assignment ist 887 bp&m

8/8/2019 Assignment Ist 887 BP&M

http://slidepdf.com/reader/full/assignment-ist-887-bpm 1/51

Tutor –Prof. Sasfder A khan

Q. No. 1: Develop your vision and mission statement for an organizationof your choice from broadcasting sector and compare your vision andmission statement with the original vision and mission statement of thatorganization?

NATIONAL PUBLIC RADIO PURPOSES:

Early in 1970, Bill Siemering — one of the organizers of National Public Radio and later its first program director — puttogether a "mission statement" for NPR. The statementsupported NPR's request for aid from CPB and went on todefine the network's first daily program, All Things Considered ,which debuted May 3, 1971.

Vision Statements and Mission Statements are the inspiring words chosen bysuccessful leaders to clearly and concisely convey the direction of the organization. Bycrafting a clear mission statement and vision statement, you can powerfullycommunicate your intentions and motivate your team or organization to realize anattractive and inspiring common vision of the future.

“Mission Statements” and “Vision Statements” do two distinctly different jobs.

A Mission Statement defines the organization'spurpose and primary objectives. Its prime function isinternal – to define the key measure or measures of the

organization’s success – and its prime audience is the leadership team andstockholders.

Vision Statements also define the organizations purpose, but this time they do so interms of the organization’s values rather than bottom line measures (values are guidingbeliefs about how things should be done.) The vision statement communicates both thepurpose and values of the organization. For employees, it gives direction about howthey are expected to behave and inspires them to give their best. Shared withcustomers, it shapes customers’ understanding of why they should work with theorganization.

Implementation of Goals

Such statements of purpose are only platitudes and good intentionsunless there is the strong commitment, creative energy and specificstrategy to implement them. The detailed implementation of NationalPublic Radio is the responsibility of the President and his staff, butsome priorities and suggested approaches are necessary to helpanswer the how and why of NPR.

M.SOHAIL AZAM/ AD511997




The priorities of NPR program development:

1. Provide an identifiable daily product which is consistent and reflectsthe highest standards of broadcast journalism.

2. Provide extended coverage of public events, issues and ideas, and

acquire and produce special public affairs programs.3. Acquire and produce cultural programs which can be scheduledindividually by stations.

4. Provide access to the intellectual and cultural resources of cities,universities and rural districts through a system of cooperativeprogram development with member public radio stations.

5. Develop and distribute programs to specific groups (adulteducation, instructional, modular units for local productions) whichmeet needs of individual regions or groups.

6. Establish liaison with foreign broadcasters for a program exchangeservice.

7. Produce materials specifically intended to develop the art andtechnical potential of radio.

1. Provide an identifiable daily product which is consistent andreflects the highest standards of broadcast journalism.

Because National Public Radio begins with no identity of its own it isessential that a daily product of excellence be developed. This maycontain some hard news, but the primary emphasis would be oninterpretation, investigative reporting on public affairs, the world of ideas and the arts. The program would be well paced, flexible, and a

service primarily for a general audience. It would not, however,substitute superficial blandness for genuine diversity of regions,values, and cultural and ethnic minorities which comprise Americansociety; it would speak with many voices and many dialects. Theeditorial attitude would be that of inquiry, curiosity, concern for thequality of life, critical, problem-solving, and life loving. The listenershould come to rely upon it as a source of information of consequence; that having listened has made a difference in hisattitude toward his environment and himself.





There may be regular features on consumer information, views of the world from poets, men and women of ideas and interpretivecomments from scholars. Using inputs from affiliate stations, for thefirst time the intellectual resources of colleges and universities will

be applied to daily affairs on a national scale.

Philosophically, time is measured by the intensity of experience.Waiting for a bus and walking through an art gallery may occupythe same time duration, but not the same time experience.Listeners should feel that the time spent with NPR was among theirmost rewarding in media contact. National Public Radio will notregard its audience as a "market" or in terms of its disposableincome, but as curious, complex individuals who are looking forsome understanding, meaning and joy in the human experience.Represented in visual terms, the listener turning from a commercial

station to National Public Radio should sense a difference as thatbetween a shopper's newspaper and Consumer Reports; TeenMagazine and Realities.

2. Provide extended coverage of public events, issues andideas, and to acquire and produce special public affairsprograms.

Broadcasting of public hearings and public affairs programs is not just a "good thing to do" but a necessity for citizens in a democraticsociety to be enlightened participants. The mechanistic instruction

about government we all recall from civics classes ill preparesadults to know about the real legislative process and how to effectchange. Political scientist Fred Newmann wrote:

By teaching that the constitutional system of the United Statesguarantees a benevolent government servicing the needs of all, theschools have fostered massive public apathy.

He believes the legalistic curriculum should be "balanced if notreplaced by emphasis on the influence of personal motives andambitions, emotions (envy, hate, love, pride), political debts,

accidents and even honest mistakes in the formulation of publicpolicy." [Newmann, p. 545] This requires investigative reporting andcitizen participation during the decision-making process. Broadcastsof public hearings are one of the best ways to hear the evidencepresented on proposed legislation and public radio might developsome vehicle through local affiliates whereby citizens could indicatetheir judgment to the decision makers. This coverage need not beconfined to Congressional Hearings but should apply to





governmental regulatory agencies as well. If no government body isholding hearings on an important issue, National Public Radio couldsponsor its own debate to help define the problem and suggestalternate solutions with the consequences of each explored.

