profit performance. Consequently, the strategy decides
the businesses in which a company competes and how the business units structure and manage their activities to improve a
company’s competitive position.
► Adds Shareholder Value
Relying on a company strategy, business units can increase investor value to something beyond the sum of its physical and
intellectual assets. By making rational strategic choices about the business a company plans to pursue, the allocation of its
resources, the use of organisational capabilities and business unit competitive advantages, the probability increases that
business unit activities succeed in increasing a company’s value.
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Types of Strategies
Business Strategy
A business strategy is the means by which it sets out to achieve its desired ends (objectives). It can simply be described as a
long-term business planning. Typically a business strategy will cover a period of about 3-5 years (sometimes even longer).
The decisions a company makes on its way to creating, maintaining and using its competitive advantages are business-level
strategies. After evaluating the company’s product line, target market and competition, a small business owner can better
identify where her competitive advantage lies. A gourmet candy company, for example, might find that it cannot compete on
price; larger corporations often enjoy economies of scale that keep costs low. Instead, the small business would choose a
differentiation strategy, emphasizing freshness, quality ingredients or some other attribute consumers will value highly
enough to pay extra. Business strategy will affect the small company’s functional decisions such as the selection of its
promotions and distribution channels.
Types of Strategies
Importance of Business Strategy
A well defined business strategy will offer a guide on how your business is performing internally. Also, how you are performing
against your competition and what you need to stay relevant into the future.
A strategy can identify trends and opportunities in the future. It can examine the broader changes in market such as political, social
or technological changes, as well as consumer changes, and can develop tactics so your business can modify and develop to suit
these future changes.
A business strategy creates a vision and direction for the whole organisation. It is important that all people within a company have
clear goals and are following the direction, or mission of the organisation. A strategy can provide this vision and prevent individuals
from losing sight of their company’s aims.
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Types of Strategies
► Customer Retention
One of the quickest ways to lose customers is to not have an effective business strategy in place for customer service, according
to More Business. Develop a program for following up on customers, and for staying in touch with repeat customers to make sure
your products are working properly. Have sales people contact customers at least once a month to discuss the customer's
business, and try to find new ways to help the customer with your product. When customers call in with problems, there needs
to be an established and efficient customer service strategy in place to reduce customer stress. Customer follow-up procedures
and efficient customer service programs are essential to customer retention and sales revenue.
► Resources
A good business strategy can assure that company resources are used efficiently. Examples of company resources include
personnel, reputation in the marketplace, customer base, company patents, manufacturing processes and logistics resources
such as warehouses and shipping partners. Create business strategies that utilize all of your company resources to help give your
company a competitive advantage over the competition, develop new products that maintain or increase your market share in
the industry and give you proprietary control over advancing technology in your industry. An inefficient use of company
resources can cost the company money, lose customers and reduce market share.
Types of Strategies
► Company Expansion
Entrepreneurial resource Gaebler Ventures, established in 1999 suggests that part of a good business strategy is the ability to
explore business opportunities outside of your standard business practice to help inspire company expansion. By promoting
vigorous marketing and engineering research with business strategies focused on new company frontiers, you can help open
up new ideas for your company that could be loosely related to your current business. For example, a computer repair
company may see an advantage to also becoming an Internet service provider after marketing research among the
company's clients. Expansion is one of the important ways that a company maintains its competitive edge.
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Types of Strategies
Marketing Strategies
A marketing strategy is a business' overall game plan for reaching people and turning them into customers of the product or
service that the business provides. The marketing strategy of a company contains the company’s value proposition, key
marketing messages, information on the target customer, and other high level elements. The marketing strategy informs the
marketing plan, which is a document that lays out the types and timing of marketing activities. A company’s marketing strategy
should have a longer lifespan than any individual marketing plan as the strategy is where the value proposition and the key
elements of a company’s brand reside. These things ideally do not shift very much over time.
Importance of marketing strategy
A marketing strategy helps a company effectively use its resources to deliver a sales message to a target audience. A marketing
strategy takes time and market research information to create. Understanding why a marketing strategy is important will help
you to justify the time and financial resources required to create one.
Types of Strategies
► Use of Resources
One of the functions of a marketing strategy is to identify a target audience and determine the most efficient ways of
reaching that audience. Market research is done to determine how marketing funds can best be spent to deliver the
advertising message. Research also is done to determine which message is most effective. In the end, the marketing strategy
refines how company financial and personnel resources will be best used to get the highest revenue return for the marketing
dollars invested.
► Budget
A marketing strategy has a starting point, a predetermined duration and a budget. Without the marketing strategy, your
company would be placing advertisements at random times, in random mediums and not understanding what results to
expect. A marketing strategy helps to set the budget for the advertising program, and it also creates the criteria that will be
used to determine how much revenue the plan generated. A marketing strategy prevents advertising spending from being an
open-ended proposition, and it works to identify successful marketing approaches that can be used to generate more
revenue in future marketing campaigns.
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Types of Strategies
► Change
The marketplace that your company sells to changes on a regular basis. Technology alters the look and functionality of
products, and changes in client needs affect how you and the competition structure your businesses. A marketing strategy
identifies those changes and recommends potential courses of action that will help make your company competitive. The
marketing strategy identifies customer buying trends and combines that with a competitive analysis to help you dictate what
future course your company will take.
► Growth
As your company evolves, it also should grow in revenue and size. A marketing strategy helps to identify those areas affected by
growth, and helps to create a plan to address customer needs. For example, your marketing strategy may identify new markets
where your newest product would be very successful. Since you do not have distribution or sales resources in those markets,
you must go out and secure those resources to meet the goals of the marketing strategy. By identifying changes or shifts in
client needs and geographic distribution requirements, the marketing strategy becomes part of the blueprint for your
company's growth.
Strategic Management Process
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Strategic Management Process

Let's walk through the strategic planning/ management process in four steps:
► Part one: How did we get to where we are now?
► Part two: Where do we want to go? What is our vision of success?
► Part three: What is going to get in our way? What do we need to be aware of?
► Part four: What do we need to do to get there?
Once an organisation has committed to why it exists and what it does, it must take a clear-eyed look at its current situation.
Remember, that part of strategic planning, thinking, and management is an awareness of resources and an eye to the future
environment, so that an organisation can successfully respond to changes in the environment. Situation assessment, therefore,
means obtaining current information about the organisation’s strengths, weaknesses, and performance – information that will
highlight the critical issues that the organisation faces and that its strategic plan must address. These could include a variety of
primary concerns, such as funding issues, new program opportunities, changing regulations or changing needs in the client
population, and so on. The point is to choose the most important issues to address.
Section Summary
► To achieve the learning first learning outcome i.e. critically analyse the existing strategic aims and objectives of the
organisation, we have learnt the concepts related to organisational aim, objectives and strategies. You have also been
introduced to strategic management process. In the next few slides we will learn strategic planning and environmental
analysis which includes short and medium internal and external change drivers to achieve the remaining learning
outcomes.
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Industries and
Sectors Analysis,
External
Environment,
Porter's five forces
framework
Strategic Planning
Strategic planning is an organisational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organisation's direction in response to a changing environment. (Strategy Management Group, 2019)
It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organisation is, who it serves, what it does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where an organisation is going and the actions needed to make progress, but also how it will know if it is successful.
The key motives for strategies are:
Environment-based
Fit strategies to changing business environment
Capability-based
Stretch and exploit organisational resources and competences
Expectations-based
Meet expectations deriving from cultural and political context
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Strategic Planning
There are a different types of approaches that can be used in strategic planning.
► The technique that can be used to develop strategic plan is depend on nature of the organisation's leadership,
culture of the organisation, complexity of the organisation's environment, size of the organisation, expertise of the
planners, etc.
► Some plans are extent to one year, many to three years, and some to five to ten years into the future
► Some strategic plans include only top-level information and no action plans. Some plans consist few number of
pages, while others are considerably lengthy
► An organisation already recognises much of what will go into a strategic plan. But, development of the strategic
plan greatly helps to clarify the organisation's plans and ensure that key leaders are all "on the same script“
For approaches in strategic planning and further knowledge please refer to the module “Strategic Planning”.
Strategic Planning
► Strategic planning model provides a range of alternative approaches to develop strategic planning process.
Organisation might choose to integrate the models and strategies to address their own issues and goals
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Strategy maps
Gerry Johnson, K. S. (1998). Exploring Corporate Strategy.

Strategy maps
• A strategy map is a diagramme that describes how an organisation creates value by connecting
strategic objectives in explicit cause and effect relationship with each other , that is Financial ,
Customer , Processes and Learning and Growth.
• The financial perspective look at creating long-term shareholder value and builds from a
productivity strategy of improving cost structure and asset utilisation and a growth strategy of
expanding opportunities and enhancing customer value.
• The last four elements of strategic improvement are supported by price , quality, availability,
selection, functionality, service, partnerships and branding.
• From an internal perspective operations and customer management processes help create
product and service attribute while innovation, regulatory and social processes help with
relationships and image.
• All these processes are supported by the allocation of human, information and organisational
capital. Organisational capital is comprised of company culture, leadership, alignment and
teamwork.
• The connecting arrows describe the cause and effect relationships.
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Strategy maps
• A better running business takes better care of its customers (Customer), and happy customers buy more of
what you’re selling (Financial). Strategy maps show how fuzzy intangible assets, like company culture and
employe knowledge, are turned into concrete tangible results.
• The vast majority of the things that executives can change in an organisation don’t contribute directly to the
bottom line. We know that it’s important to have happy employees and updated infrastructure, but it’s hard
to see how those objectives feed into the company’s end goals. Your strategy map shows these relationships
and encourages strategic thinking that goes far beyond your balance sheet.
• For example, most companies put the financial perspective on top because their end goal is to make more
money. Public utilities and nonprofits, however, have different motivations. Their finances are just a means
to an end.
• A nonprofit’s final goal is to provide the best services it can. For these organizations, it’s common to switch
the Customer and Financial perspectives so that Customer is on top. Their funding (Financial) allows them to
help people (Customer).
• Likewise, some objectives may not fit neatly within a single perspective and it may make more sense for
them to straddle the line between two perspectives. There may even be strategic objectives that don’t affect
other objectives, so they don’t have arrows.
• What’s important to remember is that your strategy map should reflect your actual organizational strategy.
It’s completely fine to deviate from the traditional layout to accommodate your unique goals.
Industries and Sectors Analysis

► An industry/Sector is a group of firms producing the same principal product or service
► The industry analysis involves identifying
• Competitive forces
• Industry life cycles
• Competitive cycles
► Porters five forces framework has two main aims:
► To understand the drivers of competitive behaviour in the sector
► To evaluate the long-run profit potential of the sector
► Key drivers for change are environmental factors that are likely to have a high impact on the success or failure of organisation’s
strategy
► Scenarios are detailed and probable views of how the business environment of an organisation might develop in the future
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Industries and Sectors Analysis
• Macro Environment
• Micro Environment
• Industry (sector)
• Competitors
External Environment
 Macro-environment is the external environment in terms of
political, economic, social and technological trends (i.e. PESTEL
factors, key drivers )
 Micro-environment is the operating environment or industry
sector in which the firm competes. It describes factors such as
suppliers, customers, competitive intensity, threat of new entry
and substitute products arising (the ‘five-forces’ analysis)
 Competitors – The rival offers & movements from other firms
seeking to serve the same target market. Need to analyse them
to outwit their plans & movements with organisations
innovation and competitive moves
 Industry - The current need of customers, the emerging needs
of future customers and new products can be anticipated.
These will depend on the market segment
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PESTEL Analysis
Let’s have a look at the each factor under this framework.
► Political factors
► Political stability
► To what degree a government intervenes in the economy
► Economic direction,
► Prioritised service
► Free services
► Trade policy
► Taxation policy
► Environmental policy 37
Political factors refer to the policy of the government such as ;
• The degree of intervention in the economy
• What kind of goods and services does a government want to provide?
• To what extent does it believe in subsidising firms?
• What are its priorities in terms of business support? ( tax exemptions)
• Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system
• Trade policy for managing exports & Imports, bilateral & multilateral trade contracts with internationals
• Decision on Prioritised services (Public sector or Private sector,) and benefitted Businesses
• Free services – Free education, Medical, Security, etc.
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► Economic factors
► Interest Rate
► Taxes
► GDP growth
► Exchange rates
► Inflation rate
► Purchasing power of customers
► Economic factors include attributes of interest rates, taxation changes, economic growth, inflation and exchange rates.
► Economic change can have a major impact on a firm's behaviour.
► For example:
► Higher interest rates may deter investment
► Higher taxes discourage some businesses, Imports, Exports
► A strong currency may make exporting more difficult because it may raise the price in terms of foreign currency
► Inflation may provoke higher wage demands from employees and raise costs
► Higher national income growth may boost demand for a firm's products
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► Technological factors
► Communication
► Automation
► Product innovation
► Technological obsolescence
► Environmental factors
► Weather
► Climate
► Natural Resources
Geographical placement & conditions

Level►7 Diploma in Strategic Management and Leadership 41
► Technological factors
► Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products.
► Improvement of communication technologies, feasibility in factory automation affect the shape of the business
► Environmental factors
• Environmental factors include the weather and climate changes
• Changes in temperature, rain, humidity can impact on many industries including farming, tourism and insurance
• Major climate changes occurring due to global warming is also critical. This external factor is becomes a significant issue for firms to consider
• The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries
► For example,
• General move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities(Hybrid cars, eliminate usage of polythene)
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Legal factors
Below factors are related to the legal environment in which firms operate. The introduction of age discrimination and disability discrimination legislation, an increase in the minimum
wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organisation's actions.
Following facts also affect for organisations behaviour:
• Consumer laws; these are designed to protect customers against unfair practices such as misleading descriptions of the product
• Competition laws; these are aimed at protecting small firms against bullying by larger firms and ensuring customers are not exploited by firms with monopoly power
• Employment laws; these cover areas such as redundancy, dismissal, working hours and minimum wages. They aim to protect employees against the abuse of power by managers
• Health and safety legislation; these laws are aimed at ensuring the workplace is as safe as is reasonably practical. They cover issues such as training, reporting accidents and the
appropriate provision of safety equipment
Socio-cultural factors
► Religious influence
► Beliefs
► Norms & Values
► Attitudes
► Sub cultures
Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work.
In the UK, for example, the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staff are living longer. It also means some firms such as ASDA have started to recruit older employees to tap into this growing labour pool.
► The ageing population also has impact on demand: for example, demand for sheltered accommodation and medicines has increased whereas demand for toys is falling.
► Considering Norms and Values of the society(consumers) is crucial for the success of it’s consumer products.
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Demographical factors
► Considering demographical factors also important for the success of the business.
• Population & it’s growth rate – availability of manpower & size of the market
• Family structure – organisations products & services should align with this
• Education - Quality of workforce
• Workforce characteristics - Women & Child workers
Porter's five forces framework
Johnson, G. e. (2008). Exploring Corporate Strategy.

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► In this approach strategies are developed with the concerned of establishing and maintaining competitive
advantage. In analysing the micro environment Porter's ‘five forces model is widely used.
The model identifies five types of competitive pressure within a sector namely;
► Established competitors
► New entrants to the market
► Substitute products
► Bargaining power of suppliers and of customers

► Industry rivalry – Rivalry are direct competitors that compete for same market share.
► Substitute products - Organisations need to consider not only competitors, but also products or services that may
act as substitutes.

► New entrants to the market-Organisations need to consider new organisations that have potentiality to compete in the market. The important issue here is to assessing the barriers for
entry.
► Bargaining power of suppliers - Suppliers are important because their relative power can determine what proportion of the price of the final product they capture. If there are large
number of suppliers in the market, supplier bargaining power is relatively low. However, if the there are limited number of suppliers in the market place, their bargaining power is high
and power on customer organisation is high.
► Bargaining power of customers – If there are range of options available for customers, their bargaining power is relatively high. If they dissatisfied with one product, they can easily shift
to another. However, if they have to depend only on one manufacturer their bargaining power is low.
► Porter argues that the degree of competitiveness within an industry depends on the availability of substitutes, the strength of suppliers and buyers, and the threat of new entrants.
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Lesson Summary
► In this lesson you have gained an understanding on organisational aim, objectives and strategies. Now you are able
to formulate a strategic plan of your own by analysing the internal and external environmental factors. This will
assist you in understanding the strategic direction of your organisation. This lesson has provided you a base on
strategic planning as well. Strategy map has been introduced which will help you to show your organisation's
strategy on a single page. It’s great for quickly communicating big-picture objectives to everyone in the company.
You have also learnt the factors such as micro environment and macro environment.
► You are advised to test your knowledge by accessing quizzes section to gain further enhance your understanding.
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Achieve
organisational
strategic aims and
objectives – Part 1
Introduction
► In this lesson we will be analysing a range of diagnostic and analytical tools to audit and assess progress towards existing
strategic aims and objectives using Balance score card, KPIs and Gap analysis. This is going to help you achieve
organisational strategic aims and objectives. It is necessary that you learn a structured evaluation of the organisation’s
strategic position. You will be learning the importance of internal and external analysis using Value chain frame work, Key
Success Factors, Critical Success Factors, BCG matrix, GE Matrix, SWOT and TWOS analysis. By end of this lesson you will
have a comprehensive understanding on resources, capabilities, strategic resource, competency and competitive
advantage that will significantly help you to understand the strategic direction of your organisation.
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Learning Outcomes
2. Be able to evaluate progress towards achieving organisational strategic aims and objectives
2.1 Apply a range of diagnostic and analytical tools to audit and assess progress towards existing strategic aims and
objectives
2.2 Structured evaluation of the organisation’s strategic position
Lesson Objectives
1. Assess progress towards existing strategic aims 11. Characteristics of a Strategic Competency
and objectives 12. Key Success Factors(KSF’s) and Critical Success
Factors (CSF’s)
2. Balanced Scorecard
13. Strategic Capabilities and Competitive Advantage
3. Measuring Organisational Performance 14. Approaches for Internal Environment Analysis -
Market Based View
4. Gap Analysis
15. Internal Analysis Tools and techniques
5. Importance of Internal Analysis 16. Portfolio Analysis
17. BCG matrix
6. Components of Internal Analysis
18. GE Matrix
7. Internal Environment Audit 19. Internal and External Situation Analysis
8. Approaches for Internal Environment Analysis -
Resource Based View
9. Types of Resources and Capabilities
10. Characteristics of a Strategic Resource
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Assess progress towards existing strategic

aims and objectives
► Are goals and objectives being achieved or not? If they are, then acknowledge, reward and communicate the progress. If
not, then consider the following questions.
► Will the goals be achieved according to the timelines specified in the plan? If not, then why?
► Should the deadlines for completion be changed (be careful about making these changes -- know why efforts are behind
schedule before times are changed)?
► Do personnel have adequate resources (money, equipment, facilities, training, etc.) to achieve the goals?
► Are the goals and objectives still realistic?
► Should priorities be changed to put more focus on achieving the goals?
► Should the goals be changed (be careful about making these changes -- know why efforts are not achieving the goals
before changing the goals)?
► What can be learned from our monitoring and evaluation in order to improve future planning activities and also to
improve future monitoring and evaluation efforts?

aims and objectives
The strategic-management process results in decisions that can have significant, long-lasting consequences. Erroneous
strategic decisions can inflict severe penalties and can be exceedingly difficult, if not impossible, to reverse.
Therefore, most strategists agree that strategy evaluation is vital to an organisation’s well-being; timely evaluations can alert
management to problems or potential problems before a situation becomes critical.
The strategy-evaluation process includes three basic activities:
 Examine the underlying bases of a firm’s strategy.

 Compare expected results with actual results.
 Take corrective actions to ensure that performance conforms to plans.
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aims and objectives
Determining which objectives are most important in the evaluation of strategies can be difficult.
Strategy evaluation is based on both quantitative and qualitative criteria. Selecting the exact set of criteria for evaluating strategies
depends on a particular organisation’s size, industry, strategies, and management philosophy.
Quantitative criteria commonly used to evaluate strategies are financial ratios, often monitored for each segment of the firm.
Strategists use financial ratios to make three critical comparisons:
 Compare the firm’s performance over different time periods.
 Compare the firm’s performance to competitors.
 Compare the firm’s performance to industry averages.

Some potential problems are associated with using only quantitative criteria for evaluating strategies. First, most quantitative criteria
are geared to annual objectives rather than long-term objectives. Also, different accounting methods can provide different results on
many quantitative criteria. Third, intuitive judgments are almost always involved in deriving quantitative criteria.

aims and objectives
Thus, qualitative criteria are also important in evaluating strategies. Human factors such as high absenteeism and turnover
rates, poor production quality and quantity rates, or low employee satisfaction can be underlying causes of declining
performance.
Marketing, finance and accounting, R&D, or MIS factors can also cause financial problems.
The need for a “balanced” quantitative/qualitative approach in evaluating strategies gives rise in a moment to discussion of
the balanced scorecard.
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Balanced Scorecard
Balanced Scorecard
A Balanced Scorecard for a firm is simply a listing of all key objectives to work toward, along with an associated time
dimension of when each objective is to be accomplished, as well as a primary responsibility or contact person,
department, or division for each objective.
The Balanced Scorecard is an important strategy-evaluation tool that allows firms to evaluate strategies from four
perspectives:
1. financial performance,
2. customer knowledge,
3. internal business processes, and
4. learning and growth.
Its analysis requires that firms seek answers to the following questions and use that information, in conjunction with
financial measures, to adequately and more effectively evaluate strategies being implemented:
 Is the firm continually improving and creating value along measures such as innovation, technological leadership, product
quality, operational process efficiencies, and so on?
 Is the firm sustaining and even improving on its core competencies and competitive advantages?
 How satisfied are the firm’s customers?
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Balanced Scorecard
Balanced Scorecard was designed to connect big picture strategic elements with operational elements. The framework
viewed an organisation from four perspectives and recommended developing objectives, measures (KPIs), goals and
initiatives in regard to each perspective above.
It takes into account your:
 Objectives, which are high-level organisational goals.
 Measures, which help you understand if you’re accomplishing your objective strategically.
 Initiatives, which are key action programs that help you achieve your objectives.
An effective Balanced Scorecard contains a carefully chosen combination of strategic and financial objectives tailored to the
company’s business.
The overall aim of the Balanced Scorecard is to “ balance” shareholder objectives with customer and operational objectives.
Obviously, these sets of objectives interrelate and many even conflict. For example, customers want low price and high
service, which may conflict with shareholders’ desire for a high return on their investment.
Measuring Organisational Performance

Another important strategy-evaluation activity is measuring organisational performance.
This activity includes comparing expected results to actual results, investigating deviations from plans, evaluating individual
performance, and examining progress being made toward meeting stated objectives.
Both long-term and annual objectives are commonly used in this process. Criteria for evaluating strategies should be
measurable and easily verifiable. Criteria that predict results may be more important than those that reveal what already has
happened. For example, rather than simply being informed that sales in the last quarter were 20 percent under what was
expected, strategists need to know that sales in the next quarter may be 20 percent below standard unless some action is
taken to counter the trend.
Failure to make satisfactory progress toward accomplishing long-term or annual objectives signals a need for corrective
actions. Many factors, such as unreasonable policies, unexpected turns in the economy, unreliable suppliers or distributors,
or ineffective strategies, can result in unsatisfactory progress toward meeting objectives. Problems can result from
ineffectiveness or inefficiency.
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Measuring Organisational Performance

Key Performance Indicator (KPI)
A KPI is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organisations
use KPIs at multiple levels to track performance measures.
It is a type of performance measurement that helps you understand how your organisation or department is performing.
A good KPI should act as a compass, helping you and your team understand whether you’re taking the right path toward your
strategic goals.
There are several types of KPIs such as;
► Financial Metrics - Profit, Cost, Cost of goods sold, etc
► Customer Metrics - Customer Lifetime Value (CLV), Customer Acquisition Cost (CAC), etc
► People Metrics -Employee Turnover Rate (ETR), Employee Satisfaction, etc
Gap Analysis
The gap analysis can be used to highlight any gaps that exist between long term forecasts of performance and the sales or
financial objectives. It provides guidance for developing objectives. The question that then quite obviously follows is; how
best to fill this strategic planning gap. In the case of the new strategies gap, the courses of action includes:
• A reduction in objectives
• Market extension in the form of new market segments, new user groups
or expansion geographically
• Product development
• Diversification by selling new products to a new market
In case of an operational gap, the approach to reducing or eliminating it totally

include:
• Greater productivity by means of reduced cost
• Improvements to the sales mix or higher prices
• Higher levels of market penetration
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Importance of Internal Analysis
As we have understood in the previous sessions you all know

that for a strategy to succeed, it should be based on a realistic
assessment of the firm’s internal resources and capabilities.
An internal analysis provides the means to identify these
strengths which the organisation needs to build on and the
weaknesses that needs to be overcome to develop winning
strategies.

► The Internal analysis considers the firm’s resources, the business the firm is in, its objectives, policies, and plans and also
how well they are presently working.
► To understand how well these elements are operating managers need to ask the following key questions.
 How well is our company’s present strategy working?
 What are the our resource strengths and weaknesses vis a vis opportunities and threats?
 Are the our prices and costs competitive with those of key rivals?
 Does our value proposition appealing to customers?
 Is the firm competitively strong or weak than our key rivals?
 What Strategic issues do we face?
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► According to Wheelen and Hunger in 2005, scanning and analysing the external environment is not enough to provide the
organisation with a competitive advantage. Analysts must also look within the corporation itself to identify internal
strategic factors ,that is those factors that are critical in determining the critical strengths and weaknesses, which in turn
will determine if the firm is able to take advantage of the opportunities while avoiding the threats.
► It is not easy managing the internal environment of an organisation. According to Barney in 1991 it involves managing all
the Resources of a business that includes all the tangible and intangible assets, capabilities, organisational processes,
information, knowledge, and other knowledge controlled by the firms. They help to implement the organisation's activities
and to improve their efficiency and effectiveness. Firms that own and accumulate rare resources, that are difficult to
imitate and is non-replaceable can achieve a competitive advantage over its competitors.
► Barney in 1991 defined competitive advantage as the degree to which a firm has reduced costs, exploited opportunities
and neutralized threats. Phillip Kotler in 2000, defined sustainable competitive advantage as the ability of an organisation
to manage it differently than their competitors. According to Gregory et al. in 2005 a competitive advantage exists when a
firm has a product or service that is perceived by its market customers as better than that of its competitors. Montgomery
in 1995 argued that a firm’s competitive advantage is a function not only of the value, inimitability, and non-
substitutability, of its resources and capabilities but also of their durability and superiority.

► Achieving a sustainable competitive advantage is not easy. Sustainable Competitive Advantages of an organisation are the
company assets, attributes, or abilities that are difficult to imitate or exceed and they provide a superior or favorable long
term position and profits to the organisation over competitors. Let us now look at some examples of sustainable
competitive advantages of a firm.
► A firm is said to have a sustainable competitive advantage if it is a Low Cost Provider. Economies of scale and efficient
operations can help the company keep new competitors from entering the industry. Being the low cost provider can be a
significant barrier to entry and low pricing done in a consistent manner can build brand loyalty which is a powerful
competitive advantage. An example is the strategy adopted by the retail giant Walmart.
► Market or Pricing Power is another source of Sustainable Competitive advantage. A company that has the ability to
increase prices without losing its market share is said to have pricing power. Companies that have pricing power are
usually taking advantage of high barriers to entry or have earned the dominant position in their market.
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► A third source is the ownership of Powerful Brands. It takes a large investment and time to build a brand. A good brand is
invaluable because it causes customers to prefer the brand over competitors. Being the market leader and having a great
corporate reputation is part of a powerful brand and a competitive advantage.
► Another source of Sustainable Competitive Advantage is the ownership of Strategic assets. Patents, trademarks, copy rights,
domain names, and long term contracts are examples of strategic assets that provide sustainable competitive advantages.
Companies with excellent research and development capabilities have valuable strategic assets.
► Barriers To Entry can also provide an organisation with a sustainable competitive advantage. Cost advantages of an existing
company over a new company is the most common barrier to entry. High investment costs such as building new plants and
government regulations are common barriers to firms trying to enter new markets. High barriers to entry create monopolies or
near monopolies allowing the organisation to enjoy super profits.
► Companies that adapt their product lines regularly to changing market conditions have a sustainable competitive
advantage over those who don’t.
► A product that never changes can be imitated by the competition easily in the long term. A product line that evolve create
the need for improved or complementary products by competitors and also keeps customers coming back for the “new”
and improved version of the company’s own product. A good example of this is the Apple iPhone series.
► Companies can also achieve a sustainable competitive advantage by offering a unique product or service that is different
to the competitors. Product Differentiation helps to build customer loyalty and the organisation is less likely to lose its
market share to a competitor than in an advantage based on low cost. The quality, number of models, flexibility in
customisation, and customer service are all aspects that can positively differentiate a product or service.
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Components of Internal Analysis

Now managers need to
critically evaluate several
components when analysing
their internal organisation
environment.

The First component is Resources. Resources are the tangible or intangible assets of an organisation essential for its activities and
processes. They can either be outsourced or internally generated.
Second component is Capabilities .Capabilities of an organisation are the industry-specific skills, organisational knowledge or the
relationships which are usually intangible in nature and can be generated through internal activities. Some competencies are
unique to a specific organisation in which they excel and these are called as their core competencies and are responsible for their
competitive advantage. According to Grant these are skills for activating, combining and coordinating physical, financial,
technological, organisational and reputational resources within the framework of a process of action linked with the
implementation of strategy in order to produce a result.
Third component is the Core Competencies. These are unique skill or technology that creates distinct customer value. For
instance, core competency of Federal express (Fed Ex) is logistics management. The organisational unique capabilities are mainly
personified in the collective knowledge of people as well as the organisational system that influences the way the employees
interact. As an organisation grows, develops and adjusts to the new environment, so does its core competencies also adjust and
change. Therefore, core competencies are flexible and developing with time. They do not remain rigid and fixed. The organisation
need to make maximum utilisation of the given resources and relate them to new opportunities thrown by the environment.
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Final component is Competitive Advantage. Competitive Advantage is the leverage that a business has over its competitors.
This can be gained by offering clients better and greater value. Advertising products or services with lower prices or higher
quality interests consumers. Target markets recognise these unique products or services. This is the reason behind brand
loyalty, or why customers prefer one particular product or service over another. Resources and capabilities are the building
blocks upon which an organisation create and execute value-adding strategy so that an organisation can earn reasonable
returns and achieve strategic competitiveness.
Although we have discussed the above components separately they are inter linked with each other. That is the Resources
generate the capabilities which in turn generate the core competencies which in turn give the value addition to the consumer
market.

The purpose of an Internal environmental audit is to regularly examine the firm’s plans and policies, human resource, financial
resource, corporate image, plant and machinery, labour-management relationship, vision, mission etc. to assess their effectiveness in
achieving company’s strategy and the goals.
Managers conduct Internal audits to achieve are several key purposes. For example, the Internal Audit helps to identify
 Whether the internal processes and systems in the organisation are working well
 What are the areas that need to be improved
 Are there any new potential environmental risks
 Have clear objectives and targets been set and are they been met
 Are adequate monitoring and control systems and procedures are in place
 Do the employees, contractors and suppliers have the necessary skills to carry out the given tasks and is given appropriate training
Internal audits also act as a valuable tool for getting the commitment within the different parts of the organisation.
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The frequency of audits will depend on the significance and impact of the external environmental forces. However, it is
important that managers audit their internal strategic factors at least once a year.
The following techniques and frameworks are useful in conducting a successful Internal Environment Audit. They are;
 Value Chain Analysis
 Value Network
 Benchmarking
 Activity Maps
 Innovation Audit
 Product Life Cycle
 McKinsey’s 7 S framework
 Portfolio Analysis
Approaches for Internal Environment Analysis

Resource Based View
Focus on the Competitive

internal Resources advantage
and Capabilities of through superior
the firm profits
Core competencies Evaluate own

drive corporate competitive
strategy and
diversification
environment
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Resource Based View
In strategic management there are two main approaches for analysing the internal environment of an
organisation.
These approaches are known as ‘The Resource Based Approach’ and the ‘Market Based Approach’.
The Resource Based View analyses and interprets internal resources of the organisations and views that resources
and capabilities in are central to formulating strategy and achieving competitive advantages.

Resource Based View
• Resources are the inputs that enable firms to carry out their activities. Internal resources and capabilities that
determine strategic choices made by the firms while competing in their external business environment. Sometimes a
Firm’s abilities also allow to add value in the customer value chain, develop new products or expand in new
marketplace.
• Competences according to Johnson et al. in 2008 are the skills and abilities by which resources are deployed effectively
through an organisation’s activities and processes .Competencies combine knowledge and skills and represent the set
of skills required to perform useful actions and captures the sum of knowledge across individual skill-sets and individual
organisational units.
• A core competence is the collective learning in the organisation, specially the capacity to coordinate different
production skills and integrate them with streams of technologies. According to Hamel and Prahalad in 1990, it is a
commitment to work across organisational boundaries.
• As core competencies are an "aggregate of capabilities” synergy is created that creates sustainable value and broad
application across the organisation. Core competencies need complementary knowledge and skills and when they are
combined they produce a superior product or service. For example, Google has a core competency in managing
information. Similarly, FedEx has a core competency in Information Technology
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Resource Based View
• The Resource Based View focus on the resources and capabilities that are within the organisation to develop
sustainable competitive advantages. To be a source of sustainable competitive advantage a resource or a competency
must be, valuable, rare, difficult or costly to imitate and there should not be easy substitutes for resource or
competency.
• According to Resource Based View, not all the resources of firm will be strategic and can be a source of competitive
advantage. Competitive advantage occurs only when there is a situation of resource heterogeneity and resource
immobility. For example, South West Airlines developed knowledge and skills that enable it to operate at much lower
cost that other major airlines. Competitors that tried to imitate Southwest were not as successful because Southwest
built a system of reinforcing competencies that continue to provide the airline with competitive advantage over time

Resource Based View
• According to Dicksen in 1996 , the RBV takes an ‘inside-out’ view or firm-specific perspective on why organisations
succeed or fail in the market place. Barney stated in 1997 that Resources that are valuable, rare, inimitable and non
substitutable make it possible for businesses to develop and maintain competitive advantages and the managers need
to identify and utilise these resources and competencies for superior performance. For example lets take Honda, the
world’s largest engine manufacturer who follows a Resource Based Approach in developing strategy. Honda has built its
business strategy around the firm’s strength, capability and expertise in building petrol-based engines. The company
initially started with small clip-on engines for bicycles then moved to two wheelers such as scooters and motorbikes,
marine engines, generators, lawn and garden equipment, and cars and even jet planes. Each of these products
competes in quite different product verticals, but leverages a unique resource and capability of Honda to build world
class petrol-based engines.
• So to sum up the Resource Based View explains the competitive advantage and the superior performance of an
organisation is achieved by the distinctiveness of its resources and capabilities.
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Types of Resources and Capabilities
All firms possess a wide spectrum of

Tangible Resources and Intangible Resources and resources and capabilities. For better
Capabilities Capabilities understanding of resources it is necessary to
distinguish such varied resources. One
useful approach for such classification is to
Financial Human group resources in two categories which are
Ability to generate Internal Funds and Managerial talents and Organisational Tangible resources and Intangible resources.
raise external capital Culture Tangible Resources are the financial,
Physical physical and organisational assets of a
Innovation company .Intangible Assets are the Human,
Location of plants, machines,
offices and their geographical Research & Development and innovation Reputational and Innovation resources.
locations of new products and processes
Organisational Reputational
Formal planning , command and Perceptions of Product Quality, as a good
employer and socially responsible
control systems corporate citizen
Types of Resources and Capabilities

According to Barney in1996 Resource Based View resources can be broadly defined to include assets, organisational
processes, firm attributes, information, or knowledge controlled by the firm which can be used to develop and implement
the strategies. When identifying resources, several researchers have grouped specific types of resources that enable firms
to develop and implement value creating business strategies.
For example, Barney in 1991 categorized resources in to three types such as ;
1. Physical capital resources which include physical, technological, plant and equipment of a firm
2. Human capital resources which includes the training, experience, insights and
3. organisational capital resources which includes formal structure
Brumagim in 1994 presents a hierarchy of resources with four different levels of corporate resources;
1. Production or maintenance resources which is considered the most basic or lowest level
2. Administrative resources
3. organisational learning resources and
4. Strategic vision resources which is considered as the most advanced or the highest level
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Characteristics of a Strategic Resource
We learned that according to Resource Based View, an

V- Valuable organisation is considered as a collection of physical
resources, human resources and organisational
Increasing
resources and the resources and competencies that are
R-Rare bases of valuable, rare, in imitable and non- substitutable are
main source of sustainable competitive advantage and
Sustainable superior performance.
I-In imitable competitive
The above features that a resource needs to fulfill is
advantage summarized in the acronym as VRIN . VRIN’ criterion
N-Non-Substitutability explain four features of a resource that needs to be in
place for the resource to create a sustainable

• Firstly a resource needs to be Valuable .Resources that are valuable can provide strategic value to the firm. Resources provide
strategic value if they help firms to exploit market opportunities or help in reducing market threats. There is no advantage of
owning resources if it does not add or enhance value of the firm.
• A resource needs to be Rare. Resources must be difficult to find among the existing and potential competitors of the firm. They
must be rare or unique to offer competitive advantages. Resources that are possessed by a several firms in the market place
cannot provide competitive advantage, as they cannot help to design and execute a unique business strategy in comparison with
the other competitors.
• The third feature is Imperfect Imitability .Imperfect imitability means making copy or imitating the resource. If this can be done
the resource will not be feasible. There can be many bottlenecks for imitating a resource because of the difficulties in obtaining
the resource, the ambiguous relationship between capability and competitive advantage or the complexity of the resources.
Resources can be basis of sustained competitive advantage only if firms that do not hold these resources cannot acquire them;
• Non-Substitutability of a resource means that the resource cannot be substituted by another alternative resource. Here, a
competitor can’t achieve same performance by replacing the company resource with other alternative resources.
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• According to Barney in 1968 strategic resources ‘must enable a firm to do things and behave in ways that lead will to high sales,
low costs, high margins or in others ways add financial value to the firm. He also contended that ‘resources are valuable when
they enable a firm to conceive of or implement strategies that improve the efficiency and effectiveness of the firm.
• Resource Based View helps managers to understand why resources and competences are perceived as the firms’ most important
asset and, at the same time, to appreciate how those assets can be used to improve business performance. According to
Campbell and Luchs in 1997 and Hamel and Prahalad in 1996 Resource Based View of the firm accepts that attributes related to
past experience, organisational culture and competences are critical for the success of the firm.
• To sum up the key points of the discussion resources and capabilities are fundamental underpinnings of any source of advantage.
Valuable resources are also termed as ‘strategic assets’ .The Resource Based View asserts that ownership and control of strategic
assets determines which organisations will earn superior profits and enjoy a position of competitive advantage over the others in
the industry.
Characteristics of a Strategic Competency

• Similar to the resources for a Competency to create Strategic Advantage it
Tacitness should have the following features or characteristics.
• First one is Tacitness or does the competency resist imitation? Tacitness is the
extent to which a competency is based on knowledge that cannot be easily
codified and communicated, when the competency is positioned along a
continuum that runs from articulated to tacit. Tacit competencies are
Robustness important for competitive advantage because they are context specific and is
more difficult for the competitors to imitate.
• Second feature is Robustness or do the competencies retain their value in a
changing environment. When positioned along a continuum that runs from
Embeddedness robust to vulnerable, Robustness of a competency characterises the
competency’s insensitivity to environmental change. Robustness increases the
value of the competencies by making them more durable and therefore
contribute to sustainable competitive advantage
Consensus
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Characteristics of a Strategic Competency

• Third feature is Embeddedness or is the competency lost when employees leave the organisation. When measured
along a continuum from embedded to mobile, embeddedness of a competency refers to the non-transferability of the
competency to another firm. Embeddedness is largely determined by a competency’s location in the organisation.
Competencies that are located in employees or physical systems are easier to transfer than those competencies residing
in the managerial systems and organisational culture.
• Fourth feature is Consensus. Consensus is the shared understanding or common perceptions within the group.
Consensus on a competency happens when managers agree on their firm’s competitive advantage regarding knowledge
and skills that is considered valuable in the industry. Consensus on firm’s competencies is measured along a continuum,
with total unanimity at one extreme and complete disagreement at the other.

(CSF’s)
Key Success Factors are the external competitive factors the organisation must satisfy to be successful.
It is important for managers to understand that competitive strategies will only be effective if they are focused on what is
important in the market or the industry’s Key Success Factors (KSF) . The organisation must satisfy these external competitive
factors if they want to be successful. The Key Success Factors of an industry are identified through the existing supply and
demand conditions, the wide technological and socio-cultural aspects and the legal and regulatory framework of the
industry. KSF’s are applicable to all companies in the industry because all competitors in that market must satisfy the same
competitive factors.
Identifying Key Success Factors can be tricky. For example, in the e-commerce industry having a transactional website is not
necessarily an industry Key Success Factor because it is part of the nature of the business. However, having a website that is
quick to download, effectively designed to support easy navigation, and is secure to make transactions does satisfy Key Success
Factors because it ensures effectiveness and competitive performance. Also a large retailer in addition to product choice and
product availability at competitive prices, ensuring easy access, parking facilities and providing extra services such as food and
beverage and a crèche is a relevant Key Success Factor to be competitive in the Retail Industry.
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(CSF’s)
To summarise anything that offers higher quality, good service, better accessibility, customer convenience and value for money can
qualify for industry KSF’s. Similalrly, adopting ethical approaches to business transactions and embracing ecological and
environmental requirements also satisfies KSF’s because the company is seen as a good corporate citizen and is more attractive to
customers. Managers need to identify the KSF’s and develop more suitable strategies according to the existing conditions of the
business environment.
Critical Success Factors are internal to the organisation and is important to achieve operational success. According to Johnson et al.
in 2011 Critical Success Factors (CSF) are the product features valued by a group of customers and are, therefore, where the
organisation must excel to outperform competitors.
There are five types of critical success factors They are;
the structure of the particular industry or the industry CSFs
competitive strategy, industry position, and geographical location or the strategy CSFs
the macro environment or the environmental CSFs)
problems or challenges to the organisation or the temporal CSFs
management perspective or the management CSFs

(CSF’s)
Critical success factors (CSFs) define the key areas of performance that are essential for the organisation to achieve its mission.
Managers must know and consider these key areas when they set goals and direct day-to-day operations and tasks that are
important to achieving goals. When these key areas of performance are made explicit, they provide a common point of reference
for the entire organisation. Therefore, any activity or initiative that the organisation undertakes must ensure consistently high
performance in these key areas. Otherwise, the organisation may not be able to achieve its goals and consequently may fail to
accomplish its mission.
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Strategic Capabilities and Competitive Advantage

We know that to survive and prosper an organisation needs
to address the challenges of the environment that it faces.
The company must be capable of performing in terms of
the critical success factors that arise from demands and
needs of its customers and the strategic capability to do this
depends on the resources and the competences of the
company.
These must reach a threshold level in order for the

organisation to survive. The further challenge is to achieve
competitive advantage. This requires it to have strategic
capabilities that its competitors find difficult to imitate or
H. Ansoff, Corporate Strategy, 1988 obtain. These could be unique resources but are more likely
to be the core competences of the organisation.
Strategic Capabilities and Competitive Advantage

The diagram summarised the link between the Strategic Resources, Capabilities and the Competitive Advantage of a firm.
• Threshold resources are the resources needed to meet customers’ minimum requirements and therefore to continue to exist
• Threshold Capabilities (‘Qualifiers’) are the capabilities needed by an organisation to meet the necessary requirements to
compete in a given market and achieve parity with competition in that market.
• Core Competencies are the linked set of skills and resources that together deliver customer value, and differentiate a business
from its competitors. They can be extended and developed as markets change or new opportunities arise
• Unique resources are those resources that critically underpin competitive advantage. Others cannot easily imitate or obtain them
• Redundant Capabilities are capabilities which are relevant in the past can become less relevant as industries evolve and change.
Such capabilities become or may become ‘rigidities’ that inhibit change and become a weakness. For example, Nokia that was the
leader in the mobile telephone segment in the past is now a cost follower
• Dynamic Capabilities are the ability of of an organisation to renew and recreate its strategic capabilities to meet the needs of the
changing environment by sensing opportunities and threats and reconfiguring the capabilities of the organisation.
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Approaches for Internal Environment Analysis-

Market Based View
Focus on locating a Competitive

firm in an advantage through
attractive industry superior profits
Generic Strategy drive Evaluate external

achieving a superior and industry
market position environment

Market Based View
The Market-based view explains a firm’s performance through the external industry structure and the strategic behavior of
competitors within the industry. According to this “outside-in” perspective, the performance of a firm and its competitive advantage
depends on the structure of its industry such as the entry barriers that keep new competitors away and protect the profit margins
of the existing firms.
The Market Based View of the firm has its roots in the field of industrial organisation economics. It was greatly influenced by the
work of Harvard economist Mason and Bain. Industrial Organistion economics analyses the structure of industries, the effects of
concentration on perfect competition, and the boundaries between firms and markets, among other factors.
The most influential contribution on Market-based view was made by Michael Porter during the early 1980s. In his hallmark paper
“How Competitive Forces Shape Strategy” , Porter explains that a firm’s performance depends on the attractiveness of its industry
and the firm’s relative positioning against competitors. His Five Forces framework is used to assess competition within an industry
and can be used by the organisation to choose attractive industries to enter.
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Market Based View
Market Based View is based on the premise that competitive advantage arises as a result of superior positioning against other
players in an industry. By differentiating the firm’s products and services from those of the competing firms, companies attain a
privileged market position. Through the achievement of superior positioning the firm can inhibit a perfect competition situation
and can command monopoly rents by intentionally limiting production below competitive levels. Instead of being a price taker in
a perfectly competitive arena, superior positioning allows the firm to retain some control over price and increase profits by
curbing competition. This result in above-normal future returns that will lead to higher present value for the firm.
Porter proposed three generic strategies a firm can pursue to achieve a superior position in an industry which are ;
Cost Leadership, where a firm achieves a superior position by producing at a lower cost than competing firms
Differentiation where a superior position is achieved by differentiating products through attributes that appeal to customers,
like higher product quality, branding, and innovative product features and
Focus where a firm secures a superior position by concentrating on a narrowly defined segment of the market based on low
cost or differentiation

Market Based View
• According to Porter, a common strategic weakness in the Market Based View is the management’s unwillingness to choose
between these generic strategies. An attempt to achieve competitive advantage by simultaneously following different
strategies usually lead to inconsistent and conflicting actions, leaving the firm “stuck in the middle” with lower than average
profits.
• Imperfect market conditions are also created through differentiation and the set up of entry barriers. Although setting up these
protective barriers benefit the players who already active in the market, the costs incurred in the setting up these entry
barriers can outweigh the incremental benefit gained from the monopoly rents.
• Third and widely cited criticisms of the Market Based View is its assumption of resource homogeneity and the mobility of
resources within an industry. Despite early management insight that competing firms within an industry are not all the same,
the Market Based View considers firms to be homogeneous entities. If temporary heterogeneity in resource allocation occurs
between firms, the Market Based View assumes it will be instantly corrected through market mechanisms and the unlimited
mobility of resources. This assumption stands is in contrast to reality. This is because Market Based View only focus on the
structure of an industry and external conditions of the firm and neglects a firm’s internal characteristics, structures, and
resources which creates differentiation between the firms.
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Internal Analysis Tools and techniques-

Value Chain Analysis
H. Ansoff, Corporate Strategy, 1988

A good way to begin the Internal Analysis is to identify where a firm’s products are located in the overall value chain.
A value chain is a linked set of value creating activities beginning with basic raw materials coming from suppliers, moving to a series of
value added activities involved in producing and marketing a product or service, and ending with the distributors getting the final
goods into the hands of the ultimate consumer.
A corporate value chain generally has two types of value creating activities: Primary Activities and Secondary Activities. Companies
use these primary and support activities as "building blocks" to create a valuable product or service.
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Primary activities relate directly to the physical creation, sale, maintenance and support of a product or service. They include the
following activities.
Inbound logistics are all the processes related to receiving, storing, and distributing inputs internally. Supplier relationships are
a key factor in creating value here.
Operations are the transformation activities that change inputs into outputs that are sold to customers. Here, the operational
systems create value
Outbound logistics are the activities involved in the delivery of the product or service to your customer and involves collection,
storage, and distribution systems, that may be internal or external to the organisation
Marketing and sales are the processes used to persuade clients to purchase the company’s product or service instead of the
competitors. The benefits of the offer or the value proposition ,how well you communicate the benefits are sources of value
creation under this activity
Service activities are related to maintaining the value of the product or service to the customers after purchasing the product or
service. This includes warranty, service agreements, maintenance contracts etc.

Support Activities by definition are the activities that support the primary activities. For example, procurement supports
operations with certain activities, but it also supports marketing and sales with other activities.
Procurement or Purchasing involves managing the purchasing process of raw material and other resources needed for the
primary activities. This includes finding vendors and negotiating best prices
Human Resource management is how well a company recruits, hires, trains, motivates, rewards, and retains its workers. People
are a significant source of value, so businesses can create a clear advantage with good HR practices
Technological development relates to activities involved in managing and processing information, as well as protecting a
company's knowledge base. Minimising information technology costs, staying current with technological advances, and
maintaining technical excellence are sources of value creation
Infrastructure includes the company's support systems, and the functions that allow it to maintain its daily operations. Like
Accounting, legal, administrative, and general management
By examining the activities in a firm’s value chain, managers are able to gain a better understanding of how these Primary and
Secondary activities influence a firm’s cost structure and value delivery.
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For example, by analysing the firm’s value chain managers can understand its operational delays and how technology can be
used to improving the speed and quality of execution. Software tools such as supply chain management ,that link the inbound
and outbound logistics with operations , Customer Relationship Management that support sales, marketing and R&D and the
Enterprise Resource Planning software that can be implemented in modules can automate the entire value chain. These software
can have a big impact on efficiently integrating the activities within the firm, as well as with its suppliers and customers.
From a strategic perspective, managers can use the value chain analysis to identify the differences and distinctiveness in its value
creation activities and processes compared to competitors. If competitors cannot copy a firm’s value chain without engaging in
painful tradeoffs, or if the firm’s value chain helps to create and strengthen other strategic assets over time, it can be a key source
for competitive advantage

All competitors can purchase the software tools discussed above. Even more important to consider, if a firm adopts software that
changes a unique process into a generic one may have co-opted a key source of competitive advantage particularly if other firms
can buy the same thing. However, using these third party software packages such as Supply Chain Management , CRM, and ERP
software depends on the firm’s specific way of doing things and using software and methods that can be purchased and adopted
by others.
For example, Dell stopped deployment of the logistics and manufacturing modules of a packaged ERP implementation when it
realised that the software would require the firm to make changes to its unique and highly successful manufacture to order and
direct distribution business model. Many of the firm’s unique supply chain advantages needed to be changed to the point where
the firm was doing the same things using the same ERP software as its competitors. By contrast, Apple had no problem adopting
third-party ERP software because the firm competes on product uniqueness rather than operational differences.
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Value Network
According to Johnson Et al. in 2008 the ‘value network’ is “the set of inter-organisational links and relationships that are necessary
to create a product or service. It visualises the business activities and sets of relationships from a dynamic and holistic perspective
and includes several unique analysis approaches that integrates with other modeling tools such as process tools, social network
analysis tools and systems.
The Value Network helps organisations derive Competitive advantage through linkages with the suppliers and distributors of the
network as much of the cost and value of a product or service occur in the supply and distribution chains. Therefore, it is
important that managers understand the bases of their organisation’s strategic capabilities in relation to the wider value network.
The value network approach helps individuals and work groups well manage their interactions and address operational issues,
such as balancing workflows or improving communication. It also helps to create a stronger value-creating linkages with strategic
partners and improve stakeholder relationships.

Value Network
 For example, the Value Network helps improving the efficiency of firm’s Own Activities by;
 Implementing the best practices throughout the company specially for the high-cost activities.
 Redesigning products to eliminate high-cost components or to facilitate speedier and more economical assembly or
manufacture
 Relocating high-cost activities to areas where they can be performed more cheaply
 Outsourcing activities that can be performed more cheaper than in-house
 Shifting to lower-cost technologies and/or invest in productivity enhancing, cost-saving technological improvements and
 Stop performing activities that add little or no customer value
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Value Network
It helps to improve the efficiency of Supplier-related Activities by;
 Pressuring the suppliers for lower prices
 Switching to lower price substitute inputs
 Collaborating closely with suppliers to identify mutual cost-saving opportunities
 Working with suppliers to enhance the firm’s differentiation
 Selecting and retaining suppliers to enhance the firm’s differentiation
 Coordinating with suppliers to enhance design or other features desired by customers and
 Providing incentives to suppliers to meet high-quality standards, and assist the suppliers efforts to improve

Value Network
It also helps to Improve the efficiency of Customer Value Activities by;
 Implementing best practices throughout the company, specially for high-cost activities
 Adopting the best practices and technologies that inspire innovation, improved designs and creativity
 Reallocating more resources for activities that have a significant impact on the value delivered to the customer
 Gaining an understanding of the intermediary buyers and how firms activities impact their value chain
 Adopting best practices for signaling the value of the product and for enhancing customer perceptions
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Benchmarking
Benchmarking is the process of identifying best practices in relation to both the product and the processes through which the
products or services are created and delivered by making comparisons with other organisations within the industry or other
industries
Benchmarking involves looking outside a particular business, organisation, industry, region or country to examine how others
achieve their performance levels and to understand the processes they use. In this way, benchmarking helps explain the
processes behind excellent performance. When the lessons learned from a benchmarking exercise are applied appropriately, they
result in better performance in critical functions within an organisation or in key areas of the business
The process of benchmarking involves four key steps:
First step is to understand in detail the existing business processes
Second step is to analyse the business processes of others
Third step is to compare own business performance with that of others analysed
And the final step is to implement the steps necessary to close the performance gap

Benchmarking
There are several types of Benchmarking which an organisation can apply.
First type is Strategic Benchmarking. This is used when businesses need to improve overall performance, strategic
benchmarking examines the long-term strategies and general approaches that have enabled high-performers to succeed such
as the core competencies, developing new products and services, and improving capabilities for dealing with changes in the
external environment. Changes resulting from this type of benchmarking analysis may be difficult to implement and take a long
time to materialize. This is most appropriate for re-aligning business strategies that have become inappropriate
 Second is Performance or Competitive Benchmarking .This is used when businesses want to consider their position in relation
to performance characteristics of key products and services. Benchmarking partners are drawn from the same sector and is
often undertaken through trade associations or third parties to protect confidentiality. It is the most appropriate method for
assessing the relative level of performance in key areas or activities of a business by comparing with others in the same sector,
and finding ways of to close the performance gaps.
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Benchmarking
Third type is Process Benchmarking .This focuses on improving specific critical processes and operations of a firm.
Benchmarking is sought from best practice organisations that perform similar work or deliver similar services. The analysis
Involves producing process maps to facilitate comparison and analysis. Process benchmarking often results in short term
benefits and is most appropriate for achieving improvements in key processes to obtain quick benefits
Fourth type is Internal Benchmarking .This Involves benchmarking businesses or operations from within the same organisation,
for example, business units in different countries. There are three main advantages of internal benchmarking which are easy
access to sensitive data and information , availability of readily standardised data for analysis and thirdly it requires less time
and fewer resources as there may be fewer barriers to implementation as practices are relatively easy to transfer across the
same organisation. Some of the drawbacks are that real innovation and best in class performance may be lacking which is found
through external benchmarking .Internal benchmarking is most appropriate where several business units within the same
organisation exemplify good practice, so management want to spread this expertise throughout the organisation, quickly.

Benchmarking
External Benchmarking involves analysing outside organisations that are known to be best in class and provides opportunities
of learning from those who are at the "leading edge.“ It can take up significant time and resources to ensure the comparability
of data and information, the credibility of the findings and the development of sound recommendations. This is most
appropriate when examples of good practices can be found in other organisations, and there is a lack of good practice within
internal business units.
Final type is International Benchmarking where best practices are identified and analysed elsewhere in the world, because
there are too few benchmarking partners within the same country to produce valid results. Globalisation and advances in
information technology are increasing opportunities for international benchmarking. However, this can take more time and
resources to set up and implement and the results may need careful analysis due to national differences. International
Benchmarking is most appropriate where the aim is to achieve world-class status, or simply because there are insufficient
"national" businesses against which to benchmark.
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Benchmarking
• One of the good industry examples to understand the strategic importance of Benchmarking is that of Toyota. In 1950, General
Motors was the world leader in the automobile industry, and Toyota was a small supplier to the Japanese domestic car market.
At this time, the founder of Toyota sent his son, Eliji Toyoda, to the United States on a mission to study American
manufacturing processes and practices. During his visit, Eliji Toyoda visited General Motors, Chrysler, Ford and even
Studebaker. He took extensive notes describing all that he saw. Also during his visit, Toyoda visited American supermarkets,
where he was impressed by the speed and precision with which grocers re-stocked their shelves at night so that supplies were
replenished in time for customers to shop during day-time hours. The observations and insights from Toyoda's study visits were
transported back to Japan, where they were adopted, adapted and improved. As history has recorded, these visits planted the
seeds for what would develop into Toyota's famous just-in-time total-quality- control program. Toyota launched its U.S.
presence on the west coast and then expanded across the country.
• During the next three decades, Toyota began challenging the far larger American competitors. By 1983, Toyota had captured
23% of the United States auto market. General Motors signed a joint venture agreement with Toyota to manufacture Toyota
products in the United States. GM’s main reason for this joint venture is to see how Toyota runs a factory observed a vice
president of the Boston Consulting Group at the time. The wheel had turned full circle. Now General Motors was studying
Toyota to learn about its winning strategies.
• Source: Excerpted from Benchmarking for Best Practices: Winning Through Innovative Adaptation by Christopher E. Bogan
and Michael J. English. Published by McGraw-Hill

Activity Maps
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Activity Maps
Another Internal analysis tool available for managers is the Activity Maps. An Activity map is a diagnostic tool to identify the
organisations competitive advantage. It connects the organisation’s value proposition to the activities of the organisation and
enable the company to deliver this value proposition better than the competitors.
The previous diagram shows the Activity Map done for Southwest Airlines. Southwest Airlines has a very robust strategy and
this is one of the reasons it has been the most consistently profitable airline in the US. Its activity map shows great fit –
everything that it does is tailored to delivering its low cost, convenience, on time, friendly but limited customer service which
are the key aspects of its value proposition. The inter linkages indicate that it is very hard for competitors to copy their
strategy because a competitor would have to match them on multiple different areas at the same time.

Activity Maps
Developing an Activity map involves several steps.
First step is to Brainstorm a long list of unique or special aspects of the company. This includes many different things such as
assets, resources, policies, culture and processes.
Second step is to identify the most important differentiated benefit of the Value Proposition
Thirdly raise the question on “How do we deliver this benefit?” and draw the cause and effect tree by identifying several layers
of cause and effect. Follow the same process for each differentiated benefit from the Value Proposition and note the common
causes
Fourthly combine the cause and effect trees to one map, linked by the common causes
Brainstorm the links further by bringing in people from diverse parts of the company.
Sense check by asking the following questions:
a. From your brainstorm – is there anything important missing from your map?
b. Can you explain the business logic behind every cause and effect relationship?
c. Does it fit with your intuition?
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Innovation Audit
• An Innovation Audit is also an important tool used in the Internal
Analysis.
• Innovation Audit is an in-depth analysis of different aspects of an
organisation’s current innovation capabilities, procedures and
processes. They are determined by examining key indicators to identify
the strengths and weaknesses. The results of the audit will highlight
what are the barriers to innovation, as well as the improvements or
new methods that is needed to maximise the organisation’s innovation
capabilities.
• The purpose of carrying out an Innovation audit is to enhance the
organisation’s innovation capability by identifying opportunities to
enhance innovation and clarify where the organisation needs to focus
to maximise their innovation success. It embeds innovation as part of
the organisation culture.

Innovation Audit
Now let’s look at the key benefits of conducting an innovation audit.
 Firstly the audit helps to build innovation and creativity in individuals

 Secondly it can identify and control the barriers that hinder creativity and innovation in the organisation
 Thirdly it fosters innovation in the organisation’s culture
 Fourthly it can align the organisation in common purpose and action to achieve its strategic goals
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Innovation Audit
Tidd, Bessant, and Pavitt in their book “Managing Innovation” has developed a innovation audit framework for an organisation
that reviews five main areas:
• First dimension is Strategy .In this the dimension, the audit takes a look at three major areas. First is whether the company has
a well-managed strategic planning process in place. Second is whether innovation is appreciated by the entire organisation and
is incorporated within the corporate strategy. Third is whether the company has put in place mechanisms that will effectively
implement the corporate strategy.
• The second dimension is the Process This dimension examines the robustness and flexibility of the organisation’s new product
development process and whether it brings the attention of everyone involved to the customer’s need as opposed to only the
marketing department focusing on the customer’s need. In this dimension, we also take a look at the organisation’s ability to
manage its internal processes. Specifically, we examine the health of the process that manages all other processes.
• The third dimension is Organisation. In this dimension, we examine two major areas. The first would be whether the
organisational structure encourages, rather than stifle innovation through effective top-down, bottom-up approach and lateral
communication and coordination within the firm. Second, and just as important, is whether the management has put in place a
system that encourages employees to bring forth new ideas.

Innovation Audit
• Fourth dimension is Linkages .In this dimension we focus on the firm’s ability to create healthy relationships with external
entities such as suppliers, customers, the firms from other industries, specialist individuals, as well as competitors. Specifically,
we take a look at the potential of these links to provide knowledge/information to the firm. Likewise, we also investigate the
firm’s ability to provide feedback to these entities.
• The fifth dimension is Learning . In this the audit takes a look at four major areas in this dimension. First, it tries to gauge the
organisation’s commitment to the training and development of its employees. Second, the audit examines the organisation’s
ability to gather knowledge and information from its linkages. Third, the audit takes a look at the firm’s ability to learn from its
successes and failures. Finally, the audit examines the firm’s ability to share these learnings to the entire organisation.
Once all five dimensions have been measured, we then use the numbers to plot the firm’s innovativeness profile. The diagram
here is an example of an innovation profile done for an organisation. The organisation needs a major overhaul to improve its
innovativeness as it has indicated a low score on a index of 0-7 on four dimensions of the framework which are strategy, learning,
linkages and organisation. Particularly, we might suggest that it revisit its strategic planning process to ensure that it is well
developed and that it incorporates innovation.
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Product (Industry) Life Cycle

The product life cycle describes the stages a product goes through from when it was first thought until it is finally phased out from
the market. Not all products reach the final stage of a product life cycle. Some continue to grow, others rise and some fail.
Now it is important for managers to understand the product life cycle stage of their products to formulate and implement
strategies to compete and succeed in each stage. When launching a new product or service as part of its strategy managers need
to address three main questions.
How and to what extent can the new product shape and duration of each stage be predicted?
How do we determine what stage the product is in?
How can it be effectively used?
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It is useful to briefly understand each stage of the product lifecycle in detail before dealing with these questions.
• The first stage is the Introduction Stage .At the Introduction Stage a new product is first brought to the market before there is a
proven demand for it and before it has been fully market tested in all aspects. Bringing a new product to market is always
associated with high uncertainty and risk. Generally, demand for a product is “created” during the product’s initial introductory
stage. How long this takes will depend on the complexity of the product, its degree of newness, its fit into consumer needs,
and the presence of competitive substitutes.
There are a few advantages and disadvantages an organisation will face in the introductory stage.
• One of the main advantages is that there is limited competition. If the product is truly original and a business is the first to
manufacture and market it the lack of direct competition would be a distinct advantage. Being first could help the organisation
to capture a large market share before other companies start launching competing products. Sometimes it will enable a
business’s brand name to become synonymous with the whole range of products, like Walkman and Hoover. Another
advantage is that the companies are able to charge a higher price that will eventually become the average market price. This is
because early adopters are prepared to pay this higher price to get their hands on the latest products. This helps the company
to recoup some of the costs of developing and launching the product. However, in some situations the companies might do
the exact opposite and offer relatively low prices, in order to stimulate the demand.

• The key disadvantages in this phase are that there is little or no market which means that there is going to be a low off take in
sales, involves high costs as creating and launching a new product requires significant research & development and marketing
costs and generate either no profit or losses to the company.The amount and duration of negative profits will differ from one
market to another. For example, some manufacturers could start showing a profit quite quickly, while for companies in other
sectors it could take years.
• The initial stage of the product life cycle is all about building the demand for the product with the consumer, and establishing
the market for the product. The key emphasis on this stage will be on promoting the new product, as well as making
production more cost-effective and developing the right distribution channels to get the product to market.
• The second stage is Growth . In the Growth phase demand for the product begins to accelerate and the size of the total market
will expand fast. This is also called the product’s “Takeoff Stage”. For many organisations this is the key stage for establishing a
product’s position in a market, increasing sales, and improving profit margins. This is achieved by the continuous development
of consumer demand through the use of marketing and promotional activity, combined with the reduction of manufacturing
costs. How soon a product moves from the Introduction stage to the Growth stage, and how rapidly sales increase, can vary
quite a lot from one market to another.
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• The Growth stage of a product is characterised by challenges such as Increasing competition, lower prices and different market
approaches for the company. When a company is the first one to introduce a product into the market, they have the benefit of
little or no competition. However, when the demand for their product starts to increase, and the company moves into the
Growth phase of the product life cycle, there will be increased competition as new manufacturers look to benefit from a new,
developing market. During the Introduction stage, companies can very often charge early adopters a premium price for a new
product. However, in response to the growing number of competitors that are likely to enter the market during the Growth
phase, manufacturers may have to lower their prices in order to achieve the desired increase in sales. Also when the product
becomes established and is no longer ‘new’ to the market, a more sophisticated marketing approach is needed to make the
most out of the growth potential of this phase.
• The standard Product Life Cycle Curve typically shows that profits are at their highest during the Growth stage. But in order to
try and ensure that a product has as long a life as possible, it is necessary for companies to reinvest some of those profits in
marketing and promotional activity during this stage, to help guarantee continued growth and reduce the threat from the
competition.

• After the Introduction and Growth stages, the product passes into the Maturity stage. This third stage is quite a challenging for
many organisations as the primary focus becomes maintaining their market share established during the introduction and
growth phases in the face of a number competitors. Some of the key challenges during this phase is market saturation as there
are fewer new customers and the majority of the consumers have already purchased the product, decreasing Market Share as
many organisations strongly compete for a share of the market and decreasing profits as profits are shared among many
competitors in the market and this situation is further worsened by the decrease in selling prices as competitors try to attract
customers for their product by decreasing the market prices. With sales reaching their peak and the market becoming
saturated, it is very difficult for companies to maintain their profits, let alone continue trying to increase them, especially in the
face of fairly intense competition. During this stage, it is organisations look for innovative ways to make their product more
appealing to the consumer is likely to maintain or even increase their market share.
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• The last phase of the product life cycle is the Decline stage and is characterised by decline in both sales and profits. During this
final phase of the product life cycle, consumers will typically stop buying this product in favour of something newer and better.
As a result of the declining market, sales will start to fall, and the overall profit that is available to the companies in the industry
will start to decrease. Ultimately, as a result of the decline in market share and profits the only option many organisations will
have is to withdraw their product before it starts to lose money by attempting to sell these products.
• One way for companies to slow down the decline in sales in this phase is to try and increase their market share by extending
the life of their product by looking at alternative production methods and new, cheaper markets. Even in the Decline stage, a
product can still be viable, and the most successful organisations are the ones that focus on effective product life cycle
management to make the most from the potential of each and every product they launched.

McKinsey 7s model was developed in 1980s by McKinsey consultants Tom Peters,
Robert Waterman and Julien Philips. Since the introduction, the model has been
widely used by academics and practitioners as a popular Internal Analysis and
strategic planning tools. It presents an emphasis on human resources or the Soft S,
rather than the traditional production tangibles of capital, infrastructure and
equipment, as a key to higher organisational performance and competitive
advantage.
The model shows how 7 elements of the company: Structure, Strategy, Skills, Staff,
Style, Systems, and Shared values, can be aligned together to achieve effectiveness
in a company. The key point of the model is that all the seven areas are
interconnected and a change in one area requires change in the rest of a firm for it
to function effectively.
In McKinsey model, the seven areas of organisation are divided into the ‘soft’ and
‘hard’ areas. strategy, structure and systems are hard elements that are much
easier to identify and manage when compared to the soft elements of skills, staff,
style and shared values. On the other hand, soft areas, although harder to manage,
are the foundation of the organisation and are more likely to create the sustained
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Now let us look at each of these 7 elements in detail .
• Strategy is a plan developed by a firm to achieve sustained competitive advantage and successfully compete in the market. So
what does a well-aligned strategy mean in the 7s model? In general, a sound strategy is the one that’s clearly articulated, is
long-term, helps to achieve competitive advantage and is reinforced by strong vision, mission and values. But it’s hard to tell if
such strategy is well-aligned with other elements when analyzed alone. So in the 7s model it looks at the strategy to see if its
aligned with other elements. For example, short-term strategy is usually a poor choice for a company but if its aligned with
other 6 elements, then it may provide strong results.
• Structure is the way business divisions and units are organized and includes the information of who is accountable to whom. In
other words, structure is the organisational chart of the firm. It is also one of the most visible and easy to change elements of
the framework.
• Systems are the processes and procedures of the company, which reveal business’ daily activities and how decisions are made.
Systems are the area of the firm that determines how business is done and it should be the main focus for managers during
• Skills are the abilities that firm’s employees perform very well. They also include capabilities and competences. During
organisational change, the question often arises of what skills the company will really need to reinforce its new strategy or new
structure.

