4 internal context & past performance analysis
DESCRIPTION
TRANSCRIPT
INTERNAL CONTEXT
LOOKS AT THE INTERNAL FACTORS THAT INFLUENCE A
FIRMS SUCCESS
INTERNAL CONTEXT
MissionObjectives
Results
Review
Strategy
StakeholdersManagement team – Culture/Style
Resources/Audit
THE MISSION – 5 key elements
1. WHAT IS THE NATURE OF THE FIRM i.e. what business are we in or should we be in 2. FROM CUSTOMER PERSPECTIVE3. MUST REFLECT FIRMS VALUES & BELIEFS 4. INCLUDE SUSTAINABLE COMPETITIVE ADVANTAGE PRINCIPLE e.g. we aim to be the leader in our field5. MAIN REASONS FOR CHOICE OF APPROACH e.g. Volvo stress the team approach – “We must treat each other with trust and respect”
OBJECTIVES
COME FROM THE MISSION THEY ARE SPECIFIC WHAT IS TO BE DONE WHEN IT IS TO BE DONE BY QUANTIFIABLE THEY FOCUS MANAGEMENT ALLOW OUTCOMES TO BE MEASURED
OBJECTIVES
1. FINANCIAL e.g. earnings per share, ROR, margins
2. STRATEGIC (time scale/firm size dependant)
e.g. diversification, merger, new markets, internationalisation, larger market share, higher product quality, lower unit cost, wider product line
OBJECTIVES
POTENTIAL CONFLICT BETWEEN OBJECTIVES
SURVIVE v GROW DISTRIBUTE v INVEST LONG TERM v SHORT TERM FINANCIAL v ETHICAL STAKEHOLDER v STAKEHOLDER
THE MANAGEMENT TEAM
CRUCIAL IN ENSURING BUSINESS SUCCESS
FACILITATING CHANGE FOCUSSING THE BUSINESS ON
OBJECTIVES KEEPING THE BUSINESS COMPETITIVE MOTIVATING RESOURCES MUST BE COHESIVE & CREATE SYNERGY
MANAGEMENT TEAM
SIZE & MEMBERSHIP DEPENDS ON:1. TYPE OF BUSINESS2. SIZE OF BUSINESS3. PRODUCTS/SERVICES OFFERED4. LIFE CYCLE STAGE OF BUSINESS5. ORGANISATIONAL STRUCTURE OF THE
BUSINESS
THE RELEVANCE OF CULTURE & STYLE
KEY IMPACT ON MANAGEMENT TEAM MT MAJOR IMPACT ON CULTURE & STYLE
THE RELEVANCE OF CULTURE & STYLE
KEY IMPACT ON MANAGEMENT TEAM MT MAJOR IMPACT ON CULTURE & STYLE
CULTURE• Set of beliefs, values and learned ways of managing• Comes from firms past, present, people, technology, physical resources, objectives and values• Power, Role, Task, Personal
THE RELEVANCE OF CULTURE & STYLE
KEY IMPACT ON MANAGEMENT TEAM MT MAJOR IMPACT ON CULTURE & STYLE
CULTURE STYLE
• Set of beliefs, values and learned ways of managing• Comes from firms past, present, people, technology, physical resources, objectives and values• Power, Role, Task, Personal
• Process of influencing people• So they will strive to achieve firms mission – enthusiastically, willingly•Trait, Style, Contingency
THE RELEVANCE OF STRUCTURE – its purpose
TO ALLOCATE WORK & ADMINISTRATION TO SPECIFIC FUNCTIONS
TO DISTRIBUTE POWER TO CONTROL THE
OPERATION OF THE BUSINESS
STRUCTURE UNITARY- traditional, functional MULTI DIVISIONAL – SBU’s FLAT MATRIX HOLDING COMPANY e.g. Virgin INTEGRATED INTERNATIONAL BUSINESS e.g. McDonald's TRANSNATIONAL ASSOCIATION e.g. Ford
*THE KEY COMPONENT ? - People
PEOPLE - WHY KEY? CAN BE MOTIVATED - financial and non
financial SKILL IS A SCARCE RESOURCE EXPENSIVE TO REPLACE – own wood/
buy trees MAJOR OVERHEAD GENERATE ADDED VALUE CAN MAKE/BREAK THE ORG CAN BE USED TO ENGINEER CHANGE
STRUCTURE & STRATEGY WHAT IS STRATEGY - HOW ORG’s AIMS AND
OBJECTIVES ARE TO BE ACHIEVED - S/T, M/T, L/T
WHAT COMES FIRST – STRUCTURE OR STRATEGY?
