Principle of Business Process Re-Engineering and Organizational Re-Structuring - Term Paper Example

1.0: Introduction Business Process Re-Engineering and organizational re-structuring are integral elements to any business organization in the twenty-first century as it is faced by stiff competition and various other external and internal factors as argued by Gerry Johnson and Kevan Scholes (2003)i. Fall in revenue and reduction in the profits generated by an organization are normally due to competition in the external world as well as due to various other internal factors that affect the efficiency of an organization internally as argued by Richard Lynch (2003)ii. This makes it clear that the efficiency of an organization and above all its effectiveness and value addition capability to the business are the critical elements that attribute to its ability to generate revenue apart from the obvious issues of competition and supplier/demand issues. This makes it clear that in cases of issues related to revenue and profits an organization should not only address the external re-engineering principles but also focus upon the investigation internally in order to effectively achieve sustainable competitive advantage in the target market. In the light of the above arguments, this report presents a critical analysis on the six different areas of problem identified by the reviewing consultants for James Merriot Ltd. The report contains six sections each focused on a specific issue with solution an optimum solution to the problem in order to effectively re-engineer the organization to achieve market leadership in their area of business. 2.0: Market Development and Customer Relationship Marketing The assessment by the consultants on the market in which the company under discussion is performing business reveals that not only competition is high but also the demand for a variety of services other than the trivial electroplating of specific devices. Since the company pioneers in the manufacture of building fittings and also in electroplating in specific areas of business like the automobile industry, it is necessary to effectively integrate the resources of the organization to increase the sales. The market development strategy is argued as the most effective strategy for an organization that has international presence and also able to increase its sales through targeting on new markets as argued by Gerry Johnson and Kevan Scholes (2003). The consultants’ review makes it clear that there is great potential for the company to develop its market in the Far East as well as in the existing geography. The argument by the consultants that the market in which the company is operating does not have many ‘knowledge’ rich players James Merriot Ltd makes it clear that the market development is an effective alternative for the organization to increase its profits in the market. Market development is also argued as an efficient method of increasing sustainability in an organization by many authors including I.F. Demirag and J.S. Solomon (2003)iii. This is not only for the efficiency of the organization but also enables develop the corporate governance for the company. This further makes it clear that the efficiency of an organization in the market and its revenue generation capability can be increased through the deployment of the market development strategy. According the Igor Ansoff and Edward J. McDonnell (1988)iv market development is not only argued as an effective strategic tool to increase the revenue generated by an organization but also the major source for deploying its richness in ‘knowledge’ of the market and business. This is also justified by recent researchers like Ron Alexander (2006)v. Although the context of argument was for a different scenario, the core theory in the argument is the fact that the knowledge and potential of an organization pioneering in a specific business area can deploy its ‘knowledge’ to increase its market share through market development strategy. The Customer Relationship in the organization also another critical element that should be addressed as part of the market development process. As the communication in the organization is predominantly informal with a family culture being deployed, it is necessary to establish formal communication channels with the clients in the business who are predominantly in the business-to-business channel. From the aforementioned arguments it is also clear that the market development strategy, which is actually the process of entering the new markets with the existing range of products, can also include the product innovation strategy, which is also one of the key elements in the Ansoff’s matrix or strategic implementation (Gerry Johnson and Kevan Scholes, 2003). This makes it clear that the efficiency of the market development strategy is dependant upon the level of innovation deployed by the organization in achieving this strategy hence making it clear that not only the Customer Relationship Marketing is essential for retaining the existing customers but also to increase the sustainability in the new markets the organization targets upon. A suggestion for the organization as part of the market development is to focus upon the promotion of its products on the building fittings and automobile electroplating methodologies to businesses in the Far Eastern countries like India and China. The increasing potential of the Indian labour market that is being harnessed by the IT companies and conglomerates for call centres can also be extended to the company under consideration. This is obviously not through the process of outsourcing but through employing the labour in the Far Eastern countries like India to harness the market potential in the target geographies to increase its revenue as well as gain market share in the global market. 