Managing Organisational Design and Change - Assignment Example

 Managing Organisational Design and Change Question- 1, What are organisations? What do organisations do? What are they composed of? How are organisations; organised? Are they all the same; in what way do they differ? What are the reasons for the differences? Few things in today’s competitive business contexts are as taken for granted as organisations. “Organisations are groups of people who work interdependently towards some purpose” (McShane and Von Glinow, 2004, p. 6). Organization, no matter whether it is a church, or a business or a trust, comprises of people, activities, processes and varied functions. According to American Heritage Dictionary of the English Language, organisations are acts or processes of organising or some thing that has been made up of elements with varied functions that contribute to the whole and to a collective functions- an organism (McLean, 2005, p. 2). Organisations are not buildings or any other physical structures, but rather, they consist of people who interact with each other with a collective desire to achieve a set of goals. People in an organisation have a specific pattern of interaction between them and they are expected of completing certain tasks within a stipulated time or of putting certain efforts in order to achieve its specific goals. People often use organization as a tool to coordinate their actions to obtain a specific goal they desire or something they value (Jones, 2004, p. 2). Various organizations have different goals and targets and therefore their processes and activities in fact will be different from one another. For instance, a manufacturing company produces goods related some way to the latest information technology whereas a resort or restaurant provides services to its customers. Jones (2004) emphasized that organizations basically create value through three different stages, namely input, conversion and output (p. 2). Input comprises of human capital, knowledge, raw materials, skills, money etc. Machinery, computers and human skills may be used to convert inputs in to the outputs like finished goods, services etc. Organizations create values as inputs are converted in to outputs. An organization normally comprises of people, structure, processes, environment and technology. For the above detailed value creation to take place, there must be people who work together to accomplish an objective with some kind of structure and relationship. People use computers, machinery and other technologies in order to convert inputs in to outputs. People, computers and machines in an organizations do various processes as well. In additions, these elements will be influenced by external environment like government, politics and societal pressures. An organisation is organized in a way that there are formal relationship between people, grouping together of individuals in to groups and there are system designs to ensure effective communication, coordination and integration of various processes. An organization will have its own specific vision and mission and its people are motivated to achieve the organizational goal based on its mission and vision. As detailed above, all organizations are creating value and they are similar in that sense. But, they are different in the way it creates values. A manufacturing organization is different from a service organization or a governmental organization because their organizational elements and processes are different. A manufacturing organization may largely depend on technology and processes where as a service organization is less likely to depend largely on technology and complex processes. Question 2 - Why is understanding the context within which an organisation operates important? Use the literature to develop and support the answers. In today’s highly competitive business contexts, organisations are giving greater emphasis on understanding the contexts in which the organization operates. Organizations are becoming increasingly aware of exploring both internal and external environments of the business so as to design organization’s design and structure. As Jackson, Schuler and Werner (2008) stressed, various elements like globalization, labour market, political landscape, industry dynamic and country cultures are significant factors influencing the environment of an organization (p. 37). It is important that understanding these factors can help improve the efficiency of organizational performance and managerial activities. Understanding business environment is critical to business success and effective management. Strategic business planning can be taken only if business environment and its elements are clearly defined and evaluated. Jones (2004) stressed that understanding the contexts that an organization operates is highly important as it can help deal with contingencies, gain competitive advantages, manage diversity and promote efficiency, speed and innovation (p. 12- 15). Business organizations can gain sustainable competitive advantages by meeting customer requirements of quality products or services and by creating loyal customers. it will be possible only if business contexts are clearly understood. Employee motivation, reward, recognition, training, achieving high performance, increased productivity, managing the diversity and creating organizational learning are some of the significant strategies of human resource management. This can be achieved only if organizational contexts are clearly understood. Question 3 - What benefits would strategic decision-makers gain from utilising a definitive framework and following a specified strategy development and deployment process? Strategic decision making is virtually an effort to gain an advantage over the providers of similar products or services (Carpenter and Sanders, 2009, p. 10). Strategic decision making and strategic planning processes thus help an organization achieve its objectives