example sm0377 assignment ac

Name

SM0377 Understanding Strategy

BA (Hons) Leadership and Management

January 2012

Word Count (Part 1): 3045

Word Count (Part 2): 1006

Contents

Contents

Part 1 ....................................................................................................................................2

1.0 Introduction .................................................................................................................................. 2

1.1 Defining Strategy .................................................................................................................... 2

2.0 External Environment .................................................................................................................. 2

2.1 Macro and Micro Environment ............................................................................................... 2

2.2 PESTEL Analysis ................................................................................................................... 2

2.3 Five Forces Analysis .............................................................................................................. 2

2.4 Summary of the External Analysis ......................................................................................... 2

3.0 Internal Analysis .......................................................................................................................... 2

3.1 SWOT Analysis ...................................................................................................................... 2

3.2 Ansoff’s Matrix ........................................................................................................................ 2

3.3 Summary of the Internal Analysis .......................................................................................... 2

4.0 The Author’s Role in Contributing to Strategy ............................................................................. 2

4.1 Role and Mission .................................................................................................................... 2

4.2 Strategic Decision Making ...................................................................................................... 2

4.3 Contribution to Strategy ......................................................................................................... 2

Part 2 ....................................................................................................................................2

Reflective Statement & Learning Log ................................................................................................ 2

Reference List ........................................................................................................................................ 2

Bibliography ............................................................................................................................................ 2

Appendices ............................................................................................................................................. 2

Appendix 1.1 - Organisation Background .................................................................................... 3

Appendix 2.1 - PESTEL Analysis ................................................................................................. 3

Appendix 2.2 - Five Force Analysis .............................................................................................. 3

Appendix 3.1 - SWOT Analysis .................................................................................................... 3

Appendix 3.2 - Competitor Comparison Chart ............................................................................. 3

Appendix 4.1 - Organisational Structure ...................................................................................... 3

Part 1

1.0 Introduction

The context of this report is to provide the reader with a strategic analysis and appraisal of the

author’s organisation. XXX is a private-sector training provider whose core business is to deliver

work-placed learning to adults in the North West of England (see appendix 1.1 for organisation

background). Relevant strategic frameworks will be applied to both the organisation’s external

and internal environment in order for a critical strategic evaluation to be sought.

1.1 Defining Strategy

Within the corporate environment there are many theoretical views and approaches to defining

strategy. The author has reviewed literature which defines strategy and which can be applied to

private-sector organisations, such as XXX.

Johnson, Scholes & Whittington (2008, p.3) provides focus on strategy being about the long

term direction of an organisation and place an emphasis on the importance of satisfying

stakeholder expectations:

“The direction and scope of an organisation over the long term, which achieves

advantage in a changing environment though its configuration of resources and

competencies with the aim of fulfilling stakeholder expectations”.

In a more recent study, Thompson & Martin (2010) argue that strategy can be used to fulfil both

short term and long term goals of an organisation. Thompson & Martin (2010) also argue that,

instead of the primary focus being on fulfilling stakeholder expectations, that strategy should be

used as an approach to achieve organisational goals or objectives. This supports earlier

research (Lynch, 2006. p.5) whereby strategy is defined as being the identification of the

organisation’s purpose and the plans and actions to achieve that purpose.

However, in providing a more competitive approach to strategy, Porter (1996, p.64) argues that

corporate strategy is about being different and intentionally choosing a different set of activities

to that of competitors:

“The essence of strategy is in the activities – choosing to perform activities

differently or to perform different activities than rivals”.

It is argued that if strategy is not applied in such a way it is merely nothing more than a

marketing slogan that will not withstand competition (Porter, 1996).

Although strategists may fail to adopt a universal approach to defining strategy, strategy is

arguably an essential tool required by organisations in the private-sector. In a recent study on

private-sector organisations, Quinn, Patton & Patrizi (2010) describe how strategy is an

important focus of management and organisational development, as it gives the organisation

the opportunity to analyse, adapt and implement change in order to achieve its goals. Strategy

is also described as being essential to organisations nowadays due to the increasingly global,

postindustrial, information based and competitive environment, compared with that of only a few

decades ago (Fleisher, & Benoussan, 2003).

2.0 External Environment

2.1 Macro and Micro Environment

This section of the report will focus on the external environmental factors that surround the

author’s organisation. Through the application of strategic framework tools an analysis will be

carried out.

Indeed, the external environment can be defined as:

“Anything that influences or impacts on the organisation, its markets, its resources

or its stakeholders” (Campbell, Edgar, & Stonehouse, 2011, p.127).

Campbell, Edgar, & Stonehouse (2011) define how the external environment is commonly split

into two types:

External general environment (the macro-environment).

Industry or competitive environment (the micro-environment).

Research (Capon, 2008) has shown that a careful and accurate analysis of both external

environments can benefit an organisation and enable them to implement an effective strategy.

Capon (2008) has outlined the key benefits attributed to the analysis of the external

environment:

Managers within an organisation are able to achieve a greater understanding and

appreciation of the external environment leading to improvement in long-term and

strategic planning.

The principle external environmental influences which generate change are highlighted.

Anticipation of threats and opportunities occurs within a time scale of long duration to

allow responses to be considered.