Jack Gould, writing in the New York Times, testified that "radioretains the enormous virtue of complete unobtrusiveness." Inreviewing coverage of congressional hearings he wrote:

Television, commercial or noncommercial, says it can attend ahearing without causing any inconvenience; this is poppycock. Theglaring lights needed by National Educational Television, . . . are ashort cut to a raging headache when experienced morning andafternoon. The hearing room was bathed in artificial incandescence,little short of nuisance, and that some witnesses donned sunglasses more confirmed the annoyance.

Because the cost of radio coverage is one-tenth television coverage,Mr. Gould concluded "...it may well prove that radio will be the mosteconomical and consistent means for uniting a citizen with hisgovernment in operation."

National Public Radio, through public affairs programs, would notonly call attention to a problem, but be an active agent in seekingsolutions. Hiring of minorities in the construction trades, forexample, is a complex social, racial problem. A thorough expositionby all sides would be instructive, but to enable persons struggling

with this issue to speak on live radio with those who developed thePhiladelphia Plan and Chicago Plan, could actually help solve theproblem in many other communities and probably evolve a bettersolution.

Everyone is aware that stopping environmental pollution is criticalfor survival, but what can a single individual do to solve such amassive problem? Not use detergents? Picket the local steel plant?Organize — but for what, to do what? Obviously individuals andgroups must solve this, and shared information and crossfertilization of ideas by live national radio could do much to speed

the process.

3. Acquire and produce cultural programs which can bescheduled individually by stations.

Susan Sontag wrote, "Art today is a new kind of instrument, aninstrument for modifying consciousness and organizing sensibility."Art is no longer a pleasant pastime for social elite, but at the core of





contemporary life. Understanding is both more essential and moredifficult. Without adequate background, the artist's message isfrequently unintelligible and we wander as one in the forestunfamiliar with trail markings, unable to "read" the environment.With the rapidity of change and decline of local theaters and

orchestras there is an equal need to preserve and transmit theculture of the past. As the arts become less of a social occasion andmore of a personal experience, the role of radio as a creator andtransmitter should increase.

National Public Radio might use any of the following to make thearts understandable and engaging.

Listeners could gain a contemporary view of the world throughthe eyes of a sensitive writer. National competitions might beheld to encourage new radio writers.

Encourage, and provide facilities for leading writers of fiction anddramatists to prepare new materials for radio.

Standards of the radio art could be improved by broadcastingregular criticisms of the medium.

Young people could be introduced to the beauty of the mediumthrough materials prepared for in-school listening. Writers of children's books could be commissioned to write for radio.

Work cooperatively with National, State and local councils on thearts and international agencies in developing greaterunderstanding and appreciation of the arts. For example,reproductions collected from around the country of a period or

school of art could be printed and distributed through localstations. Leading art historians could lead the listener viewerthrough the book in a broadcast series.

Stimulate local symphony orchestras, through nationalbroadcasts. Rather than a series of the New York Philharmonic,there could be a concert series with a different local orchestraeach week performing what it does best.

Compose and perform new works live across the country. Use the products of the National Center for Audio

Experimentation at the University of Wisconsin as acontemporary esthetic experience and to help give the service a

unique identifiable sound. A sense of the cultural diversity could be achieved by programs

featuring the music of the different ethnic groups across thecountry.

Competitions could be sponsored to encourage new artistic usesof the medium and to improve the quality of the product.





4. Provide access to the intellectual and cultural resources of cities, universities and rural districts through a system of cooperative program development with member public radiostations.

One of the unique aspects of National Public Radio is that eachmember station will have the potential of being an originator of programs as well as a transmitter; it will be national in input as wellas distribution. Since the majority of member stations are part of large universities or near urban areas, for the first time the bestintellectual resources of the country will be able to he effectivelyused, quickly and easily, on a national scale. Many Americansprobably know only of one anthropologist, Margaret Mead, and onehistorian, Arthur Schlesinger, Jr. Individual stations may contributeshort actualities, an interview of national interest, segments of alonger special program, a complete program or program series or

help to arrange for a live discussion of one specialist with another ina distant city. Stations should receive appropriate compensation fortheir contributions.

Initially, many stations may lack the skilled personnel or experiencefor some of the tasks necessary to implement this goal. Workshopsfor production personnel should be provided so that standards of excellence can be established and maintained. A significant by-product of this goal will be the considerable upgrading of staff andservice of many local public radio stations.

5. Develop and distribute programs for specific groups (adulteducation, instruction, modular units for local productions)which may meet needs of individual regions or groups, butmay not have general national relevance.

The implementation of this priority will provide needed diversity of programming to audiences presently served by some but not allpublic radio stations. Through a tape distribution system, programsfrom the national production center could be supplied to the publicradio stations without live interconnection service, as well as specialinterest programs to member stations. Even though some stations

lack the staff and facilities to use the live network service, theyshould receive a program service from National Public Radio whichcan help strengthen their schedule and local service. The tapeservice could include special documentaries and cultural programsproduced by member stations, the National Public Radio productioncenter, off air recordings of network programs, and materialsacquired from foreign sources.





