Principles of Management: In Practise - Essay Example

Executive summary A successful business entity has to forecast its future challenges and has to equip with systems before the concern arises. The contemporary industry has many challenges as the competition, the resources and the strategies are most sophisticated. Services industry has more challenges than the other industries which deal with the physical products. The customer should be made to visit the firm to experience the service as the service products are intangible, heterogeneous and variable in nature. As the competition increases, sustaining in the industry becomes more and more difficult. The below case analysis investigates a health care firm which is pressurized with the growing competition and has come up with a huge expansion plan. The paper lists out the practical factors which are to be considered by inference with the noted theories of kotler, porter. The paper draws conclusions for effective implementation of strategic expansion plans. Index Page Introduction ………………………………………………………………….3 Industry Service industry Case study introduction………………………………………………………4 Kanter’s attributes……………………………………………………………4 Implications of Kanter’s attributes…………………………………………..6 Day and Wensley prospective…………………………………………………7 Need for Merger………………………………………………………………..9 Recommendation……………………………………………………………....10 Reference………………………………………………………………………11 Principles of management: in practise Introduction An industry is generally any grouping of businesses that share a common method of generating profits, such as the "music industry", the "automobile industry", or the “service industry". -Wikipedia An industry is a conglomeration of different business entities which produced same products. The auto mobile industry which consists of various manufactures has their version of projecting the products with different features and attractions. These business entities carry similar identities in organizing the production. These business entities strive to keep their business aloft from other peers. The word industry has engrossed many other allied industries which directly or indirectly support the business activity of the industry. For example Automobile industry consists of the assembling plants, the spare parts manufactures and the maintenance etc. The total production can be perceived under single ownership or the components can be outsourced to other firms. Service industry Services occupy a unique significance in all of the business entities. The uniqueness is due to the fact that services require the presence of the customer at the production location, services are intangible, inseparable from the production and consuming, vital part of the service is the experience perceived by the customer. Services cannot be inventoried, fluctuations in demand are often difficult to manage Services include sectors like hospitality services, tourism services, customer relationships and health care industry that include health care clubs, rehabilitation centers, hospitals etc. Case study introduction ABC industries are a major health care industry player. The company has drawn ambitious plans to sustain in the already competitive field. ABC industries are a major player in the Australian health care industry. The competitors chalked out ambitious plans to expand their operation. To sustain in the industry with the existing competition the organization has to consider three main factors: Managing competition The feasibility of the new outlets at new locations The effective integration of new outlets Kanter attributes: perspective According to Kanter mastering change is an important part of an organization. Change Management is an important aspect of innovation of operations to equip the organization to the future demands. Kanter has postulated four attributes for a company which is planning to change. The ABC industries are having a series of strategies to rebuild its business to sustain in the intense competition. The attributes of Kanter can implicated to the prevailing situation as follows: Focused - organizations must choose areas in which they can excel and meet high standards. An ABC industry has chalked out expansion plans in the same field (Child care companies) to expand its business by acquiring the firms which are under good operational condition. By adopting this strategy it is planning to make strong in the existing field. This move is a positive effort from the management as ABC is already a standard player. Fast - no top down management can respond to change as rapidly as smaller divisions and departments can, so organizations must count on action taken by individuals. The job of the management, then, is transmitting values and priorities to the ordinary people in the organization. ABC industries have slated for massive expansion and the massive expansion plan is the brainchild of Joint management director Eddy groves. The success of the massive expansion depends upon the organizing ability of positioning the resources to maintain the standards that would entice more clientele. The management need to mould the staff of newly joined merging company workers to move forward the goals and objectives of the parent company. The future operational aspects are challenging as ABC has to cope with the hiring and administrational expenses in this industry as the employees can easily change the colours of the uniform. Flexible - Job definitions need to be broader; team skills are necessary, and employees need to be able to bridge functions and departments. Learning skills are a perfect match for the need to be flexible. The ability to learn also decreases defensiveness and the resistance to change. Narrow thinking only leads to turf protection. An organization in expansion demands new amendments and extensions of the objectives to suit the current requirements. The employee has to be flexible to new environments. The management has to more responsive to equip the employees to cope with the additional work pressure. ABC industries is doubling its entities, this expansion implies that more effort and more manpower is required to organize the activities. The faster the reaction in placing things in right place will move the company’s performance forward. Friendly - People need to find work pleasurable and satisfying. "We live in a world in which we need constant learning. This means that nobody can go to sleep on the job anymore" (p. 83) People need to work collaboratively. ABC industries’ having more than 700 outlets to operate has a disadvantage in the form of the training and orientation expenses for the employees who are large in number. The integration of the work culture will be an uphill task with employees of the former organization. Implications of Kanter’s attributes The company has adopting right strategies for sustaining in the intense competition as the competitors are joining the rapid expansion along with ABC. The company is planning to mark its presence more into industry by capturing major chunk of business thus accepting the challenges in running the huge business entity. The opening of more and more outlets and the number of existing players has made the players more cautions about the profitability. The profitability may spilt unequally among the players leaving every one with negligible turnovers which is