2.2 PESTEL Analysis

A common tool used to analyse the broad macro-environment of an organisation is the PESTEL

framework. PESTEL is a simple acronym which stands for Political, Economical, Social,

Technological, Environmental and Legal. According to Johnson, Scholes & Whittington (2008),

applying this framework provides a wide environmental overview by identifying a

comprehensive list of influences on the possible success or failure of particular strategies. In a

study based on the international business environment, Brooks, Weatherston, & Wilkinson

(2011) found that, by applying the PESTEL framework, analysts can assemble a logical and

comprehensive picture of any organisational environment.

However, Faulkner & Campbell (2003) argue that the PESTEL analysis can often produce vast

amounts of information which can make it impossible for an organisation to use effectively by

those making the strategic decisions. Houlden (1980), as cited by Faulkner & Campbell (2003),

states that this problem is a form of bounded rationality and describes how the sheer scale of

information available nowadays means that models, such as PESTEL, which are designed to

simplify the complex environment, can mean that useful information can be lost.

Nevertheless, in support of Johnson, Scholes & Whittington (2008) and Brooks, Weatherston, &

Wilkinson (2011), Pettinger (2004) argues that even though the analysis may outline such a

wide analysis, it will highlight to the organisation any external concerns or issues which need

urgent attention and those which the organisation has no control.

For the purpose of this report, the author has carried out a PESTEL analysis of their own

organisation (appendix 2.1). Although the analysis has produced a wide range of information,

based on the research by Pettinger (2004), the author has identified key factors which have

highlighted any external concerns or issues which need urgent attention and those which the

organisation has no control. Table 2.1 outlines these key factors.

Table 2.1 PESTEL Analysis - Key Factors

Key Factor Influence on Strategy

The Government 95% of XXX’s income is provided through the Skills Funding Agency (SFA), who

is an agency for the UK government. Ultimately, this reliance on government

resources means political factors are significant to the organisation’s strategy.

XXX have no control over the changes the Government implement but are likely

to be heavily affected by them. These could have both a positive or negative

affect of the organisation but will almost certainly need to be incorporated into its

strategy. For example:

• The governments plans to increase funding for 75,000 additional

Apprenticeships is a significant factor considering 90% of XXX’s delivery is

through Apprenticeships. XXX could be able to engage with more learners

and attract more funding.

• However, a potential threat to the organisation is that the overall budget for

the Department for Business Innovation & Skills is to be cut by £3 billion by

2014/15. This could see other training providers in the region focus their

business strategy on the delivery of apprenticeships, which ultimately would

increase competition for funding.

• Finally, the Government’s plans to reform the upper limit on tuition fees could

see a possible decline in students entering into full time higher education.

Therefore, there could be a possible increase in demand for work based

learning in the region.


Unemployment

Rates

As XXX’s primary service is to deliver workplace learning, economic factors in

the region surrounding unemployment will have a significant impact on the

organisation’s strategy. Less people in employment will mean less learners to

engage in workplace learning.

Given the current economic climate, the unemployed market could potentially be

a large market for XXX to enter. There is the opportunity to up-skill these

individuals and, through training delivered by the organisation, support them into

employment.

For learners who the organisation support into the labour market, they then have

the opportunity to deliver Apprenticeship training.

As a result of a Government initiative to target unemployment, the SFA have

recently provided flexibilities to their funding. This will allow XXX to access

funding to provide training to the unemployed. XXX are currently implementing

strategic changes to be able to deliver such training. However, this will need

urgent attention as the organisation will be reviewed by the SFA in 3 months time

at the end of their next funding quarter. Unsuccessful implementation of these

changes would likely see these flexibilities withdrawn from the organisation.

Ofsted Ofsted play a significant role in shaping XXX’s strategy through a legal factor, as

they inspect and regulate those who provide education and skills for learners of

all ages.

The core business of XXX is to provide a good and consistently high quality

learning experience for all of its learners. Ofsted will monitor the level of service

quality that XXX provide against their standards. XXX therefore need to

implement strategies which will allow them to deliver their training to promote

quality and satisfy Ofsted standards.

A ‘outstanding’ Ofsted grade will not only make the provider more attractive to its

customers, but it will also make them more attractive to funders, such as the

SFA, and allow them to gain a competitive advantage in the industry.

2.3 Five Forces Analysis

Along with an analysis of the macro-environment, it is important for organisations to analyse

competition within their industry or sector, namely; their micro-environment (Johnson, Scholes,

& Whittington, 2008).

The Five Forces analysis, originally identified by Michael Porter, is one of the most powerful

conceptual models used to identify the forces that affect an industry (Haberberg, & Rieple,

2008). The analysis is performed from the perspective of industry incumbents and suggests that

the stronger the organisation’s position concerning competitive pressure, the greater the

organisation’s profit potential (Grimm, Lee & Smith, 2006). According to Grimm, Lee & Smith

(2006), this framework helps an organisation achieve a competitive advantage by recognising

industry structure, positioning themselves in relation to that structure as well as shaping

industry structure in a beneficial manner.

Contradicting this research, Pearce & Robinson (2009) have found that managers are

frequently frustrated in their attempts to anticipate the external environments changing

influences using frameworks such as the Five Force analysis. The environment is full of

uncertainties and can often leave less powerful or smaller firms unable to maximise their long-

term planning. However, in the same study Pearce & Robinson (2009) did agree that even by

just assessing the potential impact of the micro-environment, managers can put themselves in

an advantageous position by allowing them to narrow the range of options available and

eliminate those which are inconsistent with the forecast opportunities.