• Staff element is concerned with what type and how many employees an organisation will need and how they will be recruited,
trained, motivated and rewarded.
• Style represents the way the company is managed by the leaders and the top-level managers, how they interact, what actions
do they take and their symbolic value. In other words, it is the management style of company’s leaders.
• Shared Values are at the core of McKinsey 7s model. They are the norms and standards that guide employee behavior and
company actions and is the foundation of every organisation.
The model can be applied to many situations and is a valuable tool ;

To facilitate organisational change
To help implement new strategy
To identify how each area may change in a future and
To facilitate the merger of organisations.
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Portfolio Analysis
A business portfolio is the collection of strategic business units that make up the corporation. The optimal portfolio is the one that
fits into the strengths and helps exploit the most attractive industries or markets. A strategic Business Unit (SBU) can either be an
entire mid size company or a division of a large corporation that formulates its own business strategy, have separate objectives
from the parent company and generate their own profits.
Portfolio Analysis is the process that helps executives evaluate their organisation’s prospects for success within each of the
different markets or industries they operate in. It provides managers with suggestions about what to do within each industry, and
provides ideas about how to allocate resources across industries. The objectives of a portfolio analysis are;
a) to analyse the current business portfolio and decide which SBU’s should receive more or less investment .In others what SBU’s
to Invest and Maintain)
b) to develop growth strategies for adding new products and businesses to the portfolio and
c) to decide which products or businesses should no longer be retained
BCG Matrix
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BCG Matrix
The Boston Consulting Group or the BCG matrix categorise a firm’s businesses as high or low along two dimensions: its
market share and the industry growth rate .
Each of the organisation’s product lines or business units are plotted on the matrix according to their industry growth rate
of the industry and the SBU’s relative market share. A unit’s relative Competitive Position is defined as its market share in
the industry divided by that of the largest other competitor. By this calculation, a relative market share above 1.0 belongs
to the market leader.
The Business Growth rate is the percentage of market growth that is the percentage of increase in sales of a particular
business unit classification. The BCG matrix assumes that, other things being equal, a growing market is attractive.
BCG Matrix
A product line or business unit must have relative strengths of this magnitude to ensure that it will have the dominant position
needed to be a “star” or “cash cow. On the other hand a product line or business unit having a relative competitive position less
than 1.0 has “dog” status. The area of the circle represents the relative significance of each business unit or product line to the
corporation in terms of assets used or sales generated.
• A star is a business unit that has a high market share in a growing market. The business unit is spending heavily to keep up with
growth, but the high market share should yield sufficient profits to make it more or less self- sufficient in terms of the
investment needs
• A question mark or problem child is a business unit in a growing market but do not have a high market share. Developing
question marks into stars, with high market share, needs large investment. Many question marks fail to develop, so the BCG
advises corporate parents to develop several at a time. It is important to make sure that some question marks develop into
stars, as existing stars eventually become cash cows and cash cows may decline into dogs.
• A cash cow is a business unit with a high market share in a mature market. However, because growth is low, investment needs
are less and the high market share means that the business unit is profitable. The cash cow should then be a cash provider,
helping to fund investments in question marks.
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BCG Matrix
• Dogs are business units with a low share in static or declining markets and are therefore the worst of all combinations. They may
be a cash drain and use up a disproportionate amount of company time and resources. The BCG usually recommends
divestment or closure of Dogs.
• Underlying the BCG Growth share matrix is the concept of the experience curve.The key to success is assumed to be market
share. Firms with the highest market share have a cost leadership position based on economies of scale, among other things.If a
company is able to use the experience curve to its advantage , it should be able to manufacture and sell new products at a low
price enough to garner early market share leadership.Once the product becomes a star, it is destined to be very profitable,
considering its inevitable future as a cash cow.
• Having plotted the current positions of its product lines or business units on a matrix, a company can project the future
positions, assuming that there is no change in strategy. Present and Projected matrices can thus be used to help identify major
strategic issues facing the organisation. The goal of any company is to maintain a balanced portfolio so it can be self-sufficient in
cash and always work to harvest mature products in declining industries to support new ones in growing industries.
• BCG matrix is quantifiable and is easy to use. Cash cows, dogs, stars are an easy-to-remember the way to refer to the strategic
business units or products.
BCG Matrix
However, there are a few limitations as well.
• First the use of highs and lows to form four categories is too simplistic and the link between market share and profitability is
sometimes questionable as low-share businesses can also be profitable .For example, Olivetti is still profitably selling manual
typewriters through mail order catalogues Also the Growth rate is only one aspect of industry attractiveness and there are
several other elements that needs to be looked into when measuring the Industry attractiveness.
• Another shortcoming is that the Product lines or strategic business units are considered only in relation to one competitor that is
the market leader. Small competitors with fast growing market shares are ignored. Again Market share is only one aspect of
overall competitive position and there are several other aspects that can be looked in to when measuring the overall
competitive position.
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GE Matrix
General Electric with McKinsey consulting firm
developed the GE Matrix. It is a more
complicated matrix and includes 9 cells based on
long-term industry attractiveness and business
strength or competitive position.
The GE matrix includes much more data and is
complex than the BCG matrix. For example, in GE
matrix Industry attractiveness is measured
through market growth rate, industry
profitability, size and pricing practices, among
other possible opportunities and threats.
Business strength or competitive position
includes market share as well as technological
position, profitability and size, among other
possible strengths and weaknesses.
GE Matrix
• The individual product lines or business units are identified by a letter and plotted as circles on the GE Business screen.The area
of each circle is in proportion to the size of the industry in terms of sales.The pie slices within the circles depict the market share
of each product line or business unit. The plot product lines or business units on the GE Business screen follow the 4 steps:
• First Step is to select the criteria to rate the industry for each product line or business unit. This involves assessing the overall
industry attractiveness for each product line or business unit on a scale of 1 from very unattractive to 5 very attractive
• Second Step is to select the key factors needed for success in each product line or business unit by assessing business strength
or competitive position for each product line or business unit on a scale of 1 -5 from very weak to very strong
• Third Step is to plot each product line’s or business unit’s current position on a matrix as shown in the above figure
• Fourth Step is where you plot the firm’s future portfolio assuming the present corporate and business strategies will not be
changed. This helps to identify if there is a performance gap between projected and desired portfolios. If so, this gap should
serve as a stimulus to review the corporation’s current mission, objectives, strategies and policies.
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GE Matrix
• Overall the nine-cell GE Business Screen is an improvement over the BCG Growth Share Matrix. The GE Matrix considers many
more variables and does not lead to such simple conclusions. It recognises that the attractiveness of an industry can be assessed
in many different ways other than simply using market growth rate , and it allows managers to select whatever criteria they feel
is most appropriate to their situation.
• However, it can get complicated and cumbersome than the BCG Matrix. Also the numerical estimates of industry attractiveness
and business strength/competitive position are not objective research finding but subjective judgments that will vary from one
person to another.Furthermore, the GE Matrix cannot effectively depict the positions of new products or business units in
developing industries
Internal and External Situation Analysis-

SWOT Analysis
SWOT analysis is a simple but powerful tool for
sizing up a company’s resource capabilities, and
deficiencies, its market opportunities, and the
external threats to its future growth and survival.
A SWOT analysis provides a good overview of
whether a firm’s overall position is fundamentally
healthy or unhealthy and provides a basis for
crafting strategy that capitalise on the firm’s
strategic capabilities. Moreover, the analysis
helps the firm identify opportunities that can
maximize profitable growth and threats that the
company needs to defend itself against.

H. Ansoff, Corporate Strategy, 1988 88
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SWOT Analysis
A Strength is something the company is good at doing or an attribute that enhances its competitiveness. Potential Resource
strengths and capabilities of a firm may include one or more of the following internal strategic factors.
A powerful strategy Proprietary technologies, superior technological skills

Distinctive and Core competencies and important patents
A product that is strongly differentiated from Superior intellectual capital relative to key competitors
competitors Wide Geographic Coverage and strong distribution
Competencies and capabilities that are well matched to capability
industry key success factors Strong advertising and promotion
A strong financial condition-ample financial resources to Product innovation capabilities
grow the business Proven capabilities in improving production processes
Strong brand name, image/company reputation Good supply chain management capabilities
An attractive customer base Better product quality relative to competitors
Economies of scale and/or learning and experience
curve advantages

SWOT Analysis
A Weakness, or competitive deficiency, is something a company lacks or does poorly in comparison to other firms in the industry
or a condition that puts it at a disadvantage in the market place. Potential resource weaknesses and strategic deficiencies of a
firm can be one or more of the following factors;
No clear strategic direction, mission and values Weaker dealer network than key competitors
Resources that are not well matched with and/or lack of adequate global distribution
industry success factors capability
No well-developed or proven competencies Behind on product quality, R&D and/or
A weak balance sheet with high level of liabilities technological know-how.
Weak or unproven product innovation In the wrong strategic group
capabilities Inferior intellectual capital and e-commerce
Narrow product line relative to competitors capabilities
Weak brand image or reputation Short of financial funds to grow the business
and pursue promising initiatives
Too much underutilized plant capacity
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SWOT Analysis
An Opportunity is a potentially favorable condition in which a business can capitalise on a changing trend or an increasing
demand for a product by a demographic group that has yet to be recognised by its competitors. For a market opportunity to
exist, a company must be able to identify who are their potential customers , the specific needs that needs to be met, the size of
the market, and its capacity to capture market share. Potential Opportunities of a firm may include the following external
strategic factors.
Openings to win market share from rivals Backward and forward integration
Sharply rising buyer demands for the industry’s product Falling trade barriers in attractive foreign markets
Expanding into new geographic markets and/or serving Acquiring rival firms or companies with attractive
new market segments technological expertise or capabilities
Expanding the company’s product line to meet a
broader range of customer needs
Utilizing existing company skills-technological know-how
to enter new product lines or new businesses like Online
sales

SWOT Analysis
A Threat is an Agent, factor, or force in an organisation’s external environment that is out of its control, and can directly or
indirectly affects its chances of success or failure. Potential External Threats would include;
Increasing intensity of competition among rivals

Slowdown in market growth A SWOT analysis benefits the organisation and managers
Likely entry of potent new competitors by identifying the key environmental impacts influencing
Loss of sales to substitute products the organisation's business environment by identifying
Growing bargaining power of customers and suppliers the key strengths and weaknesses It also helps to
Adverse demographic changes or shift in buyer needs or generate Strategic Factors Analysis Summary Matrix by
tastes away from the industry’ scoring the importance and impact of each of the
Restrictive trade policies, imposed by foreign factors +5 to -5 in order to assess the inter-relationships
governments between environmental impacts and strengths and
Costly new regulatory requirements weaknesses. This summary facilitate the comparisons
with competitors. Finally, the SWOT analysis helps the
firm to generate alternative strategies through the TWOS
matrix.
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TWOS Matrix

TWOS Matrix
A TOWS matrix illustrates how the external opportunities and threats facing a particular corporation can be matched with that
company’s internal strengths and weaknesses to result in four sets of possible strategic alternatives.
A TOWS analysis involves the same basic process of listing strengths, weaknesses, opportunities and threats as a SWOT analysis,
but with a TOWS analysis, threats and opportunities are examined first and weaknesses and strengths are examined last.
TOWS analysis is a useful brainstorming tool for strategic managers to create various growth and retrenchment strategies for
the organisation as a whole or specific SBU’s . For Example ,
S-O strategies-pursue opportunities that fit well with the company’s strengths
W-O strategies overcome weaknesses to pursue opportunities
S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats
W-T strategies make a defensive plan to prevent the firm’s weaknesses from making it susceptible to external threats
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Lesson Summary
► In this lesson, you have now learnt a range of diagnostic and analytical tools to audit and assess progress towards existing strategic
aims and objectives. The aim of the analytical tool is to sharpen the focus of the analysis and to ensure a methodical, balanced
approach. All analytical tools rely on historical, backward looking data to extrapolate future assumptions. It is important to exercise
caution when interpreting strategic analysis results. Otherwise the analysis may be unduly influenced by preconceptions or pressures
within the organisation which seek to validate a particular strategic assumption. It is important to ensure that key stakeholders, for
example, the board, senior directors and company departments are aware of this. Otherwise they may not be able to provide the
necessary commitment to complete the analysis.
► In order to produce a structured evaluation of your organisational strategic position, you need to evaluate the internal strategic
capability and define how it is influenced by the relationship between product resources and competences. Using an appropriate
framework will enable you to structure this appropriately. Thus, you have been provided comprehensive information on internal and
external analysis such as Value chain frame work, Key Success Factors, Critical Success Factors, BCG matrix, GE Matrix, SWOT and
TWOS analysis.
► Now you are capable to understand resources, capabilities, strategic resource, competency and competitive advantage that will
significantly help you to understand the strategic direction of your organisation.
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Achieve
organisational
strategic aims and
objectives – Part 2
Introduction
► In this lesson we will be learning about different stakeholder groups and their power and interest on organisations. You
will be introduced to few models such as Mendalow’s model and block matrix. We will examine how important it is to
have stakeholders to achieve organisation’s current and future strategies. Followed by, we will evaluate the existing
organisational strategic position by understanding the concepts of strategic choice, strategic drift and strategic policy. To
understand these concepts better, you will be introduced to Porter’s Competitive Strategies, Competitive Tactics, Market
Timing Tactics, Market Location Tactics and Product/Market Growth Strategies. Finally, we will learn how to measure the
progress towards achieving the existing strategy using different techniques of brain storming.
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Learning Outcomes
3. Be able to evaluate progress towards achieving organisational strategic aims and objectives
3.1 Take responsibility for and critically assess the expectations of all stakeholders and their influence upon future
3.2 Critically analyse, interpret and produce an evaluation of the existing organisational strategic position and progress
towards achieving the existing strategy
Lesson Objectives
1. Stakeholder Groups and Expectations
2. Stakeholder Map
3. Mendalow’s Power-Interest Matrix
4. The Block Matrix
5. Stakeholders’ influence upon future organisational strategy
6. Evaluation of the existing organisational strategic position
7. Tactics
8. Progress towards achieving the existing strategy
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Stakeholder Groups and Expectations

Any individual, group, or institution who has a vested interest in the natural resources of the project area and/or who
potentially will be affected by project activities and have something to gain or lose if conditions change or stay the
same.
According to the CIMA, stakeholders are “Those persons and organisations that have an interest in the strategy of the
organisation. Stakeholders normally include shareholders, customers, staff and the local community“ There are three
broad categories of stakeholders.
• Internal stakeholders - Internal stakeholders are members of the organisation. Example; directors, managers,
employees of an organisation.
• Connected stakeholders (primary stakeholders) - These are the stakeholders who have an economic or contractual
relationship with the organisation. Example; shareholders, customers, suppliers, distributors
• External stakeholders (secondary stakeholders) These stakeholders are not directly connected to the organisation.
but they have an interest in its activities or are impacted by them in some way. Example; government, pressure
groups, the media, local community.
Source: Johnson, G. and Scholes, K. (2002)
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• Stakeholders are groups that have a say in the decisions of a company as What you are to do, What resources you have and
What you should achieve.
• It is important that if an organisation tries to implement something which is in conflict with the desires of powerful
stakeholders, it is likely to fail. On the other hand, if powerful stakeholders agree with the organisation's action, it improves
the chances of success. So for an organisation it is important to identify, its stakeholders and their power to affect the
decisions and outcomes.
• Another aspect to be considered when mapping stakeholders is that individuals might be members of more than one
stakeholder group. E.g. an individual - An employee of the organisation, A member of the trade union, An active member of
the community.
• The different groups have completely different interest and there is a good communication network among each other.
Therefore the analysing of stakeholders is not a simple task as it involves various aspects.

Different stakeholders have different needs and interests. The different interests of key stakeholder groups of British
Airways are summarized below. The company should clearly analyse such interests to manage and satisfy
stakeholders.
• Employees – are interested in the success of the company (British Airways) as their mortgages depends on it
• Shareholders – require a return on investment, plus continuous increase in value.
• Suppliers – depends on the success of the company as their own business success is inter linked.
• Customers –require value for money, consistent service and dependability.
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Stakeholder Map
Stakeholder Map
• The Stakeholder analysis process is useful to categorize various stakeholders, which interests they represent, the
amount of power they possess, whether they represent inhibiting or supporting factors for the organisation to
realize its objectives, or methods in which they should be dealt with.
• Stakeholder mapping is the process of creating images to clarify the position of the stakeholders of the
organisation. Freeman (1984) defines stakeholders as ‘any group or individual who can affect or is affected by the
achievement of the organisation’s objectives’. Therefore the stakeholder has either the power to affect the firm’s
performance and or has a stake in the firm’s performance. This implies two types of stakeholders as strategic and
moral.
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Mendalow’s Power-Interest Matrix

• This stakeholder map classifies stakeholders in relation to the power that they hold and the extent to which they are likely to
show interest in the strategies of the organisation. The power-interest map can be used to indicate what type of relationships
the organisation should have with each of the groups.
• Minimal effort (A) - This group of stakeholders have neither interest in influencing the organisation, nor the power to do so.
Therefore the group requires only minimal effort and monitoring. For example; small investors in a large organisation.
• Keep Informed (B) - This group has high interest in influencing the organisation and its decisions, however they have low
power. Therefore these stakeholders are important for an organisation. They should be kept informed. They can be important
to influence the more powerful stakeholders. for example; the community, small suppliers
• Keep satisfied (C) - This group is powerful but their level of interest in the strategies of the organisation is low. They are
generally relatively passive, but may suddenly emerge as a result of certain events, moving to group D on that issue. The
appropriate approach to keep such stakeholders satisfied, by ensuring that their needs are met and any concern they may have
are anticipated and addressed before they become issues.
• Key Players (D) - This group of stakeholders have high power and they are highly motivated to use it in their own benefit. For
examples; major customers, key suppliers, external allies/partners. The appropriate strategy is to manage the relationship
closely.
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The Power
• Positional power - This is the power which comes from an individual’s position in an organisational hierarchy.
• Resource power - This arises as an individual can control, obtain, or create resources or other items of value.
• System power - This arises as an individual is central to a group, has political access, has high visibility and
relevance to a particular situation.
• Expert power - This arises as an individual has information, knowledge, expertise and professional credibility, and
fits with the requirements of the organisation.
• Personal power - Personal power arises as an individual has charisma, energy, attractiveness, communication
skills, personal reputation.
The Block Matrix

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The Block Matrix

• The Block Matrix is also a technique, used for mapping stakeholders. According to the Block Matrix, stakeholders are
mapped based on ‘trust’ and ‘agreement’. Trust- the organisation's capacity to believe that a person will follow through
on the commitment they make.
• Agreement- the belief that a person shares with the organisation a common commitment to important outcomes.
The following stakeholder groups can be identified as follows;
• Allies - These are the people the organisation agrees with regarding the important issues, and trust to follow through
on their commitments. This group is stronger and can be used to influence other parties.
• Bedfellows - These stakeholders agree with the organisation, but the organisation does not trust to follow through on
their agreements.
• Fence-sitters - These are the people whose positions, goals, and values are unclear and who are not convincing
enough when they express support.
• Adversaries - Adversaries are people, the organisation does not trust and do not agree with on important issues.
Stakeholders’ influence upon future organisational strategy

Johnson and Scholes (2002) define strategy as “the direction and scope of an organisation over the long term, which achieves
advantage for the organisation through its configuration of resources within a changing environment and to fulfil stakeholder
expectations.” A strategic plan is therefore large scale future oriented activities that allow interaction with the competitive
environment in order to achieve company objectives. It follows that strategic management is the process whereby a strategy is
formulated, evaluated, and continuously improved.
Strategic planning flows from the definition of an organisation’s vision, mission and objectives and subsequent environmental
scanning, to understand the organisation’s strategic position with respect to the macro external environment, its industry, competitors,
internal resources, competencies and expectations and influence of stakeholders. (Stoner, Freeman and Gilbert, 1995) This initial
process establishes a basis for strategic choice by means of a match of identified strengths to opportunities. The translation of strategic
choice into action is then implemented across all levels of the organisation through programmes, resources, technologies, and
performance management structures. (Johnson and Scholes, 2002 and Davis, 2005) This lesson focuses on the strategic position of the
organisation in the context of stakeholder expectations.
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• The structured and systematic process of analysing the external and internal environment described thus far is carried out by a
consultative process with stakeholders and should present a sound basis for establishing the foundation for the organisation’s strategy
formulation. However, the impact of stakeholders and the complex role that people play from a political and cultural perspective
should be taken into account. (Johnson and Scholes, 2002) Davis, 2005, suggests that stakeholders are individuals or groups with an
interest in the success of an organisation to deliver intended results and on whom the organisation itself depends.
• Donaldson and Preston, 1995, argue that this general statement is too wide should be qualified to “be those persons or groups with a
legitimate interest in procedure and / or substantive aspects of corporate activity.” Walsh, 2005, suggests that too broad a definition
creates a situation whereby managers function in order benefit a stakeholder group or act as a continuous conduit to stakeholders.
Stakeholders may include employees, unions, customers, financial institutions, suppliers, shareholders etc depending on the accepted
definition. The definition of stakeholder is therefore important to the organisation because it impacts on the strategic plan
formulation.

• The relationship between stakeholders and the organisation encompasses the field of stakeholder management that ranges in
complexity from stakeholder mapping through to stakeholder collaboration and social capital. The corporate governance
structure of the organisation and the regulatory framework within which it operates should determine who the organisation
serves and how the purpose and direction of the organisation is determined. This includes the management of the capacity of a
stakeholder to influence the organisation as well as accountability issues in the formal structure. This is typically structured
through a separation of ownership and management at main board level, balanced by non-executive directors and a non
executive chairperson. Internal or organisational stakeholders may blur this line through the inappropriate use of power and
politics. Society in turn creates expectations of the organisation in terms of ethics and within a cultural context that need to be
congruent with that of the organisation. (Donald and Preston, 1995)
• The organisational field approach suggests that networks of related organisations develop which share common assumptions,
values, and processes that may incorporate common organisational views on stakeholders. Under this scenario, relationship with
stakeholders are taken for granted leading to legitimised strategies shaped by expectations being accepted without a structured
strategic planning process occurring. (Walsh, 2005)
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• A stakeholder map is a tool that inventories and categorises a company’s stakeholders, shows their inter-relationships, expectations,
and power. It illustrates the approaches that the organisation can follow to achieve its business objectives while winning support
from its stakeholders. It raises the dilemma of ethics in that stakeholder management through such a strategy can be subverted to
the detriment of the organisation. (Johnson and Scholes, 2002)
• The ultimate test of how well a strategy has been thought out is at implementation level and the controls around that
implementation. Unless a strategy can be executed effectively with appropriate checks and balances then it will almost certainly fall
short in achieving objectives. This means that strategy has to be linked to the organisation’s objectives, mission, operations, and
measurable outcomes within a corporate governance framework that meets the needs of the stakeholders. The evolution of the
Kaplan and Norton’s Balanced Scorecard to incorporate financial, customer, learning and growth, and internal process metrics
evaluated against the vision and strategic objectives of the organisation provide one such strategic management control
methodology across the organisation. (Kaplan and Norton, 1996 and Kaplan and Norton, 2001)

• In conclusion, we have examined the formal process of strategy development and given examples of tools from the literature
to systematically evaluate the external and internal environments of the organisation. It has sought to demonstrate that
organisations are facing dynamic and rapidly evolving forces that influence its strategic direction. This is especially true with
the emergence of globalisation and intensively competitive world markets. The eventual choice of a strategic direction for an
organisation is a function of the values and expectations of a broad range of stakeholders which influence strategic decision
making through political power over the organisation within a cultural and ethical context. It is the control through
governance structures, and ongoing measurement of the strategic implementation process that will determine the successful
outcome of the strategy and concomitant success of the organisation.
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Evaluation of the existing organisational strategic position

Whether a business succeeds or fails depends in large measure on the strategic choices made by the owner. Spending large amounts of
time and money introducing a product that turns out to have a very limited market is an example of a bad strategic choice. Anticipating a
change in consumer tastes and introducing a service to take advantage of that change before competitors do is an example of a good
strategic choice. The development of business strategy takes into account that all companies must cope with limited resources to some
extent. The most successful companies can allocate scarce resources to the projects that have the greatest positive impact on revenue
growth or improvements in productivity and efficiency that can increase profit margins.Typical strategic choices of an organisation
involve:
• The choices as to how an organisation positions itself in relation to competitors
• The choices of products and markets available to an organisation
• The choices about how strategies are pursued
After the pros and cons of the potential strategic alternatives have been identified and evaluated through SWOT analysis and TWOS
Matrix the organisation must select one for implementation. By now as there are many feasible alternatives, how do the managers
decide on the best strategy?
First criterion is to select based on the capability of the proposed strategy to deal with the specific strategic factors developed earlier in
the SWOT analysis. If the alternatives do not take advantage of environmental opportunities and corporate strengths/competencies, and
lead away from environmental threats and corporate weaknesses, it will probably fail.
Evaluation of the existing organisational strategic position

Another important consideration in the selection of strategy is the ability of each alternative to satisfy agreed-on objectives with
the least resources and the fewest negative side effects. The attractiveness of a particular strategy alternative is a function of the
amount of risk it entails. Risk of selecting a strategy is composed not only of the probability that the strategy will be effective but
also the amount of assets the organisation must allocate to that strategy and the length of time the assets are unavailable for
other uses. The greater the assets involved and the loner they are committed, the more likely the top management will demand
a high probability of success.
The choice of a strategy is also affected by its compatibility with the key stakeholder’s expectations. For example, creditors want
to be paid on time. Trade Unions exert pressure for comparable wage and employment security. Governments and interest
groups demand social responsibility. Shareholders want dividends. All these pressures must be given some consideration when
selecting the best strategy.
Selecting the best strategy also depends on its compatibility with the corporate culture. If the selected strategy is incompatible
with the existing corporate culture, then the chances of it being successful is very low. Foot-dragging or sabotage will result as
employees fight to change in corporate philosophy.
Sometimes the most attractive alternative might not be selected if it is contrary to the needs and desires of important top
managers as personal characteristics and experience affect a person’s assessment of the strategies attractiveness.
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Strategic Policy
The selection of the best strategic alternative is not the end of strategy formulation. The organisation must then engage in
developing policies. Policies define the broad guidelines for implementation. Flowing from the selected strategy, policies
provides guidance for decision making and actions throughout the organisation. They are the principles under which the
corporation operates on a day-to-day basis. For example, General Electric Chairman Jack Welch initiated the policy that any GE
unit must be number one or two in whatever market it competes. This policy gave clear guidance to managers throughout the
organisation.
When crafted correctly, an effective policy can achieve 03 things;

It forces trade-offs between competing resource demands
It tests the strategic soundness of a particular action
It sets clear boundaries within which employees must operate while granting them freedom to experiment within those
constraints
Strategic Policy
Policies can be long lived in the organisation than the strategies that created them. These general policies such as “The customer
is always right” developed by Nordstrom and “Everyday Low Prices” set by Wal-Mart can in time become part of the
organisation’s culture. Thus a change in strategy should be followed quickly by a change in policies. As we learned under the
Cultural Web managing policy is one way to manage a culture.
After the strategy, divisional and corporate budgets are approved procedures must be developed. Often called Standard
Operating Procedures or SOP’s, they typically detail the various activities that must be carried out to complete the company
strategy. Also known as organisational routines, procedures are the primary means by which organisations accomplish much of
what they do. Once in place procedures must be updated to reflect any changes in technology as well as strategy. For example, a
company following a differentiation strategy will manage its sales force more closely than a firm following a low cost strategy.
Differentiation requires long-term customer relationships created out of close interaction with the sales force. An in-depth
understanding of the customer’s needs provides the foundation for product development and improvement. Procedures will
ensure that the day-to-day operations will be consistent over time.
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Porter’s Competitive Strategies
There are countless variations in the

competitive strategies that organisations use,
mainly because each company’s strategic
approach is different to fit its own
circumstances and industry environment. The
custom-tailored nature of each company’s
strategy to face the future change conditions
win over its rivals in the industry makes the
chances of any two companies –even
companies in the same industry –having the
same strategies that are exactly alike in every
detail.

According to Porter the competitive strategy is all about being different. It means deliberately choosing to perform activities
differently or perform different activities than rivals to deliver a unique mix of value.Although there are many variations of
the competitive strategies employed by companies they can be broadly divided in to two broad and important differences:
whether a company’s target market is narrow or broad

whether the company is pursuing a competitive advantage linked to low costs or product differentiation
Based on these two criteria FOUR distinctive competitive generic strategies can be identified.
A low-cost provider strategy that is appealing to a broad spectrum of customers by being the overall low-cost provider of a
product or service
A broad differentiation strategy that seek to differentiate the company’s product or services from rivals in ways that will
appeal to a broad spectrum of buyers
A focused strategy based on lower cost that concentrate on a narrow buyer segment by serving the niche members at a
lower cost than the rivals
A focused strategy based on differentiation concentrating on a narrow buyer segment by offering niche members
customised attributes that meet their tastes and requirements better than rival products
Each of these four competitive strategies creates a different market position as shown in the figure .Each approach is
distinctly different to competing and operating the business. Lets now look at each of these generic strategies in detail now.
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Cost Leadership Strategy
A company achieves a low-cost leadership when it becomes the industry’s lowest-cost provider than the
competitors. However, a lower-cost provider strategy targets to achieve lower cost not by necessarily providing
the lowest possible cost but by including features and services that buyers consider essential. For a cost
leadership strategy to provide a sustainable competitive advantage organisations need to achieve this low cost
strategy in ways that it is difficult for the competitors to match or imitate.
To be successful with a low-cost provider strategy managers have to scrutinize each cost-creating activity and
determine what drives its cost. Then they have to use this knowledge to manage the cost of each activity
downward and achieve cost savings throughout the value chain. Managers have two main options to create a
profitable low-cost advantage over the competitors. The First option is to use the lower-cost edge to underprice
the competitors and attract price-sensitive buyers in great enough numbers to increase the overall profits of
the firm. The strategy here is to keep the size of the price cut smaller than the size of the firm’s cost advantage
and thereby get a bigger profit margin per unit sold and the profits added on the incremental sales or to
generate enough added volume to increase total profits despite thinner profit margins where the larger volume
will make up for the smaller margins provided the underpricing of competitors brings in enough sales. Second
option is to maintain the present price and market share and use the lower cost benefit to make higher profit
margin.

To achieve a low-cost advantage the organisation needs to reduce the cumulative cost of its value chain
activities either by controlling the cost drivers or revamp the value chain by completely eliminating or by-
passing some cost-producing activities in the value. There are several ways a company can control their cost
drivers.
First factor Economies of scale. Economies of scale arise when activities can be performed in larger volumes
more cheaply than in smaller volumes and from the organisation’s ability to spread costs like R&D and
advertising over a greater sales volume. For example, manufacturing economies can usually be achieved by
simplifying the product line, scheduling longer production runs for fewer models, and using common parts and
components in different models. In global industries, making separate products for each country market
instead of selling a standard product across all markets result in increased unit cost because of the lot time in
model changeover, shorter production runs and not been able to reach the optimum level of production for
each country product. Second factor is the learning curve effects. The cost of performing an activity can
decline over time as the experience of the employees build over time. Learning curve economies can result
from new technologies, improved plant layouts and work flows ,making product design modifications that
streamline the assembly process, speed and knowledge gained from repeatedly siting and building new plants,
retail outlets or distribution centers. Third way to reduce the cost of value chain activities is to reduce the cost
of key resource inputs.
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The cost of performing value chain activities depends on what the firm has to pay for its key resource inputs. The
extent to which a company can reduce its costs depends on the use of union or non union labour, bargaining power
the company as over supplier raw materials and other inputs, locational variables such as wage levels, tax rates,
energy costs, inbound and outbound freight and shipping costs that change based on the location and the level of
expertise the company has in managing its supply chain.
The fourth way is to create links with the other activities of the company or the industry value chain and perform
activities in a cooperative and coordinating manner that provide cost benefits to the firm. For example, by linking
the company’s material inventory costs with the activities of the suppliers the company can save costs on the
design of parts and components, quality assurance, just in time delivery and integrated materials supply. Another
way is to share resources and processes with other business units in the organisation such as order processing,
customer billing systems and maintaining a common sales force to meet customers that can provide significant cost
savings. Vertical Integration also helps reduce costs in the value chain. By expanding backward into sources of
supply or forward towards end users or both the company can have considerable bargaining power over the
suppliers and customers and can generate significant cost savings by having a single firm perform adjacent activities
in the industry value chain. Capacity utilization is a big cost driver for those value chain activities that are
associated with high fixed costs such as manufacturing , R&D etc. Higher levels of capacity utilization helps
depreciation and other fixed costs to be spread over a large unit volume and bring the unit fixed cost.

An organisation’s costs can significantly go up by some strategic choices and operational decisions taken by the
managers. For example, adding or cutting the services provided to buyers ,incorporating more or few
performance and quality features to the product, increasing or decreasing the number of distribution channels
or lengthening or shortening the delivery times to customers can significantly increase or reduce the cost of its
value chain activities.
The second approach is to revamp the value chain by bypassing some activities or completely eliminating them.
The primary ways an organisation can achieve a cost advantage by reconfiguring the value chain are by making
greater use of internet technology applications that provide a seamless system for checking material against
incoming orders, check supplier stocks, sharing the incoming customer orders with suppliers through Electronic
Data Interchange ,check the market prices for parts and components and e-sourcing and tracking deliveries
until the orders are delivered to the customer; Using direct end user sales and distribution approaches such as
e-commerce platforms where consumers place orders on-line that helps to eliminate the 35 to 50 percent of
the wholesale and retail costs in the value chain and simplifying the product design by reducing the number of
parts or standardizing the parts using computer aided design techniques and Offering basic products or
services to cut the costs related with multiple features and options are some of the main ways managers can
revamp the value chain activities.
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For example, Southwest Airlines follow this no frills strategy to compete successfully in the budget airline
industry. Shifting to more simple, less capital –intensive, or more streamlined and automated technological
processes, by passing the use of high cost raw materials or replacing them with alternatives, relocating facilities
closer to suppliers and customers to cut down transport costs and pruning slow selling items from the product
line are other ways an organisation can revamp the value chain to achieve greater cost savings. A competitive
strategy based on low-cost leadership works best when the industry is cahracterised by few or all of the
features below. You will remember that we discussed these features in detail when we learned the Porter’s Five
Forces Framework.
a.) There is intense price competition between the rival firms in the industry
b.) The products of rival sellers are essentially identical and supplies are readily available in the market
c.) There are few ways to achieve product differentiation that have value for the buyers
d.) Most buyers use the product in the same way and a standardized product can satisfy the customer
requirements
e.) There is low switching cost when switching from one supplier to another
f.) There are few and a large number of buyers who have strong bargaining power and can reduce the overall
prices in the industry
g.) Industry new entrants use introductory low prices to attract buyers and build a customer base.

Differentiation Strategy
Differentiation strategies are attractive whenever buyers needs and preferences are too diverse to be fully satisfied by a
standardized product or by sellers with identical products and capabilities. To develop a successful Differentiation strategy the
organisation must study the buyer’s needs and behavior carefully to understand what they consider important, what they think
has value and what they are willing to pay for. Then the company has to design the product or service incorporating these buyer
desired attributes that will clearly set them apart from the competitors. Competitive advantage results once a sufficient number
of buyers become strongly attached to the differentiated attributes.
Successful differentiation allows the organisation to Command a premium price for their products. It also increase sales and gain
buyer loyalty to its products. Differentiation increases profitability when the extra price the product commands exceeds the
added costs of achieving the differentiation. A differentiation strategy fails when buyers don’t value the brand’s uniqueness and
when it is easily copied by the competitors.
Organisations create differentiation for their products and services from many aspects. These include a unique taste like Pringles;
multiple features like Microsoft Windows ; wide selection and one stop shopping like Amazon.com; superior service like FedEx ;
superior design and Performance like BMW; prestige and distinctiveness like Rolex ; product reliability like Johnson & Johnson
products ; quality manufacture like Michelin tires ; technological leadership like 3M Corporation a full range of services like
Charles Schwab; a complete line of products like Campbell soups and top of the line image and reputation like Ralph Lauren.
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Although it is easy enough to understand that a successful differentiations strategy creates customer value , the big question
is how do the managers create these value along the activities of the value chain. There are four main approaches an
organisation can use to create value to along the value chain. First is to incorporate product attributes and user features that
lower the buyer’s overall cost of using the company's product. Making the company’s product more economical for the buyer
can be done by reducing the buyer’s raw material waste, inventory requirement by providing just in time deliveries, increasing
product reliability and maintenance intervals to reduce the repair and maintenance cost and using on-line systems to reduce a
buyer’s order processing and procurement costs and providing free technical support. Second approach is to include features
that enhance the buyer’s satisfaction in non-economic and intangible ways. For example BMW, Ralph Lauren and Rolex have
differentiation based competitive advantages linked to buyer’s desire for status ,image, prestige, upscale fashion, superior
craftsmanship and the finer things in life. The third approach is to incorporate features that raise product performance. This
can be accomplished with attributes that provide buyers greater reliability, durability, convenience, or ease of use than the
competitor products. The fourth approach is to deliver value to customers via competitive capabilities that rivals don’t have or
can’t afford to match. For example, Japanese automakers can bring new models to market faster than American and European
automakers and satisfy the changing customer preferences for different vehicle styles.

So when does a differentiation strategy works best? Differentiation strategies work best in market conditions,
 where there are many ways to differentiate the product and many buyers perceive these differences as having value
 where the buyer needs and uses are different and different approaches are needed to meet these requirements
 a few competitor firms are following a similar differentiation approach
 where technology changes rapidly and competition revolves around rapidly evolving product features
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Focus Strategy
What sets a Focus strategy apart from a Low-cost leadership and broad differentiation is that it concentrates on a narrower
segment of the market. This target segment or niche can be defined by the geographic uniqueness , by specialized requirements
in using the product, or by special product attributes that appeal to this small segment of buyers. For example, eBay in on-line
auctions, Porsche in sports cars and Google in special search engine software are operations that have scaled their operations to
serve a narrow local customer segment.
As we understood at the beginning of this discussion a Focus strategy can be based on low-cost or differentiation. A focused low
-cost strategy try to achieve a competitive position by serving the target buyers in the niche at a lower cost or a lower price than
the competitors. This strategy makes great sense when a firm can lower costs significantly by limiting its customer base to a well-
defined buyer segment. The avenues available in the firm’s value chain for achieving low cost advantage by either controlling
factors that drive cost or revamping the value chain are similar for a Focused Low-Cost strategy. Focused low cost strategies are
fairly common. For example producers of private label goods are able to achieve low costs in product development, marketing,
distribution and advertising by concentrating on making generic items imitable of name-brand merchandise and selling it directly
to retail chains wanting a basic house brand to sell to their price sensitive consumers.

A focused differentiation strategy try to achieve a competitive position by serving the target buyers in the niche a product or
service they perceive as suitable for their tastes and preferences. The successful use of a Focused Differentiation strategy
depends on the existence of a buyer segment that is looking for special product attributes or service capabilities and the firm’s
ability to deliver these unique preferences better than the competitors in the market. Example of companies that follow a
focused differentiation strategy include Godiva Chocolates, Chanel, Gucci, Rolex and Haagen-Dazs.
A focused strategy based on low-cost or differentiation become very attractive in securing a competitive advantage when the
following marketing conditions are prevailing.
 The target market niche is big enough to be profitable and offer good growth potential
 Industry leaders do not see having a presence in the niche is crucial for their success
 It is costly or difficult for multi-segment competitors to put their capabilities to meet the specialized needs of the target
market niche and at the same time satisfy the needs and expectations of their mainstream customers
 The industry has many niches and the focuser can pick a competitively attractive niche based on his resources and capabilities
 Few other competitors are attempting to compete in the same niche
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When an industry has many different niches and segments the strength of competition can vary across and within the segments.
This makes it important for a focuser to pick a niche that is both competitively attractive and suitable for their resources and
capabilities. The focuser’s specialized capabilities and competencies provide the most strongest and dependable basis for
competing with the other players and provides an edge over the multi-segment rivals who have trouble in meeting the unique
needs and requirements of the target niche while serving the expectations of their regular customers.
Competitive Tactics
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Competitive Tactics
Competitive tactics are various tactics that are useful , shorter in time horizon and narrower in scope than generic strategies
that form the basis of Business Level Strategies.
There are two categories of Competitive Tactics that deal with timing that is when to enter a market and market location or
where and how to enter and/or defend the organisation’s competitive position.
When to make a strategic move is often as important as what move to make. A timing tactic deals with when a company
implements strategy. The firsts company manufacture and sell a new product or service is called the first mover or pioneer. Some
of the advantages of being a first mover are that the company is able to establish a reputation as an industry leader, move down
the learning curve to assume the cost leader position, and earn temporarily high profits from buyer s who value the product or
service very highly. A successful first mover can also set the standard for all subsequent products in the industry. A company that
sets the standard “locks in” customers and is then able to offer further products based on the standard. For example, Microsoft
was able to do this in software with its Microsoft Windows Operating system.
Competitive Tactics
Research indicate that moving first or second into a new industry or foreign country can result in greater market share and
shareholder wealth than moving in later provided that first mover has sufficient resources to both exploit the new market and
defend its position against late movers with greater resources. Timing tactics include first-movers , second-movers or rapid
followers, and late movers .
A market location tactic deals with where a company implements a strategy. A company or business unit can implement a
competitive strategy either offensively or defensively. An offensive tactic usually takes place in an established competitor’s
market location. A defensive tactic usually takes place in the firm’s own current market position as a defense against possible
attack by a rival.
Let us discuss these Competitive Tactics in detail now.
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Market Timing Tactics

As discussed earlier there are three types of Timing Tactics.
First Timing Tactic is the First Mover Advantage. First movers are the companies that take an initial competitive action that is
either strategic or tactical. These are companies that have the resources, capabilities, and core competencies that enable them
to gain a competitive advantage through innovative and entrepreneurial competitive actions. By being first, the first mover
hopes to gain a sustainable competitive advantage, earn above-average returns until competitors respond effectively and gain
customer loyalty. This creates a barrier to entry by competitors. Any advantage gained generally will depend on the type of
competitive action and type of industry as also to the extent to which the action is difficult to imitate. First mover actions based
on core competencies should be sustainable for longer periods than actions based on other factors as in the example of
Microsoft Windows Operating system.
There are several advantages of a First Mover advantage. Firstly it helps the organisation to establish the position and
reputation as the industry leader. Secondly it helps to move down the learning curve faster than the rival firms and achieve cost
leadership if the firm is competing on the basis of a low-cost leadership strategy and earn short-term high profits from buyers
who value the product or service highly if the firm is competing on the basis on the Differentiation strategy.

First Movers also set the standards for all subsequent products and the followers in the industry and thereby create a high
investment barrier for the new entrants. The first mover advantage also has some disadvantages for a firm. For example, first
movers are not able to predict the success of their strategy and therefore it entails high risk of failure. Secondly the second movers
or the followers generally develop imitating technologies at cheaper costs and thereby avoid high development costs. For example,
several small printer-supply manufacturers have started to make low-cost clones on the premium-priced replacement ink and toner
cartridges manufactured by market leaders such as Hewlett Packard, Epson and Canon. The clone manufacturers dissect the
cartridges of the name brand company and then reengineer a similar version that will not violate patent rights of the original
manufacturer at less than 50% of the original R&D and manufacturing cost and markets it at prices that are almost half that of the
original prices.
Second movers are companies that respond to a first mover's competitive action, often through imitation or a move designed to
counter the effects of the first mover's action. How fast a second mover responds may influence its results. Before following the first
mover, a second mover should evaluate initial customers' reactions to the first-movers actions and analyse markets to identify
critical issues.
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By responding quickly the second mover may be able to capture some of the initial customers and gain a degree of brand and
customer loyalty. By being the second mover the firm can avoid some of the risks faced by the first mover. It will also help him to
learn from the first mover's mistakes and successes and avoid market development costs incurred by the first mover. However, a
rapid response may not be possible if the product introduced by the first mover is beyond the capability of competitors to
successfully imitate and competitors do not have the resources or capabilities that will enable them to quickly move into action.
Late movers are companies that respond to a competitive action, but only after considerable time has elapsed after the first mover's
action and the second mover's response. There is a danger in moving late as a late mover's performance generally suffers relative to
the performance of first and second movers. As late movers are the last ones to respond to the first and second movers' actions, late
movers tend to be poor performers and often are weak competitors.
Market Location Tactics

Market Location Tactics are divided into Offensive
Strategies and Defensive Strategies. Offensive
strategies are followed by market challengers and
there are five Offensive strategies.
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First startegy is Frontal attack. This is a direct, head-on attack meeting competitors with the same product line, price, promotion, etc.
Because the attack is on the enemy’s strengths rather than weakness this is considered the most risky and is the least used
competitive strategies.
Second strategy is Flanking attack. The aim of this strategy is to engage competitors in those products markets where they are weak
or have no presence at all. The goal is to build a position from which to launch, an attack on the battlefield later.
Third strategy the Encirclement attack is the multi pronged attack aimed at diluting the defenders ability to retaliate in strength. The
attacking firm stands ready to block the competitor no matter which way he turns the product market. Market encirclement consists
of expanding the products into all segments and distribution channels
Fourth strategy is Bypass attack .This is the most indirect form of competitive strategy as it avoids confrontation by moving into new
and as yet uncontested fields. Three type of bypass are possible; develop new products, diversify into unrelated products or diversify
into new geographical markets.
Fifth strategy is Guerilla warfare .This strategy is less ambitious in scope and involves making small attacks in different locations whilst
remaining mobile. Such attacks take several forms. The aim is to destabilize the competitor by small attacks.

Defensive Strategies are tactics followed by market leaders to defend their market share. There are five defensive strategies.
First one is Position defense. This is a static defense approach of the current position, retaining current product markets by
consolidating resources within existing areas.
Second one is Mobile defense where a high degree of mobility prevents the attackers chances of localizing the defense and
accumulating its forces for a decisive battle. A business should seek market development, product development and diversification to
create a stronger base.
Third strategy is Pre-emptive defense. Pre-emptive defense is launched in a segment where an attack is anticipated instead of moving
into related or new segments. This is the best form of defensive strategy.
Fourth strategy is Flank position defense .This is used to occupy a position of potential future importance in order to deny that
position to an opponent. Leaders need to develop and hold secondary markets to prevent competitors from using them as a spring
board into the primary market.
Fifth strategy is the Counter offensive defense – This is attacking where the company is being attacked. This requires immediate
response to any competitor entering a segment or initiating new moves
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Product/Market Growth Strategies

Growth strategies are pursued by organisations to achieve growth in sales, assets, profits or a combination of these.Organisations
that compete in expanding industries must grow to survive. Continuing growth means increasing sales and a chance to take
advantage of the experience curve to reduce per unit cost and increase profits. An organisation can grow internally by expanding
its operations both globally and domestically, or it can grow externally through mergers, acquisitions and strategic alliances.
The Ansoff product/market growth matrix provides a simple way of generating four basic alternative directions for strategic
development. According to this matrix an organisation generally starts with existing products, and existing markets. The
organisation has the choice of penetrating further within its existing sphere or moving rightwards by developing new products for
existing markets or to move downwards by bringing its existing products to new markets or taking the most radical step of full
diversification with altogether new markets and new products.
The most commonly used model for analysisng the possible strategic directions that an organisation can follow is the Ansoff
Matrix.This matrix shows potential areas where core competencies and generic strategies can be deployed.There are four broad
alternatives:
Market Penetration
Market Development
Product Development
Diversification
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Market penetration
This strategy involves focusing on selling your existing products or services into the existing markets to gain a higher market share.
This is the first strategy most organisations will consider because it carries the lowest amount of risk. A successful market
penetration strategy relies on detailed knowledge of the market and competitor activities. It relies on your company having
successful products in a market that you already know well. The organisation uses a market penetration strategy when they want
to increase the market share for its current products, restructure a market by driving out competitors and/or increase usage.
There are several Market Penetration Strategies an organisation use.
First is Price Adjustments. By lowering prices of their products the firm hopes to generate more sales volume by increasing the
number of units purchased and to make price more appealing to consumers when compared to the competition Second is
Increased Promotion where organisation attempts to increase market penetration through greater promotional efforts. For
example, the organisation may launch an advertising campaign to generate greater brand awareness or implement a short-term
promotion with a finite ending date.

Third is Increase Distribution Channels where the organisation attempt to increase market penetration by increasing the
distribution channels or channel options it uses to get products into the hands of consumers, to make them more widely
available. For example, a company that traditionally sells its products through retail outlets may add other distribution channels
such as sending direct mail offerings, on-line purchasing or setting up a telemarketing operation.
Another market penetration strategy is Product Improvements. Making product improvements is used to create new interest in a
stagnating product or to offer an extra benefit when using it. Consumer products manufacturers have often used the "new and
improved" claim to entice customers to give a product another chance or to improve the perception of quality. Companies can
also change the product's packaging to give it a more modern design that might appeal to a younger customer base.
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Market Development
This is based on entry into new markets or new segments of existing markets while employing existing products. Entering new
markets is likely to be based on leveraging existing competences but may also require development of new capabilities and
competencies. Entering new segments of existing markets may require the development of new competencies that serve the
partcular needs of customers in these segments.The major risk of market development is that it centres on entry into markets in
which the business may have only limited experience.
Market development strategies include finding new geographical markets. The prime example of this is internationalisation where
firms distribute their products and services in overseas markets via distributors or own channels, but the spread of a small retailer
into new towns can also be considered as market development.
Second is to find new distribution channels. For example, in the public services, a college might offer its educational services to
older students than its traditional intake, perhaps via evening courses or distance learning programme.Market development can
also take place when new markets and user segment are created by different prcing or customized products to meet the
requirements of that segment. For example, aluminium, whose original use in packaging and cutlery manufacture is now
supplemented by users in aerospace and automobiles.

Product Development
Refers to the development of new products for existing markets. As with market development , the intention is to attract new
customers ,retain existing ones and increase the present market share.Providing new products will be based on exploiting
existing competences but also require that new competences are built as in product research.For example, Apple has a ritual of
periodically , launching cutting-edge technology products such as the iPod,iPhone,iPad and MacBook Air, and does so by
continually exploiting its core competency in technology and innovative design.Product development offers the advantage to a
business of dealing with customer needs of which it has some experience because they are within the existing market. In a world
of shortening product life cycles ,product development has become and essential form of strategic development for many
organisations.
There are mainly three Product development strategies. First one is the Product Development Diversification Strategy A
product development diversification strategy takes a company outside its existing business and a new product is developed for a
new market. An example of this strategy is a company that has sold insurance products and decides to develop a financial
education program aimed at college students. The new product is not revolutionary as there are other companies producing
similar products, but it is new to the company producing it.
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Second strategy is Product Modification. Product modification strategies are generally aimed at existing markets, although a
side benefit may be the capturing of new users for the new product. An example of this strategy is toothpaste. Toothpastes that
promote whitening ability or anti-cavity attributes are built on existing plain toothpastes that only have attribute of cleaning the
teeth.
Third strategy is Revolutionary Product Development. Revolutionary products are those for which there is no real prior need.
Computers and mobile phones are good examples. Before these products appeared on the market, consumers did not know if
they needed them. But, the germ of an idea on how to better communicate resulted in products that have changed the world
and have drastically changed the competitive landscape

Second strategy is Product Modification. Product modification strategies are generally aimed at existing markets, although a
side benefit may be the capturing of new users for the new product. An example of this strategy is toothpaste. Toothpastes that
promote whitening ability or anti-cavity attributes are built on existing plain toothpastes that only have attribute of cleaning the
teeth.
Third strategy is Revolutionary Product Development. Revolutionary products are those for which there is no real prior need.
Computers and mobile phones are good examples. Before these products appeared on the market, consumers did not know if
they needed them. But, the germ of an idea on how to better communicate resulted in products that have changed the world
and have drastically changed the competitive landscape.
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Diversification

Diversification is achieving business growth through new products and new markets.It is an appropriate option when current
markets are saturated or when products are reaching the end of their lifecycle. It can produce important synergies and can also
help to spread risk by broadening the product and market portfolio. Diversification can take two main forms depending on just
how different the products and markets are to the existing ones.
Related Diversification is said to have occurred when the products and or markets share some degree of commonality with
existing ones.This ‘closeness’can reduce the risk of diversification.In practice, related diversification usulaly means growth into
similar industries or forward or backward in a businesse’s existing supply chain. For example, the Walt Disney company has
concentrated its growth around entertainment and has diversified in to theme parks,movie production, toys, games and
broadcasting.
Unrelated Diversification is growth into product and market areas that are completely new and with which the business shares
no commonality at all.It is sometimes referred to as ‘conglomerate diversification’.For example, Virgin Group is a prime example
of unrelated diversification where the business operates in space tourism, air and train travel, hospitality, entertainment,
finance, mobile telecommunication etc. to name a few diversified areas.
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There are several key reasons why organisations opt for a Diversification strategy although this strategy entails the
highest level of risk in the product/market matrix. :
First is due to the Efficiency gains that can be made by applying the organisation’s existing resources or capabilities
to new markets and products or services. These are often described as economies of scope, by contrast to
economies of scale. If an organisation has underutilised resources or competences that it cannot effectively close or
sell to other potential users, it makes sense to use these resources or competences by diversification into a new
activity. Secondly by Stretching Corporate Parenting capabilities into new markets and products or services can be
another source of gain. This highlights corporate parenting skills that can otherwise be easily neglected. At the
corporate parent level, managers may develop a competence at managing a range of different products and services
which can be applied even to businesses which do not share resources at the operational unit level. Increasing
market power can result from having a diverse range of businesses. With many businesses, an organisation can
afford to cross-subsidise one business from the surpluses earned by another, in a way that competitors may not be
able to. This can give an organisation a competitive advantage for the subsidised business, and the long-run effect
may be to drive out other competitors, leaving the organisation with a monopoly from which good profits can then
be earned.

Organisations diversify to respond to market decline is one common but doubtful reason for diversification. It is arguable that
Microsoft’s diversification into electronic games such as the Xbox – whose launch cost $500m in marketing is a response to
slowing growth in its core software businesses.
To spread the risk across a range of businesses is another common justification for diversification. The expectations of powerful
stakeholders, including top managers, can sometimes drive inappropriate diversification. Under pressure from Wall Street
analysts to deliver continued revenue growth, in the late 1990s the US energy company Enron diversified beyond its original
interest in energy trading into trading commodities such as petrochemicals, aluminium and even band- width. By satisfying the
analysts in the short term, this strategy boosted the share price and allowed top management to stay in place. However, it soon
transpired that very little of this diversification had been profitable, and in 2001 Enron collapsed in the largest bankruptcy in
history.
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Progress towards achieving the existing strategy
Now it's time to think about the different things that you could do to create a clear advantage, and meet your strategies and
objectives. Here are some fundamental activities that can help you make this decision.
Brainstorm Options
• Use creativity tools like Brainstorming, Reverse Brainstorming and Starbursting to explore projects that you could run to
develop competitive advantage. Guide your brainstorming with reference to the organisation's mission statement, but,
depending on your role in the organisation, consider how far you should be constrained by this. (We will discuss each in detail
in the slides following)
Examine Opportunities and Threats
• Your SWOT Analysis identified some of the main opportunities and threats you face. Using this as a starting point, brainstorm
additional ways to maximise your opportunities, minimise your threats, or perhaps even turn your threats into opportunities.
We are already learnt these models in the previous slides.

Solve Problems
• A problem-solving approach can also help at this stage. If your problem is that you're not achieving your goals, ask yourself how
you can ensure that you do. If everyone in your industry finds it hard to deal with a particular problem, then you may gain a
competitive edge by dealing with it.
• For example, if you want to increase your customer satisfaction ratings in an industry plagued by poor customer relations, your
starting position is "low satisfaction." Brainstorm why this is the case, and create strategic options that would increase
satisfaction. Tools like Root Cause Analysis, the 5 Whys and Appreciative Inquiry can give you some interesting new
perspectives on these problems.
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What Is Brainstorming?
• Madison Avenue advertising executive Alex Osborn developed the original approach and published it in his 1953 book, “Applied
Imagination”. Since then, researchers have made many improvements to his original technique.
• The approach described here takes this research into account, so it's subtly different from Osborn's approach.
• Brainstorming combines a relaxed, informal approach to problem solving with lateral thinking. It encourages people to come up
with thoughts and ideas that can, at first, seem a bit crazy. Some of these ideas can be crafted into original, creative solutions to a
problem, while others can spark even more ideas. This helps to get people unstuck by "jolting" them out of their normal ways of
thinking.
• Therefore, during brainstorming sessions, people should avoid criticizing or rewarding ideas. You're trying to open up possibilities
and break down incorrect assumptions about the problem's limits. Judgment and analysis at this stage stunts idea generation and
limit creativity.
• Evaluate ideas at the end of the session – this is the time to explore solutions further, using conventional approaches.

Why Use Brainstorming?
• Conventional group problem solving can often be undermined by unhelpful group behaviour. And while it's important to start
with a structured, analytical process when solving problems, this can lead a group to develop limited and unimaginative ideas.
• By contrast, brainstorming provides a free and open environment that encourages everyone to participate. Quirky ideas are
welcomed and built upon, and all participants are encouraged to contribute fully, helping them develop a rich array of
creative solutions.
• When used during problem solving, brainstorming brings team members' diverse experience into play. It increases the
richness of ideas explored, which means that you can often find better solutions to the problems that you face.
• It can also help you get buy-in from team members for the solution chosen – after all, they're likely to be more committed to
an approach if they were involved in developing it. What's more, because brainstorming is fun, it helps team members bond,
as they solve problems in a positive, rewarding environment.
• While brainstorming can be effective, it's important to approach it with an open mind and a spirit of non-judgment. If you
don't do this, people "clam up," the number and quality of ideas plummets, and morale can suffer.
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Individual Brainstorming
• While group brainstorming is often more effective at generating ideas than normal group problem solving, several
studies have shown that individual brainstorming produces more – and often better – ideas than group brainstorming.
• This can occur because groups aren't always strict in following the rules of brainstorming, and bad behaviors creep in. Mostly,
though, this happens because people pay so much attention to other people that they don't generate ideas of their own – or
they forget these ideas while they wait for their turn to speak. This is called "blocking."
• When you brainstorm on your own, you don't have to worry about other people's egos or opinions, and you can be freer and
more creative. For example, you might find that an idea you'd hesitate to bring up in a group develops into something special
when you explore it on your own.
• However, you may not develop ideas as fully when you're on your own, because you don't have the wider experience of other
group members to draw on.
• Individual brainstorming is most effective when you need to solve a simple problem, generate a list of ideas, or focus on a
broad issue. Group brainstorming is often more effective for solving complex problems.

Group Brainstorming
• Here, you can take advantage of the full experience and creativity of all team members. When one member gets stuck with an
idea, another member's creativity and experience can take the idea to the next stage. You can develop ideas in greater depth
with group brainstorming than you can with individual brainstorming.
• Another advantage of group brainstorming is that it helps everyone feel that they've contributed to the solution, and it
reminds people that others have creative ideas to offer. It's also fun, so it can be great for team building!
• Group brainstorming can be risky for individuals. Unusual suggestions may appear to lack value at first sight – this is where
you need to chair sessions tightly, so that the group doesn't crush these ideas and stifle creativity.
• Where possible, participants should come from a wide range of disciplines. This cross-section of experience can make the
session more creative. However, don't make the group too big: as with other types of teamwork, groups of five to seven
people are usually most effective.
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Reverse brainstorming - helps you to solve problems by combining brainstorming and reversal techniques. By combining these,
you can extend your use of brainstorming to draw out even more creative ideas.
To use this technique, you start with one of two "reverse" questions:
Instead of asking, "How do I solve or prevent this problem?" ask, "How could I possibly cause the problem?" And instead of
asking "How do I achieve these results?" ask, "How could I possibly achieve the opposite effect?“
Starbursting is a form of brainstorming that focuses on generating questions rather than answers. It can be used iteratively, with
further layers of questioning about the answers to the initial set of questions. For example, a colleague suggests a new design of
ice skating boot. One question you ask might be “Who is the customer?” Answer: "Skaters". But you need to go further than this
to ensure that you target your promotions accurately: “What kind of skaters?” Answer: "Those who do a lot of jumping, who
need extra support", and so on. This would help focus the marketing, for example to competition ice dancers and figure skaters,
rather than ice rinks that buy boots to hire out to the general public.
Lesson Summary
► In this lesson you have covered the different stake holder groups, their power and interest on organisations. Models in
relation to stake holder mapping have been introduced to you. This will help you to understand the importance of
communication, cooperation and association you should have with stakeholders of an organisation. Now you should
have a clear understanding on existing organisational strategic position by understanding the concepts of strategic
choice, strategic drift and strategic policy along with Porter’s Competitive Strategies, Competitive Tactics, Market Timing
Tactics, Market Location Tactics and Product/Market Growth Strategies. In addition to learning these strategies you are
also aware of brain storming techniques to help progress towards achieving the existing strategy.
► In the next lesson you will learn alternative strategic choices in detail which will provide a deep understanding on
strategic direction.
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Evaluate strategic
options
Introduction
► In this lesson, you will be learning about different alternative strategic choices an organisation could have in short,
medium and long term. Therefore, you will be introduced to the concepts of organic growth and in-organic growth along
with different types of international strategies. The international market entry modes will be evaluated to provide you an
in-depth knowledge to help to make decision on the suitability of alternative strategic choices based on finance, risk and
return aspects. At the end of the lesson you will understand that no business operates in a static environment, which is
why it is vital that firms always consider how this strategy will fit with market circumstances now and in the future.
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Learning Outcomes
4. Be able to determine and evaluate strategic options to support a new strategic position
4.1 Critically evaluate and develop a range of alternative strategic options to meet organisational strategic aims,
direction and objectives in the short and medium term
4.2 Determine and justify the existing strategic option that can meet the revised strategic position
Lesson Objectives
1. Organic Growth Strategies
2. In-Organic Growth Strategies
3. International Market Selection
4. Types of International Strategy
5. International Market Entry Modes
6. Suitability of Strategic Choice
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Organic Growth Strategies

Organic growth is the process of business expansion by increased output, customer base expansion, or new
product development, as opposed to mergers and acquisitions, which is inorganic growth.
Developing the company’s strengths through organic growth can make you a stronger competitor in your
industry. For example, a company that continually devotes its profits to improving its quality-control
department offers increasing value to its customers, making it an increasingly formidable competitor. Organic
growth also can increase your market share and improve customer retention. Reinvesting your profits in your
sales and customer-service departments, for example, helps attract new customers while strengthening
relationship.
The disadvantage of an organic growth strategy is that external growth strategies or inorganic get faster
results. For example, a home-security company could spend years developing a strong marketing team, or it
could acquire a small marketing firm that already has the staff and necessary expertise. The latter approach
requires substantially more money in the short term, which is why organic growth might be the best option
for some small businesses.
Organic Growth Strategies

Organic growth strategies present some risks. Suppose you choose to invest your time and resources into growing your
business organically, but a major competitor decides to pursue external growth strategies by merging with other businesses.
Within a short time, you could go from a roughly equal competitive standing to being completely outmatched. On the other
hand, if your competitor grows too rapidly, it might shift its focus away from the elements necessary for success in your
industry, such as offering high-quality products and personalised customer service.
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In-Organic Growth Strategies

Inorganic growth is the growth of business, sales expansion etc. by increasing output and business reach by acquiring new
businesses by way of mergers, acquisitions and take-overs. This kind of growth also takes place due to government directives,
leading to enhancement of business in some identified priority sector or area. The inorganic growth rate also factors in the
impact of foreign exchange movements or performance of other economies. As opposed to the organic growth, this kind of
growth is affected to a great extent by exogenous factors. It is also a faster way for companies to grow compared with organic
growth, where the main focus is productivity enhancement and cost reduction.
Mergers are where two companies amalgamate to form a new company. Mergers occur when the two companies involved
are roughly the same in size and strength. Where the companies involved are in different countries a merger may be
preferred to an acquisition. Examples of some of the famous mergers are Daimler Benz and Chrysler, Alcatel and Lucent and
Mittal Steel Alcelor.
Acquisitions involve one company purchasing another. Acquisitions can be ‘friendly’ if they are supported by the board of the
target company, or unfriendly, when they are opposed by the target company’s board. When they are unfriendly they are
referred to as “hostile takeover”.

Joint Ventures have become an extremely popular form to access market knowledge and distribution capabilities by
multinational firms and to access technology, brands and product developments of the multinationals by the local company.
Governments in emerging market countries often encourage foreign companies to take a local partner in order to encourage
the flow of technology and management capabilities to the host country. By sharing resources between the partners, joint
ventures not only economize on investment but also allow access to more highly developed resources and capabilities a firm
can create for itself. For example, the Freemove alliance formed by Telefonica Mobiles in Spain, TIM in Italy, T-Mobile in
Germany and Orange in France created a seamless third- generation, wireless communication network across Europe at a
fraction of the cost incurred by Vodafone. It also allowed each firm access to the mobile network of the leading operator in at
least five European countries.
Franchising is a contractual agreement between the owner of a business system and trademark referred to as the franchiser
that permits the franchisee to produce and market the franchiser’s product or service in a specified area. Franchising brings
together the brand, marketing capabilities and business systems of the large corporation with the entrepreneurship and local
knowledge of small firms. Examples of successful franchises include McDonald’s chain, Hilton Hotels and Seven-Eleven
convenience stores. Franchising facilitate the close coordination and investment in transaction-specific assets that vertical
integration permits with the high powered incentives, flexibility and cooperation between strategically different businesses.
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Under a Licensing agreement the licensing firm grants the right to another firm in the host country to produce or sell a
product. The licensee pays compensation to the licensing firm in return for technical expertise. This a especially useful
strategy if the trademark or brand name is well known, but the company does not have sufficient funds to finance its entering
the country directly. For example, Anheuser-Busch used this strategy to produce and market Budweiser beer in the United
Kingdom, Israel, Japan, Australia, Korea and the Philippines. This strategy is also important if the country makes entry either
through difficult or impossible investment.
The greater the difficulties of specifying long-term contracts for long-term customer deals, vendor partnerships can provide
the security needed for transaction- specific investments, the flexibility to meet the changing circumstances, and the
incentives to avoid opportunism. These arrangements can be entirely relational contract with no written contract at all. For
example, many Japanese firms use the vendor partnership to develop collaborative relationships with the suppliers of parts
and components for technology, design, quality and production scheduling.

The best way to explain the difference and implications between organic and inorganic growth for firms is through an example
.If company A is growing at a rate of 5% and company B is growing at a rate of 25%, most investors opt for company B. The
assumption is company A is growing at a slower rate than company B, and therefore has a lower rate of return. There is another
scenario to consider, however. What if company B grew revenues 25% because it bought out its competitor for $12 billion. In
fact, the reason company B purchased its competitor is because company B’s sales were declining by 5%. Company B might be
growing, but there appears to be a lot of risk connected to this growth, while company A is growing by 5% without an
acquisition or the need to take on more debt. Perhaps company A is the better investment even though it grew at a much
slower pace than company B. Some investors may be willing to take on the additional risk, but others opt for the safer
investment.
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International Market Selection

Once a business has developed core competences and strategies that can potentially be exploited globally, the decision
must be made as to where and how to employ them. When entering international and global markets, it will be necessary
to build new competences, alongside those, which have provided domestic competitive advantage. These new competences
are required in the areas of global sourcing and logistics, and global management.
The Internationalisation of a business does not happen overnight. It involves entry into key countries, with largest markets
first, followed by entry to less important countries later. Initial moves into international markets will involve market
development as these market segments can be regarded as new to the business. The initial market development may then
be followed by product development and later on by diversification.
An organisation wishing to "go international" generally faces three major decisions as follows;
• In terms of Marketing which countries are to be entered first?
• In terms of Sourcing which countries are value-adding activities to be located?
• In terms of Investment and Control which market development strategies are to be employed to gain entry to the chosen
overseas markets?

The marketing decision as to which countries and markets are to be entered first will be based on a number of important
factors such as,
The potential size of the market: is the market for the product likely to be significant?
Economic factors: are income levels adequate to ensure that significant number of people are able to afford the product?
Cultural and linguistic factors: is the culture of the country likely to favour the acceptance of the product to be offered?
Political Factors: what are the factors that may limit entry to markets in the host country?
Technological factors: are the levels of technology adequate to support provision of the product in the host market and are
technological standards compatible?
At the beginning, a business will chose to enter markets in those countries where the above conditions are most favourable to
the firm.
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Under Sourcing decision the company must determine within which countries they will locate key value adding activities of their
business that will gain cost, skill and resource advantages. In other words organisations will attempt to locate activities in
countries where there are production advantages to be gained. Such advantages will depend upon:
Wage levels: low wage levels will assist low production costs
Skill levels: there must be suitable skilled labour available
Availability of materials: suitable materials must be accessible
Infrastructure: transport and communication must be favourable to the logistics of the business
Finally on deciding the methods for Investment and Control the firm can choose either internal or external methods for
development of overseas markets. Internal methods are usually slower, but tend to entail lower risk. External methods involve
the business developing relationships with other businesses and entail a higher risk. The choice of the method will depend on a
number of factors such as;
• the size of the investment required or the amount of investment capital available
• knowledge of the country to be entered and potential risk involved (political instability)
• revenue and cash flow forecasts and expectations
• operating cost considerations
• control considerations (some investment options will have implications for the parent company to control activity in the host
country)

Internal development methods are based on the organisation exploiting its own resources and competences and
involve the organisation carrying out some of its activities overseas. This may be in the form of exporting its
products or setting up some form of production facilities abroad. The advantages under this method are that the
firm can maximise future revenue from sales abroad and there is a high degree of control over overseas activities.
The main drawbacks include the significant risk if knowledge of the host country and its markets are limited and it
requires considerable direct investment.
External Development Methods on the other hand involve the organisation entering into relationships with
businesses in a host country, and may take the form of strategic alliances or joint ventures, mergers and
acquisitions ,franchising and licensing. These methods often reflect ‘off shoring’ and have the advantage of
providing local knowledge and reduces operating and investment costs except in the case of Mergers &
Acquisitions. Possible drawbacks include reduced revenues , reduced control of activities and the trade off of
optimal income against the advantages of lower financial exposure.
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Cost benefits of Benefits of International strategy
scale replication Learning
Benefits
To compete
strategically
Serve Global
Customers
Exploit the National

Level 7 Diploma in Strategic Management and Leadership Resources 15

As more industries become global, strategic management is becoming an increasingly important way to keep track of
international developments and position a company for long-term competitive advantage. Following are some of the key
benefits organisations can achieve by going international.
Theodore Levitt in his article Globalisation of Markets has stated that forms that compete on a national basis are highly
vulnerable to companies that compete on a global basis. International players win out over the national competitors for two
reasons. First, supplying the world market gives access to scale economies in product development, manufacturing and
marketing. Second, the key barriers to exploiting these scale economies, locally differentiated customer preferences, are fast
disappearing in the face of the uniformity created by technology, communication and travel. In view of Levitt’s analysis of the
potential for global strategies and later contributions on the subject five major benefits of internationalisation are identified.
First, is cost benefits of scale replication. In industries where internationalisation occurs through direct investment rather than
exporting, the major cost efficiencies from international operations derives from economies in the replication of knowledge
based assets-including organisational capabilities. When a company has created a knowledge based asset or product whether it
may be a recipe, a piece of software or an organisational system, subsequent replication costs become a fraction of the original.
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For example, with Disney opening its Disneyland theme parks in Tokyo, Paris and Hong Kong, Disney can achieve significant
economies in developing new rides. Similarly, McDonald’s started its business within the USA and has replicated the outlets
across 200 countries throughout the world today.
Second is to serve Global customers. In several industries such as investment banking, audit services and advertising the primary
reason for internationalisation has been the need to serve international clients. Similarly the internationalisation of auto part
manufacturers has followed the internationalisation patterns of the auto assemblers.
Third, is the learning benefits. The learning benefits of international operations refer not only to the firm’s ability to access and
transfer localized knowledge but also integration of knowledge from different locations and creating new knowledge by
interacting with different national environments. For example, IKEA’s expansion has required it to adjust to the Japanese style ad
design preferences, Japanese modes of living, and the Japanese high quality consciousness. As a result, IKEA has developed its
capabilities with regard to both quality and design and has enhanced its competitiveness worldwide. Recent contributions to the
international business literature suggest that this ability of multinational firms to develop knowledge in multiple locations, to
synthesise that knowledge and transfer it across national borders is the greatest advantage over nationally focused companies.

Fourth benefit, is the ability to compete strategically. As history states the major advantage of the Romans over the Gauls, Goths
and other Barbarian tribes, was the Roman’s ability to draw upon the military and economic resources of the Roman Empire to
fight local wars. In the same way multinational firms possess a key strategic advantage over the nationally focused competitors.
For example, a multinational firm can fight aggressive competitive battles in individual national markets using their resources
specially their cash flows from other markets. This cross-subsidisation of competitive initiatives in one market using profits from
other markets involves predatory pricing- cutting prices to a level that drives competitors out of business although such practices
are against the World Trade Organisation’s anti-dumping rules and national anti-trust laws.
Fifth benefit is the firm’s ability to exploit the national resources. As we have already seen, internationalisation strategy does not
only involve production in one location and then distributing globally. International strategies also involve exploiting the
efficiencies from locating different activities in different places. Traditionally this meant search of raw materials and low-cost
labour. Increasingly it means a quest for knowledge. For example, among semiconductor firms, a critical factor determining the
location of overseas subsidiaries is the desire to access knowledge within the host country. Ghemwat refers to this exploitation
of differences between countries as arbitrage. Increasingly arbitrage is about exploiting the distinctive knowledge available in the
different locations rather than exploiting wage differentials by offshoring products to low-wage locations.
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Types of International Strategy

With the advent of the Internet and the ability of organisations to communicate and trade globally, independent of size,
internationalisation and the global context are central to many businesses. One of the most important considerations in the
development and implementation of a strategy is the extent to which the organisation’s activities, products and markets are
spread across geographical regions. While some businesses will be predominantly domestically based others operate in many
countries, and sometimes in almost all regions of the world
At the corporate level, firms choose to use one of three international strategies: multidomestic, global, or transnational
(transnational is a combination of multidomestic and global).These three strategies reflect trade-offs between local
responsiveness and global cost efficiency .At the same time for firms to gain a competitive advantage, they have to devise
strategies that take best advantage of the firm’s core competencies and that are difficult for competitors to copy.
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Multidomestic Strategy-
A Multidomestic strategy focuses on competition within each country and maximises local responsiveness. It assumes that the
markets differ and, therefore, are segmented by country boundaries. In other words, consumer needs and desires, industry
conditions (e.g., the number and type of competitors), political and legal structures, and social norms vary by country. Using a
multidomestic strategy, the firm can customie its products to meet the specific preferences and needs of local customers. As a
result, the firm can compete more effectively in each local market and increase its local market share.
The disadvantage of a multidomestic strategy, however, is that the firm faces more uncertainty because of the tailored strategies
in different countries. In addition, because the firm is pursuing different strategies in different locations, it cannot take advantage
of economies of scale that could help decrease costs for the firm overall. The multidomestic strategy has been more commonly
used by European multinational firms because of the variety of cultures and markets found in Europe.
Yum! Brands has a strong incentive to compete internationally with its restaurant concepts (i.e., KFC, Pizza Hut, Taco Bell, A&W
Restaurants, and Long John Silver’s). Yum! pursues a multidomestic strategy by trying to localize as much as possible. The firm
doesn’t open restaurants using only the US model. Wherever the company has locations, it consistently adapts to local tastes and
negotiates well when cultural and political climates change: “In Japan, for instance, KFC sells tempura crispy strips. In northern
England, KFC stresses gravy and potatoes, while in Thailand, it offers fresh rice with soy or sweet chili sauce.