Most public radio stations have developed several distinct programservices for specific audiences: farmers, elderly, blind, low income,youth. These efforts could be furthered and supplemented by NPRproduction on a national basis.

The largest specialized audience programming has beeninstructional programs for in-school listening and continuingprofessional education. Hundreds of thousands of youngsterspresently receive enrichment programs by radio and while many of these must be designed for local school district curricula, some live(a daily news background program for elementary pupils) and tapedprograms drawn from national resources could strengthen thisimportant service. Similarly, the group of stations now providing in-service training for health related professions could be expandedand used to disseminate vital timely information to key healthcenters across the country. An increasing number of stations will be

developing instructional programming on the side channel of FM(SCA) while broadcasting general audience programs on the mainchannel. With the unique technical versatility of radio two differentprogram services can be offered simultaneously.

Programs in the "by and for" specific cultural, ethnic minorities’category could be developed. For example, there could be a linkupof stations in urban areas with sizeable non-white audiences, orstudent groups studying ecology, or groups with distinct lifestylesand interests not now served by electronic media. As man pullshimself out of the mass society to develop his unique humanness,

his minority identification (ethnic, cultural, value) becomesincreasingly important. This diversity is partially reflected in printmedia, but has not been manifested in the electronic. A few of thesegrowing interests are reflected in the comparative circulationfigures for the periodicals listed below. The figures are taken fromAyer's Directories based upon the previous year's circulation.

In order to provide minorities access to the medium, it is not onlyimportant to establish the identity of that group, but essential if thetotal population is to understand and appreciate theinterdependence of pluralism. In addition to the cognitive

information, these programs should help supply what WarrenBennis calls the "need for affective education -- the cultivation of competence in the emotional and interpersonal."

National Public Radio could also supply modular program units tonetwork stations which could be used in local news and publicaffairs programs. For example, there may be congressionaltestimony on pollution problems in Lake Michigan which would be of





interest to stations in that region. There may be interviews withpersons from a specific region or about regional issues. Some of thematerial may be in rough form, outs of national productions oractualities for local newscasts.

6. Establish liaison with foreign broadcasters for a programexchange service.

Although presently overwhelmed by domestic problems, theindividual's role as a citizen of the world should not be overlooked.International programs can be a source of cultural enrichment andan effective means to further understanding among peoples aroundthe world. The speed and volume of international travel, economicinterdependence among nations makes this area of programmingmore important than ever. In time/space, New York now is closer toAsia than it was to Washington, D.C. at the turn of the century; a

plane can travel from New York to London in the same time as anautomobile or train travels across New York State. We not onlylearn more about other peoples through international programs,but also more about ourselves through the eyes of a distantobserver.

Contact can be established with the Canadian BroadcastingCorporation, British Broadcasting Corporation, AustralianBroadcasting Commission and other international sources foracquisition of programs of common interest.

In addition to the cultural fare usually associated with internationalprograms, there could be live interconnected broadcasts on aspectsof foreign policy and problems of common concern--development of the north country of Canada, ecology of Lakes Erie and Ontario,balance of payments, etc. National Public Radio could also be aprimary resource for programs on U.S. life for distribution to foreignbroadcasters.

7. Produce materials specifically intended to develop the artand technical potential of radio.

There should be a close working relationship with the NationalCenter for Audio Experimentation at the University of Wisconsin toapply the principles discovered there to the art of broadcasting.Improving the art of the sound medium should be an on-goingconcern at the production center just as newspapers andmagazines constantly improve the format and appearance of theirmedium. The technical staff will be concerned with newdevelopments in studio and remote equipment and the





transmission of material by satellite. National Public Radio shouldutilize the most advanced techniques of the medium, shouldintroduce new concepts and have the highest technical standardsin the field.

odfrey Featherstone, writing in the British publication Anarchysuggests some of the potentials:

Using sounds alone, with no imposed pictures or rigid, linear printtending to fragment and narrow thought processes andimagination, can stimulate a habit of thinking in terms of dynamiccomplexes of ideas or far-reaching constellations or "fields" of imagery. Sound can tap the flow and structures of feelings of ordinary people if they speak directly for themselves about theirlives' central experiences in actuality is made fuller, complex,concrete through the tone, pace, rhythm, and stress of their speech

... Skillfully, tactfully and simply relating actuality material to song,Charles Parker's Radio Ballads ... about the efforts, strengths, risks,hardships discriminating wisdom rooted inmost people's workinglives did this with an impact greater than a multitude of politicalpropaganda efforts.

Vision and Mission: Seven Suggestions Why You Need Both

One of the most common questions that I’m asked is whether thereis any difference between a mission and a vision. It’s a questionthat has a quick answer – yes!-with a whole lot of reasoning behind

it.

I’m always glad to be asked this question because it’s usually askedby a thoughtful person who wants to do their best for theirorganization. The person has likely been reading or talking tosomeone who uses the words mission and vision or perhaps has tofill out a form where they are required. People who ask thisquestion are actually aware that you need to have one if not both,and care enough to find out which they should use.

I think there are good reasons why people talk about mission and

vision these days.

1. The awareness of mission and vision has three majorbases:

• There are many books, articles, conferences speakers thatspeak in lay language about mission and vision. What used to





belong to researchers and high level consultants is noweverywhere for anyone.• There are consultants aplenty who are trained to use oneor the other words and justify neither.• Business models for non-profits use these words and there

continues to be a transference of what is good for the ‘forprofit’ sector to the ‘not for profit’ sector.