For the purpose of this report, the author has applied this framework to their own organisation

(appendix 2.2). Using this analysis of their own organisation, the author has identified key

factors, within the micro-environment, which can affect the private training industry’s

profitability. Table 2.2 outlines these factors.

Table 2.2 Five Forces Analysis - Key Factors


Government

(bargaining power

of suppliers)

Porter (2008) describes how the Government are best understood as a sixth

force as their involvement is neither inherently good nor bad for industry

profitability. However, in this analysis, the Government can arguably be

described as a direct force as they are the main supplier of funding in the

private sector training industry. They directly control the industry through

funders and regulators, such as the SFA and Ofsted.

This leaves training providers with very little bargaining power over its

suppliers in terms of any changes they wish to make. However, the best way

for a training provider to increase its bargaining power and attract funding is to

satisfy its funders and regulators. For example:

• By satisfying the funding requirements and meeting contract value profiles

set by the SFA will mean the organisation is in a greater position to retain

funding, secure further funding and gain a competitive advantage in the

industry.

• By satisfying the standards of Ofsted, an independent regulator who

reports directly to the Government, the organisation will be more attractive

to its customers. A provider who is attractive to its target audience is also

more likely to meet its SFA profiles and in return gain and secure funding.

Quality of service

(bargaining power

of buyers and

competitive rivalry)

Due to the industry being so heavily regulated, services delivered by providers

often become standardised and undifferentiated. This means that customers

can play providers off against each other, thus creating strong competition

between rivals in the industry.

Although providers may try to differentiate themselves by offering flexibilities;

with shorter lengths of stay, additional learning programmes and advances in

technology, the demand for providers to deliver quality services should be

focal in its business.

Besides providing flexibilities to the customers, delivering a quality service will

allow the provider to be compliant and consistent. This will satisfy customers,

funders, regulators and inspectorate. Indeed, by being able to provide the

highest quality provision will give a provider the opportunity to be successful in

the industry.

2.4 Summary of the External Analysis

Through applying both the PESTEL and the Five Forces frameworks, the key external strategic

factors affecting private-sector training providers have been identified.

The Government are clearly a major factor in shaping the organisation’s strategy as they are

the main funders in the industry. Although providers have no bargaining power with the

changes the Government wish to make, they can increase their bargaining power to win larger

contracts by satisfying Government agencies, such as the SFA, through achieving contract

value profiles and delivering a quality service.

The services XXX offer are deemed to be of quality if the meet the requirements set out by the

industry inspectorate, Ofsted. By meeting these requirements the organisation are more likely

to attract more customers and therefore achieve its SFA contract value profiles.

Along with these factors the current economic climate, with its high levels of unemployment, is a

critical factor due to the nature of the learning which is delivered. However, the government are

providing genuine opportunities for providers to tap into this market and provide learning to the

unemployed.

3.0 Internal Analysis

3.1 SWOT Analysis

Besides an external analysis, an organisation should also undertake an internal analysis to

provide an effective platform to develop strategic options (Jeffs, 2008).

A commonly used tool for internal analysis is SWOT. SWOT analyses an organisation’s

strengths, weaknesses, opportunities and threats, and summarises the key issues from the

external environment and the strategic capability of an organisation that are most likely to

impact on its strategic development (Johnson, Scholes & Whittington, 2008). Johnson, Scholes

& Whittington (2008) describe how this can be a useful tool to generate strategic options as well

as assessing future courses of action.

However, in an earlier study, Barney (1995), as cited by Mazzucato (2002), describes how

many organisations focus too heavily on their opportunities and threats. To obtain a sustainable

competitive advantage, Barney (1995) argues that organisations must give enough attention to

their strengths and weaknesses, including their internal resources and capabilities.

In accordance with this research (Barney, 1995), the author has carefully analysed all internal

factors using SWOT analysis (appendix 3.1). Comparing this with the external strategic factors

identified the previous section, the author has identified the key factors which the organisation

are currently addressing when developing their strategy to meet their strategic objectives,

outlined in appendix 1.1. Table 3.1 outlines these key factors.

Table 3.1 SWOT Analysis - Key Factors


Achieving

contract value

profile

Each financial year providers, who have been awarded a contract by the SFA,

are given contract value profile which they must achieve. Providers who fail to

achieve their contract value profile will not only lose out on funding available to

them, but risk having future contract values reduced as a penalty.

In the financial period of August 2010 - July 2011, XXX were unable to achieve

their contract’s value profile. Not only is this a weakness to the organisation, but

it is arguably a threat due to the potential of the loss of future funding. The

organisation claim that the key factors affecting this were the high levels of

unemployment in the region, change in Government, and the changes in

regulations to Apprenticeship frameworks.

The organisation have also just released figures which show that the

organisation were unable to achieve their value profile for the first quarter of the

2011/12 financial funding period. However, the organisation have been

presented with the following key opportunity to overcome this weakness and

achieve their financial targets:

• SFA funding flexibilities - following the closure of the first financial quarter,

XXX have now been awarded flexibilities to their funding contract. The

organisation are now in a position to deliver training to unemployed

individuals who seek to gain employment. This not only means that the

organisation have the opportunity to tap into a new market and grow the

organisation, but they have a greater opportunity to achieve their value

profile.