Global Strategy-
One way to think about global strategies is that if the world is flat, you can sell the same products and services in the same way
in every country on the planet. The strategic business units operating in each country are assumed to be interdependent, and the
home office attempts to achieve integration across these businesses. Therefore, a global strategy emphasises economies of scale
and offers greater opportunities to utilise innovations developed at the corporate level or in one country in other markets.
Although pursuing a global strategy decreases risk for the firm, the firm may not be able to gain as high a market share in local
markets because the global strategy isn’t as responsive to local markets. Another disadvantage of the global strategy is that it is
difficult to manage because of the need to coordinate strategies and operating decisions across country borders. Consequently,
achieving efficient operations with a global strategy requires the sharing of resources as well as coordination and cooperation
across country boundaries, which in turn require centralisation and headquartered control.
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Although pursuing a global strategy decreases risk for the firm, the firm may not be able to gain as high a market share in local
markets because the global strategy isn’t as responsive to local markets. Another disadvantage of the global strategy is that it is
difficult to manage because of the need to coordinate strategies and operating decisions across country borders. Consequently,
achieving efficient operations with a global strategy requires the sharing of resources as well as coordination and cooperation
across country boundaries, which in turn require centralisation and headquartered control.
The cement and concrete industry is an example of an industry where the Global Strategy have taken effect. CEMEX, a Mexico-
based cement and building materials company founded in 1906, pursued an international business strategy that led to its growth
and position as one of the top building materials companies in the world today. CEMEX acquired companies to grow rapidly, took
advantage of economies of scale, and used the Internet to lower its cost structure. Perhaps most crucial to its international
expansion success was foreseeing the shifts in distribution technologies that would bring previously disparate regional markets
closer together.

Transnational Strategy-
The difficulty is that combining the multidomestic and global strategies is hard to do because it requires fulfilling's the dual goals
of flexibility and coordination. Firms must balance opposing local and global goals. On the positive side, firms that effectively
implement a transnational strategy often outperform competitors who use either the multidomestic or global corporate-level
strategies.
The Ford Motor Company and BMW are examples of firms pursuing a transnational strategy. Ford, for example, is focusing on the
“world car,” building one core car that will be sold globally. This strategy lowers Ford’s development costs, because rather than
developing different cars for different countries or regions, Ford will sell the same car to all markets. The ‘world car strategy’,
however, poses a major hurdle: how to design a car that appeals to consumers in many different countries. To tackle the issue,
Ford took a page from BMW, which uses the concept of “fashion forward” when designing its 3 Series cars for multiple markets.
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International Market Entry Modes

Direct Exporting
Many manufacturing firms begin their global expansion as exporters and only later switch to another mode for serving a foreign
market. This method reduces the often-substantial costs of establishing overseas operations and helps firms achieve experience
curve and location economies, by manufacturing the product in a central location and exporting it to other national markets.
However, this method is not advantageous if the location economies can be gained by moving manufacturing overseas and also
when the transport cost is high to make exporting uneconomical.
E.g: Direct Exporting was used by Sony to dominate the Global TV market, by Japanese automakers such as Toyota to make
inroads to the US market and South Korean firms such as Samsung to gain market share in the computer memory chips.
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Licensing
Under licensing the licensor grants the rights to use intangible property to a licensee under a licensing agreement for a specified
period, and in return the licensee pays a royalty fee to the licensor. Intangible properties include patents, inventions, formulas,
processes, copyrights, designs and trademarks.
E.g: When Xerox, inventor of photocopier, wanted to enter the Japanese market, the company was prevented in setting up a
wholly owned subsidiary by the Japanese government. To enter the Japanese market, Xerox formed a joint venture with Fuji
Photo that came to be known as Fuji Xerox. Xerox licensed its xerographic know-how to Fuji-Xerox and, in return Fuji paid a
royalty fee equal to 5% of the net sales revenue to Xerox from its sales of photocopiers. The license was Originally granted for 10
years but later on renegotiated and extended up to 10 years.

Licensing
Advantages:
The main advantage in this method is that the licensee puts up most of the capital required for the overseas operation and
thereby reduces development costs and risks involved in operating in a foreign market. In addition this method is suitable when a
firm possesses some intangible property that may have business applications, but is not willing develop the application by them.
Disadvantages:
Licensing has three key drawbacks. First, it does not give the licensor tight control over manufacturing, marketing, and strategy
that is required for realising experience curve and locational. Second, licensing by the nature of its agreement, limits the firm
from coordinating strategic moves that is required when operating in a global market by using the profits earned in one country
to support the competitive attacks in another. Third, the firm may face a risk in losing control of the technical-know how, if the
licensee copies and improves on the technology and uses it to enter the markets served by the firm (licensor).
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Franchising
Franchising is similar to licensing, however tends to involve long-term commitments than licensing. Franchising is a specialised
form of licensing in which the franchisor not only sells intangible property (often the Trademark) to the franchisee, but also agree
with the franchisee to run the property according to agreed conditions on an on-going basis and receives a royalty payment
which is often a percentage of franchisee’s sales or profits. Whereas manufacturing firms primarily uses licensing, primarily
service firms employ franchising.
E.g: MacDonald’s is a good example of a firm that has grown by using the franchising strategy. MacDonald’s has set strict rules as
to how the franchisee should operate the restaurant, extend control over the menu, cooking methods, staffing policies, and
design and location.

Strategic Alliances
Strategic Alliances refer to cooperative agreements between potential and actual competitors. Strategic Alliances may be formed
as joint ventures, in which two or more firms have equal stakes in the business (e.g., Fuji-Xerox) or short-term contractual
agreements, in which two companies agree to, cooperate on a particular task ,such as developing a new product.
E.g: When Warner Brothers wanted to produce and distribute films in China they entered into a joint venture with two Chinese
firms. As a foreign film company, Warner found that if it wanted to produce films on its own for the Chinese market it had to go
through a complex approval process for every film, and it had to farm out distribution to a local company, which made doing
business in China very difficult. Due to the participation of the Chinese firms, however, the joint venture films will go through
streamlined approval process, and the venture will be able to distribute any films the company produced. Moreover, the joint
venture will be able to produce films to Chinese TV, which was not allowed to foreign firms.
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Strategic Alliances
Advantages:
Strategic Alliances provides a firm with several advantages. First, they facilitate entry into a foreign market. For example, many
firms feel that if they are to successfully enter the Chinese market, they need a local partner who understands business
conditions and who has got connections. Second, they allow firms to share fixed costs and associated risks of developing new
products and processes.
Disadvantages:
First, Strategic Alliances provide competitors a low-cost route to new technology and markets. Second, wrong selection of the
partners that do not help the firm achieve its strategic goals. For example, they may not have market access or do not share cost
and risk of new product developments or do not provide access to critical competencies. Third, the alliance may not be
structured to an acceptable level where the acquiring firm does not give too much away to the partner. Finally, poor
management of cultural differences and integrating operations to achieve maximum synergy from the alliance results in the
failure of strategic alliances.

Joint Ventures
A joint venture entails establishing a firm that is jointly owned by two or more independent firms. Some firms, however, have
sought joint ventures in which they have the majority of the share and therefore tighter control.
E.g: Sony-Ericsson is a joint venture between Sony and the Swedish company Ericsson. Ericsson is the Swedish manufacturing
company of the telecommunications equipment while Sony is a mobile phone manufacturing company. Ericsson used to get
chips from Philips, but in March 2000, a fire destroyed the production facility of Philips. Facing an acute shortage of chips,
Ericsson was prompted to form a joint venture with Sony. On February 16, 2012, Sony acquired Ericsson’s share in the venture
and renamed the company as Sony Mobile Communications.
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Joint Ventures
Advantages:
Joint ventures have a number of advantages. First, a firm benefits from the local partner’s knowledge of the host country’s
competitive conditions, culture, language, political systems and business systems. Second, when the development costs and or
risks of opening foreign markets are high, the firms benefit by sharing these costs and risks with a local partner. Third, in may
countries political considerations make the joint ventures the only feasible entry mode. Research suggests joint ventures with
local partners face a low risk of being subject to nationalisation or other forms of adverse government interference due to local
partners having influence on host-government policy.
Disadvantages:
There are several disadvantages in Joint Ventures as well. First, as with licensing, a firm that enters a joint venture risks giving
control of its technology to its partner. Second, Joint ventures may not give a firm a tight control over its subsidiaries that might b
location economies. Third, the shared ownership arrangement can lead to conflicts and battles for control between the investing
firms if their goals and objectives change or if they take a different view as to what the strategy should be.

Wholly owned subsidiaries
In a wholly owned subsidiary, the firm owns 100% of the shares. Establishing wholly owned subsidiary can be done in two ways:
• set up a new operation in that country, often referred to as Greenfield venture
• acquire an established firm in the host nation and use that firm to promote products
Advantages:
There are several clear advantages of wholly owned subsidiaries. First, when a firm’s competitive advantage is based on
technological competence, this mode of entry will reduce the risk of losing control over that competence.( e.g: firms in semi-
conductor ,electronics and pharmaceutical industries etc.) .Second, this method provides the firm tight control over its overseas
operations. This enables the firm to engage in global strategic coordination i.e. to use profits earned in one country to support
competitive attacks in another. Third, the firm can realise location and experience curve economies and enjoy 100% of the
profits generated in the host country.
Disadvantages:
Disadvantages include the high cost and capital investment required to set up a wholly owned subsidiary and the risks associated
with doing business in a new culture.
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Acquisitions
In an Acquisition, the acquiring company obtains the majority stake in the acquired firm, which does not change its name or
legal structure.
Advantages:
Acquisitions have three key advantages. First, they are quick to execute and by acquiring an established enterprise the firm can
rapidly build its presence in the target foreign market.
Second, in many markets that are rapidly globalising acquisitions take place to preempt the competition. For example, in
telecommunications, where a combination of deregulation within nations and liberalisation of regulations governing cross-
border foreign direct investments are made, it is much easier for firms to enter foreign markets through acquisitions.
Third, managers believe acquisitions to be less risky than setting up wholly owned subsidiaries, as the company is acquiring a
firm producing a known revenue and profit stream.

Acquisitions
Disadvantages:
Acquisition fail due to several reasons:
First, the acquiring firms often overpay for the assets of the acquired firm. The price of the target firm can get bid up if more
than one firm is interested in its purchase, which is often the case. Second, a clash between the cultures of the acquiring and
acquired firm resulting in high employee turnover, resentment of the new management’s ‘way of doing things’ etc.
Third, the expected synergies by integrating the operations take a long time for realisation as the differences in management
philosophy and company culture can create many roadblocks that will slowdown the effective integration of operations. Finally,
many acquisitions fail due to inadequate pre-acquisition screening, as the acquiring firms do not thoroughly evaluate the costs
and benefits involved in the acquisition.
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Suitability of Strategic Choice

There will always be decisions to be made in business. These decisions will affect its operations, leading to either success of
failure. Having strategic alternatives will present more potential solutions to address the requirements of a business for its
success. These alternatives must be subject to analysis based on certain factors known as selection factors namely: the objective
and the subjective factors. Objective factors are based on analysis, facts or data that facilitates strategic choice. One example of
an objective factor selection is the market share, expressed as a percentage in the total market share of a company’s business in
its industry. Subjective Factors are based on personal judgments, collective or descriptive factors. One example of this is the
perception of a company’s top executives regarding the company’s business prospect in the next 3 to 5 years. (Kazmi, 2008)
Evaluating strategic alternatives should lead to a clear assessment of viable options. In practice, many factors affect ranking
strategic alternatives. A simple and systematic approach would be ranking (on a scale of 1-5) under six criteria namely:
competitiveness, controllability, compatibility, feasibility, impact and risk. The results should prompt some key questions to about
the alternatives (Joyce, Woods, 2001).

Risk vs. Return
Every strategy that is implemented by a business would include both risks and rewards. We can then evaluate strategic
alternatives through comparing them.
Every strategic implementation in a business always encounters uncertainties along the way. It is often thought that the greater
the risk, the higher the return. However, this is not always the case. We can try to maximise return by minimising the risk. This is
how it should be in business. When too much risk is involved, it also signifies ignorance of many contributing factors, which is
counterproductive.
The bottom-line is to always approach each strategy with care and calculation. We must also establish the viability of the strategy
that needs to be implemented. Strategies that face too much impediments in must be excluded, with focus on objectives that
need to be achieved for the success of the business.
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The Fund may be suitable for investors who have a short-to medium-term investment horizon, can accept short-term
fluctuations in account value and would like to diversify their portfolio with an alternatives investment option.
The alternative investment strategies that the Fund pursues are complex and may involve greater risk than traditional
investments (stocks, bonds and cash). The performance of alternative investments is not expected to correlate closely with more
traditional investments; however, it is possible that alternative investments will decline in value along with equity or fixed-
income markets, or both, or that they may not otherwise perform in accordance with expectations.
Alternative investments can be highly volatile, are often less liquid, particularly in periods of stress, are generally more complex
and less transparent, and may have more complicated tax profiles than traditional investments. In addition, the performance of
alternative investments may be more dependent on a sub-adviser’s experience and skill than traditional investments. The use of
alternative investments may not achieve the desired effect.

Foreign currencies and emerging markets involve certain risks such as currency volatility, political and social instability and
reduced market liquidity. Short sales by a Fund theoretically involve unlimited loss potential since the market price of securities
sold short may continuously increase. Leverage may increase the risk of loss and cause fluctuations in the market value of the
Fund’s portfolio to have disproportionately large effects or cause the NAV of the Fund generally to decline faster than it would
otherwise. To the extent that the investment advisor misjudges current market conditions, the Fund's volatility may be amplified
by its use of derivatives and its ability to anticipate price movements in relevant markets, underlying derivative instruments and
futures contracts. The Fund's currency investment strategy may be impacted by currency exchange rates, which can fluctuate
significantly over short or extended periods of time.
These changes may be caused by governmental or political factors that affect the value of what the Fund owns and its share
price. The Fund may experience high portfolio turnover, which may result in higher costs and capital gains. The Fund is a recently
formed mutual fund and has a limited history of operations. There can be no assurances that its objective will be met.
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Lesson Summary
Overall, you have learnt that the success of a company is strongly influenced by its ability to identify and implement
strategies which will help it in maintaining or enhancing its competitive position. Based on the above, you are now able to
formulate different alternative strategic options by analysing risk, profit, feasibility and suitability. You are now aware of
international strategies and international entry modes.
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Lesson 1: Marketing
Plan and Strategic
Objectives
Module: Strategic Marketing
Introduction
► In this lesson we will be focused on to explore the link and relationship between marketing plan and strategic objectives.
In doing so, the marketing tools and techniques will be discussed and will identify how they could support the strategy as
well as it’s impact on the marketing plan.
Secondly the marketing methodologies and approaches will be discussed contributing to a marketing plan of an
organisation. Finally the risks associated with marketing planning will be discussed.
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Learning Outcomes
1. Be able to understand the relationship between the marketing plan and strategic objectives
1.1 Critically evaluate how marketing techniques and tools can support the strategy of an
organisation and how this impacts on the marketing plan
1.2 Determine marketing methodologies and approaches that contribute to a marketing plan
within complex organisations
1.3 Address risk associated with the marketing plan
Lesson Objectives
1. Strategy and Strategic Objectives
2. What is a Marketing Plan
3. Market Orientation
4. Marketing Environment
5. Marketing Tools and Techniques
6. Marketing Methodologies and Approaches
7. Market Research
8. Risks associated with Marketing Planning
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Strategy and Strategic Objectives

Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its
configuration of resources and competences with the aim of fulfilling stakeholder expectations. (Johnson, G, Whittington, R and Scholes, K.,
2013)
The key level of Strategy are:
•Corporate level - Determine overall scope of the organisation and add value to the different business units while meet expectations of
stakeholders. This is the level which higher management or the board of directors define the things that the organisation should do.
Examples:
•Cost Leadership
•Product Differentiation

•Business level (Strategic Business Units) - How to compete successfully in particular markets. Mostly middle level managers get
involve in deciding business strategy. Examples:
•Market Development
•Product Development
•Market Penetration
•Diversification
•Operational level - How different parts of organisation deliver strategy. The middle level and lower level managers are involved
in deciding operations strategies. Examples:
•Reducing costs of materials with bulk purchases
•Automating parts of the production line
•Making the delivery component of operations more efficient could involve anything from improving warehouse layout to reduce
time and labor in fulfilling orders to obtain delivery contracts.
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The aims and objectives – both at the corporate and strategic business unit level – are often expressed in financial terms. They could be the expression of desired sales
or profit levels, rates of growth, dividend levels or share valuations.
The organisations also have market based objectives, many of which are quantified as targets such as market share, customer service, repeat business and so on.
Examples:
•Increase client satisfaction from 82.0% to 90.0% by December 31, 2020
•Improve corporate reputation by 10% by the end of the financial year 2021
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Example: Improve market penetration by 2% by the end of 2020
Example: Reducing the cost of operation by 5% by the end of financial year
Example: Increase Business to Customer sales by 4% by the end of 2nd quarter of the financial year.
several business units, each business unit would develop separate strategic objectives for themselves based on the
corporate objectives. Thereafter, business and functional objectives would have to be developed in order to specify the
scope and direction of the main functional activities leading to tactical objectives in the operational level.
What is a Marketing Plan

Planning is the process of trying to match an organisation’s capabilities to the opportunities around it. Planning is essential for
organisations to succeed in increasingly hostile and complex business environments.
Marketing attempts to satisfy external demand by understanding it and matching organisational resources to satisfy it. It is not
only about making use of opportunities and maximising returns, but it is also about minimising risk for the organisation.
Some of the benefits of marketing planning are as follows:

• It helps to achieves better coordination of activities: External opportunities can be matched to internal resources and
competencies.
• It increases the organisation’s preparedness to change: Marketing planning facilitates market research and forecasting, hence
organisations can identify opportunities and threats in advance. In turn, marketing planning reduces non-rational responses to
unexpected situations.
• It reduces conflicts in the organisation’s direction: Marketing plans are created after careful thinking and in agreement with many
individuals. Marketing plans help to reinstate goal congruence.
• It provides a framework for continuing the review of operations: A marketing plan has implementation and control targets
embedded.
(McDonald, 2008)
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The marketing plan as a means of conveying organisational purpose and future vision:
• Marketing plans help to convey the vision and the mission and implement strategies to achieve them. In most organisations, the
vision and mission are only known and followed by the senior management. Marketing planning helps to set direction among
lower level employees by setting appropriate objectives and controls that reflect the vision and mission.
• Marketing plans also act as a focal point of reference for all employees. While the vision and mission are broad in scope,
marketing plans effectively transform them into narrow tasks.
The marketing plan as a vehicle for setting direction and focus:
► The marketing plan shows the organisation’s current and future direction.
► A marketing plan incorporating a vision and mission maps the direction that the organisation should take, both now and in the
future.
► The mission provides a reference point in making strategic decisions and setting objectives.
► The marketing plan should be communicated widely if it is to provide the focus for both management and employees.

Marketing plan as operational framework:
► Sets out plans for each aspect of the strategies
► Outlines the strategies and tactics for the marketing mix
► Provides guidance for other functional areas
► Provides an effective route map for monitoring and controlling
► Identifies the timing of various activities
► Provides detailed guidance for the implementation of plans, activities, timing, resources and costs
► Provides a detailed plan for a range of activities
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Marketing plan as a method of resource and budget allocation:
► The marketing plan is helpful in identifying priorities. The marketing plan identifies which activities need to be carried out first and matches them with the
organisation’s resources. Therefore, it is helpful in making priorities to identify the critical activities in the organisation.
► The costs of all the activities should be incorporated into the marketing plan, within the budget. When the responsibilities are agreed upon, authority can be given
to departments and individuals to manage each aspect of the master budget.
The marketing plan as a vehicle for using digital media:
► Statistics (Ofcom, 2012) have revealed that the average time spent online per month per internet user stood at 23.5 hours in 2011. It also mentions that two-thirds
of internet users have accessed Facebook. These statistics emphasise the importance of digital media for marketing.
► Social media platforms, with Facebook itself having over 400 million users, present marketers with many opportunities. Social media can be used to provide great
customer service, obtain product/service feedback, create networks, promote products and services, and even to publish company updates.

Marketing plan as a tool for performance measurement:
A good marketing plan will identify not only the strategies and activities but also the deadlines by when they should be achieved.
► The marketing plan allocates time and costs for every activity. Therefore, it facilitates the measurement of actual performance
against the plan.
► The milestones set in the marketing plan facilitate the organisation to devise appropriate corrective actions, when negative
performance is detected.
► The marketing plan will identify various performance measures. Measures can be used to compare the performance of one period
against another, or to benchmark the performance of two different activities.
** we will be discussing the key components about the Marketing Plan in depth under Lesson 02.
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Market Orientation
Marketing has evolved through different phases over the years. The main streams of marketing evaluation can be identified
as follows:
►Production orientation: Under this approach manufacturers focus on making products available and affordable to the
customers. With the increase in competition, manufacturers start focusing on increasing the quality of the product by
adding more features and functions.
►Sales orientation: Here businesses focus on increasing their sales by changing consumers' minds to fit their products.
►Market orientation: Under this approach consumers’ needs and wants become central to all manufacturing and marketing
strategies.
A more recent addition to the evolution of marketing is the concept of societal marketing. This is where marketers take
responsibility for the welfare of the society as a whole and for the long-term sustainability of their activities.
Market Orientation
Marketing was not a widely practiced concept at the beginning of the 19th century, where the basis of production
orientation was that people will buy anything as long as it is cheap enough.
When commercial manufacturing of products and services began, the marketplace gave more priority to the basic needs
of consumers that were satisfied through the products.
The market players tried to make products that were affordable and available. Manufacturers produced higher volumes of
products to reduce the unit-cost and only then did they plan on how to sell them.
During this period, the market consisted of only a few suppliers and therefore consumers had a limited choice of products
and had to be satisfied with what was produced by the manufacturers.
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Market Orientation
What is marketing orientation?
► A business orientation or philosophy where the whole organisational success is dependent upon the efficient identification of
the needs and wants of target markets, and the effective satisfaction of them, is identified as marketing orientation.
► In a marketing-oriented firm, the customers’ needs and wants are at the centre of everything the firm seeks to achieve. A
marketing-oriented firm will aim to fit into customer requirements rather than trying to make customers fit into the
organisation.
► A further distinguishing feature of marketing orientation is that it incorporates the concept of collecting customer feedback.
By collecting customer feedback a manufacturer can acquire ideas on how to improve their products and services, and how
they can satisfy customers in a better way.
Market orientation was initiated by listening to what customers want. According to the nature of the customer requirements,
resources are allocated and only then are products and services manufactured.
The fundamental difference between this marketing orientation and other orientations discussed previously is that marketing
orientation looks at customer requirements first, before making any decisions.
Market Orientation
Current practice of market orientation:
Nestle practices marketing orientation, as they concentrate on their customers and try to understand their needs and
wants. They have a wide range of products that are consumed by all age groups.
Nestle focuses heavily on research and technological expertise to produce goods that are healthy and nutritious. Nestle
introduced low-calorie ice cream to consumers who are health conscious and also introduced sugar-free products such as
“Kit Kat Light”, as a result of a high level of market research and development.
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Marketing Environment
The following definitions help us to build a picture of the role of marketing in an organisation:
“Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements
profitably.” (The Chartered Institute of Marketing)
“The process by which companies create value for customers and build strong customer relationships in order to capture
value from customers in return.” (Kotler and Armstrong, 2010)
Organisations operate in an open system and they are influenced by the complexity and dynamism of the environment. In
order to be competitive, organisations need to think and make careful tactical and strategic decisions. Before marketing
planning takes place for an organisation, the internal and external environment of an organisation should be well
understood. Then only a suitable marketing plan could be planned and developed for an organisation.
The marketing environment consists of the factors and forces that affect a company’s capability to operate effectively in
providing products and services to its customers. The key areas of a company’s marketing environment are:
1. Internal Environment
2. Micro Environment
3. Macro Environment
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Internal Environment
The internal environment comprises of anything within the organisational context. The internal marketing environment is
best reviewed and presented as a SWOT analysis.
The key elements to consider under the internal environment of the organisation are vision, goals and corporate objectives
as part of the mission, the competitive advantages (over the competition), the organisation’s market share, the relevant
capabilities in each functional area of the organisation (HR, Sales, Finance, Admin, etc.),
The organisational assets and core competencies, the company culture, product and service portfolio, innovation within the
organisation, the current market position, past business performance and competitive advantages are also included under
the internal environment of the organisation.
Some of the key elements have been stated below:
Resources : These are the human resources structures, facilities, machinery, equipment etc., found within an organisation.
Unarguably, the human resources of an organisation can be considered to be the most vital of the organisational resources. It is only
through the effective acquisition and management of these resources that an organisation can define its sustenance in the
marketing environment.
Competencies : Assets, resources and competencies are closely linked in an organisation. The competencies are the skills within the
organisation that maximise the value of assets (CIM, 2014). They would include:
•Team competencies
•Organisational competence
•Individual competence
•Operational competence
•Functional competence
•Strategic competence
Organisational goals and objectives: These are often derived from the marketing plan and are focused on achieving the
organisation’s mission and exploiting the competitive advantage of the organisation. These objectives are reflected through the
strategic business unit and the corresponding business objectives. This will also be reflected through all departments - for example,
the marketing department would develop their marketing objectives in line with the overall organisational objectives.
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Micro Environment
The micro environment includes key stakeholders with a close, two-way operational relationship with the business. Thus the
micro environment can be controlled to a certain extent by the company.
Micro environmental forces are closer to an organisation, which has a direct impact on an organisation’s ability to serve its
customers, including suppliers, competitors, distributors, employees, creditors and capabilities of the organisation.
Normally the micro environment does not affect all the companies in an industry in the same way, because the size, capacity,
capability and strategies are different. For example, the raw material suppliers are giving more concessions to large sized
companies. However, they may not give the same concessions to small companies.
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Micro environmental factors include external factors which have a direct impact on the organisation's strategy. This includes the
following key stakeholders:
• Competitors - Other organisations attempting to sell similar products to meet similar customer needs.
• Employees - They are the internal stakeholders of the organisation.
• Suppliers - Those who provide the inputs to enable a business to produce products and services.
• Intermediaries - Those who make an organisation’s products available to their end-users.
• Distributors - These are the independent organisations that distribute the product/s of the organisation to the target market.
• Customers - Those whom an organisation wishes to engage in an exchange process, usually by selling them something.
• Shareholders - Individuals or groups who have invested capital in the business.
Macro Environment
The Macro environment comprises a complex set of uncontrollable variables which collectively form a framework within which
organisations conduct business. The key areas which would have an impact on the organisation are:
Political environment - Some government decisions affect business operations. The government alters conditions which might be
favorable or unfavorable to an organisation. The international environment and changes therein will also be analysed here.
Economic factors - The economy influences the total amount of money available to consumers and businesses to make purchases. It
affects the levels of income consumers retain to spend on themselves and has an impact on the amount of profit and cash that
businesses generate. Also, changes in interest rates, exchange rates, GDP and GNP, taxation and how it affects the business.
Social factors - This is the study of the measurable aspects of population structures and profiles, including factors such as age, size,
gender, race, occupation and location. Other factors such as increased mobility of labour; social marketing, representation of family,
international and cultural differences and changing social values are also considered here.
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Technological environment - Technology is a driving force for change in society and can be significant to the marketer for a
number of reasons. Technological changes can be external or internal. Some of these changes create breakthrough products
and can make other products become obsolete. Enhanced production capability techniques; product development;
enhanced and effective communications within service provision would be the focus here.
Environmental factors - Environmental issues have been of major concern in recent years, and have caused consumers to
think more critically about the origins, content and manufacturing processes of the products they buy. Therefore waste;
packaging; sustainability; climate change; and corporate social responsibility would play a pivotal role in the change of the
environmental landscape for organisations.
Legal factors - Legislations are formed to improve the well being of society. Governmental forces normally come as
legislations. They tend to have one of three objectives i.e. protect consumers from businesses, to protect society from
businesses, to protect businesses from each other. Therefore legislation such as Consumer Protection legislation and the Data
Protection Act.
Marketing Tools and Techniques

The marketing tools and techniques could be identified particular to each sub area that we discussed under the Marketing Environment. Once the key areas of the Marketing
environment – Internal, Micro and Macro are understood well only, the marketing planning could be done and it will be successful in the context of the organisation. This process of
analysing and trying to understand the environment of the organisation with the use of tools and techniques is known as marketing auditing.
A Marketing Audit is a comprehensive, systematic, independent and periodic examination of a company’s or business unit’s marketing environment, objectives, strategies and
activities with a view to determining problem areas and opportunities, and recommending a plan of action to improve the company’s performance. Kotler and Keller (2006)
It is a powerful tool for:
► Increasing the return on your overall marketing budget.
► Reviewing the marketing health of your business/organisation.
► Identifying weaknesses in your strategic plans.
► Providing a platform to build a productive and effective marketing strategy.
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According to Wilson and Gilligan (2005) the marketing audit has three purposes:
1. To identify the organisation’s current market position.
2. To understand the environmental opportunities and threats it faces.
3. To clarify the organisation’s ability to cope with environmental change.
The key outcomes from the audit can be summarised in the marketing plan and/or marketing strategy. A fundamental aspect
of marketing planning is the ability to identify and assess key changes in the business environment:
► Both now, and in the past, and into the future.
► Both internally within the business, and externally in the wider economy.

The audits are being conducted on all the key
environment types – Internal, Micro and Macro
environments. The environment is complex, • Organisations should conduct environmental
Scanning the environment
diverse and is changing continuously. audits to identify the factors affecting them.
Organisations should adopt a systematic
approach to scan the external environment and
• Organisations should monitor the changes
keep up with the changes. The key steps of a Monitoring
and identify opportunities and threats.
systematic approach in auditing are given below:
• The changes should be based on the available

Forecasting
information.
• The organisation should then assess the

Assessment potential impact of these changes on the
business.
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The tools and frameworks used to assess the Internal Marketing environment are:
• Product Life Cycle
• Porter’s Value Chain
• BCG Matrix
• GE Matrix
• Ansoff Matrix
• McKinsey’s 7s Framework
• 5M Model
• SWOT Analysis

Product Life Cycle
According to this model, products have finite lives and they progress through four common stages –
Introduction, Growth, Maturity and Decline. Analysing these stages helps to develop appropriate
marketing strategies and to monitor the progress of the product.
The following table illustrates how the marketing mix should differ from one stage to the other.
By analysing where each product or service falls under the key stages of the cycle, you could get a
good understanding and plan how to take the product to the next level when planning.
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Porter’s Value Chain
The value chain evaluates the value that each activity adds to the organisation’s products/services. It classifies activities
under primary and secondary categories. It states that the linkages among the activities are crucial for the organisation’s
success.

Primary activities: These are day-to-day activities which are directly concerned with the creation or delivery of a product or service.
These activities include;
►Inbound logistics –include receiving , warehousing and inventory control of input materials.
►Operations – are the value creating activities that transform inputs to the final product.
►Outbound Logistics – are the activities required to get the finished product to the customer. It includes warehousing , order
fulfillment etc .
►Marketing and sales – are those activities associated with purchasing the product including channel selection, advertising , pricing etc
►Services – activities that maintain and enhance product value including customer support , repair services , etc .
Support Activities: The primary activities described in the value chain analysis is facilitated by support activities. The supportive
activities include;
•Procurement – the function of purchasing raw materials and other inputs for value creating activities.
•Technology development – include research and development , process automation and other technology development to facilitate
value chain activities.
•Human resource management – the activities associated with recruitment, development and compensation of employees.
•Firm infrastructure – includes activities such as finance , legal , quality management etc .
When you analyse the organisations primary and secondary activities through the model a detailed insight on each area could be
obtained.
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BCG Matrix
The Business Consultancy Growth (BCG) is a two dimensional framework which allows organisations
to assess their performance or the standing of their products. This model can be applied at
corporate, SBU and product levels. The framework uses relative market share and market growth
rate to categorise products into four quadrants.

Based on the quadrant in which the products sits, organisations can consider the following strategies:
The BCG framework is often criticised as high market share is only one success factor for products and in practice, dogs
sometimes generate more cash than cash cows.
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GE Matrix

GE Matrix
The GE matrix is an extension of the BCG matrix for multinational organisations. Instead of market share and growth rate, it
considers industry attractiveness and business unit strength when categorising products and SBUs.
Industry attractiveness is measured through factors such as market size, market growth rate, market profitability, competitive
rivalry and entry barriers.
Business unit strength is measured through market share, customer loyalty, management strength, distribution strength and
production capacity.
The GE matrix is criticised for difficulties in valuing industry attractiveness and business unit strength and it does not
acknowledge the organisation’s core competencies or the interactions among the SBUs.
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Market / Industry Attractiveness
This dimension helps determine the attractiveness of the market by analysing the benefits a company is likely to get by
entering and competing within the market. A number of factors are studied within this analysis. These include the size of the
market, its rate of growth, profit potential, and the nature, size and weaknesses of the competition within the industry. Some
factors used to determine market attractiveness include:
►Long term growth rate
►Size of the industry

►Industry Profitability (Entry barriers, exit barriers, supplier power, buyer power, threat of substitutes etc)
►Structure of the industry
►Product life cycle
►Demand
►Pricing trends
►Labour
►Market Segmentation
►Business/Competitive Strength

The other main dimension that makes up this grid is the competitive or business strength of the company itself. An
assessment along this dimension helps understand whether a company has the required competence to compete in a
particular market. This can be determined by internal factors such as assets, market share and development of this market
share, brand position and loyalty, creativity, and handling of market changes and fluctuations. This can also be determined by
external factors such as environmental concerns, government regulations and laws, energy consumption etc. Some factors
that can determine this business/competitive strength include:
►Total market share
►Market share growth compared to competitors
►Strength of the brand
►Company profitability
►Customer loyalty
►Value chain
►Product differentiation
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Strategic options in GE matrix
1. Invest for growth: Strong or medium business strengths and medium or high industry attractiveness
2. Withdraw from the market or harvest: Market with low to medium attractiveness linked with medium to weak
business strengths
3. Manage selectively: Low business position linked with high industry attractiveness or vise versa.

Ansoff Matrix
Ansoff matrix is a tool that helps businesses grow via existing and/or new products, in existing and/or new markets.
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A marketing audit highlights the different probable conditions that a company would face in the future. The Ansoff matrix
is used with the strategic objectives to define the future directions of the business.
Ansoff’s product/market growth matrix suggests that a business’ possibility of growth depends on whether it sells new or
existing products in new or existing markets. Thereby the Ansoff matrix provides organisations with four strategic business
options:
• Market penetration
• Market development
• Product development
• Diversification
Through this matrix you are able to understand the business direction of the organisation for appropriate marketing
planning.

McKinsey’s 7s Framework
The 7S framework is a tool used to analyse the internal environment of an organisation.
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► Strategy: The plan devised to maintain and build competitive advantage over the competition.
► Structure: The way the organisation is structured and who reports to whom.
► Systems: The daily activities and procedures that staff members engage in to get the job done.
► Shared Values: Known as "superordinate goals" when the model was first developed, these are the core values of the
company that are evidenced in the corporate culture and the general work ethic.
► Style: The style of leadership adopted.
► Staff: The employees and their general capabilities
► Skills: The actual skills and competencies of the employees working for the company.

5M Model
Managing business organisations has always been a challenge since it became scientific. The earliest known accounts of
business management in man's existence tended to be crude, brutish, and short. Anything, and anyone, found to be an
impediment to any growth in entrepreneurship was either pilloried or guillotined off for 'progress' to be made.
Then came the industrial revolution. Slavery became abolished as people had causes to be more 'humane' in business. Man's
overuse had become juxtaposed with the gears and belts of machines. Things became manufactured at the touch of a
button. Materials were optimally utilised. Time became shorter and physical exertion of force required to create utility
became a thing of the past.
Since man became victorious in the industrial revolution, every business has been using these five Ms: man, materials,
machines, minutes and money; to operate with, or without, success.
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• Man: man, the first of the five Ms, is the most important. The right personnel for the right position is a sure bet for
organisational effectiveness and efficiency. Thus, lateness and absenteeism, unsafe acts, alcoholism, poor training,
incompetence are just some of the attributes of man at work that could rock business ventures. Human resources
determine the workings of the other four basic business resources. People make sure materials, machines, minutes and
money are utilised in a productive manner to achieve goals, aims, and objectives of organisations and enterprises. Poor
employment practices are inimical to the sustenance of such ventures. With the right man in the right job, a large portion
of effective business management will have been achieved.
• Materials: Without materials, human resource is made redundant. Thus every right thinking and right planning
organisation knows that materials needed for any business or service must be in place before 'man' can be of use in any
business activity. Supply chain departments grew out of this thinking and have been a very useful and effective aspect of
business management. A group of cement factory workers waiting for a supply of limestone may have nothing much to do
for as long as the supply does not arrive. Even if it arrives, but in poor quality, the production is certainly doomed for a
loss. Quality compromised brings down businesses. Poor quality of materials potentially ruins entrepreneurship.

• Machines: machines have made man fulfill almost effortlessly various dreams of creating things that make existence more
worthwhile. Machines have replaced man in tilling, planting, and harvesting. Man has been replaced by looms in cotton
and fabric processing. Countless other ventures requiring physical exertions of force has been taken over by things fixed
with gears, bolts and nuts and conveyor belts. Recently, computers joined in the fray of increasing production and
reducing the time spent by man for manufacturing and general production of goods and services. However, without man
and materials, machines will be useless. They need to be operated by man and fed with materials.
• Minutes: time management is one contemporary aspect of business that has been employed by effective and successful
business ventures to optimise delivery. As noted earlier, lateness and absenteeism of man at work is a large chunk of time
off production. Poor time management is as ineffectual as a broken down machine, an indisposed employee or lack of
adequate materials for production of goods or services. Various schemes have been used by successful enterprises to
ensure proper and efficient use of time by man and machine, including timely delivery of materials, to ensure business
sustainability. Compromising time is tantamount to a business venture shooting itself in the foot. There are many instances
to ascertain this truism.
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•Money: Without money, no venture or enterprise can motivate workers, get quality and sufficient materials, get the right
machines and maintain them or even ensure that time is properly managed. Money management, when not properly
organised has been the most known factor involved in the collapse of enterprises in history. The quantity and quality of
money expended in ventures has a direct bearing on the fruitfulness of the same over time. Accounts departments have
been revolutionised over the years, to ensure maximum operations of surviving business organisations. Where there is not
enough money or no good workers, materials or machines can be employed or purchased or acquired. In other words, such a
venture will be wasting its time existing in the first place.

SWOT Analysis
SWOT Analysis is a summarising tool used by organisations in the internal marketing environment.
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SWOT is an acronym used to describe the particular strengths, weaknesses, opportunities, and threats that are strategic factors for
a specific company. A SWOT analysis should not only result in the identification of a corporation's core competencies, but also in
the identification of opportunities that the firm is not currently able to take advantage of due to a lack of appropriate resources.
Therefore, this analysis which is engaged with the analysis of both internal and external environment as a scan of internal and
external environment is an important part of the strategic marketing planning process.
• Strengths: the strengths of a company are its resources and capabilities that can be used as a basis for developing the competitive
advantage. Examples of strengths include a strong brand name, market share, good reputation and expertise and skill.
• Weaknesses: the absence of certain strengths may be viewed as weaknesses. For example, the weaknesses could be low or no
market share, no brand loyalty and lack of experience.
• Opportunities: The opportunities or the chances that are available for the organisation in the external environment such as to
gain benefit, sell more, improve brand awareness, increase profits, start a new business, expand to a new market or improve
reputation are some of the examples for opportunities of an organisation.
• Threats: The external influences, pressures or risks aimed at the organisation could be called as threats.
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Once we have identified the opportunities and threats coming from the external environment, those opportunities and
threats again can be plotted in a matrix in order to have a clear understanding of each variable, and to weigh all those
factors according to importance.
Here, the opportunity will be analysed further based on the probability of the success and relative attractiveness. Those
which have a high probability of success and a high degree of attractiveness will generate a favorable outcome to the
organisation. They will need more attention from the decision makers. On the other hand, the factors that have a low
probability of success and a low degree of attractiveness will be the factors that need the company’s lowest consideration.
The threats that have been identified in the SWOT analysis will be further analysed through the threats matrix where the
threats are plotted on the matrix based on the likelihood of their happening and scale of the plotted damage. Here too,
the factors that are highlighted with a high probability of occurrence, and a high degree of negative impact for the
organisational performance (profit/ sales), needs to be the key consideration and the management should be able to have
a contingency plan in this regard.

SWOT Analysis for Walmart.
Strengths Weaknesses
- Powerful retail brand - Huge span of control
- Reputation for value for money products - Not flexible with some of the
- Core competency in use of information competitors
technology - Presence is relatively in few countries
- Human resource strategy on continuous
development
Opportunities Threats
- Market growth in Europe, India and - Being number one means that you are
China the target of competition, locally and
- Opportunity to continue with the globally.
current strategy of large, super centres - Increasing price competition from other
players in the market
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The tools and frameworks used to assess Micro Marketing environment are:
• Customer Analysis – Mendelow’s Matrix
• Competitor Analysis – Porters’ Five Forces, Competitor Impact Analysis
• SPICC Analysis
• Stakeholder Analysis - The power/interest matrix

Customer Analysis
Mendelow’s Matrix
This stakeholder map classifies stakeholders in relation to the power that they hold, and the extent to which they are likely to
show interest in the strategies of the organisation. The power-interest map can be used to indicate what type of
relationships the organisation should have with each of the groups.
There are four key categories:
► Minimal effort
► Keep informed
► Keep satisfied
► Key players
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Minimal effort (A) - this group of stakeholders have neither interest in influencing the organisation, nor the power to do so.
Therefore the group requires only minimal effort and monitoring. For example; small investors in a large organisation.
Keep Informed (B) - this group has high interest in influencing the organisation and its decisions, however they have low
power. Therefore these stakeholders are important for an organisation. They should be kept informed. They can be
important to influence the more powerful stakeholders. for example; the community, small suppliers
Keep satisfied (C) - this group is powerful but their level of interest in the strategies of the organisation is low. They are
generally relatively passive, but may suddenly emerge as a result of certain events, moving to group D on that issue. The
appropriate approach to keep such stakeholders satisfied is by ensuring that their needs are met and any concerns they may
have are anticipated and addressed before they become issues.
Key Players (D) - this group of stakeholders have high power and they are highly motivated to use it to their own benefit. For
example, major customers, key suppliers, external allies/partners. The appropriate strategy is to manage the relationship
closely.

Competitor Analysis
Porters’ Five Forces
Porter’s Five Forces model is a useful tool to analyse the competitive environment. It considers five main competitive areas
illustrated below:
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•Competitive rivalry, intensity of competition can be assessed through factors such as the size of the market, size of the
competitors, the amount of fixed costs incurred in operations and barriers to leave the market.
•Threats of new entrants refers to the new entrants coming to the market and can be encouraged through factors such as
absolute cost advantages, government policy, capital requirements, switching costs and access to inputs.
•Threats of substitute products can be assessed in terms of switching costs, price performance, buyer preference for
substitutes and trade-off of substitutes.
•The bargaining power of suppliers can be evaluated through suppliers’ concentration, differentiation of inputs, switching
costs of firms in the industry, threat of forward integration and availability of substitute inputs.
•The bargaining power of buyers can be assessed through buyer volume, availability of buyer information, significance of
brand identity in the industry, price sensitivity and level of product differentiation.

Competitor Impact Analysis
This is a simple technique that is used to assess the probable impact of specific environmental changes on an organisation or
its competitors. This measures the sensitivity of key parameters to change in environmental variables. Normally, an
organisation can produce a number of impact grids in order to provide an informative picture about the environmental
changes.
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Competitor Impact Grid - this analysis encourages the marketers to assess the effects of the environmental changes in
advance. The grid on the slide shows the effect of potential environmental changes on direct competitors in multiple
groceries, and the effect rated on the scale from + + + to _ _ _ with 0 representing the neutral situation, where a positive
score implies opportunity and improvement in profit, sales or competitive position. However, competitors vary in their ability
to hold up threats or exploit opportunity.
As for the grid shown in the slide, most of the competitors are affected by the tightened planning regulations. Aldi is a
relatively new entrant to the market and therefore has low impact from the food agency set up. On the other hand, the
serious recession tends to be of advantage to the cost-focused retailers such as Kwik Save and Aldi.
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SPICC Analysis
Under the SPICC analysis the below key areas will be researched and analysed.
► Suppliers
► Publics
► Intermediaries
► Customers and Markets
► Competition
Businesses look at everything within their immediate environment and then look outside at the overall industry to ensure
their long term sustainability. In marketing it is important because the organisation should be aware and need to know how
their message is reaching and being received by each of those segments. A SPICC analysis will help to determine what more
could be done for those key groups in order to build a stronger and sustainable brand when planning marketing for the future
financial years.

Stakeholder Mapping / Analysis
The Power / Interest Matrix
There are different ways in which stakeholder mapping can be used to gain an understanding of stakeholder influence. The approach to stakeholder mapping
identifies stakeholder expectations and power and helps in understanding political priorities. It underlines the importance of two issues:
● How interested each stakeholder group is in impressing its expectations on the organisation’s purposes and choice of strategies.
● Whether stakeholders have the power to do so.
The power/interest matrix describes the context within which a strategy might be pursued by classifying stakeholders in relation to the power they hold and the
extent to which they are likely to show interest in supporting or opposing a particular strategy.
The matrix helps in thinking through stakeholder influences on the development of strategy. However, it must be emphasised that how managers handle
relationships will depend on the governance structures under which they operate and the stance taken on corporate responsibility.
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For example, in some countries unions may be very weak but in others they may be represented on supervisory boards; banks may
take an ‘arm’s-length’ relationship with regard to strategy in some countries, but be part of the governance structures in others.
A laissez-faire type of business may take the view that it will only pay attention to stakeholders with the most powerful economic
influence (for example, investors), whereas shapers of society might go out of their way to engage with and influence the
expectations and involvement of stakeholders who would not typically see themselves as influential.
Key Players - The acceptability of strategies to key players (segment D) is of major importance. It could be that these are major
investors, but it could also be particular individuals or agencies with a lot of power – for example, a major shareholder in a family
firm or a government funding agency in a public sector organisation.
Keep Satisfied - Often the most difficult issues relate to stakeholders in segment C. Although these might, in general, be relatively
passive, a disastrous situation can arise when their level of interest is underrated and they suddenly reposition to segment D and
frustrate the adoption of a new strategy. Institutional shareholders such as pension funds or insurance firms can fall into this
category. They may show little interest unless share prices start to dip, but may then demand to be heard by senior management.

Keep Informed - Similarly, organisations might address
the expectations of stakeholders in segment B, for
example community groups, through information
provision. It may be important not to alienate such
stakeholders because they can be crucially important
‘allies’ in influencing the attitudes of more powerful
stakeholders, for example, through lobbying.
Minimal Effort - The "Minimal effort" stakeholders group

neither does have a high interest in organisational
information and decisions nor does have power to exert
much influence. The organisation should keep this group
informed as necessary, but should do it through the
"minimal effort" approach, not investing too much effort
into them.
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The tools and frameworks used to assess the Macro Marketing environment are:
•PESTEL
•Strategic Group Mapping

PESTEL
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Under the PESTLE framework the key external environmental factors such as political, legal, social, economic, technological
and environmental will be investigated and assessed in terms of their influence on the organisation and its progressive
activities.
•Political environment - The government alters conditions which might be favourable or unfavourable to an organisation.
International environment and changes therein will also be analysed here.
•Economic factors - The economy affects the levels of income consumers retain to spend on themselves and has an impact
on the amount of profit and cash that businesses generate. Also, changes in interest rates, exchange rates, GDP and GNP,
taxation affect the business.
•Social factors - Other factors such as increased mobility of labour, social marketing, representation of family, international
and cultural differences and changing social values are also considered here.

•Technological changes can be external or internal. Some of these changes create breakthrough products and can make other
products become obsolete. Enhanced production capability techniques, product development, and enhanced and effective
communications within service provision would be the focus here.
•Environmental factors such as waste, packaging, sustainability, climate change and corporate social responsibility would play
a pivotal role in the change of the environmental landscape for organisations.
•Legal factors tend to have one of three objectives, i.e. to protect consumers from businesses, to protect society from
businesses, and to protect businesses from each other – i.e. legislation such as consumer protection legislation and the Data
Protection Act.
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Strategic Group Mapping
Porter, 1980 defines strategic groups as the groups of firms in an industry following the same or a similar strategy along the
key strategic dimensions.
After identifying and analysing the competitors, they should be categorised according to the strategies they are pursuing. This
will be important especially for new organisations to identify where their main competitors are and to position themselves in
the market.
Factors that can be used to identify strategic groups include market share, product diversity, market position, market
segments served, distribution channels used, size, product range, and pricing.
Below is an example shown from the airline industry.
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Section Summary
At the very beginning of the presentation we looked at what is a Marketing plan, what is Market Orientation and how it
happened since the products and services were introduced to the world. Further the environment that an organisation
operates too have been discussed in order to get an initiation towards the core of the lesson – Tools and Techniques of
Marketing.
We have now completed learning and understanding what are the marketing tools and techniques of different
organisational environments – Internal, Micro and Macro levels. Each of the tools have been categorised under the key
areas depending on the analysis it brings out.
We are next going to look at the marketing strategies, the marketing research process and the risks related to marketing
planning within the organisation in a brief manner as we will be discussing them in detail in the next two lessons of this
module.
Methodologies and
Approaches,
Market Research,
Risks associated with
Marketing Planning
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Marketing Methodologies and Approaches

Under this section the key marketing strategies will be considered. The Marketing strategies address customers,
competition and internal issues of marketing planning. Hence, they should be used to fill the planning gap identified after
setting marketing objectives and conducting the marketing audit. Therefore, marketing strategies are used to achieve
marketing objectives based on corporate objectives, vision and mission.
Marketing strategies specify the ways to satisfy customer requirements. Firstly, market segmentation is done to identify
the customers in the market and their unique needs. Targeting and positioning help to provide products and services that
meet those unique needs and satisfy customers accordingly.

In filling the planning gap, organisations can continue to use existing strategies which have proven successful for the
organisation, while replacing unsuccessful strategies with new ones.
The success of a strategy depends on its suitability based on the organisation’s resources, competencies and capabilities as
well as suitability as per market characteristics.
There are four main types of marketing strategies as follows:
► Growth strategy – Based on Ansoff’s matrix
► Competitive strategy – Based on Porter’s generic strategies
► STP strategies – Segmentation, Targeting and Positioning
► Branding strategies – Based on brand pyramid or the brand iceberg
These will be discussed in depth under the Lesson 02 of the module.
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Marketing strategies as product ‘offers’
Marketing strategies not only benefit organisations, but they also ensure that customers receive relevant and beneficial product
and service offers.
Developing correct STP strategies ensures that customers receive relevant products and services that satisfy their needs.
Selecting proper growth strategies ensures that customers receive new products and services as well as attractive offers that
encourage them to stay loyal to the organisation.
Having a proper competitive focus helps customers in selecting the service providers that suit them the most. For example, one
customer for coffee would want different flavours and textures whereas another would want a simple coffee at the best price.

Identifying customers and offers for future development
While segmentation benefits organisations in identifying unique needs of customers, it also helps in bringing hidden and
unsatisfied needs to the surface.
If an organisation does not have a proper segmentation and targeting process, it will fail to understand the differences in
the needs of people and will not be successful in growth and future development.
In order to segment the market and come up with relevant marketing strategies, organisations should conduct market
research to identify areas for future product development.
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Marketing Research
The marketing research process
Marketing research costs time and money. The marketing research process outlines the steps
involved in undertaking a marketing research project. The process may look complicated yet the
degree of complexity depends on the nature of the research task.
Exploratory research expects to develop initial ideas and insights and then provide direction for
any further research required. It is only a basic investigation that does not involve much time or
cost. Usually, this research is used to define detailed objectives for subsequent marketing
research programmes.
Marketing Research
Market research for marketing planning
Alan Wilson, 2018 has laid out the steps of a

marketing research process.
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Marketing Research
1. Identify the problem or opportunity - Due to rapid changes in the marketing environment, it is necessary for marketing
managers to address new issues that may create opportunities or problems for their organisations. To understand the
exact information requirements, clear problem identification is essential. For example, new product development may
offer either potential business opportunities or huge financial costs. A drop in product range means that the product
range is out of date and needs an expensive restoration. This kind of issue raises questions that need to be answered
prior to making a decision. Therefore, the marketing research may assist in providing answers to some of these
questions.
2. Issue a research brief - Identification of research requires considering the ideas and suggestions of all personnel
involved in making and implementing decisions, based on the research results. Early feedback and input reduce issues
and complaints subsequent to the completion of research.
Marketing Research
The key areas to understand are:
•The occurrence which led to the decision that marketing research was required to understand the context. For instance, if a
company is keen to assess customer satisfaction levels subsequent to a sizeable drop in sales, the management would be
keen on assessing the customer behaviour towards products, rather than simply conducting research to obtain inputs for
performance measurements.
•The alternative courses of action available to the organisation. It is important to define the problem clearly to identify
alternative solutions. Usually, there is a danger of including peripheral research questions, which may significantly change the
nature of the project. Due to such occurrences, the research may lose focus.
•The individual pieces of information that are required to evaluate alternative courses of action.
•The timescale within which decisions have to be taken and the budget available.
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Marketing Research
As per Chartered Institute of Marketing, 2019 official terminology, a research brief is the description of a research problem used to
inform potential suppliers of solutions. Therefore it provides the specification with which the researchers will design the research
project. The research brief consists of the following elements:
•Background – This section should set out a brief explanation of what is happening within the organisation.
•Project rationale – Sets out the reasons for the research being required.
•Objectives – Sets out the precise information needed to assist marketing management with the problem or opportunity.
•Outline of the possible method – States the broad indication of the approach to be undertaken in the research.
•Reporting and presentational requirements – This sets out how the research progress will be updated in terms of interim reports,
and how the final research findings will be presented, i.e. how many hard and soft copies and the need for an oral presentation.
•Timing – Sets the time-scale for the proposal submission and research completion.
Marketing Research
3. Develop a proposal and research design & Agency selection
Develop a proposal and research design - On submission of the research brief, a research proposal will be developed. This is
the submission prepared by the research agency for a potential client, specifying the research to be undertaken. Based on
the research proposal, the client will select an agency to undertake the research. The proposal then becomes the contract
between the agency and the client company. Just like the research brief, the research proposal is also very important.
The research proposal needs to include details on the company background, research rationale, objectives, approach and
method, reporting and presentation procedures, timing, fees, personal CVs and related experience, and references. All these
details have to be presented from the research agency’s perspective.
Agency selection - When a client organisation presents the research brief, potential research agencies present their research
proposals. After assessing the proposals put forwarded, the client company will select the agency.
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Marketing Research
After selecting the most suitable agency, the actual research will be undertaken. In this regard, formulation of suitable
research objectives is vital as these objectives provide the necessary guidance. Based on the research problem and
objectives, a suitable methodology has to be laid out. The following sequence is followed:
4. Collection of Secondary data (internal, external)- This is information that has been previously gathered for some other
research purpose. There are two basic sources of secondary data: internal data and external data. Internal data is available
within the organisation, e.g. sales reports, information from customer loyalty cards and marketing information systems.
Whereas external data is information available from published and electronic sources originating outside the organisation,
e.g. government reports, newspapers, the internet and published research reports.
5. Collection of Primary data – This is collected through a programme of observation and qualitative or quantitative research,
either separately or in combination. Quantitative research uses a structured approach with a sample of the population to
produce quantifiable insights into behaviour, motivations and attitudes. Qualitative research uses an unstructured research
approach with a small number of carefully selected individuals to produce non-quantifiable insights into behaviour,
motivations and attitudes.
Marketing Research
Piloting and data capture – All primary research should be tested to see that the data collection methods are sound. Pilot
questionnaires assist in developing the structure and question sequence. They ensure that the data collection device is
effective. ‘Fieldwork’ is the generic term used for data collection. It may cover the collection of a range of data.
Data input, coding and editing - Data which is gathered from respondents must be recorded and edited to produce a data set
that can be analysed. In qualitative research, it is the production of a transcript of the interview, and in quantitative work it is
the creation of a data set that the computer can work with. All potential responses must be given a different code to enable
analysis. Data is checked for completeness and consistency, and if there are significant problems the respondent may be
called back to check details.
6. Data analysis - Data analysis may differ from project to project, depending on data collection methods, and also on the
expected use of the findings. The data used for analysis should undergo validation, editing and computer data entry. It may
then be tabulated or analysed using a wide variety of statistical and non-statistical techniques before being fed into any
presentation of the research results.
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Marketing Research
7. Results and findings, Presentation and recommendations
Results and findings - Based on the research findings, marketing decisions should be made. Research findings need to be
clearly presented to solve the research problem. Thus, results need to be presented in a manner that can be accessible to the
audience.
Report/presentation - Research results will be presented in the form of a written report, and it may be supported by an oral
presentation. The supporting data will also need to be presented but this should be in the appendices. The body of the report
remains solutions-focused. Members must ensure that research conclusions disseminated by them are clearly and
adequately supported by data.
Business decision - The output should be marketing decisions that are made at reduced risk, and a feedback loop to the
business situation should exist.
Risks associated with Marketing Planning

There are several drawbacks, weaknesses and malfunctions that are inherited within the organisations which could act as
risks for marketing planning within the organisation. Some of the key areas that could be identified are:
•Managerial, organisational, and cultural shortcomings
•Planning inadequacies
•Poor and inadequate organisational resource
•Lack of innovation
•Ability and willingness to utilise digital media when the knowledge is lacking
•Failure to integrate into corporate planning systems
**We will be looking at risks and their mitigation in depth under lesson 02.
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Lesson Summary
In this lesson you have covered the key areas that help you to understand the relationship between the marketing plan and strategic
objectives. We first understood the background of the marketing orientation, marketing planning, strategic objectives and marketing
environment and then moved into exploring marketing tools and techniques thus supporting the thinking of you towards critically
evaluating how marketing techniques and tools can support the strategy of an organisation and how this impacts on the marketing
plan.
Towards the latter part of the lesson we have discussed and developed knowledge related to determining marketing methodologies
and approaches that contribute to a marketing plan within complex business organisations. The lesson has been concluded by briefly
discussing the risks associated with the marketing planning.
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Lesson 2: Strategic
Marketing Plan
Module 7: Strategic Marketing
Introduction
In this lesson we will be focused on to identify and understand the key components of a Marketing Plan, the risks related
to each stage of the plan and how to mitigate them successfully .
Further, the achievement of the strategic objectives through the marketing plan also will be considered under this lesson.
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Learning Outcomes
2. Be able to produce a strategic marketing plan
2.1 Critically analyse the components of a marketing plan and the levels of importance of each component to the
achievement of strategic objectives
2.2 Address mitigation strategies for high risk components of the plan
2.3 Develop a marketing plan that will achieve strategic objectives for a complex organisation
Lesson Objectives
1. Components of Marketing Plan
2. Risk Mitigation
3. Achieving strategic objectives through marketing planning
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Components of Marketing Plan

SOSTAC Models
A marketing plan consists of six main stages:
1. S – Situational analysis (Marketing Audit)
2. O – Objectives (setting marketing objectives based on corporate objectives)
3. S – Strategies (marketing strategies)
4. T – Tactics (marketing mix)
5. A – Action plan (budget, timescales and responsibilities)
6. C – Controls

1. Situational analysis: The first stage of the marketing plan is to identify the current situation surrounding the organisation through a comprehensive marketing
audit.
2. Objectives: The second step is to develop SMART marketing objectives based on the corporate objectives and the findings of the marketing audit. The
marketing objectives should focus on areas such as market share, sales, new product development, market development, etc.
3. Strategies: Once the objectives are determined, marketing strategies should be developed to achieve them. Marketing strategies include mainly growth
strategies, competitive strategies, segmentation, targeting and positioning strategies, branding strategies and international strategies.
4. Tactics: Tactics include the activities used to achieve the set marketing strategies. In this stage, the organisation should devise tactics for the marketing mix
elements.
5. Action plan: The next step is to decide the timing of the recommended activities and to allocate a responsible person and a budget for each activity.
6. Controls: As the last stage of the marketing plan, controls have to be set, based on critical success factors and marketing objectives.
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Situational Analysis
As the Situational Analysis or the Marketing Audit has been discussed under the lesson 1, now the focus of the
detailed discussion should be on objective formulation for the Marketing Plan.
After conducting a marketing audit, marketing objectives have to be set to minimise the planning gap.
Planning gaps highlight what needs attention and objectives help to prioritise what should be done.
Gap is the difference between corporate objectives and current performance.
Organisations have to set appropriate strategies to close the identified planning gap. The marketing strategies
should be carefully selected since organisations have finite resources, which makes prioritisation a key.
Therefore, marketing objectives play an important role in portraying direction and order of importance for
opportunities.

Marketing Objectives
Marketing is now accepted as a strategic discipline or general management function and in this respect must care for the health of a business in the future - especially
against competitive influences.
Successful marketers must be concerned with every aspect of their business, including future project and other areas of their industry. Successful companies are
setting strategic marketing objectives for five or ten years and more in advance, and often know as much about their competition as they know about themselves.
Strategic marketing objectives take into consideration the long-term planning horizons of the company, thereby focusing on the longer term business aspect of the
company.
They also pay attention to the commitment of company resources, e.g. the kind of resources required by the company in the long term to achieve its objectives, and
how the existing resources of the company can be used and improved to achieve those objectives.
Strategic marketing objectives determine the nature of an organisation (according to the type of business it is in), what it should be in the future, and the expectations
of stakeholders.
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They also affect and involve all the levels, functions and activities of a business.
Strategic marketing objectives also reflect both internal (company) and external (environmental) considerations, since strategic marketing planning takes
both internal company aspects and external environmental considerations into account to plan the overall direction of the business.
Objectives need to be SMART
► Specific – The objective should be simple and clear. It should include precise terms.
► Measurable – The objective to be achieved must be numerically measured. Without numeric measurement it is impossible to identify how much has already been achieved from the objectives.
► Achievable – The company or the staff should be well aware of the resources or capabilities they posses to reach a certain level. If it seems to be unachievable it would simply be ignored, or the
company should strive to allocate the necessary resources.
► Realistic – The objectives that have been set need to match with the organisational values and beliefs. Achieving the objective must contribute to the company’s success.

► Time-bound – Without a time frame, no task can be effectively completed. If there is no time scale,
achieving the objective can continue indefinitely and there will be no way of measuring success.
An example of a SMART marketing objective is as follows:
Increase the market share of product A by 20% within the next two years
The above objective is:
► Specific – It’s simple, clear and can be easily understood.
► Measurable – It’s quantified (the increase expected is clearly stated as 20%)
► Achievable – Achieving a 20% increase within two years is not an over-ambitious target
► Realistic – An increase in market share contributes to the organisation’s success
► Time bounded – The period within which the objective has to be achieved is clearly stated
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Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives.
In filling the planning gap, organisations can continue to use existing strategies which have proven successful for the organisation, while replacing
unsuccessful strategies with new ones.
The success of a strategy depends on its suitability based on the organisation’s resources, competencies and capabilities as well as suitability as per
market characteristics.
Plans and objectives are generally tested for measurable results. Commonly, marketing strategies are developed as multi-year plans, with a tactical plan
detailing specific actions to be accomplished in the current year.
Once the marketing objectives are set, the organisation should examine the alternative options that are available to achieve the set objectives.
Alternatives can be evaluated based on the suitability, acceptability and feasibility framework.

There are four main types of marketing strategies as follows:
► Growth strategies – Based on Ansoff’s matrix
► Competitive strategies – Based on Porter’s generic strategies

Growth strategies
► Branding strategies – Based on brand pyramid
Growth strategies can be determined with the
use of Ansoff’s growth matrix. It compares
products and markets and offers four strategic
options.
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Ansoff’s strategic options available:
1. Market penetration: This means selling existing products to the existing market. It requires aggressive marketing activities and has the least risk.
2. Market development: This means offering an existing product to a new market -new segments, new distribution channels and overseas markets.
3. Product development: A new product is offered to an existing market. Product development can also be incremental where substantial changes are made to
existing products.
4. Diversification: New product is offered to a new market and this involves high risk. This can be related (some connection with existing activities) or unrelated (there
is no connection with existing activities).

Competitive Strategy
Competitive advantage is a unique feature or a sustainable platform from which exists with the organisation and business to
compete with competitors and stand out from the crowd. Porter’s generic strategies can be used to determine the most
suitable competitive strategy for an organisation.
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Porter’s Generic strategies are explained as follows:
► Cost leadership: This involves achieving a competitive advantage by operating at the lowest cost possible. Infrastructure (such as
technology, skills and government grants), relationships (such as efficient supplier management) and economies of scale help organisations
gain cost leadership.
► Product differentiation: This involves achieving competitive advantage by selling a highly differentiated product. The drivers of
differentiation are product augmentation (basic product is enhanced by adding more values), product perception and product performance.
► Focus: This is where an organisation gains competitive advantage by catering to a smaller or niche segment. The drivers of focus strategy
are product and service specialism (differentiated products or premium products are produced for the customers), geographic
segmentation (local market may be the base for the production) and through end-user focus (focus on the specific needs of the end user).

The best practices in selecting a competitive strategy:
► Organisations should have one clear strategy rather than a mix of strategies. If they are unable to move forward with one
strategy, we use the term ‘stuck in the middle’ to describe them.
► After selecting a particular strategy, organisations should make it sustainable. According to Drummond et al. (2008), for a
strategy to be sustainable, the following criteria should be met.
 Relevant to the current and future needs of the market

 Defensible, which means barriers for copying should be skill based and asset based.
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Segmentation Targeting and Positioning Strategies (STP)
Segmentation
After deciding about the growth and competitive strategies, the next step is to decide about the segmentation, targeting and positioning strategies.
► Market segmentation is the process of grouping customers in markets with some heterogeneity into smaller, more similar or homogeneous segments.
► Segmentation is important for an organisation as it does not have finite resources. Therefore, it needs to make the maximum use of those rare resources.
► The concept of segmentation is applied to both consumer and business markets. Business markets tend to be complex because the decisions are made by Decision
Making Units (DMUs).

The following variables can be used to segment the consumer markets:
 Geographic segmentation: Organisations can segment according to continents, regions, countries, cities, towns and villages. This is important for organisations doing
international marketing. Geographic segmentation is used in combination of other forms of segmentation.
 Demographic segmentation: This is the segmentation based on demographic factors such as age, gender, income, family lifecycle, and social class.
 Psychographic segmentation: This is also called lifestyle segmentation and looks at variables such as beliefs, opinions, motives and aspirations. It is also used in combination with
other variables.
 Behavioral segmentation: This is where organisations use variables such as benefits sought, loyalty, buyer readiness stage, usage rate and attitude to segment a market.
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The Business to Business market (B2B) can be segmented using criteria such as:
► Size: Customer organisations can be categorised into groups based on their size, e.g. small, medium and large.
► Business sector: Most often, B2B organisations segment their customers based on the industry in which the customer
operates, e.g. finance, insurance, banking, etc.
► Age: Customer organisations can also be segmented based on their age, i.e. the number of years they have been in
existence, e.g. 3 years, 5 years, or 10 years.
► Product application: Customers can also be divided into groups based on how they intend to use the product offered by
the organisation. For example, a simple intranet can be used by one company to improve internal communication, another
as a tool to connect with its suppliers and partners and another would use it purely for enhancing reputation.

There are four different types of markets. It is important for an organisation to define its markets before segmenting since
the variables used differ from one market to the other.
► Local markets: Local markets include the closest competitors and customers for a product or service. Some products
compete in local markets which might limit to a single geographic area such as a rural village in India.
► National markets: National markets include an entire country. Some products compete at national level where they offer
products across all geographic areas in a country.
► International markets: Some products compete in international markets, where products are sold to customers across two
to three different countries.
► Global markets: Global markets include majority of countries in the world. Products which are commonly sold in global
markets are FMCG products from companies such as Unilever and Procter and Gamble.
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The conditions for successful segmentation are:
► Organisations should avoid over segmentation as it negatively affects profitability. Moreover, it also makes the customer
feel confused about the organisation and the product. Therefore, this should be avoided.
► Competition has to be analysed according to Michael Porter’s Five Forces analysis (Bargaining power suppliers, bargaining
power of buyers, barriers to entry, threat of new entrants and threat of substitute products) before segmentation. The
actions and reactions of competitors are equally important in segmenting.
► Market factors such as the current and future size of the segment, customer reactions to price changes, seasonal patterns
of demand and stage of the product life cycle have to be considered when selecting segmentation variables.

Profiling Segments and Defining Customer Types:
Customer profiling plays an important role in segmentation. It involves creating a personas of type of customers by describing their common characteristics. Some of
the questions that can be used to develop personas are:
► What do we help them to solve?
► What are their demographics?
► How do they spend their day?
► What do they value most?
These types of customers represent the typical users of a product or service. For example, in the retail fashion industry, organisations use fit on models to get average
measurements for small, medium, large, etc. Likewise, the personas help to define the specifics of each type of customer.
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Contemporary methods of Segmentation are:
With buyer sophistication, defining the types of customer has become an increasingly difficult task. Some of the new
methods of segmentation are:
► Contextual segmentation: This involves segmentation according to contexts of purchasing, using/consuming. For example,
a diner can segment its visitors based on the secondary purpose of the visit and whom they accompany. Some diners
come for celebrations with friends and family while others come with colleagues for social image.
► Psycho-behavioural: This is where organisations cluster their customers based on purchase motivations as well as
purchase behaviour.

United Airlines has identified some unique segment profiles:
► Schedule optimisers: They must reach their destination by a certain time and select their flights accordingly.
► Corporate troopers: They use an airline and a class of travel that has been chosen for them by their company.
► Mile accumulators: They go out of their way to take flights that will build up their air miles entitlement.
► Reluctant travelers: They do not enjoy travel and look for services that will make the experience bearable, e.g. special privileges and frequent flyer programmes.
► Tour takers: They want everything arranged for them.
► Quality vacationers: They treat the travel as part of the holiday experience and thus fly with carriers that provide superior services.
► Travel seekers: They love to travel and seek out new experiences. They want their travel to be comfortable.
► Frugal flyers: They seek out the lowest cost carriers, but still expect their flight experience to be a good one.
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Once segments are defined using appropriate criteria, they must be evaluated under the following criteria to qualify them as
suitable for targeting.

Targeting
Once the audience is segmented using appropriate criteria, the next step is to determine a target based on a targeting strategy. There
are three main targeting strategies that organisations can select from:
 Undifferentiated marketing: In this case, the organisation can ignore the market segment differences and cater to the whole market using
one marketing mix.
 Differentiated marketing: The organisation can operate in several market segments and designs different marketing mixes for each
segment.
 Concentrated marketing: This is the most focused approach and the organisation specialises in serving one specific market segment.
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Targeting strategies evaluated:

Factors that should be considered when selecting a targeting strategy:
► Resources available: It is important for an organisation to use limited resources in developing one segment. Therefore, allocation
of resources should be carefully looked at.
► The nature of the market: If the market is homogeneous, it would be appropriate to use undifferentiated strategy.
► The competition: Identify the targeting approaches of competitors and need to explore the opportunity for a different approach
► Product life cycle stage: At the introductory stage, the company may offer only one product variant and at the later stage, it may
offer several product variants to the market. Therefore, the lifecycle stages also play a part in adopting targeting strategies.
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Organisations have finite resources. Targeting ensures that the finite resources are used in the most efficient manner.
Therefore, the appropriateness of the targeting strategy and the segments selected determine the output of the resources.
Targeting facilitates a focused effort for organisations where they can offer individualised attention to core needs and wants
of a selected segment or segments.
Resources will not be wasted as in mass marketing since the focus will only be on the most relevant audience. For example, a
premium airline can focus its efforts on high income travellers instead of trying to accommodate the needs and wants of all
kinds of travellers such as families, budget travellers, etc.

The following criteria can be used to evaluate the suitability of a segment for targeting both internally and externally:
► Size: The size of the segment should be substantial and manageable.
► Growth: The segment should not be in a maturity stage and should have the potential for growth.
► Profitability: The cost of serving the customers in the segment should be lesser than the revenue that can be earned
through the segment.
► Relationship potential: While some segments aim to create a long term relationship, others prefer to engage in a one off
transaction. Their relationship potential should match the aims and objectives of the organisation.
► Competition: If the segment is served by many competitors, the possibility of obtaining market share will be challenging.
Therefore, competition in the segment should be manageable.
► Capabilities: The needs and wants of the segment should match with the organisation’s capabilities.
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Segments can also be evaluated using the Shell Directional Policy matrix. The matrix compares the market segment’s
attractiveness with business strength to highlight lucrative segments that are suitable for targeting.
► The market segment attractiveness (business sector prospects) is determined by profit potential, market growth rate,
market size and strength of competition.
► Business strengths are determined by market share, potential for differential advantage, potential cost advantages and
brand image.
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► When selecting the target market/s suitable for company, the firm must consider two aspects:
► Overall attractiveness of the market: First, the organisation should decide whether the market segment is attractive
in terms of size, growth, profitability, relationship potential, competition, risk, scale economies, etc.
► Capabilities of the company: Then, the organisation should evaluate whether investing in that particular market
matches its objectives and capabilities. Certain attractive segments are often rejected by the management since they
do not fit the company’s objectives.
► Freytag and Clarke (2001) have developed a model for selecting suitable segments as target markets.
According to them, the selection decision is based on a combination of the future attractiveness of the
segment, the resources available to the firm and the firm’s strategy.