2. Funding requirements are now as never before asking for themission and vision to be filled in the blanks.

3. Semantics are more precise because people talk about itmore often. When we invent new words its because this isimportant for communication. I think that the distinctionsbetween mission and vision are becoming more important.

4. There is a trend to making sure that a framework is in place.People care more about how we do things right and are moving

away from the ‘just do it’ approach to one that requires a moreserious framework. The dot com hurry up and get going had itsplace and lost it to be replaced by a calculated and consideredapproach.

Here are 7 questions with answers that might help to provide morerationale as to why an organization needs both a mission and avision:

What exactly are a mission and a vision?

A mission and a vision are statements that have been written toguide certain actions and future states:

• A mission is what an organization does, its action; a vision iswhat an organization would like to happen as a result of theaction that it does.

• Mission equals the action; vision is the ultimate result of theaction.

• Mission answers the question “What would not happen if we werenot here as an organization?” Or more positively, “What changeis achieved because we exist?

• Vision answers the question: “What are the results, the ends, theconsequences of our action?”

• Vision looks forward; mission looks at today.

Do we need both a mission and a vision? Yes. You need to be able to tell yourself both what you do and whyto make sense of your work. I like Joel Barker’s quote from thePower of Vision, a training video for organizations who need





examples about how individuals and organizations use vision fortheir success. Vision without action is merely a dream. Actionwithout vision just passes the time. Vision with action can changethe world. If you have just a mission, the action written, - and notthe vision, you will not know where you’re going or if you have

arrived.In an organization, vision is to leadership as mission is tomanagement. Can everyone be a leader? Can everyone be amanager? No, but you need to have some of both leadership andmanagement.How do we figure out two when one is hard enough to do? Vision-creating is one of those things that people either love or hateto do. If you are part of a team that is giving birth to a vision youneed to try and be creative about how you do this. This kind of thinking, of visioning, takes time; takes lots of input from membersand other key stakeholders; and, I believe it takes a creative and

task-oriented facilitator to help it happen.Which do we decide first - the vision or the mission?Since the vision is the most difficult for most people to come upwith, I suggest that you find the mission first. Focus on theanswering the easiest question first – “what do we do?” which givesyou the mission, then answer the question – “what will happen as aresult of what we do? - which gives you the vision.How often do we change the mission and vision?A vision is tied to the strategic plan and may not change in muchless than 5 years if not more. A mission could change annually andsince it directs the annual or business plan, depends on the

external and internal changes. The mission could change in lessthan 5 years as long as it still fits with the vision.How do we know our vision and mission are right?• People nod when you tell them what you do.• People who are part of your organization can visualize

themselves and what they do in the vision and missionstatements.

• The mission and vision are still exciting to the creators themorning after the retreat.

• The mission and vision make sense for our organization and fitswith all we say we are and do.

• There’s an irresistible pull of emotion in the center of us aroundthe vision – that makes us feel that it’s right.

How long are the vision and mission?Vision and mission statements are just that – brief and concise. If you are writing pages and pages you likely will cause confusion. Onthe other hand, if you make the statements too short you are likelywriting a slogan. Try to keep the vision and mission statements





long enough to make sense and short enough for people toremember, and say, easily.Vision and mission statement are foundational parts of goodgovernance. Organizations which work at having both will find thatthey will have no problem distinguishing between a vision and

mission and using them toward their success.





Q: 2 a) As a manager of any service organization, how would youidentify and analyze strategic gap?

In business and economics, gap analysis is a tool that helps a company to compare its actual

performance with its potential performance. At its core are two questions: "Where are we?" and "Where

do we want to be?" If a company or organization is not making the best use of its current resources or is

forgoing investment in capital or technology, then it may be producing or performing at a level below its

potential. This concept is similar to the base case of being below one's production possibilities frontier .

The goal of gap analysis is to identify the gap between the optimized allocation and integration of the

inputs and the current level of allocation. This helps provide the company with insight into areas which

could be improved. The gap analysis process involves determining, documenting and approving the

variance between business requirements and current capabilities. Gap analysis naturally flows

from benchmarking and other assessments. Once the general expectation of performance in the industry

is understood, it is possible to compare that expectation with the company's current level of performance.This comparison becomes the gap analysis. Such analysis can be performed at the strategic or

operational level of an organization.

Gap analysis is a formal study of what a business is doing currently and where it wants to go in the future.

It can be conducted, in different perspectives, as follows:

1. Organization (e.g., human resources)

2. Business direction

3. Business processes

4. Information technology

Gap analysis provides a foundation for measuring investment of time, money and human resources

required to achieve a particular outcome (e.g. to turn the salary payment process from paper-based to

paperless with the use of a system). Note that 'GAP analysis' has also been used as a means for

classification of how well a product or solution meets a targeted need or set of requirements. In this case,

'GAP' can be used as a ranking of 'Good', 'Average' or 'Poor'. This terminology does appear in

the PRINCE2 project management publication from the OGC (Office of Government Commerce).