Through addressing these economical and political factors, the organisation now

has the opportunity to achieve their financial target for the contract year. If

strategic changes are effectively implemented and managed correctly the

organisation have an excellent chance of achieving two of their strategic

objectives of growing the organisation and improving profitability.


Ofsted One of the organisation’s strategic aims is to be graded as ‘outstanding’ by

Ofsted. As mentioned in the previous section, an outstanding Ofsted grade will

not only make the provider more attractive to its customers, but it will also make

them more attractive to funders and allow them to gain a competitive advantage

in the industry. It will also allow the organisation to compete with large colleges in

the region.

Unfortunately, a current weakness is that XXX were only graded as being ‘good’

by Ofsted in an inspection in August 2010. Reasoning from Ofsted, and

identifying further weaknesses, were poor learner achievement rates, lack of

support for training advisors and weak management of KPIs in some

departments.

As a result of this inspection, XXX created a ‘Quality Improvement Strategy’

which was specifically designed to take steps to address the issues raised by

Ofsted. This was implemented with an immediate effect. In October 2011, XXX

were then subject to an Ofsted Focused Monitoring Visit, which reviewed the

improvements made following the inspection. Feedback from this visit identified

that Ofsted were highly impressed by the strategic improvements.

If XXX continue to successfully promote quality throughout their organisation, in

a way they done over the past year, they have a genuine opportunity to achieve

an outstanding grade. Therefore, achieving one of their strategic goals.

3.2 Ansoff’s Matrix

One of XXX’s strategic objectives is to grow their organisation in terms of profit and their ability

to compete with large public colleges in its region. Jeffs (2008) describes how growth is

desirable for many organisations and Ansoff’s Matrix is a commonly used tool to develop

strategies. Johnson, Scholes & Whittington (2008) states that the matrix provides an

organisation with an alternative set of directions, namely:

Increased penetration of existing markets.

Market development, including building new markets possible in new customer

segments.

Product development, referring to product improvement and innovation.

Diversification, involving a significant broadening of scope for both markets and

products.

However, from a cautious viewpoint, Mazzucato (2002) argues that there can often be a limit to

the growth of an organisation. Mazzucato (2002) states that strategic plans for growth will

depend on the experience of the management leading the process and many actions,

especially diversification, are done at a high risk to the organisation. Joyce & Woods (2001)

support this cautious approach and provide further argument that any rapid growth can often

mean organisations fail to effectively manage its new capacity, meaning the quality of products

are affected.

Using its growth objective, and considering the analysis of its external environment, XXX have

put in place various strategies to help them to achieve this. However, the organisation must be

not allow quality to suffer (Joyce & Woods, 2008) as a result of any growth. The author has

used Ansoff’s Matrix in order to identify these key strategies (table 3.2).

Table 3.2 Ansoff’s Matrix

Growth Type Growth Strategies Identified

Market

Penetration

XXX are currently implementing a number of strategies in order to help them

increase their share of the current market. These include:

• Refer a Friend Scheme - this scheme asks current customers and employees

to refer a friend to enroll onto a XXX learning programme. Those who refer

new customers will be awarded a bonus between £50-£100 for each new

customer. It is hoped this recruitment drive will increase the organisation’s

customer base, as well as helping the organisation achieve its contract value

profile and become more profitable.

• Through the use of MIS, the organisation have developed reporting tools

which will allow them to identify further opportunities amongst its current

customers. For example, this report can be used to identify those who have

recently completed an Apprenticeship and would be eligible to enroll onto an

Advanced Apprenticeship. Not only will this aid the organisation in its growth

but retaining customers is cheaper than attracting new ones.

• Prince’s Trust Millionaire Makers - throughout 2011 XXX has been engaging

with the Prince’s Trust to raise money for the charity. Not only will this

address corporate social responsibility but it will allow XXX to promote their

services to young potential learners through the charity through various

networking events and advertising.

• XXX has set up a working party that will look at the creation/development of

Facebook and Twitter sites. It is hoped this will allow the organisation to

growth through the interaction of younger potential customers.


Market

Development

Although one of XXX’s objectives is to gain an ‘outstanding’ grade with Ofsted

and compete with large local colleges, at present they offer a much smaller

range of training products compared to these public bodies. However, a strategic

advantage the organisation has is that they are more flexible in its delivery and

have a good reputation for accommodating nonstandard shift patterns of its

customers and working environment.

Whilst the organisation does have this strategic advantage over public

competitors, it’s ability to equally compete with large public bodies remains a

longer term strategic growth objective. Therefore, XXX’s short-term strategy

focuses heavily on it’s private competitors. XXX currently ensure they offer a

larger and more up-to-date range of courses than it’s competitors (appendix 3.2).

In July 2011, XXX began to deliver Apprenticeships in IT Professional

Communication. Not only is this delivered to customers in workplace

environments, but the organisation also opened an internal academy to deliver

this qualification. At present, only one of XXX’s private competitors deliver this

specialist qualification (appendix 3.2).

Product

Development

As well as ensuring its range of products competes with that of it’s competitors,

the organisation also ensures quality and innovation are at the forefront of its

delivery.

