Resource Planning - Competition and Risk - Assignment Example

Resource Planning – Competition and Risk Table of Contents Question 3 Market Orientation 3 Strategic Investment 4 Cost Comparisons 4 Pricing 5 Enterprise Resource Planning 5 Question 2 6 Competitive advantage of an organization 6 Risk mitigation strategies 8 References List 11 Question 1 Every organization should design an effective plan to manage its resources. Organizations often face resource constraint and thus it becomes imperative for an organization to identify effective resource planning techniques. This role is mainly carried out by a project manager. The project manager builds up a team to carry on the operations. The team should include skilled human resource. The process also requires the consideration of other vital factors. An organization’s resource planning technology is mainly guided by the market orientation, strategic investment, cost comparisons, pricing, and enterprise resource planning technology. These enable an organization to plan its resources properly (Slovic, The perception of risk, 156). Market Orientation Organization focuses on the orientation of the market while making plans about resource management. The strategic plans designed with respect to orientation of market helps to identify a feasible fit between opportunities from market changes and objectives of the organization. This kind of planning enables an organization to formulate products and services that would meet the forecasted growths and profits. Planning based on orientation of the market requires various areas of action. The organization’s business operations are managed like portfolios for investment. Growth rate of the market is regularly scrutinized to have a clear assessment of activities related to business. Evaluation of the organizational position is also a cause of concern. The organization’s market value should also be assessed. The long term goals and objectives have to be achieved by strategising a game plan. The strategic plans have to be carried on in different levels. In the corporate level, plans are designed for appropriating profits in the long run. This is done by strategically guiding the entire organization. The divisional level formulates plans for each division by properly distributing funds to each unit within the business. The business unit level proposes business plans for sustainable growth of the business. Plans related to marketing are developed at the product level (Fricke, Market Orientation: The Construct, Research Propositions, and Managerial Implications, 67). Strategic Investment Resource planning is influenced by proper strategic investment. Various financial strategies are required for efficient resource management. New investments plans need to be critically evaluated for enabling utilization of resources effectively. Development of recourses in the future is ensured by strategic investment plans. Proper allocation of resources will also be ensured. Senior officers have a vital role to play while making decisions related to strategic investment. The immediate effects of the strategic investment have to be clearly evaluated for a sustainable growth in the future. The business plan should be assessed properly for proper implementation and execution of plans that would help to manage resources effectively. Decentralization should be encouraged for proper resource planning. Strategic investment finances should be utilized effectively for self-sustaining growth in the long run (Smit and Trigeorgis, Strategic investment: Real options and game, 89). Cost Comparisons Proper planning of resources also requires proper understanding of cost and expenditure. The organization should draft an appropriate budget for its business operations. The budget should clearly specify costs associated with different areas. The organization should evaluate costs associated with different project it undertakes. Cost negotiations should also be ensured during the procurement of raw materials, human resource and other overheads. The cost should be compared with various sources for getting the best deal. Resources planning should also be done in a cost effective manner. This can be done by delegation of authority to the most suitable individual within an organization (Fleisher and Bensoussan, Strategic and competitive analysis: methods and techniques for analyzing business competition, 78). Pricing Efficient pricing strategies can also have an effect on proper resource planning. Effective product positioning is guaranteed while considering pricing as a strategic issue. The pricing strategies help to channel resources properly. Identification of pricing mechanisms becomes imperative. Marketing analysis of an organization gives an idea about the resource allocation. The organization should also understand the distribution networks of the product. The organization would accordingly allocate its resources to different sectors. The organization should also have a clear idea about how price varies with quantity demanded. Understanding of pricing structure necessitates the understanding of different costs like variable and fixed cost. Pricing objectives should also be clearly set. All these will help in proper resource management in the long run (Mahajan, Muller and Wind, New-product diffusion models, 98). Enterprise Resource Planning Organizations’ resource planning technology can be improved by using Enterprise resource planning (ERP) which uses an integrated process to supervise operations related to business. The software manages business processes. This software helps in automating functions related to human resources and services related to technology. ERP software incorporates different aspects of business operations ranging from marketing and sales, development and planning of product and manufacturing issues (Olson, Managerial issues of enterprise resource planning systems, 70). Most often larger business organizations prefer such software for carrying out activities. The software requires efficient skills and a committed team of employees for its operation. Data can be handled and analyzed using such tools. The ERP system has many characteristics that enable proper resource planning. This system emphasizes on real time data. Periodic updates are not given much importance. It has a database that is common for all operations and thus it supports all kinds of applications. All the modules are consistently updated. The installation system of the application is elaborately explained by the software (OLeary, Enterprise Resource Planning Systems: Systems, Life Cycle, Electronic Commerce and Risk, 46). Question 2 Competitive advantage of an organization Competitors fail to imitate a particular organization’s implemented strategies when that organization uses unique tools and resources. Thus it is imperative for a company identify its own competitive advantage. This would help the organization to understand business objectives that would foster growth. The competitive advantage of