As the first stage, the organisation should consider the future
attractiveness of the segment. This includes the current size
and its potential growth opportunities of the selected market
segment. It is important to note that future attractiveness of
the market is much more important than its current level of
attractiveness.
As we have already discussed, an organisation cannot simply

select a market which is attractive (now or will be attractive
in future). It also needs to consider resource constraints.
Therefore, as the next step, organisations are required to
decide the demand for resources and capability of company
to satisfy those demands.
As the third step, organisations are required to consider their

strategy. The selected market segment should fit the overall
strategy/ direction of the company.
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► When deciding about the position of a product/ brand, the organisation should ensure that it has sufficient Point Of
Difference (POD). POD is the number of differentiated and unique attributes that the product/brand has when compared
to the competitor’s offering.
► Organisations should have an appropriate balance of POP (Point Of Parity – what the product should contain to be similar
with other offering) and POD. Too much focus on POP results in a ‘me too product’.

Positioning
Once a suitable targeting strategy is identified, the next step is to determine a positioning strategy.
► Positioning is the act of designing the company’s offer and image so that it occupies a distinct and valued place in the
target customers’ minds. (Kotler, 1996)
► There are four main positioning strategies that organisations can select from: corporate positioning, product positioning,
market positioning and repositioning.
► The positioning strategy should be adjusted when the product and market is matured. Emergence of new technology,
evolving competition and changing customer needs and wants often require changes to the positioning strategy.
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The four main positioning strategies are as follows:
► Corporate positioning: This is where the organisation is positioned as a whole.
► Product positioning: This is where the individual products are positioned separately.
► Market positioning: This involves positioning based on market attributes such as user profiles, competitor products, etc.
► Repositioning: Changing the identity of a product or an organisation

Criteria for effective positioning:
► Importance: The differentiation points should be important and understood by the majority of customers.
► Profitability: The profits derived from the differentiation effort should lead to covering the costs of investment and generate profits.
► Distinctive: The product can not be copied by rivals, or it must be difficult to be copied.
► Superior: The customer should be able to receive the expected benefits.
► Affordable: Customers should be able to pay for the product.
► Communicable: The difference can be easily communicated to the customers and they should be able to understand it.
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Marketing mix should play a crucial role in positioning
► Product
 The relevance of product benefits
 The position of branding
 Compatibility of new products with positioning
► Price
 The reflection of quality by the price
 The reflection of value for money
► Promotion
 Reflection of positioning through promotion

Relevance of communication channels
 39

Positioning and repositioning in practice:
► Positioning should be adjusted when the product and market are matured.
► Products have to be constantly appraised and reviewed to sustain their competitiveness in the market.
► Repositioning is done through pricing, promotion or distribution without making changes to the product.
► Main areas for repositioning
 Quality: Changing the quality of the product can be either towards relatively higher quality or relatively lower quality.
 Design: This may involve changing the visual appearance or the packaging and the presentation of a product.
 Performance: This may include issues such as convenience, safety, ease of handling, efficiency, effectiveness and
adaptability.
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► The positioning statement of an organisation should convey the organisation’s differential advantage and the customer
value offered.
► Positioning originates from value proposition as it is the way of communicating the differentiated value of the
product/brand to the customers. There are three ways of delivering value:
► Operational excellence: Offering a good product/ service at the lowest possible price.
► Product leadership: Offering best product
► Customer intimacy: Offering customised solutions

Positioning and Perceptual Maps:
► Based on experience, people carry a model in their heads as to how the world works. Perception is analytical and
synthetic, resulting in each and every individual having a slightly different view of the world.
► In the perspective of marketers, marketing communication is used to shift perception, where they aim to create collective
perception amongst the target market.
► The perceptual map includes information about brands/products that people purchase, willing to buy or would never buy.
The perceptual map shows different brands against each other based on some identified factors in the market.
► The location of each brand shows the perceived position against the two variables identified. This is helpful for marketers
to compare and contrast different brands available in the market.
► Positions concentrate on placing the product or brand at a suitable place in the perceptual map of their target market,
relative to the competitors.
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An example of a perceptual map drawn for auto manufacturers: Consumer Perception by Price & Quality (Skema Business
School, 2014)

Accordingly to Jobber (1995), the following factors are important for successful positioning of product/ brand:
► Credence: Credibility of the attributes used to position the product/ brand.
► Competitiveness: Offering a benefit which is supplied by a rival offering.
► Consistency: Providing a consistent message over a period of time
► Clarity: The message should be clear and distinctive, helping to create clear differentiated position in the mind of
customers.
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Brand Strategies
A brand strategy is a formal plan used by a business to create a particular image of itself in the minds of current
and potential customers. When a company has created and executed a successful brand strategy, people know
without being told who the company is and what they do.
Companies as large and established as Coca-Cola, as well as small brands and even businesses that sell services
to other companies, all benefit from a carefully created brand strategy. As a result of brand strategy, people
develop a particular feeling or opinion about a company—a feeling that drives their buying decisions. This
feeling equates to brand equity. The stronger people feel about a brand, the stronger the brand equity.
Branded goods are easier to sell. Therefore many companies today contemplate naming their products, even if
they are generic products (e.g. aluminium foil).

A few branding strategies which are used by marketers are mentioned below:
► Brand stretching – The use of an established brand name for products in unrelated markets.
► Line extension – The use of an established product’s brand name for a new item in the same product category.
► Multi-branding – Two or more similar and competing products are marketed by the same company under different
brands.
► New brands – These are the new brand emergence for any product/service in the market.
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Brand Resonance Pyramid/Stages of Brand Development

The first level of the pyramid deals with establishing the identity of the brand. Keller suggests a single building block for this
phase and terms it brand salience. Salience refers to how easily or often a consumer thinks of the brand, especially at the
right place and right time. In building a highly salient brand, he argues that it is important that awareness campaigns not only
build depth (ensuring that a brand will be remembered and the ease with which it is) but also breadth (the range of
situations in which the brand comes to mind as something that should be purchased or used).
The second layer of the pyramid deals with giving meaning to the brand and here Keller presents two building blocks: brand
performance and brand imagery. Brand performance is the way the product or service attempts to meet the consumer’s
functional needs. Brand performance also has a major influence on how consumers experience a brand as well as what the
brand owner and others say about the brand.
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Delivering a product or service that meets and, hopefully, exceeds consumer needs and wants is a prerequisite for successful
brand building. In communicating brand performance, Keller identifies five areas that need to be communicated: primary
ingredients and supplementary features; product reliability, durability and serviceability; service effectiveness, efficiency and
empathy; style and design; and price
Brand imagery deals with the way in which the brand attempts to meet customers’ psychological and social needs. Brand
imagery is the intangible aspects of a brand that consumers pick up because it fits their demographic profile (such as age or
income) or has psychological appeal in that it matches their outlook on life (conservative, traditional, liberal, creative, etc).
Brand imagery is also formed by associations of usage (at work or home) or via personality traits (honest, lively, competent,
rugged, etc).

Luxury cars, BMW in particular, are brands that work hard to communicate brand performance and imagery. Sales people,
brochures, Internet sites and car journal reviews will all tell you about the performance of a BMW. The delivery of this type of
communication has largely remained consistent, only being updated at regular intervals to reflect the specifications of new
models. What has changed is the imagery used to communicate the brand from the power-impregnated advertisements of a
BMW outrunning a land speed rocket car to the more esoteric imagery of innovative kinetic sculptures being powered by the
wind.
The change in advertising imagery reflects a shift by the German automaker away from targeting the affluent automobile
enthusiast to targeting the “ideas class”, a market segment which comprises up-market buyers more interested in design and
innovation than brute performance.
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Third level of the pyramid develops a consumer response to the brand. Keller proposes two building blocks for this tier,
namely brand judgments and brand feelings. Judgments about a brand emerge from a consumer pulling together different
performance and imagery associations. These judgments combine into a consumer’s opinion of a brand and whilst there are
multiple judgments that an individual can make, Keller believes there are four that companies must pay attention to in their
brand-building efforts. They are the perceived quality of the brand; brand credibility (the extent to which the brand is
perceived as having expertise, being trustworthy and likable); brand consideration (the brand must be relevant to the
consumer so that they are likely to purchase or use it); and brand superiority (the extent to which consumers view the brand
as being unique and better than other brands).
Maintaining brand judgement is particularly important when a company embarks on brand extension as what counted as
quality, credibility, consideration and superiority in one market can evaporate as the brand extends its product line and/or
market reach.

Baby food manufacturer Gerber tried to enter the adult food market in the 1970s by producing small helpings of fruits,
vegetables, desserts, etc in the same jars it used for infant food. Unable to garner credibility (adult food is very different to
baby food), consideration (how many adults would think about buying food for themselves that is packaged in a well-
established baby-food jar) and superiority (many other brands specialise in adult food) for its new product range, Gerber
quickly ditched which was widely regarded as a spectacular failure.
The final tier of the pyramid deals with the consumer’s relationship with the brand and here Keller introduces the sixth
building block which he calls brand resonance. Resonance is characterised by the intensity of the psychological bond that
customers have with the brand and their level of engagement with the brand. The challenge for the brand manager and
strategist is to develop the bond and increase the number of interactions (repeat purchases of a product or service) through
the development of marketing programmes that fully satisfy all the customers’ needs, provides them with a sense of
community built around the brand and even empowers them to act as brand champions.
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Along with Apple, Harley-Davidson is a brand that succeeds in creating a strong and lasting bond with its customers. The
motorcycle manufacturer’s primary vehicle for achieving this is the global Harley Owners Group, known affectionately as
HOG, which organises regular events for its more than 600,000 members. Executive from the company often join these rides,
which can number up to 25,000 riders, which successfully reinforce the brand’s message of freedom, individualism, self-
expression, etc as well as building the sense of community that the brand creates. Harley-Davidson customer are famously
loyal with over 45 percent of owners having previously owned one of the brand’s distinctive motorcycles.
In wrapping up this review of the pyramid model, it is useful to heed Keller’s advice not to take shortcuts: “The length of time
to build a strong brand will therefore be directly proportional to the amount of time it takes to create sufficient awareness
and understanding so that firmly held and felt beliefs and attitudes about the brand are formed that can serve as the
foundation for brand equity.”

Marketing Tactics
Students are required to have a comprehensive knowledge about the fundamentals of the marketing mix and how its elements have
to be shaped in order to successfully implement the marketing strategies and achieve the marketing objectives.
The key components of the Marketing Mix are:
• Product
• Price
• Place
• Promotion
• People
• Physical Evidence
• Processes
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Product
Kotler (1984) defined product as anything that can be offered to a market for attention, acquisition, use or consumption that might
satisfy a want or need. It includes physical objects, services, persons, places, organisation and ideas.
Products possess the following attributes:
1) Tangible attributes: availability, delivery, performance, price, design
2) Intangible attributes: Image, perceived value
A product consists of five layers:
► The core product represents the basic benefit offered by the product, e.g. if you take a pen, its core benefit is writing. Therefore,
the basic need that is satisfied by the product is considered the core product.
► The generic product refers to the basic features of the product. In our example of a pen, the generic attributes are the ink and
material (plastic) used to manufacture it.

► The expected product is about the general features
expected from the product by customers, e.g. pen – proper
writing.
► Augmented product includes the features of a product that

customers do not expect but which suppliers provide to
add value to their offering and to be distinguished from
competitors. For example, the pen may have additional
features such as a torch, a music player or a calculator.
► Potential products refers to the possible evolution of the

product. These are not expected by customers. Companies
spend on research and development to develop potential
products, e.g. a pen that can be used as a storage device
for information
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There are four main product elements.
► Branding: A brand is the personality of the product. It helps distinguish it from other competitor products in the
market. It also adds value to it. Brand conscious customers are willing to pay more for branded products.
► Product lines: Product lines in companies should be managed carefully. Each product line requires certain resources
that should be allocated to each task in a systematic way. Portfolio matrices, such as the BCG matrix, can be used to
gain ideas about the level of resources needed for each product line according to the situations these products face.
► Packaging: This is what comes with the product such as wrappers, boxes or labels. Packaging can play a big role in
today's market place. Customers pay a lot of attention to the condition of the packaging in which their products come.
► Service support: Service elements that are combined with the product add value to the offering. Today, service plays a
major role overcoming the importance of the product features. Customers prefer to have friendly service and after sale
security rather than having merely high quality products without any service attached.

When making decisions about a product, it is very important to take into account its life cycle. The standard
product life cycle consists of five stages.
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1. Development: This is when the idea of the product is discussed by marketers, engineers and designers. Marketers analyse its viability in the market place.
2. Introduction: This is the first stage of the product in the market place. Customers are still beginning to get to know of the product and very low sales are generated at this stage.
3. Growth: While customers are becoming aware of the product, sales increase. More and more customers buy the product and the company begins to earn higher profits than in the previous stage. Recognising that there are profits, competitors enter the market at this stage.
4. Maturity: At this stage, the customer base becomes divided among competitors and sales growth eventually slows down. The product is established in the market place and is capable of recovering the money invested in the early stages.
5. Decline: With the arrival of new products or customer requirements changing over time, the sales will fall dramatically. At this stage, the company can reduce expenditure on promotions and secure the small profit it can earn in the declining market.

Organisations should change their strategies based on the stage of the product in its life cycle.
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Price
In many ways, one of the most visible, and also potentially the most controllable and flexible element of the mix for many
organisations is price. At the same time, it is generally acknowledged that pricing decisions are the most difficult tasks for
marketing managers.
There are several reasons for this; the most significant of which is the nature and complexity of the interaction that
commonly exists between the three groups, namely consumers, competitors and the distribution network.
Several other factors that influence the pricing decision are corporate objectives, the nature and the structure of the
competition, the product life cycle, legal consideration, consumers’ response patterns, and cost. Organisations consider
price as an important element due to many reasons.

The pricing objectives should be determined before setting or changing the price of products. There are various objectives that
organisations wish to achieve through pricing:
► Survival: To cover at least the product and operational costs
► Return on investment: To earn a profit by selling the product or service
► To develop company image: To project the company as a seller of expensive products
► Market establishment: To create a differentiating factor for the organisation
► The maintenance and improvement of market position
► Meeting, following or discourage the competition
► Early cash recovery: To earn the highest return from a product before it declines
► Preventing new entry: To make it difficult for new players to enter the market
► To encourage market growth
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Both internal and external factors affect pricing decisions:
Internal factors:
► Cost of production: The price should cover the cost of operations
► Marketing mix: The price should complement the other elements of the marketing mix
► Marketing objectives: The price should accommodate the marketing objectives
External factors:
► Nature of demand – price elasticity
► Competition – prices of competitors
► Other environmental factors such as seasons

Pricing helps creating customer value. Superior value is when the customer recognises that you are offering a combination
of quality, price and service which is superior to your customers’ expectations and your competitors’ proposition.
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The price of a product or service should be decided based on the 3Cs framework:
• When considering a price for a product,

companies have to understand the highest value
that they can sell a specific product on the basis of
“customers’ assessment of the value”, i.e. what is
the value perception of the customer to satisfy
that specific need and want?; prices of the
competitors as well as the cost of production.
• On the basis of this analysis, the company will
then decide whether to adapt a more Market
Skimming orientated (towards the price ceiling) or
Market Penetration orientated (towards the price
floor) approach towards their pricing. Sometimes,
companies may decide on the basis of the
outcomes of the 3Cs, that they wish to stick to the
middle of the market – which is an “Intermediate
pricing”.

► Price some times changes according to the lifestyle stage the product. Price can also be used to achieve various objectives
at different stages of the PLC.
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Pricing objectives at each stage of the PLC:
► Introduction stage: Generally high as the developers tend to try and cover product development costs.
► Growth stage: Price is maintained at a high level if demand is high.
► Maturity stage: Price reductions may be necessary to tackle competition to avoid price wars.
► Decline stage: Price may be lowered to liquidate inventories leftover.
Price elasticity refers to the relationship between changes in quantity demanded and changes in price. It is calculated as
follows:
Percentage change in quantity demanded
Price elasticity =
Percentage change in price

 If the % change in quantity demanded is greater than the % change in price, demand is said to be elastic – E is greater than
1.
 If the % change in quantity demanded is less than the % change in price, demand is said to be inelastic – E is less than 1.
 The coefficient of elasticity calculations for normal goods give a negative result because price and quantity demanded are
inversely related. However, for inferior goods and those with unusually shaped demand curves, the elasticity will be
positive, showing an increase in quantity demanded.
The factors affecting the price elasticity of demand:
• Income: If a small proportion of consumer income is spent on a specific good, and if price changes, it is unlikely to have an
impact on demand and vice versa. The demand for unimportant items such as shoe polish is likely to be very inelastic.
• Substitute: If there is a close substitute for a specific product, then increase in price will lead to greater fall in quantity
demanded, because consumers tend to move towards alternatives.
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• Necessities: The demand for the retail goods tends to be stable and inelastic. Conversely, luxury goods are likely to be fairly
elastic. Improvements in living standards push certain commodities from luxury to the necessity category, e.g. television.
• Habit: Customers become addicted to a product or they purchase such products automatically. The demand for such
products are likely to be inelastic.
• Time: Consumers may be ignorant in the short run, they purchase alternative goods until the price exceeds a certain level.
Therefore, in the long run, inelasticity may be lessened.
• Definition of market: If the market is defined widely, then there are few alternatives, therefore demand will be inelastic,
e.g. food.

Pricing Methods:
► Absorption costing: Under this method, the price will include all the costs (including overheads) incurred to manufacture the product. The total cost is divided by the total number
of products made to determine the cost of one product.
► Cost base and marginal costing: Again cost is the base for price setting. Only the direct costs incurred in manufacturing the product are considered so as to identify the unit cost
and the margin set for this unit cost. This is a very difficult method to use as the process of dividing overheads per unit is highly complex.
► Cost plus pricing: The pricing starts from the cost of the product and a percentage is added to the production cost as the company’s profit. This method does not take into account
how much customers are willing to pay for products and is merely based on the cost of the product.
► Demand pricing: Under this method, price is used as a tool to manage demand according to the corporate objectives and production capacity. A company can set higher prices to
reduce the demand to match its production capabilities.
► Penetration pricing: The company sets lower prices on a product with the intention of capturing a large portion of the market. As such, the company keeps a very low level of
profit margin but hopes to attract a larger portion of the market before competitors enter. This pricing strategy does however involves a high risk if competitors start a price war.
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► Skimming: Most luxury products are introduced to the market with a premium price. This price is charged to recover the R&D costs incurred
with product development. Marketers use this pricing method to offer a premium offering to price sensitive and brand conscious
customers. Price skimming involves charging a high price initially and then gradually reducing the price to attract a larger audience.
► Loss-leader: Some firms sell their products at a lower price than the manufacturing cost. By doing this, a company makes a loss on the
products but this loss leader strategy is used to attract a higher number of customers. For instance, if a supermarket adopts this loss leader
strategy, it leads to an increase in the number of customers visiting the store and leads to an increase in the sales of other products. As
such, the supermarket can increase profits and is able to cover the loss incurred on the items sold below the production cost.
► Promotional pricing: Promotional prices are set for different purposes to increase sales or introduce new products to the market place. The
promotional prices are effective for short periods as the continuous price cutting may damage the image of the product or service.
► Odd-even pricing: This is a psychological model that implies a lower price to the customers. The products are not priced at round numbers,
e.g. a product may be marked at a cost of GBP 99.58.

Place
The place element should be decided after answering the following basic questions with regard to distribution:
 Who are potential customers ?
 Where do they buy ?
 When do they buy ?
 How do they buy ?
 What do they buy ?
For marketers, the distribution decision is primarily concerned with the supply chain’s front-end or channels of distribution that
are designed to move the product (goods or services) from the hands of the company to the hands of the customer. For example, a
soft drink may move from the manufacturer to a regional distributor to a retailer to the consumer.
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Activities involved in the channel are wide and varied though the basic activities revolve around these general tasks:
Intermediaries: Many producers do not sell products or services directly to consumers and instead use marketing
intermediaries to execute an assortment of necessary functions to get the product to the final user.
These intermediaries, such as middlemen (wholesalers, retailers, agents, and brokers), distributors, or financial
intermediaries, typically enter into longer-term commitments with the producer and make up what is known as the
marketing channel, or the channel of distribution.

The following diagram summarises the main channels used for distributing consumer products:
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Direct Vs. Indirect Distribution:
► In direct distribution, the manufacturing organisation uses its own resources to deliver the product to end customers.
► The main advantages of direct selling are that there is no need to share profit margins and the producer has complete control over the sales process. Products are not sold alongside those of competitors either.
► On the other hand, in indirect distribution, intermediaries are used to deliver the products to end customers. Most companies believe that intermediaries can perform distribution activities more efficiently and less expensively.
Factors that encourage direct selling:
► There may be a need for an expert sales force to demonstrate products, provide detailed pre-sale information and after-sales service.
► Retailers, distributors, dealers and other intermediaries may be unwilling to sell the product.
► Existing distribution channels may be owned by, or linked to, competing producers (making it hard to obtain distribution by any other means than direct).
► However, there are significant costs associated with selling direct which may be higher than the costs associated with an intermediary to generate the same level of sales.

Factors that encourage the use of intermediaries:
► More efficient distribution logistics since they are experts in what they do.
► Overall costs (even taking into account the intermediaries’ margin or commission) may be lower since they benefit from
economies of scale and specialisation.
► Consumers may expect choice (i.e. the products and brands of many producers) at the point of sale and intermediaries
have the resources to provide such choice.
► Producers may not have sufficient resources or expertise to sell directly.
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Disintermediation and Electronic Marketing Channels:
► Disintermediation involves elimination of traditional intermediaries and direct distribution through electronic marketing
channels.
► Electronic channels take many forms, including an organisation simply adding a website to the marketing armory and
equipping it with facilities for people to place orders on it, to fully fledged e-tailors selling a range of products just like a
physical store. E-tailors may mirror the retail scene.
► There are shops that sell one product, a close allied range or more. There are e-shops that are independent businesses
and others that are the e-arm of an existing business: thus books can be bought from Amazon or from Barnes and Noble
or Waterstone’s.
► These are some successful examples for electronic marketing channels. Amazon applies a superb online distribution
channel which is key to their business success. Travelocity is an online travel agency that fully operates online.
Level 7 Diploma in Strategic Management and Leadership (Burns, B., 2016) 78
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Distribution Strategies
There are three main distribution strategies that organisation’s can choose from:
► Exclusive: These focus on selling products directly to final customers. This method uses a limited number of distribution channels
to distribute products. There are many different reasons for a company to operate an exclusive distribution channel. Some highly
expensive and prestigious brands follow this distribution to maintain their status among their high profile customers.
► Selective distribution: Secondly, the selective distribution involves the use of more than a few but less than all that is used both by
established and new firms. Selective distribution enables the producer to gain adequate market coverage with more control and
less cost than intensive distribution.
► Intensive: The strategy of intensive distribution is characterised by placing the goods in as many outlets as possible. When the
consumer requires a great deal of location convenience, it is important to offer a greater intensity of distribution. This strategy is
generally used for FMCG, or essential goods.

Channel Modification Decisions:
The necessity to compete effectively in a dynamic economy forces companies to look critically at their distribution channels.
There are different reasons which lead manufacturers to modify their existing channels such as:
 shifts in geographical concentration of buyers
 inability of existing intermediaries to meet the needs of buyers
 costs of distribution
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Promotion
Aims and objectives of the promotional communication process could be discussed under the DRIP framework:
Differentiate, Remind, Inform, and Persuade.

There are three main promotional strategies namely push, pull and profile.
► Push is where the manufacturer takes the decision to concentrate his communication efforts on members of the
distribution channel. The basis of this strategy is to promote directly to the suppliers, therefore pushing the products
down the line to reach the consumers through various channel members.
► The pull strategy operates in contrast to the push strategy and requires the manufacturer to create a demand for the
product through direct communication with the customers. The aim is to create demand and to direct promotions to the
supply chain and pull the product upwards through the channels and through customer demand.
► Profile is the task of building a fuller picture for the stakeholders and satisfying the needs of them. It is mainly to build
awareness, perception, attitudes and reputation. Tools that fall under the profile strategy are, public relations,
sponsorships and corporate advertising.
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When to use the push strategy?
► The push promotion strategy tries to attract the distribution channel members to the product. As implied by the name,
manufacturers try to push their products to the intermediaries using this strategy.
► The intermediaries’ decisions mostly depend on the relationship and trust with the manufacturer. This is where the
manufacturer makes the decision to concentrate his communication efforts on members of the distribution channel.
► Push strategies are mostly used when there are easily identifiable buyers, when the offering is complex, when purchase is
perceived as risky, when the offering is in early stage of life cycle and when funds are limited for consumer-directed
advertising.
► Push strategies can be used to:

 Reinforce differentiation towards channel members
 Remind and reassure dealers about the quality of the product
 To persuade the intermediaries to take stocks.

When to use the pull strategy?
► In the pull strategy, the company tries to attract customers to its products. Here, the communication is more expensive
and the manufacturer tries to address the mass market by using one to one communication. This is a strategy that
involves direct communication with the consumer.
► The pull strategy can be used for the following reasons:
 To differentiate a brand from its competitors
 To remind of the brand values
 To inform about a new product or raise level of awareness
 To persuade target audience to purchase.
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When to use a profile strategy?
► The profile strategy mainly targets the stakeholders in the market place and communicates the company’s personality,
identity and image to them and builds good perception about the company in the society.
► The profile strategy focuses on three main elements:
 Corporate personality
 Corporate identity
 Corporate Image

An example of a marketing communications plan summary:
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Promotional Tools:
Organisations use a wide range of communications tools and media to convey their messages to the public and
stimulate the desired result. The main elements of communication can be broadly classified as follows:

Communication tools can be categorised as follows:
- Above the line refers to advertising using “paid for media” for which paid agencies are traditionally commissioned. Above
the line tools target mass audiences, e.g. TV, radio and press.
- Below the line refers to promotional activities conducted using media which allows the company to have direct control
over the target or intended audiences.
- Through the line refers to activities or tools used to refer audience to below the line media using above the line media
leading to a direct contact with the organisation, e.g. a TV ad which provides information on a sales promotions campaign
or providing a toll-free number for driving direct contact with new clients.
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Promotional Media:
Promotional media involves the mediums used to deliver promotional tools. The main types of promotional media are as follows:
► Broadcast – television, radio
► Print – newspapers, magazines
► Outdoor and transport – billboards, taxis
► New media – the internet, mobile phones
► In store – point of sale, packaging
► Other – cinema, product placement, ambient

Integrated Marketing Communication Mix:
When creating an integrated marketing communication mix, the following have to be considered:
 Information requirements of buyers: Which communication tool has the greatest impact on prospective buyers?
 Nature of the offering: The complexity of the product or service in concern has to be considered when deciding on the
optimal mix.
 Target market characteristics: The lifestyle, attitudes and culture of the audience should be considered when deciding
about the communication tools.
 Organisational capacity: The skills and resources’ availability in house should be considered in order to decide whether to
go ahead with the campaign in-house or to outsource it.
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People
People play a key role in service marketing for many reasons. They play a key role in service inseparability and in service
variability, people can bring in consistency in service offerings. They also play a key role in service perishability by building
relationships with key stakeholders.
Factors such as corporate values, culture and style, organisation structure and power can influence the development of
the right people.
The employees’ attitudes develop according to the internal organisational culture. Knowledge workers, employees,
management and other consumers often add significant value to the total product or service offering. To provide excellent
service to customers, acquiring the right people and developing the right attitudes inside the organisation are very
important.

Recruitment, training and development of “people” should be based on the following fundamentals:
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Physical Evidence
Services are intangible. Physical evidence provides something tangible enabling people to “feel” the quality of service. Physical evidence could
be looked at from three areas:
► Environment helps to address the issues of how many people come to shop, how long do they stay, etc. These actions can be improved by
appropriate physical layout of the store lighting, heating, sound, color and even smell, e.g. hospitals, theaters and saloons. It includes
tangible goods that help communicate and perform the service and intangible experience of existing customers.
► Tangible clues: Many services have small products associated with them. The products which are tangible clues associated with services
help to make the intangible services tangible to a certain extent. For example, the training manuals provided for a distance learning course
supports to add the tangible aspect to the service – distance learning.
► Facilitating goods: Facilitating goods are products that are associated with the service, which may or may not be supplied by the service,
e.g. a customer could buy a hotel’s branded mug as a token of memorabilia for staying in the luxury hotel.

Processes
The third and final dimension is the process by which the product or service is acquired and in particular how this process
is managed. Process refers to the level of systems and processes that are in line to facilitate the delivery of services.
Effective process management has proven to be a potentially powerful differentiator, since it relates to how customers are
treated from the point of their very first contact with the organisation through to the last.
In order to achieve an effective process management system, the marketing planner needs therefore to begin with a
detailed audit of the current processes, looking at each of these from the customer’s view point with a view to identifying
the sorts of factors that are the basis for customer satisfaction and customer dissatisfaction.
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Processes should be managed in terms of the following:
• Flexibility: The process should be flexible in nature. Even though processes have certain
structure, the rigid structure creates inconvenience for customers as well as employees.
Therefore, the process should be flexible to some extent to facilitate individual requirements and
change according to the environment.
• Process contact: The processes should facilitate the level of personal contact expected by the customers. Today, most
service organisations have automated their stereotype services. Banks have introduced ATM machines and reduced
queues inside their branches.
• Procedure and policy: Level of authority and flexibility granted to different levels of staff to smooth the process.
• Legal: In some services, the process should comply with the legal framework of said country, especially in services related
to money and properties, as the legal obligations are fairly high in these scenarios.

The marketing mix is the set of marketing tools which a business blends to achieve the marketing goals in a defined target
market.
Effective marketing mix decision ensure that a business is marketing the right product to the right person in the right place
and at the right time which is the key success factor of the marketing plan. It helps to gain competitive advantages with
considering market segmentation. Basically, there are two frameworks in order to manage effective marketing mix decision at
product or service level: 7Ps and 4Cs (Customer/consumer value, Cost, Convenience, and Communication)
As an example, Apple Inc. uses 7Ps framework in order to manage effective marketing decisions:
•Product: The iPhone 4 combine three amazing products- a mobile phone, wide screen iPod, and a breakthrough internet
device–into one small, lightweight, hand held device with the best e-mail ever on a mobile phone, full screen with browsing,
multi touch screen, and applications which gives the best experience of smart phone to the consumers.
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► Place: Apple has set the distribution channel which is appropriate and convenient to its targeted customer. It is offering
this product not only through its own retail store and online store but it has build channel with other retail store and the
network providers which give easy assess to the target customers.
► Promotion: In order to promote iPhone 4 to the targeted market segment, Apple is using several promotional tools like
advertising, publicity, direct marketing, internet marketing, Bluetooth marketing etc. which really helps Apple to bust the
sales. Apple is using both below the line and above the line promotional strategy.
► Price: As other organisation apple has their own pricing policy and the price of the iPhone 4 is marked according to it. The
price of the iPhone may affect by marketing objective, marketing mix strategy, costs, nature and demand of the market,
competition and other environmental forces like economy, reseller, government etc.
Other components of marketing mix decision are people, process and physical evidence. These components of marketing
mix of Apple are well blended; the marketing strategy is well joined with strategy.
Section Summary
So far we have been discussing the Marketing Objectives, Marketing Strategies and Marketing Tactics after the initial discussion about marketing planning at the beginning of the lesson. The key marketing strategies that have been discussed so far are:
► Growth strategies – Based on Ansoff’s matrix
► Competitive strategies – Based on Porter’s generic strategies
► Branding strategies – Based on brand pyramid
The key elements of the Marketing Mix are:
• Product
• Price
• Place
• Promotion
• People
• Physical Evidence
• Processes
Now we are going to look at the next 2 components of the Marketing plan – Action Plan and Controls. Further the information related to Risk Management too will be looked at in the context of Marketing Planning.
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Action Plan, Controls,

Risk Mitigation and
Achieving Strategic
Objectives

Action Plan
Time-scales and responsibilities
► When preparing a marketing plan, appropriate timescales should be set for each activity. A Gantt chart can be used to
provide an overall picture of the frequency and timings at which each activity will take place.
► It is also important to allocate responsibilities for each activity. An activity schedule can be presented to list down the main
activities that should be conducted and to allocate people responsible for each of them. The allocated people will be held
accountable in the case of non performance.
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An example of an Action Plan Gantt Chart:

Forecasting and Budgeting
A budget is a financial plan developed in numerical terms for a period of one year. Budgets are developed to quantify a plan,
coordinate activities, identify critical issues and to assign responsibility. There are three main approaches to budgeting.
► Historic: The budget is based on previous data and previous budgets.
► Zero based: The budget for each function is developed from scratch after analysing all expenditure.
► Activity based: The budget is based on the cost of activities.
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Controls
Marketing plans serve as the blueprints for your company's sales strategy. They lay out every detail of what's to come over
the next year and may be subject to alteration or evaluation because of changes in the market. Marketing should not be set
in motion and left alone, but constantly reviewed, evaluated and adjusted to suit the needs of the company and the wants of
the consumer. Understanding how to judge whether your marketing plan is delivering the best possible results can save you
time and money and help ensure the success of your organisational business.
Some of the key ways to measure marketing plan performance are:
•Return on Investment - Return on investment is always a major concern when it comes to marketing or any other business
expense. The idea is to check whether the money you put into your marketing plan has resulted in a profit. You must
measure the amount spent on each campaign, versus the amount of sales each campaign brought in specifically. You can
calculate an overall measurement, but a more specific breakdown by each marketing initiative will tell you exactly which
campaigns worked and which fell short.

•Reviewing Sales Numbers - Reading the numbers can be the fastest and most basic way to determine whether your plan is working.
For example, if your overall sales for last year from April 1st to March 31st totaled GBP100,000 and your total sales for this year
totaled GBP150,000, you can deduce that your current marketing plan is having some sort of positive effect. Take into account any
rise in prices or expansion of the business, but when all is said and done, in raw numbers, you are selling more than you did a year
ago.
•Customer Response and Reactions - Customer response in all its varied forms can help you to determine what type of reactions your
marketing creates. Surveys online and in person, general customer service feedback and online commentary can all reveal what your
customers think of your marketing and which campaigns have the greatest impact. Simple questions like "How did you find out about
our seasonal sale?" can reveal which initiatives are reaching the customer and which market segments are making purchases.
•Marketing Reach Expansion - If your marketing reach isexpanding, the effectiveness of your plan is the probable cause. Marketing
that makes its way into new regions either by customer recommendation or natural growth indicates both a successful and popular
product or experience and an effective marketing message. The expansion of your marketing budget is another sign that your plan is
working well and has gained more support from the company.
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•Marketing Partner Response -Your marketing partners will offer feedback about whether your marketing plan
is working. Partner feedback reveals the effectiveness of your efforts in relation to associated brands, suppliers
and vendors. These outside members of the team might feel the effects of a successful campaign before you
do because they are often on the front lines and might have more direct customer interaction.
The same goes for a negative report. If your partners are asking when you will be releasing new marketing
efforts, it might be time to revamp the marketing plan.
•Outside Salespeople Feedback - Outside salespeople are a great barometer for the measurement of marketing
effectiveness. Ask for feedback from your soldiers in the field to determine whether the message you are
providing and the ways you are providing it are effective. You are sure to get advice in any case, but if the
feedback is overwhelmingly negative or customers are completely unaware of your latest marketing efforts,
your plan should be revised to better address existing clients and to suit the needs of your sales team.
•Actions of Competitors - The actions of your competitors can often be very telling when it comes to the
success or failure of your marketing plan. If competitors rush to copy what you've done or try their best to one-
up your initiatives, the plan is working. If your campaigns go largely ignored or there is an immediate negative
response, there may be an issue or at least a question about what you've set in motion.
The reviewing measures of the Marketing Plan and controls have been looked at in depth from the next lesson.
Risk Mitigation
The barriers and constraints to implement the marketing planning process are:
Managerial, organisational, and cultural shortcomings - Managerial shortcomings faced by organisations when
implementing marketing plans are lack of top management support and organisational bureaucracy. If the top
management does not understand the importance of marketing, or if the management is sales driven, funds and support
will not be provided from implementing the plan.
Organisational shortcomings that limit the success of a marketing plan involve the lack of proper systems such as
knowledge sharing systems, lack of marketing skills and lack of financial resources. While small organisations suffer mainly
from lack of resources, large organisations suffer from poor organisation of structures that hinder the success of marketing
planning.
Certain organisations by nature are sales driven and are reluctant to challenge the traditions. Such cultural barriers hinder
the success of marketing plan.
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Risk Mitigation
Planning inadequacies – Some of the main planning inadequacies are:
► Scope of the marketing plan is too short: When marketing plans cover only a very short period, they lack vision and do not
provide motivation for employees to pursue them.
► Lack of marketing intelligence systems: When information is not stored and available through proper mediums, employees
have to repeat certain tasks and waste time on preparing for activities instead of actually conducting them.
► Insufficient competitor analysis: In practice, it is often difficult to obtain information about competitor activities.
Therefore, most organisation’s tend to skip conducting a thorough competitor analysis in order to fast track the progress
of implementation.
► Lack of understanding of the environment and customer behaviour: It requires a great deal of market research to
understand how environments operate and how customer behaviour changes accordingly. Since market research
consumes a great deal of resources, organisations attempt to proceed with what they know about the market instead of
conducting market research.
Risk Mitigation
Poor and inadequate organisational resource - The success of a marketing plan depends on the availability of human
resources, financial resources and relevant infrastructure.
When preparing the marketing plan, marketing managers should be cautious about the marketing budget. While ambitious
plans are tempting to pursue, their implementation will not succeed if the necessary funds are not available. It is
important to convince the management to allocate necessary funds to execute the marketing plan.
The success of the marketing plan also depends on human resources in terms of capacity, skills, knowledge and
experience. The marketing team can weigh the capacity against the requirements and decide between in house
implementation and outsourcing. Training and development also play a major role in delivering the required skills.
In addition to human resources and financial resources, the success of a marketing plan also depends on organisational
infrastructure. Proper systems for recording information, knowledge sharing and automating marketing communications
play a key role in implementation.
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Risk Mitigation
Lack of innovation - Lack of innovation creates a major impact on the effectiveness of marketing plans.
Most organisations fail to innovate as they depend on their past strategies to bring them success in the
future. Innovation, which was once limited to research and development department has become a pre-
requisite for success of every function.
Marketers should have innovation skills to implement marketing mix improvements. For example, process
improvements are no longer limited to queuing and billing. For example, in innovative stores, customers can
browse catalogues online, visit the store and the app would actually direct them towards the clothes rack
which holds the dress or coat they like!
Ability and willingness to utilise digital media - Digital media has transformed how people connect with each
other. While digital media has opened a world of new opportunities for organisations, the transition is slow
as it requires new skills and expertise.
The effectiveness of digital media for business activities is still unknown as it works both ways. Unlike in the
past, negative word of mouth gets disseminated in minutes, leaving no room for organisations to respond
before the harm is done. Also, organisations now have to compete with every other organisation in the
world to be heard since everyone is competing for the same promotional space.
On the other hand, it provides limitless access to audiences. It provides great opportunities for organisations
limited with funds. Therefore, it is important to provide training and development to ensure that marketers
Risk Mitigation
Failure to integrate into corporate planning systems - The purpose of all marketing activities should be to
assist in achieving corporate goals and objectives. However, in reality, functions and departments get carried
away with their individual and departmental goals instead of considering their strategic fit to corporate
goals.
The main reason for lack of goal congruence is linked to individual performance measures. Every manager
seeks to portray excellent performance in their areas in order to secure performance related compensation.
When performance measures are not coordinated, all functions may record excellent performance, yet as a
whole, the corporate objectives might not be achieved.
Therefore, in order to ensure that all marketing planning is integrated to the corporate plans, the starting
point of a marketing plan should always be the corporate objectives.
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Risk Mitigation
The key risk mitigation methods are:
Risk assessment and Risk Assessment Matrix - The risk

matrix is an effective educational tool to illustrate the
importance of risk management strategies. It is easy to
use, easy to explain, and effective at promoting audience
participation during risk management programmes. Risk
management strategies can enable both large & small
business owners, including all scales, to survive and
succeed in spite of unexpected events.
The risk assessment matrix is one of the widely accepted

tools for assessment. It assesses the level of risk in terms
of the probability of risk being experienced and the
severity of the impact on the oragnisation.
Risk Mitigation
Action evaluation - Once risks have been identified then they need to be analysed for their impact, severity, and the
probability of the risk being experienced. There are a range of tools for assessing risks, and the key objective of these tools
and frameworks is to prioritise risk, and to allocate resources appropriately for the mitigation of these risks .
In addition to the risk assessment matrix, other techniques, such as Expected Value, Sensitivity Analysis, Monte Carlo
Simulations, Failure Mode Effect Criticality Analysis and PERT, can also be used to quantify the risks.
Contingency planning - A contingency plan is a plan devised for an outcome other than the usual (expected) plan. It is often
used for risk management of an exceptional risk that, though unlikely, would have catastrophic consequences. Contingency
plans are often devised by governments or businesses.
The company could be severely strained or even ruined by such a loss. Accordingly, many companies have procedures to
follow in the event of such a disaster.
During times of crisis, contingency plans are often developed to explore and prepare for any eventuality. During the Cold
War, many governments made contingency plans to protect themselves and their citizens from nuclear attack. Today there
are still contingency plans in place to deal with terrorist attacks or other catastrophes.
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Risk Mitigation
Stakeholder analysis - Stakeholder Management is an important
discipline that successful people use to win support from others. It
helps them ensure that their projects succeed where others fail.
Stakeholder Analysis is the technique used to identify the key
people who have to be won over. You then use Stakeholder
Planning to build the support that helps you succeed.
Risk impact probability charts - Risk management is an important

function in organisations today. Companies undertake increasingly
complex and ambitious projects, and those projects must be
executed successfully, in an uncertain and often risky environment.
The Risk Impact/Probability Chart provides a useful framework

that helps you decide which risks need your attention.
Achieving strategic objectives through

marketing planning
The key to achieving strategic objectives through marketing planning is to derive marketing objectives in line with the
strategic objectives and then make sure to achieve the marketing objectives through marketing planning.
David Jobber suggested five different organisation structures in order to implement a marketing plan namely: no marketing
organisation, functional organisation, product base organisation, market centred organisation and matrix organisation. As an
example, out of these five structures, Apple Inc. has structured as a product based organisation which focuses on individual
responsibilities to product managers for managing product lines. Specifically Apple focused for individual product lines and
can develop own marketing mix which helps to apple to align marketing plan to strategic objectives.
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Lesson Summary
The key focus of this lesson was to provide you with a comprehensive understanding on the key components of the
Marketing Plan. The six main stages are:
1.S – Situational analysis (Marketing Audit)

2.O – Objectives (setting marketing objectives based on corporate objectives)
3.S – Strategies (marketing strategies)
4.T – Tactics (marketing mix)
5.A – Action plan (budget, timescales and responsibilities)
6.C – Controls
Towards the secondary section of the lesson the barriers and constraints to implement the marketing planning
process and suitable risk mitigation strategies have been discussed. The achievement of strategic objectives through
marketing planning has been discussed as well under this lesson.
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Lesson 3: Promoting
Marketing Plan
Module: Strategic Marketing
Introduction
In this lesson we will be looking at the broader perspective of how the marketing plan supports achieving the
organisational corporate / strategic goals and objectives resulting management success for the organisation.
Secondly, how the organisational commitment and agreement could be obtained to work in line with the marketing plan
will be discussed and explored, thus achieving the strategic objectives of the organisation.
Finally the measuring and review methods of the marketing plan will be discussed.
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Learning Outcomes
3. Be able to promote the marketing plan in support of strategic objectives
3.1 Discuss how the plan supports strategic objectives
3.2 Develop an approach to gain agreement for the marketing plan that will change organisation actions and methods
to achieve strategic objectives
3.3 Critically evaluate and provide review measures for the agreed plan
Lesson Objectives
1. Support of Marketing Plan in achieving strategic objectives
2. Approaches to gain agreement
3. Reviewing the Marketing Plan
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Support of Marketing Plan in achieving strategic

objectives
This topic was discussed briefly under the previous lesson and it will be looked at in detail under this lesson. It is believed that the marketing plan of
any organisation should act as the support function to the overall objective of the organisation, thus complementing each other in all strategic
aspects.
There are six key planning questions as follows:
► What is the current position of the organisation?
► What contributed towards there present position?
► What direction is set for the organisations future movement?
► Where does the organisation aim to be or the level it aims to attain in the near future?
► What needs to be done to achieve these objectives in the set frame of time?
► And finally is the organisation heading in the right direction and is inline with its organisation objectives?

objectives
Planning is necessary to make sure the flawless process of revenue generation. Planning is done via marketing plan and
marketing plan enables organisation to implement proper strategies in order to gain the competitive advantage.
However, corporate objectives should be assisted by marketing plans. Corporative objective always refers to the
organisation as whole. Therefore every plan must contribute towards it.
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objectives
Delegation of authority always encourages employees to become expert into their fields. This process leads to different employees situated at different places to
work collectively. , “there must be a plan showing how the work will be organised. The plan for the systematic arrangement of work is the organisation structure.
Organisation structure comprises of functions, relationships, responsibilities, authorities, and communications of individuals within each department”. (Sexton,
1970).
The plan provided by the Marketing Plan could be executed through out the organisation - internally and through out the market – externally once all parties /
divisions/ functions of the organisation are agreed and committed towards execution. If any changes are required operationally in terms of successful execution of
the marketing plan those should be taken place within the functions / team of the organisation. Below are some key ways of how organisations could facilitate
execution of marketing plan with the goal of achieving strategic objectives in mind.
► Traditional Structures - Organisation related to traditional structures emphasise on different functions or departments within company. This kind of structure makes
every level of management aware about their line of authority. Traditional structure can be divided into two approaches line and line in staff.
► Line-And-Staff Structure - Line format of traditional structure is not suitable for big companies. Therefore line in staff format is applied to them just to make sure of
work is divided properly among different employees as per their capability. Hence work of organisation would be flawless in making sure of guidelines given.
(Boone and Kurtz, 1993).

objectives
► Matrix Structure - Those companies, which are classified as per the project are called matrix organisation. These kind of
companies consist of both vertical authority relationships (employees report to their respective seniors) and horizontal
work relationships (employees report to their project manager about time line of the concerned project) (Keeling and
Kallaus, 1996). This supports employees to multitask and to utilise their skills in different projects supporting the daily
work of the organisation.
► Geographic organisation and customer equity management - Although customer equity can be calculated in different
ways, one definition of customer equity is in terms of “the sum of lifetime values of all customers” (Rust, Zeithamal, and
Lemon 2004). Customer lifetime value (CLV) is affected by revenue and cost considerations related to customer
acquisition, retention, and cross-selling.
Geographic segmentation is where the market is divided into different geographical unit such as nations, regions and
states.
The next one is demographic segmentation where the market is divided into groups based on variables such as age,
gender and income. This two is the most popular type of segmentation (Kotler et al, 2001).
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objectives
► Marketing strategy and implementation - Marketing strategy is classified into four parts:
1) Customer audit and customer market segments trends
2) Strategic target segments, capability, positioning, value proposition and branding
3) Tactical plans for product line, distribution and sales, promotion, and pricing
4) Implementation.
► Marketing strategies use Research and Development to explore new needs of customer in order to launch new and different products in the
market.
► Marketing control - According to Kotler, Marketing control is a process to measure actual marketing performance achieved with that of
planned performance and take corrective step is any deviation is there between actual and planned performances. Marketing control
process includes formulation of performance standard, performance appraisal, deviations correction and marketing plan reformulation.
Approaches to gain agreement

Communication is the key of success for any company. Its foremost goal is to create awareness of business, product and
companies position among customers. Different tools of communication could be websites, brochures, media, and
involvement in trade shows. By using different tools of communication, company encourages target customers to buy more.
In the same manner the management of organisations should be smart enough to sell the idea of marketing planning process
and gain the agreement and commitment of the internal customers towards the successful execution of the marketing plan
being results oriented. Some of the key ways to gain employee agreement / commitment are:
•Employee Empowerment and delegation - the employee empowerment will go a long way in terms of giving the ownership
of the work they do and making them naturally innovative, goal oriented and creating the urge and want for striving for
excellence. The delegation of work will make the team manager free for forecasting, forward thinking and anticipating while
the team members excelling and become experts of the area of work they take part in.
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► Training - Training can be a crucial part of achieving something. Training can be classified in three types:
1. Proper understanding of industry
2. Understand the capacity of business
3. Understand the need of interpersonal development.
Through appropriate training and educating the employees will gain the knowledge of importance in commitment towards
working as per the marketing plan. Learning about different aspect of business would surely get the success.
► An encouraging compensation plan for connected stakeholders – it could be for employees, dealers, distributors or
partners, a reasonable compensation plan could always encourage and uplift the go getter spirit of the employees knowing
that going beyond what is expected will always positively impact on them.
Most of the time, seldom making compensation plans causes delays in profit because of not serving distributors, dealers
and employees interests. Further, compensation will improve employee moral and high morale which directly impact
confidence level. High confidence level improves employee capacity of working hard.

► Quality focused view – When the employees are focused towards selling quality over quantity the long term benefit for the
organisation in terms of managing fruitful customer relationships is immense. The basic concept here is that customer always
prefer to go with high quality product. This is the only reason why they might pay a high price to get a product with quality.
► Sense of responsibility and commitment - In order to be successful, company need to have consistency in the process of learning,
being responsible with what they sell and do. Revenue would be great, customers would be happy eventually this would lead to
high returns in terms of profit.
Some key factors that will be helpful in creating a marketing oriented organisation and implementation of the marketing plan are:
SITUATIONAL FACTORS
• Management by common sense
• Product orientation
• Creating a healthy competition
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MANAGEMENT FACTORS
• Sufficient understanding of marketing
• Belief and trust in marketing
• Being open to change
• Focusing on long-run payoff of marketing
MARKETING FACTORS
• Competence of marketing personnel
• Good confident leadership
• Being powerful and empowering others
• Working in harmony with other departments
• Measuring marketing’s contribution towards corporate success effectively
INDIVIDUAL FACTORS
• Being focused on overall stake rather than personal stake
• Goal congruence

Marketing Orientation of the organisation is another major way of encouraging all stakeholders to support the marketing
plan and to gain agreement towards successful execution of the same.
The European Journal of Marketing, has indicated that marketing orientation has many labels such as:
1. Customer orientated.
2. Integrated marketing.
3. Market orientated culture.
4. Marketing orientated.
5. Market led.
(Harris, LC and Ogbonna, E., 2001)
Whichever the label is chosen, the most important aspect to remember is that market orientation is a form of
organisational culture, covering the whole business and provides superior customer value (Narver, JC and Slater, SF, 1990)
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Below are some categories of Business Oriented Cultures that have been practiced and still in practice with businesses:

Clearly, a market orientation culture will provide the best solution for a business. There is however one concern: it tends to
focus on what the customers think they need. The idea of incipient markets was promoted to cater for the needs of
customers who don’t actually recognise it at the initial stages.
It is the advancements in technology, particularly relating to the internet, which is creating opportunities for businesses to
generate value propositions that have never been considered by its customers. A good example was the introduction of
iTunes from Apple, a classical incipient market case.
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What can a market orientated culture do for a business? It may take many years before a business sees the benefits of such a
culture. It is highly likely that there will be an increase in competitiveness and long term sustainability driven by:
1. The creation of a well organised structure, working across functions that are highly motivated and task oriented. It will utilise
tried and tested processes for gathering and dissemination of information across all functions. (Lambin, JJ, 2000)
2. The team will be able to provide the business with a strong competitor understanding, allowing it to proactively adjust strategies
to maintain its market position and build barriers to restrict others from entering. (Narver, JC and Slater, SF 1990)
3. The team will have a greater understanding of its customer’s needs and wants: ensuring that it can continually update its value
proposition, keeping it as the market leader and most respected brand (Kotler, P et al, 2005)
4. It will ensure that the business focuses on the longer term, allowing it to build strategies which sustain the competitiveness of
the category (Hooley, G et al, 2008)
5. It will develop a culture that is directed by leaders who are visionary and competent to complete the task.
Reviewing the Marketing Plan

It is not enough to plan; a plan must include some form of measurement and a process for monitoring and reviewing results.
An overall strategic plan might outline broad objectives for marketing. The marketing plan would detail more specific
objectives for the marketing department to monitor and report on. The results achieved -- whether they fall short or exceed
expectations -- provide input used to consider changes or adjustments in the plan. Ongoing measurement and reporting can
help to ensure the strategic plan continues to achieve measurable results.
The reviewing of the marketing plan has been discussed briefly under the previous lesson as well. The methods of reviewing
considering various aspects and areas have been considered under this lesson.
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Controls
Marketers need to measure the effectiveness of marketing. Some of the main metrics that can be used for measuring are as
follows:
► Efficiency measures in marketing: They assess the ability of the organisation to use its assets and include measures such as
capacity utilisation, sales turnover per employee, speed of delivery, inventory levels and conversion of enquiries to sales.
► Effectiveness measures in marketing: They measure the extent to which the goals and objectives are achieved. They include
measures like number of customers, unit sales, relative value, customer loyalty and relative quality.
► Innovation metrics: They measure the number of patents and trade marks registered, percentage of new products from
existing products, new product success rates and introduction of new products.
► Brand equity metrics: They measure the brand value, brand strength and level of trust in the brand.
► Online performance metrics: They measure the effectiveness of online promotional efforts though click-through rates, cost per
click, cost per lead, and cost per sale.
► Triple Bottom Line (TBL): This uses expanded spectrum of values and criteria in measuring success in terms of economy,
ecology and social dimensions.

Finance measures/control ratios
A financial ratio (or accounting ratio) is a relative magnitude of two selected numerical values taken from an
enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to
evaluate the overall financial condition of a corporation or other organisation.
Financial ratios may be used by managers within a firm, by current and potential shareholders (owners) of a
firm, and by a firm's creditors. Financial analysts use financial ratios to compare the strengths and
weaknesses in various companies.
Financial ratios may not be directly comparable between companies that use different accounting methods
or follow various standard accounting practices.
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Finance measures/control ratios
1. Profitability
Gross profit margin = (GP/Sales)×100
► This demonstrates the margin of gross profit from the total sales. When calculating gross profit we do not incorporate sales and
distribution expenses, administration expenses, taxation expenses or the interest costs. So it is purely the profit generated only after
incorporating production-related costs.
Net profit margin = (NP/Sales)×100
► This covers all the costs where the NP margin will demonstrate the margin of profits after all costs have been accounted for. Net
profit is the amount attributable to the shareholders.
2. Investment performance
Price to earnings ratio (P/E) = Market price of a share (MPS)/Earnings per share (EPS)
► This demonstrates the investor confidence in the business. If the ratio is high, then it is better for an organisation. When the ratio
is high then the market price of the share is high (even though the EPS may be low).

3. Gearing Ratios
Debt ratio = (total debt/total assets)
► Where
Total debt = Current liabilities + Long-term liabilities
Total assets = Fixed assets + Current assets
► This helps a company to understand the amount of assets the company possesses to pay out all the debt of the company.
If the ratio is more than one, it indicates that the company assets are not sufficient to pay out all the debt that it has.
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4. Liquidity
Current ratio = (Current assets/Current liabilities)
► This demonstrates the liquidity position of the firm. If the ratio is more than one, it shows that the organisation’s current assets are
sufficient to pay out all current liabilities. This means that in the short term the organisation is less likely to have a liquidity issue.
Liquidity ratio = (Current assets-stock)/Current liabilities
► Since the stock is the least liquid item among current assets, when we take it off and divide by the current liabilities, it provides us with
a more accurate interpretation of the current position of the company compared to calculating the current ratio.

5. Asset Utilisation
Stock turnover = Cost of goods sold/Stocks figure in the balance sheet
► This demonstrates the cost of goods sold per £1 of stocks held in the company
Debtor turnover = Sales/Debtors
► This demonstrates the sales value generated per £1 of debtors available in the balance sheet
Credit turnover = Cost of goods sold/Creditors
► This demonstrates the cost of goods sold per £1 of creditors in the balance sheet
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Operational measures
Operations performance measurement measures progress toward meeting the objectives of prevailing system
management and operations. Although the specific objectives of management and operations activities vary among
organisations, most relate to the overall goals of transportation mobility, productivity, and safety.
An operational definition, when applied to data collection, is a clear, concise, detailed definition of a measure. The need
for operational definitions is fundamental when collecting all types of data. It is particularly important when a decision is
being made about whether something is correct or incorrect, or when a visual check is being made where there is room
for confusion.
When collecting data, it is essential that everyone in the system has the same understanding and collects data in the same
way. Operational definitions should therefore be made before the collection of data begins.

Key Performance Indicators (KPIs)
If a Key Performance Indicator is going to be of any value, there must be a way to accurately define and measure it.
A performance indicator or Key Performance Indicator (KPI) is a type of performance measurement. An organisation may
use KPIs to evaluate its success, or to evaluate the success of a particular activity in which it is engaged.
Whatever Key Performance Indicators are selected, they must reflect the organisation's goals, they must be key to its
success and they must be quantifiable (measurable). Key Performance Indicators are usually long-term considerations.
The definition of what they are and how they are measured does not change often. The goals for a particular Key
Performance Indicator may change as the organisation's goals change, or as it gets closer to achieving a goal.
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Time intervals required on control measures
When preparing a marketing plan, appropriate timescales should be set for each activity. A Gantt chart can be used to
provide an overall picture of the frequency and timings at which each activity will take place.
It is also important to allocate responsibilities for each activity. An activity schedule can be presented to list down the main
activities that should be conducted, and to allocate people responsible for each of them. The allocated people will be held
accountable in the case of non performance. (Refer Action Plan, Components of Marketing Plan under Lesson 2)

Marketing dashboards and Metrics
Marketing occupies a fascinating position at the intersection of art and science. Modern marketers reconcile these
qualities by meticulously measuring the results of their campaign to see how well they connect with their audience.
Strategic dashboards, or scorecards, are designed to enable senior executives to execute strategy, manage performance,
and drive new or optimal behaviours across the enterprise. These are primarily designed to facilitate monthly strategic
reviews or operational planning sessions, and help executives collaborate on ways to fix problems or exploit opportunities.
In strategic metrics, the main focus is on the executive strategy and it will help in making strategic decisions. The
management will use this also with the executives.
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Main metrics to consider are:
 Market share and relative market share
 Market growth
 Market demand
 Market penetration

Operational and activity metrics
Operational metrics measure the efficiency and effectiveness of an operation or a process. Activity metrics refer to activity
and individual performance measures of employees. Some of the metrics that measure the operational processes are:
► Product
 Market cost per unit
 New product adaptation unit
 Cannibalisation rate
► Price
 Sales per variation
 Profit impact
 Price elasticity of demand
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► Promotion
 Share of voice
 Recall, recognition
 Response rate
 Conversion rate
 Redemption rate
 Reach
► Online
 Page impressions
 Total clicks
 Cost per action
 Cost per lead
Lesson Summary
The key focus of this lesson was to provide you with a comprehensive understanding on promoting the marketing
plan to the internal organisational stakeholders as well as external organisations stakeholders.
Under the first section we have discussed the support of the marketing plan in order to achieve the strategic
objectives while looking at key ways as to how organisations could facilitate execution of marketing plan with the
goal of achieving strategic objectives in mind.
Secondly the key ways to gain employee agreement / commitment were discussed while bringing out Marketing
Orientation as a major way of encouraging all stakeholders to support the marketing plan and to gain agreement
towards successful execution.
Finally the methods of reviewing the marketing plan have been discussed in detail including financial ratios and
activity metrics.
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Application of
solutions to
organisational
change
Level 7 Diploma in Strategic Management and
Leadership
Module: Organisational Change Strategies
Introduction
This lesson aims to develop a robust understanding of change management within the context of organisational
transformation. Relevant models and frameworks on change management will be observed at the beginning of the lesson.
Thereafter, a range of problem-solving tools and techniques to address change challenges will be discussed and relevant
solutions that link to the achievement of organisational strategy will be evaluated towards the end of the lesson.
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Learning Outcomes
1. Understand how to apply solutions to organisational change
1.1 Critically evaluate the range of organisational change models and frameworks that could be used in your
organisation.
1.2 Identify and apply a range of creative problem solving tools and techniques to address change challenges.
1.3 Critically evaluate, determine and justify change solutions that link to the achievement of organisational strategy.
Lesson Objectives
1. Define the term Change Management
2. Discuss the importance of Organisational Change
3. Discuss theoretical frameworks and models pertaining to Organisational Change Management.
4. Identify organisational challenges to change.
5. Identify PSMs - problem structuring methods to address the identified change challenges.
6. Discuss change solutions that link to the achievement of organisational strategy.
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Understand the
term ‘Change
Management’
Introduction to the term ‘Change Management’
Change management is the systematic approach and

application of knowledge, tools and resources to deal with
change. In other words, it is about defining and adopting
corporate strategies, structures, procedures and
technologies to deal with changes in external and internal
conditions of the business (Dibella, 2007).
Importance of Organisational Change

Change is the need of the hour for every individual, every organisation. Engaging in the same old methodology which is turning to be
obsolete can lead to failure. Hence, the need to change should be of highest priority.
Change benefits organisations and employees in a number of ways. They are;
1. Build up Competition: Change does not necessarily indicate a major transformation every time. But it can seriously help to
build competition, which can help organisations progress and develop themselves.
2. Bring Technological Advancement: Change that results from the adoption of new technology is common in most organisations
and while it can be disruptive at first, ultimately the change tends to increase productivity and service. For Example, Toyota –
the company to emulate in the automobile industry, it has emerged to become one of the most successful organisations in
terms of establishing change management.
3. Develop Satisfied Customers: Satisfied customer is a boon for every organisation. Just a mere tweak in the strategy can do
wonders. The Google experience is a classic example of a company committed to wowing its customers based on consistent
quality and constant innovation over the years.
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Theoretical frameworks and models of

Organisational Change Management
Change Management frameworks are practically a requirement for any organisation undergoing change. Therefore, choosing
the right framework is vital for success, whether that change is digital, cultural, or organisational.
Over the past few decades, various business leaders have developed frameworks and processes that is used to effect
Some are simple, some are complex. Some are people-focused, some are process-focused. Each framework has its strengths.
Yet, some are more appropriate than others for a given situation.

In this lesson, the following change management models will be covered;
1. Lewin’s change management model
2. The McKinsey 7-S model
3. Kotter’s theory
4. Nudge theory
5. ADKAR
6. Bridges’ Transition Model
7. Kübler-Ross’ Five Stage model
8. The Satir change management model
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1. Lewin’s change management model
Lewin’s model is one of the most popular approaches developed in the middle of the last century. The model distinguishes three stages
which primarily focuses on behaviour modification of individuals.
 Unfreeze - This stage involves communicating the need for change and getting your employees on board with the new initiative.
 Change - Make all the necessary changes and improvements using education, training and new processes.
 Refreeze - Transform the new processes into the status quo.

► This model is used to examine how various aspects of your organisation work together. There are seven internal
elements of an organisation that needs to be effectively aligned to achieve its objectives. They are shown as
follows;
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In McKinsey model, the seven areas of organisation are categorised into ‘soft’ and ‘hard’ areas. Strategy, structure and
systems are hard elements that are much easier to identify and manage when compared to soft elements. On the
other hand, soft areas, although harder to manage, are the foundation of the organisation and are more likely to
create a sustained competitive advantage.

► Strategy: This is an organisation's plan for building and maintaining a competitive advantage over its competitors.
► Structure: This represents the way business divisions and units are organized (i.e. how departments and teams are structured,
including who reports to whom).
► Systems: These are the processes and procedures of the company, which reveal daily activities of a business and how decisions are
made. Systems determines how the job gets done.
► Shared values: These are the core values of an organisation, as shown in its corporate culture and general work ethic. They were
called "superordinate goals" when the model was first developed.
► Style: The style of leadership adopted.
► Staff: The employees and their general capabilities.
► Skills: Actual skills and competencies of an organisation's employees.
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This is a theory that focus less on the change itself but more on the people behind it. By inspiring a sense of urgency
for change and maintaining that momentum, Kotter’s theory can be used to have a significant impact in adapting
business to the current climate.

1. Create a sense of urgency - Make employees aware of the need and urgency for change. This requires an open, honest and convincing
dialogue.
2. Create a guiding coalition - Establish a project team that can occupy itself with the changes the organisation wants to implement.
Preferably, this coalition should be made from employees working in different jobs and positions. So that, all employees can rely on the
group and identify themselves with the team members.
3. Create a vision for change - Formulating a clear vision can help everyone understand what the organisation is trying to achieve within
the agreed time frame. Subsequently, ideas of employees can be incorporated in the vision, so that, they will accept the
vision faster.
4. Communicate the vision – Converse about the new vision with employees at all possible times and by taking their
opinions, concerns and anxieties seriously.
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5. Remove obstacles - Eradicate any challenges that could undermine the vision.
6. Create short-term wins - Create short-term goals. As a result, the employees will have a clear idea of what is going on. When the goals
have been achieved, employees will be motivated to fine tune and expand the change.
7. Consolidate improvements - Change is a slow-going process and it must be driven into the overall corporate culture. An organisation
therefore needs to keep looking for improvements. Only after multiple successes have been achieved, it can be established that the
change is paying off.
8. Anchor the changes - A change will only become part of the corporate culture when it has become a part of the core of the organisation.
Values and standards must agree with the new vision and the employees’ behaviour must provide a seamless match. Employees must
continue to support the change. Regular evaluation and discussions about progress help consolidate the change.

4. Nudge Theory
Nudge theory is a flexible and modern change-management concept for;
• understanding how people think, make decisions and behave,
• helping people improve their thinking and decisions,
• managing change of all sorts and
• identifying and modifying existing unhelpful influences on people.
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4. Nudge Theory
The theory is comprised of 7 steps, which are as follows;
1. Clearly define the change.
2. Consider the change from the point of view of the

impacted stakeholder.
3. Develop a change roadmap with key decision points

and provide transparent data.
4. Engage those being impacted in the decision-making

process.
5. Listen to feedback.
6. Reduce obstacles.
7. Keep momentum with short term wins.


5. ADKAR
This is a goal-oriented change management

model that drives powerful results by
supporting individual changes to achieve
organisational success. ADKAR is an
acronym that represents the five tangible
and concrete outcomes that people need
to achieve for lasting change:
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6. Bridges’ Transition Model
This model primarily focuses on transitions and the psychological changes that lie behind significant organisational change.
According to the findings of Bridge, the situational changes are not as difficult for companies to make as the psychological transitions
of the people impacted by the change.
Therefore, this theory involves a three-phase process of:
1) Ending, Losing, Letting Go - helping people deal with their tangible and intangible losses and mentally prepare to move on.
2) The Neutral Zone - critical psychological realignments and repatterning takes place. This is all about helping get people through
it, and capitalising on all the confusion by encouraging them to be innovators.
3) The New Beginning - helping people develop the new identity, experience the new energy, and discover the new sense of
purpose that make the change begin to work.

7. Kübler-Ross’ Five Stage model
The "Five stages" model is used to understand how people react to change at different times.
► Denial: Occurs when employees resist admitting that change needs to happen and necessitate intense communication and a slow
transition into change.
► Anger: Occurs when people grow fearful and resentful of change, and requires acceptance of this outrage, additional dialogue, and
support.
► Bargaining: Occurs when employees attempt to change the intended changes, and requires listening to this feedback while
remaining on firm on essential parts of the transformation.
► Depression: Occurs when employees slow productivity because of a sour or despaired mood towards change, and necessitates
limiting friction in activities and implementing rewards for small successes.
► Acceptance: Occurs when change is fully implemented, and requires celebration of this recognition as well as continuing to instill
the changes
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8. The Satir change management model
The Satir System is a five-stage change

model that describes the effects each stage
has on feelings, thinking, performance, and
physiology. Using the principles embodied
in this model, managers and leaders can
use the model to understand how their
teams cope with change as they undergo it.
They can then use this understanding to
move their teams through the change more
quickly and more efficiently.

The Satir change management model puts the focus on tracking process, which will effectually change performance over
time. Instead of instigating the changes, the five stages are meant to be plotted or graphed over time:
1. Late Status Quo: This defines the starting point before the change. What is the current state of performance,
technology, morale, etc.?
2. Resistance: Resistance occurs when employees react with negative emotions to change. What exactly are employees
resistant to? What new elements are causing this resistance and why?
3. Chaos: This stage occurs at the lowest point of morale and motivation and the height of resistance to change.
4. Integration: Here, productivity takes a positive turn, and enthusiasm begins. As with all stages, tracking performance
and success is vital.
5. New Status Quo: Finally, a new “normal” should be implemented. The change has become “normal,” and ideally,
higher and better performance result.
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Organisational Challenges to Change

Wookcock and Francis (1990, cited in Gilegeous, 1997, p.18) in their study of work, highlighted the below
factors as challenges or barriers that impede change process;
Unclear aims and values Unfair rewards
Inappropriate management philosophy Poor training
Lack of management development Personal stagnation
Confused organisational structure Inadequate communication
Inadequate control Poor team work
Inadequate recruitment and selection Low motivation and creativity
Organisational Challenges to Change

The above-mentioned factors explain the nature of resistance that is likely to rise, once a change initiative is subject to
implementation. It is important that the above difficulties are properly addressed before the unfreezing of change takes
place.
Unless adequate attention is given, the said factors may lead the firm to a serious condition, and sometimes will also lead to
the collapse of an organisation. Employees of any firm are likely to challenge the change programme, where they will
become stubborn and not open for change. This might lead to the credibility of the change programme being challenged by
employees which will in turn, result in losing the overall credibility of the firm. Therefore, ignoring the resistance to change is
prone to failure. Hence, management should have the willingness and attitude to accept resistance for change and to look
into these matters with an open mind.
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Creative problem-solving tools and techniques

to address change challenges
Creative Problem Solving (CPS) is a key skill in learning how to accurately identify problems and their causes, generate
potential solutions, and evaluate all the possibilities to arrive at a strong corrective course of action. Every team in any
organisation, regardless of department or industry, needs to be effective, creative, and quick when solving problems.
There are many different problem-solving techniques. However, it is vital to understand that these techniques are all based
around the following key elements:
1. Defining and evaluating the problem
2. Identifying or creating options
3. Evaluating and selecting options
4. Testing options and implementing an option as a solution

Creative problem-solving tools and

techniques to address change challenges
Divergent Creative Problem-Solving Techniques
Brainstorming: One of the most common methods of divergent thinking, brainstorming works best in an open group setting
where everyone is encouraged to share their creative ideas. The goal is to generate as many ideas as possible – you analyze,
critique, and evaluate the ideas only after the brainstorming session is complete.
Mind Mapping: This is a visual thinking tool where you graphically depict concepts and their relation to one another. You can
use mind mapping to structure the information you have, analyze and synthesize it, and generate solutions and new ideas
from there. The goal of a mind map is to simplify complicated problems so you can more clearly identify solutions.
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Divergent Creative Problem-Solving Techniques
Appreciative Inquiry (AI): The basic assumption of AI is that “an organisation is a mystery to be embraced.” Using this
principle, AI takes a positive, inquisitive approach to identifying the problem, analysing the causes, and presenting possible
solutions. The five principles of AI emphasize dialogue, deliberate language and outlook, and social bonding.
Lateral Thinking: This is an indirect problem-solving approach centered on the momentum of idea generation. As opposed to
critical thinking, where people value ideas based on their truth and the absence of errors, lateral thinking values the
“movement value” of new ideas: This means that you reward team members for producing a large volume of new ideas
rapidly. With this approach, you’ll generate many new ideas before approving or rejecting any.

The Osborn Barnes method of Creative Problem Solving
In 1953, Alex Osborn wrote a book titled “Applied

Imagination: Principles and Procedures of Creative
Problem-Solving.” This book was one of the first to write
about how brainstorming and creative problem-solving
could be applied as a structured process. Here are the key
elements of the CPS process (as shown in the figure):
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Two key themes in the Osborn-Parnes approach are;
 firstly the belief that creative thinking is a taught skill. This may seem obvious now, but in the 1950s, this broke the
established paradigm that people were born with inherent creative skills - or not.
 The second key theme is the use of convergent and divergent thinking at each stage of the CPS process. This involves
learning ways to identify and balance expanding and contracting thinking and knowing when to apply them.