of marketing, competitive advantages, satisfactory revenues, increased productivity etc. Strategic decision making forces the organisation to determine its long-term goals (Jones, 2004, p. 109) and to take strategic measures and tools that can help accomplish both short and long term goals. Strategic planning, its follow up and designing and development of strategies are basically critical factors that help management create a positive environment towards achieving organizational goals and also to fit the internal capabilities to the external environment by choosing the best among the possible alternatives (Bhushan and Rai, 2004, p. 5). By establishing long-term goals, managers will be able to decide what are the basic purposes of the organization and to formalize that purposes as well. By utilizing a definitive strategic framework and following it, the strategic decision makers will be able to promote organizational efficiency. Managers working towards clear and definitive goals are less likely to be insufficient in their managerial roles. Designing and developing a specified strategy can provide a means of communication among various levels of management hierarchy. Strategic decision making provides managers with an increased sense of the organizational needs and also of its environmental constraints. Strategic planning increases the creativity of the organisation in addressing its problems, managing contingencies and risks and also in managing changes. PESTEL analysis of Tesco, a leading grocer in UK PESTEL analysis of Tesco Political Factors: Laws regarding retailing Fair trade issues Community organization’s efforts to boycott Economic Factors Availability credit inflation Social factors Social trend towards supermarket and self service Technological factors Debit/ credit cards, Bar code and EPOS Electronic data interchange Environmental factors Need for green business, Pollutions and other environmental issues Legal Factors Government legislation Tesco’s PESTEL Analysis Tesco is a successful and leading grocery and general merchandising retailer with high international business standards. It enjoys more than 32% market share with more than 2000 stores in the UK itself. Though it faces few marketing challenges in the present UK’s business environment, it has more opportunities to grow further. Laws, government agencies and other pressure groups can largely influence Tesco’s business. Fair trading has recently become an increasingly important factor in UK’s business environment. All the business organizations in UK come under the scrutiny and keen observation of the Office of Fair Trading and it therefore influences the business of Tesco as well (Schut, p. 2009, 184). Community organizations have recently put efforts to boycott supermarkets and large confectionary businesses in order to support small scale retailers to avoid the dominant power of large retailers. Increased availability of credit is an economic factor that can impact Tesco’s business as well because it may result to the growth of premium foods and less demand on economy products. Today’s social trend is ‘every thing under one roof’ and it will be an advantage to the Tesco. Latest technology advances like debit or credit card use, electronic data interchange, bar code reading, laser and self scanning can have significant impacts on retail business, especially a large retailer like Tesco. Environmental protection and issues like pollution and green house gas emission are some of the environmental factors that largely influence Tesco’s business. Government legislation regarding obtaining planning permission to construct stores in cheaper land areas may impact retailers business including Tesco. Question 5 - Five Force analysis of the Coca-Cola organisation. Five Force Analysis: Michael. E. Porter’s five forces analysis is by far one of the widely used strategic tool to analyse competition rivalry and underlying profit opportunities within the industry. Five forces, namely competition rivalry, threats of new entrants, threats of substitutes, bargaining of buyers and bargaining of suppliers, are analysed to identify the factors within the industry which make it more or less difficult to achieve a competitive advantage (Hill and Jones, 2009, 42). Conclusion The above five forces analysis of Coca-Cola shows that even though it has many substitutes like water, wine, beer, juices and soft drinks and it faces relatively stronger competition from various small and large scale soft drinks producers, it has more opportunities in its marketing landscape. It has gained strong brand image from its marketing strategies over last few decades. Its spending on advertising and R&D to come up with new products like BlaK Cola are some of its strengths. Most of its ingredients are basic commodities like water, colour, flavour, sugar etc and therefore bargaining power of suppliers seems to be relatively less. Coca cola’s customers come from convenient shopping, food stores and fountain and therefore bargaining power of buyers also seems to be relatively less. Question 6 - McKinsey 7S model and its use for organizational change programme. McKinsey 7S model, developed by a well known management consultancy firm called McKinsey in 1970s, is one of the best known tools for assessing the degree of internal alignment between organizational factors. This strategic tools emphasizes the significance of achieving balance between seven elements, they are structure, strategy, skills, system, style, staff and shared values (Holbeche, 2005, p. 241). The McKinsey 7S model helps understand the dynamics of organizational change and for designing and developing goals for change program. Out of the seven elements described above, strategy, system and structure represent ‘hard triangle’ which has been a major focus of change consultancy. The other four elements, staffs, skills, style and shared values represent soft issues as they are real critical factors to success of