an organization ensures that customers are attracted to the products and services of that organization instead of competitor’s product and services. The organizations thus exclusively focus on being unique in its business processes (Porter, Competitive advantage: Creating and sustaining superior performance, 56). Organizations may often collaborate with its competitors to generate higher profits. Companies share costs, resources and knowledge for advanced research. This ensures development of innovative products. Collaboration of Toyota and BMW is one such example. They collaborated even if they were competitors of each other in the market for luxury cars. Pure competition is more favourable for collaboration. Collaboration is meaningful when both parties associated add some value to the product or service that is developed. The terms of collaboration should be structured clearly and there should be transparency in the process. The collaboration should also be based on non-differentiating methods. Limits of collaboration must be clearly mentioned at the beginning. Thus competitive advantage can be enhanced with collaboration (Axelrod, The complexity of cooperation: Agent-based models of competition and collaboration, 56). Market behaviour can be explained by the models of competition. Competitive behaviour does not exist for a monopoly firm. On the other hand, pure competition includes a large number of buyer and sellers. The products are also identical in this case. However, prices do not get influenced. None of the buyers and sellers has influence on prices. Sellers and buyers act independently and they are not involved in each other’s activities. Negotiations between buyer and seller are absent. Sellers often keep the prices of the goods lower to attract more consumers. Producers decide whether to keep prices competitive so that other entrants are restricted from entering the industry (Barney and Clark, Resource-based theory: Creating and sustaining competitive advantage, 123). Competitive advantage of a company is also influenced by the organization’s ability to manage risk as this helps to the organization to identify significant failures. Business settings change constantly these days and thus the chances of risk increases due to volatility in factors that influence business operations. Risk has to be efficiently minimized. Organizations also has to maintain regulatory obligations imposed by various institutions which sometimes limits business which in turn increases risk by constraining chances of diversification. Long term success can only be ensured if risk is assessed properly. Risk assessment also provides competitive advantage to an organization. Risk assessment is a process that can help the organization to identify the opportunities and shortcomings associated with different types of risky situations. Assessing risk properly can ensure proper exploitation of resources that would help the business to prosper and become sustainable in the future. Business objectives must be specifically mentioned. The risk ratings of the organization have to be properly evaluated. Results of the Enterprise Risk Management (ERM) program has to be interpreted properly to take advantage of on the opportunities. Risk management process should be associated with the business operations and the approach used should be top-down in nature. This approach should be complemented with an assessment process which should be bottom up. Assessing risk associated with the products is also vital for an organization. It helps to understand the structure of cost and pricing in the market. Brand value of the product can also be monitored for further improvement. Risk assessment of products help the organization to understand the products value in the market and thus helps to identify factors that would give the product a competitive advantage over other products (PricewaterhouseCoopers, A practical guide to risk assessment). Risk mitigation strategies Profitability of a business project can be affected by risks associated with project performance. Delivery and operation of business project is also affected by risks. Risk identification is the most important aspect if risk has to be mitigated effectively. Risk associated with the business operation has to be understood properly and then evaluated based on the strategies designed. Risk mitigation is a mechanism by which opportunities can be enhanced by reducing threats. Proper actions have to be taken to mitigate risk efficiently. Identified risks have to be regularly tracked and monitored. New risks also need to be understood and identified. Business projects should also emphasize on designing a method that would scrutinize risks effectively. Figure 1: Risk Management fundamental steps (Source: The MITRE Corporation, Risk Mitigation Planning, Implementation, and Progress Monitoring) The steps of risk mitigation are illustrated in the figure 1. The whole process is iterative in nature. All the steps are linked with each other and proper implementation of the steps can effectively mitigate risk. After implementation of the steps, the risk mitigation step involves development of mitigation plans designed to manage, the effectiveness of the same has to be evaluated. Risk mitigation strategies are therefore vital for organisations. The strategies if implemented effectively can result in sustainable growth of the company (The MITRE Corporation, Risk Mitigation Planning, Implementation, and Progress Monitoring). References List Axelrod, R. M. The complexity of cooperation: Agent-based models of competition and collaboration. (Princeton: Princeton University Press, 1997). Barney, J. B. and Clark, D. N. Resource-based theory: Creating and sustaining competitive advantage. (Oxford: Oxford University Press, 2007). Fleisher, C. S. and Bensoussan, B. E. Strategic and competitive analysis: methods and techniques for analyzing business competition. (NJ: Prentice Hall, 2003). Fricke, S. Market Orientation: The Construct, Research Propositions, and Managerial Implications. (Norderstedt: GRIN Verlag, 2001). Mahajan, V., Muller, E. and Wind, Y. New-product diffusion models. (Berlin: Springer, 2000). OLeary, D. Enterprise Resource Planning Systems: Systems, Life Cycle, Electronic Commerce and Risk. (Cambridge: Cambridge University Press, 2000). Olson, D. L. Managerial issues of enterprise resource planning systems. (New York: McGraw-Hill, Inc., 2003). Porter, M. E. Competitive advantage: Creating and sustaining superior performance. (New York: Simon and Schuster, 2008). PricewaterhouseCoopers, 2008. A practical guide to risk assessment. http://www.pwc.com/en_us/us/issues/enterpriseriskmanagement/assets/risk_assessment_guide.pdf Slovic, P. E. The perception of risk. (New York: Earthscan Publications, 2000). Smit, H. T. and Trigeorgis, L. Strategic investment: Real options and games. (Princeton: Princeton University Press, 2012). The MITRE Corporation, 2014. Risk Mitigation Planning, Implementation, and Progress Monitoring. Read More