Change Path Diagnostic
This is a creative problem solving tool developed by

Strebel (1994, cited in Gilgeous, 1997, pp.21-22) to
address change challenges within a highly dynamic
environment. This diagnostic helps a firm to identify the
best course of action or the best suitable change path
for a given situation.
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Main conclusions of this diagnostic path can be highlighted as follows:
In a situation that the change forces are strong, a firm is likely to face a high level of resistance. The key issues will be whether
the resistance will be overcome and when it will be done? The level of resistance is high when the firm accommodates
limited renewals.
If the forces of change cannot be counterbalanced, then full adaptation is needed. It could be either with deep revitalisation
if sufficient time and resources are available, or with quick, rapid restructuring at an instance where time and resources are
short. In a situation where the forces for change are weak, it affects the performance levels. Then, proactive change will be
initiated, if the forces of change can be identified eagerly. The most appropriate change path will be chosen on the basis of
openness / closeness of the firm to the concept of change.
Creative problem-solving tools and techniques

to address change challenges
If the change forces cannot be identified readily, then the challenge is such that management needs to create a
mobilising sense of uneasiness with the things as they are. Firms will look for the help of change campaigns if
required. Yet. if there are more than one change force, then they will look at the stronger change forces first,
followed by the weaker ones. An ongoing change campaign should be ensured as once the change campaign freezes,
the likelihood is high for them to run into trouble.
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Change solutions that link to the achievement of

organisational strategy.
Following are the change solutions that are available for organisations;
Perceptions of Change
Successful implementation of a change programme will greatly rely on different perceptions of the employees who are concerned and
subjected to change. Hence, managing perception is a very important area when it comes to change management and thereby, to achieve
the set organisational strategies.
It is a common understanding that the top management of any company will only discuss and try to find solutions for board room level
problems that they foresee regarding a given change initiative. However, when it comes to the operational level, the situation will be
different and sometimes worse than predicted. Furthermore, some lower level managers and employees may possess opposing opinions
about change. Therefore, the ‘change agent’ or the ‘mediator’ is largely required to balance the various natures of perception and bring
them to a common platform so that change can be successfully introduced.
Moreover, it is essential that managers find ways of obtaining and providing feedback from and to the firm / employees, so that, problems
which are likely to occur can be identified and sorted.
Change solutions that link to the achievement

of organisational strategy.
Different mechanisms to ensure positive perceptions on change
Wilson (1994, cited in Gilgeous, 1997, pp.12-13) recommended the following solutions as a mechanism to ensure positive
perceptions on change:
1. Newsletters, publications and poster campaigns
2. Attitude surveys
3. Management by wandering around
4. Consultants
5. Joint project groups
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Different mechanisms to ensure positive perceptions on change
6. Steering committee
7. Video
8. Roadshows
9. Change centre and progress charts
10. Consultative committee

Conditions for Success
Gilgeous (1997, pp.13-14) in his work of study, suggested that there are few conditions that must prevail within an organisation
during times of change. They are;
► Active involvement and support from top management
► Adopt a green-field approach for change
► Recognition of success and appropriate rewards
► Managing the individual skills, capabilities and innovativeness in the correct composition
By ensuring these conditions are met within an organisation, it will be able to successfully achieve the required organisational
strategy.
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Change solutions that link to the achievement

of organisational strategy.
Rules for Successful Change
Pugh (1993, cited in Gilgeous, 1997, p. 28) highlights the rules for successful change:
► Establish the need for change appropriately
► Think through change instead of thinking out from change
► Use informal discussion and feedback to initiate change
► Use a positive approach for those who object to change
► Be prepared to change your own self.
Lesson Summary
Under this lesson, we have covered all key objectives by first introducing the term ‘change management’ and then by discussing
the importance of managing change within an organisation.
A sound knowledge on concepts related to organisational change were discussed in detail afterwards. This is useful for students
to establish a solid foundation of theoretical background in order to understand the other three lessons in the “Organisational
Change strategies” module.
Towards the latter part of the lesson, challenges revolved around change was identified and the relevant problem structuring
methods to address the identified change challenges have also been discussed accordingly.
Finally, solutions that link to the achievement of organisational change strategies were discussed in depth.
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Develop Change
Strategies with the
use of
Implementation
Models
Leadership
Introduction
This lesson aims to provide an overall understanding of how to develop a change strategy using implementation models.
Different models that could be used to implement change within an organisation will be discussed extensively throughout the
lesson. Towards the end of the lesson, the criteria required to select and support such models and its link to achieve the
desired organisational change will be assessed.
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Learning Outcomes
2. Understand how to develop a change strategy using implementation models
2.1 Critically evaluate a range of change implementation models
2.2 Identify and justify the criteria to select and support a change implementation model and will achieve the
organisational change desired
Lesson Objectives
1. Introduction to oganisational change strategy
2. Causes of Change
3. Targets of Change
4. Forces Supporting Organisational Change
5. Forces Resisting Organisational Change
6. Change Implementation Models
7. The required criteria to select and support a change implementation model
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Introduction to oganisational change strategy

Organisational change is the process by which an organisation moves from their present state to some desired future state to
increase their effectiveness (Jones, 2007,p.269).
In view of that, it is essential for an organisation to ensure that the change process is successful as well as it is promptly
implemented to obtain maximum benefits expected out of the change program. Change management is a challenging task, as
it involves coordination and re-arrangement of many areas/functions of an organisation. On the other hand, it is necessary
that the management who are involved with change get the support from all related parties and ensure the resistance is
minimal. Therefore, it is important for us to understand that a change program cannot be implemented overnight, nor the
results can be obtained within a shorter duration. Careful and adequate attention and analysis must be given to all areas
concerned, if the results of a change program is to be as expected.
Causes of Change
Change can be caused by various factors. However, these factors can be broadly classified into two areas, namely; External
factors and Internal factors.
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Causes of Change
External factors – These are triggers that arise from areas which are external to a firm. For example, changes in the
technology, changes in the market place, changes in customer preferences, expectations and life styles, changes which occur
as a result of competitor activities, changes due to political activities and transformation of government legislations, changes
due to various economical factors etc.
Reaction of firms to changes in the external environment will happen in different levels and different ways. In some
instances, a firm could follow a total blind and deaf approach as well. Thus, could bring the firm to a serious disastrous
situation.
Internal factors – Internal perspective of change will occur once the elements such as management philosophy, structures,
cultures, leadership, power and control are transformed / modified or replayed by newer and different ways.
Targets of Change
Organisational changes are of two main forms, which is; planned change and unplanned change.
According to Wilson (1992), a change can be planned logically and systematically, which is considered as the planned change. This assumes
that the environment is known and therefore, a logical process of environmental analysis can be coupled in the service of planning. However,
this view does not take account of unexpected outcomes or consequences which may occur when implementing change.
A change which takes place within an organisation as a strategic intervention, but are introduced in an unplanned manner, in response to
either a change in the demographic composition of an organisation or due to performance gaps is considered as the unplanned change.
The following are different levels that a firm should target during times of change to improve overall organisational effectiveness (Jones,
2007,pp.270-271).
► Human resources
► Functional resources
► Technological capabilities
► Organisational capabilities
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Targets of Change
Human Resources
This is known as the most important asset for any organisation. This is because, skills, abilities and competencies of a
workforce act as a major determinant of its productivity and successful performance in the market place. It is therefore
paramount that managers find the appropriate ways to improve effectiveness and efficiency levels of the workforce.
As suggested by Jones (2007, p.270) the following are the type of change efforts, that is aimed at improving employee
productivity.
► New investment in training and development activities, so that, employees acquire new skills and abilities.
► Socialising employees into the organisational culture, so that, they learn the new routines on which organisational
performance depends.
► Changing organisational norms and values to motivate a multicultural and diverse workforce
► Ongoing examination of the way in which promotion and reward systems operate in a diverse workforce.
► Changing the composition of the top management team to improve organisational learning and decision making
Targets of Change
Functional Resources
It is important that organisations develop its internal procedures in a manner that it complements external environmental changes. On that basis, when
management makes decisions on resource allocation, extra resources must be directed towards more profitable functions or ventures to create highest value
to the firm. This would include changes to organisational structure, culture, technology, etc. Hence, functional resources are a target for change.
Technological Capabilities
This is the area within an organisation that will be subjected to continuous change. Changes to technology will allow a firm to gain use of market
opportunities. Further, technological competencies will be a cornerstone for change as it backs a firm’s new product development process. Thus, it is
important that organisations find ways of developing new products and services that will help them to retain their existing customers as well as attract new
ones.
Organisational Capabilities
In order to harness human resources, functional resources and technological capabilities, a firm must have a proper organisational structure and a culture in
place. Overall organisational capabilities will therefore be a target for change at all instances. This is because, it will focus on improving interactions between
the functions and the employees of the firm in a manner that it will maximise the overall value addition. Thus, change to the organisational structure and
culture can happen at any level of a firm, irrespective whether it is the top management level or for operational level tasks.
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Forces Supporting Organisational Change

As suggested by Jones (2007,pp.271-274) the following factors are identified as forces supporting organisational change.
Competitive forces - Competition is a major determinant of change. An organisation will be able to stay ahead of the
competition in the market place, if they are equipped with sustainable competitive advantages in comparison to others in the
market. It is essential that a firm stays ahead of competition in terms of areas such as product quality, features, after sales,
innovation etc.
Economic, Political and Global forces - Organisations needs to be sensitive to global changes and challenges. These stem
from various areas such as economic booms, downturns, different trade agreements entered between countries and
governments etc. It is important that firms are responsive to the demands which stem from economic, political and global
forces, so that they are in line with the market trends. Adaptation to such forces is a total change process to any firm’s
culture, structure etc.
Forces Supporting Organisational Change

Demographic and Social forces - It is a fact to accept that the composition of the workforce is different than the old days.
Female employees replace more male employees in every aspect, when it comes to recruitment of an organisation. Employees
who belongs to different countries, different religious backgrounds, with different values, principles, norms and beliefs
increases the diversity of workforce. Managing a diverse workforce is not an easy task. Therefore firms needs to get used to
different management styles and patterns, which in turn will initiate change within a firm.
Ethical forces - Ethical behavior and business practices are becoming increasingly important in present context, as firms need to
match increasing demands form forces such as political, government, and the society at a large. Business ethics and ethical
behavior brings in more recognition to a company from all stakeholder groups concerned. Therefore changes are a must and
the managers at all levels should be allowed to promote and practice ethical behavior.
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Forces Resisting Organisational Change

As suggested by Jones (2007,pp.274-275) forces which resist organisational change can rise from four different levels which
are as follows:
1. Organisational Level - Resistance to change at this level could stem from areas such as organisational structure, culture
and the firm’s business strategy.
2. Functional Level - Differences in power levels and conflict as well as differences in sub-level orientation will result in
functional level resistance for change.
3. Group Level - Resistance to change at this level will stem from areas such as norms, cohesiveness, group thinking, etc.
which are some features commonly observed within group behavior.
4. Individual Level - Factors such as cognitive biases, uncertainty and insecurity about change, selective perception and
retention, habitual behaviour will cause individual level resistance to change. Fear of losing jobs, non-
recognition, motive to enjoy benefits at the expense of others etc. could bring resistance to change at an individual
level.
Change Implementation Models
Lewin’s Force Field Theory of Change
As identified and explained by Lewin (1951) there are

two sets of forces which are always in opposition
within an organisation. At times where these forces
are evenly balanced, it will cause organisational
inertia resulting in resistance for change.
If the change is needed to be actually executed, then

the managers or strategists should find ways to
increase the forces that will support change and
reduce the impact from forces which are against
change processes or this has to be practiced
simultaneously. This will help the firm to overcome
organisational inertia and to support the change.
Source: (Lewin, 1951, p. 50)

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Three Step Model of Change
Kurt Lewin’s three step model explains the stages which are important for successful change:
• Unfreezing will include releasing or segregating all present level demands, arguments and disagreements, meetings or a
process of re-education which might be accomplished through team building.
• Moving is an important element in the change process where the firm will move to a new level of behaivours, values, and
attitudes as a result of change.
• Refreezing is a process which the management will ensure that the changed processes are set and secured at the new
standard without reverting it back to where it was. In other words, it will calm down the firm at the new state of
equilibrium to ensure that the new ways are safe from deterioration or failure.

The Intervention Strategy Model
The Intervention Strategy Model (ISM) was developed by
McCalman and Paton (1992) cited in Gilgeous (1997, pp.24-
27).
This model suggests a well structured and a systems
approach. It highlights 3 main phases of intervention,
namely:
► Definition and identification of the appropriate problem
owners
► Evaluation phase
► Implementation phase
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Definition and identification of the appropriate problem owners:
Stage 01: Problem or system specification and description: Management will gain an understanding about the problematic
situation and the need for change. Historical data, diagrammatic techniques etc. will be used in this regard.
Stage 02: Formulation of objectives and constraints: This stage will determine the different change objectives in par with the
identified problem. Subsequently, different ways and means of achieving the same will be recognised too. This will generate
various options, out of which, the management has to select one option carefully. Meantime, constraints are also to be
expected as the resources are of scares nature.
Stage 03: Identification of performance Measures: Key performance indicators needs to be identified as they will be used to
measure the actual performance against the standard performance. The KPIs should ideally be quantifiable. For instance,
costs, savings, volume, labour, time etc, can be considered as some of the KPI’s. Establishing performance measurements will
help the firm to evaluate different options effectively.

Evaluation
► Stage 04: Generation of options or solutions: This is mostly carried out as a group exercise where techniques such as
brainstorming, focus groups, meetings, workshops etc. will be conducted as some of the common group exercises. It is
important that the members of the group have a sound knowledge on each other, if not, the firm will have to seek
assistance on team building exercises to ensure adequate knowledge prevails.
► Stage 05: Selection of appropriate evaluation technique and option editing: A basis for a final evaluation is identified by
considering the available options to a greater depth. A firm will look for an evaluation technique that is truly viable.
Techniques such as simulation, cost benefit analysis. Investment analysis, diagrams etc. will be used with this regard.
► Stage 06: Option evaluation: Priority for each objective that was previously determined will be evaluated against various
options. It is important that this is sorted at the first time it self since it tend to take a considerable amount of time as well
as resources.
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Implementation
► Stage 07: Development of implementation strategies: There are 3 main implementation strategies which are;
1. Pilot studies – This leads to change eventually where the management is given an option to see the actual results of change in the most
safest way. Pilot studies help sort out any problems before more extensive change is instituted. However, it can cause a delay when
change is a factor that is particularly important in a fast moving dynamic situation.
2. Parallel running – This is where the new system is running for a time, along side the old system, until confidence is gained that the new
system is reliable and effective. Parallel running is applied more frequently to the implementation of computer systems but can be
applied to other kinds of change too.
3. Big bang – This has the highest speed of change as well as the highest level of resistance in the short term. Hence the risk of failure is
high unless planned carefully.
► Stage 08: Consolidation: Appropriate consolidation between the old and the new systems are essential. Even after the implementation
process, further changes can be forced on to the situation, if the imbalance between the system and the environment becomes too great.
The criteria to select and support a change

implementation model
If an organisation is in the process of choosing a change management approach, or making sure it is already in line with the
current strategic priorities with what the approach it already has, it is important to ask the following questions:
1. Is the Methodology Structured?
Change management methodology should be a structured process that is applied to organisational changes, with the aim of
managing human elements of a change. A structured change management methodology ensures you are not taking a "hit or
miss" approach where one project team does all the right things (and gets adoption and value realization) and another team
misses key elements or steps.
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2. Is the Methodology Flexible?
Some frameworks are linear in scope. They provide users with a road map for implementing change by completing a
prescribed set of tools and templates. Linear frameworks can be sufficient when dealing with routine changes within a
specific department or business unit. However, not every change is linear. Transformation and other enterprise-wide changes
are far more complex by definition. In fact, many implementations are quite unpredictable and require a process that can be
flexible and scalable based on what is occurring at the moment, rather than what is next on the to-do list.
3. Does the Framework Provide Guidance on What to Do in a Variety of Situations?
The goal of “implementation management,” shouldn’t be "to do" a process, but rather to have core principles to guide the
organisation on what it should be doing, given the day-to day project realities and challenges. The change framework should
be a repeatable process, but also one where it doesn’t have to apply every step, every time. Some judgment should be
involved in determining which strategies and tactics are needed and when. In other words, a good change management
methodology will be designed to be used in any situation in a “fit for purpose way.”

4. Is the Methodology Robust Enough to Address Systemic Changes?
Any organisation that undergoes change must question itself whether the methodology provides guidance on how to address highly
complex changes that cross multiple business units (i.e. changes like mergers and acquisitions, one company solutions, cultural
changes, shared services, etc.? A systemic change management methodology is the framework for building competency in all of the
key groups involved in implementing organisational change. This may include at a minimum:
 leaders who are Sponsors of these changes
 program and project management teams
 business process improvement groups
 IT professionals
 HR and OD professionals
If all these critical players aren't knowledgeable about the change management practices within the organisation, then the firm is
conclusively not taking a systemic approach.
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5. Does the Methodology Have a Business Focus,or is it More Conceptual?
Some frameworks are more about getting people on board and the “journey of individual change,” rather than about
business outcomes and Return on Investments. For example, most "home-grown" change management methodologies
aren't focused on supporting the way a business actually operates and implements. A change management methodology
should be focused on total value realization as defined by the following 5 measures of success:
► On time
► Within budget
► Business objectives
► Technical objectives and
► Human objectives
Only when all five metrics have been met, a behavior change will occur. And without behavior change, there is no true
change, which in turn means return on investments or the desired outcomes of the organisation has not been achieved.
Lesson Summary
At the beginning of the lesson, an introductory note on organisational change strategy was provided.
Subsequently, factors that cause change, different levels that a firm should target during change and forces that support and
resist organisational change were discussed in order to provide a basic understanding on factors that should be considered
prior to developing a change strategy.
With this learning, different change implementation models such as Lewin’s ‘Force Field Theory of Change’, ‘Three Step
Model of Change’ and the ‘Intervention Strategy Model (ISM)’ were discussed extensively.
Towards the end, the criteria required to select and support such models and its link to achieve the desired organisational
change were assessed using five questions.
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Organisational
Response to Change
Leadership
Introduction
This lesson supports the understanding of monitoring the progress and effects of change within an organisation. Analytical
tools and techniques used to measure and track change in a globally transformational context will be discussed throughout
the lesson. It also develops a robust understanding of leadership, communication and change management within the
context of organisational transformation.
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Learning Outcomes
3. Be able to analyse an organisational response to change.
3.1 Identify and demonstrate the use of analytical tools to monitor the progress and the effects of change within your
organisation.
3.2 Critically assess monitoring and measurement techniques used to measure and track change within an organisation.
3.3 Analyse and critically assess strategies to minimise the impact of adverse effects of change in your organisation
Lesson Objectives
1. Introduction to Change Management Tools and Techniques
2. Analytical tools and techniques to monitor the progress and the effects of change
3. Supporting tools and techniques to measure and track change
4. Strategies to minimise the impact of adverse effects of change
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Introduction to Change Management Tools

and Techniques
Change management is a multi-disciplinary profession. It relies on models from psychology, organisation design, systems thinking and much more. With all this conceptual
dialogue, it’s easy to forget the everyday customs we use to get things done, which can be simply referred to as ‘change management tools and techniques’.
When a change initiative is introduced to the organisation, it will ultimately impact one or more of the following:
 Processes
 Systems
 Organisation structure
 Job roles
While there are numerous approaches and tools that can be used to improve the organisation, all of them ultimately prescribe adjustments to one or more of the four parts
listed above. Change typically results as a reaction to a specific problem or opportunities the organisation is facing based on internal or external stimuli. While the notion of
becoming “more competitive” or “closer to the customer” or “more efficient” can be the motivation to change, at some point these goals must be transformed into the specific
impacts on processes, systems, organisation structures or job roles. This can be done through the use of change management tools and techniques.
Analytical tools and techniques to monitor the

progress and the effects of change
Following elements have been identified as analytical tools and techniques used in order to monitor the progress and the effects of change;
► Total Quality Management (TQM)
► Flexible workers and flexible working teams
► Empowerment
► Restructuring
► E-Engineering
► The learning organisation
► Business process re-engineering
► Continuous Improvement
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Analytical tools and techniques to monitor the progress and the

effects of change
Total Quality Management (TQM)
Change will bring effectiveness and efficiency to current work patterns as well as interrelations of the employees. For that
reason, TQM will focus on coordinating the design of various inputs, so that, they fit together smoothly and function
effectively. Likewise, different employees across the firm will also work together to identify non value adding areas that
results in reduction of inputs and work procedures which are unnecessary. As a result, the assembly line will be more reliable
and simplified. This will improve the overall quality and bring cost advantages to the firm.
Quality aspect of the product or service ultimately focuses on obtaining the highest customer satisfaction. Therefore, the aim
is to deliver highest level of customer perceived value. For this, the firm needs to have a proper system that collects and
analyses the data and distribute meaningful information to all relevant parties. Employees must be given extensive training
where they will identify the cost of errors as TQM identifies ‘getting it right the first time’ rather than trying to reverse
mistakes.

effects of change
Total Quality Management (TQM) Cont.
Implementing TQM is not a simple task to any organisation as it has to be led by a visionary leader who has the correct
capability to persuade his/her team to adopt the TQM practices. Novel ways of viewing the role of each person and the
organisation as a whole will be expected with the change of TQM. De-centralisation of decision making and empowerment
are key to success of TQM. Also this demands a high degree of commitment from its employees at all levels. It is important
that all employees and managers understand that change initiatives such as TQM is of more long-term effect where the
results cannot be observed in a short time duration. Firms such as Toyota, Citibank are good examples for firms who have
implemented TQM to its production processes successfully.
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effects of change
Flexible workers and flexible working team
A worker is required to develop skills in a certain area at first and then overtime will be given the training to perform other
tasks, which in turn, will increase the substitutability of workers. Flexi work patterns will help a firm to be quick to the market
since the level of responsiveness within the firm to a given task is high. This will lower the concerns of boredom, stagnation,
fatigue etc. Learning is highly encouraged in such situations where the change is such that the workers should possess the
knowledge and capability to combine tasks, innovate, redesign the production process or the product that will increase the
efficiency, productivity and lower the costs in an overall perspective.
Need of change in attitude and behaviour could bring positive or negative concerns about the total change initiative.
Therefore, management should identify ways to communicate the advantages of flexi working patterns and gain acceptance.
Flexible work teams are responsible for effective rollout of TQM concept. Toyota and GE are best example for a firm who
pursued success with the initiation of flexi-work groups.

effects of change
Empowerment
“Empowerment is leadership that increases the authority and responsibility of those closest to our products and customers.
By actively pushing responsibility, trust and recognition into the organisation we can harness and release the capabilities of
all our people”. (Waterman, 1994 cited in Gilegeous, 1997,p.287)
Empowerment will allow an organisation to help its employees adapt to change in a more effective manner. Assigning
appropriate authority and responsibility to employees will make them be in charge of the implemented changes. As a result,
they will feel that they are part and parcel of the change programme and thus, the anticipated level of resistance could be
kept at a minimal level.
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effects of change
Empowerment
Empowerment will essentially effect positively on change as follows:
 Increased employee involvement on change programs.
 Improved quality of working life. Consequently, room for anxiety and frustration which a change could bring could be kept
at a minimal level.
 This looks into the quality aspect of production. Hence, TQM practices are further enhanced.
 Looks for possibility of continuous improvement. Therefore room for failure is at a minimal level.

effects of change
Empowerment Cont.
 Encourage team working and learning within a firm that focus on improved communication as well as better flow of
information. This would create minimal room for resistance for change.
 Empowerment will prepare employees to meet the new challenges positively since adequate room is given for them to act
in the best favour of a company.
 Empowerment will help to streamline current processes by making the employees to find new ways of cost reduction,
improving productivity and to redefine total organisational values.
 Change could initiate restructuring of firms. Therefore, empowerment will facilitate restructuring as employees are
recognised for their efforts and they are treated as assets to the company. This will bring self change to the firm. Thus,
removing layers or redefining job roles will be a relatively easy task.
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effects of change
Empowerment Cont.
Implications of Empowerment on People:
Changing roles: Empowerment will affect in changing

roles for employees in a firm. Changing roles bring
change to the company. Level of empowerment for a
firm will bring an added competitive advantage and will
help an organisation to survive in the long run.
Rewards: Empowerment will break all functional

barriers and the total reward structure will be altered
as a result. Performance and innovativeness will be
recognised to ensure ‘make the change happen’.

effects of change
Empowerment Cont.
Transferring ownership: At a given point the leaders or entrepreneurs of a firm will need to transfer ownership of work to lower level
employees with the aim of ensuring the change is implemented successfully. Therefore, empowerment will create an environment for
ownership and responsibility of all performance areas concerned. This will secure creativity, accountability and innovation as the decisions will
not stem down from the managers all the time.
Changes in attitude and behaviours: Successful implementation of change initiatives will need a drastic change in attitude and behaviour.
However, empowerment can bring fear and uncertainty to employees initially. Nevertheless, the situation can be eased by making empowered
team members to work with others, which will allow them to realise the importance of improving their skills and competencies, resulting in
changes of attitudes and behaviours.
Autonomy, entrepreneurship and innovation: Empowerment will bring motivation to employees. In consequence, innovation and novelty can
be introduced to the business organisation more comfortably. Employees are given the chance to act on their own for the best favour of the
firm, yet they will be appropriately judged. This will make the change process a success.
Training needs: Training is a key part of empowerment. This will minimise the employee’s level of frustration and fear about the unknown
change. This is also a way of achieving competitiv advantage.
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effects of change
Empowerment Cont.
Empowering employees will bring a drastic change to

any organisation. It is paramount that the
management or strategists properly identify the
targets of empowerment. This could be change
sponsors, change agents or most commonly the
change players. They need to be made understood as
to what the firm is expecting to achieve by
empowerment and what steps are involved with the
process of empowerment. Following is a six-step
process which explains different involvements of
empowerment which is suggested by Kinlaw, (1995)
cited in Gilgeous (1997,p.292)

effects of change
Empowerment Cont.
Steps in the Empowerment Process;
1. Define and communicate
2. Set goals and strategies
3. Train people
4. Adjust the organisational structure
5. Adjust the systems
6. Evaluate and improve
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effects of change
Empowerment Cont.
1. Define and communicate - Appropriately explain the meaning of empowerment to all members of an organisation.
2. Set goals and strategies - Set a proper framework for employees at all levels to sustain empowerment by their own
efforts and hard work.
3. Train people - Employees should be trained adequately, so that, they can perform successfully in their new roles and
thereby achieve the overall organisational goals through the support of empowerment.
4. Adjust the organisational structure - This will demand lean management practices and more flat and flexible structures.
Bureaucratic structures will be therefore eliminated and will give greater autonomy and freedom to perform.
5. Adjust the systems - This is where the firm will alter its processes in a manner that it will complement and support
empowerment of people. Ex: Reward systems, promotions, training, hiring etc.
6. Evaluate and improve - It is an important aspect that the processes which were empowered are measured to assess
improvements. Most importantly its essential that employee perceptions are evaluated and corrected if not in place.

effects of change
Empowerment Cont.
Benefits and Problems Relating to Empowerment;
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effects of change
Restructuring
“Restructuring is a process by which managers change task, authority relationships and redesign organisational structure and
culture to improve organisational effectiveness.”
(Jones, 2007,p.286).
“Downsizing is the process by which managers streamline the organisational hierarchy and layoff managers and workers to
reduce bureaucratic costs”
(Jones, 2007,p.286).

effects of change
Restructuring Cont.
Negative impacts of downsizing: Employees or managers who remain after a restructuring effort are to bear an extensive
amount of work load. Therefore, work stress is immense and often would lead to de-motivation. Employees work with fear
that they will be the ‘next person to go home’. Thus, they are compelled to bear the workload of too many where this
situation could blow out at any instance.
Companies may sometimes trade off short term gains from cost savings for long-term losses because of lost opportunities
(i.e. Redundancy of middle level managers in a firm or elimination of the middle layer will bring stagnation to a firm as there
will be no employees to look or create for opportunities in the market and also lead innovation). However, extensive growth
and tall structures will make the top management to arrive at a possible decision of downsizing to remain competitive or
survive in the market through proper allocation of resources.
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effects of change
Restructuring Cont.
Positive effects of restructuring: Firms who experience rapid loss of market share, or performance deterioration will essentially opt
for downsizing as a methodology to save cost and to survive in the market. Yet, unforeseen changes in the environment such as shifts
in the technology which makes a product obsolete, economic recessions, etc. will make restructuring to occur as it will minimise the
effects of too tall structures which are highly bureaucratic.
Resistance to change will be brought in through restructuring efforts. It is important that the management who opt for downsizing
decisions, look for possibilities of establishing new task and role relationships since change will bring uncertainty and threat to certain
employees. Furthermore, the management will need to look into some other areas such as designing golden hand shakes, voluntary
retirement schemes, or a compensation system for the employees who will be made redundant. However, restructuring efforts will
take a considerable amount of time. Therefore, it may also fail due to high degree of resistances.

effects of change
E-Engineering
“E-engineering is referred to as different attempts made by organisations to use all kinds of information systems to improve their
performance” (Jones, 2007,p,286).
E- engineering will essentially focus on changing the way of value creation to its customers. As mentioned above, e-engineering will take all
types of information systems to create value to their customers. With the increased pace of market developments and environmental
dynamism, it is important that firms be more responsive to customer demands and also be quick to markets which will help them to survive
in the long run. However, developments in the recent information technology has raised the need to change placing its importance at the
core of all processes of a firm.
The world is treated as a single global village. Customers are far more demanding as they have access to all market information in no-time.
Firms are often compelled to develop strategies to treat the global consumer groups. Value addition to customers is far more important.
Thus, winning firms are the ones who will create value addition to customers within the shortest duration and bring novelty to their product
or service experience day by day.
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effects of change
The Learning Organisation
“A learning organisation is an organisation that facilitates the learning of all its members and continuously transforms itself” (Pelder
et al., 1991 cited in Gilgeous, 1997,p.309). It can be used as a technique to monitor the progress and effects of change effectively.
The concept of learning organisation will focus on developing both employees as well as the organisation. Employees of a firm will be
developed in a manner, they will be capable of learning, changing and improving which in turn, will compliment the firm to learn,
change and improve too.
A learning organisation looks at developing the human side and improvement in performance, so that, they are comfortable in linking
with technical, and inanimate factors which will be used to determine the success of change. Learning is an important aspect to
sustain innovation within a firm. However, it is important that a firm or individuals learn quickly since slower learning will not help
them to survive in a market due to intensity of competition. Learning should be an up to date practice. Hence, continuous learning is
the best approach to pursue this goal.

effects of change
The Learning Organisation Cont.
Depicted is a model developed by Pelder et al. (1991) cited in

Gilgeous, (1997, pp.313-317) that explains characteristics of a
learning organisation, which is often referred to as the ‘eleven
characteristics model of learning organisation’.
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effects of change
1. The learning approach to strategy: Company policy and strategy formulation with the other areas such as implementation, evaluation
and improvement are consciously structured as a learning process. Development of business plans and making revisions to the same will
be done as the process goes along. Management actions will be experiments rather than set solutions. Small scale feedback loops will be
built into planning process, so that, experience is used to enable continuous improvement.
2. Participative policy making: Members of a firm will have a chance to engage in policy formulation process and to contribute to major
decisions. Such decisions are likely to be accepted and welcomed more by the members of a firm. A continuous debate will follow that
will include areas such as working with tensions, conflicts, appreciate different values, etc. Following are the fundamentals for
participative policy making:
 Right to take part for all diverse groups and their values and concerns are to be considered.
 Diversity of members and their ideas will lead to better ideas, creativity and well excelled solutions.
 Customer requirements as well as meeting other stakeholder concerns is a key to long term success and achievement of its purpose.

effects of change
3. Informating: Information technology is used to support the learning process by empowering people. Following are the
areas that needs to have major shifts in attitude or perspectives:
 Make information widely available as much as possible.
 Need of information to the firm, most importantly to understand what is happening in the firm rather than using the
information to reward, report etc.
 Understanding the nature of data
4. Formative accounting and control: Organisational accounting, budgeting, reporting, etc. are established in a manner that
it will support learning and look after internal customers. Thus, systems will add value to the company. This will demand
its employees to have a very positive perspective towards change as it is important to point out the individuals
responsible to run a control system, its customers and to find ways to delight them.
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Analytical tools and techniques to monitor the progress

and the effects of change
5. Internal Exchange: All internal parts of a firm, i.e. departments and employees will look into each other as customers
and suppliers in a market economy situation. Constant exchange of information will be carried out and respect to each
party will be established. Therefore, this will establish good relationships among each party within a firm.
6. Reward flexibility: Newer ways of rewarding employees will be explored in a learning atmosphere. This will be in
monitory as well as non monitory terms. This will further encourage new idea generation and participation of
employees to support the change in terms of learning.
7. Enabling structures: Opportunities are created for business and individual development. Personal growth and
development is allowed through loosely structured roles for internal suppliers and customers. Flexible roles and
structures are established, so that, response to change is quick to all current as well as future changes.

effects of change
8. Boundary workers as environmental scanners: Relationships with external customers, clients and suppliers are
established to capture market data and take use of such information. Specilised departments or personnel will be
appointed for this purpose who will deliver goods and services, receive supplies and orders. Most importantly, they will
gather information and disseminate the same within the firm, so that, it facilitates a positive atmosphere for learning.
9. Intercompany learning: This enable mutual learning through joint training, sharing in investment, and sharing research
and development. Furthermore, firms will use benchmarking practices to learn from best performers in other
industries, and sometimes even competitors' may get together for mutual learning with the intention of achieving a
win-win situation.
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effects of change
10. Learning climate: A firm should have a proper learning climate. Managers primary task is therefore to facilitate its
members to experiment and to learn from experience. Proper feedback should be provided, and mistakes must be
accepted and allowed. Learning from failed experiment is an essential feature in a learning climate.
11. Self development opportunities for all: Organisational resources and facilities will be made available for its employees
to develop themselves in terms of skills, competencies, capabilities as well as right attitudes. Employees are encouraged
to take responsibility for their own development.

effects of change
Organisational learning can occur in several ways which the following are very important aspects in creating a learning organisation;
 Learning from systematic problem solving
 Learning from experimentation
 Learning from own experience
 Learning from others’ experience
 Transferring knowledge through the organisation
It is important that the management has appropriate measurements to measure learning as if not properly measured the success
cannot be identified. A simple cost benefit analysis about learning is not sufficient as learning affects in many areas such as quality,
flexibility, customer service, NPD etc. On the other hand, a correct atmosphere should also be made available for learning through
positive attitudes, openness to accept risk and mistakes, proper organisational culture, availability of resources etc.
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effects of change
Barriers to Learning
► Inappropriate organisational structures.
► Weak management and lack of management support.
► Inefficient processes to capture information, acquire and transfer them.
► Lack of resources and schemes to facilitate learning.
► Lack of measurement of learning.
► Being unable to allocate rewards and provide incentives to learn.

effects of change
Business Process Re-Engineering (BPR)
“Business process re-engineering is the fundamental rethinking and redesign of business processes to achieve dramatic
improvements in critical contemporary measures of performance, such as cost, quality, service and speed” (Hammer &
Champy, 1993 cited in Gilgeous, 1997,p. 340).
Careful analysis of above definitions suggest that ‘BPR’ stems from the concept of change as it highlights most important
fundamentals for change such as change in employee perceptions and readiness for change.
Accordingly, the concept of BPR will make severe changes to existing processes, structures, and other work relationships with
the anticipation of achieving a higher future performance level. It is important that the management identifies the need for
BPR and such needs will be backed by intense market competition, and other practical problems which firms face in
implementing concepts such as total quality management and JIT (just- in- time) stock keeping systems.
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effects of change
Business Process Re-Engineering (BPR) Cont.
Power in the market place is shifted to customers from the suppliers by intense competition which is in markets. Therefore,
firms need to provide appropriate attention to the changes and demands in the “Three Cs” as suggested by Hammer and
Champy (1993) cited in Gilgeous (1997.p.342) which are:
1. Customers - becoming more demanding
2. Competition – becoming more stronger
3. Change – becoming the only thing that is constant

effects of change
Why Adopt BPR
As identified by Carr and Johansson (1995) cited in Gilgeous (1997, pp. 343-345) following are the reasons which drive organisations to adopt
BPR:
1. Problems with the concept of TQM.
2. Growing market pressures relating to increased customer service.
3. Need to response to the market within a shorter duration.
4. Importance of quality and the concern for cost.
5. Flexibility for operations.
6. organisational processes should be quick to the extent that they enter to the market within the shortest possible time. This will help
them to enjoy first mover advantages and also to acquire a loyal customer base. If firms are to be quick to the market, they need to have
high tuned business processes which captures market insights, generate ideas and by this means transform them to products or services.
This will be an easy task when flexible structures, processes and work relations are in place. BPR facilitates effective as well as productive
procedures. Therefore, firms often opt to adopt BPR for their firms, if they have appropriate capacity as well as the capability.
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BPR will help a firm to improve its processes in numerous ways which include the following;
► To maintain a lower level of stocks.
► To conduct production in shorter lead times.
► To reduce overall cost.
► To achieve higher productivity.

Risks Associated with BPR;
 BPR extensively focus on a turnaround in the business process or the operational activities of a firm. However, the output will
be measured in financial terms. Therefore, a considerable output generation cannot be noted in the short run. This could make
the managers as well as the employees to loose their faith placed on BPR.
 Changes made to operational activities, organistional structures, work relationships etc. will bring fear and uncertainty to
employees at all levels. Thus, it has a negative impact on the firm. Further, this could bring concerns of possible resistance for
newly introduced business practices and processes.
 BPR needs more guidance and assistance from experts who have experienced it. Furthermore the support from executive
management is very important. Unless a proper vision is established, and guidance is given BPR effort is unlikely to be
recognised by the other members of a firm. Therefore, the possibility of failure is high.
 Although much enthusiasm is given at the beginning, most BPR efforts tend to fail due to many reasons. This will waste many
of organisational valuable resources which could be used to generate some other positive outcome.
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effects of change
A Framework for Re-engineering through Business Positioning
The framework illustrated was developed by Morris and Brandon
(1994) cited in Gilgeous, (1997,p.351). According to these authors, the
model could be followed to introduce ‘BPR’ into a firm’s process. This
model is therefore known as the ‘Dynamic Business Process Re-
engineering Change Model’.
The model appropriately discusses how PBR should be placed within a
change process as it is treated as one stage of change management or
an initiative for change. Different stages of the above model are as
follows:
1. Business positioning
2. Business Re-engineering
3. Infrastructure building
4. Implementation / operation / evaluation

effects of change
Business Positioning: Business positioning will allow the organisation to position in the market place or in the consumer’s
mindset. Positioning is treated to be outside the BPR process. This stage will make the firm or management to obtain an
understanding as to what the organisation is today, what needs to be done to achieve an improved position and to be
competitive in the market place. In this manner, business positioning will identify the best investment options as well as the
best strategy for a way forward. Thus, a firm will look into conducting a situational analysis and a competitive analysis where
the outcomes of the same would be identified objectives, strengths, weaknesses and market threats.
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effects of change
Business Re-engineering: This stage will essentially look in to areas such as the ways of changing, and the impact it would
bring to organisational plans and position in the market place. Further it is important to identify how the change plan will
best fit with the current operations. Mapping current business processes, modelling new re-engineered workflows and
analyse the impact on them and designing new organisational work flows will be a part and parcel in this stage. A firm will
look in to conducting a cost benefit analysis at this stage to identify the relative worthiness in conducting a BPR program.

Infrastructure Building: Infrastructure building will happen in terms of different functional areas such as work flow,
technology, marketing, finance, human resources etc. This stage of BPR will look into the changes need to be made in the
way of conducting business, how to manage the impact on staff and how a proper co-ordination can be done in terms of all
the changes. The management will look into financial arrangements, technology systems development, organisational
development and also on a detailed implementation planning. In addition, the organisation will also make an adequate
budget available and thereby develop an initial marketing plan and goal.
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Implementation, operation and evaluation: This stage will analyse whether the firm is doing the best they can, and how new
ideas can be accommodated within the firm. Organisations will start up new operations, make it run and evaluate the
outcomes. The management is anticipated to generate profits, experience as well as satisfaction from the BPR effort at this
stage. Adopting BPR practices will bring extensive amount of learning to a firm which are:
1. Rigorous analysis of operations to eliminate waste.
2. Elimination of non value-added steps.
3. Teambuilding and cross functional teamwork.
4. Employee empowerment.
5. Doing it right the first time.

effects of change
Comparison of BPR with Other Programs;
Depicted above is a comparison between BPR and other change initiatives which was carried out by Manganelli and Kelin,
1994 cited in Gilgeous, 1997,p.354.
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effects of change
Continuous Improvement
This is also known as the ‘Kaizen’ approach by the Japanese, where it seeks to find ways to efficiently add value to
organisational processes, so that, it will satisfy the customers.
Success of continuous improvement will be backed by the extent to which it is supported by the management. Thus,
continuous improvement will look into the very basic and fundamental activities as well as the most sophisticated ones in a
firm.

effects of change
Continuous Improvement Cont.
There are so many instances where organisations are brought in with different change initiatives such as introduction of new
technology, providing training, introduction of flexible manufacturing systems etc. and have implemented them successfully.
Yet, management information sharing is still restricted. As a result, situations of mistrust and conflicts could rise. This is a
typical situation where the total organisation has not learnt to add value to its end customers, which is not a correct scenario.
Nevertheless, the ideal situation will be continuous improvement. So that, change introduced through learning,
restructuring, empowerment, BPR, TQM etc. provide visible proof that the situation is getting better by the day with the
involvement of employees being the key.
Continuous improvement will therefore apply to every level of a firm, whether it is the operational level work floor to the
very top management, policies and procedures. The ultimate aim is to somehow delight the customer and maintain
organisational profitability, competitiveness and ensure long term survival in the market place.
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Two major concerns for continuous improvement will be;
1. Housekeeping and workplace organisation
This reflects general attitude towards work on the shop floor. This will try to improve ways that will positively affect
overall productivity at the operational level. Better organised workplace will bring more benefits in terms of reduced
production time, better resource management, to explore any possible problems effectively, etc. In this manner, the
quality of products and the production process is improved, and the defects are reduced or eliminated. This will help
a firm in achieving significant cost reductions as well. Safety aspects, interpersonal relationships, and productivity are
also positively improved by adhering to good housing keeping practices.

2. Elimination of waste
As discovered by Toyota, cited in Gilgeous, (1997,p.436) waste elimination will focus on the following;
 To eliminate waste from over production
 To eliminate waste of wasting time
 To eliminate transportation waste
 To eliminate processing waste
 To eliminate inventory waste
 To eliminate waste of motion
 To eliminate waste from product defects
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effects of change
As suggested by Gilgeous (1997, pp.437-438) following are the main steps involved in managing continuous improvement;

Identify the problem: Actual root cause of a problem needs to be addressed if continuous improvement is to be achieved.
Temporary solutions will not bring a conclusion to a problem, nor improvement can be achieved. Therefore, it is important
that the problem is carefully analysed and the best solution is picked from number of solutions available. A firm can get use
of methods such as brainstorming and try to get ideas from employees, use of analysis tools such as Pareto charts, cause and
effect diagrams, bar graphs, check lists, histograms etc. It is further suggested that continuous improvement is introduced in
small or basic steps if the concept is relatively new to the firm.
Plan: What improvements are expected to be achieved should be made clear, and clear objectives about the improvement
should be set. Resource requirements, time frames, responsible persons, etc. should clearly be identified and properly
communicated.
Implement: Proper approvals, as well as involvement of people from all related areas is a must for successful
implementation.
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effects of change
Follow up: It is important to assess if desired improvement is been achieved by the firm / departments / process to which the change
was subjected to. It is important that improvement is made to stick with the organisations by not letting them to be neglected.
Continuous improvement programs will highlight the need to procedures and standards as well as the need for involvement of all
parties for it to be a success. Standards are set as a yardstick to measure its performance, and this can be due to statutory reasons or
to establish safety aspect as well. Furthermore, it is important that company-wide involvement is generated, and all parties
concerned are aware that their roles and responsibilities is in the process of continuous improvement. Proper flow of information and
communication to and from the employees will help a firm to experience minimal level of resistance in conducting continuous
improvements.
Additionally, skill development is another important area in continuous improvement. Employees should be given appropriate skills
relating to maintenance, management, improvement and innovation, so that, results from continuous improvement are sustained
within the firm. Workforce of a firm needs to be motivated, so that, they effectively contribute to improve key business processes.
Supporting tools and techniques to measure and track

change
Analytical tools and techniques usually focus on the start of the change effort. They deal with researching, assessing and
strategising. Alternatively, supporting tools help picture, quantify, measure and track the change initiative effectively. They
are more dynamic than analytical and planning tools.
Following tools and techniques can be used to develop an approach that closely accounts for the needs of an organisation;
1. Flowcharting
2. Metrics and Data Collection
3. Force Field Analysis
4. Culture mapping
5. Project plan
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change
1. Flowcharting
Making a flowchart serves as a visual sketch, especially, for those in the organisation who don’t have a broader view of some
of the key processes in the organisation.
Flowcharting is a simple way to get people on board with where a company is at and where it would like to be. One useful
exercise is to have managers all draw what they consider the current organisational flowchart to look like, and you will
probably be surprised to find a huge variety in how people perceive the key processes of the organisation – some even have
conflicting views, and this misunderstanding needs to be dealt with before moving on to another change management tool.
Once any change begins to be implemented, it can be added to the flowchart, so that, all members of the organisation have
the chance to keep up with the change – raising their feelings of contribution and commitment to the organisational goals.

change
2. Metrics and Data Collection
Many people squirm at the idea of number crunching, but collecting the right information and data is a critical step in change
management.
Focusing on facts – how the organisation has done in the past and where it stands today in respect to competition, risks, and
opportunities, etc. will steer change management in a constructive direction and shorten the decision-making time.
It will also help avoid any unnecessary arguments that only lead to frustration and loss of momentum.
Meaningful and correct data needs to be collected and displayed using a metric design that is easy to read. Metrics and data
collection must include the cycle time which is the average time from start to end, the range of cycle time which includes the
shortest and the longest cycle time, and the percentage with the longest and the shortest time, and the total number of units
that flows through the process in a certain period of time and percentage of errors and units that need to be redone.
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Supporting tools and techniques to measure and track change
3. Force Field Analysis
This change management tool provides an initial view of change problems that need to be tackled. It highlights the driver for
change and change inhibitors.
Originally developed by a social psychologist, the idea behind ‘Force Field Analysis’ is that for change to be successful, the
driving forces need to be strengthened or the resisting forces should be weakened.
The strongest inhibitor to change is resistance from members of the organisation. For new change to be accepted by
members of the organisation, it is vital to focus on the benefits of the new change. In addition, it is also crucial to include
discussions that is aimed at understanding and dealing with staff who are resistant to change.
Supporting tools and techniques to measure and track change

4. Culture Mapping
Another useful change management tool is culture mapping. As a matter of fact, every organisation has its own ways of doing
things. This means that every organisation has its own way of establishing values, concepts, norms and practices. Some
typical paradigms that most organisations have include are: respect for authority where decisions made by senior
management are unquestioned or the reward system is based on good performance or seniority. Therefore, to manage
change within an organisation, it is essential to be fully aware of the organisational culture, so that, the management
practices carried out are appropriate.
At times, the norm, and “this is how we have always done it” mentality is so deeply embedded in the organisational culture
that it is the biggest hurdle to change. Thus, before start working on organisational change management, it is crucial to first
change the existing paradigms and that can be possible only by understanding this change management tool.
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change
5. Project plan
Having a clear project plan is critical for staying on track. It will serve as a framework from which to work in, to know where
some flexibility is allowed, and which boundaries should not be crossed.
Most of the time, a change management initiative will require many people working in various departments of the
organisation to implement new changes simultaneously. It is therefore, very important to utilize this change management
tool to come up with a clear plan on how the proposed change is going to be implemented. Having a project plan will clarify
roles and help manage deadlines – keeping the company agile during some of the biggest challenges of the change process.
Strategies to minimise the impact of adverse

effects of change
It is important that the management of a firm understand about the different effects which change could bring to a firm, especially
the people involved with the organisation. Change will essentially rise internal conflicts among individual personalities and at the
same time it can bring external conflicts which are conflicts between the individuals and different departments.
The human resource is lively, and they can assemble themselves to different thinking patterns. Therefore, employees of an
organisation is the key element that needs to be handled with greater care. If change has a negative impact on the employees, it will
apply to the overall firm as the productivity levels will tend to decline due to de-motivation and dissatisfaction. Therefore, it is
important that ‘people’ in a firm are been best involved in the change process to generate successful results. ‘People’ who are
involved and affected by the change initiatives can be, thus, categorised under 3 main groups which are;
1. Change sponsors
2. Change champion
3. Change players
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effects of change
This figure developed by Gilgeous (1997, p.220) explains,
the relationship between the change sponsor, change
champion and change player.

effects of change
1. Change sponsors
Change sponsors are those who have authority to decide who should carry out the changes and they bear the responsibility of seeing that the
right people with the right skills are chosen and supported” (Gilgeous, 1997,p.219). Main areas of concerns for change sponsors are as
follows:
 Understanding the changes they are making.
 Manage the resources required for the change.
 Dealing with people involved in the change.
2. Change Champions
Change champions are the people who are expected to initiate change and take the responsibility for change (Gilgeous, 1997,p.219). These
champions should possess the capacity to lead and manage the change program and also to obtain the support from the top management as
well as the other employees of the firm.
Change champions could be of 2 main forms;

 Change champions appointed within the organisation
 Change champions appointed outside the organisation
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effects of change
2. Change Champions Cont.
Risks associated with being a change champion
The role could bring either success or failure to a firm. Therefore, the responsibility lies on the shoulders of the change agent
to ensure success is pursued. Change agent should ensure continuous change, which in turn, could be a very difficult task. If
efforts of change agents are not appreciated or publicised by the firm, the effect is such that they will get de-motivated and
dissatisfied.
Some firms will look for change in change champions, if their efforts are not been visible through the success of firms. If the
whole organisation suffer due to failure of change, then the situation is such that the top management will overlook valuable
effort put in by the change agent, thus this will effect the career progression of the change agent.

effects of change
3. Change Players
Change players are the targets for change in an
organisational environment and they will make
the change happen. Effects on change players are
more personal as changing working patterns,
different peers and colleagues, new practices,
new skills etc. demand a greater degree of
turnaround in every aspect. Therefore, possible
effects of change on change players can be
illustrated as shown in the figure.
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effects of change
Change Communications
Scholars agree that clear and consistent communication is important during organisational change. From a leadership
perspective, communication is the way of ensuring that employees understand change and are supportive of it.
Importance of communication strategies to minimize the impact of adverse effect of change
 Through a proper communication system organisations can reduce their uncertainty about the new strategy and jobs.
 Also, communication acts as a means of reassessing and renegotiating the psychological contract between employee and
the organisation.

effects of change
Change Communications
Communication strategies used in organisational change;
1. Programmatic vs Participatory
The primary characteristic of programmatic approach is that they are focused on “telling and selling.” Such approaches emphasise the
top-down dissemination of information to “tell” employees about the change and deliver it in such a way as to “sell” employees on why
they should be committed to implementing it. As Lewis (1999) noted, a key component of programmatic approach is “the
dissemination of information, which concerns the downward dispersal of knowledge, ideas, training, facts, and requests or directives
for action concerning the change”.
On the other hand, participatory communication means a theory and a practice of communication used to involve people in the
decision-making of the development process. The purpose of such a communication strategy should be to make something common,
to share meanings, perceptions or knowledge. In this communication strategy, sharing implies an equitable division of what is being
shared, which is why communication should almost be naturally associated with a balanced and two-way flow of information.
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effects of change
Change Communications Cont.
Communication strategies used in organisational change;

2. A more differentiated approach to communication
This typology of communication strategy represents different beliefs and assumptions about the purpose of communication
during change, and assumptions about the role of leaders and followers in change. The following are the extremes providing
either too much or too little, or no communication, making it hard for employees to make sense of organisational change.
 Spray and pray
 Tell and sell
 Underscore and explore
 Identify and reply
 Withhold and uphold

effects of change
Whatever the communication strategy used, organisations should make a number of choices at a tactical level, i.e.
implementation of the change.
The message - what should be communicated and what should be ignored? Who gives the message? When to give the
message?
The audience – with whom should leaders communicate?
Media or channel – How will leaders and employees communicate?
Is the communication one-way or two-way?
Communication plan – when and where will communication occur?
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effects of change
Role of external communication in organisational change;
Organisational change may directly affect external stakeholders such as investors, regulators, customers etc. Regular
communication with those stakeholders is also vital to ensure their continued support is gained towards achieving the
organisational changes.
Role of informal communication in organisational change;
Communication about change does not happen only through formal channels. It also happens through gossip, rumours,
informal chat around the edges of meeting, and over a lunch or a coffee. Such informal communication particularly can
provide support and opportunity for sense making and learning.
Lesson Summary
At the beginning of the lesson, a brief introductory note had been provided on change management tools and techniques.
Subsequently, the relevant tools and techniques that are used to monitor the progress and effects of the change were
discussed extensively. They are namely; Total Quality Management (TQM), Flexible workers and flexible working teams,
Empowerment, Restructuring, E-Engineering, The learning organisation, Business Process Re-engineering (BPR) and
Continuous Improvement.
In addition to that, a compiled list of measurement techniques used to measure and track change had also been identified
and elaborated to provide a robust understanding of this area.
Finally, a range of strategies to minimise the impact of adverse effects on change have been looked at, together with the
importance of communication strategies during organisational change.
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The Impact of
Change Strategies
Leadership
Introduction
This lesson aims to provide a robust understanding of the processes required to review the impact of change within an
organisation. Eventually, results of a change impact review will also be discussed in depth.
Towards the end of the lesson, the relevant steps involved in a change analysis based upon stakeholders will be
demonstrated to provide an overall picture on the change management processes.
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Learning Outcomes
4. Understand how to evaluate the impact of change strategies
4.1 Critically evaluate the processes required to review the impact of the change in your organisation.
4.2 Critically analyse and discuss the results of a change impact review.
4.3 Formulate findings of a change analysis and present them in an appropriate way for different stakeholders.
Lesson Objectives
1. Introduction to Change Management Process
2. Processes to Review the Impact of Change
3. Results of a Change Impact Review
4. Change Analysis for Stakeholders
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Introduction to Change Management Process
The change management process is the sequence of steps or

activities that a change management team or a project
leader follows, in order to drive individual transitions and
ensure the team meets the intended outcomes. The
elements shown in the image have been identified as key
elements of a successful change management process.
Processes to Review the Impact of Change

It is important that managers understand, the process of change will take its own time as well as it will go through a serious
of steps. Managers should have the capacity and sensibility to understand the need for change since the initiative of change
will happen only when the need for change is recognised by the management. Furthermore, it is important to identify the
relative position of the company in comparison to the identified problem, in which, it is also known as the gap analysis.
Once the gap is identified, the management of a firm needs to identify the future desired position and also identify suitable
strategies to reach the desired level. Once the actual change program is executed, it is important that the management
ensure stabilising and strengthening the newly implemented change as any change program is to reach a level further but not
to come back to the level it originally was, nor to go below the original level.
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Different Phases of Planned Change
As suggested by Bullock and Batten (1985) cited in Gilgeous (1997,p.7), the change activities could be categorised under 4
main phases as shown in the below diagram.
(Bulluck and Batten, 1985 cited in Gilgeous, 1997,p.6)


Exploration Phase
This is the phase where a firm will become attentive and responsive to the need for change. At this stage, the management will
take a series of decisions including whether the organisation will accept the need for change and whether it will go ahead with the
new change initiative, along with the required resource allocation. The management will further look for a suitable party who will
act as a facilitator for change, who will also help the firm in planning and executing the change initiatives. If a firm decides to get
the help of an intermediary party, then it will look into establishing a proper contract with the change consultant and will clearly
define the responsibility of each party, so that, it will be more convenient for the organisation in the future.
Planning Phase
This is the stage which a firm will become responsive to the change problem by trying to understand the real picture of the
problem and root causes behind the same via diagnosing it properly. This will lead the firm to establish clear change goals and to
formulate a set of actions to attain the goals. Also, this stage will appoint key decision makers from the organisation who will have
the authority to approve or reject the change proposals and to act in the best interest of the company.
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Action Phase
This is where the actual change will execute. The change initiatives, and action plans which were decided and agreed at the
exploration and planning stages will actually put into action. It is important that the management continuously evaluate and
monitor the process of implementation and generate appropriate feedback to make adjustments needed. This will help to
make the total change effort a success where the total quality of the change process will also improve as a result.
Integration Phase
Integration phase will ensure the change initiatives are a part of day to day operations, so that, all parties concerned are
inevitably compelled to adhere to the new initiatives. Simultaneously, the management must seek for the room for
consolidating and make the change stable, where the reliance on the change consultant will be gradually decreased at this
stage. Employees of the firm will be encouraged to adapt to the change through appropriate appraisal, feedback, reward
systems and recognition.

Key Dimensions for Managing Change
Making a firm to go through the total process of change is a very challenging task. It is important that the management focus
more towards the operations of a firm during the change process and relate the change strategy to the overall business
strategy for it to be successful. Therefore, the overall business strategy of an organisation will decide the extent to which the
change process is given prominence within the firm and how it will influence the main areas that will be subjected to change,
namely; the technology, innovation and the overall organisation.
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The business dimension: Overall strategic direction and the competitive position of the company will be reflected through the
business dimension. Before executing a change program, it is essential that the overall competitive position of the firm as well as
the business strategy is properly audited, so that, it generate a snapshot view about the current performance of the company.
This will reveal a list of opportunities within the organisation and the areas for improvement. Managers will look and agree for a
way forward and the subsequent action would be to conclude the key business strategies which will be used to implement change
on different functional levels such as finance, HR, marketing etc. Further, goals of quality, flexibility of operations, the cost factor
etc. will be looked into as areas of improvement. This will lead the organisation to set a base to introduce novelist to the
technology, adaptation to innovation and to turnaround the total organisation.
The technology dimension: Introduction of new technology is a catalyst of change as it influence the firm to improve its
productivity levels and results in improved quality of the organisation’s produce. The change will come in the form of continuous
improvement when it is considered in the angle of technology.

The innovation dimension: Innovation is an essential element for successful change or improvements in the processes.
Organisations are inevitably demanded to offer innovative products or services to the market since it will decide their competitive
advantage over the others in the market and will ensure their long-term survival. Hence, it is important that a firm has the right
attitude and correct culture for innovation. Change will usually bring innovation to the company in the form of new ideas, new
processes, new working patterns etc. and the same will help a company to be responsive to the market trends at a fast pace and
improve effectiveness, accordingly.
The organisation dimension: Successful change will not only rely on good technology and innovation. The people’s aspect is also
equally important to ensure a successful change program is implemented within the organisation. Therefore, the organisation
dimension will imply that the employees are essential in the change process, and they will be the party who will drive the aspects
of innovation as well as technology. A change program or an initiative will bring both positive and negative aspects to the people in
a firm depending on their attitude and perspective of the change. Thus, it is paramount that full involvement of employees are
ensured as it is vital for the success of the program.
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The organisation dimension:
Furthermore, the organisational dimension demands high skills from the management since employees of a firm will
be the center of attention for any change initiative. As suggested by Gilgeous (1997, p.10) the organisation dimension
will be further categorised in to 2 areas, namely;
1. The organisation design – This involves restructuring and making change to the organisational culture, so that,
elements such as the new technology, innovation and employees will be best utilised in a manner to deliver an
excellent customer experience.
2. The job design – This is concerned in areas such as appropriate job designing to ensure the employees are up to
the required skill level, they are paid with correct amounts, rewarded and appreciated to an extent they are
satisfied, look into appropriate workgroups with proper blend of high productivity, etc. The job design focus on
putting up the correct infrastructure and developing the mentality the employees need to provide their 100 %
contribution to the total change process and also help the firm to reinforce and stabilise the same.

Strategic Options for Change Management
Another process that can be used to review the impact of change is strategic options. As suggested by Kotler et al (1986) a
firm can have 2 main approaches to change, which are;
► Revolutionary change
► Evolutionary change
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Revolutionary Change: This type of change will involve a limited number of top management at the
planning stage and it will be planned in a highly structured manner. Implementation of the change
initiative will be at a rapid pace. Employees of a firm who will experience ‘revolutionary change’ will
either willingly agree to it or they are forced to go ahead and experience the change in situations if they
don’t accept it on a personal level. Revolutionary change is likely to raise many conflicts among the
organisation making the level of resistance high. Even though the level of resistance is high, and more
parties will resist the new change initiative at the beginning, it is natural that all parties will be persuaded
by the management to contribute towards the change at the end. However, the chances are high for the
situation to get worsened and the parties which resist for change to suffer to a greater extent.
Evolutionary Change: As opposed to revolutionary change, ‘evolutionary change’ will be seen in a
friendlier manner by the people in the organisation and high involvement of all parties of a firm can be
observed. The change is slow and will happen in different steps and levels where the management of a
firm will ensure that the rest of the firm are comfortable with the new state of affairs before moving
further. Level of resistance is minimal as the change initiative and the process takes a more participatory
approach. A firm will invest heavily in areas such as training and development, mainly focusing on
improving skills and competencies of problem solving, team-building, organisational development,
leadership etc.

Irrespective of the change approach a manager may opt, they need to be aware of some important factors which will help
them to make the change process a reality. Hence, is it important for managers to have an idea of the type of resistance that
may come from the orgnaisation and the relevant stakeholders, how well they are to trust the change initiators and the level
of power and authority that should be vested on them, type and quantity of data needed and how these will be gathered
within the firm and the possible stakes involved with initiating the change program.
It is paramount that all managers give appropriate attention to the above factors and choose a change approach which has
the best chance to be successful.
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Types of Organisational Change
► Evolution can take a long time period, But, results in a

fundamentally different organisation once completed. This is
proactive change undertaken in participation of the need for
future change.
► Adaptation is implemented through a series of steps.
► Revolution is likely to be a forced, reactive transformation

using simultaneous initiatives on any front. More likely to be
forced and reactive because of the changing competitive
nature that organisations are facing.
► Reconstruction often forced and reactive because of a

changing context. This entails changing an organisation’s
culture.

Social Change
Social change process is very common, and it happens rapidly in the present context. It is essential that business
organisations be responsive to these social changes, if they are looking for long term survival in the market place. Winning
firms are the ones who are quick to the market, who are highly sensitive in grasping these social changes and take initiatives
to go by the trend. Therefore, more attention must be placed on these social change processes since it enables to review the
impact of change within an organisation.
Social change could be defined as follows: “Social change is a process of any variation whether desirable or not in the existing
social structure, social behavior and cultural values occurring as a consequence of the explosion of scientific and technical
knowledge followed by new inventions and discoveries” (Ravi, 2011,p.431).
“Social change implies changes in social attitudes, behaviour, customs, habits, manners, relations, and values of people in
social institutions and structures in the ways or styles of living” (Ruhela cited in Ravi, 2011,p.431).
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Process of Social Change
Depicted is a process suggested by Ravi

(2011,p.430) which shows how social change
happens step by step. It is self explanatory that
each step is related with the other and
occurrence of one will lead to occurrence of
the other.

Process of Social Change Cont.
In a managerial point of view a firm should be sensitive and they should continuously monitor the elements in the society
that has been subjected to change in order to survive in the market place. Changes in the society and the social structure will
bring different thinking patterns which influence the behaviour of consumers. Consumer demand will therefore tend to
change accordingly. Therefore, a firm’s products or services needs to change in line with the changes happen in the society.
Failure to do so will result in poor performance. Thus, could lead a firm to bankruptcy position as well
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Different Forms of Social Change
As suggested by Ravi (2011, pp.433-434) following are known as different forms of social change:
 Economic form
Social change may come in the form of economic changes. Birth of new organisations and death of existing ones, economic
booms and recessions, changes in the inflation rates, changes in disposable income of consumers, changes in money supply,
unemployment rates etc. will directly and indirectly affect the social structure. These changes may effect with immediate
action as well as overtime.
 Political Form
Change of power in a given country will effect the style of the overall administration of the country. History bear witness to
different political styles and thinking patterns and the effects of such may directly influence individual behavior and the
society as a whole. Ex: Marxism and Communism

Different Forms of Social Change Cont.
 Religious form
Religion is also evolved overtime. Different religious beliefs provide guidance to individual life patterns. Thus, it results in
affecting the consumption patterns as well. Ex: life style of Muslim community is different to that of the Christian
community; as a result this has emerged multiethnic countries with different social layers.
 Moral Form
This is where changes in the values and thoughts of individuals and community leads to incremental changes in the society.
For instance, single parent families were not encouraged in the past days. However, this concept has evolved. E.g. ‘live-in-
together” couples were not accepted in the eastern society in most of the cases, yet in the western society this is a normal
lifestyle.
 Scientific and technological form
This is where changes in the society will take place as a result of technological developments and scientific advancements.
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Different Forms of Social Change Cont.
 International form
International relations and concepts such as ‘globalization’ affects the thinking patterns, attitudes, behavior, consumer
preferences of the society as a whole. This, leads to social changes.
 Legal form
Different countries practice different laws. These regulate and govern life styles and life patterns of social institutions.
Therefore, this could also contribute to social changes. For example, professions such as prostitution is prohibited by law in
certain countries where as in some countries, it is legalised and practiced as a profession.

Different Forms of Social Change
 Social form
These refer to changes in the social customs that leads to changes in the society. For instance, countries such as India has a
system of child marriage, some countries prohibit widows to remarry, In Muslim community, a man can marry more than
once where in the western community this is considered as a crime.
 Location form
This is where urbanisation result social change. Urbanisation has brought in concepts such as apartments, flats,
supermarkets, pubs, clubs etc. to affect the life patterns of individuals. It is often observed that rural areas suffer from less
facilities where compared with urban areas. (Schools, hospitals, other developments are more in number and are with high
facilities in urban areas. Therefore, the tendency is such that many individuals prefer to migrate into areas with high facilities
and high living standards.)
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Results of a Change Impact Review

A change impact review is a key aspect of responsible requirements of management. It provides accurate understanding of
the implications of a proposed change, which help the teams make informed business decisions about which proposals to
approve.
The review examines the proposed change to identify components that might have to be created, modified, or discarded and
to estimate the effort associated with implementing the change.
Skipping this stage, does not change the size of the task. It just turns the size into a surprise. In product development,
surprises are rarely good news. Before a developer says, “Sure, no problem” in response to a change request, he or she
should spend a little time on reviewing the impact of change.

A Change Impact Review Procedure
Impact review has three aspects:
1. Understand the possible implications of making the change. Change often produces a large ripple effect. Hence, stuffing
too much functionality into a product can reduce its performance to unacceptable levels.
2. Identify all the files, models, and documents that might have to be modified, if the team incorporates the requested
change.
3. Identify the tasks required to implement the change, and estimate the effort needed to complete those tasks.
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Steps in a change impact review process are:
1. Identify the sequence in which the tasks must be performed and how they can be interleaved with currently planned
tasks.
2. Determine whether the change is on the project’s critical path. If a task on the critical path slips, the project’s
completion date will slip. Every change consumes resources, but if you can plan a change to avoid affecting tasks that
are currently on the critical path, the change won’t cause the entire project to slip.
3. Estimate the impact of the proposed change on the project’s schedule and cost.
4. Evaluate the change’s priority by estimating the relative benefit, penalty, cost, and technical risk compared to other
discretionary requirements.
5. Report the results of a change impact review to all stakeholders, so that, they can use the information to help them
decide whether to approve or reject the change request.
Change Analysis for Stakeholders

To implement change successfully, you must understand the perspectives of your stakeholders and balance their needs with
the business needs. If your stakeholders don’t get it, they won’t buy into it. Then it’s likely your project will fail, despite your
best communication and training efforts.
Thus, ‘stakeholder analysis’ or ‘stakeholder mapping’ is a simple technique which can be used at the beginning of major
programmes involving any kind of significant change. Stakeholder Mapping allows you to analyse the key "Stakeholders" who
might either be impacted by or have an interest in the programme. The purpose of such an exercise is to help you identify
who you need to influence, in what way and when (relative priority).
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Steps for Stakeholder Change Analysis;
Step 1: Identify the stakeholders
Potential Stakeholders:
• People who can exert influence or pressure on your change
• People responsible for creating your change
• People who can choose to use or not use the results of your change
• People who will ultimately benefit from the work of your change

Step 2: Prioritize the stakeholders
Using a Power/interest grid for stakeholder analysis as shown in the image, you can prioritize your stakeholders based on
their stake in the project and their engagement.
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Step 3: Stakeholder map
Now that you have prioritized your stakeholders, you can use a stakeholder map to easily categorize them. This is depicted in
the next slide.
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Lesson Summary
Under this lesson, we have covered the key objective areas such as understanding the meaning of change management
process, evaluating the processes required to review the impact of change in your organisation, discuss results of a change
impact review and formulate findings of a change analysis for different stakeholders, at last.
Different Phases of Planned Change, Key Dimensions for Managing Change, Strategic Options for Change Management, Social
change processes were discussed as important processes required to review the impact of change.
Relevant procedures required to discuss results of a change impact review and steps involved in the change analysis for
stakeholders have also been demonstrated towards the latter part of the lesson.
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Lesson 1: Conceive
and analyse strategic
Options
Module: Strategic Planning
Introduction
► In this lesson we will be closely looking at areas such as strategy and its levels, organisational strategic aims and objectives,
strategic planning and approaches, strategic options and implications, stakeholders of organisations and stakeholder
expectations. The objective of the lesson is to look at the strategic planning fundamentals and basics within the
organisation to keep the next step of strategic planning.
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Learning Outcomes
1. Be able to conceive and analyse strategic options
1.1 Critically analyse and identify the organisation’s strategic aims and objectives including the approach adopted to
strategic planning
1.2 Determine alternative strategic options available and the implications for the organisation
1.3 Critically evaluate the impact of stakeholder expectations on a strategic plan and the planning horizon
Lesson Objectives
1. Strategy and its levels
2. Organisational strategic aims and objectives
3. Strategic Planning and approaches
4. Strategic options and implications
5. Stakeholders of organisations
6. Stakeholder expectations
7. Stakeholder Mapping
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Strategy and its levels

Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment
through its configuration of resources and competences with the aim of fulfilling stakeholder expectations. (Johnson, G,
Whittington, R and Scholes, K., 2013)
The key level of Strategy are:
•Corporate level - Determine overall scope of the organisation and add value to the different business units while meet
expectations of stakeholders. This is the level which higher management or the board of directors define the things that the
organisation should do.
Examples:
•Cost Leadership
•Product Differentiation

•Business level (Strategic Business Units) - How to compete successfully in particular markets. Mostly middle level managers get
involve in deciding business strategy.
Examples:
•Market Development
•Product Development
•Market Penetration
•Diversification
•Operational level - How different parts of organisation deliver strategy. The middle level and lower level managers are involved in
deciding operations strategies.
Examples:
•Reducing costs of materials with bulk purchases
•Automating parts of the production line
•Making the delivery component of operations more efficient could involve anything from improving warehouse layout to reduce
time and labor in fulfilling orders to obtain delivery contracts that reduce delivery contracts.
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Organisational strategic aims and objectives

The aims and objectives – both at the corporate and strategic business unit level – are often expressed in financial terms. They
could be the expression of desired sales or profit levels, rates of growth, dividend levels or share valuations.
The organisations also have market based objectives, many of which are quantified as targets such as market share, customer
service, repeat business and so on.
Examples:
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Organisational strategic aims and objectives

Example: Improve market penetration by 2% by the end of 2020
Example: Reducing the cost of operation by 5% by the end of financial year
Example: Increase Business to Customer sales by 4% by the end of 2nd quarter of the financial year.
several business units, each business unit would develop separate strategic objectives for themselves based on the
corporate objectives. Thereafter, business and functional objectives would have to be developed in order to specify the
scope and direction of the main functional activities leading to tactical objectives in the operational level.
Strategic Planning and approaches

Strategic planning is an organisational management activity that is used to set priorities, focus energy and resources, strengthen
operations, ensure that employees and other stakeholders are working toward common goals, establish
agreement around intended outcomes/results, and assess and adjust the organisation's direction in response to a changing
environment. (Strategy Management Group, 2019)
It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organisation is, who it
serves, what it does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where an
organisation is going and the actions needed to make progress, but also how it will know if it is successful.
The key motives for strategies are:
Environment-based - Fit strategies to changing business environment. As a n example if the industry rivalry is very high the strategies
must be introduced to survive in the high competition.
Capability-based - Stretch and exploit organisational resources and competences. If the organisation has bought a land as an
investment or a security for the business, it could be used as a warehouse for few years until the organisation finds a lucrative
opportunity to increase revenue with it, rather than just letting the land to sit.
Expectations-based - Meet expectations deriving from cultural and political context. If the culture of the market or the external
political background is becoming favourable for a long waited business idea and now it is the right time, the appropriate strategies
could be developed.
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The four approaches for strategic decision making are:
1. Unilateral firms are both low process and low input. They tend to have a top-down leader who makes decisions alone. These
type of leaders often has difficulty explaining their decision-making process and the role other employees played. Interestingly,
the leaders have two different types of attitudes: Some disliked their process and admitted that they should do things
differently, while others seemed very confident with how they made decisions. A potential benefit for Unilateral firms is that
leaders can make decisions quickly, without the constraints of process complexity and debate. However, the negative impact is
that, lacking checks and balances, Unilateral firms can make bad decisions fast. Moreover, speed is not a sure thing in a
Unilateral firm: If the top-down leader chooses to procrastinate on a tough decision, no process is there to force timely action.
2. Ad Hoc firms are low process and high input. These firms do not have a codified, recurring process that they follow every time
they make a strategic change. But when a change needs to be made, the leader pulls their team together to take action. The
exact steps the firm follows and the exact people in the room change from one decision to the next. The benefit of an Ad Hoc
system is that rigid rules don’t constrain the firm. Leaders can tailor the process to each decision by adjusting the length of
deliberations, the involved parties, and other factors. The main risk is that the firm may not learn over time how to get better at
making strategic decisions. The top leader of an Ad Hoc firm might also use the process flexibility to exclude stakeholders who
disagree with the leader’s position. This will eliminate the debate that fuels Ad Hoc decision making and, in essence, shift the
firm down to the unilateral box.