3.0: Address competition The consultants’ review of the competition at home reveals that the company under scrutiny has the advantage of technological advancement and use of state of art systems to produce its products in the target market. Alongside, it is also clear that the pricing of the products in the markets with the competitors are more or less the same which makes it clear that the value added Far Eastern imports sold by the competitors are at the same price level of the relatively higher quality products sold by the organization. Hence the differentiation through pricing which is normally a successful strategy cannot be deployed in this case due to the difference in the quality of the products sold and the costs involved with the production. Philip Kotler and Kevin Lane Keller (2005)vi have identified that the marketing communication is an essential element that can help address the competition in the target market. This is not only because of the obvious reason that the awareness of the products will increase the probability of its purchase over another through the knowledge of its features but also because of the fact that the effective communication of a product to the target customers is the key for actually establishing presence in the market. From the review of the organization under scrutiny it is clear that the presence of the company is not distinct in the market although the company is a leading supplier of building fitting and electro plating in the automobile industry along with various other segments the metal plating business. This is obviously because of the reason that the company failed to establish an effective brand identity in the markets it is competing. Branding is argued as a critical element in the marketing communication both for the purpose of addressing the competition as well as to achieve sustainability in the target market. In a business-to-business scenario where the organization is predominant, it is clear that the establishment of a brand identity is the key for effectiveness in the target market. Frances Brassington and Stephen Pettit (2003)vii further argue that the efficiency of an organization in the business-to-business through branding is the key for its sustainability in the market. The customer focus of the organization, which will be discussed later in the report is an essential element for the success of the organization in generating revenue as well as deploying its ‘knowledge’ to enter new markets as well as develop product innovation. The company overview has revealed that the customers in the home for the company are predominantly small organizations involved in the building business and self-employed plumbers apart from the organizations in the automobile industry that use the services of the organization in the electro plating area of business. This makes it clear that the company’s existence as a brand in the market is essential for effective market communication to increase the Customer Relationship and achieve higher level of revenue generation. In case of the overseas competition where the organization faces the costs issues through competing with unequal competitors from the Far East makes it clear that the company should start its production centres in the Far East to reduce the costs as well as increase the ability to quickly address spikes in the market demand of the Far East as well as the west. Since the production of automobiles like the Ford and Toyota have been heavily outsourced to India, it is necessary for the organization to establish its presence in the Far East. With respect to the health and safety issues, the deployment of uniform health and safety policies in the Far Eastern centres the organization has an advantage over the local competitors through attracting efficient work force to increase its productivity as well as effectively address the competition. Alongside, the marketing strategy deployed by the organization in conformance with its organizational culture and the ability to increase its market spread through deploying its ‘knowledge’ in technology and markets to enter new areas of metal plating business will leverage competitive advantage for the business and generate revenue. The reduction in the costs which is the essential element to narrow the pricing margin is also the key for increasing the profits in the organization. This makes it clear that the organization should deploy its production on-site to the customers and also increase its production from the Far East to address the competition effectively. Alongside, the increasing demand for quality products in the electro-plating segment of the business provides the organization a lead over its competitors through the ‘knowledge’ and technology in the organization. This can be effectively utilised to increase its market share in the global markets whilst sustaining its position in the home markets. 4.0: Product Mix The product mix is argued as the critical element for an organization’s revenue generation capability as argued by Philip Kotler and Kevin Lane Keller (29005). This is not only because of the fact that the company’s efficiency in the production and development is dependant upon the efficiency in the delivery of the end products that make the organization’s position in the target market. From the aforementioned it is clear that the strategic positioning of the products in the company’s production range not only in conformance with the strength of the organization in the specific product sales but also with regards to the demand and overall organizational knowledge is the key to generate profits as argued by Richard Lynch (2003). The identification of the home related products sold by the organization as the star in the BCG matrix of the consultants’ report makes it clear that the organization should focus upon the efficient deployment of its ‘knowledge’ and resource to research on efficient methods of increasing its strength in the market. Alongside, the