As identified in the Five Forces analysis, the industry regulations often make it

hard for providers to differentiate their products, indeed creating strong rivalry

between competitors. Therefore, XXX adopt strategies which will allow them to

deliver quality and innovative services.

At the end of 2009, the organisation introduced e-portfolio software called

Learning Help. This is an innovative system which helps to enhance the learners

experience by providing them with a personalised learning journey. This also

means that learning materials can be accessed via the internet.

This use of technology has allowed XXX to reach more learners in rural areas,

thus helping to grow in these geographical areas, and aids the learners in

completing their programmes in a timely manner.

Learners who progress well through their programme are more likely to achieve.

In the past it has been poor achievement rates, as identified in the SWOT

analysis, which have prevented XXX from gaining outstanding by Ofsted

inspectorate.

XXX have heavily incorporated technological advances to allow them to improve

the quality of their service. The organisation continues to watch the market for

the latest technological advances to remain ahead of the competition.


Diversification This is an area where the organisation have recently withdrawn from. The

organisation offered a free recruitment service to organisations and learners, to

place individuals into employment and then deliver Apprenticeship training.

In July 2010, the organisation announced that it would no longer be operating

this service as it was not financially feasible. It was also a distraction from their

core business.

XXX, at present, have no strategic plans for any further type of diversification.

3.3 Summary of the Internal Analysis

The author’s internal audit of their organisation has shown that their organisation has its

strengths, weaknesses, opportunities and strength along with its potential to grow in the current

market.

In the last financial year and the first quarter of the current financial year, the organisation has

under performed in terms of its profitability. However the SWOT analysis has identified

opportunities; through flexabilities in funding, training delivered to the unemployed market and

improving quality, which provide the potential to improve profitability. Through discussing

SWOT analysis the author has identified that the organisation has strategies in place to over

come its weaknesses and threats, and to build on its strengths and opportunities. All of these

will help the organisation achieve its strategic objectives.

The growth analysis identified that the organisation has genuine strategies in place to aid its

growth in the training industry. At present XXX is ahead of its private competitors in terms of it

range of products and its size. They also continue to use the latest technology and innovation

for their training products to grow within the industry.

However, a goal of the organisation is to grow and complete with large public bodies, such as

local colleges. In addition to its growth strategies the organisation must achieve ‘outstanding’ in

their next Ofsted inspection for the organisation to stand any chance of achieving this. As

outlined in the SWOT analysis, the organisation have implemented a ‘Quality Improvement

Strategy’ which has been reviewed by Ofsted, whom were highly impressed.

Indeed, it can be argued that XXX have comprehensively assessed their external environment

and effectively identified strategic areas which need addressed to allow them to meet their

objectives. It is hoped over the remaining financial year the organisation can meet their financial

targets through the implementation of these strategies, and compete with larger organisations

in its long term future.

4.0 The Author’s Role in Contributing to Strategy

4.1 Role and Mission

As the author of this report, my role within XXX is a Team Leader within the Finance

Department. The Finance Department falls under the Quality Division (see appendix 4.1) and

can be defined as a ‘support function’ (Slack, Chambers, & Johnston, 2010) as its purpose is to

support the core functions, such as training delivery staff, to operate effectively.

In accordance with Slack, Chambers, & Johnston (2010) my department carries out a range of

administrative tasks which support the training delivery staff in the field. Along with this my

department also carries out a range of quality checks to ensure training is conducted and

documented in a way which satisfies SFA financial guidance. Indeed my department, although

not directly responsible for delivery of training, plays an important role in ensuring quality and

consistency in order to help the organisation achieve its mission.

XXX mission is:

XXX

4.2 Strategic Decision Making

Regarding strategic decision making, Campbell, Stonehouse, & Houston (2002) define how

strategy exists within a number of levels of the organisation. Both Campbell, Stonehouse, &

Houston (2002) and Johnson, Scholes & Whittington (2008) have defined three levels of

strategy (table 4.1).

Table 4.1 Levels of Strategy

Level Description

Corporate Level

Strategy

Strategy at this level is concerned with the overall scope and direction of

an organisation, including how value will be added to the different parts

of an organisation. These can include decisions relating to ownership,

objectives, products, marketing, finance, etc.

Level Description

Business Level

Strategy

Strategy at this level is concerned with how the various businesses

included in the corporate strategy should compete in their particular

markets. These can include decisions relating to core competences in

marketing, finance, sourcing and distribution.

Functional Level

Strategy

Strategy at this level is concerned with how the component parts of an

organisation effectively deliver both corporate and business level strategy

in terms of resources, processes and people.

Within my organisation both corporate and business level strategies are made by the board of

directors, as shown in appendix 4.1. Within this board, there are no non-executive members

and more than half of the board is made up of family members. According to recent research

(Solomon, 2010), it could be argued that this board does allow for enough corporate

transparency and not enough disclosure to stakeholders, as well as arguably making self-

serving decisions. Beasley (1996), as cited by Solomon, 2010, also found that organisations

without non-executives on their board increased the incidence of fraudulent financial activity.