The need for new products or additions to existing lines may have emerged from portfolio analyses, in

particular from the use of the Boston Consulting Group Growth-share matrix, or the need will have

emerged from the regular process of following trends in the requirements of consumers. At some point a

gap will have emerged between what the existing products offer the consumer and what the consumer

demands. That gap has to be filled if the organization is to survive and grow.


http://en.wikipedia.org/wiki/Business

http://en.wikipedia.org/wiki/Economics

http://en.wikipedia.org/wiki/Capital_(economics)



http://en.wikipedia.org/wiki/Production_possibilities_frontier

http://en.wikipedia.org/wiki/Operations_research

http://en.wikipedia.org/wiki/Resource_allocation

http://en.wikipedia.org/wiki/Benchmarking



http://en.wikipedia.org/wiki/Organization

http://en.wikipedia.org/wiki/Business_process

http://en.wikipedia.org/wiki/Information_technology

http://en.wikipedia.org/wiki/PRINCE2

http://en.wikipedia.org/wiki/Office_of_Government_Commerce

http://en.wikipedia.org/wiki/Growth-share_matrix



http://en.wikipedia.org/wiki/Economics


http://en.wikipedia.org/wiki/Production_possibilities_frontier

http://en.wikipedia.org/wiki/Operations_research

http://en.wikipedia.org/wiki/Resource_allocation

http://en.wikipedia.org/wiki/Benchmarking


http://en.wikipedia.org/wiki/Organization

http://en.wikipedia.org/wiki/Business_process

http://en.wikipedia.org/wiki/Information_technology

http://en.wikipedia.org/wiki/PRINCE2

http://en.wikipedia.org/wiki/Office_of_Government_Commerce





To identify a gap in the market, the technique of gap analysis can be used. Thus an examination of what

profits are forecasted for the organization as a whole compared with where the organization (in particular

its shareholders) 'wants' those profits to be represents what is called the 'planning gap': this shows what

is needed of new activities in general and of new products in particular.

The planning gap may be divided into three main elements:

Usage gap

This is the gap between the total potential for the market and the actual current usage by all the

consumers in the market. Clearly two figures are needed for this calculation:

market potential

existing usage

Current industrial potential

[edit]Market potential

The maximum number of consumers available will usually be determined by market research, but it may

sometimes be calculated from demographic data or government statistics. Ultimately there will, of course,

be limitations on the number of consumers. For guidance one can look to the numbers using similar

products. Alternatively, one can look to what has happened in other countries.[citation needed ] The increased

affluence of all the major Western economies means that such a lag can now be much shorter.

at least the maximum attainable average usage (there will always be a spread of usage across a range of

customers), will usually be determined from market research figures. It is important, however, to consider

what lies behind such usage......

[edit]Existing usage

The existing usage by consumers makes up the total current market, from which market shares, for

example, are calculated. It is usually derived from marketing research, most accurately from panel

research such as that undertaken by the Nielsen Company but also from ad hoc work. Sometimes it may

be available from figures collected by government departments or industry bodies; however, these are

often based on categories which may make sense in bureaucratic terms but are less helpful in marketing

terms.

The 'usage gap' is thus:

usage gap = market potential – existing usage

This is an important calculation to make. Many, if not most marketers, accept the existing market

size, suitably projected over the timescales of their forecasts, as the boundary for their expansion


http://en.wikipedia.org/w/index.php?title=Gap_analysis&action=edit&section=2


http://en.wikipedia.org/wiki/Wikipedia:Citation_needed





http://en.wikipedia.org/wiki/Nielsen_Company




http://en.wikipedia.org/wiki/Nielsen_Company




plans. Although this is often the most realistic assumption, it may sometimes impose an

unnecessary limitation on their horizons. The original market for video-recorders was limited to the

professional users who could afford the high prices involved. It was only after some time that the

technology was extended to the mass market.

In the public sector, where the service providers usually enjoy a monopoly, the usage gap will

probably be the most important factor in the development of the activities. But persuading more

consumers to take up family benefits, for example, will probably be more important to the relevant

government department than opening more local offices.

The usage gap is most important for the brand leaders. If any of these has a significant share of the

whole market, say in excess of 30 per cent, it may become worthwhile for the firm to invest in

expanding the total market. The same option is not generally open to the minor players, although

they may still be able to target profitably specific offerings as market extensions.

All other gaps relate to the difference between the organization's existing sales (its market share)

and the total sales of the market as a whole. This difference is the share held by competitors. These

gaps will, therefore, relate to competitive activity.

[edit]Product gap

The product gap, which could also be described as the segment or positioning gap, represents that

part of the market from which the individual organization is excluded because of product or service

characteristics. This may have come about because the market has been segmented and the

organization does not have offerings in some segments, or it may be because the positioning of its

offering effectively excludes it from certain groups of potential consumers, because there are

competitive offerings much better placed in relation to these groups.

This segmentation may well be the result of deliberate policy. Segmentation and positioning are very

powerful marketing techniques; but the trade-off, to be set against the improved focus, is that some

parts of the market may effectively be put beyond reach. On the other hand, it may frequently be by

default; the organization has not thought about its positioning, and has simply let its offerings drift to

where they now are.

The product gap is probably the main element of the planning gap in which the organization canhave a productive input; hence the emphasis on the importance of correct positioning.

[edit]Competitive gap

What is left represents the gap resulting from the competitive performance. This competitive gap is

the share of business achieved among similar products, sold in the same market segment, and with

similar distribution patterns - or at least, in any comparison, after such effects have been discounted.