fact that the demand for houses in the UK as well as the buildings for commercial purposes has increased since the dawn of the twenty-first century (Dominic Fenn, 2005viii) further justifies that the investment in the research and development of innovative products in this segment of the business is essential for generating profits mainly in the home markets. The identification of the standard kitchen related products as the cash cow further makes it clear that the product mix for the organization should embrace the building industry for achieving leadership in the home markets that will leverage profits. The combined deployment of the designer home products and the standard home products in the target market will increase the revenue for the organization whilst leveraging competitive advantage. The arguments on the marketing communication and the competition in presented in the previous sections support this argument. The increasing outsourcing of the automobile industry to the Far East and the need for a global market share is justified through categorising the motor and motorcycle industry based products predominantly in the ‘problem child’ or the questionable areas for development to the organization. Although, this supports the need to reduce focus on the automotive industry with regards to the UK markets, it also makes it clear that the need to efficiently harness the international market demand for electroplating in the automotive industry is essential to increase profits and sustainability in the business. It is thus recommended for the organization to increase its presence in the Far East and deploy its resources through the use of local labour to address the global market demand in automotive industry. This approach will not only leverage the market development strategy for the organization but also increase its market spread (i.e.) the base for its operations thus making it clear that a dip in the demand for building based products in the market can be replaced by the company’s operations in the automotive industry. It is thus recommended for the organization to enable its presence in the Far East. 5.0: Organizational Structure Derek Torrington and Laura Hall (2003)ix argue that the efficiency of an organization is not only in its capability to effectively produce the products and increase its position in the target market but mainly to increase its internal efficiency through effectively addressing the organization structure. The sections 2, 3 and 4 focused upon the organization’s need to address the external elements like competition and market demand whilst the sections 5, 6 and 8 will address the more sensitive elements within the organization to increase its sustainability in the market. The corporate governance of an organization is the ability of the organization is its ability to effectively the consultants’ report reveals that the organization not only adheres the traditional hierarchical structure but also rather complicated which is not only because of the fastening of the elements in the organization but also due to lack of streamlined flow of the chain of command that affects the supply chain of the organization. It is hence recommended to effectively deploy the top-down organizational structure to eliminate overlapping of powers as well as eliminating breakage in the chain of commands. The identification of the consultants that some of the precious raw materials tend to ‘disappear’ due to complex chain of command in the warehouse clearly indicates that not only the streamlining of the supply chain is essential but also there is a need for effective use of technology in addressing the organizational efficiency internally. Although the company is focused upon the customer, only the management is focused upon the customer whilst the tactical team and the operational staff seldom seem to be concerned with the strategic focus of the organization. This is mainly due to the lack of formal communication in the organization, which further makes it clear that the organizational re-structuring is imperative. The communication inefficiency and the need to address communication is dealt with in later sections. The informal mode of communication should be restricted although this is an effective method to retain effective staff relationship as argued by Michael Armstrong (2004)x. The effectiveness of the organization in the communication through formal channels will not only increase the transparency of the information communicated but also accomplish the effectiveness of the organizations’ core strategy. This makes it clear that the effective formal communication will increase the ability of the company to accomplish corporate governance, which is essential for sustainability in the home and global markets. The delegation of the power through the presence of middle managers for line management is essential in the organizational structure in order to eliminate the issues of communication associated with the communication hierarchy. The presence of the line managers in the hierarchy will increase the level of formal communication and above all the presence of a point of contact for the operational staff. This will enable the effective addressing of any issues and the ability of the organization to increase its ability to increase human resource management. 