Chapter 9- Corporate planning and implementation

Strategies need to be introduced effectively within the business and this process starts with a corporate
plan.

Corporate plan- A plan containing details of a businesses central objectives and the strategies to
achieve them.

Should always point towards the mission statement (intertwined)

Corporate planning:
● Planning to develop and implement future strategies is an important function of senior managers.
● The planning process is aided by the development of a detailed corporate plan.

Components of corporate planning:

They often include-
1) Overall objectives of the organisation to be achieved within a period.
2) Strategy or strategies to be used to attempt to meet the objectives.
3) Main objectives for the key departments of the business derived from the overall objective.

Once strategies have been implemented, results should be measured and evaluated before being
compared to the original results. These can be used to determine the corporate objectives for the next
period.

Potential benefits of corporate plans:

● Senior managers have focus and purpose for what they’re attempting to achieve. Strategies are
chosen with the best chance of achieving the objective that has been set.
● Effective to communicate the sense of purpose and focus.
● Comparison between original objectives and actual outcomes. How well has the business
performance matched its aims. Control and reviewing process.
● Planning process should be considerate to managers about the strengths and weaknesses in
relation to the business environment.

Potential limitations of corporate plans:

● Some planning processes fail to consider the future unforeseen circumstances.
● Plans can be obsolete by rapid and unexpected internal or external changes.
● If a business refuses to make variations or adaptations, the inflexibility could be disastrous
● Should be adaptable/ flexible to allow them to be relevant.

Corporate planning- The process used by companies to set long-term plans to meet certain objectives,
such as business growth and higher return on capital employed.

The internal influences on a corporate plan:

● Financial resources- Can new strategies be afforded?
● Operating capacity- Is this sufficient if expansion plans are approved by directors?
● Managerial skills and experience- Major constraints on the plans success due to the
diversification chosen
● Employee numbers and skills- Workforce planning is a key factor in the success of any
corporate plan.
 ● Culture of the organisation- The values, attitudes and beliefs of the people working in and
organisation that affects the way they interact with each other and with external stakeholders.

The main external influences on a corporate plan

● Macroeconomic conditions- Expansion put on hold during recession
● Central bank and government economic policy changes
● Likely technological changes- Best laid plans may become outdated quickly
● Competitors' actions- Competitive nature of the market

Corporate culture
How people in an organisation take decisions and interact with each other and with other stakeholders.

Corporate culture- The values, attitudes and beliefs of the people working in an organisation that affect
the way they interact with each other and with external stakeholders

Different organisations have different cultures.

The cultures of an organisation give a sense of identity.

Adopting an inappropriate culture for a business or for a situation in which a business is in can lead to
poor decision-making. Managers must adopt cultural values and beliefs that are appropriate to the context
of the business.

Culture is based on:

● Values
● Attitudes
● Beliefs

These have an influence on the way employees in a business act, take decisions and relate to others in
the organisation.

The main types of corporate culture

Power culture:
A culture that concentrates power among just a few people.
Associated with autocratic leadership (power is concentrated at the centre of the organisation)
Swift decisions can be made as few people are involved

Role culture
A culture in which each member of staff has a clearly defined job title and role.
Associated with bureaucratic organisations.
People operate within the rules and show little creativity.
The structure is well defined as everyone has delegated authority

Task culture
A culture based on cooperation and teamwork
Groups formed to solve a particular problem.
Have lines of communication similar to a matrix.
Empowered to make decisions.
Team members are actively encouraged to be creative
Person culture
Individuals are given the freedom to express themselves fully and make decisions for themselves.
May be conflict between individual goals and those of the whole organisation.
Most creative type of culture.

Entrepreneurial culture
Culture encourages management and workers to take risks and come up with new ideas as well as test
out business ventures.
Success is rewarded
Failure is not necessarily criticised as it shows initiative of risk-taking.

● As with leadership, there is no right or wrong culture for a business.

● Business culture influences the style of leadership used.

● Autocratic will lead to difficulty in managing and leading change.

Adopting an inappropriate culture for a business for a situation can lead to poor decision-making .
Managers need to adopt cultural values and beliefs where they are appropriate.

Changing corporate culture

Transformations of businesses are often a result of changing the corporate culture of a business.

Existing business culture becomes an issue when it restricts growth, development, and success.
Changing the value system of a business and the attitudes of all employees is never easy. The process
may take several years for all workers and processes to be converted to a new culture. (changing the
ways people think and react to problems).