Needless to say, it is not a factor in the case of the monopoly provision of services by the public

sector.

The competitive gap represents the effects of factors such as price and promotion, both the absolute

level and the effectiveness of its messages. It is what marketing is popularly supposed to be about.

[ e d i t ] S e e a l s o

Capability (systems engineering)

Gap analysis (conservation)

[ e d i t ] M a r k e t g a p a n a l y s i s

In the type of analysis described above, gaps in the product range are looked for. Another

perspective (essentially taking the "product gap" to its logical conclusion) is to look for gaps in the

"market" (in a variation on "product positioning", and using the multidimensional "mapping"), which

the company could profitably address, regardless of where the current products stand.

Many marketers would question the worth of the theoretical gap analysis described earlier. Instead,

they would immediately start proactively to pursue a search for a competitive advantage.

The SWOT analysis is an extremely useful tool for understanding anddecision-making for all sorts of situations in business and organizations.SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats.

Information about the origins and inventors of SWOT analysis is below. TheSWOT analysis headings provide a good framework for reviewing strategy,position and direction of a company or business proposition, or any otheridea. Completing a SWOT analysis is very simple, and is a good subject forworkshop sessions. SWOT analysis also works well in brainstormingmeetings. Use SWOT analysis for business planning, strategic planning,competitor evaluation, marketing, business and product development andresearch reports. You can also use SWOT analysis exercises for team buildinggames. See also PEST analysis, which measures a business's market andpotential according to external factors; Political, Economic, Social and Technological. It is often helpful to complete a PEST analysis prior to a SWOTanalysis. See also Porter's Five Forces model, which is used to analysecompetitive position.

A SWOT analysis measures a business unit, a proposition or idea; a PESTanalysis measures a market. A SWOT analysis is a subjective assessment of data which is organized by the SWOT format into a logical order that helpsunderstanding, presentation, discussion and decision-making. The four




http://en.wikipedia.org/wiki/Capability_(systems_engineering)

http://en.wikipedia.org/wiki/Gap_analysis_(conservation)




http://en.wikipedia.org/wiki/Capability_(systems_engineering)

http://en.wikipedia.org/wiki/Gap_analysis_(conservation)





dimensions are a useful extension of a basic two heading list of pro's andcon's (free pro's and con's template here).

SWOT analysis can be used for all sorts of decision-making, and the SWOTtemplate enables proactive thinking, rather than relying on habitual or

instinctive reactions. The SWOT analysis template is normally presented as agrid, comprising four sections, one for each of the SWOT headings:Strengths, Weaknesses, Opportunities, and Threats. The free SWOT templatebelow includes sample questions, whose answers are inserted into therelevant section of the SWOT grid. The questions are examples, or discussionpoints, and obviously can be altered depending on the subject of the SWOTanalysis. Note that many of the SWOT questions are also talking points forother headings - use them as you find most helpful, and make up your ownto suit the issue being analysed. It is important to clearly identify the subjectof a SWOT analysis, because a SWOT analysis is a perspective of one thing,be it a company, a product, a proposition, and idea, a method, or option, etc.

Here are some examples of what a SWOT analysis can be used to assess:

a company (its position in the market, commercial viability, etc) a method of sales distribution a product or brand a business idea a strategic option, such as entering a new market or launching a new product a opportunity to make an acquisition a potential partnership changing a supplier outsourcing a service, activity or resource

an investment opportunityBe sure to describe the subject for the SWOT analysis clearly so that people arecontributing to the analysis, and those seeing the finished SWOT analysis,properly understand the purpose of the

SWOT assessment and implications.

SUBJECT OF SWOT ANALYSIS: (DEFINE THE SUBJECT OF THEANALYSIS HERE)





Strengths Advantages of proposition? Capabilities? Competitive advantages?

USP's (unique selling points)? Resources, Assets, People? Experience, knowledge, data? Financial reserves, likely returns? Marketing - reach, distribution,awareness? Innovative aspects? Location and geographical? Price, value, quality? Accreditations, qualifications,certifications? Processes, systems, IT,

communications? Cultural, attitudinal, behavioural? Management cover, succession?

Weaknesses Disadvantages of proposition? Gaps in capabilities? Lack of competitive strength?

Reputation, presence and reach? Financials? Own known vulnerabilities? Timescales, deadlines andpressures? Cashflow, start-up cash-drain? Continuity, supply chain robustness? Effects on core activities,distraction? Reliability of data, planpredictability? Morale, commitment, leadership?

Accreditations, etc? Processes and systems, etc? Management cover, succession?

Opportunities Market developments? Competitors' vulnerabilities? Industry or lifestyle trends? Technology development andinnovation? Global influences? New markets, vertical, horizontal? Niche target markets? Geographical, export, import? New USP's? Tactics - surprise, major contracts,etc? Business and productdevelopment? Information and research? Partnerships, agencies,distribution?

Volumes, production, economies? Seasonal, weather, fashioninfluences?

Threats Political effects? Legislative effects? Environmental effects?

IT developments? Competitor intentions - various? Market demand? New technologies, services, ideas? Vital contracts and partners? Sustaining internal capabilities? Obstacles faced? Insurmountable weaknesses? Loss of key staff? Sustainable financial backing? Economy - home, abroad? Seasonality, weather effects?