Besides these criticisms, it could also be argued that by failing to include middle management

in decision making is detrimental to the organisation’s overall strategic management. Although

the conventional view is that strategy is the business of top management, research (Johnson,

Scholes & Whittington, 2008) has shown middle managers are often overlooked yet they can

provide benefits to strategy making. This is because middle managers generally have more

involvement in procedures. They are better at interpreting strategic intentions into action, have

a strong commitment to strategic goals and are in a position to communicate the strategy more

effectively (Johnson, Scholes & Whittington, 2008).

In support of this research (Johnson, Scholes & Whittington, 2008), I agree that strategic

decisions are not always communicated effectively to my department by the board. An example

of this surrounds the recent funding flexibilities that have been made available to my

organisation by the SFA. My department was informed of this information secondhand by a

member of the Sales Department. It took over two weeks for this information to be

communicated to the organisation through the Business Update from the board. Formisano

(2004) states that all levels of the organisations should be engaged in decision making and

poor vertical communication is one of the main reasons why strategies fail.

4.3 Contribution to Strategy

On a more positive note, my department is set Key Performance Indicators (KPIs) by the board

of directors which supports the achievement of corporate and business strategies. These have

been effectively communicated to my department. KPIs are used as a tool to evaluate and

ensure performance that is linked to strategic objectives (Sanchez, & Benoit, 2010). In a study

of private sector organisations, Lathan (2007) describes how KPIs must fit the company

strategy and goals in order for them to provide a consistent approach to operations.

I would agree with this research (Lathan, 2007) and argue that the objectives set by the board

are relevant to the companies strategy and provide my department with a clear direction of

purpose.

My role, as a team leader, is to ensure that my department consistently achieves its KPIs. One

of our main KPIs is to ensure the training delivery staff provide consistent and compliant

documentation which underpins the training they deliver. As mentioned throughout this report

quality is a key driver for XXX’s success. Using the definition by Schroeder (2003) and ensuring

documentation is compliant with SFA funding guidance will ensure my organisation is adopting

a quality approach that satisfies its funders.

I ensure my department is able to do this by implementing training and providing on going

support and guidance to individuals. I have set up a Training Matrix which identifies an

individuals competence in each area relating to KPIs to ensure every member of the team can

do their job effectively. I also ensure that all individuals fully understand the guidance set out by

the SFA so that quality can be achieved.

In line with research (Jay, 2003 and Sinickas, 2006) I also hold daily team briefings and regular

team meetings within the department. This is an effective way to communicate, build motivation

and gives me the opportunity to plan daily task to ensure that workloads are prioritised so that

other KPIs can be achieved.

Indeed, as a department my team work effectively and consistently achieves its KPIs. However,

I feel communication from the board, regarding other important strategic decisions, should be

improved. I also feel it may be beneficial for middle management to have some involvement in

decision making, in support of the research by Johnson, Scholes & Whittington (2008).

Part 2

Reflective Statement & Learning Log

Research in the field of leadership and management has placed an emphasis on the

importance of reflective learning. For the best results, it is argued that individuals should reflect

on their learning and newly developed skills, as well as identifying how this can be applied to

their daily roles in their organisations and how this can develop their future career path (Watson

& Reissner, 2010). It is within this context that I aim to reflect on the knowledge gained and

developed throughout module SM0377: Understanding Strategy.

Knowledge developed as a result of this module

I began this module be attending weekly lectures and undertaking recommended further

reading, of which I needed to keep a Learning Log. I feel this Learning Log was a particularly

useful tool in helping me develop throughout module.

At the beginning of the module I started to keep a log of the lectures that I had attended. This

encouraged me to revisit and conceptualise what I had learned. This further embedded my

strategic knowledge and also initiated me to think strategically whilst understanding how the

learning could be applied to actual activities and issues in my workplace.

In addition, the Learning Log encouraged me to undertake the recommended further reading

and e-learning activities, as outlined in the Teaching and Learning Plan. Admittedly, this is

something I would otherwise not have undertaken so rigorously. The further reading and

activities reinforced the learning that I had acquired in the lectures. This again helped me to

understand how strategy could be applied within my organisation and in my assignment, as the

weeks progressed.

Through the learning acquired in the lectures, further reading and the activities I began to enjoy

my learning and applying this to my organisation. As a result, I signed up to Business Updates

from the Skills Funding Agency (SFA); a key stakeholder to my organisation. This allowed me

gain to knowledge of strategic factors which could affect my organisation, and indeed my

current role.

As I progressed through the weeks, I also began to analyse my organisation’s macro and micro

environments. Through this I was able to understand how stakeholders such as the SFA, the

Government and Ofsted strongly shape and effect my organisation’s strategy. This also further

highlighted my organisation’s need for quality and the need to be reflective to changes in their

macro-environment; particularly political, legal and economical factors.

How learning has contributed my performance within my organisation

In addition to gaining a better understanding of my organisation’s position in the private sector

training market, I also began to gain an understanding of how my job role links to my

organisation’s strategy. Namely, through helping to promote quality and achieving Key

Performance Indicators (KPIs).

Although Corporate and Business Level Strategy within my organisation are made by the board

of directors, I have realised that the role I play in Functional Level Strategy. I have been able to

identify how my department contributes to the achievement of the organisation’s strategic

objectives. This will indeed have a beneficial affect on my organisation. Through better

understanding of this, I felt more motivated in my job role and adopted a more positive

approach, possibly as I felt my job role had more importance than I had originally thought. I

began to focus on the quality within the department, as well as looking at improvements and

efficiencies that could be made to ensure KPIs are consistently achieved (previously I had not

realised that KPIs were directly linked to the strategic goals of the organisation).