3. Administrative firms are high process but low input. These firms follow rigorous processes and well-defined routines to
make strategic decisions without actually eliciting debate from other employees. One benefit is the detailed data collection
and documentation that accompanies this extensive process. If Administrative firms are smart, they can leverage this
information to improve future decision making. But, similar to Unilateral firms, the low level of input can result in bad
decisions if leaders do not consider key information or opinions. In fact, this risk can be especially grave in administrative
firms because the detailed process and the sheer quantity of information gathered can act as theater, masking the lack of
broad input from internal and external stakeholders.
4. Collaborative firms are both high process and high input. These firms have the rigorous process of an administrative firm,
but also the engaged employees of an Ad Hoc firm. These leaders show strong consistency across different types of
decisions and could clearly articulate how employees added value during the process. The detailed process ensures that the
leaders don’t miss any steps. The frequent input ensures that they don’t miss any information. However, the inflexible
system can potentially slow down decision making and prevent firms from acting on time-sensitive opportunities. For
example, Collaborative firms may inadvertently include irrelevant parties in strategy discussions or spend too much time
achieving consensus among the participants in order to maintain engagement.
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The methods of strategic decision making could have
an impact over the strategic planning process within
the organisation.
Depending on the nature of Strategic Decision

making within the organisation the strategic
planning process will be influenced.
(Teti, K. et al, 2017)
Strategic options and implications

Bases of Competitive Strategy
Price Based Strategies – Route 1 is the ‘no frills’ strategy, which combines a low price with low perceived product/service
benefits and a focus on a price-sensitive market segment.
Route 2, the low-price strategy, seeks to achieve a lower price than competitors whilst maintaining similar perceived product
or service benefits to those offered by competitors. Increasingly this has been the competitive strategy chosen by Asda
(owned by Wal-Mart) and Morrisons in the UK supermarket sector. In the long run, both a ‘no frills’ strategy and a low-price
strategy cannot be pursued without a low-cost base. However, low cost in itself is not a basis for advantage. Managers often
pursue low cost that does not give them competitive advantage. The challenge is how costs can be reduced in ways which
others cannot match such that a low-price strategy might give sustainable advantage.
Differentiation Strategies – The broad differentiation strategy provides products or services that offer benefits different from
those of competitors and that are widely valued by buyers. The aim is to achieve competitive advantage by offering better
products or services at the same price or enhancing margins by pricing slightly higher. In public services, the equivalent is the
achievement of a ‘centre of excellence’ status, attracting higher funding from government (for example, universities try to
show that they are better at research or teaching than other universities).
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Hypercompetitive Strategies - Many organisations face turbulent, fast-changing, uncertain business environments and increasing
levels of competition, this is called hypercompetition. Here imitation, innovation or changes of customer preferences mean
advantage may be short-lived at best. Competitive advantage will therefore relate to organisations’ ability to change fast, to be
flexible and to innovate.
Gaming Strategies - Game theory is concerned with the interrelationships between the competitive moves of a set of
competitors. It is helpful in understanding the competitive dynamics of markets and in considering appropriate strategies in this
light. There are two key assumptions in relation to understanding competitive dynamics in terms of game theory are:
• Rationality - Competitors will behave rationally in trying to win to their own benefit.
• Interdependence - Competitors are in an interdependent relationship with each other. So one competitor’s move is likely to
galvanise response from another and the outcome of choices made by one competitor is dependent on the choices made by
another. Moreover, to a greater or lesser extent competitors are aware of such interdependencies and the moves that
competitors could take.

Strategic Directions
The organisation should have development directions which brings out the strategic options available to an organisation,
in terms of products and market coverage, taking into account the strategic capability of the organisation and the
expectations of stakeholders.
The key strategic options which are also known as ‘Ansoff’s growth strategies’ that are available for any organisation are:
• Protect and Build
• Product Development
• Market Development
• Diversification
(Ansoff, H., 1988)
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Protect and Build
Consolidation - Protect and strengthen position in current markets with current products, downsizing or withdrawal from
activities and maintenance of market share.
Market penetration - Organisation gains market share through market penetration by leveraging competences and aggressive
selling. The desirability of dominant market share is clearly visible under this strategic option. Example: Gaining 2% of market
share through marketing penetration done during the previous quarter.
Product Development
The product development is delivering modified or new products to existing markets with existing or new capabilities while
following changing customer needs, short product life cycles and exploitation of core competence in market analysis.
The associated dilemmas and risks are the expenses involved, potential unprofitability and unacceptable consequences of not
developing new products within the organisation. Example: Organisation developing a new product as a result of a market
research they undertook last year.

Market Development
Market Development is offering existing products in new markets segments or geographically different markets.
The organisation could look for new market segments with similar critical success factors and introduce new uses for existing
products. Example: Organisation opening a branch office or signing up with a partner in another country to sell products to
the markets of that country.
Diversification
This option takes the organisation away from both its current markets and products and leads to a totally new area of
business. The diversification could be broadly categories into related diversification and unrelated diversification.
Example: An organisation which was producing fresh milk, also expanding it’s operation to produce yogurt under the same
brand name.
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Methods for pursuing strategies
Internal Development - Build on and develop an organisation’s own capabilities. Organic development could be considered as a
major contributor for internal development. When an organisation has grown over the years adding new divisions and new
subsidiaries or business units or producing new products to the market than the products that they started with, then it could be
called as an internal development or the organisation has grown organically. Example: An organisation opening up 5 branch
offices around the country.
Mergers and Acquisitions - Take over ownership of another organisation. This is a basic buy over of an organisation or merging
two organisations together to work as one may be in the same industry or in a different industry (vertically or horizontally related
in the value chain). Example: A burger making organisation buying the business of a raw material supplier such as the bakery
which supplies the buns to the business.
Strategic Alliances - Two or more organisations share resources and activities. Organisation getting into a partnership as a
franchise agreement or a profit sharing agreement in working together and serving the customers. When the strategic alliances
happen the service and product improvements could take place for the customers when the strengths of both companies get
together. Example: A vehicle insurance company getting into a partnership with a health care insurance company.
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Stakeholders of organisations
Stakeholders are those individuals or groups who depend on the organisation to fulfill their own goals and on whom the
organisation depends.
The decisions managers have to make about the purpose and strategy of their organisation are influenced by the expectations
of stakeholders. This poses a challenge because there are likely to be many stakeholders, especially for a large organisation,
with different, perhaps conflicting, expectations.
This means that managers need to take a view on:
(i) Which stakeholders will have the greatest influence
(ii) Which expectations they need to pay most attention to and
(iii) To what extent the expectations and influence of different stakeholders vary
The stakeholders could be broadly categorized into two as External Stakeholders and Internal Stakeholders
External Stakeholders
External stakeholders can be usefully divided into three types in terms of the nature of their relationship with the organisation
and, therefore, how they might affect the success or failure of a strategy:
● Economic stakeholders, including suppliers, competitors, distributors (whose influence can be identified using the Porter’s Five-
Forces framework and shareholders (whose influence can be considered in terms of the organisational governance)
● Socio/political stakeholders, such as policy makers, regulators and government agencies who will influence the ‘social
legitimacy’ of the strategy.
● Technological stakeholders, such as key adopters, standards agencies and owners of competitive technologies who will influence
the diffusion of new technologies and the adoption of industry standards.
The influence of these different types of stakeholders is likely to vary in different situations. For example, the ‘technological
group’ will be crucial for strategies of new product introduction whilst the ‘social/political’ group is usually particularly
influential in the public sector context.
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Internal Stakeholders
There are also stakeholder groups internal to an organisation, which may be departments, geographical locations or
different levels in the hierarchy such as board members, partners, volunteers and donors.
Individuals may belong to more than one stakeholder group, and such groups may ‘line up’ differently depending on the
issue or strategy in hand. The external stakeholders may seek to influence an organisation’s strategy through their links
with internal stakeholders. For example, customers may exert pressure on sales managers to represent their interests
within the company.
Source: Freeman (1984)
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Stakeholders expectations
Since the expectations of stakeholder groups will
differ, it is normal for conflict to exist regarding
the importance or desirability of many aspects
of strategy. In most situations, a compromise will
need to be reached. Some of the typical
stakeholder expectations that exist and how
they might conflict are:
Stakeholders expectations
Global organisations may have added complications as they are operating in multiple arenas.
For example, an overseas division is part of the parent company, with all that implies in terms of expectations about
behaviour and performance, but is also part of a local community, which has different expectations. These two ‘worlds’
may not sit comfortably alongside each other. For these reasons, the stakeholder concept is valuable when trying to
understand the political context within which strategic developments take place. Indeed, taking stakeholder expectations
and influence into account is an important aspect of strategic choice.
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Stakeholders Mapping
There are different ways in which stakeholder mapping can be used to gain an understanding of stakeholder influence. The
approach to stakeholder mapping identifies stakeholder expectations and power and helps in understanding political priorities.
It underlines the importance of two issues:
● How interested each stakeholder group is in impressing its expectations on the organisation’s purposes and choice of strategies.
● Whether stakeholders have the power to do so.
The power/interest matrix describes the context within which a strategy might be pursued by classifying stakeholders in
relation to the power they hold and the extent to which they are likely to show interest in supporting or opposing a particular
strategy.
The matrix helps in thinking through stakeholder influences on the development of strategy. However, it must be emphasised
that how managers handle relationships will depend on the governance structures under which they operate and the stance
taken on corporate responsibility.
For example, in some countries unions may be very weak but in others they may be represented on supervisory boards; banks
may take an ‘arm’s-length’ relationship with regard to strategy in some countries, but be part of the governance structures in
others.
A laissez-faire type of business may take the view that it will only pay attention to stakeholders with the most powerful economic
influence (for example, investors), whereas shapers of society might go out of their way to engage with and influence the
expectations and involvement of stakeholders who would not typically see themselves as influential.
Key Players - The acceptability of strategies to key players (segment D) is of major importance. It could be that these are major
investors, but it could also be particular individuals or agencies with a lot of power – for example, a major shareholder in a family
firm or a government funding agency in a public sector organisation.
Keep Satisfied - Often the most difficult issues relate to stakeholders in segment C. Although these might, in general, be relatively
passive, a disastrous situation can arise when their level of interest is underrated and they suddenly reposition to segment D and
frustrate the adoption of a new strategy. Institutional shareholders such as pension funds or insurance firms can fall into this
category. They may show little interest unless share prices start to dip, but may then demand to be heard by senior management.
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Keep Informed - Similarly, organisations might address
the expectations of stakeholders in segment B, for
example community groups, through information
provision. It may be important not to alienate such
stakeholders because they can be crucially important
‘allies’ in influencing the attitudes of more powerful
stakeholders, for example, through lobbying.
Minimal Effort - The "Minimal effort" stakeholders group

neither does have a high interest in organisational
information and decisions nor does have power to exert
much influence. The organisation should keep this group
informed as necessary, but should do it through the
"minimal effort" approach, not investing too much effort
into them.
Stakeholder mapping might help in understanding better some of the following issues:
● In determining purpose and strategy, which stakeholder expectations need to be most considered?
● Whether the actual levels of interest and power of stakeholders properly reflect the corporate governance framework within which
the organisation is operating.
● Who the key blockers and facilitators of a strategy are likely to be and how this could be responded to – for example, in terms of
education or persuasion.
● Whether repositioning of certain stakeholders is desirable and/or feasible. This could be to lessen the influence of a key player or,
in certain instances, to ensure that there are more key players who will champion the strategy (this is often critical in the public
sector context).
● Maintaining the level of interest or power of some key stakeholders may be essential. For example, public ‘endorsement’ by
powerful suppliers or customers may be critical to the success of a strategy. Equally, it may be necessary to discourage some
stakeholders from repositioning themselves. This is what is meant by keep satisfied in relation to stakeholders in segment C, and to
a lesser extent keep informed for those in segment B. The use of side payments to stakeholders as a means of securing the
acceptance of new strategies can be a key maintenance activity. For example, a ‘deal’ may be done with another department to
support them on one of their strategies if they agree not to oppose this strategy.
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Lesson Summary
In this lesson you have covered the key objective areas such as critically analysing and identifying the organisation’s strategic
aims and objectives including the approach adopted to strategic planning, determining alternative strategic options available
and the implications for the organisation and lastly critically evaluating the impact of stakeholder expectations on a strategic
plan and the planning horizon.
Further, the levels of strategy, hierarchy of objectives, the approaches of strategic planning and decision making, strategic
options and stakeholder power / interest matrix were discussed under the lesson in understanding the setting for strategic
planning.
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Lesson 2:
Formulating a
Strategic Plan
Introduction
► In this lesson we will be closely looking at areas such as evaluating strategic options for planning, then assessing the
feasibility of strategic options, strategic tools and techniques that could be used for evaluation and assessment of options,
the risk assessment of strategies under the first part of the lesson.
The second part will be dedicated to discussing the key components of a strategic plan and choosing strategies for the plan
and then to discuss the key issues of strategic planning.
The overall objective of the lesson is to look at justifiable, potential and worthwhile strategic options for the organisation’s
strategic plan while understanding the risk assessment as well.
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Learning Outcomes
2. Be able to formulate a strategic plan
2.1 Critically evaluate the strategic options available to the organisation over the existing planning horizon and factoring
in wider context market and competitor impacts
2.2 Assess and determine the priorities and feasibility of alternative options over the existing planning horizon
2.3 Carry out a risk assessment of the preferred strategy and alternatives
2.4 Identify, justify and articulate the selected strategies within the plan and address any potential problems
2.5 Produce a strategic plan and its components to achieve the selected strategic direction
Lesson Objectives
1. Evaluating strategic options for planning
2. Suitability of Strategic Option
3. Acceptability of Strategic Option
4. Risk Assessment
5. Risk assessment of strategies
6. Feasibility of Strategic Option
7. Components of a Strategic plan
8. Issues in Strategic Planning
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Evaluating strategic options for planning

We have discussed and
understood what are the key
strategic options from the
previous lesson. A snap shot of
the key strategic options we
learnt have been shown here:
(Johnson, Scholes and

Whittington, 2011).
Evaluating strategic options for planning

Now you are required to learn and understand how the strategic options could be evaluated to consider them for the
organisation’s strategic planning process.
The strategic options might be evaluated by asking why some strategies might succeed better than others. It does this in
terms of three key success criteria which can be used to assess the viability of strategic options:
•Suitability is concerned with whether a strategy addresses the key issues relating to the strategic position of the
organisation.
•Acceptability is concerned with the expected performance outcomes (such as the return or risk) of a strategy and the extent
to which these meet the expectations of stakeholders.
•Feasibility is concerned with whether a strategy could work in practice; therefore, whether it has the capabilities to deliver a
strategy.
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Suitability of Strategic Option

Suitability is concerned with whether a strategy addresses the key issues that have been identified in understanding the
strategic position of the organisation. It is therefore concerned with the overall rationale of a strategy. In particular this
requires an assessment of the extent to which any strategic option would fit with key drivers and expected changes in the
environment, exploit strategic capabilities and be appropriate in the context of stakeholder expectations and influence and
cultural influences.
Indeed a major skill of a strategist is to be able to discern the key strategic issues. Evaluating the suitability of a strategy is
extremely difficult unless the issues have been identified.
When evaluating a strategic option for it’s suitability to the organisation it should be discussed as to why it is been considered
and it should be revealed that the strategic option is bringing answers for the identified strategic issues in hand.

Some concepts and frameworks that could be considered in understanding suitability of strategic options are;
1. PESTEL – will provide the understanding of external market factors.
2. Scenarios – with provide the understanding of both internal and external environment with uncertainties and risks.
3. Five Forces – will provide understanding of the competition and competitors in he market.
4. Strategic Groups – will help to understand the attractiveness of groups, their influences and strategic space.
5. Core Competencies – will provide the understanding of basis of competitive advantage of competition and industry
standards.
6. Value Chain – will provide understanding about internal environment and support identifying out sourcing opportunities.
7. Stakeholder Mapping – will support understanding of the power, interest and influence of the stakeholders and both
internal and external environment.
8. Cultural Web – will support understanding the impact on feasibility as well as the level of acceptability lies within the
orgnaisation.
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Some examples of suitability are;
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Evaluation tools for assessing suitability
There are a number of tools that can be used to assess the suitability of strategic options. These include:
● The TOWS matrix -This is a method of identifying strategic options on the basis of a SWOT analysis. However, it can also be used
to provide an assessment of suitability by ‘justifying’ options in terms of the extent to which they address the strengths,
weaknesses, threats and opportunities relating to the strategic position of the organisation.
● The relative suitability of options that matters - There may be options ‘available’ to an organisation that are more or less suitable
than others. There are useful frameworks that can assist in understanding better the relative suitability of different strategic
options.
● Ranking strategic options - Options are assessed against key factors relating to the strategic position of the organisation and a
score (or ranking) established for each option.
● Decision trees can also be used to assess strategic options against a list of key factors. Here options are ‘eliminated’ and
preferred options emerge by progressively introducing requirements which must be met (such as growth, investment or diversity).
● Scenarios - Here strategic options are considered against a range of possible future situations. This is especially useful where a
high degree of uncertainty. Suitable options are ones that are sensible in terms of the various scenarios so several need to be ‘kept
open’, or perhaps in the form of contingency plans. Or it could be that an option being considered is found to be suitable in
different scenarios.
Acceptability of Strategic Option

Acceptability
Acceptability is concerned with the expected performance outcomes of a strategy. These can be of three types: return, risk
and stakeholder reactions. It is probably sensible to use more than one approach in assessing the acceptability of a strategy.
Return - Returns are the benefits which stakeholders are expected to receive from a strategy. Measures of return are a
common way of assessing proposed new ventures or major projects by managers within businesses. So an assessment of
financial and non-financial returns likely to accrue from specific strategic options could be a key criterion of acceptability of a
strategy – at least to some stakeholders.
There are different approaches to understanding return. You will be now looking at three of these. It is important to
remember that there are no absolute standards as to what constitutes good or poor return. It will differ between industries,
countries and between different stakeholders. Views also differ as to which measures give the best assessment of return, as
will be seen below.
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Financial Analysis – Traditional financial analyses are used extensively in assessing the acceptability of different strategic options.
Three commonly used approaches are ROCE, Payback period and Discounted cash flows.
Forecasting the return on capital employed (ROCE) for a specific time period after a new strategy is in place. For example, an ROCE of
15 per cent by year 3. The ROCE is a measure of the earning power of the resources used in implementing a particular strategic
option.
Estimating the payback period is the length of time it takes before the cumulative cash flows for a strategic option become positive.
Payback is used as a financial criterion when a significant capital injection is needed to support a new venture. The judgement that
has to be made is whether the payback period is too long and the organisation is prepared to wait. Payback periods vary from
industry to industry. Public infrastructure projects such as road building may be assessed over payback periods exceeding 50 years.
Calculating discounted cash flows (DCFs) is a widely used investment appraisal technique. It is an extension of payback analysis. Once
the cash inflows and outflows have been assessed for each of the years of a strategic option they are discounted. This reflects the fact
that cash generated early is more valuable than cash generated later.
There are also other considerations to be borne in mind when carrying out a financial analysis. In particular, do not be misguided by
the apparent thoroughness of the various approaches. Most were developed for the purposes of investment appraisal. Therefore,
they focus on discrete projects where the additional cash inflows and outflows can be predicted relatively easily. For example, a
retailer opening a new store. Such assumptions are not necessarily valid in many strategic contexts. The precise way in which a
strategy develops (and the associated cash flow consequences) tend to become clearer as the implementation proceeds rather than
at the outset. Nor are strategic developments and the relevant cash flows easy to isolate from ongoing business activities.

Additionally, financial appraisals tend to focus on the direct tangible costs and benefits rather than the strategy more broadly. For
example, a new product may look unprofitable as a single project. But it may make strategic sense by enhancing the market
acceptability of other products in a company’s portfolio. In an attempt to overcome some of these shortcomings, other
approaches have been developed in an assessment of return.
Cost Benefit Analysis – In many situations, profit is too narrow an interpretation of return, particularly where intangible benefits
are an important consideration. This is usually so for major public infrastructure projects, for example, such as the sitting of an
airport or a sewer construction project or in organisations with long-term programmes of innovation (for example, pharmaceuticals
or aerospace). The cost–benefit concept suggests that a money value can be put on all the costs and benefits of a strategy,
including tangible and intangible returns to people and organisations other than the one ‘sponsoring’ the project or strategy.
Although in practice monetary valuation is often difficult, it can be done and, despite the difficulties, cost–benefit analysis is useful
provided its limitations are understood. Its major benefit is in forcing managers to be explicit about the various factors that
influence strategic choice. So, even if people disagree on the value that should be assigned to particular costs or benefits, at least
they can argue their case on common ground and compare the merits of the various arguments.
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Real Options - The previous approaches assume a reasonable degree of clarity about the outcomes of a strategic option.
There are, however, situations where precise costs and benefits of strategies only become clear as implementation proceeds.
In these circumstances the traditional discounting cash flow approach discussed above will tend to undervalue a ‘project’
because it does not take into account the value of options that could be opened up by the particular project. It could be
argued that this extra value arises because executing a strategy almost always involves making a sequence of decisions. Some
actions are taken immediately, while others are deliberately deferred.
The strategy sets the framework within which future decisions will be made, but leaves space for learning from ongoing
developments and for discretion to act based on what is learnt. So the flexibility can be used to expand, extend, contract,
defer or close down a project. So a strategy should be seen as a series of ‘real’ options (that is, choices of direction at
particular points in time as the strategy takes shape). There are three main benefits of this approach:
•Bringing strategic and financial evaluation closer together.
•Valuing emerging options.
•Coping with uncertainty.

Real Options Framework
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Stakeholder Analysis - There has been a growing interest in shareholder value analysis (SVA) and ‘managing for value’ (MFV).
In the main this is because of the growing concern about the need for company directors to pay more attention to providing
value for shareholders. A major limitation of traditional accounting measures such as operating profit (profit before interest
and taxation) is that they ignore the cost of capital. Misleading signals are given, therefore, about whether value is created or
destroyed. In turn, this can give misleading views about the acceptability of specific strategic options. In this context there
have been increasing questions raised about the extent to which the waves of mergers and acquisitions generate shareholder
value.
There are two measures of shareholder value. One is external to the company. The other is internal:
The external measure is referred to as total shareholder return (TSR). In any financial year, it is equal to the increase in the
price of a share plus the dividends received per share actually received in that year. This is then divided by the share price at
the start of the financial year.
The internal measure is called economic profit or economic value added (EVA). If the operating profit (after tax) is greater
than the cost of the capital required to produce that profit then EVA is positive. Evidence suggests that a positive EVA will
lead to positive share price performance. For this reason, EVA is a good internal proxy for shareholder return.

Used effectively, both EVA and the subsequent improvement in TSR performance align the interests of owners and managers.
Although shareholder value analysis has helped address the shortcomings of traditional financial analyses, it cannot remove
all the inherent uncertainties surrounding strategic choices. It has also been criticised for over emphasising short-term
returns.
Nevertheless, the idea of valuing a strategy may serve to give greater realism and clarity to otherwise vague claims for
strategic benefits. Perhaps the major lesson, however, is that firms that most successfully employ SVA do so within an over-all
approach to managing for value throughout the firm rather than merely as a technique for purposes of analysis.
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Risk Assessment
Risk - Another aspect of acceptability is the risk that an organisation faces in pursuing a strategy. Risk concerns the probability
and consequences of the failure of a strategy. This risk can be high for organisations with major long-term programmes of
innovation, where high levels of uncertainty exist about key issues in the environment or where there are high levels of
public concern about new developments – such as genetically modified Crops.
Formal risk assessments are often incorporated into business plans as well as the investment appraisals of major projects.
Importantly, risks other than ones with immediate financial impact are included such as ‘risk to corporate or brand image’ or
‘risk of missing an opportunity’.
The Risk Assessment Matrix is key component which most of the businesses use in terms of monitoring their risks. There are
different strategies to mitigate the risks faced by an organisation. Selection of an strategy will depend on a range of factors
such as industry and the organisation and it s market position.
Risk Assessment
Also the strategy to be used will depend on the resource requirement as well as the internal capabilities. It could be seen that
the strategy to be used in a particular business context depends on various internal as well as external factors.
The key decision on risks which an organisation usually takes are:
•Reduce/ mitigate – Reducing the probability that the event will occur and or the impact if the event does occur
(Unacceptable high / extreme risks and Acceptable Medium risks and Acceptable Low risks)
•Transfer - Transferring the cost of an undesirable outcome to someone else (Unacceptable high / extreme risks)
•Avoid - Completely avoiding potential events thus providing a zero probability that they will occur (Unacceptable high /
extreme risks)
•Accept - Let the risk happen and be ready to bear the consequences. (Acceptable Low risks and Acceptable Medium risks)
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Risk Assessment
Risk Assessment
Developing a good understanding of an organisation’s strategic position is at the core of good risk assessment. However, some of
the concepts below can also be used to establish the detail within a risk assessment:
1. Financial Ratios
2. Sensitivity Analysis
3. Stakeholder Reactions
Financial Ratios - The projection of how key financial ratios might change if a strategy were adopted can provide useful insights into
risk. At the broadest level, an assessment of how the capital structure of the company would change is a good general measure of
risk. For example, strategies that would require an increase in long term debt will increase the gearing (or ‘leverage’) of the
company and, hence, its financial risk. A consideration of the likely impact on an organisation’s liquidity (cash position) is also
important in assessing risk. For example, a small retailer eager to grow quickly may be tempted to fund the required shop-fitting
costs by delaying payments to suppliers and increasing bank overdraft. The extent to which this increased risk of reduced liquidity
threatens survival depends on the likelihood of either creditors or the bank demanding payments from the company – an issue
that clearly requires judgment.
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Risk assessment of strategies

Sensitivity Analysis - Sometimes referred to as ‘what if’ analysis, sensitivity analysis allows each of the important assumptions
underlying a particular strategy to be questioned and challenged. In particular, it tests how sensitive the predicted
performance or outcome (for example, profit) is to each of these assumptions.
For example, the key assumptions underlying a strategy might be that market demand will grow by 5 per cent per annum, or
that the company will stay strike-free, or that certain expensive machines will operate at 90 per cent loading. Sensitivity
analysis asks what would be the effect on performance (in this case, profitability) of variations on these assumptions. For
example, if market demand grew at only 1 per cent, or by as much as 10 per cent, would either of these extremes alter the
decision to pursue that strategy? This can help develop a clearer picture of the risks of making particular strategic decisions
and the degree of confidence managers might have in a given decision.
Risk assessment of strategies

Stakeholder reactions - The stakeholder mapping shows how it can be used to understand the political context and consider the
political agenda in an organisation. However, stakeholder mapping can also be useful in understanding the likely reactions of
stakeholders to new strategies, the ability to manage these reactions, and hence the acceptability of a strategy.
There are many situations where stakeholder reactions could be crucial. For example:
● Financial restructuring. A new strategy might require the financial restructuring of a business, for example an issue of new shares,
which could be unacceptable to powerful groups of shareholders, since it dilutes their voting power.
● An acquisition or merger could be unacceptable to unions, government or some customers.
● A new business model might cut out channels (such as retailers), hence running the risk of a backlash, which could jeopardise the
success of the strategy.
● Outsourcing is likely to result in job losses and could be opposed by unions.
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Feasibility of Strategic Option

Feasibility is concerned with whether an organisation has the resources and competences to deliver a strategy. A number of
approaches can be used to understand feasibility.
Financial feasibility - A useful way of assessing financial feasibility is cash flow analysis and forecasting. This seeks to identify the
cash required for a strategy and the likely sources for obtaining that cash. These sources are sometimes referred to as funding
sources.
Cash flow forecasting is, of course, subject to the difficulties and errors of any method of forecasting. However, it should highlight
whether a proposed strategy is likely to be feasible in terms of both cash generation and the availability and timing of new funding
requirements.
This issue of funding strategic developments is an important interface between business and financial strategies. Financial feasibility
can also be assessed through break-even analysis. This is a simple and widely used approach for judging the feasibility of meeting
financial targets such as the ROCE and operating profit.
In addition, it provides an assessment of the risks of various strategies particularly where different strategic options require
markedly different cost structures.

Resource deployment - Although financial feasibility is important, a wider understanding of feasibility can be achieved by
identifying the resources and competences needed for a specific strategy. Indeed the effectiveness of a strategy is likely to be
dependent on whether such capabilities are available or can be developed or obtained.
For example, geographical expansion in a market might be critically dependent on marketing and distribution expertise, together
with the availability of cash to fund increased stocks. Or a strategy of developing new products to sell to current customers may
depend on engineering skills, the capability of machinery and the company’s reputation for quality in new products.
A resource deployment assessment can be used to judge
(i) the extent to which an organisation’s current capabilities need to change to reach or maintain the threshold requirements for
a strategy
(ii) if and how unique resources and/or core competences can be developed to sustain competitive advantage. The issue is
whether these changes are feasible in terms of scale, quality of resource or time-scale of change.
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Evaluation criteria: three qualifications
There are three qualifications that need to be made to this discussion of evaluation criteria:
● Conflicting conclusions and management judgment. Conflicting conclusions can arise from the application of the criteria of
suitability, acceptability and feasibility. A proposed strategy might look eminently suitable but not be acceptable to major
stakeholders, for example. It is therefore important to remember that the criteria discussed here are useful in helping think
through strategic options but are not a replacement for management judgment. Managers faced with a strategy they see as
suitable, but which key stakeholders object to, have to rely on their own judgment on the best course of action, but this should be
better informed through the analysis and evaluation they have undertaken.
● There needs to be consistency between the different elements of a strategy. There are several elements of a strategy, so an
important question is whether the component parts work together as a ‘package’. So competitive strategy (such as low price or
differentiation), strategy direction (such as product development or diversification) and strategic method (internal, acquisition or
alliances) need to be consistent.
They need to be considered as a whole and make sense as a whole. There are dangers that they do not. For example, suppose an
organisation wishes to develop a strategy built on its inherent competences developed over many years as a basis of differentiation
that competitors will find difficult to imitate.

It may believe it can do this by using those competences to develop new products or services within a market it knows well. If
so there may be dangers in looking to develop those new products through acquiring other businesses which might have very
different competences and capabilities that are incompatible with the strengths of the business.
● The implementation and development of strategies may throw up issues that might make organisations reconsider
whether particular strategic options are, in fact, feasible or uncover factors that change views on the suitability or
acceptability of a strategy. This may lead to a reshaping, or even abandonment, of strategic options. It therefore needs to be
recognised that, in practice, strategy evaluation may take place through implementation, or at least partial implementation.
This is another reason why experimentation and low-cost probes may make sense. More generally, care should also be taken
in assuming that the careful and systematic evaluation of strategy is necessarily the norm in organisations.
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Components of a strategic plan

Often, strategy development is equated with formalised strategic planning systems. These may take the form of systematised, step-
by-step, chronological procedures involving different parts of the organisation.
A strategic plan is a document used to communicate with the organisation the organisations goals, the actions needed to achieve
those goals and all of the other critical elements developed during the planning exercise. (Strategy Management Group, 2019)
Strategic planning is an organisational management activity that is used to set priorities, focus energy and resources, strengthen
operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended
outcomes/results, and assess and adjust the organisation's direction in response to a changing environment.
It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organisation is, who it serves,
what it does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where an organisation is
going and the actions needed to make progress, but also how it will know if it is successful. (Strategy Management Group, 2019)

The key stages of strategic planning in a large organisation are:
•Initial guidelines. The cycle’s starting point is usually a set of guidelines

or assumptions about the external environment (for example,
price levels and supply and demand conditions) and the overall priorities, guidelines and expectations of the corporate centre.
•Business-level planning. Business units or divisions then draw up strategic plans to present to the corporate centre. Corporate centre
executives then discuss those plans with the business managers usually in face-to-face meetings. On the basis of these discussions
the businesses revise their plans for further discussion.
•Corporate-level planning. The corporate plan results from the aggregation of the business plans. This coordination may be
undertaken by a corporate planning department that, in effect, has a coordination role. The corporate board then has to approve the
corporate plan.
• Financial and strategic targets are then likely to be extracted to provide a basis for performance monitoring of businesses and key
strategic priorities on the basis of the plan.
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Any organisation must engage in Strategic Planning that clearly defines objectives and
assesses both the internal and external environment to formulate strategy, implement the
strategy, evaluate the progress and make judgments as necessary to stay on track.
A simplified version of the planning process has been depicted by the diagram:

The key steps of Strategic Planning are:
Mission & Objectives – The mission statement describes the company’s business vision including unchanging values and
propose of the firm and forward looking visionary goals that guide the pursuit o future opportunities.
Guided by the business vision the company’s leaders could define measurable financial and strategic objectives. Financial
objectives involve measure such as sales targets and earnings growth. Strategic objectives are related to the company’s
business position, and may include measures such as market share and reputation.
Examples:
•Increase organisation’s revenue by 5% by 31st of March 2019
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Environmental Scan – The environmental scan includes the following key components:
•Internal analysis of the organisation
•Analysis of the organisation’s industry
•External Environment
The internal analysis will bring out the organisation’s strengths and weaknesses and the external analysis will reveal the
opportunities and threats. A SWOT analysis will be helpful in order to explore a profile of strengths, weaknesses,
opportunities and threats for the organisation.
The industry analysis could be undertaken through the Porter’s Five Forces framework. This framework evaluates entry
barriers, bargaining power of customers, suppliers, the threat of substitutes and overall industry rivalry.

Strategy Formulation – Given the information from the environmental scan, the organisation should match its strengths with the
opportunities while addressing weaknesses and external threats.
To attain superior profitability, the organisation should seeks to develop a competitive advantage over it’s rivals. A competitive
advantage could be built on cost or differentiation. The Porter’s three industry independent generic strategies could be used for
the organisation to select from:
•Cost Leadership - it involves being the leader in terms of cost in your industry or market. This will help the firm to increase profits
by reducing costs, while charging industry-average prices and also to increase market share by charging lower prices, while still
making a reasonable profit on each sale because you've reduced costs.
•Differentiation - Differentiation involves making your products or services different from and more attractive than those of your
competitors. How you do this depends on the exact nature of your industry and of the products and services themselves, but will
typically involve features, functionality, durability, support, and also brand image that your customers value.
•Focus - Companies that use Focus strategies concentrate on particular niche markets and, by understanding the dynamics of that
market and the unique needs of customers within it, develop uniquely low-cost or well-specified products for the market. Because
they serve customers in their market uniquely well, they tend to build strong brand loyalty amongst their customers. This makes
their particular market segment less attractive to competitors.
As with broad market strategies, it is still essential to decide whether you will pursue Cost Leadership or Differentiation once you
have selected a Focus strategy as your main approach: Focus is not normally enough on its own.
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Strategy Implementation – The selected strategy could be implemented by means of programmers, budgets and procedures.
Implementation involves organisation of the company’s resources and motivation of the staff to achieve objectives.
The way in which the strategy is implemented can have a significant impact on whether it will be successful. In a large
company those who implement the strategy likely will be different people from those who formulated it. For this reason care
must be taken o communicate the strategy and the reasoning behind it. Otherwise the implementation might not succeed if
the strategy is misunderstood or if lower level managers resist its implementation because they do not understand why the
particular strategy was selected.
For the effective implementation, it needs to be translated to more detailed policies that can be understood at the functional
level of the organisation. The expression of the strategy in terms of the functional policies also serves to highlight any
practical issues that might not have been visible at the higher level.

The strategy should be translated into specific policies for functional areas such as:
•Marketing
•Research and Development
•Procurement
•Production
•Human Resources
•Information Systems
In addition to developing functional policies, the implementation phase involves identifying the required resources and
putting into place the necessary organisational changes.
Further the strategies selected should be evaluated in terms of suitability, acceptability and feasibility before the adoption in
the context of the plan and organisation.
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Evaluation & Control – The implementation of the strategies must be monitored and adjustments made as needed.
Evaluation and control consists of the following steps:
•Define parameters to be measured
•Definite target values for those parameters
•Perform Measurements
•Compare measured results to the pre-defined standard
•Make necessary changes
The strategic planning process is dynamic and continuous. A change in one component can necessitate a change in the entire
strategy. As such, the process must be repeated frequently in order to adapt the strategy to environmental changes.
Throughout the process the organisation may need to cycle back to a previous stage and make adjustments.

It is important to note that major strategic decisions may not, themselves, be made within or as a direct result of such planning
processes. For example, the decisions about competitive strategy in a business-level strategic plan will quite likely be taken in
management meetings in that business. However, such decisions may then be built into the formal plan. None the less a strategic
planning system may have many uses. First, it may indeed play a role in how the future organisational strategy is determined. For
example, it might:
● Help structure analysis and thinking about complex strategic problems.
● Encourage questioning and challenge of received wisdom taken for granted in an organisation.
● Encourage a longer-term view of strategy than might otherwise occur. Planning horizons vary, of course. In a fast-moving consumer
goods company, 3–5-year plans may be appropriate. In companies which have to take very long-term views on capital investment,
such as those in the oil industry, planning horizons can be as long as 15 years (in Exxon) or 20 years (in Shell).
● Enhance coordination of business-level strategies within an overall corporate strategy.
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A planning system may also facilitate converting an intended strategy into organisational action by:
•Communicating intended strategy from the centre to operating units.
•Providing agreed objectives or strategic milestones against which performance and progress can be reviewed.
•Coordinating resources required to put strategy into effect.
A planning system may also have a psychological role by:
•Involving people in strategy development, therefore perhaps helping to create ownership of the strategy.
•Providing a sense of security and logic for the organisation, not least senior management who believe they should be
proactively determining the future strategy and exercising control over the destiny of the organisation.
The understanding that is gained through the key components of the strategic plan will be supportive in pursuing the chosen
strategic directions of the organisation such as product development, market development, market penetration and
diversification.
Issues in Strategic Planning

There are four main dangers in the way in which formal systems of strategic planning have been employed:
•Confusing strategy with the plan - Managers may see themselves as managing strategy when what they are doing is going through
the processes of planning. Strategy is, of course, not the same as ‘the plan’: strategy is the long-term direction that the
organisation is following, not just a written document.
•Detachment from reality - The managers responsible for the implementation of strategies, usually line managers, may be so busy
with the day-to-day operations of the business that they cede responsibility for strategic issues to specialists or consultants.
However, these rarely have power in the organisation to make things happen. The result can be that strategic planning becomes an
intellectual exercise removed from the reality of operation. Strategic planning can also become over-detailed in its approach,
concentrating on extensive analysis that, whilst technically sound in itself, misses the major strategic issues facing the organisation.
For example, it is not unusual to find companies with huge amounts of information on their markets, but with little clarity about
the strategic importance of that information. The result can be information overload with no clear outcome. At the extreme,
strategic planners may come to believe that centrally planned strategy determines what goes on in an organisation. In fact it is
what people do and the experience they draw on to do it that are likely to play a much more significant role. If formal planning
systems are to be useful, those responsible for them need to draw on such experience and involve people throughout the
organisation if planning is to avoid being removed from organisational reality.
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Issues in Strategic Planning

•Lack of ownership - The strategy resulting from deliberations of a corporate planning department, or a senior management
team, may not be owned more widely in the organisation. In one extreme instance, a colleague discussing a company’s
strategy with its planning director was told that a strategic plan existed, but found it was locked in the drawer of the
executive’s desk. Only the planner and a few senior executives were permitted to see it! There is also a danger that the
process of strategic planning may be so cumbersome that individuals or groups might contribute to only part of it and not
understand the whole. The result can be that the business-level strategy does not correspond to the intended corporate
strategy. This is particularly problematic in very large firms.
•Dampening of innovation - Highly formalised and rigid systems of planning, especially if linked to very tight and detailed
mechanisms of control, can result in an inflexible, hierarchical organisation with a resultant stifling of ideas and dampening of
innovative capacity.
Lesson Summary
In this lesson you have been taught to be able to formulate a strategic plan.
In learning the same you have learnt how to critically evaluate the strategic options available to the organisation over the
existing planning horizon and factoring in wider context market and competitor impacts. You have also learnt to assess and
determine the priorities and feasibility of alternative options over the existing planning horizon. The key criteria for evaluation
are Suitability, Acceptability and Feasibility. Identifying, justifying and articulating the selected strategies within the plan and
addressing any potential problems have been covered as well.
The carrying out of a risk assessment of a preferred strategy and alternatives too have been learnt through the concepts such as
Financial Ratios, Sensitivity Analysis and Stakeholder Reactions.
Under the latter part of the lesson you have been learnt how to produce a strategic plan and its components to achieve the
selected strategic direction.
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Lesson 3: Execute
Strategic Plan
Introduction
In this lesson we will be closely looking at areas such as internal and external market factors that are required to look at
when developing a strategic plan, the tools for analysing internal and external market factors, the tools required for
monitoring and reviewing of implemented strategic plans and the impact of strategic planning on an organisation in terms
of it’s directions and objective achievements.
The overall objective of the lesson is to look at the key factors to consider when developing the strategic plan and then
evaluating and monitoring the implemented plan while understanding how the strategic plan has an impact on the
organisation’s corporate goals.
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Learning Outcomes
3. Be able to implement, evaluate, monitor and review the strategic plan
3.1 Critically review the organisational and market factors to be considered in the implementation of the strategic plan
3.2 Determine and apply a range of tools and concepts to monitor and review the strategic plan
3.3 Determine the impact of the strategic plan on the organisation’s direction and achievement of the organisation’s
objectives
Lesson Objectives
1. Internal and external factors
2. Evaluate, monitor and review strategic plans
3. Impact and uses of a strategic plan for organisation
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Internal and External Factors

In the previous lesson we looked at how to develop a strategic plan and in this lesson we are going to look at the influences on the
organisation’s strategic plan and it’s execution, evaluation, impact on the organisation and uses.
For any business to grow and prosper, managers of the business must be able to anticipate, recognise and deal with change in the
internal and external environment. Change is a certainty, and for this reason business managers must actively engage in a process
that identifies change and modifies business activity to take best advantage of change. That process is strategic planning.
The organisational factors are known as internal factors and the market or macro environmental factors are known as external
factors. The internal and external factors are the key factors that have a direct impact on organisation’s strategic planning decisions
and strategic direction. All businesses have an internal and external environment.
The internal environment is very much associated with the human resource of the business or organisation, and the manner in
which people undertake work in accordance with the mission of the organisation. To some extent, the internal environment is
controllable and changeable through planning and management processes.
The external environment, on the other hand is not controllable. The managers of a business have no control over business
competitors, or changes to law, or general economic conditions. However the managers of a business or organisation do have
some measure of control as to how the business reacts to changes in its external environment.
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Internal Environment Factors
Generally the strategic planning process will examine the strengths and weaknesses of the organisation and it is likely that significant
discussion will center on the relative strength of internal environment factors.
Factors in the internal environment and their affect on the business/organisation:
Human Resource -The knowledge, experience and capability of an organisation's workforce is a determining factor of success. For
this reason, organisations pay particular attention to the recruitment of staff and also to engage in the training of staff and volunteers
to build the organisation's capability. In pursuing both recruitment and training strategies, an organisation is often limited by its
financial strength. Nevertheless, training of staff is an essential aspect of good business management, and even in difficult financial
circumstances is an achievable strategy.
Organisational Culture - The culture within the organisation is a very important factor in business success. The attitudes of staff and
volunteers, and their ability to "go the extra mile" makes a very significant difference. Negative attitudes can severely impact on the
organisation's ability to implement strategies for development despite however thorough the planning processes. Positive attitudes
of staff and volunteers will not only make the management task easier but also will be noticed and appreciated by customers of the
business or members of organisation.
Organisation Structure - Businesses and organisations may be impeded by their structure, constitution and/or forms of governance.
Organisation structure is essentially the way that the work needed to carry out the mission of the organisation is divided among its
workforce.

In a non-profit organisation, the organisation will include the management board or committee (i.e. President, Secretary,
Treasurer and Ordinary Committee Members), the salaried staff of the organisation and all the volunteers that have roles as
coordinators of various business functions (e.g. Event Coordinator, Promotions Coordinator and Coaching Coordinator) under the
organisational structure. When an organisation is a for-profit business that operates in a very competitive environment, its
organisation structure may help or hinder the ability of the organisation to react to change.
For example, when the organisation structure has many levels of management, decision making can be slow as information is
carried up and down the hierarchy. For this reason, "flatter" organisation structures are often preferred i.e. people who work "at
the coal face" and one level of management above. Volunteers are normal part of the non-profit organisation but not the profit-
business. Although it is often hard to find volunteers, the organisation structure of the non-profit organisation can be very
flexible by appointing volunteers as needed.
Management - The capability of the management team and the leadership styles employed by managers will also have a major
impact on the morale of staff (and volunteers in a non-profit organisation) and organisation culture. More contemporary forms of
management involve workers in decision making processes and trusting that, although managers and workers have different
viewpoints, they largely benefit by working together to achieve the business objectives.
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Assets - The internal environment of the organisation can be made richer or poorer by its assets. For example, the
organisation's premises can be pleasant and uplifting, or demure and depressing. The availability of equipment is another
asset that can significantly impact on the internal environment. If equipment is in short supply or not of the expected
standard, then staff may be hindered in the performance of their duties, or if equipment is used by customers then customer
satisfaction will fall.
Financial Strength - Financial strength is a factor in its own right that influences the internal environment of the organisation.
Despite however good other internal factors may be, it is very difficult for an organisation that is too short of cash to
implement strategies within the strategic plan. If the organisation struggles financially this can impact on staff morale as
budgets need to be excessively tight.
The critical review of the internal factors in your organisational contexts could be done with the use of frameworks such as
SWOT, Cultural Web, Scenarios, Core Competency analysis, Value Chain and internal Stakeholder Mapping.

External Environment Factors
The business cannot control these aspects but can respond to change
if needed. The main problem for business managers is to be able to
respond early to change in the external environment, and this
depends on how soon any change is identified.
Some external environmental factors such as economic conditions are

reported daily in the media and managers have a wealth of
information on which to develop strategic plans. However, some
external factors may be difficult to identify, particularly of the pace of
change is very slow or is hidden from view.
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Factors in the external environment and their affect on the business/organisation:
Economic conditions - Prevailing economic conditions of the nation will have an effect on the spending patterns of citizens.
Increases in interest rates and/or a high level of unemployment will depress consumption of non-essential goods and
services.
For example. when people experience financial hardship, they will spend much less on sport and recreation, holidays, new
cars and luxury goods. Economic conditions are global as well as national, and when there was a global financial crisis as in
2007, changes in the external environment were dramatic.
Market (competition) - The strength of business competition is a constantly changing factor in the external business
environment. Not only will competitors come and go, but they will also change marketing strategies, product lines and prices.
Often such changes are not heralded and business managers must be alert as to what competitors are doing.

Technology - Technological change has been rapid in the last 50 years and is a factor in the external environment that
constantly exerts pressure on the business or organisation. If businesses do not adapt sufficiently quickly to technological
change, they risk losing market share. It's not just that technological change affects the design of products, but even the
delivery of services can change.
Climate change - Climate change is an insidious threat because the pace of change may be recognisable only if considered on a
decade-by-decade basis. The effect of climate change will not fall equally on all nations and all businesses. Businesses that
depend directly on a good supply of water e.g. agriculture, field sports will be adversely effected if climate change results in
reduced rainfall. However the flow on affects of drought will eventually work their way through to all businesses in the effected
community.
Legal - Taxation is one of most obvious changes in law through legislation. Sometimes taxation changes occur overnight with
little warning and sometimes there is plenty of time for the business to prepare. Other law changes that commonly affect
business include Workplace Health and Safety, Industrial Relations, Consumer Protection and Environmental Law.
Media - The media is undergoing rapid and significant change. The main driver of this change is technology and the rise of the
internet. Newspapers once carried many pages of job adverts but now this business is conducted by online recruitment
companies such as Seek.
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Political - Like law, changes in government policy can be well notified and discussed, or without warning. As an example of
how government policy has an effect, is that many organisations depend on government financial assistance. When there is a
change of government, such funding assistance can disappear in a short space of time.
Demographic -There is constant change in the make-up of the population. Some of these changes include an increasing
proportion of elderly citizens, increasing number of two-income families, the age at which people marry is increasing,
increasing ethnic diversity, suburbs which were once dominated by young families now have few. These demographic
changes can have a significant effect locally.
For example, a sport club which once prospered can begin to decline as the local area has less and less children.
The critical review of the external factors in your organisational contexts could be done with the use of frameworks such
as PESTEL, Scenarios, Porters’ Five Forces, Strategic Groups, Value Chain and External Stakeholder Mapping.
Evaluate, monitor and review strategic plans

Monitoring the strategic plan
The one thing you should never do with a strategic plan is to put it away in a bottom draw and forget about it until the next
time it needs to be revamped. There is a real risk of this considering that strategic plans are set for a period of 3-5 years.
A strategic plan should be reviewed by management on regular basis so that:
•It serves as a guide to the decision-making process of management
•Strategies can be evaluated for their effectiveness
•The impact of significant changes to the business environment can be considered
Strategic plans should NOT be considered as unchangeable for their stated period.
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There is every probability that the strategic plan will need amending from time to time for reasons such as:
•It becomes evident that a particular strategy is already unsuccessful
•New and better opportunities become evident
•The organisation's financial circumstances change
•Significant people either arrive or leave the organisation
•Factors in the external environment change
The organisation's management should therefore review the strategic plan on a quarterly basis by measuring the extent to which
key performance indicators have been achieved. A short report (perhaps one page) that tables progress made, can be presented to
the management committee or board to facilitate the process. If the existing plan becomes unworkable in any significant way, a
new plan should be formulated. It may not be necessary to go through all the steps taken to prepare the existing plan, simply that
goals, objectives and strategies need to be amended or removed.

Key questions to ask while monitoring and evaluating the plan:
Are the goals and objectives being achieved or not? If they are, then acknowledge, reward and communicate the progress. If not,
then consider the following questions:
1. Will the goals be achieved according to the timelines specified in the plan? If not, then why?
2. Should the deadlines for completion be changed (be careful about making these changes -- know why efforts are behind
schedule before times are changed)?
3. Do personnel have adequate resources (money, equipment, facilities, training, etc.) to achieve the goals?
4. Are the goals and objectives still realistic?
5. Should priorities be changed to put more focus on achieving the goals?
6. Should the goals be changed (be careful about making these changes -- know why efforts are not achieving the goals before
changing the goals)?
7. What can be learned from our monitoring and evaluation in order to improve future planning activities and also to improve
future monitoring and evaluation efforts?
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Frequency of Monitoring and Evaluation
The frequency of reviews depends on the nature of the organisation and the environment in which it's operating. Organisations
experiencing rapid change from inside and/or outside the organisation may want to monitor implementation of the plan at least
on a monthly basis. Boards of directors should see status of implementation at least on a quarterly basis. Chief executives should
see status at least on a monthly basis.
Reporting Results of Monitoring and Evaluation
Always write down the status reports. In the reports, describe:
1. Answers to the key questions while monitoring strategic plan.
2. Trends regarding the progress (or lack thereof) toward goals, including which goals and objectives
3. Recommendations about the status
4. Any actions needed by management

Deviating from Plan
It is OK do deviate from the plan. The plan is only a guideline, not a strict roadmap which must be followed. Usually the
organisation ends up changing its direction somewhat as it proceeds through the coming years. Changes in the plan usually
result from changes in the organisation’s external environment and/or client needs result in different organisational goals,
changes in the availability of resources to carry out the original plan, etc.
The most important aspect of deviating from the plan is knowing why you’re deviating from the plan, i.e., having a solid
understanding of what’s going on and why. For an example, you have planned to open 3 new outlets during the next financial
year, however due to a disaster that took place within the country the sales didn’t happen as much as you thought during the
current financial year and therefore the revenue and profits were not up to the expected level. This brings out that you are
unable to open 3 new outlets however you have sufficient investment for 1 outlet. In that case you could revise the plan to open
one outlet during the financial year as planned and open the remaining two in the 3rd financial year probably when you cover up
the lost income due to the disaster that occurred.
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Changing the Plan
Be sure some mechanism is identified for changing the plan, if necessary. For example, regarding changes, write down:
1. What is causing changes to be made.
2. Why the changes should be made (the "why" is often different than "what is causing" the changes).
3. The changes to made, including to goals, objectives, responsibilities and timelines.
Manage the various versions of the plan (including by putting a new date on each new version of the plan).
Always keep old copies of the plan.
Always discuss and write down what can be learnt from recent planning activity to make the next strategic planning activity more
efficient.

Key tools / practices to review strategic plans at organisations:
1. Having periodic review dates – Business / strategic plans should be reviewed on a regular basis, especially if a business is
expanding quickly, experiencing cash flow problems, adding new products or services or reaching into new markets. Align
your review dates with the short-term and long-term goals outlined in the original business plan and conduct a
comparative analysis. Depending on your business, this could be a monthly, quarterly or annual review.
2. Developing a Tracking System - If your business plan contains measurable goals, develop a tracking system to assess
where you stand regularly. For example, if the plan calls for earning a certain amount of revenue per month, track
revenue on a daily or weekly budget to monitor and control the process. This approach allows you to tweak the system if
your numbers are far off the mark.
3. Monitor key elements frequently / periodically - Key elements of the business plan include research on your market and
competition as well as revenue projections. Each of these elements is subject to rapid change, and you should remain
aware of where you stand with regard to these issues. The organisation could use relevant KPIs and Metrics in the areas
that are required to be tested tto understand the performance levels.
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4. Coordinate Business and Marketing Plans - Business and marketing plans overlap in several ways, so reviewing both
documents simultaneously on a regular basis helps you monitor and control the goals and measurements of each plan. If an
element of one plan changes dramatically, evaluate the impact it has on the other plan.
For example, if your marketing plan calls for you to launch a major media campaign, but your business plan’s revenue
projections are weak, revise each to stay on track.
5. Make Changes When Necessary - A business plan is not an unchangeable document. Consider it a fluid plan that can be
tweaked and updated as your business changes and grows. Don’t cling to elements of your plan that are outdated or no
longer useful.
For example, if part of your five-year plan includes moving to a larger facility, but you find after five years that your small
facility works just fine, revise and update the business plan. Continually review and revise your plan so that you are always
looking ahead in one, three and five-year increments, basing future projections on past performance.
Impact and uses of a strategic plan for

organisation
Strategic planning is a formalised, documented organisational management process used to analyse its current situation, set
priorities, and to focus resources and energy to achieve and maintain an organisation’s competitive advantage. While many
organisations understand the importance of strategic planning and spend a great deal of time and money coming up with the
strategic plan, it still remains something that is reviewed just once a year or worse - a glossy document that sits on the shelf!
There are many benefits that go along with strategic planning. The key to successful strategic planning is to build in measures
and implementation steps that allow you to engage your staff and monitor the results at regular intervals.
A Strategic Plan has a great impact on the organisation’s well being as it is the backbone which plans organisation’s business
activities. The Strategic plan has a strong hold when it comes to populating rest of the plans within the organisation such as
marketing plan, sales plan, distribution plan, etc. The changes that are taking place in the strategic plan should be reflected
appropriately in the other plans which seek guidance from the strategic plan and should be executed achieving the end goals
and objectives of the organisation and direction planned by the board of directors.
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organisation
Here are the top 5 benefits / uses of strategic planning:
1. It allows organisations to be proactive rather than reactive

A strategic plan allows organisations to foresee their future and to prepare accordingly. Through strategic planning, companies can
anticipate certain unfavourable scenarios before they happen and take necessary precautions to avoid them. With a strong strategic
plan, organisations can be proactive rather than merely reacting to situations as they arise. Being proactive allows organisations to
keep up with the ever-changing trends in the market and always stay one step ahead of the competition.
2. It sets up a sense of direction

A strategic plan helps to define the direction in which an organisation must travel, and aids in establishing realistic objectives and
goals that are in line with the vision and mission charted out for it. A strategic plan offers a much-needed foundation from which an
organisation can grow, evaluate its success, compensate its employees and establish boundaries for efficient decision-making.
3. It increases operational efficiency

A strategic plan provides management the roadmap to align the organisation’s functional activities to achieve set goals. It guides
management discussions and decision making in determining resource and budget requirements to accomplish set objectives -- thus
increasing operational efficiency.

organisation
4. It helps to increase market share and profitability
Through a dedicated strategic plan, organisations can get valuable insights on market trends, consumer segments, as well as
product and service offerings which may affect their success. An approach that is targeted and well-strategised to turn all
sales and marketing efforts into the best possible outcomes can help to increase profitability and market share.
5. It can make a business more durable

Business is a tumultuous concept. A business may be booming one year and in debt the next. With constantly changing
industries and world markets, organisations that lack a strong foundation, focus and foresight will have trouble riding the
next wave. According to reports, one of every three companies that are leaders in their industry might not be there in the
next five years, but the odds are in favour of those that have a strong strategic plan.
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Lesson Summary
In this lesson you have been taught to be able to implement, evaluate, monitor and review the strategic plan implemented
for your organisation.
While attempting the same in a holistic manner, you have also considered critically reviewing of organisational (internal)
and market (external) factors to be considered in the implementation of the strategic plan and determining and applying a
range of tools and concepts to monitor and review the strategic plan of the organisation.
Determining the impact of the strategic plan on the organisation’s direction and achievement of the organisation’s
objectives have been looked at last, through considering the uses of strategic planning.
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Identify personal
skills to achieve
strategic ambitions
Module: Development as a Strategic Manager
Introduction
In this lesson we will be closely looking at the strategic direction of organisation using approaches to business strategy, old
and new business models and strategic evolution in the market place. We will also learn resource based approach to further
determine the strategic direction. We will then look at different strategic skills required for a leader to operate in a complex
environment to achieve personal and organisational strategic ambitions. Whilst learning them, you will also understand the
relationship between existing, required and future skills to achieve strategic ambitions. Thereby, you will be introduced to a
range of leadership core competences and distinctive competences required to become an effective strategic leader.
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Learning Outcomes
1. Be able to identify personal skills to achieve strategic ambitions
1.1 Critically analyse the strategic direction of the organisation
1.2 Critically evaluate the strategic skills required of the leader operating in a complex environment to achieve personal
and organisational strategic ambitions
1.3 Assess the relationship between existing, required and future skills to achieve strategic ambitions
Lesson Objectives
1. Approaches to business strategy
2. Old and new business models
3. Strategy evolution
4. Resource based approach to strategy
5. Strategic skills required for the leader
6. Relationship between existing, required and future skills
7. Core competences
8. Distinctive Competences
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Approaches to business strategy

“Strategic direction” is all about the actions taken to achieve the goals of an organisational strategy. Some companies use a “vision
statement” or “mission statement” to define where the organisation wants to be, but in short, this statement is a way for the
organisation to set the direction that the organisation wants to go, and define what it wants to be in the future.
Strategic direction includes the plans and actions that needs to be put in place to work toward this vision of the future for the
organisation. Therefore, we will be looking at different approaches to business strategy, old business models, new/ emerging business
models in the market, strategic evolution which talks about the history of strategies and resource based approach to strategy.
The word “strategy” means different things to different people, much of which isn’t really strategy at all, A Strategy by Any Other
Name, more on this topic.
Within the domain of well-defined strategy there are three types of strategies:
 Corporate strategy
 Business strategy
 Marketing strategy

Corporate strategy
Corporate Strategy is the overall direction of the company, defined by senior management, that takes into consideration an
assessment of the existing capabilities of the company and external opportunities and threats. It usually coincides with the
immediate future fiscal period or it could be developed with a longer-term view, such as a three-year plan.
It is important to understand the overall Corporate Strategy and its relationship to sales and marketing. The Marketing
Strategy works within the direction provided by the overall Corporate Strategy of the company and also interacts with other
elements of the Corporate Strategy.
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Corporate Strategy is a combination of the following:
► Senior Management Direction and Insights: This is provided by senior management based on their experiences and insights
related to the business.
► Corporate Product Strategy: This defines the products or services the company offers and the research and development efforts
required to create them.
► Corporate Marketing Strategy: This defines how the company will target, position, market and sell the planned products and
defines metrics, targets and budgets for all marketing activities.
► Corporate Operations Strategy: This defines how the company will manage operational activities, manufacture its products and
provide the corresponding customer support and warranty.
► Corporate Finance Strategy: This defines how the company will manage its finances, attain funding and financially sustain its
operations. The Finance Strategy should include forecasts and projections and summarise costs, income and investments.
► Corporate Human Resource Strategy: This maps the human resource capabilities within the company and considers talent
management and acquisition needs to sustain growth.

Importance of Corporate strategy
A corporate strategy both names the outcomes a company intends to achieve and devises the means for it to do so. More
directly, a corporate strategy determines the scope of a company’s activities and the manner in which a company’s business
processes support company goals. In doing so, strategic management limits a company’s authorised initiatives, which leaders
select based on the company’s resources and the external environment in which it competes.
The importance of a corporate strategy hinges on its being an effective means to allocate a company’s resources, establish
business expectations and improve a company’s competitive position, as well as increase shareholder value to something
beyond the sum of its physical assets.
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► Allocates Company Resources
A corporate strategy is a tool a company uses to limit the allocation of its resources to the best available business investment
opportunities. During strategic planning and budgeting processes, a company assesses the performance of each business
unit. Based on its findings, the company acquires and divests assets and revises resource allocations. Leaders allocate
company resources according to the desirability of each business unit’s market opportunities, which determines its planning
priorities.
► Establishes Expectations
A company conveys its corporate strategy to individual business units to drive performance and establishes the expectations
of internal and external stakeholders, or those with an interest in the success of a company. Corporate objectives focus on
key areas, such as market standing, productivity and profitability, for which measurable objectives are set, such as achieving a
particular market share or financial return on investments. It’s through expectations that stakeholders align their activities
with strategic goals and assume particular roles to ensure a corporate strategy is carried out successfully.

► Improves Competitive Position
The corporate strategy is concerned with a company’s growth and profit performance. Consequently, the strategy decides
the businesses in which a company competes and how the business units structure and manage their activities to improve a
company’s competitive position.
► Adds Shareholder Value
Relying on a company strategy, business units can increase investor value to something beyond the sum of its physical and
intellectual assets. By making rational strategic choices about the business a company plans to pursue, the allocation of its
resources, the use of organisational capabilities and business unit competitive advantages, the probability increases that
business unit activities succeed in increasing a company’s value.
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Business Strategy
A business strategy is the means by which it sets out to achieve its desired ends (objectives). It can simply be described as a
long-term business planning. Typically a business strategy will cover a period of about 3-5 years (sometimes even longer).
The decisions a company makes on its way to creating, maintaining and using its competitive advantages are business-level
strategies. After evaluating the company’s product line, target market and competition, a small business owner can better
identify where her competitive advantage lies. A gourmet candy company, for example, might find that it cannot compete on
price; larger corporations often enjoy economies of scale that keep costs low. Instead, the small business would choose a
differentiation strategy, emphasising freshness, quality ingredients or some other attribute consumers will value highly
enough to pay extra. Business strategy will affect the small company’s functional decisions such as the selection of its
promotions and distribution channels.

Importance of Business Strategy
A well defined business strategy will offer a guide on how your business is performing internally. Also, how you are
performing against your competition and what you need to stay relevant into the future.
A strategy can identify trends and opportunities in the future. It can examine the broader changes in market such as political,
social or technological changes, as well as consumer changes, and can develop tactics so your business can modify and
develop to suit these future changes.
A business strategy creates a vision and direction for the whole organisation. It is important that all people within a company
have clear goals and are following the direction, or mission of the organisation. A strategy can provide this vision and prevent
individuals from losing sight of their company’s aims.
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► Customer Retention
One of the quickest ways to lose customers is to not have an effective business strategy in place for customer service, according to
More Business. Develop a program for following up on customers, and for staying in touch with repeat customers to make sure
your products are working properly. Have sales people contact customers at least once a month to discuss the customer's
business, and try to find new ways to help the customer with your product. When customers call in with problems, there needs to
be an established and efficient customer service strategy in place to reduce customer stress. Customer follow-up procedures and
efficient customer service programs are essential to customer retention and sales revenue.
► Resources
A good business strategy can assure that company resources are used efficiently. Examples of company resources include
personnel, reputation in the marketplace, customer base, company patents, manufacturing processes and logistics resources such
as warehouses and shipping partners. Create business strategies that utilise all of your company resources to help give your
company a competitive advantage over the competition, develop new products that maintain or increase your market share in
the industry and give you proprietary control over advancing technology in your industry. An inefficient use of company resources
can cost the company money, lose customers and reduce market share.

► Company Expansion
Entrepreneurial resource Gaebler Ventures, established in 1999 suggests that part of a good business strategy is the ability to
explore business opportunities outside of your standard business practice to help inspire company expansion. By promoting
vigorous marketing and engineering research with business strategies focused on new company frontiers, you can help open up
new ideas for your company that could be loosely related to your current business. For example, a computer repair company may
see an advantage to also becoming an Internet service provider after marketing research among the company's clients. Expansion
is one of the important ways that a company maintains its competitive edge.
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A marketing strategy is a business' overall game plan for reaching people and turning them into customers of the product or
service that the business provides. The marketing strategy of a company contains the company’s value proposition, key marketing
messages, information on the target customer, and other high level elements. The marketing strategy informs the marketing plan,
which is a document that lays out the types and timing of marketing activities. A company’s marketing strategy should have a
longer lifespan than any individual marketing plan as the strategy is where the value proposition and the key elements of a
company’s brand reside. These things ideally do not shift very much over time.
Importance of marketing strategy
A marketing strategy helps a company effectively use its resources to deliver a sales message to a target audience. A marketing
strategy takes time and market research information to create. Understanding why a marketing strategy is important will help you
to justify the time and financial resources required to create one.

► Use of Resources
One of the functions of a marketing strategy is to identify a target audience and determine the most efficient ways of
reaching that audience. Market research is done to determine how marketing funds can best be spent to deliver the
advertising message. Research also is done to determine which message is most effective. In the end, the marketing strategy
refines how company financial and personnel resources will be best used to get the highest revenue return for the marketing
dollars invested.
► Budget
A marketing strategy has a starting point, a predetermined duration and a budget. Without the marketing strategy, your
company would be placing advertisements at random times, in random mediums and not understanding what results to
expect. A marketing strategy helps to set the budget for the advertising program, and it also creates the criteria that will be
used to determine how much revenue the plan generated. A marketing strategy prevents advertising spending from being an
open-ended proposition, and it works to identify successful marketing approaches that can be used to generate more
revenue in future marketing campaigns.
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► Change
The marketplace that your company sells to changes on a regular basis. Technology alters the look and functionality of products, and
changes in client needs affect how you and the competition structure your businesses. A marketing strategy identifies those changes
and recommends potential courses of action that will help make your company competitive. The marketing strategy identifies
customer buying trends and combines that with a competitive analysis to help you dictate what future course your company will take.
► Growth
As your company evolves, it also should grow in revenue and size. A marketing strategy helps to identify those areas affected by
growth, and helps to create a plan to address customer needs. For example, your marketing strategy may identify new markets where
your newest product would be very successful. Since you do not have distribution or sales resources in those markets, you must go out
and secure those resources to meet the goals of the marketing strategy. By identifying changes or shifts in client needs and geographic
distribution requirements, the marketing strategy becomes part of the blueprint for your company's growth.

Once an organisation has committed to why it exists and what it does, it must take a clear-eyed look at its current situation.
Remember, that part of strategic planning, thinking, and management is an awareness of resources and an eye to the future
environment, so that an organisation can successfully respond to changes in the environment. Situation assessment, therefore,
means obtaining current information about the organisation’s strengths, weaknesses, and performance – information that will
highlight the critical issues that the organisation faces and that its strategic plan must address. These could include a variety of
primary concerns, such as funding issues, new program opportunities, changing regulations or changing needs in the client
population, and so on. The point is to choose the most important issues to address.
Let's walk through the strategic planning/ management process in four steps:
► Part one: How did we get to where we are now?
► Part two: Where do we want to go? What is our vision of success?
► Part three: What is going to get in our way? What do we need to be aware of?
► Part four: What do we need to do to get there?
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Source - Davis, F. R. (2005)
The above diagram is a simplified version of what we learnt in previous slide. However, for further knowledge on strategic
direction you can refer to the module “Strategic direction” to obtain further information.
Old and new business models

► A business model is simply the overarching plan of a company to generate a profit by selling a service or a product. The business
model provides an outline of the plans of the company to produce a product or service and to market it. This plan also includes the
expenses that will occur with manufacture and marketing of the service or product. Different business models exist, each of which
can suit different companies and types of businesses. Learning these models will help you understand the strategic direction of
your organisation. For example, where is was, where it is now and how it can progress in future.
Manufacturer
► The manufacturer business model utilises raw materials to create a product to sell. This type of business model might also involve
the assembly of prefabricated components to make a new product, such as automobile manufacturing. A manufacturing business
can sell the products created directly to customers, which is known as the business-to-consumer model. Another option involves
outsourcing the sales aspect of the process to another company, which is known as the business-to-business or B2B model.
Wholesaling manufacturers typically sell products to retailers, which then sell directly to consumers. An example of this type of
company might be a clothing manufacturer that sells merchandise to a retailer, which then sells to consumers.
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Distributor
► A company fitting the distributor business model would be a business that buys products directly from a manufacturing
company. This business would then resell the products directly to consumers or to a retailer. The distributor often acts as one
of the middle points between a manufacturer and the general public. Distributors have the challenge of setting price points
that will produce a profit while also utilising effective promotion strategies that will secure strong sales. Competition can be
fierce for distributors, which necessitates continual analysis of the market.
Retailer
► A retailing business purchases products directly from a wholesale or distributing company, then sells the inventory directly to
the public. Retailers often utilise a brick-and-mortar location for points of sale. Examples of retailers include grocery stores,
clothing stores, and department stores. Retailers might be nationwide chains, or they could be independent shops operated by
a single entity. A physical location for a retailer is common but not mandatory. Retailers may choose to offer sales as an online
retailer. Online retailing can be done alone or in combination with selling from a physical location. Retailers experience the
ongoing challenge of competing against other retailers that offer similar products.