Swot a n a lys i s ex a m p le This SWOT analysis example is based on an imaginary situation. Thescenario is based on a business-to-business manufacturing company, whohistorically rely on distributors to take their products to the end user market.





The opportunity, and therefore the subject for the SWOT analysis, is for themanufacturer to create a new company of its own to distribute its productsdirect to certain end-user sectors, which are not being covered or developedby its normal distributors.

Subject of SWOT analysis example: the creation of owndistributor company to access new end-user sectors notcurrently being developed.

Strengths End-user sales control anddirection. Right products, quality andreliability. Superior product performance vscompetitors. Better product life and durability.

Spare manufacturing capacity. Some staff have experience of end-user sector. Have customer lists. Direct delivery capability. Product innovations ongoing. Can serve from existing sites. Products have requiredaccreditations. Processes and IT should cope. Management is committed andconfident.

Weaknesses Customer lists not tested. Some gaps in range for certainsectors. We would be a small player.

No direct marketing experience. We cannot supply end-users abroad. Need more sales people. Limited budget. No pilot or trial done yet. Don't have a detailed plan yet. Delivery-staff need training. Customer service staff need training. Processes and systems, etc Management cover insufficient.

Opportunities Could develop new products. Local competitors have poorproducts. Profit margins will be good. End-users respond to new ideas. Could extend to overseas. New specialist applications. Can surprise competitors. Support core business economies.

Could seek better supplier deals.

Threats Legislation could impact. Environmental effects would favourlarger competitors. Existing core business distributionrisk. Market demand very seasonal. Retention of key staff critical. Could distract from core business. Possible negative publicity. Vulnerable to reactive attack bymajor competitors.

See also the free PEST analysis template and method, which measures abusiness according to external factors; Political, Economic, Social and Technological. It is often helpful to complete a PEST analysis prior tocompeting a SWOT analysis.See also Porter's Five Forces model.





Mor e on the d i f fe rence an d re la t i on sh ipb e tween P E ST a n d SWO T

PEST is useful before SWOT - not generally vice-versa - PEST definitely helpsto identify SWOT factors. There is overlap between PEST and SWOT, in that

similar factors would appear in each. That said, PEST and SWOT are certainlytwo different perspectives:PEST assesses a market, including competitors, from the standpoint of aparticular proposition or a business.SWOT is an assessment of a business or a proposition, whether your own ora competitor's.Strategic planning is not a precise science - no tool is mandatory - it's amatter of pragmatic choice as to what helps best to identify and explain theissues.PEST becomes more useful and relevant the larger and more complex thebusiness or proposition, but even for a very small local businesses a PEST

analysis can still throw up one or two very significant issues that mightotherwise be missed. The four quadrants in PEST vary in significance depending on the type of business, eg., social factors are more obviously relevant to consumerbusinesses or a B2B business close to the consumer-end of the supply chain,whereas political factors are more obviously relevant to a global munitionssupplier or aerosol propellant manufacturer.All businesses benefit from a SWOT analysis, and all businesses benefit fromcompleting a SWOT analysis of their main competitors, which interestinglycan then provide some feed back into the economic aspects of the PESTanalysis.

T h e o r ig in s o f th e SWO T a n a lys i s m od e l This remarkable piece of history as to the origins of SWOT analysis wasprovided by Albert S Humphrey, one of the founding fathers of what we knowtoday as SWOT analysis. I am indebted to him for sharing this fascinatingcontribution. Albert Humphrey died on 31 October 2005. He was one of thegood guys.SWOT analysis came from the research conducted at Stanford ResearchInstitute from 1960-1970. The background to SWOT stemmed from the needto find out why corporate planning failed. The research was funded by thefortune 500 companies to find out what could be done about this failure. TheResearch Team were Marion Dosher, Dr Otis Benepe, Albert Humphrey,Robert Stewart, Birger Lie.It all began with the corporate planning trend, which seemed to appear firstat Du Pont in 1949. By 1960 every Fortune 500 company had a 'corporateplanning manager' (or equivalent) and 'associations of long range corporateplanners' had sprung up in both the USA and the UK.





However a unanimous opinion developed in all of these companies thatcorporate planning in the shape of long range planning was not working, didnot pay off, and was an expensive investment in futility.It was widely held that managing change and setting realistic objectiveswhich carry the conviction of those responsible was difficult and often

resulted in questionable compromises. The fact remained, despite the corporate and long range planners, that theone and only missing link was how to get the management team agreed andcommitted to a comprehensive set of action programmes. To create this link, starting in 1960, Robert F Stewart at SRI in Menlo ParkCalifornia lead a research team to discover what was going wrong withcorporate planning, and then to find some sort of solution, or to create asystem for enabling management teams agreed and committed todevelopment work, which today we call 'managing change'. The research carried on from 1960 through 1969. 1100 companies andorganizations were interviewed and a 250-item questionnaire was designed

and completed by over 5,000 executives. Seven key findings lead to theconclusion that in corporations chief executive should be the chief plannerand that his immediate functional directors should be the planning team. DrOtis Benepe defined the 'Chain of Logic' which became the core of systemdesigned to fix the link for obtaining agreement and commitment.