7.0: Culture The family culture adhered by the organization is the key for its success as identified by the consultants since the informal communication is encouraged whilst it is also emphasised that formal communication channels are necessary for the effectiveness of the organization. The fact that the staff members tend to be disappointed due to the lack of communication which is the critical element that causes the poor performance of any organization as argued by Derek Torrington and Laura Hall (2003). It is thus essential to establish formal communication channels not only for the sake of increasing the communication efficiency but also to communicate any new opportunities that arise in the organization. This is because the identification of the consultants that the promotions in the organizations are predominantly informal making it clear that the organization is not only facing the problem of communication breakage but also staff unhappiness which is a far critical issue to be addressed. Apart from the establishment of the formal communication channels, the consultants’ report has praised the culture adhered by the organization making it clear that there is no need for major changes in the existing culture of the company. The fact that the organizational culture reflects upon the performance of an organization as argued by Michael Armstrong (2004) further justifies that the organizational culture should be addressed in order to effectively use the human resource in the organization. Since the informal communication is supported by most researchers, it is thus emphasised that the organization should embrace the culture of formal communication channels whilst retaining the informal communication at the strategic level to increase the co-operation in the organization. Since the family presence at the strategic level is predominant, the informal communication will encourage the effectiveness of the strategic decision-making whilst nurturing the culture of the organization. 8.0: Decision – Making Decision Making in the organization as per the consultants’ report reveals that the CEO has the total control. This approach to the decision-making is not a successful element for the company since the more operational level decisions that require strategic attention will increase the time in the decision-making as well as affect the flexibility in the organization. This makes it clear that the presence of the middle management to monitor the tactical level is necessary for the efficiency of the organization. This also increases the transparency of the information flow and the effectiveness in the tactical management. The use of the information systems for decision-making is the essential for the organizations’ success in the target market. This is not only because of the fact that the organization is knowledge rich but also essential for the efficiency of the organization in the decision-making through strategically using the information. The complexity in the decision-making by the organization can be eliminated through the combined use of information systems and the middle management, as the efficient use of information for decision-making at the operational level will increase the organizations’ ability to effectively allocate resources and manage the supply chain of the organization. From the initial arguments in the previous sections it is clear that the supply chain of the organization is not streamlined and hence the chain of control as well as the flow of the information form the ingredients for the efficiency in the organizational decision-making. This further justifies that the integrated use of information systems both at the operational and strategic level will increase the efficiency of the organization in managing its resources both human and otherwise. This further justifies the ability of the organization to increase its stability in the markets thus leveraging competitive advantage. Since the strategic decision-making in the twenty-first century market involves the use of critical information on the market demand as well as the productivity of the organization, it is essential for the effective use of the information systems at the strategic level support decision-making. John Ward and Joe Peppard (2003)xi argue that the effective use of information in the organization decision-making at a strategic level will not only enable the organization to judge its position in the target market but also help accomplish effective allocation of the resources and market development at the high level of the organization. The existing strategy of customer focus by the organization that is identified by the consultants as an effective one for the next five years can be increased as well as nurtured by the organization through the effective use of the information in the organization to support decision-making. The strategic use of the information in the organization will also enable the organization to accomplish effective value addition in the market thus enabling the strategic positioning of the company in the UK and international markets. This makes it clear that the effective use of information systems for the decision-making along with the organizational re-structuring will increase the sustainability of the company under consideration. 9.0: Conclusion From the discussions presented in this report it is clear that the organization should address inter re-engineering more than the external strategies. This is naturally because of the complex nature of the organizational structure as well as the lack of increased level of formal communication in the organization. Alongside, it is also clear that the strategic use of information systems to support decision-making is essential for the effectiveness of the organization. This will also help achieve corporate governance and streamlined policy implementation within the organization thus increasing the performance efficiency of the organization. The analysis on the market development and product mix has revealed that the organization should deploy its richness of ‘knowledge’ to increase its productivity and reach new markets in order to generate revenue and leverage competitive advantage. As a conclusion to the report, it is clear that the organization should first address its internal organizational issues prior to addressing the market and competition since the efficiency within the organization is essential for any new ventures by the company. Read More