Franchise
► A franchise business model might involve any of the other business models, such as manufacturing, distributing, or retailing. Franchise business
are set up according to the unique service or product sold or produced. The business model of the franchise is adopted by the purchaser of the
franchise, who is known as the franchisee. Purchasing a franchise has some important benefits for the franchisee, since most business processes
and protocols are already established for the business. However, with these established protocols come less flexibility for the franchisee.
Additional Business Model Structure Options
► Within these four standard business models, business owners can structure their companies to include specific features of one or more models.
For example, a company that engages in direct sales to consumers might integrate a process of product demonstrations in the consumer’s home.
Companies could also engage in direct online sales without the use of an intermediary company. Retailers that utilise both a physical store
location and a website could offer online sales for consumers who could then pick up their items at the brick-and-mortar store. Companies might
also hold Internet auctions for sales. Some businesses also utilise a sales approach that offers a free basic service with the option to upgrade to a
paid, premium service. Business model structures can vary significantly, and companies might explore a wide array of combinations to find a
model that meets with success.
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When an organisation creates a new business model, the process is called business model innovation. There is a range of reviews
on the topic, the latter of which defines business model innovation as the conceptualisation and implementation of new business
models. This can comprise the development of entirely new business models, the diversification into additional business models,
the acquisition of new business models, or the transformation from one business model to another. The transformation can affect
the entire business model or individual or a combination of its value proposition, value creation and deliver, and value capture
elements, the interrelations between the elements, and the value network. The concept facilitates the analysis and planning of
transformations from one business model to another. Frequent and successful business model innovation can increase an
organisation’s resilience to changes in its environment and if an organisation has the capability to do this, it can become a
Innovative business models are changing the world as we know it. Airbnb is the biggest accommodation provider worldwide
without owning a single room, Uber is the biggest cab company without owning a single cab and Alibaba is the biggest retailer with
no stock at all.
Strategy evolution
Strategy, like evolution itself, started at the beginning of time. From mankind‘s inception, people have been devising ways to
outsmart and outperform each other in a game of survival of the fittest. Survival, however, has always depended on people’s
ability to adapt, plan, and evolve into something stronger and better. In other words, survival depends on strategy.
Much like people evolve, so do successful businesses. Strategic planning is a process of evolution where making the right
moves, with the right information, at the right time is vital to achieving strategic success. Strategy truly is a process of planning.
The Evolution of Strategy
Strategic processes all have a starting point. For businesses, this starting point derives from an organisational need to adapt,
compete, and evolve within a competitive market. Early strategy innovators Henry Mintzberg and Max Mackeown, understood
this and defined strategic planning as a “pattern in a stream of decisions” and about “shaping the future.” However, developing
a pattern and shaping the future first require laying a foundation for success. Successful businesses pinpoint an overall vision,
break down that vision into individual plans of action, and then change or reevaluate their plans based on key performance
indicators. They understand strategic planning is a top down process where every level of an organisation is part of the strategic
planning process.
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Strategy evolution
The Evolution of Tech
► Understanding the strategic process and implementing it are two very different things; one requires knowledge while the other
the execution of that knowledge. With the invention and launch of the first personal computer in 1975 strategic planning evolved.
Today’s modern computers give organisations the ability to develop strategic planning models and develop strategy software that
allows every level of an organisation to view and execute a plan. Whether a dashboard, a vision statement, or even KPIs, the
invention of the modern computer and strategic planning software has allowed corporations to align strategies at every level and
move beyond the paper and pencil plans of the past.
The Evolution Endgame
► Having the right knowledge base and the right tools to succeed are important when evaluating performance management. Equally
Important to strategy is adaptability. Humans have survived by their ability to adapt and change with their environment. Rigid end
goals without flexibility are as doomed to die as the dodo bird.
► CEOs and managers who hold fast to end goals, without evaluating if the end goals continue to make sense, lose their ability to
affect real change or to develop even stronger goals with greater viability. Strategic planning should always be a process of
evaluation, collaboration, management, and adaptation. Corporations who do this will achieve a winning strategy that is truly a
process of evolution and will better stand the test of time.
Strategy evolution
While the underpinnings of the concept of strategy can be traced to military ancestry, the business application has gained in
popularity and following. The daily newspaper business sections and the Wall Street Journal are filled with corporate strategies,
investment strategies, and advertising strategies to name just a few. Business strategy drives companies of all shapes and sizes,
ideally capturing the differences that can carry a company to success. Let us look at the strategy evolution in last 30 years. This will
help you understand the strategic direction of your organisation and make effective decisions to progress well in future.
Internal Sourcing of Competitive Advantage (In early 90’s)
The microeconomic perspective on strategy was followed in the late 1980’s through the early 1990’s with a focus on the quest for
competitive advantage. However, the path for seeking competitive advantage changed, to one seeking sources of competitive
advantage within the firm. Embodying this shift in thinking was the work by Gary Hamel and C.K. Prahalad entitled, Competing for
the Future, published in 1994. Hamel and Prahalad introduced the term core competencies to represent the sources of competitive
advantage inherent in the firm. They define core competencies as a bundle of skills and technologies that enables a company to
provide a particular benefit to customers, representing the sum of learning across individual skill sets and individual organisational
units. The sourcing of competitive advantage from within the firm follows the Resource-Based Theory, which focuses on the firm’s
assets and capabilities and how these internal strengths provide advantage over rivals.
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Strategy evolution
Strategic Innovation and Implementation (1995 – 2001)
Strategic innovation and implementation have dominated the period of the mid 1990’s through 2001. The importance of strategic
innovation has been exacerbated by the application of technology to the business process. Companies that once aspired to securing
sustainable competitive advantage have realised that it no longer exists. The goal now is to exploit dynamic sources of competitive
advantage that can be leveraged to finance the next wave of innovation. The other facet of business strategy that has received
significant attention recently is the implementation process. Too many companies have realised all too well that even the most
wonderfully conceived strategy is irrelevant if not properly implemented. C. Davis Fogg’s work entitled, Implementing Your Strategic
Plan (1999) advocates five broad categories for successful implementation of strategy:
1. Setting accountability
2. Enabling and aligning action
3. Fixing the organisation
4. Providing an environment in which people can excel
5. Judging and rewarding
Strategy evolution
Strategic Thinking & Simplification (2003 and beyond)
The emphasis on execution, objectives and metrics has left many business practitioners wondering, “ How do I go about creating
strategy in the first place?” There has been very little in the way of instruction on the keys to strategic thinking and moving from
strategy on an annual basis to strategy as a daily practice. The primary problem is that many companies view strategic thinking and
strategic planning as one in the same, and have failed to allocate sufficient time to the two distinct activities. The shifting emphasis
for strategy will now move toward strategic thinking and simplification: people learning the tangible skills of strategic thinking and
using them in simple frameworks that allow strategy development to be an on-going, daily occurrence rather then an annual trek
to the Mecca of strategy gods resting high above the corporate hierarchy. Learning to use strategic thinking on a regular basis will
have the following benefits:
1. It will give you a deeper sense of purpose regarding your work
2. It will grow your business
3. It will enhance your decision-making ability, resulting in a better use of resources
4. It will become a part of your daily routine, not an additional time-consuming activity
5. It will help you solve problems in new and creative ways
6. It will immediately increase your value to the company
7. It will advance you faster in your career than any other skill you possess
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Strategy evolution
Inbound Marketing (Present)
Inbound marketing was created as the Internet began to take on a new function for consumers. Instead of an information gateway, the
Internet became a place for people share information, which led to a whole new phase in marketing as brands and businesses search for
ways to engage with their consumers. This began the age of consumer-centered marketing, where retailers create values for customers
and look for ways to earn their business.
Inbound marketing really took hold when social media launched in the early 2000s. MySpace, LinkedIn, and Facebook gave retailers and
consumers a whole new way to communicate. All of a sudden it became easier than ever for consumers to voice their opinions and
reviews of certain brands, meaning retailers needed to work harder to gain their trust and offer them better products and prices.
As the widespread use of the Internet continued to grow, so did email marketing and SEO. Google came out with their own analytics
platform that helped brands reach more audiences through paid and organic search.
2006 through 2009 saw the advent of eCommerce retail with Amazon and eBay, making it easier than ever for consumers to get the
products they wanted and needed. Twitter also launched during this time, giving SEO even more clout than it had already garnered.
Mobile marketing also began to revamp as smartphones allowed users to access the Internet from anywhere they had service or an
Internet connection.
Strategy evolution
In this day, marketing is now centered on inbound marketing led by social media, blogs, and SEO. This was partly due to
the fact that internet usage now surpasses time spent watching television, and inbound marketing costs more than 60
percent less than outbound marketing and creates a better relationship between buyer and seller.
Since the beginning of the marketing industry, advertising has seen a major shift in focus – most dramatically from
outbound marketing (focused on the retailer) to inbound marketing (focused on the consumer). The major shifts in
marketing from the early years until the present digital age include multiple channel marketing, user-generated content,
brand accountability, paid search and SEO, and metric analysis that allow marketers to track consumers’ path. Marketing
efforts will always focus on the consumer and how to get them to buy more, but gradually we are beginning to focus more
and more on the relationship between retailers and consumers as a whole, making it easier for customers to trust their
vendors.
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Resource based approach to strategy

• In strategic management there are two main approaches for
analysing the internal environment of an organisation. These
approaches are known as ‘The Resource Based Approach’ and the
Focus on the internal
‘Market Based Approach’. Competitive
Resources and
• The resource based strategy analyses and interprets internal advantage through
Capabilities of the
resources of the organisation and views that resources and superior profits
firm
capabilities in are central to formulating strategy and achieving
competitive advantages.
• In understanding your organisation’s strategic direction and
planning the future steps it is beneficial to understand the aspects
of resources and formulate strategies based on your internal
environment. Core competencies
Evaluate own
competitive drive corporate
environment strategy and
diversification

Resources are the inputs that enable firms to carry out their activities. Internal resources and capabilities that determine
strategic choices made by the firms while competing in their external business environment. Sometimes a Firm’s abilities also
allow to add value in the customer value chain, develop new products or expand in new marketplace.
Competences according to Johnson et al. in 2008 are the skills and abilities by which resources are deployed effectively
through an organisation’s activities and processes .Competencies combine knowledge and skills and represent the set of skills
required to perform useful actions and captures the sum of knowledge across individual skill-sets and individual organisational
units.
A core competence is the collective learning in the organisation, specially the capacity to coordinate different production skills
and integrate them with streams of technologies. According to Hamel and Prahalad in 1990, it is a commitment to work across
organisational boundaries.
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As core competencies are an "aggregate of capabilities” synergy is created that creates sustainable value and broad application
across the organisation. Core competencies need complementary knowledge and skills and when they are combined they
produce a superior product or service. For example, Google has a core competency in managing information. Similarly, FedEx has
a core competency in Information Technology.
The Resource Based View focus on the resources and capabilities that are within the organisation to develop sustainable
competitive advantages. To be a source of sustainable competitive advantage a resource or a competency must be, valuable, rare,
difficult or costly to imitate and there should not be easy substitutes for resource or competency.
According to Resource Based View, not all the resources of firm will be strategic and can be a source of competitive advantage.
Competitive advantage occurs only when there is a situation of resource heterogeneity and resource immobility. For example,
South West Airlines developed knowledge and skills that enable it to operate at much lower cost that other major airlines.
Competitors that tried to imitate Southwest were not as successful because Southwest built a system of reinforcing competencies
that continue to provide the airline with competitive advantage over time.
We learned that according to Resource Based View, an

V- Valuable organisation is considered as a collection of physical resources,
human resources and organisational resources and the
Increasing resources and competencies that are valuable, rare, in imitable
and non- substitutable are main source of sustainable
R-Rare bases of competitive advantage and superior performance.
Sustainable The above features that a resource needs to fulfill is
I-In imitable competitive summarised in the acronym as VRIN . VRIN’ criterion explain
four features of a resource that needs to be in place for the
advantage resource to create a sustainable competitive advantage.
N-Non-Substitutability
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Firstly a resource needs to be Valuable .Resources that are valuable can provide strategic value to the firm. Resources provide
strategic value if they help firms to exploit market opportunities or help in reducing market threats. There is no advantage of
owning resources if it does not add or enhance value of the firm.
A resource needs to be Rare. Resources must be difficult to find among the existing and potential competitors of the firm. They
must be rare or unique to offer competitive advantages. Resources that are possessed by a several firms in the market place
cannot provide competitive advantage, as they cannot help to design and execute a unique business strategy in comparison with
the other competitors.
The third feature is Imperfect Imitability .Imperfect imitability means making copy or imitating the resource. If this can be done
the resource will not be feasible. There can be many bottlenecks for imitating a resource because of the difficulties in obtaining
the resource, the ambiguous relationship between capability and competitive advantage or the complexity of the resources.
Resources can be basis of sustained competitive advantage only if firms that do not hold these resources cannot acquire them;
Non-Substitutability of a resource means that the resource cannot be substituted by another alternative resource. Here, a
competitor can’t achieve same performance by replacing the company resource with other alternative resources.
Strategic skills required for the leader

Personal development is the vital practice that needs to be adopted to ensure the achievement of strategic ambitions of an
organisation. The manager of an organisation cannot perform well without developing his potential to extreme professional level.
The personal development further enables the manager to analyse the progress direction of that organisation. This ensures the
progress of that organisation. The achievement of those strategic ambitions solely depends upon the objectives of that
organisation. These objectives are further divided into goals. These goals can successively be achieved with the help of evaluation
of strategic skills of the leader of that organisation. The personal development enhances the vision to distinguish between the
existing, required and the skills which are required in future to attain the strategic ambitions of that organisation.
Personal skills are the key to achieve the desired strategic ambitions. To manage an organisation and to raise it to high levels,
vigorous and strong management is required along with extraordinary personal skills by the manager. Every organisation has its
strategic ambition. This strategic ambition defines the personal, professional short term and long term goals of the organisation.
This does not only means the maximisation of profit but also includes earning a repute that makes the name recognised. A
strategic ambition may also include gaining a competitive edge that reduces the threat from common competitors. A strategic
manager may also attempt to set its aim to maximise sales and customers, at the same time creating brand loyalty for existing
ones. Growth could also be another strategic ambition for any organisation.
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The right combination of personal and professional skills archives the strategic objective of the organisation. Tolerance,
patience hard work, accepting challenges, working with team, effective time and conflict management and critical
understanding of the issues contributes the personal skills which when effectively merged together transforms into an ideal
personality that serves as an example. These attributes acts as ladder towards success and such a manager guarantees success
for the organisation as leader’s personality strives to achieve the strategic goals, ambitions and objectives of the company.
Moreover, personal skills that lead to success also includes a comfortable body language and facial expressions when
communicating along with the finest voice indulged in honesty and integrity with a mind so positive will cross all barriers to
become an ideal personality. Professionally speaking a manager needs to a lot more than to be a good manager. He should be
able to portray emotional intelligence at all times. He should be capable of team management and know when to delegate
and what to delegate. The supervision constitutes as ability for the manager and a strong ability to do so leads the directions
of the activities carried out in the organisation towards success.

We will look at the key leadership skills and characteristics that make leaders successful.
1. Honesty and Integrity: Dwight D. Eisenhower, (1963) once said “The supreme quality of leadership is unquestionably
integrity” which stands very true, because without it, no real success is possible. Honesty and integrity are two of the
most important characteristics that make a good leader, because it is by the example of the leaders following the values
and core beliefs and ethics of the organisation that employees will feel secure and follow suit.
2. Confidence: this is a key characteristics of leaders because they need to show confidence so that others follow their
commands. Therefore, a leader needs to be sure of their decisions and qualities in order for subordinates to follow
them.
3. Inspiring: this is the quality of persuading others to follow. In most cases, this is only possible if the leader is able to
inspire followers through setting a good example.
4. Commitment and Passion: teams look up to their leaders therefore need to see that the leader is also passionate about
the tasks and are fully committed.
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5. Good communication skills: it is a necessity for leaders to be able to clearly communicate their vision to their team and
tell them the strategy to achieve the goals set. Without good communication of what is required and what the steps are,
there will be miscommunication and lack of motivation. Words have the power to motivate people, therefore good
communication combined with the above 4 qualities already mentioned, leaders have the power to truly impact their
employees and lead them in the direction desired.
6. Decision-making capabilities: having a futuristic vision is very important for leaders, however, they should also have the
ability to make the right decisions at the correct time, because these decisions will have profound impact on masses.
7. Accountability: Arnold H Glasow, 1998 said “A good leader takes little more than his share of the blame and a little less
than his share of the credit” – which ties in well with the skill of being accountable. Subordinates should be accountable for
what they are doing, and when they do well, good leaders will show acknowledgement and help when they’re struggling.

8. Delegation and Empowerment: no one can do everything right all the time. Therefore, it is important for leaders to focus
on key responsibilities while leaving the rest to others. Therefore, the skill to empower followers and delegate tasks to them
is crucial.
9. Creativity and Innovation: this is what separates a leader from a follower, taking Steve Jobs as an example, he was the
greatest visionary of our time and he said the following: “Innovation distinguishes between a leader and a follower” which
holds true in the current ever-evolving market. Therefore creative thinking and constant innovation are skills and
characteristics a leader in the current fast-paced world must have.
10. Empathy: this is very important, for leaders to be able to develop empathy with their follows, because dictorial style of
leadership where empathy is neglected does not create a healthy atmosphere, leading to a failure of creating a closer
connection with followers.
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Core competences
Although leaders have certain types of skills by nature, it is important to know the required skills to be an effective strategic leader as in the
business models that are emerging in the market require a range of new skills. Therefore, you are expected to understand the importance of having
a range of leadership core competences and skills required to achieve strategic ambitions.
Competencies can vary between different industries and levels of seniority, though the majority are found across many industries. They are often
sprinkled throughout job descriptions and person specifications. As part of your application you will need to demonstrate how you meet each of
the core competencies identified by the employer. This guide outlines the most popular competencies that you will come across during your job
search.
People Management
Managing people is usually a competency reserved for supervisory or managerial roles but it can also be expected of junior staff. Being able to
manage employees may form a significant part of your role. It is therefore important that you can demonstrate superior people management skills.
1. Training and Development
► This core competency can range from identifying training and development opportunities through to helping individual employees update their
knowledge of emerging technologies. It can also involve skills development, so that employees can go for promotions or increase their
responsibilities.
Core competences
In a number of roles, employers will want to see that you are committed to developing your skills and you are willing to
participate in training and development.Examples include:
► Pro-actively identifying training opportunities
► Developing your employees' skills through relevant assignments
2. Managing Performance
► This is a continuous process which involves making sure that employee performance contributes to the goals of the
department and the wider business. This competency may be included in the person specification.
► Within your application, you should demonstrate how you help the organisation achieve its goals, how you maintain high
standards, what you do when performance problems arise and how you develop your own performance through training or
shadowing.
Examples include:
► Setting clear, measurable performance goals
► Finding solutions to problems that may impact your performance
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Core competences
3. Coaching and Mentoring
► In certain roles, particularly technical jobs in IT or programming, you may be expected to provide coaching and mentor
junior staff. Managers should also possess these skills.
► In your application you should be able to demonstrate how you have worked with colleagues or partners to offer coaching
and mentoring to improve their practice, enhance their skills or advance their knowledge. It takes a certain aptitude to
coach and mentor staff, so you must be able to convey how you have used this skill in the past and how you can relate it to
the role you are applying for.
Examples include:
► Sharing your expertise with others
► Listening and responding to questions effectively
Core competences
4. Team Building
► Employers need to know that you can work collaboratively as part of a team to meet defined objectives. People who
possess this competency will encourage information sharing and partnership working, and actively encourage others to
participate in the decision making process.
► Team building is important at every level within an organisation, not just at managerial level. Through your application and
interview you should be able to demonstrate your ability to work across departments, help colleagues outside of your
immediate working group and obtain feedback to see how colleagues could work together more cohesively.
Examples include:
► Responding constructively to others' ideas and suggestions
► Encouraging active participation and cooperation within the team
Team building is an important competency, whatever your seniority.
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Core competences
Personal Development
Personal development is a career-long process and is a way to regularly assess your skills and capabilities, consider your goals and
maximise your potential. There are a number of ways in which you can improve your own development in the workplace, such as re-
evaluating your time, conducting a skills appraisal, reviewing your transferable skills or overcoming any barriers to acquire a new skill.
5. Commitment to Excellence
► Demonstrating a commitment to quality means that you take pride in your work and strive to deliver the best possible results. You
should always be looking for opportunities to improve the way you work, generate ideas for streamlining processes and thoroughly
check your work. Resilience, determination and innovation are all qualities that you should emphasise if this core competency is
required.
Examples include:
► Fact-checking your work
► Actively seeking new ways of working to improve productivity
Core competences
6. Mind Mapping and Structured Thinking
► In certain careers, employees are required to deploy structured thinking skills and generate ‘mind maps’ (diagrams used to
display connections between ideas or concepts). This could be either in a project-based role or a technical capacity. Setting
out your ideas and thoughts in a logical pattern using mind maps is an essential skill in these types of roles. Examples of this
competency include:
► Using mind maps to display complex information
► Communicating specialist technical information clearly and concisely
7. Career Progression
► Employers look favourably on employees who are committed to career progression and development. It shows that you are
driven, committed and aim to deliver the very best that you can for the business. Career progression may appear in the form
of promotions or can be as simple as being assigned more senior duties. Examples include:
► Working to develop existing competencies to a higher level
► Actively seeking training opportunities that facilitate progression
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Core competences
Leadership
Leadership competencies help businesses determine which level of management requires certain skills. When selecting and
developing management professionals, organisations should consider a candidate's competencies and compare these with the skills
that need further development in order to succeed within a leadership role. Approaching leadership competencies in this manner can
help businesses make accurate decisions about recruiting, developing and promoting the highest quality candidates.
8. Strategic Management
► All businesses need to be managed effectively to succeed. A strategic management competency relates to the coordination of
business operations to achieve and maintain an advantage over the competition. Strategic management is about reviewing
multiple business areas and evaluating data, systems and processes to make informed decisions.
Examples include:
► Evaluating data to gain business insight
► The ability to analyse multiple processes and systems simultaneously
Core competences
9. Future Planning
► All successful managers need to be able to plan effectively. There will be a number of business areas which require careful
planning from finance through to marketing and general operations. You will need to demonstrate your capacity to
meticulously plan business activities and implement projects successfully.
Examples include:
► Identifying industry trends and developments in advance of planning
► Anticipating stumbling blocks and developing contingency plans
10. Persuading and Influencing Staff
► As a manager you will be expected to influence and persuade a wide range of people in a variety of situations. This may
include influencing budget managers to take greater control of their finances, or persuading a member of the team to
change an approach or behaviour that is negatively impacting on performance.
► If you want to effectively persuade and influence people in a business, you should clearly define what you expect, plan
ahead and listen carefully to those you are communicating with.
Examples include:
► Using audience-specific language and examples to best illustrate your point
► Presenting multiple arguments in support of your position
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Core competences
11. Change Management
► As a management professional there will be occasions where you will have to undergo a period of organisational change. This may relate to
streamlining services, cutting budgets or improving performance. To drive change initiatives, you need to be receptive to change occurring within the
workplace. You also need to demonstrate strong people skills and define a clear direction for the organisation so employees understand what is
expected.
Examples include:
► Helping others to manage the emotional impact of change
► Embracing change and proposing more effective ways of working
Communication
In any business, communication skills are absolutely essential. Being able to share information verbally and in writing is an integral part of any position.
12. Commitment to Customer Excellence
► Whether you are providing products or services, your customers should always be at the forefront of decisions and service delivery. Customer
excellence involves responding to queries promptly, offering as much information as possible and providing products or services that customers value.
Examples include:
► Speedy and effective resolution of customer issues and complaints
► Adopting processes to track customer satisfaction
Core competences
13. Collaborative Working
► This involves establishing strong partnerships with fellow professionals and outside agencies. Being able to promote inter-
departmental working and relationships with other organisations is essential in some roles such as healthcare. Collaborative
working can involve a range of different aspects including networks, partnerships or alliances.
Examples include:
► Expressing an interest in others' experiences and ideas
► Working to build strong channels of communication with outside agencies/departments that may later be of assistance
14. Customer Relationship Management
► Being able to manage your customer relationships is important. Customer refers to anyone who purchases your product or
accesses your service. Promoting customer loyalty and delivering excellence are important qualities that employers look for.
Examples include:
► Communicating with customers to deliver a better service
► Ensuring interactions with customers are always polite and positive
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Core competences
15. Social and Emotional Learning
► This competency is very important in industries such as education and welfare. It is the process through which you
implement strategies to understand and effectively manage emotions to achieve a particular outcome.
Examples include:
► The ability to recognise and regulate your emotions and behaviours in the workplace
► The ability to recognise others’ emotions and perspectives and take them into account
16. Persuasive Techniques
► In certain careers, you will be required to persuade people to adopt your way of thinking and initiate some kind of action.
This may be changing a way of working or signing a contract. Persuasive techniques are very important in certain careers
such as sales- or marketing-based roles, as well as for professionals who work in a managerial capacity.
Examples include:
► Successfully addressing key concerns and presenting mutually beneficial solutions
► Building successful relationships to ensure support during negotiations
Core competences
17. Writing Skills
► Being able to communicate clearly and concisely is an important skill for a number of reasons. You may be required to draft
reports or prepare correspondence. Even communicating with fellow colleagues and partners is often achieved through
email, so it’s important to be able to convey what you need to succinctly and effectively.
Examples include:
► Using concise, clear, appropriate language
► Structuring ideas clearly
18. Speaking and Listening Skills
► Professionals must be able to communicate effectively when speaking to people. Demonstrating that you can communicate
complex information to a non-technical audience is also valued by employers. In any verbal communication you should
always ensure that you speak carefully and clearly so that you are easily understood.
Examples include:
► Speaking clearly and at a measured pace
► Maintaining eye contact to hold listeners' attention
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Core competences
Logical Reasoning
Sound reasoning skills are important. You need to be able to demonstrate that you are capable of considering all the facts,
thinking them through intelligently to reach important decisions.
19. Making Decisions
► Within many different roles you will be expected to make decisions - from prioritising your workload through to managerial
decisions involving staff, working patterns or processes. To do so, you will need to deploy logical reasoning to assess the
information that you have and make the best decision in the current situation.
Examples include:
► Analysing data and information to make considered decisions
► The ability to prioritise different business needs
20. Methodical Approach
► Certain tasks in the workplace require a methodical approach, particularly those that are complex or involved. This may
mean breaking the task down into more manageable segments or splitting the task between a team. Approaching a project
methodically will produce better results than simply jumping straight in and trying to find an immediate solution.
Core competences
Examples include:
► Breaking complex tasks into manageable segments
► The ability to identify possible problems or stumbling blocks
21. Identifying Patterns or Connections
► Within many different roles, finding patterns, evaluating data and reaching conclusions is essential for the business. Positions such as marketing,
business analysis and even general management all require candidates to demonstrate the ability to identify patterns. These could relate to
performance, customer retention, sales or finance.
Examples include:
► Understanding the impact of specific data patterns and trends on the business
► Identifying inconsistencies in data and information
22. Research
► Reviewing information, collating data and reaching informed decisions features significantly in many different roles. As a core competency it
involves looking at data from a critical perspective, seeing the bigger picture and identifying gaps so that you can explore all possibilities.
Examples of this competency include:
► The ability to identify relevant sources of information
► Effectively using data and research to reach informed, effective decisions
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Core competences
23. Problem Solving
► Solving problems is a fundamental skill that all employees should possess. It could range from something as simple as addressing
a staff shortage through to something much more technical, such as overcoming a major stumbling block during the course of a
project.Examples include:
► The ability to identify the cause and effects of problems in the workplace
► Analysing existing information to come up with appropriate solutions
Transferable Competencies
While some of the above competencies relate to specific industries, there are several competencies which are ‘transferable’. This
means that you can take them from one industry such as marketing and apply them in another such as IT.
24. Resourcefulness
► Being resourceful is all about finding innovative ways to overcome obstacles or solve problems. It can also relate to finding ways
to deal with unforeseen or challenging situations using the resources that you have available.
Core competences
Examples include:
► Using existing information to devise new ways of working
► The ability to tackle unforeseen challenges using existing resources
25. Trustworthiness
► In the workplace, honesty is a sign of trust. Colleagues and clients depend on your ability to make trustworthy decisions and
provide an honest service. Being trustworthy can also relate to your ability to get things done without being constantly
chased, or completing work without it being checked to ensure it is of the right standard.
Examples include:
► Communicating openly and honestly with colleagues and customers
► Taking personal responsibility for the quality and content of your work
26. Stress Reduction
► Although a certain degree of stress in the workplace is normal, things can spiral out of control. Excessive stress can impact on
many different areas, including your emotional health.
► It is impossible to control everything in your working environment, but you should implement steps to reduce your stress
levels. Being able to cope well under pressure and facing excessive amounts of stress are completely different things, so you
need to be able to distinguish between the two and seek the support of a senior colleague if required.
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Core competences
Examples include:
► Responding calmly to criticism
► Proactively managing feelings or symptoms of stress
27. Moral Principles and Ethical Standards
► Ethics are all about moral principles, or knowing the difference between right and wrong. They can also refer to behaviours
and standards such as how you carry out your work and the way in which you handle certain situations.
Examples include:
► Taking responsibility for mistakes and errors in your work
► Respecting confidentiality agreements
28. Planning and Organisation
► Being able to effectively plan and organise your workload is very important, particularly in careers such as law, finance and
even marketing, as these are industries which are extremely deadline-driven. Planning is about coordinating your resources
and budgets to meet deadlines or achieve targets.
Examples include:
► Using resources effectively to achieve objectives
► Prioritising your workload to ensure deadlines are met
Core competences
29. Business Acumen
► Employers want to see that you have an aptitude for business. This could be reflected in your knowledge, qualifications or
achievements through your work or academic studies.
Examples include:
► Analysing competitors’ products and services to better understand your business position
► Understanding how industry trends impact on the business
Technical Competencies
Competencies in this category relate not only to computer skills but also to your ability to think creatively, devise innovative
systems and processes and develop policies to facilitate operations. Technical competencies are set to become ever more
important to the graduate workforce.
30. Creative thinking
► Developing innovative solutions and thinking creatively is important in a number of different sectors. It can relate to using
mind mapping to brainstorm ideas or looking at something from a different perspective.
Examples include:
► Using existing knowledge to develop original ways of working
► Working with others to brainstorm original, mutually beneficial solutions
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Core competences
31. Technical Capabilities
► The ability to identify how you can use systems and technology to improve ways of working. It may be implementing a new
strategy for collecting customer data, or rolling out a system to collect performance data.
Examples include:
► Developing new solutions with existing technology
► Acting as a technical expert in a specific area/programme
32. Computer Literacy
► In many industries you will be required to operate various computer systems and familiarise yourself with different software
packages. This could range from the basic Microsoft Office to more complex computer software for roles such as
accountancy or website design. Mastering certain computer skills is essential in certain roles.
Examples include:
► The ability to learn new systems quickly
► Experience of using a variety of relevant software packages
33. Data Management
► This is important for collecting, managing and reporting data. It involves the capacity to use data to improve processes and
operations while analysing results and presenting findings to others.
Core competences
Examples include:
► Experience of checking all available data to get a more complete picture
► Using the data to propose effective solutions and identify potential risks
34. Equipment and Program Knowledge
► If your role involves delivering technical support to customers, you need to acquire in-depth knowledge of equipment and programs.
This not only allows you to deliver excellent customer service but to also diagnose and troubleshoot problems more quickly.
Examples include:
► Understanding how specific equipment and programs can benefit the business and its customers
► Ability to use existing knowledge to diagnose technical issues
35. Policies and Planning
► Policy development establishes a foundation on which businesses build their culture and values. Consequently, understanding how
policies are created and more importantly how to comply with them is an important competency that many employers will look for
when recruiting new team members.
Examples include:
► Knowledge of how and why policy is important
► The ability to effectively communicate business values and culture
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Relationship between existing, required and

future skills
Apart from the characteristics and skills we identified previously, Centre for creative leadership (2017) also described that leaders at
different levels of the organisation face different challenges. Yet, timeless competencies are needed by leaders throughout an
organisation, regardless of role, industry, or location. The 4 core leadership skills needed for every career are explained below;
1. Self-Awareness. This means simply understanding your strengths and weaknesses, but gaining self-awareness is anything but simple.
Self-awareness is critical for ongoing and long-term effectiveness as a leader.
2. Communication. It’s one of the most basic, across-the-board skills all of us need to develop and refine during our careers.
“Communicating information and ideas” is consistently rated among the most important skills for leaders to be successful.
Communication is also embedded in a number of other leadership competencies, including “leading employees,” “participative
management” and “building and mending relationships.
3. Influence. Developing your influencing skills helps you to communicate your vision or goals, align the efforts of others, and build
commitment from people at all levels. Ultimately, influence allows you to get things done and achieve desirable outcomes.
4. Learning Agility. You need the ability to constantly be in a learning mode, to value and seek out the lessons of experience. To develop
as leaders and as people, we need to be active learners.

future skills
The below model developed by Mumford, Zaccaro,
Harding & Jacobs, (2000) provides a comprehensive
picture as to how skills relate to the materialisation of
effective leadership. According to the above model
leadership will be direct outcomes of skills such as
problem solving, social judgement, and knowledge. This
gives a guideline for many firms to reach at an effective
leadership level and how individuals can acquire essential
skills that would help them to be emergent leaders.
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future skills
Skills model of leadership
Individual Attributes
► Individual attributes will have impact on leadership skills and knowledge. These attributes will help a leader to approach
difficult problem solving, as complex problem solving becomes a difficult task when employees move up the firm. General
cognitive ability is the level of intelligence of an individual which includes information processing, memory skills, creative
thinking, analytical and reasoning skills etc. that will emerge from the biology. Crystallised cognitive ability will be learned and
acquired over time by gaining knowledge and experience. This will tend to increase and be stable over time, and will not
deteriorate over time with the age of employees.
► Motivation is where leaders are willing to tackle organisational problems, willing to express dominance and are being
committed to the social good of the firm. Type of personality will also effect the individual attributes. This will cover areas such
as openness, willingness to learn, integrity, tolerance etc which will influence leaders performance.

future skills
Skills model of leadership
Competencies
► These will be key to achieve effective performance of leaders and are of 3 main forms such as problem solving skills, social
judgment skills and knowledge.
► Problem solving skills include a leader’s creative ability to solve complex and unanticipated situations through appropriate
identification of problems, gathering of information related to the issue, generating prototype plans to solve the problems etc.
Leaders are often looked in to in the process of finding solutions for a given problem and implementing the same for the best
favour of the company and by giving guidance to achieve the common targets / goals. Social judgment skills explain about the
capacity of a leader to understand people and social systems. This essentially include social judgment skills as well as people skills
that was discussed in the traits approach. It is important that a leader takes in to account about different perceptions and
perspectives of others about a given problematic situation. Knowledge simply defined is putting the information gathered about a
problematic situation to order so that pitfalls are easily identified and the most suitable course of action is too revealed.
► In the next few slides, we will be looking at the future skills/ competencies that are required in the growing business models to
sustain in the market place.
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Distinctive Competences
Distinctive competence refers to some characteristic of a business that it does better than its competitors. Because the business is able to
do something better than other businesses, that business has a competitive advantage over other businesses. Distinctive competence can
occur in various areas, including technology, manufacturing, consumer relations, marketing, or the people that work for the business.
Companies with a distinctive competence are ones that have an advantage that is difficult for other businesses to copy. In order for a
company to develop a distinctive competence, it must do a very thorough internal and external review of its corporate environments.
Companies must constantly be monitoring conditions in the business environment. Failure to do this could cause the company to lose
their distinctive competence because of changes in the business environment.
To determine its distinctive competence or competences, an organisation should conduct an internal and external review and find those
areas of skill and technology that are in demand in the marketplace. If these skills are not in demand, they are not areas of competence.
An organisation must also consistently change its distinctive competence in a changing business environment to keep its competitive edge,
and its competence must become part of its corporate strategy. Examples of distinctive competence are fast delivery and the extremely
high quality of an organisation's product. Additionally, providing exceptional customer satisfaction, exceptional marketing skills and Public
relation skills are also be considered as distinctive competences as they can not be simply replicated by other businesses.
Advantages of Distinctive Competencies
In order to gain an edge over the competition, developing effective, distinctive competencies is vital. Due to the fact, that competitors
may decide to develop new capabilities, market requirements may regularly change. So, distinctive competencies must be identified
through thorough analysis and organisations must be ready to meet the new requirements that are crucial for further development.
► Distinctive Competencies Lead to Competitive Advantage – Distinctive competencies may lead to determining the most effective
and efficient. For instance, after Kodak understood that its core competence is imagining, their company gained an edge over the
competition. Moreover, competitive advantage may be gained by any business that can produce products with fewer expenses or
by effectively performing key activities.
► Distinctive Competencies Bring Firm Sustainability – If an organisation is not focused on offering certain products or services, and
its goal is to gain sustainable advantage, it’ll result in solving new problems, rather than resolving the same over and over again.
► Learning Faster Than Your Competitors – One of the best perks of distinctive competencies is learning and adapting to new
requirements faster than your competitors.
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The above diagram shows the importance of resources, leadership capabilities and distinctive competencies in achieving the
strategies. This will in turn increase the competitive advantage and result in superior profitability. Thereby, we understand
the role of leadership skills and forming an effective intellectual capital for an organisation.
Lesson Summary
In this lesson you have gained an understanding on the strategic direction of your organisation by considering the approaches
to strategies, business models and strategic evolution over last 30 years. Additionally, this unit has given you a comprehensive
understanding resource based approach to strategy.
Subsequently, you have looked at different personal skills, strategic skills and skills required for the future to become a
strategic leader. Now you have an in-depth understanding on leadership core competencies and distinctive competencies that
are required in future to become an effective strategic leader to achieve strategic ambitions.
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Manage personal
leadership
development to
support achievement
of strategic ambitions
Introduction
In this lesson, you will be learning the importance of leadership development plan and its components. Through this, you will
understand the need for personal development, skills improvement and learning needs. As a result you will be introduced to
Honey and Mumford learning styles. This will help you choose a right learning style which suits you. Further, this lesson will
look at personal development plan in order to improve your skills and competencies. You will also identify the gap in between
the objectives and your current performance.
Furthermore, this lesson will introduce you to models and frameworks such as Career anchors, Adair’s action-centred
leadership model, Blake and Mouton’s models and Blanchard Model. These leadership models help you to come up with an
implementation process to underpin the success of the development plan that can realise substantial changes in leadership
style.
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Learning Outcomes
2. Be able to manage personal leadership development to support achievement of strategic ambitions
2.1 Critically discuss the opportunities to support leadership development

2.2 Design a personal development plan to direct leadership development in a complex
environment
2.3 Devise an implementation process to underpin the success of the development plan that
can realise substantial changes in leadership style
Lesson Objectives
1. Leadership development plan
2. Honey and Mumford learning styles
3. Personal development
4. Gap analysis
5. Career anchors
6. Action-Centred Leadership - John Adair
7. Blake and Mouton: Managerial Grid
8. The Hersey-Blanchard Model of Leadership
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Leadership development plan

A leadership development plan is a detailed plan that helps you set your career towards advanced
leadership roles and senior management positions. It is an invaluable tool to strategically guide you
throughout your career growth and professional development.
With a leadership development plan, you will achieve the following:
► Greater overall career satisfaction
► More interesting opportunities & challenges
► More impactful career
There are 4 main components that must be always included when designing a leadership development
program. These components are listed in the following slides:

1. Create a career vision.
► The vision that you place for your career is the most important part of a leadership development
plan.
► It will set the overall

tone of voice for the professional development strategies you must run. You
need to meditate on what you really want to achieve with your professional life. You also need to
think deeply about your previous achievements and assess whether they contributed to your career
growth and development. You need to honestly assess yourself with regards to your strengths and
weaknesses, as well as leadership competencies and technical skills.
► In fact, this will ensure

that you will be able to bridge the gap between your current situation and the
things you want to achieve.
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2. Make leadership development goals with a clear timeline.
► After creating a vision for your career, it is now the time to create leadership development goals with
a clear timeline.
► Having a clear and very specific timeline for achieving results will ensure that you make your vision a
reality. It will push you further to take specific actions in order to reach your long-term professional
development goals. This will also lead you to make pro-active steps that are time-bound in support
of your career vision.
3. Include specific action steps that can be measured daily, weekly or monthly.
► As the saying goes, “The journey of a thousand miles begins with a single step.” You can’t expect to
achieve your career vision in a very short span of time. This is why you need to create specific action
steps that can be measured from time to time. They must not only be specific, but also measurable
and realistic. Results of the action steps must be measured by the key performance indicators that
can be monitored daily, weekly or monthly.

4. Have a regular assessment & evaluation of the overall leadership development plan.
► You need to regularly reassess your leadership development plan to keep it relevant. You can’t always
expect to have the perfect plan. This is the reason why assessment and evaluation is very important.
► Implementing such strategy can actually produce a feedback mechanism. You will then be able to
adjust the leadership development plan easily in order to address the deficiencies and the problems
encountered. You can also change it quickly when there is a change in your career vision. Leadership
development plans must be flexible.
Occasions for Leadership Development Programs
1. Early career
Young, ambitious managers with 5 to 10 years of business experience can prepare for greater
responsibility and accelerate their careers with business management training.
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2. Mid-career
An executive development program can provide mid-career managers with the skills to create higher value for
their organisations and drive performance in a fast-changing global environment. Such programs will also
improve your networks at this important time. This is also the time to consider business management degrees.
3. When facing specific challenges
Leaders facing specific business challenges in business development strategy, finance, sustainability or operations
can benefit from business management programs that focus on sharpening analytical and strategic leadership
skills.
4. Top level
As a senior executive, or CEO, you need to ensure you continue to identify the right business opportunities, drive
innovation and lead with conviction. An executive leadership development program specifically designed for top
managers, as well as board member training, will help you stay cutting-edge and ultimately reach the highest
pinnacle of your leadership development plan.

The Essence of Leadership Development Programs
Leadership development programs are a critical element of a comprehensive leadership development plan.
By integrating leadership development training into your plan, you’ll be ready to make the most out of
opportunities for consistent career progress, and be confident as you step into new roles or face new
challenges. The trick, of course, is to pick the right leadership development program for the right moment.
For example, young managers with around 8 years of experience should be looking to advance in their roles –
which should be reflected in their leadership development plan as the time to become a more impactful leader.
Such managers can develop their leadership skills through leadership training programs focusing on developing
personal leadership styles. This could include better self-awareness, understanding the dynamics of human
behavior in different situations, and practicing leadership with small and large teams. Integrated leadership
coaching can also be helpful.
By including a quality leadership development program in their leadership development plan, young managers
can master the mobilising of people towards business goals - improving their current performance and
demonstrating they are ready for the next career step.
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Personal development plan

What is personal development planning?
• This is the process of creating a plan of action for personal development in a career, educational or
relationship context.
• This process takes into account the goals, values, awareness and reflections of an individual in terms of each
of the above contexts.
• The tangible product of this process is termed as a Personal Development Plan (PDP) or Individual
Development Plan (IDP) or Personal Enterprise Plan (PEP).
• This plan will incorporate the strengths and weaknesses of the individual, aspirations and goals, education
and other competencies. The plan will lay out the specific action plan for achieving the identified goals.

Steps to creating a leadership development plan:
► • Step 1: Define What Generally Makes a Great Leader
► • Step 2: Take a Self-Assessment
► • Step 3: Identify Your Core Values
► • Step 4: Write a Personal Vision Statement
► • Step 5: Analyze What Others Think of You
► • Step 6: Identify Current and Lacking Leadership Skills
► • Step 7: Set Goals
► • Step 8: Write an Action Plan
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Step 1: Define What Generally Makes a Great Leader
The best way to make a leadership development plan is to draw inspiration from today's great leaders. To start,
make a leadership skills list of qualities that you think make up the traits, competencies, abilities, and
experience of a good leader.
Three samples of skills you might put on your list:
• Honest, ethical behavior
• Being able to clearly and succinctly communicate a vision
• Using creativity and intuition to navigate difficult and
unpredictable situations

Step 2: Take a Self-Assessment
• Next you want to identify your core characteristics. These are personality traits like "adventurous," "observant,"
and "impulsive.” To do this, take a test like the Myers-Briggs Type Indicator (MBTI) or StrengthsFinder. Or, rally a
group of friends, peers, colleagues, and family to write down words they'd use to describe you.
• By breaking down your personality traits and strengths, you’ll have more insight into your personal style and be
able to better answer the “Who am I?” piece of the personal leadership development process, which we'll get to
later.
Step 3: Identify Your Core Values
• Core values are the principles you use to make decisions and define integrity and ethics. They are the things
that help you weigh choices in life, and are typically unwavering.
• Some examples of core values include: Loyalty, responsibility, health, friendship, balance, achievement,
challenge, affiliation, courage and creativity.
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Step 4: Write a Personal Vision Statement
A personal vision statement reflects your personal traits and core values. It seeks to answer the question, “Who am I
and what is my higher calling?”
To narrow this broad objective, focus on the following things:
• What you want to be
• What you want to achieve or contribute
• The principles/values you use to make decisions, big and small

Step 5: Analyse What Others Think of You
• Being a great leader isn't just about what you think makes an effective leader. Other people; your industry, peers,
and those you lead need to also think you're effective.
• To check if the personality traits, core values, and personal mission statement you settled on align with what others
currently think of both you and leaders in general, you could conduct a mini audit using a few questions.
• The answers to these questions should serve as a checks and balance to all the work you did prior to this step.
Step 6: Identify Current and Lacking Leadership Skills
The next step is to expand on and further define the skills needed to become your definition of an ideal leader.
• First, identify the skills you already have.
Skills are different than traits: Skills can be taught (e.g. Excel, communication, delegating, etc.). Traits are natural
abilities that last a lifetime (e.g. thoughtful, risk-adverse, introverted, etc.).
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Assess the identified strengths
Once you’ve made your list, mark each item with an “S” if it is one of your strengths or a “D” if it’s something that needs
development. If you’re unsure, ask a mentor, friends, and/or colleagues to offer their insights.
Evaluate the assessed strengths
Lastly, cross reference the skills you identified with the lists you made of "skills all great leaders have" and "the skills others think I
have (or lack)." Ask yourself, "Are there gaps in which I need to improve?”
Step 7: Set Goals
Using the prioritized personal leadership skills list you developed in step six, write 2–3 stretch leadership development goals (goals
that are challenging) and 1–2 manageable goals (goals that are “SMART”) that will help you achieve each of your reach goals.
Step 8: Write an Action Plan
The action plan lays out the specific steps you’ll take, resources you’ll use, and the support system you’ll build to reach your stretch
and SMART goals. Then, put them in order of importance and/or time it will take to achieve said goals.
Peter Honey and Alan Mumford Learning

Styles
When we start to learn something new, our first concern is naturally with what we are learning. But have you
stopped to consider how you learn? How will you approach your new subject? Do you know how effective that
approach will be? Have you considered other methods? Educational research has shown that by becoming more
aware of how you learn, you can become a more efficient and effective learner. There is no one single method
of learning; there are many, and what works best depends on the task, the context and your personality. You will
be a more effective learner if you are aware of the range of possible learning methods, and know when to apply
them and what works best for you.
Peter Honey and Alan Mumford (1986a) identify four distinct styles or preferences that people use while
learning. They suggest that most of us tend to follow only one or two of these styles, and that different learning
activities may be better suited to particular styles. Knowing your predominant learning style will help you judge
how likely an activity is to be helpful to you. Honey and Mumford have produced a questionnaire (Honey and
Mumford, 1986b) that can identify your preferred learning styles. But you may be able to decide yourself by
reading the following descriptions; do you recognise yourself?
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Styles
The four learning styles are (Mobbs, 2010):
► Activists:Activists are those individuals who learn by doing. Activists need to get their hands filthy. They
have a receptive way to deal with learning, including themselves completely and without inclination in
new encounters. The learning activities can be brainstorming, problem solving, group discussion, puzzles,
competitions, role-play etc
► Theorists: These learners get a kick out of the chance to comprehend the hypothesis behind the activities.
They require models, ideas and truths with a specific end goal to participate in the learning procedure. Like
to break down and integrate, drawing new data into a methodical and consistent ‘hypothesis’. Their choice
of learning activities includes models, statistics, stories, quotes, background information, applying
concepts theoretically etc.

Styles
► Pragmatists: These individuals have the capacity to perceive how to put the learning into practice in their
present reality. Conceptual ideas and recreations are of constrained utility unless they can see an approach
to put the concepts practically in their lives. Experimenting with new ideas, speculations and methods to
check whether they work is their mode of action. They learn better through taking time to think about how
to apply learning in reality, case studies, problem solving and discussion.
► Reflectors: These individuals learn by watching and contemplating what happened. They may abstain from
jumping in and prefer to watch from the sidelines. They want to remain back and see encounters from
various alternate points of view, gathering information and using the opportunity to work towards a suitable
conclusion. They like paired discussions, self-analysis questionnaires, personality questionnaires, time out,
observing activities, feedback from others. coaching, interviews etc.
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Styles
People show preferences for particular learning styles, and different learning activities are suited to
different styles of learning. You are most likely to learn when your learning style and the nature of the
activity match. So if you can choose among activities to learn the same subject, you may be able to
choose an activity to match your preferred style. But often you aren’t given the luxury of a choice, so
you will need to use a style that may not come naturally. If you are prepared to use different styles on
occasion, so that you strengthen styles that you currently don’t often use, you can become an all-round
learner, able to benefit from any learning opportunity.
Personal development
Employers are increasingly aware of the importance of investing in their staff and often have structures and
processes in place to provide opportunities for the training and development of their employees. Nonetheless,
managers also need to take personal responsibility for renewing and updating their skills and knowledge
throughout their working lives. Personal development is a continuous lifelong process of nurturing, shaping and
improving skills and knowledge to ensure maximum effectiveness and ongoing employability. Personal
development does not necessarily imply upward movement; rather, it is about enabling individuals to improve
their performance and reach their full potential at each stage of their career.
Personal development planning is the process of:
► establishing
aims and objectives (or goals) - what you want to achieve or where you want to go, in the short,
medium or long-term in your career
► assessing current realities
► identifying needs for skills, knowledge or competence
► selecting appropriate development activities to meet those perceived needs.
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Action checklist Personal Development Plan - PDP is usually understood as a cyclical process, where
improvement comes from moving around the loop. The following chart outlines the process:
Establish your purpose or direction
The purpose of any development activity needs to be identified. You may do this, either, by yourself or
with the help of your manager, mentor, career coach, colleagues, or friends. This involves:
► gaining an awareness of your current standing and future potential within your chosen field or sector
► gaining a measure of what you are good at and interested in (because these things will motivate you)
► taking account of the organisational (and sectoral) realities you encounter
► linking your plans to organisational (and sectoral) needs as much as possible.
Think about:
► your own value system, involving private life and family, work and money, constraints and obstacles
to mobility, now and in the future
► the characteristics of the kind of work that fits with your value system.
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Identify development needs
The identification of development needs may emerge from intended or actual new tasks or
responsibilities, from discussions with your manager or others, or from dissatisfaction with current
routines. Some people know what they are good at, others may be less sure. Various instruments such
as self-assessment tests, benchmarking exercises and personal diagnostics are available to help you
assess your skills in a structured way. Your development needs will depend largely upon your career
goals. If you intend to remain in similar employment, you may need development to re-motivate or re-
orient yourself, or to improve your current performance and effectiveness. Alternatively, development
may be required to prepare you for promotion, your next job, a new career or self-employment.
Identify learning opportunities
As a result of one, or several, of the assessment processes above, draw up a list of the skills or
knowledge you need to acquire, update or improve. Compare this list with your current skills and
knowledge base and identify the gaps.
Consider:
► your learning style - some learn best by trying out new things, whilst others prefer to sit back and observe; some
prefer to experiment, others to carry out research. The Learning Styles Questionnaire, devised by Peter Honey
and Alan Mumford will help identify preferred learning styles .
► your development: in addition to your own organisation, consider government and private advisory agencies,
literature and open learning, multi-media or online packages, professional institutes, your peer groups, networks
and colleagues and family and friends
► the range of learning options available - these can be broadly differentiated into three categories:
Education takes place over a sustained but finite period of time, usually leads to a qualification and may open up
the way into a new career direction.
Training is carried out at a specific time and place and is usually vocationally relevant and limited to specific
measurable aims and objectives.
Development encompasses a wide range of activities with learning potential that are either workbased (such as
work shadowing, job rotation, secondment, attachment, mentoring, delegation, counselling or coaching) or
personal (such as private reading, authorship, presenting papers, peer group contacts, networking, or community
involvement).
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Formulate an action plan
For each of the skills and knowledge gaps you identify, set yourself development objectives. These need to be
SMART: Specific, Measurable, Achievable, Realistic and Timely. There must be an element of challenge in them
so that they stretch you as an individual and carry you on to new ground. But they must also be attainable and
viable within a realistic time-frame, otherwise time will overtake you.
Undertake the development
Put your plan into action- what you do and how you do it should be your choice. In addition to training courses,
options include work shadowing, secondment, job rotation, project work, networking and community
involvement.
Record the outcomes
Keeping records serves to remind you - and others, such as potential employers - what you have done. Most
importantly your records will help you to focus on what you have got out of your development activity. Record
the date, the development need identified, the chosen method of development, the date(s) when
development was undertaken, the outcomes, and any further action needed.
Evaluate and review
Evaluation is the key stage in the self-development cycle. There are two issues you should reflect upon:
whether the development activity you have undertaken was appropriate and worthwhile; and whether
and how your skills or working behaviour have improved as a result. Evaluating development activities
also involves asking the following questions:
a) What am I able to do better as a result?
b) Has this experience thrown up further development needs?
c) How well did this development method work?
d) Could I have gained more from this activity?
e) Would I follow this approach again?
Evaluation will also provide a key lead for the next stage of the continuing cycle. Goals change, tasks
vary and new needs will emerge. It is important to revise your own plan accordingly.
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Gap Analysis
Writing a personal gap analysis involves knowing what skills you want to master and the levels of the skills
you already have to determine the differences, or gap, between the two. In addition, a personal gap analysis
details what you need to do to reduce the gap.
Writing a Personal Gap Analysis
► Step 1
Ask yourself what your skill goals are. Where do you want to be in terms of your career, learning and
personal accomplishments? Make a list of the skills you need in order to achieve your goals. Your list can
include computer proficiency levels, leadership skills, dancing skills or just about any skill you will need to
reach your goals.
► Step 2
Make a list of your existing skills. At the side of each skill, list your degree of competence. Areas can be
excellent, good, need some improvement and need much improvement. Assign a number to each level.
Example: Excellent--10; Good--8; Need some improvement--6; and Need much improvement--4. These
numbers will now represent your skill levels.
Gap Analysis
► Step 3
Make a word table showing the list of skills you need/desire in one column with the value of 10 for each. List the
skills you already have in the second column with the values or numbers you assigned to each. Assign the number 0
to the skills you have not yet acquired. In the third column, note the differences you have in skill areas and
numbers. For example, if your typing needed improvement and you gave it a value of 6, you need to improve it by 4
points
► Step 4
Examine everything you have written for each skill, note the particular difference and write a list of possible ways of
reducing the difference or gap.
► Step 5
Take each item on your list of possible ways of reducing the differences and detail how the gaps can be reduced
under headings of how, when, where and with what resources. Actions can be training programs you may need to
attend or personal development exercises you may need to take--such as bench pressing an increased number of
weights or learning to prepare a particular type of cuisine.
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Gap Analysis
► Step 6
Create a timeline. Show the actions required for bridging the

gap, the anticipated starting dates and possible completion
dates.
► Step 7
Create a budget list. Show each required action and anticipated

costs. Include all fees and resources, such as tuition, books,
computer programs, telephone calls and transportation.
► Step 8
Combine all sections under appropriate headings into a complete

document, calling it your personal skill gap analysis. You can
update this document over time as your career goals materialise
or are altered and you think you need to reexamine your skill
gaps.
Career Anchors
The concept of the Career Anchors was introduced by Edgar Schein (Edgar Schein’s (1975) model of
career anchors). A Career Anchor is something that develops over time and evolves into a self-concept,
shaping an individual's personal identity or self-image and includes:
► Talents, skills and abilities - the things that we believe we are good at, and not so good at.
► Motives and needs - what is important to us and take the form of goals, e.g. money, status,
challenge, autonomy.
► Attitudesand values - the kind of organisation that we feel comfortable with, one that matches our
own values and beliefs.
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Career Anchors
Identify your career anchors and how well you perceive these to match your current job
► Edgar Schein identified eight career anchor themes (see table in next slide) and has shown that
people will have prioritised preferences for them. Schein identified these career anchors to enable
people to recognise their preferences for certain areas in their job.
► For example a person with a primary theme of Security/Stability will seek secure and stable
employment over, say, employment that is challenging and riskier. People tend to stay anchored in
one area and their career will echo this in many ways.
► Understanding your preference will help you to plan your career in a way that is most satisfying to
you. For example, People will be more fulfilled in their careers if they can acknowledge their career
anchors and seek jobs that are appropriate for these.
Career Anchors
Career anchor category Traits
Technical/functional This kind of person likes being good at something and will work to become a guru or expert. They like to be challenged and then
competence use their skills to meet the challenge, doing the job properly and better than almost anyone else
These people want to be managers. They like problem-solving and dealing with other people. They thrive on responsibility. To be
Managerial competence
successful, they also need emotional competence
Autonomy/independence These people have a primary need to work under their own rules and ‘steam’. They avoid standards and prefer to work alone
Security/stability These people seek stability and continuity as a primary factor of their lives. They avoid risk and are generally ‘lifers’ in their job
These people like to invent things, be creative and most of all to run their own businesses. They differ from those who seek
Entrepreneurial creativity autonomy in that they will share the workload. They find ownership very important. They get easily bored Wealth, for them, is a
sign of success
Service/dedication to a Service-orientated people are driven more by how they can help other people than by using their talents. They may work in public
cause services or in areas such as human resources
People driven by challenge seek constant stimulation and difficult problems that they can tackle. Such people will change jobs
Pure challenge
when the current one gets boring, and their career can be varied
Those who are focused first on lifestyle look at their whole pattern of living. Rather than balance work and life, they are more
Lifestyle
likely to integrate the two. They may even take long periods of time off work in which to indulge in passions such as travelling
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Career Anchors
With the themes identified by Schein in mind, complete the table below – this will help you identify how well suited
you are to your current job. By completing this tool, it may highlight that you are in the right sort of job or that you
need a change if you are going to succeed in your desired career path. This may be a positive thing as it will give you
insight into your future goals and objectives.
How important is this aspect of
How does this match with your
your career to you(score out of 5,
Schein career anchor current post?(score out of 5, where
where 0 is not important and 5 is
0 is not important and 5 is vital)
vital)
Technical/functional competence
Managerial competence
Autonomy/independence
Security/stability
Entrepreneurial creativity
Service/dedication to a cause
Pure challenge
Lifestyle
Career Anchors
An alternative way of using the Career Anchors:
Career Anchors My motivator or driver Implications for me

Technical and Functional Competence – what you would not give up is the
opportunity to apply your skills in the area of technical/functional competence and
develop those skills to a high level.
Managerial Competence – what you would not give up is the opportunity to climb to
a high enough level in the organisation. You want to be responsible for total results;
you seek challenging assignments and leadership opportunities.
Autonomy and Independence – what you would not give up is the opportunity to
define your own work in your own way, in your own time, to your own standards. You
would turn down opportunities for advancement in order to retain autonomy.
Security and Stability – what you would not give up is employment security. Your
main concern is to achieve a sense of having succeeded so that you can relax; you are
concerned about financial security and less concerned with work content and rank in
the organisation.
Entrepreneurial Creativity – what you would not give up is the opportunity to create
your own organisation or enterprise. You are restless by nature, constantly require
new creative challenges and are willing to take risks and overcome obstacles.
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Career Anchors
Career Anchors My motivator or driver Implications for me
Variety – why do you seek variety? What are your range of talents and
drivers that you wish to fulfil?
Power, Influence and Control – Do you enjoy controlling others? How
important is this to you?
Service to others – do you get a lot of satisfaction in helping others? Is this
important to your lifestyle?
Basic Identity – do you prefer to wear a uniform or something similar?
Variety – why do you seek variety? What are your range of talents and
drivers that you wish to fulfil?
Using Careers Anchors

The thought of a career change can be confusing, stressful, and scary for some. Others seize the chance to make a change for the
better, even if it means a shift in income, location, lifestyle or training.
Changing to a trade-based career may be an option for people who prefer practical roles, hands-on work, specialised skills or the
desire to work for themselves and not be confined to an office.
Career Anchors
So, if you’re having trouble dragging yourself out of bed and off to work – here are some tips for career
changing:
1. Think about what you really enjoy doing
You can structure the following activity to help you discover your passion and/or strengths:
List 5 things you love doing
List 5 things you love doing AND you’re good at (they could include the first 5 activities, but they might not!)
Think about whether any of the above fall into an occupational group – for example, a person who love turning
wood probably will enjoy carpentry or joinery (Building & Construction). Someone that loves clothes and can
draw may be well suited to clothing design, manufacturing, costume making or millinery (Manufacturing). If you
like the outdoors, active careers can be found in landscaping, horticulture or building (Rural & Farming).
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Career Anchors
2. Think about the achievements you would value in life
Expert on organisational leadership and culture, Edgar Schein identified 8 career anchors. These anchors are what
drives people to success. Once you discover your career anchors (i.e. what drives you) you can focus your career
more effectively.
To discover your career anchors – List the 8 anchors on paper and spend half an hour ordering them in priority
according to what drives you, and what’s important to you. Then, come back to the 8 in two days time and see if
you’d swap anything around. This activity can provide real clarity about what it is you want in life and what work,
career or trade skill you might enjoy.
3. Seek feedback from others about what you’re good at

In your workplace, school, tech or your family there are people around you who may have valuable feedback about
your strengths and weaknesses. Playing to your strengths make sense. There’s little use in being passionate about
gardening if you are really a black thumb. It’s important to focus on passions with a dose of reality – rather than
daydreaming.
Ask them what they think you’re good at. Ask them if they have observed you doing something with real interest,
engagement and enjoyment. Knowing how other people see you and have observed you can be a real insight to
yourself.
Career Anchors
4. Research the options for re-training
By now you may have identified one or two real possibilities for a career based on a greater understanding of your
passion, strengths and career anchors. Now’s the time to research what skills are required to get there.
5. Put a plan in place to do it!

If you’re a school leaver – you’ll need to plan the 5 key steps to getting where you want to be – will you need an
apprenticeship? What training must you enroll in? By when should you find an employer?
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Action-Centred Leadership - John Adair

A model for team leadership and management.
► John Adair's simple Action-Centred Leadership model provides a great

blueprint for leadership and the
management of any team, group or organisation. Action Centred Leadership is also a simple leadership and
management model, which makes it easy to remember and apply, and to adapt for your own situation.
► Good managers and leaders should have full command of the three main areas of the Action Centred
Leadership model, and should be able to use each of the elements according to the situation. Being able to do
all of these things, and keep the right balance, gets results, builds morale, improves quality, develops teams
and productivity, and is the mark of a successful manager and leader. (John Adair, 1973)

The model
► The three parts of Adair's Action-Centred Leadership model are commonly represented by three
overlapping circles, which is a trademark belonging to John Adair, and used here with his permission.
Adair's famous 'three circles' model is one of the most recognisable and iconic symbols within
management theory. When you refer to this diagram for teaching and training purposes please
attribute it to John Adair, and help preserve the integrity and origins of this excellent model.
► John Adair's Action-Centred Leadership model is represented by Adair's 'three circles' diagram, which
illustrates Adair's three core management responsibilities:
► achieving the task
► managing the team or group
► managing individuals
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John Adair's action-centred leadership task-team-individual model adapts extremely well (as below) for the demands of modern
business management. When using it in your own environment think about the aspects of performance necessary for success
in your own situation, and incorporate local relevant factors into the model to create your own interpretation. This will give you
a very useful management framework:
Managerial Responsibilities: The Task
► identify aims and vision for the group, purpose, and direction - define the activity (the task)
► identify resources, people, processes, systems and tools (inc. financials, communications, IT)
► create the plan to achieve the task - deliverables, measures, timescales, strategy and tactics
► establish responsibilities, objectives, accountabilities and measures, by agreement and delegation
► set standards, quality, time and reporting parameters
► control and maintain activities against parameters
► monitor and maintain overall performance against plan
► report on progress towards the group's aim
► review, re-assess, adjust plan, methods and targets as necessary

Managerial Responsibilities: The Group
► establish, agree and communicate standards of performance and behaviour
► establish style, culture, approach of the group - soft skill elements
► monitor and maintain discipline, ethics, integrity and focus on objectives
► anticipate and resolve group conflict, struggles or disagreements
► assess and change as necessary the balance and composition of the group
► develop team-working, cooperation, morale and team-spirit
► develop the collective maturity and capability of the group - progressively increase group freedom and authority
► encourage the team towards objectives and aims - motivate the group and provide a collective sense of purpose
► identify, develop and agree team- and project-leadership roles within group
► enable, facilitate and ensure effective internal and external group communications
► identify and meet group training needs
► give feedback to the group on overall progress; consult with, and seek feedback and input from the group
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Managerial Responsibilities: The Individuals
► understand the team members as individuals - personality, skills, strengths, needs, aims and fears
► assist and support individuals - plans, problems, challenges, highs and lows
► identify and agree appropriate individual responsibilities and objectives
► give recognition and praise to individuals - acknowledge effort and good work
► where appropriate reward individuals with extra responsibility, advancement and status
► identify, develop and utilise each individual's capabilities and strengths
► train and develop individual team members
► develop individual freedom and authority

Importantly as well, Adair set out these core functions of leadership and says they are vital to the Action Centered Leadership
model:
► Planning - seeking information, defining tasks, setting aims
► Initiating - briefing, task allocation, setting standards
► Controlling - maintaining standards, ensuring progress, ongoing decision-making
► Supporting - individuals' contributions, encouraging, team spirit, reconciling, morale
► Informing - clarifying tasks and plans, updating, receiving feedback and interpreting
► Evaluating - feasibility of ideas, performance, enabling self-assessment
The Action Centred Leadership model, therefore, does not stand alone, it must be part of an integrated approach to managing
and leading, and also which should include a strong emphasis on applying these principles through training.
Adair also promotes a '50:50 rule' which he applies to various situations involving two possible influencers, e.g the view that
50% of motivation lies with the individual and 50% comes from external factors, among them leadership from another. This
contradicts most of the motivation gurus who assert that most motivation is from within the individual. He also suggests that
50% of team building success comes from the team and 50% from the leader.
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Blake and Mouton: Managerial Grid

Robert Blake and Jane Mouton developed their managerial grid in the
early 1960’s. They described two dimensions:
► concern for people indicates the degree to which a leader

considers team members’ needs, interests and personal
development.
► concern for production indicates the degree to which the leader

emphasises objectives, organisational efficiency and productivity.
Within these dimensions they identified five example managerial

styles:
► Impoverished
An impoverished leader is largely ineffective. They are not
particularly interested in developing systems or people. In fact
they aren’t especially interested in getting a job done – not really a
leader at all.

► Country club
A country club leader is primarily focused on people and assumes that if they are happy and secure,
they will work hard and achieve the objectives. This style of leadership can result in poor results due
to a lack of direction and control.
► Produce or perish
This type of leader is authoritative and similar to McGregor’s theory X. They focus on efficient
procedures and employee needs are always secondary to the production of the objectives.
► Team leadership
Characterised by high people and task focus, the style is based on the theory Y of McGregor and has
been termed as most effective style according to Blake and Mouton. The leader feels that
empowerment, commitment, trust, and respect are the key elements in creating a team atmosphere
which will automatically result in high employee satisfaction and production.
► Middle-of-the-road
While this may appear to be a useful compromise situation between people and production it often
means that the manager is happy with average performance and neither the needs of people nor the
needs of production are fully met.
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Following Mouton's death in 1987, Blake and his team created two additional managerial styles which are
often considered to be a combination (dependent on the situation) of the previous five. These are known
as Paternalistic and Opportunistic.
► Paternalistic
Paternalistic managers are described as switching regularly between the Country Club and Produce-or-
Perish styles of leadership. They are often supportive and encouraging, caring for the needs of individuals
within their team, whilst simultaneously being very defensive of their decisions. They will generally not
delegate any true responsibility for tasks, and will not consult on decisions with team members, but will
instead dictate the terms of a role.
► Opportunistic
The Opportunistic manager can be found anywhere across the Managerial Grid, depending on the situation.
These leaders will favour their own individual needs, moving themselves from quadrant to quadrant on the
grid to align themselves with a style which will suit them at any one time. They are manipulative, and will
utilise their flexible managerial style to get what they need from individuals at the time.

Individual Development
It is important when contextualising your managerial style in accordance with the Managerial Grid, to
remain objective. By analysing your individual strengths and weaknesses you can begin to plan your
personal development with the aim of achieving the ultimate goal as a Team Leader.
You can break down the development process into a few simple steps:
1. Identify your managerial style. Consider several recent situations when you were required to utilise
your role as a manager or leader. Evaluate how you acted during these situations in accordance with
the task and the team members, and position yourself along the Managerial Grid.
2. Identify areas for leadership development. Now, considering where your results generally centred
around, identify the particular style of styles you most closely associate with. Do these suit the context
of your role or the situations that were at hand?
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Subsequently, consider the skill or style gaps between you and becoming a Team Leader. If you believe yourself
too Results-oriented, perhaps begin to include team members in decision-making more often, improve your
communication, or maybe even delegate more responsibility. If the opposite is true, and you are strongly
Person-oriented, maybe work on improving your project management or scheduling skills, or how you clearly
communicate roles and tasks.
3. Contextualise your grid position based on the situation. The key to the Managerial Grid is retaining a level of
behavioural flexibility. Some situations will require most of a Results focus than another, and vice-versa. For
example, if your team is going through a major change, or a new member arrives, it may be more suitable to
focus on their needs during this period. However, if the organisation is in a phase of uncertainty or struggle, it
may be more suited to prioritise results slightly over the individual need for the time being.
The Hersey-Blanchard Model of Leadership

The Hersey-Blanchard Leadership Model (Kenneth H. Blanchard, 1982) also takes a situational perspective of
leadership. This model posits that the developmental levels of a leader's subordinates play the greatest role in
determining which leadership styles (leader behaviours) are most appropriate. Their theory is based on the
amount of direction (task behaviour) and socio-emotional support (relationship behaviour) a leader must provide
given the situation and the "level of maturity" of the followers.
► Task behaviour is the extent to which the leader engages in spelling out the duties and responsibilities to an
individual or group. This behaviour includes telling people what to do, how to do it, when to do it, where to do
it, and who's to do it. In task behaviour the leader engages in one way communication.
► Relationship behaviour is the extent to which the leader engages in two-way or multi-way communications.
This includes listening, facilitating, and supportive behaviours. In relationship behaviour the leader engages in
two-way communication by providing socio-emotional support.
► Maturity is the willingnessand ability of a person to take responsibility for directing his or her own behaviour.
People tend to have varying degrees of maturity, depending on the specific task, function, or objective that a
leader is attempting to accomplish through their efforts.
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In summary therefore leader behaviours fall along two continua:
Directive Behaviour Supportive Behaviour
One-Way Communication Two-Way Communication
Followers' Roles Clearly Communicated Listening, providing support and
encouragement
Close Supervision of Performance Facilitate interaction Involve follower in
decision-making
For Blanchard the key situational variable, when determining the appropriate leadership style, is the readiness
or developmental level of the subordinate(s). As a result, four leadership styles result:
• Directing: The leader provides clear instructions and specific direction. This style is best matched with a low
follower readiness level.
• Coaching: The leader encourages two-way communication and helps build confidence and motivation on the
part of the employee, although the leader still has responsibility and controls decision making. Selling style is
best matched with a moderate follower readiness level.