Directly challenging the way things have been done for years, involve substantial change of personnel,
job descriptions, communication methods and working practices.

The best ways to change an organisation's culture:

Corporate culture and decision making

Different business cultures make decisions and introduce changes in different ways.

Changes will be imposed on the employees.- This may create resistance to change and cooperation of
the workforce may be unlikely to be attained in the future.

Businesses that operate with task or people based cultures are more likely to encourage active
participation in deciding on and implementing major strategic changes. Consultation and participation
through two way communication could lead to employees willingly accepting change- This contributes to a
successful change process.

The other link between culture and decision making occurs when the culture is either strong or weak.

Strong culture promotes and facilitates successful strategic decision making while weak does not.
Strong culture means that there is very widespread sharing of common beliefs, practices and norms of
the business.

If business culture is people-focused and based on listening to customers and empowering workers, then
this may lead to improvement in customer service.

In businesses with weak cultures, employees may have no agreed set of beliefs and there is no pride in
ownership of work. People form their own groups based around cultures that conflict with the weakly held
business culture.

The importance of corporate culture

Impact of culture may have a significant impact on how new strategies are decided and implemented.

Reinforcing the importance of corporate culture:

● The values of a business establish the norms of employee behaviour- what is and what isn't
acceptable.

● Culture determines the way in which managers and workers treat each other.

● A distinctive organisational structure can support a businesses brand image and relationships
with customers.

● Culture determines not just how strategic decisions are made and implemented, but also the type
of strategic decisions that are taken. A business with people based culture is unlikely to make a
decision that would damage a workers health or the environment.

● Corporate culture is linked to the performance and long term success of businesses. Companies
dedicated to continuous improvement with workers' involvement have been more profitable in the
long term.

Transformational leadership
This is of most importance during periods of significant corporate change.

The leader works with the team to identify the need for change, creates a vision to inspire people to
accept change and implements change with the cooperation of the team.
The importance of transformational leadership:
Increases the chances of successful change within a business (supported by employees and benefits
their input which leads to continued business success).

Increase flexibility and adaptability of a business to cope with frequent change.

Focuses on leading change, not forcing it on employees with an autocratic style (encourages workers to
accept change and work towards making success).

Improves employee motivation and performance.

Managing and controlling strategic change

1) Understanding what strategic change means:

● Strategic change is the continuous adoption of business strategies in response to changing
internal pressures or external forces.
● Managers need to control change to ensure its positive and not negative.
● Businesses must have a vision, a strategy and an adaptable process for change management.
● Change in management needs to be able to cope with dramatic one off changes as well as more
gradual evolutionary change.
● Evolutionary or incremental change occurs quite slowly over time- anticipated or unexpected.
● Incremental change is easy to anticipate and the easiest to manage.
● Dramatic or revolutionary change if unanticipated causes many problems.
● Dramatic changes might lead to totally rethinking the operation of an organisation-Business
Process re-engineering

Change management- Planning, implementing, controlling and reviewing the movement of an

organisation from its current state to a new one.

Business Process re-engineering- Rethinking and redesigning the processes of a business to achieve
a dramatic improvement in performance.

2) Recognise the major causes of change

3) Understanding the stages of the change process

Checklist for senior managers:
● Where are we now and why is change necessary? Recognise why a business needs to
introduce change

● New vision and objectives: For change, a new vision may be needed and communicated to
those it will affect.

● Ensure resources are in place to enable change to happen: Starting change and finding there
is little finance could be disastrous.

● Give maximum warning of the change- Employees should not be surprised of this may cause
resistance.

● Involve employees in the plan for change and its implementation: Encourages acceptance to
change and proposals to improve the process

● Communicate: Throughout the stages of change is vital.

 ● Introduce initial changes that bring quick results

● Focus on training: Allows employees to feel that they are able to make real contributions to the
changed organisation.

● Sell the benefits: Employees and other stakeholders may benefit directly from changes.

● Remember the effects on individuals

● Check on how individuals are coping and supporting them: Some need more support than
others. The lack of support of employees may lead to damaging the business leading to low
quality output and poor customer service as a result of poor motivation.

4) Lead change, do not just manage it

All strategic change must be managed:
● New objectives need to be established that recognise the need for change.
● Resources of finance and labour need to be available for the change to be implemented
● Appropriate action needs to be taken to implement the planned changes.

Managing change effectively is important to successful implementation.

Leading strategic change is much more than just managing resources.