TRADITIONALLY - STRUCTURE EVOLVES & STRATEGY FOLLOWS
HOW - STRUCTURE EVOLVES AS ORG GROWS AND PROCEEDS THROUGH ITS LIFE CYCLE
STRUCTURE & STRATEGY
e.g. as org grows from sole trader to private co and plc the structure becomes larger and more bureaucratic - hence “structure evolves”
STRATEGY THEN TENDS TO FOLLOW ARGUABLY - THEY TEND TO PROCEED IN
UNISON! ? BETTER THAT STRATEGY COMES FIRST
FOLLOWED BY STRUCTURE e.g. Sony uses this practice.
STRUCTURE & STRATEGY OR ARE THEY MORE CLOSELY
INTERRELATED i.e. structure needs to be considered while strategy is being developed
IN THIS MODEL THEN THEY MAY BE CLOSELY INTERDEPENDANT
MODERN, FLEXIBLE, PRO ACTIVE & DYNAMIC ORG’s TEND TO FOLLOW THIS FORM i.e. the structure influences the strategy and vice versa. ORG’s THAT “SUCCESSFULLY FLOW”
RELEVANCE OF RESOURCE AUDIT - RESOURCES
LAND RAW MATERIALS LABOUR CAPITAL ENTREPRENEUR INFORMATION & KNOWLEDGE
THE RELEVANCE OF THE RESOURCE AUDIT
RESOURCES – the means by which the business generates value
VALUE IS THEN DISTRIBUTED TO STAKEHOLDERS:
SHAREHOLDERS – higher divi’s, appreciating share value
WORKERS – improved working conditions and higher pay
CONSUMERS – lower prices, higher quality, improved service
THE RELEVANCE OF THE RESOURCE AUDIT
OTHER STAKEHOLDERS – suppliers, local community, national community, global community
REMEMBER - RESOURCES CAN ALSO PROVIDE SUSTAINABLE COMPETITIVE ADVANTAGE (SCA) e.g. via highly skilled staff
RESOURCE AUDIT – WHY?
TO IDENTIFY THOSE RESOURCES THAT DELIVER SCA
& VALUE ADDED & THOSE THAT DON’T UNDERUTILISED RESOURCES AND
THOSE THAT ARE NOT NEEDED RESOURCE GAPS SKILLS GAPS OPPORTUNITIES FOR RATIONALISATION
& UNIT COST CUTTING
ANALYSIS OF PAST PERFORMANCE
THE MEASURES USED TO ASSESS BUSINESS
PERFORMANCE & THE NEED FOR ANALYSIS
PAST PERFORMANCE
CAN REFER TO PERFORMANCE FROM KEY STAKEHOLDER PERSPECTIVE
i.e. shareholders, financiers, consumers, workers
WIDER PERFORMANCE i.e. local community/economy,
national and international community/economy
PERFORMANCE – key stakeholders
FINANCIAL MEASURES PROFIT & SALES LIQUIDITY RATIOS GEARING PROFITABILITY INVESTOR RATIOS TRADING ACTIVITY UNIT COST VALUE ADDED SHARE VALUE
PERFORMANCE – key stakeholders
NON FINANCIAL MEASURES
PERFORMANCE – key stakeholders
NON FINANCIAL MEASURES
•MARKET SHARE•PRODUCT PORTFOLIO•QUALITY•SERVICE•PRODUCTIVITY•R & D ACTIVITY
PERFORMANCE – key stakeholders
NON FINANCIAL MEASURES
•MARKET SHARE•PRODUCT PORTFOLIO•QUALITY•CUSTOMER SERVICE•PRODUCTIVITY•R & D ACTIVITY
•EMPLOYEE BENEFITS•GROWTH•MERGERS/TAKEOVERS•BENCHMARKING•OUTSOURCING•RATIONALISATION
THE NEED FOR ANALYSIS
ASK QUESTIONS & PROVIDE ANSWERS HAVE PERFORMANCE MEASURES
CHANGED HOW MUCH WHY HAVE THEY CHANGED HOW HAS THE BUSINESS BEEN AFFECTED WHO HAS BENEFITTED WHO HAS SUFFERED USE STATISTICS, GRAPHS & DIAGRAMS TO
ASSIST ANALYSIS
WIDER PERFORMANCE POLLUTION
CONGESTION IMPACT ON
ENVIRONMENT CHOICE, PRICE &
QUALITY CONCENTRATION OF
POWER EFFICIENCY
ETHICAL BEHAVIOUR
TAX EMPLOYMENT SOCIAL
RESPONSIBILTY ECONOMIC
IMPACT