• Supporting: With this style, the leader and followers share decision making and no longer need or expect
the relationship to be directive. Participating style is best matched with a moderate follower readiness level.
• Delegating: This style is appropriate for leaders whose followers are ready to accomplish a particular task
and are both competent and motivated to take full responsibility. Delegating style is best matched with a high
follower readiness level.
To determine the appropriate leadership style to use in a given situation, the leader must first determine the
maturity level of the followers in relation to the specific task that the leader is attempting to accomplish
through the effort of the followers.
As the level of followers' maturity increases, the leader should begin to reduce his or her task behaviour and
increase relationship behaviour until the followers reach a moderate level of maturity. As the followers begin
to move into an above average level of maturity, the leader should decrease not only task behaviour but also
relationship behaviour. Once the maturity level is identified, the appropriate leadership style can be
determined.
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Lesson Summary
In this lesson, you have learnt the essence of leadership development and the role it plays in enhancing leadership
skills to achieve strategic goals of the organisation. You have learnt to identify your own leadership styles. This will
help you in understanding your learning needs and contribute useful insights in your personal development plan. You
are able to identify your objectives, current stand, required skills, and gap in order to review and evaluate them.
Further, you are able to identify your needs and preferences in your career using career anchor model. Understanding
your preference will help you plan your career in a way that is most satisfying to you. You have been introduced to a
range of useful leadership models such as John Adair’s action-centred leadership, Blake and Mouton’s managerial grid
and Blanchard model. These leadership development models will bring substantial changes to your leadership style.
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Evaluate the
effectiveness of the
leadership
development plan
Introduction
In this lesson, we will be looking at the ways of measuring achievements of outcomes of the leadership development plan
against original objectives. Thereby, we will be looking at techniques such as balance score card and KPIs.
Further, the lesson will discuss about different types of leadership styles to be used in different organisational settings. You
will be introduced to models such as Argyris’ double loop learning and Reddin’s 3D Leadership model. You will understand
the importance of team roles with the help of Belbin’s team roles model. Finally, you will be learning the techniques on how
to review and update the leadership development plan.
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Learning Outcomes
3. Be able to evaluate the effectiveness of the leadership development plan
3.1 Critically evaluate the achievement of outcomes of the plan against original objectives
3.2 Evaluate the impact of leadership style and the achievement of objectives on strategic ambitions in different
organisational settings
3.3 Critically review and update the leadership development plan
Lesson Objectives
1. Review outcomes of the leadership development plan
2. Balance scorecard
3. Key Performance Indicators (KPIs)
4. Leadership and Industries
5. Different situations and Leadership styles
6. Argyris’ double loop learning
7. Reddin’s 3D Leadership model
8. Belbin’s team roles
9. Review and update the leadership development plan
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Review outcomes of the leadership development plan

One has to analyse below aspects to know whether objectives of a plan have been achieved or not,
► Assessing your Personal development plan (PDP) records and action plans
► Development need, objectives, outcomes, need met? Yes/no? With evidence, outcome,
► What went well?, what didn’t?, what would I do differently next time?
► An effective leadership development plan must allow an individual to review its progress, pros and cons. Effective leadership development plan
evaluation requires preparation and careful planning. Creating an evaluation/ review plan will help you align the evaluation objectives with the
organisational strategic objectives and expectations. An evaluation plan will allow you to identify necessary resources and any potential
barriers to the evaluation process. It will also give you an opportunity to get involvement from key stakeholders, helping to focus stakeholders’
attention on support for achieving the training objectives and organisational strategic ambitions.
► Your evaluation plan should consider the following questions:
 What are the scope, aims, and objectives of the evaluation?
 What is the evaluation time frame?
Review outcomes of the leadership development plan

 Some results cannot be assessed until some months after the program ends. Some assessments require a pre- and post-
program administration (e.g., 360-degree feedback).
 Who will be involved in developing and managing the evaluation process, and how can they be engaged in the process?
 What resources and inputs will be needed?
 What areas of expertise will be needed?
 What will be evaluated, which data will need to be collected, who will provide it, and how and when will it be collected?
 What data analyses will be needed, how will the results be reported, and to whom will they be reported?
 What criteria will be used to judge the success of the evaluation process?
In the process of leadership development plan evaluation/ review, you could use certain evaluation/ review techniques such
as Balance scorecard, Key Performance Indicators (KPIs). Let us discuss them in detail in the next few slides.
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Balance scorecard
► To be successful, you need to fully prepare your business for the balanced scorecard and vice versa. You'll need to decide,
with senior managers and other stakeholders, what your organisation's goals and targets are. You'll need to do a lot of
analysis and consideration - and then do the same for the processes that will be needed to support it.
► You'll then need to communicate the processes, and their rationale, to your people. The better you have prepared your
processes and the more you have thought out your balanced scorecard approach, the easier this will be. But for the
change to be successful it will need the cooperation of your entire team.
► Finally, it cannot be emphasised enough that a balanced scorecard approach needs to be continually worked on. If it is
introduced and then forgotten it will have no effect. The measurement of goals and targets needs to be continuous, as
does the development the scorecard shows is needed.
► Using visual aids like the dashboard and the 'traffic light' systems can give your people a clear focus of where they are
doing well in their jobs and where they need to develop. It can be a hugely successful motivational tool, as well as one that
supports the success of your organisation.
Balance scorecard
The balanced scorecard (BSC) is a strategic planning and management system that organisations use to:
► Communicate what they are trying to accomplish
► Align the day-to-day work that everyone is doing with strategy
► Prioritise projects, products, and services
► Measure and monitor progress towards strategic targets
The system connects the dots between big picture strategy elements such as mission (our purpose), vision (what we aspire
for), core values (what we believe in), strategic focus areas (themes, results and/or goals) and the more operational elements
such as objectives (continuous improvement activities), measures (or key performance indicators/ KPIs, which track strategic
performance), targets (our desired level of performance), and initiatives (projects that help you reach your targets).
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Balance scorecard
Balance scorecard
The Balance score card methods suggests that we view the organisation from four perspectives, and to develop objectives,
measures (KPIs), targets, and initiatives (actions) relative to each of these points of view:
► Financial: often renamed Stewardship or other more appropriate name in the public sector, this perspective views
organisational financial performance and the use of financial resources
► Customer/Stakeholder: this perspective views organisational performance from the point of view the customer or other
key stakeholders that the organisation is designed to serve
► Internal Process: views organisational performance through the lenses of the quality and efficiency related to our product
or services or other key business processes
► Organisational Capacity (originally called Learning and Growth): views organisational performance through the lenses of
human capital, infrastructure, technology, culture and other capacities that are key to breakthrough performance
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Key Performance Indicators (KPIs)

A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively you are achieving your goals and
objectives. Organisations and individuals use KPIs at multiple levels to track performance measures.
It is a type of performance measurement that helps you understand how you, your organisation or department is performing.
A good KPI should act as a compass, helping you and your team understand whether you’re taking the right path toward your
strategic goals.
There are several types of KPIs such as;
► Financial Metrics - Profit, Cost, Cost of goods sold, etc
► Customer Metrics - Customer Lifetime Value (CLV), Customer Acquisition Cost (CAC), etc
► People Metrics -Employee Turnover Rate (ETR), Employee Satisfaction, etc
Leadership and Industries

Firstly, let’s clarify the four main types of classification for industries:
1. Primary: raw materials (mining, farming, fishing etc)
2. Secondary: manufacturing (making cars, steel etc)
3. Tertiary: providing a service (teaching, nursing etc)
4. Quaternary: research and development (IT, technological etc)
Depending on the industry, organisations will be set up and lead differently. Therefore, the style of leadership does depend
on the industry in which the organisation operates.
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Let’s firstly look at the types of leadership:
► Managerial: these leaders have the least influence; employees follow them only because they have to. However, these
leaders are not in a position to influence others, instead they desire to be served by others.
► Relational: builds relationships in order to influence employees. They create an atmosphere where employees want to
follow them, developing mutual respect.
► Motivational: seeks benefit for themselves, others and the organisation, where employees want to follow them for who
they are and what they know.
► Inspirational: inspire managerial and relational leaders to become motivation through focusing on growing themselves in
order to inspire themselves to grow.
► Transformational: the passion of a transformational leader is to transform others. This type of leadership is the most
influential and highly respected

► Depending on the industry a leader works in, their leadership style and type will differ, for example, in the case of research
and development industries, the leader should be more democratic if not laissez-faire and highly inspirational, in order to
allow free-flow of innovative ideas and communication throughout the organisation.
► In contrast, in the case of the primary sector, where it is all about obtaining raw materials, leadership doesn’t need to be
inspirational or motivational. It is very simplistic rigid work which needs to be very organised. In some cases, leaders will
even take an autocratic approach in order to get things done and sorted, with only sometimes taking into considerations
opinions and suggestions from employees.
As you can see, leadership style and type changes and is often a combination of two or more, all depending on the situations
that leaders are faced with and the industry in which they operate.
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Different situations and Leadership styles

Leadership Styles – Kurt Lewins
• Kurt Lewin and colleagues did leadership decision experiments in 1939 and identified three different styles of leadership,
in particular around decision-making.
1. Autocratic
• In the autocratic style, the leader takes decisions without consulting with others. The decision is made without any form of
consultation.
• An autocratic style works when there is no need for input on the decision, where the decision would not change as a result
of input, and where the motivation of people to carry out subsequent actions would not be affected whether they were or
were not involved in the decision-making.
2. Democratic
• In the democratic style, the leader involves the people in the decision-making, although the process for the final decision
may vary from the leader having the final say to them facilitating consensus in the group.
• Democratic decision-making is usually appreciated by the people, especially if they have been used to autocratic decisions
with which they disagreed.
• It can be problematic when there are a wide range of opinions and there is no clear way of reaching an equitable final
decision.

Leadership Styles – Kurt Lewins
3. Laissez-Faire
• The laissez-faire style is to minimize the leader's involvement in decision-making, and hence allowing people to make their
own decisions, although they may still be responsible for the outcome.
• Laissez-faire works best when people are capable and motivated in making their own decisions where there is no
requirement for a central coordination, for example in sharing resources across a range of different people and groups.
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• There are various different situations that can occur
within organisations, all of which highly rely on the leader
and how they deal with the situation.
• This diagram is an example of a situation in relation to
employees and the classification that can be given when
working on a particular task (Yukl, 2013).
• The key point to take away is that in reality there is no
one “best” leadership style, model or theory that can be
applied. Leaders are effective when they are flexible and
can adapt according to the company’s goals, objectives
and situations they are faced with.

Based on various situations and contexts, a leader may have to take different leadership styles which we have learnt before.
Other leadership style options may include transactional leaders, transformational leaders and charismatic leaders.
• Transformational Leaders - Empowers workers to achieve an articulate vision and a act as a Change Agent.
• Transactional Leaders - Exchange rewards and promises for effort
• Charismatic Leadership - A person who is different from others and endowed with exceptional power and qualities
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Transformational Leadership
• Facilitates a redefinition of a people’s vision and mission
• Renews people’s commitment and restructure their systems for goal accomplishment.
• Builds a relationship of mutual stimulation and elevation that converts followers into leaders.
Charismatic Leaders
• Born with traits that make them charismatic
• Extroverts, self-confident, achievement oriented
• Behaviours can be changed too, they can learn to become charismatic
• Articulating overarching goals
• Communicating with high performance expectations
• Creating a bond that inspired followership

Change and leadership
This is another important aspect of an organisation which can contribute to leadership. A leader’s role is mostly understood
at the time of facing a major change in the organisation. Leading change is one of the most important and difficult
responsibilities for managers and administrators. It involves guiding, encouraging, and facilitating the collective efforts of
members to adapt and survive in an uncertain and sometimes hostile environment. For some theorists, this is the essence of
leadership.
Many types of changes can be made by leaders, and some types are more difficult than others. The focus of a change effort
may involve roles, attitudes, technology, strategy, economics, or people.
Many efforts to implement major change in an organisation are unsuccessful, and resistance to change is a major reason for
failure. One explanation for the outcome of a proposed change is in terms of leader power and the types of influence
processes that leaders use. Therefore, leadership in times of change is of utmost importance.
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Transformational Leaders- an example
Lee Kuwan Yew – Former President of Singapore
• Transformed Singapore from a tine colonial post to thriving global economic centre
Unique as aspects of his Leadership ;
• Role as a strategist- sweeping changes to the economy
• Unique attribute –averse to strong ideologies
• Eg Singapore airlines-concern, as to how it performs
• Accent on meritocracy – getting the best for Government
• Policies related to HR
• Balancing education in society
Different Situations and Leadership styles

Leadership guidelines for implementing a major change
• Create a sense of urgency about the need for change
• Communicate a clear vision of the benefits to be gained
• Identify likely supporters, opponents, and reasons for resistance
• Fill key positions with competent change agents
• Use task forces to guide the implementation of changes
• Prepare people for change by explaining how it will affect them
• Help people deal with the stress and difficulties of major change
• Provide opportunities for early successes to build confidence
• Monitor the progress of change and make any necessary adjustments
• Keep people informed about the progress of change
• Demonstrate continued optimism and commitment to the change
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A situational approach to leadership
• A situational leadership emphasises on leadership
in different situations, therefore an effective
leader will have the capacity to adapt him/herself
to the demands of different situations. A
situational approach to leadership will provide a
two dimensional view, i.e. Directive and
supportive dimensions (Blanchard et al. 1985).

• Leaders should possess capabilities to match their leadership styles against different
competencies and capabilities of subordinates. Present business environment is highly volatile and
dynamic, therefore nothing is certain. This requires high level of adaptation for commercial
establishments if they are to remain competitive and thrive in excellence. Organisations need to
be highly responsive to market demands, therefore a leader in a situational approach should have
a definite capability to understanding a given situation and adapt to the same where he then can
direct the followers towards the change successfully.
• Directive dimensions will emphasise on task oriented areas. This dimension will have one way
communication outlining what to be done, who are the responsible persons in attaining the job, and
how to reach the goals. This includes the following:
1. Provide directions to accomplish goals

2. Establish goals and methods for evaluation
3. Setting timelines
4. Defining roles
5. Show how goals are been achieved
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Supportive dimensions will emphasise on human relationships and make group members feel and support each other in
attaining the established goals. This encourage two way communication, and the level of responsiveness is such that this will
provide both social as well as emotional support. This will include following:
1. Letting the followers to contribute their ideas

2. Assisting them in problem solving
3. Encouragement through praising and rewarding
4. Good listening skills and effective sharing of information
• Situational approach to leadership is a more practical approach when it comes to business practice as there are different
approaches which a leader can adopt at different managerial levels. Furthermore this is more widely used at different phases
of project management. Ex: Middle managers can use this concept to direct staff meetings, Head of department can use this
to plan structural changes within the department.

The above model developed by Blanchard et al. (1985) provides different combinations of situational leadership, and
outlines four main leadership styles as well as four combinations of development levels for the followers. This can be
best explained by considering the two concepts in isolation.
• Leadership styles
• Development levels
Leadership styles:
• High directive – low supportive style (S1): This is also known as the directing style, where a leader will spend more
on task related behaviours emphasising highly in effective achievement of goals. Human relations or the supporting
behaviours are not given much consideration. A high degree of supervision can be observed and a leader will
continuously provide instructions as to how goals are to be achieved.
• High directive – high supportive style (S2)/ Coaching approach: A leader will focus to achieve goals and also to
maintain a high level of human relationships. A leader will work hand in hand with the subordinates through
encouraging them, requesting and coordinating subordinate input. However, the leader will decide what goals are
to be achieved as well as how they will be achieved.
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The other two Leadership styles:
• High supportive – low directive style (S3): Goal attainment is not given the highest emphasis, however much focus is given
to supportive behaviours and human relationships so that the followers’ skills, competencies will naturally come up and will
be contributed to accomplish the task. Training, praising, rewarding, offering feedback, employee recognition etc. are some
distinctive features of this leadership style. Subordinates will have control over their actions and day to day decisions,
however problem solving will be facilitated by the leader.
• Low supportive – low directive style (S4) / Delegating approach: These leaders are the ones who will provide minimal
involvement to both task related and supportive behaviours. Employees will have therefore to be self motivated and self
supportive in getting the task done. His level of involvement in planning, goal clarification, control etc. are minimal
therefore the followers have the autonomy to do the way they want to get the job done.

A situational approach to leadership - The
leadership continuum
• This is situational theory that is been
suggested by Tulsian & Pandey (2002). Accordingly,
the leadership style will move on a continuum
from boss –centered leader behaviours to
subordinate-centered behaviour.
• Boss centered leadership will involve with the
leader making most of the decisions with a little
freedom given to the subordinates. This will
change in the opposite direction once is moved
towards the right side of the continuum. It is
important to note that there is no universally
accepted best model of leadership style which will
help at all given situations. Instead leadership style
will need to change according to different
scenarios.
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A situational approach to leadership - The leadership continuum
An effective leader will adjust his leadership style to suit with different situations and for this he will go through a separate
process which includes the following. Accordingly a leader will have to necessarily look in to his style of leadership in par with
the situational variables which he has to face, and these situational variable are of high interdependency.
1. Assessment of own strengths and weaknesses
2. Assessment and understanding about different individuals who are under him with whom he maintains a two way
communication
3. Influences from the external environment
4. Situation of the organisation and the duties he has to look in to
• It is important to seek for the best continuum for any leader to play safe. However this will depend on 3 main forces which
are,
• Forces relating to the managers such as individual value system, confidence in subordinates, Forces relating to
subordinates such as desire for independence, willingness to take responsibility, knowledge, Forces relating to the
situation such as type of organisations structure, availability of time, group cohesiveness and effectiveness, and the
nature of the problem
Argyris’ double loop learning

► Argyris (1976) proposes double loop learning theory which pertains to learning to change underlying values and assumptions. The
focus of the theory is on solving problems that are complex and ill-structured and which change as problem-solving advances.
► Double loop theory is based upon a “theory of action” perspective outlined by Argyris & Schon (1974). This perspective examines
reality from the point of view of human beings as actors. Changes in values, behavior, leadership, and helping others, are all part
of, and informed by, the actors’ theory of action. An important aspect of the theory is the distinction between an individual’s
espoused theory and their “theory-in-use” (what they actually do); bringing these two into congruence is a primary concern of
double loop learning. Typically, interaction with others is necessary to identify the conflict.
► There are four basic steps in the action theory learning process:
(1) discovery of espoused and theory-in-use,
(2) invention of new meanings,
(3) production of new actions, and
(4) generalisation of results.
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Double loop learning involves applying each of these steps to itself. In double loop learning, assumptions underlying current
views are questioned and hypotheses about behavior tested publically. The end result of double loop learning should be
increased effectiveness in decision-making and better acceptance of failures and mistakes.
Application
► Double loop learning is a theory of personal change that is oriented towards professional education, especially leadership
in organisations. It has been applied in the context of management development.
Example
► Here are two examples from Argyris (1976, p16). A teacher who believes that she has a class of “stupid” students will
communicate expectations such that the children behave stupidly. She confirms her theory by asking them questions and
eliciting stupid answers or puts them in situations where they behave stupidly. The theory-in-use is self-fulfilling. Similarly,
a manager who believes his subordinates are passive, dependent and require authoritarian guidance rewards dependent
and submissive behavior. He tests his theory by posing challenges for employees and eliciting dependent outcomes. In
order to break this congruency, the teacher or manager would need to engage in open loop learning in which they
deliberately disconfirm their theory-in-use.

Principles
► Effective problem-solving about interpersonal or technical issues requires frequent public testing of theories-
in-use.
► Double loop learning requires learning situations in which participants can examine and experiment with
their theories of action.
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Reddin’s 3D Leadership model

The Three-Dimensional Grid or 3-D Leadership Model is developed by Professor Bill Reddin, who introduced the concept of
“situational demands” which talks about the way in which the leader must behave to be most effective.
The 3-D model has taken into the consideration the beliefs of the managerial grid and added one more dimension to it i.e.
Effectiveness. The effectiveness means to know what was the result when one used a particular leadership style in a
particular situation.
Thus, three-dimensional axes represent the “task-orientation”, “relationship orientation” and “effectiveness”. Task
orientation means the extent to which the superior directs his subordinate’s efforts towards the goal attainment. The
relationship orientation means the extent to which the manager has personal relations with his subordinates and finally, the
effectiveness means the extent to which the manager is successful (Reddin W.J., 1970).

When the leadership style meets the demands of the situation, then the leadership is said to be effective else ineffective. On
the basis of this, there are four styles that a manager adopts and is shown in the figure below:
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► The Separated Manager is the one who is engaged in correcting deviations. He is the person who formulates the rules and
policies and imposes these on others.
► The Related Manager is the one who likes to work with others and see an organisation as a social system where everyone
works together. He does not worry about the time and accepts others as they are and do not try to change them.
► The Dedicated Manager is the one who is task oriented and is only concerned with the production. He does not like to mix
up with the subordinates and cannot work without power and responsibility.
► The Integrated Manager is the one who mixes up with the subordinates and facilitate two way communication. His major
emphasis is on building a strong teamwork and effective communication network.
Reddin believed that the way leader behaves in a certain situation may not be appropriate in some other situations, and this
led to the evolution of the 3-D leadership model.

Reddin identified four major leadership styles on the high effectiveness plane and four corresponding styles on the low
effectiveness plane, effectiveness being where the leadership style matched the demands of the situation. So a manager who
demonstrated a high level of task-orientation and low relationships orientation where it was the style that was required was
called a Benevolent Autocrat while a manager who applied that style of behaviour where the situation did not call for it was
labelled an Autocrat.
The real theoretical breakthrough with Reddin’s 3-D model was the idea that one could assess the situation and identify what
behaviour was most appropriate. His model relates the level of managerial effectiveness to the most appropriate use of each
of these styles.
What it means?
Reddin’s four basic management styles result from the different levels of concern for the people and the task. From these
four basic styles, Reddin added a third dimension as a means of measuring managerial effectiveness. Where the four styles
are being used in the most inappropriate way, this is the lowest level of effectiveness and those occupying these quadrants
are labelled as: Missionary, Compromiser, Deserter, and Autocrat. Where the four styles are being used in the most
appropriate way and thus at the highest levels of effectiveness, Reddin labelled the roles as: Developer, Executive,
Bureaucrat, and Benevolent Autocrat.
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How can this help you?
The appropriate use of the four basic

management styles is the solution to
managerial effectiveness. There is no
one right management style, as
depending upon the variable, any of
the four basic styles can be successful
if used appropriately.
(Reddin W.J., 1970).
Belbin’s team roles

As we know different leadership style has different kind of influences in teams and organisation. Therefore, it will be helpful
to learn how different team roles influence in the achievement of objectives. This will help you to become a good strategic
leader.
Dr. Meredith Belbin, 2009 and his team discovered that there are nine clusters of behaviour - these were called 'Team Roles‘.
Each team needs access to each of the nine Team Role behaviours to become a high performing team. However, this doesn't
mean that every team requires nine people! Most people will have two or three Team Roles that they are most comfortable
with, and this can change over time. Each Team Role has its strengths and weaknesses, and each has equal importance.
However, not all are always required at the same time - it is important to first look at the team objectives, and work out
which tasks need to be undertaken.
By using Belbin, individuals have a greater self-understanding of their strengths, which leads to more effective
communication between colleagues and managers. Great teams can be put together, existing teams can be understood and
improved, and everyone can feel that they are making a difference in the workplace.
Let’s look at each team roles now.
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Action Oriented Roles
► Shaper (SH)
 Shapers are people who challenge the team to improve. They are dynamic and usually extroverted people who enjoy
stimulating others, questioning norms, and finding the best approaches for solving problems. The Shaper is the one who
shakes things up to make sure that all possibilities are considered and that the team does not become complacent.
 Shapers often see obstacles as exciting challenges and they tend to have the courage to push on when others feel like
quitting.
 Their potential weaknesses may be that they're argumentative, and that they may offend people's feelings.
► Implementer (IMP)
 Implementers are the people who get things done. They turn the team's ideas and concepts into practical actions and
plans. They are typically conservative, disciplined people who work systematically and efficiently and are very well
organised. These are the people who you can count on to get the job done.
 On the downside, Implementers may be inflexible and can be somewhat resistant to change.

► Completer-Finisher (CF)
 Completer-Finishers are the people who see that projects are completed thoroughly. They ensure that there have been no errors
or omissions and they pay attention to the smallest of details. They are very concerned with deadlines and will push the team to
make sure the job is completed on time. They are described as perfectionists who are orderly, conscientious and anxious.
 However, a Completer-Finisher may worry unnecessarily, and may find it hard to delegate.
People Oriented Roles
► Coordinator (CO)
 Coordinators are the ones who take on the traditional team-leader role and have also been referred to as the chairmen. They
guide the team to what they perceive are the objectives. They are often excellent listeners and they are naturally able to recognise
the value that each team member brings to the table. They are calm and good-natured, and delegate tasks very effectively.
 Their potential weaknesses are that they may delegate away too much personal responsibility, and may tend to be manipulative.
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► Team Worker (TW)
 Team Workers are the people who provide support and make sure that people within the team are working together effectively.
These people fill the role of negotiators within the team and they are flexible, diplomatic and perceptive. These tend to be popular
people who are very capable in their own right, but who prioritise team cohesion and helping people get along.
 Their weaknesses may be a tendency to be indecisive, and to maintain uncommitted positions during discussions and decision-
making.
► Resource Investigator (RI)
 Resource Investigators are innovative and curious. They explore available options, develop contacts, and negotiate for resources on
behalf of the team. They are enthusiastic team members, who identify and work with external stakeholders to help the team
accomplish its objective. They are outgoing and are often extroverted, meaning that others are often receptive to them and their
ideas.
 On the downside, they may lose enthusiasm quickly, and are often overly optimistic.

Thought Oriented Roles
► Plant (PL)
 The Plant is the creative innovator who comes up with new ideas and approaches. They thrive on praise but criticism is
especially hard for them to deal with. Plants are often introverted and prefer to work apart from the team. Because their
ideas are so novel, they can be impractical at times. They may also be poor communicators and can tend to ignore given
parameters and constraints.
► Monitor-Evaluator (ME)
 Monitor-Evaluators are best at analysing and evaluating ideas that other people (often Plants) come up with. These people
are shrewd and objective, and they carefully weigh the pros and cons of all the options before coming to a decision.
 Monitor-Evaluators are critical thinkers and very strategic in their approach. They are often perceived as detached or
unemotional. Sometimes they are poor motivators who react to events rather than instigating them
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► Specialist (SP)
 Specialists are people who have specialised knowledge that is needed to get the job done. They pride themselves on their skills and abilities,
and they work to maintain their professional status. Their job within the team is to be an expert in the area, and they commit themselves
fully to their field of expertise.
 This may limit their contribution, and lead to a preoccupation with technicalities at the expense of the bigger picture.
How to Use the Tool
Knowledge of Belbin's Team Roles model can help you to identify potential strengths and weaknesses within your team, overcome conflict
between your co-workers, and understand and appreciate everyone's contributions. It comprises four steps:
► If you have a large group, divide participants into "teams" of approximately five or six. If you work with a smaller group, avoid splitting it up.
► Ask each team to draw a circle, to divide it equally into nine sections, one for each of Belbin's team roles, and to enter their names in the
segments that correspond to their top two roles.
► Encourage discussion among the team members by asking them to list five main areas where they think their strengths and weaknesses lie,
and how these match, overlap or contrast with those of their co-workers.
► Ask your team to come up with three action points based on its findings, focusing on helping the team to perform more effectively.
Review and update the leadership development plan

It is necessary to understand the importance of Personal Development Plan and its effectiveness in personal development
program which is very significant because it provide us the current progress comparison with the past and help out to change
or amend policies at the right time to achieve the original goals and objectives.
Many organisations are already working on this, which gives it a competitive edge over other organisations and enable it to
track down its progress and help to make realistic and achievable objectives for the future and this is one of the main cause
of its success so far.
Leadership development plan must also be reviewed and updated as a result of constant change that happens in the
environment and industry. An organisation or a leader that does not respond to the changing needs of the environment can
not survive in the market and develop a competitive advantage over the competitors in the market. This will ultimately help
you to achieve the strategic organisation objectives/ ambitions. Therefore, reviewing and updating the leadership
development plan should consider not only the personal objectives but also the environmental changes.
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It is worth taking time to review your activities against your plans on a regular basis, probably every quarter or so. Less often,
and you may find that you are not placing a high enough priority on your development activities and letting progress slip.
More often, and you are likely to find that you have not made enough progress, or that you are tempted to put the review
off, because the last one was so recent.
This reflective process has two main purposes:
► To check that you have actually followed your development plan; and
► To ensure that your planned development has helped you towards your goals.
You may also find that your goals are no longer valid, and you want to update them.
A regular review process can therefore lead to you revising both your goals, and your planned development activities, to
ensure that they take you where you want to go.

A Possible Review Process
1. Set aside time for your review. It is no good trying to reflect meaningfully in just five minutes. Make sure you are in no
rush, and also that your environment is conducive to quiet reflection.
2. Find your original plan, with your goals and planned activities. You need to know what you said you were going to do.
3. For each planned activity, assess how far what you have done by way of activity was in line with your plan.
4. You need to be honest with yourself:
► How much did you do?
► Was it as much as you were expecting to achieve?
► Did you do something different, but more effective?
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5. Consider how successful you feel your development has been in getting you to your goals.
► Have you made progress towards your goals?
► Have you identified more activities that will need doing that might slow down your progress?
► Are your goals (and their timing) still realistic?
6. Decide what you need to do next.
► Is it more of the same, or something different?
► Do you need to take more time, or find some external support, perhaps?
► Revise your plan to set out your new activities.
It is helpful to document your thinking during the review process. This means you can look back next time and remember
why you changed your goals or activities.

Reviewing Your Goals
Every year or so, it is also likely to be helpful to review your personal development goals. As with the review of your planned
activity, it is important to set time aside for this process. Again, it is also helpful to document it, because this forces you to
articulate your reasoning. Ask yourself:
► Are these goals really what I want to achieve more than anything else?
► Do they inspire me to take action?
► If the answer to either of those is ‘no’, then you probably have the wrong goals.
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Leadership plans need to be constantly updated to reflect:
• Changes in organisation’s strategic objectives – changes in the external enviornment and internal circumstances call for
changes to strategic objectives from time to time. The leadership plan should reflect these changes in strategic objectives.
• Changes in personal circumstances – with time and experience, individuals grow. Skills that were lacking at the time of
making the plan could later on become a competency.
The following steps can be taken to update a personal leadership

development plan:
• Identify the goals set in the personal leadership development plan
• Conduct an audit to assess to what level the goals have been met.
• Identify the gap between the desired outcome (set objectives) and current performance.
• Conduct an audit to detect changes to organizational circumstances, vision and strategic objectives.
• Update the plan to include new goals and an action plan

Problems in updating LDPs
• Conducting audits to identify performance and changes to strategic objectives requires a great deal of time and resources.
This could defer a leader from constant monitoring.
• It is human nature to dislike criticism. Not every leader will positively consider conducting audits to find out shortcomings
of leadership skills.
• Skills take time to develop and hone. Constant updates to a leadership plan could result in demotivation.
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Lesson Summary
In this lesson you have gained an understanding on evaluating leadership development plan using balance scorecard
and KPIs. The lesson has given you a good insight of different leadership styles in different industries and organisation
settings. This has helped you to evaluate the impact of leadership style and the achievement of objectives on strategic
ambitions in different organisational settings. You have been introduced to a range of models for this purpose such as,
Argyris’ double loop learning, Reddin’s 3D Leadership model and Belbin’s team roles which will help you understand
your team, organisation strategic ambitions and ways of achieving them strategically.
Finally, you have learnt how to review and update personal development plan based on the understanding you have
gained so far.
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Advocate an
employee welfare
environment
Introduction
In this lesson, we will be looking at the importance of employee welfare and how it contributes to the achievement of
organisational strategic ambitions. You will have an opportunity to learn a range of concepts and theories in order to develop
organisational values that will realise strategic ambitions. First part of this lesson will look at the employee welfare and health
and safety at work.
Subsequently, we will be looking at Erikson’s Life Stage Theory, Nudge Theory and Psychological Contract that will help you
understand the psychological needs of the employees and influence in the achievement of strategic organisational objectives.
The final section of this lesson will help you understand the importance of learning and motivating employees through
coaching, mentoring and sponsorship. Further, we will also learn the concept of intellectual capital. Therefore, it brings out
the influence of corporate commitment to employee development through which the strategic ambitions will be achieved.
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Learning Outcomes
4. Be able to advocate an employee welfare environment that supports organisational values
4.1 Critically evaluate the impact of corporate commitment to employee welfare on strategic organisational objectives
4.2 Discuss how an employee welfare environment can affect achievement of strategic organisational objectives
4.3 Determine the influence of corporate commitment to employee welfare on the development of organisational
values that will realise strategic ambitions
Lesson Objectives
1. Importance of employee welfare
2. Health and safety at work
3. Impact of employee welfare on organisational objectives
4. Erikson’s Life Stage Theory, Nudge Theory
5. Psychological Contract, Kirkpatrick’s Learning Evaluation Model
6. Developmental mentoring
7. Sponsorships
8. Formal and informal coaching
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Importance of employee welfare

► Staff welfare is ‘creating an environment to promote a state of contentment which allows an employee to flourish
and achieve their full potential for the benefit of themselves and their organisation.’
► Organsations must believe that being ‘a great place to work’ is rooted in its heritage and values that plays a crucial
role in achieving its business goals. It is believed that employee is great assets to accomplish strategic ambitions.
Only by the help of fit and healthy people and well motivated workforce, organisations can reach to its strategic
ambitions. Depending on society culture, traditions, and era, understanding of companies’ social responsibility
might vary.
► Corporate Social Responsibility (CSR) has received a lot of attention in recent times due to its potential of leveraging
strategic economic benefits for corporations. Using the stakeholder approach and with a special focus on
employees as a critical stakeholders, it is important to provide sufficient employee welfare to create a positive and
effective working environment. There is a strong positive relationship between engagement in corporate social
responsibility and employee commitment. This provides firms with valuable evidence that, paying particular
attention to the welfare of employees can in the long run boost their commitment and performance, which will
ultimately result in the growth of the organisation.
► In the next few slides,let us look at the ways of providing employee welfare in order to create a safe, secure and
respectable working environment.

Employee welfare and organisational objectives
Organisations require commitment and corporation from individual employees in order to achieve its strategic objectives.
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Types of employee welfare
Employee welfare can be categorised as statutory or non-statutory, meaning as required by the law or by the will of the
management respectively.
Welfare activities can also be classified as either:
• intra-mural (inside the workplace) or
• extra-mural (outside the workplace).

Intramural welfare
Intramural welfare facilities are those within the working environment and include;
• Condition of the working environment (safety, cleanliness, and safety measures)
• Employee convenience (bathrooms, drinking water)
• Health services (first aid and treatment center, ambulance, counseling)
• Women and child welfare (family planning services, maternity aid)
Extramural welfare
Extramural welfare activities are diverse with many of them being sponsored by government acts. Some include:
• comfortable residences,
• proper roads and infrastructure and sanitation constitutional acts such as the factories act of 1948 and contract labor act of 1970
are examples of governmental welfare activities.
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Assessing employee welfare programmes
An effective employee welfare programme should:
• Fit with the business strategy
• Add value to operational requirements
• Be appropriate to the size of organisation
• Be fully supported by management at the highest level
Health and safety at work

The Health and Safety at Work Act 1974 (HASAWA) lays down wide-ranging duties on employers. Employers must protect the 'health,
safety and welfare' at work of all their employees , as well as others on their premises, including temps, casual workers, the self-
employed, clients, visitors and the general public. However, these duties are qualified with the words 'so far as is reasonably
practicable'. This means that employers can argue that the costs of a particular safety measure are not justified by the reduction in risk
that the measure would produce. But it does not mean they can avoid their responsibilities simply by claiming that they cannot afford
improvements.
Employer’s duties
► Under Section 8 of the Act the employer has a duty to ensure employees’ safety, health and welfare at work as far as is reasonably
practicable. In order to prevent workplace injuries and ill-health the employer is required, among other things, to:
► Provide and maintain a safe workplace which uses safe plant and equipment
► Prevent risks from use of any article or substance and from exposure to physical agents, noise and vibration
► Prevent any improper conduct or behaviour likely to put the safety, health and welfare of employees at risk
► Provide instruction and training to employees on health and safety
► Appointing a competent person as the organisation’s Safety Officer

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Employees’ duties
► The duties of employees while at work are set out in Section 13 of the Act. These include the following:
► To take reasonable care to protect the health and safety of themselves and of other people in the workplace
► Not to engage in improper behaviour that will endanger themselves or others
► Not to be under the influence of drink or drugs in the workplace
► To undergo any reasonable medical or other assessment if requested to do so by the employer
► To report any defects in the place of work or equipment which might be a danger to health and safety
Risk assessment and safety statement
► Under the Safety, Health and Welfare at Work Act 2005, every employer is required to carry out a risk assessment for the
workplace which should identify any hazards present in the workplace, assess the risks arising from such hazards and
identify the steps to be taken to deal with any risks.

The employer must also prepare a safety statement, which is based on the risk assessment. The statement should also
contain the details of people in the workforce who are responsible for safety issues. Employees should be given access to this
statement and employers should review it on a regular basis.
Protective equipment and measures
► The employer should tell employees about any risks that require the wearing of protective equipment. The employer
should provide protective equipment (such as protective clothing, headgear, footwear, eyewear, gloves) together with
training on how to use it, where necessary. An employee is under a duty to take reasonable care for their own safety and
to use any protective equipment supplied. The protective equipment should be provided free of charge to employees if it
is intended for use at the workplace only. Usually, employees should be provided with their own personal equipment.
► There is a range of measures that employers must take in regard to visual display units (VDUs). These include examining
the reflection and glare, the operator's position in front of the VDU, the keyboard and the software used. Operators must
be given adequate breaks from the VDU. In addition, employers must arrange for eye tests and, if required, make a
contribution towards the purchase of prescription eyeglasses.
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Reporting accidents
► All accidents in the workplace should be reported to the employer, who should record the details of the incident. Reporting the
accident will help to safeguard social welfare and other rights that may arise as a result of an occupational accident. An
employer is obliged to report any accident that results in an employee missing 3 consecutive days at work (not including the day
of the accident) to the Health and Safety Authority.
Health and safety leave
► An employer should carry out separate risk assessments in relation to pregnant employees. If there are particular risks to an
employee's pregnancy, these should be either removed or the employee moved away from them. Under Section 18 of the
Maternity Protection Act 1994, if neither of these options is possible, the employee should be given health and safety leave
from work, which may continue up the beginning of maternity leave. If a doctor certifies that night work would be unsuitable for
a pregnant employee, the employee must be given alternative work or health and safety leave.
► Following an employee's return to work after maternity leave, if there is any risk to the employee because she has recently
given birth or is breastfeeding, it should be removed. If this is not possible, the employee should be moved to alternative work.
If it is not possible for the employee to be assigned alternative work, she should be given health and safety leave. If night work is
certified by a doctor as being unsuitable after the birth, alternative work should be provided. If alternative work cannot be
provided, the employee should be given health and safety leave.

Health and safety and young people
► An employer should carry out a separate risk assessment in relation to an employee under 18 years of age. This risk
assessment should be carried out before the young person is employed. If certain risks are present, including risks that
cannot be recognised or avoided by the young person due to factors like lack of experience, the young person should not be
employed.
Bullying
► One of the employer’s duties is to prevent improper conduct or behaviour (which includes bullying). An employer should
have established procedures for dealing with complaints of bullying in the workplace and deal with such complaints
immediately. Ignoring complaints of bullying could leave an employer open to a possible claim for damages by an employee.
It is advisable for an employer to have an established grievance procedure to deal with complaints of bullying.
Harassment
► The Employment Equality Acts 1998-2015 place an obligation on all employers to prevent harassment in the work
place. Under this legislation, you are entitled to bring a claim to the Workplace Relations Commission and your employer
may be obliged to pay you compensation if you are harassed by reason of your gender, civil status, family status, sexual
orientation, age, disability, race, religious belief or membership of the Traveler community.
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Violence in the workplace
► The possibility of violence towards employees should be addressed in the safety statement. For example, factors like the
isolation of employees and the presence of cash on the premises need to be taken into account. Proper safeguards should be
put into place to eliminate the risk of violence as far as possible and the employee should be provided with appropriate means
of minimising the remaining risk, for example, security glass.
Assault:
► Under the Non-Fatal Offences Against the Person Act 1997, assault is a criminal offence. It is also an offence if you are made to
fear immediate assault. If you have been assaulted or threatened with assault at work by another employee, you should report
the matter immediately to your employer and it can also be reported to relevant authorities.
Victimisation
► Under the Safety, Health and Welfare at Work Act 2005, the employee may not be victimised for exercising their rights under
safety and health legislation such as making a complaint. This means that the employer may not penalise an employee by
dismissal or in some other way, for example, by disciplinary action or by being treated less favorably than other employees.
Impact of employee welfare on organisational objectives

Having discussed different aspects of employee welfare, let us now look at the impact of employee welfare on strategic
organisational objectives. In other words, we will learn the reasons for corporate commitment on employee welfare and the
perks it brings to achieve strategic organisational objectives.
Organisations benefit in various ways by treating the well-being of their workforce as basic concern which can reflect in work
place in a greater extent. Creating an environment to promote a state of contentment which allows an employee to flourish
and achieve their full potential for the benefit of themselves and their organisation.
The staff welfare focuses on commitment to employee wellbeing overall. For example, physically and mentally to behave
ethically and contribute to economic development while improving the quality of workforce. This will ultimately have effects
on the effectiveness and efficiency of the workforce. Thereby, strategic organisational objectives could be achieved. For
example, increased production, increased sales, customer satisfaction, maximisation of profits, shares etc.
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Impact of employee welfare on organisational objectives

Additionally, organisations are committed to employee welfare for some of the below reasons,
► To win over employee’s loyalty and increase their morale.
► To combat trade unionism and socialist ideas.
► To build up stable labour force, to reduce labour turnover and absenteeism.
► To develop efficiency and productivity among workers.
► To save oneself from heavy taxes on surplus profits.
► To earn goodwill and enhance public image.
► To reduce the threat of further government intervention.
► To make recruitment more effective.
Erikson’s Life Stage Theory

► Erikson's theory described the impact of social experience across the whole lifespan. Erikson was interested in how social
interaction and relationships played a role in the development and growth of human beings. (Erik H. Erikson , 1994)
► It is importance to learn this theory in order to understand the expectations of employees and their needs in a work place in
order to achieve organisational objectives.
► Each stage in Erikson's theory builds on the preceding stages and paves the way for following periods of development. In each
stage, Erikson believed people experience a conflict that serves as a turning point in development. In Erikson's view, these
conflicts are centered on either developing a psychological quality or failing to develop that quality. During these times, the
potential for personal growth is high but so is the potential for failure.
► If people successfully deal with the conflict, they emerge from the stage with psychological strengths that will serve them well
for the rest of their lives. If they fail to deal effectively with these conflicts, they may not develop the essential skills needed for
a strong sense of self.
► Erikson also believed that a sense of competence motivates behaviors and actions. Each stage in Erikson's theory is concerned
with becoming competent in an area of life. If the stage is handled well, the person will feel a sense of mastery, which is
sometimes referred to as ego strength or ego quality. If the stage is managed poorly, the person will emerge with a sense of
inadequacy in that aspect of development.
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The stages that make up his theory are as follows:
► Stage 1 - Trust vs. Mistrust
► Stage 2 - Autonomy vs. Shame and Doubt
► Stage 3 - Initiative vs. Guilt
► Stage 4 - Industry vs. Inferiority
► Stage 5 - Identity vs. Confusion
► Stage 6 - Intimacy vs. Isolation
► Stage 7 - Generativity vs. Stagnation
► Stage 8 - Integrity vs. Despair
Let's take a closer look at the background and different stages that make up Erikson's psychosocial theory.

Psychosocial Stage 1 - Trust vs. Mistrust
► The first stage of Erikson's theory of psychosocial development occurs between birth and one year of age and is the most
fundamental stage in life.
► Because an infant is utterly dependent, developing trust is based on the dependability and quality of the child's caregivers.
At this point in development, the child is utterly dependent upon adult caregivers for everything that he or she needs to
survive including food, love, warmth, safety, and nurturing. If a caregiver fails to provide adequate care and love, the child
will come to feel that he or she cannot trust or depend upon the adults in his or her life.
► If a child successfully develops trust, he or she will feel safe and secure in the world. Caregivers who are inconsistent,
emotionally unavailable, or rejecting contribute to feelings of mistrust in the children under their care. Failure to develop
trust will result in fear and a belief that the world is inconsistent and unpredictable
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Psychosocial Stage 2 - Autonomy vs. Shame and Doubt
► The second stage of Erikson's theory of psychosocial development takes place during early childhood and is focused on
children developing a greater sense of personal control.
► At this point in development, children are just starting to gain a little independence. They are starting to perform basic
actions on their own and making simple decisions about what they prefer. By allowing kids to make choices and gain
control, parents and caregivers can help children develop a sense of autonomy.
► Like Freud, Erikson believed that toilet training was a vital part of this process. However, Erikson's reasoning was quite
different than that of Freud's. Erikson believed that learning to control one's bodily functions leads to a feeling of control
and a sense of independence.
► Other important events include gaining more control over food choices, toy preferences, and clothing selection.

Psychosocial Stage 3 - Initiative vs. Guilt
► The third stage of psychosocial development takes place during the preschool years.
► At this point in psychosocial development, children begin to assert their power and control over the world through
directing play and other social interactions.
► Children who are successful at this stage feel capable and able to lead others. Those who fail to acquire these skills are left
with a sense of guilt, self-doubt, and lack of initiative.
Psychosocial Stage 4 - Industry vs. Inferiority
► The fourth psychosocial stage takes place during the early school years from approximately age 5 to 11.
► Through social interactions, children begin to develop a sense of pride in their accomplishments and abilities. Children
who are encouraged and commended by parents and teachers develop a feeling of competence and belief in their skills.
Those who receive little or no encouragement from parents, teachers, or peers will doubt their abilities to be successful.
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Psychosocial Stage 5 - Identity vs. Confusion
► The fifth psychosocial stage takes place during the often turbulent teenage years. This stage plays an essential role in
developing a sense of personal identity which will continue to influence behavior and development for the rest of a
person's life.
► During adolescence, children explore their independence and develop a sense of self. Those who receive proper
encouragement and reinforcement through personal exploration will emerge from this stage with a strong sense of self
and feelings of independence and control. Those who remain unsure of their beliefs and desires will feel insecure and
confused about themselves and the future.
► When psychologists talk about identity, they are referring to all of the beliefs, ideals, and values that help shape and guide
a person's behavior. Completing this stage successfully leads to fidelity, which Erikson described as an ability to live by
society's standards and expectations.

Psychosocial Stage 6 - Intimacy vs. Isolation
► This stage covers the period of early adulthood when people are exploring personal relationships.
► Erikson believed it was vital that people develop close, committed relationships with other people. Those who are successful at
this step will form relationships that are enduring and secure.
► Remember that each step builds on skills learned in previous steps. Erikson believed that a strong sense of personal identity was
important for developing intimate relationships. Studies have demonstrated that those with a poor sense of self do tend to have
less committed relationships and are more likely to suffer emotional isolation, loneliness, and depression.
Psychosocial Stage 7 - Generativity vs. Stagnation
► During adulthood, we continue to build our lives, focusing on our career and family.
► Those who are successful during this phase will feel that they are contributing to the world by being active in their home and
community. Those who fail to attain this skill will feel unproductive and uninvolved in the world.
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Psychosocial Stage 8 - Integrity vs. Despair
► The final psychosocial stage occurs during old age and is focused on reflecting back on life.
► At this point in development, people look back on the events of their lives and determine if they are happy with the life that they
lived or if they regret the things they did or didn't do.
► Those who are unsuccessful during this stage will feel that their life has been wasted and will experience many regrets. The
individual will be left with feelings of bitterness and despair.
Why do you learn this model?
One of the strengths of psychosocial theory is that it provides a broad framework from which to view development throughout the
entire lifespan. It also allows us to emphasise the social nature of human beings and the important influence that social relationships
have on development.
While Erikson's model emphasises the sequential significance of the eight character-forming crisis stages, the concept also asserts
that humans continue to change and develop throughout their lives, and that personality is not exclusively formed during early
childhood years. This is a helpful and optimistic idea, and many believe it is realistic too. It is certainly a view that greatly assists
encouraging oneself and others to see the future as an opportunity for positive change and development, instead of looking back
with blame and regret. This approach helps you to achieve your personal and organisational goals when you know yourself from
within.
Nudge Theory
Nudge theory is a flexible and modern change-management concept for understanding of how people think, make decisions,
and behave; helping people improve their thinking and decisions; managing change of all sorts and; identifying and modifying
existing unhelpful influences on people.
Nudge theory was named and popularised by the 2008 book, 'Nudge: Improving Decisions About Health, Wealth, and
Happiness', written by American academics Richard H Thaler and Cass R Sunstein. The book is based strongly on the Nobel
prize-winning work of the Israeli-American Daniel Kahneman and Amos Tversky. Nudge theory is a highly innovative, effective
model for change-management.
The concept is a relatively subtle policy shift that encourages people to make decisions that are in their broad self-interest.
It’s not about penalising people financially if they don’t act in certain way. It’s about making it easier for them to make a
certain decision.
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Nudge Theory
A good recent example can be found in UK pension policy. In order to increase worryingly low pension saving rates among
private sector workers the Government mandated employers to establish an “automatic enrolment” scheme in 2012. This
meant that workers would be automatically placed into a firm’s scheme, and contributions would be deducted from their pay
packet, unless they formally requested to be exempted.
The theory was that many people actually wanted to put more money aside for retirement but they were put off from doing
so by the need to make what they feared would be complicated decisions.
The idea was that auto enrolment would make saving the default for employees, and thus make it easier for them to do what
they really wanted to do and push up savings rates.
Organ donation is another example of an area where nudge policy is seen to have worked. Spain operates an opt-out system,
whereby all citizens are automatically registered for organ donation unless they choose to state otherwise. This is different
from the UK where donors have to opt in.
The Spanish opt-out system is one of the reasons Spain is a world leader in organ donation.
Psychological Contract
► The Psychological Contract is an increasingly relevant aspect of workplace relationships and wider human behaviour.
Descriptions and definitions of the Psychological Contract first emerged in the 1960s, notably in the work of organisational and
behavioural theorists Chris Argyris and Edgar Schein. Many other experts have contributed ideas to the subject since then, and
continue to do so, either specifically focusing on the Psychological Contract, or approaching it from a particular perspective, of
which there are many. The Psychological Contract is a deep and varied concept and is open to a wide range of interpretations
and theoretical studies.
► Primarily, the Psychological Contract refers to the relationship between an employer and its employees, and specifically
concerns mutual expectations of inputs and outcomes.
► The Psychological Contract is usually seen from the standpoint or feelings of employees, although a full appreciation requires it
to be understood from both sides.
► Simply, in an employment context, the Psychological Contract is the fairness or balance (typically as perceived by the
employee) between:
 how the employee is treated by the employer, and
 what the employee puts into the job.
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In the Psychological Contract Venn diagram:
► vc = visible contract - the usual written employment

contractual obligations on both sides to work safely
and appropriately in return for a rate of pay or salary,
usually holidays also, plus other employee rights of
notice and duty of care.
► pc = psychological contract - which is hidden,

unspoken, unwritten, and takes account of the
relationship references (r) between employee and
market (which includes other external factors), also
the employer's relationship with the market (also r),
and the visible contract (vc).
► Note that only the visible contract (vc) element is

written and transparent. All the other sections are
subject to perceptions until/unless clarified.
► At a deeper level the concept becomes increasingly complex and significant in work and management - especially in change management and in large organisations.
Interestingly the theory and principles of the Psychological Contract (PC) can also be applied beyond the employment situation to human relationships and wider
society.
► Unlike many traditional theories of management and behaviour, the PC and its surrounding ideas are still quite fluid; they are yet to be fully defined and understood,
and are far from widely recognised and used in organisations.
► The concept of 'psychological contracting' is even less well understood in other parts of society where people and organisations connect, despite its significance and
potential usefulness. The psychological contract develops and evolves constantly based on communication, or lack thereof, between the employee and the employer.
Promises over promotion or salary increases, for example, may form part of the psychological contract.
► Managing expectations is a key behaviour for employers so that they don’t accidentally give employees the wrong perception of action which then doesn’t materialise.
Employees should also manage expectations so that, for example, difficult situations or adverse personal circumstances that affect productivity aren’t seen by
management as deviant.
► Perceived breaches of the PC can severely damage the relationship between employer and employee, leading to disengagement, reduced productivity and in some
cases workplace deviance. Fairness is a significant part of the psychological contract, bound up in equity theory – employees need to perceive that they’re being treated
fairly to sustain a healthy psychological contract.
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► In many cases, issues in the workplace reflect a violation of the PC, as opposed to a violation of the employment contract recorded in writing. Because of this, the PC
offers one of the most insightful approaches of understanding and influencing behavior at work. It is important to understand the nature of this contract in order to
maintain a positive relationship between employers and employees. The solution for avoiding and resolving violations is communicating the mutual expectations of
both parties involved.
► One practical solution is putting mutual expectations in writing at the beginning of an employment or performance reviews and openly discussing the ‘terms of the
business relationship’. This could entail sections as ‘What we expect from the employee’ and ‘What employees can expect from us as a company in return’. Similarly,
employees could articulate their thoughts in sections like ‘What I expect from my employer’ and ‘What I am willing to put in’. Be as specific as possible and give specific
examples and incentives (monetary and also non-monetary!), as this increases the likelihood of fulfilment of the contract on both sides. The PC should also be in line
with the organisation’s values and philosophy as this demonstrates cohesiveness and integrity, and carries out a positive organisational culture.
► This ‘written agreement’ could become part of your internal talent management. Performance reviews offer the appropriate time and format to discuss the PC. It also
enables new employees to achieve desired performance standards much faster as everyone knows what do to, in order to be rewarded. But keep in mind: this contract
changes constantly, is always potentially unstable, and needs to be redefined on a regular basis.
► When the PC is applied in an appropriate manner, organisations are more likely to increase their overall performance and reduce turnover rate of their staff. This makes
the contract an effective tool for the management of your organisation which in turn assist in achieving organisation objectives.
Kirkpatrick’s Learning Evaluation Model

As organisation starts to grow and expand, the need to develop employees becomes a necessity. This development can be
achieved through several ways, including coaching, mentoring and sponsorships. Incorporating various learning aspects are
crucial in a work place. This is also considered to be a form of employee motivation at work. This kind of employee welfare
affect in development of organisational values that will ultimately realise strategic ambitions.
While developing organisational values, there is an influence of a corporate commitment to staff welfare. In this modern
business era most of the company are keeping sharp eye on staff welfare to gain employees loyalty and increase their moral
that enable to promote the efficiency of employee in work place which is beneficial to employee and company as well.
Now let us look at the way of providing learning, training, coaching and mentoring to the employees that will contribute in
achieving personal, organisational and social objectives.
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► The Kirkpatrick Model is probably the best known model for analysing and evaluating the results of training and educational
programs. It takes into account any style of training, both informal or formal, to determine aptitude based on four levels criteria.
► Level 1 Reaction measures how participants react to the training (e.g., satisfaction?). Level 2 Learning analyzes if they truly
understood the training (e.g., increase in knowledge, skills or experience?). Level 3 Behavior looks at if they are utilizing what they
learned at work (e.g., change in behaviors?), and Level 4 Results determines if the material had a positive impact on the business /
organisation.
► This model was developed by Dr. Donald Kirkpatrick (1924 – 2014) in the 1950s. The model can be implemented before,
throughout, and following training to show the value of training to the business.
► As outlined by this system, evaluation needs to start with level one, after which as time and resources will allow, should proceed in
order through levels two, three, and four. Data from all of the previous levels can be used as a foundation for the following levels’
analysis. As a result, each subsequent level provides an even more accurate measurement of the usefulness of the training course,
yet simultaneously calls for a significantly more time-consuming and demanding evaluation.

Undoubtedly, the most widely used and in-
demand method for the assessment of
training in businesses nowadays is
Kirkpatrick’s system based around the four
levels as guidelines. The Kirkpatrick model
has been used for over 30 years by many
different types of companies as the major
system for training evaluations. It is evident
that Kirkpatrick’s vision has made a positive
impact to the overall practice of training
evaluation.
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Level 1 Evaluation – Reaction
In what ways participants liked a particular program / training? How participants feel?
► The objective for this level is straightforward, it evaluates how individuals react to the training model by asking questions that
establishes the trainees’ thoughts. Questions will figure out if the participant enjoyed their experience and if they found the material
in the program useful for their work. This particular form of evaluation is typically referred to as a “smile sheet.” As outlined by
Kirkpatrick, each program needs to be assessed at this level to help improve the model for future use. On top of that, the
participants’ responses is essential for determining how invested they will be in learning the next level. Even though an optimistic
reaction does not ensure learning, an unfavorable one definitely makes it less likely that the user will pay attention to the training.
Examples of resources and techniques for level one:
► Online assessment that can be graded by delegates/evaluators.
► Interviews
► Can be done immediately after the training ends.
► Are the participants happy with the instructor(s)?
► Did the training meet the participant’s needs?
► Printed or oral reports provided by delegates/evaluators to supervisors at the participants’ organisations.
► “Smile sheets”.

Level 2 Evaluation – Learning
New skills / knowledge / attitudes? What was learned? and What was not learned?
► Evaluating at this level is meant to gauge the level participants have developed in expertise, knowledge, or mindset. Exploration at
this level is far more challenging and time-consuming compared to level one. Techniques vary from informal to formal tests and
self-assessment to team assessment. If at all possible, individuals take the test or evaluation prior to the training (pre-test) and
following training (post-test) to figure out how much the participant comprehended.
Examples of tools and procedures for level two:
► Measurement and evaluation is simple and straightforward for any group size.
► You may use a control group to compare.
► Exams, interviews or assessments prior to and immediately after the training.
► Observations by peers and instructors
► Strategies for assessment should be relevant to the goals of the training program.
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Level 3 Evaluation – Transfer
Was the leaning being applied by the attendees?
► This level analyses the differences in the participant’s behavior at work after completing the program. Assessing the change makes it
possible to figure out if the knowledge, mindset, or skills the program taught are being used the workplace.
► For the majority of individuals this level offers the truest evaluation of a program’s usefulness. Having said that, testing at this level is
challenging since it is generally impossible to anticipate when a person will start to properly utilise what they’ve learned from the
program, making it more difficult to determine when, how often, and exactly how to evaluate a participant post-assessment.
► This level starts 3–6 months after training.
Examples of assessment resources and techniques for level three:
► This can be carried out through observations and interviews.
► Evaluations have to be subtle until change is noticeable, after which a more thorough examination tool can be used.
► Online evaluations tend to be more challenging to integrate. Examinations are usually more successful when incorporated within
present management and training methods at the participant’s workplace.
► Quick examinations done immediately following the program are not going to be reliable since individuals change in various ways at
different times.

Level 4 Evaluation – Results
What are the final results of the training?
► Commonly regarded as the primary goal of the program, level four determines the overall success of the training model by
measuring factors such as lowered spending, higher returns on investments, improved quality of products, less accidents in
the workplace, more efficient production times, and a higher quantity of sales.
► From a business standpoint, the factors above are the main reason for the model, even so level four results are not usually
considered. Figuring out whether or not the results of the training program can be linked to better finances is hard to
accurately determine.
Types of assessment strategies and tools used for level four:
► It should be discussed with the participant exactly what is going to be measured throughout and after the training program
so that they know what to expect and to fully grasp what is being assessed.
► Use a control group
► Improper observations and the inability to make a connection with training input type will make it harder to see how the
training program has made a difference in the workplace.
► The process is to determine which methods and how these procedures are relevant to the participant’s feedback.
► For senior individuals in particular, yearly evaluations and regular arrangements of key business targets are essential in order
to accurately evaluate business results that are because of the training program.
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Developmental Mentoring
Developmental mentoring is concerned with co-learning and helping someone make better decisions and grow in wisdom,
as a result of deeper self-awareness. Instead of having a protege, as is the case in Sponsorship Mentoring, this kind of
mentoring uses the term mentee, to place less emphasis on any difference in power.
Lis Merrick defined Developmental Mentoring in 2005 as:
► The role of the mentor is one of support to the mentee. The mentor will listen and give advice and guidance, when it is
appropriate. Mentoring focuses on developing capability by working with the mentee’s goals to help them realise their
potential. The mentee is responsible for their learning and development and setting the direction and goals for the
relationship. The flow of learning is two-way in a mentoring relationship and the mentor often gains as much as the
mentee. (Merrick, 2005)
This is in contrast to a ‘structured’ or ‘sponsorship’ model of mentoring that was more widespread at the time, especially in
the business world in the United States. It is important to be clear on how different these two approaches are,
Developmental Mentoring Structured Mentoring
The mentor is more experienced in a relevant field but ideally The mentor may have a hierarchical influence over the mentee
independent of the mentee’s direct professional life. and their career progression.
The mentor helps the mentee to discover their own wisdom and do The mentor can promote and escalate the career of the mentee.
things for themselves.
The mentor’s experience and wisdom are not necessarily passed The mentor gives advice and guidance and the acquisition of skills
on, but can be accessed when needed. or knowledge is paramount.
There is a recognition of mutual growth and learning together The learning is one way; from mentor to mentee.
despite the different levels of experience.
The primary focus is on the development of the mentee and their The primary focus is on career development for the benefit of the
personal journey. organisation.
Great questions are central. Great advice is the focus.
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Characteristics of developmental mentoring
► Mentor and mentee are able to address difficult issues as they arise due to the significant level of trust built between the
two.
► There is no line of accountability, e.g. manager/direct report, supervisor/researcher, so the conversations are more likely
to be free from bias.
► Generosity of time and help by the mentor and the willingness of the mentee to take charge of their learning.
► A focus on developing levels of understanding or taking on more responsibility.
Most careers are now in some form of transition and seeking a mentor through the Academy is an excellent way to gain the
input of an independent, non-judgmental expert colleague who will help you negotiate what lies ahead.
Sponsorships
Sponsorships usually only include the sponsor and the individual who is on the receiving end of his or her support. A
sponsorship is similar to mentoring, but it is almost a higher level of mentoring. Unlike with mentoring, the sponsor should
be a person with a high status in an organisation who can advocate for an individual’s future successes. This upper-level
status means that the sponsor is someone who holds power and influence in the company and can therefore successfully
endorse and advocate for an employee’s advancement by communicating with other people in the company.
A sponsor develops successful strategies, which may include staying on top of new, required skills for the individual’s desired
position, as well as new opportunities. Then, the sponsor informs the individual of these requirements and opportunities to
help prepare them for a promotion or raise. By working toward that goal under the encouragement of a sponsor, the
employee becomes more engaged and motivated to accomplish tasks and projects, which benefits the company as well.
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Sponsorships
The mentor or sponsor is typically someone who works in the same company as the individual(s) they are helping, which
creates a deep understanding between them. While mentoring is generally related to good advice and key objectives,
sponsorships typically go one step further, as the sponsor is more personally involved in the further development and success
of an individual. Coaches, on the other hand, are usually (but not always) an informal second party who plays a hand in
helping employees grow and develop on both a personal and a professional level in a shorter time period. Even though they
aren’t always within the organisation, they are still deeply invested in the development of the individual.
When considering what process to use to grow and develop employees, first consider what type of environment your
employees would prosper in. Here’s the question to ask: Would an employee benefit more from a one-on-one relationship or
from a team effort? No matter what developmental process a company chooses, the one that is chosen should be in the best
interest of everyone involved.
Formal coaching
► Coaching is a task-oriented, performance-driven relationship between an experienced or expert coach and an employee
(or a group of employees) at any level in an organisation. This relationship is important for both the employee’s and the
organisation’s success, because it involves more than just one-time feedback from a supervisor or a one-time training
session. A company looking to hire a coach would do so if it needed to develop a small portion of staff or if there is a skills
gap.
► Coaches help further the development of an individual by focusing less on technical skills and more on soft skills, such as
becoming a better public speaker. It allows for individuals to grow by discovering and defining their personal and career
goals, creating a plan for achieving those goals, and receiving consistent feedback and guidance, which helps them acquire
new skills and improve overall performance and engagement.
► This process can occur either in person or virtually, allowing more employees to receive coaching at the same time. The
ongoing support offered through coaching, whether in person or virtually, is a partnership between a coach and an
employee that helps develop the individual. One important attribute is that coaching is specific to an individual’s needs:
Coaches take the time to discuss with employees what they want to achieve in their career. This personalisation caters to
their motivation to complete their goals, thus benefiting the employees and the company in the long run.
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Formal coaching
► The most obvious characteristic of formal business coaching is that it is being used explicitly – during the session both
parties are clear that they are engaged in ‘coaching’ and are committed to this process as well as the outcome.
► Formal coaching usually takes place during scheduled appointments. This sends a powerful signal to individual team
members that their development and success is important, and that the manager is there to provide support.
► When a series of appointments are scheduled, coaching becomes a beginning and end. This can have a motivating effect,
with the well-known phenomenon of ‘deadline magic’ coming into play towards the end of the process, when both
business coach and coachee focus their efforts on achieving the goal(s) within the allotted time.
► The clear parameters of formal coaching mean that both coach and coachee tend to spend most sessions in coaching
mode – i.e. with the coachee doing most of the talking, and the business coach primarily engaged in listening, asking
questions and giving feedback.
Informal Coaching
► Informal business coaching is a bit of a grey area – when the approach is used implicitly, as part of the everyday conversation between the
manager and her team, it may be that neither party would describe the conversation as ‘coaching’.
► Some team members are uncomfortable with the word ‘coaching’ or the idea of being coached – but respond well to a manager who takes
the time to listen carefully to them and ask questions that empower them to find their own way of meeting a challenge or solving a
problem, without being told what to do.
► Or a manager may be so familiar with this approach (or it may be so similar to her natural communication style) that she may not
consciously decide to ‘coach’ someone but instinctively listen and ask rather than ‘tell and sell’.
► Informal coaching does not take place in scheduled appointments but in everyday workplace conversations. These conversations may be
short or long, one-to-one or within a group, task-focused or people-focused – what qualifies them as coaching is not a formal model or
structure, but a style of conversation.
► The coaching style of management is one in which the manager typically takes a ‘step back’ in order to empower team members and elicit
their commitment and creativity, helping them to both get the job done and learn something new in the process. So instead of giving orders
or dispensing knowledge, the manager asks questions and listens to see what team members come up with.
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Informal Coaching
► For a manager-coach, coaching is not something that begins and ends with a session or programme – asking questions,
listening, empathising and giving observational (rather than judgmental) feedback are elements of her personal
communication style. For a coaching organisation, this leadership style is simply ‘the way we do things round here’.
► Because informal coaching is a way of doing things rather than a clearly defined programme, there is no overall beginning
and end, but an ongoing process. The conversation becomes open-ended, with markers such as goal-setting and review
occurring along the way, not as book-ends but part of a larger process of learning.
► As informal coaching is not confined to formal sessions, this leadership style is not used exclusively but according to the
demands of the situation, as part of a range of management styles.
Informal Coaching
How to choose a coaching style?
The manager’s preference

Some managers are comfortable with scheduling formal sessions and having a clearly structured coaching programme –
others’ toes curl up at the very thought. When working with people, it’s vitally important to be yourself and use an approach
you feel comfortable with. So make sure you are honest with yourself and your team about your own preferences and work
with, not against them.
On the other hand there’s nothing wrong with a bit of creative experiment – I’ve seen some managers achieve great results
by starting the first session by saying “Well this is a new approach for me and to be honest I’m not sure whether it’s my style,
but let’s try it out and see how it goes…”.
The coachee’s preference

It goes without saying that this is at least as important as the manager’s preference. Some coachees love the idea of having
dedicated time for their own development, as well as clearly defined goals and a structure for achieving them. Others are
deeply suspicious of a formal structure for this kind of work, and much prefer to do things in a more informal, casual way.
Ignore this at your peril!
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Informal Coaching
Company culture
Just as individuals have preferences, so do organisations. Approaches that are well-received in a large broadcaster or
newspaper may be unworkable or inflammatory in a small agency or studio. This doesn’t mean you can’t try something new,
but you may have to be creative about how you sell it to people within the company.
The kind of task

It’s difficult to generalise about this, as I’ve seen both formal and informal coaching used successfully with a wide range of
tasks and goals. However for ‘big picture’ goals such as a large new project, a person’s career or annual goals, a formal
session can be a powerful way of setting the scene and getting people focused. There are also many instances in which a
smaller or ongoing issue may not merit a formal meeting, but a brief chat by the proverbial water cooler is just the job to
tease out a problem and get things moving again.
Benefits to the organisation in coaching

People undertaking coaching will feel valued and invested in, as someone is giving their time and expertise to help them. Coaching helps people discover their own
motivation as it taps into their core values. Additionally, organisation change can better be implemented through coaching and training to create values in order to
achieve strategic objectives. Some of the motives/ benefits through which strategic ambitions can be achieved are listed below,
► Working relationships
► Enhanced teamwork and improved working relationships mean there is less conflict and a greater capacity to solve
issues when they arise.
► Staff morale improves and a positive change of culture and attitudes takes place.
► Personal development
► Individuals are empowered and their problem-solving ability improves.
► Greater transfer of knowledge and experience means more continuity in the workplace.
► Increased opportunity is available for staff development outside training.
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Benefits to the organisation in coaching

► Performance
► Improved performance and greater productivity contribute to increased profitability,

improved quality and enhanced service to customers or clients.
► Health and wellbeing
► Employees are healthier and happier.
► Job satisfaction increases.

► The risk of burnout is reduced.
► Improved work/life balance results in less sick leave used, higher rates of staff retention and
less spent on recruiting.
Intellectual capital
Another aspect that organisations focus on to enhance its value is, intellectual capital in order to achieve its strategic ambitions.
Intellectual property is the value of a company or organisation's employee knowledge, skills, business training or any proprietary
information that may provide the company with a competitive advantage. Intellectual capital is considered an asset, and can
broadly be defined as the collection of all informational resources a company has at its disposal that can be used to drive profits,
gain new customers, create new products or otherwise improve the business. It is the sum of employee expertise, organisational
processes, and other intangibles that contribute to a company's bottom line. The following are the primary types of intellectual
capital.
Human Capital
The knowledge, know-how, abilities and creativity of employees. In many cases, people don't like to be referred to as "capital."
Terms such as talent or human resources are common alternatives.
Structural Capital
Intangible elements of a firm's organisational culture, business processes and ability to innovate. This includes documents, media,
processes, systems, applications, data, intellectual property and trade secrets.
Relational Capital
A firm's relationship with the outside world including investors, customers, employees, partners, regulators, communities and other
stakeholders. This can include both informal relationships such as business contacts and formal contracts.
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Intellectual capital
Understanding Intellectual Capital
Intellectual capital is a business asset, although measuring it is a very subjective task. This asset to a firm is not booked on the
balance sheet as "intellectual capital"; instead, to the extent possible, it is integrated into intellectual property (part of intangibles
and goodwill on the balance sheet), which in itself is difficult to measure. Companies spend much time and resources developing
management expertise and training their employees in business-specific areas to add to the 'mental capacity,' so to speak, of their
enterprise. This capital employed to enhance intellectual capital provides a return to the company, though difficult to quantify, but
something that can contribute toward many years' worth of business value.
Various methods exist to measure intellectual capital but there is no consistency or uniform standard accepted in the industry. For
example, the Balanced Scorecard measures four perspectives of an employee as part of its efforts to quantify intellectual capital.
The perspectives are financial, customer, internal processes, and organisation capacity.
On the other hand, Danish company Skandia considers the transformation of human capital into structural capital as the mission of
intellectual capital. The company has designed a house-like structure with financial focus as the roof, customer focus and process
roof as the walls, and renewable and development focus for sustainability as the platform to measure intellectual capital Walsh, J. P.
(2005).
Because of the nebulous nature and defining features of intellectual capital, it is also referred to as intangible assets and
environment.
Lesson Summary
Now you have understood the importance of employee welfare and how it contributes to the betterment of the company.
Therefore, you have had an opportunity to look at the health and safety at work and how this will have an impact on strategic
organisational objectives. Further, we have discussed how an employee welfare environment can affect achievement of
strategic organisational objectives by discussing and reflecting a range of models and theories such as Erikson’s Life Stage
Theory, Nudge Theory and Psychological Contract.
Subsequently, you have learnt Kirkpatrick’s Learning Evaluation Model, sponsorship, mentoring, formal and informal coaching
in order to develop organisational values that will realise strategic ambitions. We have also looked at the benefits of coaching
to an organisation in order to achieve strategic objectives and importance of developing intellectual capital.
27

QUALIFI Strategic Management and Leadership 7

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QUALIFI Strategic Management and Leadership 7

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24/02/2021

Level 7 Diploma in Strategic Management and Leadership 2

1. Be able to set performance targets for teams to meet strategic objectives

Level 7 Diploma in Strategic Management and Leadership 3

1. Understand the terms strategy, strategic objectives and performance

2. Discuss the link between team performance and strategic objectives

3. Understand performance targets

4. Discuss tools and techniques for setting team performance targets

5. Discuss the value of team performance tools to measure future performance

Level 7 Diploma in Strategic Management and Leadership 4

Strategy, Strategic Objectives and

► Determine overall scope of the organisation

► Add value to the different business units

► Meet expectations of stakeholders

Level 7 Diploma in Strategic Management and Leadership 5

Strategy, Strategic Objectives and

► How to compete successfully in particular markets

► How different parts of organisation deliver strategy

Level 7 Diploma in Strategic Management and Leadership 6

Strategy, Strategic Objectives and

► The long-term direction of the organisation

► The scope of an organisation’s activities

► Gaining advantage over competitors

► Addressing changes in the business environment

► Building on resources and competences (capability)

► Values and expectations of stakeholders which affect operational decisions

Level 7 Diploma in Strategic Management and Leadership 7

Strategy, Strategic Objectives and

► Be made in situations of uncertainty

► Affect operational decisions

► Require an integrated approach (both inside and outside an organisation)

► Involve considerable change

Level 7 Diploma in Strategic Management and Leadership 8

Strategy, Strategic Objectives and

The hierarchy of objectives are:

► Business / Strategic Objectives

Level 7 Diploma in Strategic Management and Leadership 9

Strategy, Strategic Objectives and

Level 7 Diploma in Strategic Management and Leadership 10

Strategy, Strategic Objectives and

Level 7 Diploma in Strategic Management and Leadership 11

The Team Performance and Strategic

1. First, it aims to improve performance.

2. Second, it endeavours to develop employees.

3. Third, it seeks to satisfy the expectations of the various organisational stakeholders.

4. Fourth, it is communication and involvement to agree goals and objectives jointly.

Level 7 Diploma in Strategic Management and Leadership 12

The Team Performance and Strategic

Level 7 Diploma in Strategic Management and Leadership 13

The Team Performance and Strategic

Level 7 Diploma in Strategic Management and Leadership 14

The Team Performance and Strategic

Outcome of the congruence analysis

Level 7 Diploma in Strategic Management and Leadership 15

Understanding Performance Targets

Possible Targets for next year:

Level 7 Diploma in Strategic Management and Leadership 16

Tools and Techniques for setting Performance

Level 7 Diploma in Strategic Management and Leadership 17

Tools and Techniques for setting Performance

1. Quality: doing things right

2. Speed: doing things fast

3. Dependability: doing things on time

4. Flexibility: being able to change what you do