I found myself taking more of an interest in activities such as reading weekly business updates

and identifying how any changes would affect the strategic goals of my organisation, as well as

my department. Following on from this, I was able to pass my knowledge and understanding

onto my colleagues. I have been able to explain and help to address any queries they had

through a more positive approach.

Reflection on my learning

As previously mentioned, I believe the Learning Log had a positive effect on my learning. By

completing this I was encouraged to participate in further activities outside of lectures, as well

as reflecting on learning I had gained in lectures. Indeed, I was also encouraged to apply my

learning to the workplace and understand how this could be applied in my assignment.

In a previous module I completed a Learning Style questionnaire, based on Honey & Mumford’s

Learning Cycles, which identified that I had a strong preference to the learning style of a

‘pragmatist’. Table 1.0 provides a description of this learning style and the preferred learning

activities.

Table 1.0 Learning Style of a Pragmatist

Pragmatist Activities

Description • Positively search out new ideas or techniques which might apply in

their situation.

• Take the first opportunity to experiment with applications.

• Respond to problems and opportunities as a ‘challenge’.

• Are keen to use ideas from management courses.

• Like to get on with things with a clear purpose.

Preferred Learning

Activities

• Where there is a link between the subject matter and a problem or

opportunity on the job.

• Shown techniques for doing things with obvious advantages.

• Where there is a chance to try out and practice techniques with

coaching/feedback from a credible expert.

• Exposure to a model that can be emulated.

• Techniques given are applicable to the current job role.

• Immediate opportunities are available to implement what has been

learned.

• There is a high face validity in the learning activity.

• Practical issues can be concentrated on.

(Information adapted from: Mumford, 1997 and Honey & Mumford, 1986)

The preferred learning activities suggest that a pragmatist is all about things working in practice

and being relative. I believe the Learning Log encouraged me to learn in a way which suited my

learning style, as it made the learning relative and practical to my organisation and current

position. Without this I feel that I may have struggled to understand some of the more complex

theories of Strategy.

Areas for further development

In producing this assignment there were certain areas of Strategy which I focused on more than

others, these include; PESTEL, Five Forces Framework, SWOT and Ansoff’s Matrix.

There are other frameworks which I would have liked to have applied to my organisation, such

as the Value Chain analysis and Porter’s Generic Strategies. I feel that Porter’s Generic

Strategies would be a particularly useful tool to apply to my organisation, as one if its strategic

objectives is to grow the organisation. This would follow on from the growth analysis outlined in

this report, and would help to shape strategy in terms of increased competition through growth.

I would also like to further develop my knowledge in Corporate Social Responsibility. This year

my organisation has taken part in the Millionaire Makers Challenge which raised money for the

Prince’s Trust. At the AGM the organisation announced that they would be choosing two new

charities to raise funds for next year. It would be interesting to assess and understand their

reasoning behind this, as this is something the organisation has previously not been involved in.

Indeed, in leaving this module, I feel as though I am now in a position to apply the skills and

competences that I have gained at both my current organisation and indeed, to my future

managerial career.

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Appendices

Appendix 1.1 - Organisation Background

XXX

Appendix 2.1 - PESTEL Analysis

Factor Influence

Political • Publication of the National Skills Strategy, whereby the Government have set

out measures to improve skills, training and apprenticeship. These include

providing funding for an additional 75,000 Adult Apprenticeships and investing

in skill sectors on which future growth and jobs depend.

• Department for Business Innovation & Skills - a department set up by the

government to support sustained growth and higher skills across the

economy. The department's budget for 2011/12 is £17.6 billion reducing to

£14.6 billion by 2014/15 under the government’s 2010 spending review.

• Government reforms to higher education were the upper limit on tuition fees

will be raised to £9,000 in 2012.

Economical • The rate of employment is lower than the national average.

• The North West has the highest proportion of workless households of any UK

region.

• The dominant sectors of the North West economy are manufacturing,

business services and the public sector.

• The North West has a much lower number of businesses per 10,000

population than the national average.

• There is a smaller proportion of highly qualified people in the North West than

nationally, but there are also fewer skills shortages.

Factor Influence

Social • Broadly, the population is ageing, and there is a relatively low proportion of

people from black and minority ethnic groups.

• However, the ethnic diversity of the North West has changed significantly

since the 2001 Census. In particular, the region’s non-white population has

grown dramatically; there have been increases in the Black African, Black

Caribbean, Chinese and Mixed heritage.

• With employment and ethnicity, there are notable trends. In particular, white

and mixed raced people are the most likely to be employed, whilst

Pakistani/Bangladeshi people have the lowest employment rates in the

region.

• Women in the North West earn less than their male counterparts, are

underrepresented at professional and managerial levels, and are more likely

to be concentrated at the lower skilled end of the market.

• Disabled people have lower overall levels of qualifications than non disabled

counterparts.

Technological • The Information Authority’s plans to strategically reform its electronic data

collection methods.

• The Information Authority’s change to the Learning Aims Database (LAD)

which is replaced by the Learning Aim Reference Application (LARA). This

imposes changes such as a new look, new location, new platform and new

technology.