Change leadership involves having a much greater vision than just making sure the right resources are
available to deal with change:
Project champions
● Often appointed by senior management to help drive a programme of change through a business.
● Come from middle or senior management.
● Need to have enough influence within the organisation to make sure that things get done.
● Not necessarily be involved in the day-to-day running of the new scheme- smooth the path of the
project team planning the change.
● Will remove as many obstacles as possible.
● Speak in support of the changes being suggested at meetings of senior managers.
● Ensure that sufficient resources are available and that everyone understands the project's goals
and objectives.

project champion: a person appointed to support a project and drive it forward by explaining the benefits
of change and assisting and supporting the team putting change into practice.

Project groups or teams

● Problem-solving through team building and using the power of project groups is a structured way
of making a breakthrough in a difficult change situation.
● Project groups should work with the manager responsible for introducing the change.
● A team meeting of experts should discuss and decide on an appropriate action plan being
developed and agreed.
● The responsibility for carrying the plan out still lies with the original manager.
● They will be better equipped to solve the problem that was preventing change from being
effectively implemented.

project groups: groups created by an organisation to address a problem that requires input from
different specialists.

Promoting change (John Kotter)

Gaining acceptance of change by both the workforce and other stakeholders is more likely to lead to a
positive outcome than imposing change on unwilling people.

The best way to promote change in any organisation is to adopt the following eight-stage process:
Resistance to strategic change
The biggest problem any organisation faces when it attempts to introduce changes:

The importance of these resistance factors vary from business to business.

When workers are kept informed and consulted about change, and where managers offer support to
employees, resistance to change is likely to be low.

High resistance to change in the business where there are a lack of trust and poor communication.

Contingency planning and crisis management (disaster recovery planning)

● Unplanned events can have a devastating effect on businesses of any size.
● Crises( fire, floods, damage to inventory, illness of key employees, IT system failure, or accidents)
either on the business's premises or involving its vehicles could all make it difficult or impossible
to carry out normal everyday activities.
● Important customers could be lost or the business could cease operating completely.

Effective contingency planning allows a business to take steps to minimise the potential impact of a
disaster and ideally prevent it from happening in the first place. If unexpected emergencies do occur, they
require effective crisis management.
contingency plan: a plan for preparing an organisation's resources for unlikely events.

crisis management: the process of dealing with a sudden emergency event.

The key steps in contingency planning are as follows:

1) Identify the potential disasters that could affect the business
● Common to all businesses, but others will be specific to certain industries.
● For example, the oil industry must plan for oil tankers sinking, explosions at refineries and
leakages in oil and gas pipelines. Failure to do this can have serious consequences.
● One of the costliest disasters in recent years was the oil leak from the BP Deepwater Horizon oil
rig. Compensation and fines cost the company $65 billion.

2) Assess the likelihood of these occurring

● Some incidents are more likely to occur than others and the degree of impact on business
operations also varies.
● It seems obvious to plan for the most common disasters, but the most unlikely occurrences can
have the greatest total impact on a business's future.
● Managers need to balance these issues carefully when choosing which disaster events to
prepare for most thoroughly.

3) Minimise the potential impact of crises

● Effective planning can sometimes cut out a potential risk altogether.
● When this is not possible, the key is to minimise the damage a disaster can do.
● This does not just mean protecting fixed assets and people, but also the company's reputation
and public goodwill.
● This is often best done by the publicity department telling the truth and explaining the causes, if
known.
 ● Should also give full details of how to contact the business and the actions being taken to
minimise the impact on the public.
● Employee training and practice drills with mock incidents are often the most effective ways of
preparing to minimise any negative impact.

4) Plan for continued operations of the business

● Continuity planning is a key part of preparing for contingencies
● The sooner the business can begin trading again, the smaller the impact on customer
relationships.

continuity planning: preparing resources so that the business can continue operations after a major
crisis.

Benefits and limitations of contingency planning

Benefits Limitations

● Reassures employees, customers and local ● Costly and time-consuming. Trains employees and
residents that concerns for safety are a priority. has practice runs on what to do in events.

● Minimises negative impact on customers and ● Needs to constantly be updated as the number and
suppliers in the event of a major disaster range of potential disasters can change over time.

● PR response is much more likely to be speedy and
appropriate- managers must explain what the
company intends to do, by when and how.
● Employee training needs to increase if labour turnover
is high.
● Avoiding disasters is still better than planning for what
ti do if they occur.