change or its failure (Holbeche, 2005, p. 241). Butler (2006) emphasized that the McKinsey model helps analyze the formal organization of the business (structure), formal and informal communication (system), management operation, values and philosophies (style), the human resources (staff), competencies of the people (skills), key objectives and goals of the organization (strategy) and organizational culture (shared values) (p. 235). PESTEL and Five Force models provide an outlook in to the environmental factors of the business and competition rivalry, that in turn help understand the scope of a change initiative whereas McKinsey 7S model provides a keen look in to various internal factors that help management understand the dynamics of a particular change program. McKinsey 7S model in particular helps determine the status of a change need and also to design and develop a change program. Question- 7- Boston Matrix Boston Matrix provides a tool for classifying and characterizing the activities of an organization in relation to its markets. Either its products or business strategic units are located on the matrix for business analysis purposes. This model is helpful to judge about hoe each product or strategy can be managed effectively and also to identify gaps or areas that may seem problematic when the market grows (Meldrum and McDonald, 2007, p. 131). Two key aspects of marketing are focused in Boston Matrix, market growth rate and relative market share. High market share and high market growth rate represents Stars which shows the market is growing and the products have strong market share too. High market share but low market growth rate represents cash cow in which the products will be cash generators. As it is having high market share, the products are cash generators. Low market share and high market growth represent problem child. This is an example of recently launched products. The market is growing but it has not built its market share and therefore it requires more cash than it generates so it can be termed as cash users. When the organization has low market share and low market growth, it is placed as Dog in the Boston Matrix. The main aspects of this level is that the business may not be making any loss but its next step may be withdrawing the products from its existing market (Tyler, 2007, p. 234). An organization may sell its products or services even after it has reached decline stage of the life cycle because the financial and business risks are relatively lower in the decline stage as compared to other stages like maturity or even saturation. By selling even after the decline, the business may be able to gain relatively very less rates of profits. Question 8 - Value chain Value chain analysis provides a framework that an organization can understand that parts of its operations that create values and that parts of its operation that do not create values. Value creation and its relation to the costs are extremely significant measures because the firms earns above average returns only when the value it creates is greater than the costs incurred to create that values. The value chain analysis helps determine the value creation levels and understand the cost position and thus to measure whether a chosen strategy will be effective or not. A university’s value chain will represent both primary and support activities. University services, marketing and distribution of education services and university operations will be placed in the primary activities that are involved with a service and its sales. The infrastructure facilities of the university, its human capital and its development in technology will be represented in the support activities that provide assistance necessary for the primary activities to be taken place (Hitt, Ireland and Hoskisson, 2009, p. 85). The value chain of a university depicted above includes various elements like technology, infrastructure, human resources, marketing and service distributions. The cost effectiveness of human resources, for instance, can be improved by recruiting and selecting more knowledgeable. Experienced and qualified professionals. Similarly, the costs effectiveness of its marketing can be improved by implementing more effective marketing and distribution strategies. Question 9- Competitive positioning of Ryan Air, BMW and Rolls Royce, and Porter’s Generic Strategy Model Target Scope Advantage Low Cost Product Uniqueness Broad – Industry Wide Ryan Air Cost Leadership Strategy RyanAir’s low-budget airlines and low-cost strategy have led it to its success (Mun, 2008). Ryanair is attempting to become the lowest cost producer. BMW Differentiation Strategy With innovative products and vehicle models, BMW remained a successful player, providing wide range of products (brandingstrategy, 2005) Narrow- Market Segment Focus Strategy (Low cost) Rolls Royce Focus Strategy (Differentiation) Rolls Royce charges premium prices for superior quality cars (ecofine.com) As the Porter’s generic model, depicted above, shows, Ryan Air has been successful with its cost leadership strategy, where as BMW fits to the differentiation strategy matrix of the porter’s generic model. Rolls Royce, though it enjoys relatively very low market share, has been successful with focus strategy as it marketed premium cars for high prices. These three large companies sustain their competitive advantages in different way and with different strategies. Ryan Air remained to be cost-leader as its low costs strategy attracted large number of customers and it thus could maintain a sustainable competitive advantage. BMW marketed wide range of vehicles with differentiation strategy and it could dominate in the market by meeting wide range of customer requirements. When it comes to Rolls Royce, it’s premium vehicles for high costs helped it generate relatively high rate of returns and thus to help it sustain a competitive advantage. 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