• SASE Implementation - changes made by the National Apprenticeship

Service (NAS) where ‘Blueprint compliant’ apprenticeship framework are

being replaced with the new ‘SASE (Specification for Apprenticeship

Standards in England) compliant’ apprenticeship frameworks.

Environmental • Sustainability Agenda.

• Pressure to reduce Carbon Footprint.

• The need for recycling.

Factor Influence

Legal • Ofsted Inspections

• Apprenticeships, Skills, Children and Learning Act (2009) - this act outlines

the changes to be implemented regarding the new SASE compliant

frameworks.

• Government review of the Skills Funding Agency (SFA) and its structure - the

SFA are a partner organisation of the Department for Business Innovation &

Skills and fund and regulate adult further education and skills training in

England.

Sources of information: Conservatives (2011), Department for Business Innovation & Skills

(2011), UK National Statistics (2011).

Appendix 2.2 - Five Force Analysis

Force Threat

Threat of entry • Existing providers may have built up an established reputation, meaning new

entrants may need to differentiate. Learners maybe unwilling to engage with a

newcomer without this established reputation.

• Switching costs from one provider to another is nil, however if the other

provider has claimed SFA funding this would not be able to be claimed again.

• The capital investment requirement to enter the market is relatively low,

however a new entrant would have to secure SFA funding, acquire staff with

the correct skills and experience and register with the relevant awarding body.

• An existing provider may have a quality advantage over new entrants - such a

Ofsted grading, which a new entrant would not have.

• Government and Ofsted regulations may make it difficult for a new entrant.

Bargaining

power of

suppliers

• Funded learning in England stems from Government. This leaves providers

with little bargaining power over suppliers, as there is no real alternative.

• As the government are serving many industries, they are likely to choose to

fund the industry which needs protecting.

• There are low switching cost if the Government chose to withdraw funding

from one provider and award to another.

• Commercially funded learning (that funding provided by a learner’s employer)

is available. However, this customer group has a negotiating leverage as they

are a relatively low number of buyers and are often harder to source.

Bargaining

power of buyers

• Customer are often faced with standardised and undifferentiated products,

which can lead to learners playing one provider off against the other.

• Customers demand quality and flexibility.

• Customers face minimal to nil switching costs in changing providers.

• Large volumes of customers have a greater negotiating leverage.

Threat of

substitutes

• Local colleges can deliver the same training in a non-work-based

environment.

• Learners may choose not to opt for work-based training and in stead opt for

Higher Education.

• Learners may choose not to opt for any sort of training at all.

Force Threat

Competitive

rivalry

• Strong rivalry between competitors to secure Government funding.

• Rivalry between competitors to attract learners is also strong as products are

often identical.

Appendix 3.1 - SWOT Analysis

SWOT Factors Identified

Strengths • 15 years of successfully winning and delivering Government contracts.

• A well established reputation in the region.

• Successful management of contracts and staff performance through an

effective Management Information System (MIS).

• Innovative learning methods - such as trainers ability to differentiate and

personalise training programmes to adapt to their own learners.

• Winners of several awards as well as being shortlisted for a number of other

regional awards.

• An experienced workforce who are developed through training to support

their growth.

• Good use of ICT for communications and delivery of training following the

implementation of Learning Help (E-Portfolio software) in November 2009.

Weaknesses • Ofsted grade is ‘good’, rather than the desired ‘outstanding’ grade.

• Unable to meet all profiles set out by the SFA in 2010/12 contract year.

• Learner achievement rates in some delivery ares are less than 85%.

• Training advisors require more support from Programme Managers and

Internal Verifiers out in the field.

• Weak management of KPIs in some departments.

• Insufficient Customer Service contact with learners and employers.

SWOT Factors Identified

Opportunities • The growing unemployed market - this is a good opportunity to deliver

training to unemployed and Not in Education, Employed of Training (NEET)

individuals.

• Recent flexibilities applied to SFA funding to allow XXX to deliver funded

training to assist individuals into employment.

• Use feedback from Ofsted to implement plans for change to enable the

organisation to be awarded an ‘outstanding’ grade.

• Government reforms to higher education were the upper limit on tuition fees

will be raised in 2012 - this could see an increase in demand for work-based

learning.

• Employment of a successful ‘Bid Writer’ to identify other bid opportunities to

enhance and support the organisation’s core business (including

Commercial, Government, Local Authority and ESF bids).

Threats • Change in Government has caused delay on some new contracts and have

been put on hold until after the spending review.

• Change in Government has seen capping on Train 2 Gain contracts.

• Winning Government contract has become more competitive.

• XXX may lose contract bids where funders choose to award contracts to

providers with ‘outstanding’ Ofsted grades.

• XXX may lose out on funding due to failing to achieve profiles set out by the

SFA.

• Rate of unemployment in the North West is above the national average - this

means less people are able to engage in work-based learning.

• Use of new E-Portfolio software could make both staff and learners feel

threatened by technology.

Source of information: Strategic Business Plan (2010) & Marketing Strategy (2011).

Appendix 4.1 - Organisational Structure

example sm0377 assignment ac

Documents

external analysis

internal analysis

pestel analysis

forces analysis

swot analysis

word count

contents contents

external environment