encouraging for future of the industry. The joint managing director has forecasted the future of the industry; his business entity was the foremost to respond to the changing business equations. Able leadership and proper projection will provide the right moves when required by the organization and keep it aloft. ABC move can be an appropriate move when the operational aspects can be ably organized. As ABC has been a successful player the volume of business should not affect the standard of the service, as long as the service is kept at the required levels changes ripe huge outputs. Days & Wensley model perspective Day and Wensley model has described that competitive advantages has two important aspects to look into: Customer prospective, competitor prospective. Competitor prospective: Differentiating the service opportunities for the competitors ABC has initiated major expansion to elevate the business prospects ahead of others as the service industry is packed with competitors and the revenues of the companies were depleting. The customers’ volume is shared among the existing companies. ABC initiative has made the merging of two companies which enables them to hold the outlets of the merging companies thus absorbing their revenues. The key success factors would be The companies should be more customer centric as the customer is the end users. The quality of the service will influence the volume of the business and can enhance the existing customer base The employee satisfaction levels will play a significant role in maintaining the service standards The working environment and the employee incentives will hold the employees regulating the attrition levels The ambience and the process flow of the operations can differentiate ABC from existing competitors ABC has acquired two companies which have several braches across the country and even has planned to expand in to other areas. Quality actually depends on many factors that cannot be fully controlled by the service supplier, such as the ability of the consumer to articulate his or her needs, the ability and willingness of employees to satisfy those needs, the presence (Or absence) of other customers, and the level of demand for the service. Because of these complicating factors, the organisation cannot always know for sure that the service is being delivered in a manner consistent with what was originally planned and promoted. Sometimes services may be provided by a third party, further increasing the potential heterogeneity of the offering. So the organisation has to concentrate on developing tye expansion strategies which extent the level of services and increase the reach to the customers. Thus customer oriented strategies will enable the organisation to frame right strategies which can enhance the service levels and elevate the expectation of the customers. The positive sources of the company are the market volume of the company standing at 18% The company has acquired two firms which are well established players, thus increasing overall market presence in the industry The total market presence may go up in due course of time Need for Merger: The acquisition was planned as a future strategy. The reason behind the expansion of ABC is due to the fact that two many players were competing in the same location decreasing the profitability of the business entities thus hurting the overall performance of the organisation altogether. Thus by integration of these out lets would bring the operational and organizational benefits in to one roof. The performance will be consistent as the revenue generation will be exponential due to the fact that the monetary benefits are diverted towards on entity. To run these large numbers of outlets ABC went for capital fund raising. The acquisition plans will enable ABC to maintain already existing outlets, thus decreasing the future investments on operation. ABC can now look into some other unique regions where there is still scope to explore. The company is willing to buy operating contracts by raising $300 million. The company will have the advantage of deciding on where and when the new outlets can be opened. ABC can now decide on which brand it can open it new outlets. The three brands it had can be cashed upon by using their names at places where they are well known. By the above strategy the customers will not loose their outlet; However ABC can earn good return by sustaining same service standards. The uses of organizing the outlets according to the brand popularity enable ABC to cut down the costs incurred on Advertising stints to be carried to introduce their company Preventing duplicating of the same company outlets in the same region Building the business opportunities on the existing platform Preventing the cost incurred on the establishments of the business entities Recommendation: The important challenges for the management with the initiation of the merger are: Ensure the service quality levels So as to improve the quality service firms can take three steps towards quality control: The first is investing in good hiring and training procedures. Recruiting the right service employees and providing them with excellent training; Hiring people with right attitude and people who can tune their abilities with the organisation objectives will be a unique advantage. Every aspects of Training and orientation of the employees towards the important service aspects may enhance the performance levels The second step is standardising the service performance process throughout the organisation. This is helped by preparing a service blueprint that depicts events and process in a flowchart; with objective of recognising potential fail points; The third step is monitoring customer satisfaction through suggestion and complaint systems, customer surveys, and comparison-shopping For a service industry a customer experience with the organisation makes him perceive the service again and again. He can spread the word of mouth about the service offered. Every customer cannot be satisfied but the organisation can reach his expectations. So, customer is spread the performance, the organisation has the responsibility to study the customers’ perceptions and should strive to match to their expectation every time. Organizing right activities at right place The service requirements may differ for different regions in order to be successful the organisation has to decentralize the activities and provide te freedom to implement ideas and concepts which are best suited to the organisation. Innovating the service capabilities according to the changing needs of customers and differentiating from the competitors Reference: 1. http://leadertoleader.org/leaderbooks/l2l/summer99/kanter.html 2. Kanter, Rosabeth Moss. (1995). Mastering change. In Chawla, S. & Renesch, J. (Eds.). Learning organizations: Developing cultures for tomorrows workplace. Portland, OR: Productivity Press, pp.70-83. available at http://home.nycap.rr.com/klarsen/learnorg/kanter.html 3. Nicole. P. Hoffman, An examination of sustainable competitive Advantage, concept: past, present and future, The university of Alabama http://oxygen.vancouver.wsu.edu/amsrev/forum/heiens01-00.html http://www.1000ventures.com/business_guide/crosscuttings/core_competencies.html http://www.1000ventures.com/business_guide/profits_sustainable.html Read More