1. Values2. Appraise3. Motivation4. Search5. Select6. Programme7. Act8. Monitor and repeat steps 1 2 and 3

We discovered that we could not change the values of the team nor set theobjectives for the team so we started as the first step by asking the appraisalquestion ie what's good and bad about the operation. We began the systemby asking what is good and bad about the present and the future. What isgood in the present is Satisfactory, good in the future is an Opportunity; badin the present is a Fault and bad in the future is a Threat. This was called theSOFT analysis.When this was presented to Urick and Orr in 1964 at the Seminar in LongRange Planning at the Dolder Grand in Zurich Switzerland they changed the

F to a W and called it SWOT Analysis.

SWOT was then promoted in Britain by Urick and Orr as an exercise in and of itself. As such it has no benefit. What was necessary was the sorting of theissues into the programme planning categories of:

1. Product (what are we selling?)2. Process (how are we selling it?)3. Customer (to whom are we selling it?)





4. Distribution (how does it reach them?)5. Finance (what are the prices, costs and investments?)6. Administration (and how do we manage all this?)

The second step then becomes 'what shall the team do' about the issues ineach of these categories. The planning process was then designed throughtrial and error and resulted finally in a 17 step process beginning withSOFT/SWOT with each issue recorded separately on a single page called aplanning issue. The first prototype was tested and published in 1966 based on the work doneat 'Erie Technological Corp' in Erie Pa. In 1970 the prototype was brought tothe UK, under the sponsorship of W H Smith & Sons plc, and completed by1973. The operational programme was used to merge the CWS milling andbaking operations with those of J W French Ltd. The process has been used successfully ever since. By 2004, now, thissystem has been fully developed, and proven to cope with today's problemsof setting and agreeing realistic annual objectives without depending on

outside consultants or expensive staff resources.

T h e s even k ey r es ea r ch f i n d in g s The key findings were never published because it was felt they were toocontroversial. This is what was found:1) A business was divided into two parts. The base business plus thedevelopment business. This was re-discovered by Dr Peter Senge at MIT in1998 and published in his book the 5th Dimension. The amount of development business which become operational is equal to or greater thanthat business on the books within a period of 5 to 7 years. This was a majorsurprise and urged the need for discovering a better method for planning

and managing change.2) Dr Hal Eyring published his findings on 'Distributive Justice' and pointedout that all people measure what they get from their work and divide it bywhat they give to the work and this ratio is compared to others. If it is notequal then the person first re-perceives and secondly slows down if addeddemands are not met. (See for interest Adams Equity Theory and the Equity Theory3) The introduction of a corporate planner upset the sense of fair play atsenior level, making the job of the corporate planner impossible.4) The gap between what could be done by the organisation and what wasactually done was about 35%.

5) The senior man will over-supervise the area he comes from. Finance-Finance, Engineering-Engineering etc.6) There are 3 factors which separate excellence from mediocrity:a. Overt attention to purchasingb. Short-term written down departmental plans for improvementc. Continued education of the Senior Executive





7) Some form of formal documentation is required to obtain approval fordevelopment work. In short we could not solve the problem by stoppingplanning.

In conclusionBy sorting the SWOT issues into the 6 planning categories one can obtain a

system which presents a practical way of assimilating the internal andexternal information about the business unit, delineating short and long termpriorities, and allowing an easy way to build the management team whichcan achieve the objectives of profit growth. This approach captures the collective agreement and commitment of thosewho will ultimately have to do the work of meeting or exceeding theobjectives finally set. It permits the team leader to define and develop co-ordinated, goal-directed actions, which underpin the overall agreedobjectives between levels of the business hierarchy.

Q. 2) B. Select any firm from manufacturing sector;discuss the general environment technology to leveragehuman capital and knowledge?

Answer)

ANALYSIS OF COMPETITION The third element of Strategic analysis is to look at the competitiveenvironment - what your Competitors are doing, where the nexttechnological developments are coming from and the general directions the

market is moving.





Competitive and environmental analysisA competitive and environmental analysis of your markets should include allthe key influencing factors that affect the way in which you can compete. Acompetitive review is important for two reason.

Firstly, even if you know what the customers want and have the resources tomeet the customers' demands, it may be that the competitive environmentmeans that it is not worth pursuing particular parts of the market for a wholerange of strategic reasons, such as the threat a price war, channel conflict,or legal or ethical considerations.Secondly, you need to know if your competitors are doing things better thanyou are, or more dangerously, whether they are looking to change the basisof competition in the market, for instance by moving to a direct sales model,or by introducing some revolutionary new product or technology. The main types of competitive analysis from a strategic point of view are:

"The Five Forces"

Benchmarking and competitive evaluationMarket Intelligence is the primary mechanism for gathering informationabout competitors (although some may come from talking to customers inyour own market surveys). Notanant is our on-line market knowledgesystem for collecting, sharing and managing customer and competitorknowledge provided by Gegen CIS.

Five forces The five forces come from Porter's famous framework and are:

Power of Buyers Power of Suppliers

Threat of substitutes Barriers to entry Competitors

The idea is that change in your market is likely to come as the basis of one of these five areas. For instance, buyers may distort the market by forcingprices down, or by deciding to take build products in-house.In considering how these "forces" act on your markets, you get a picture of issues such as channel conflict, threats from vertical integration, the impactof regulatory change or the advent of new technology. You can also take aview as to how you are or can affect the competitive situation for your ownbenefit, rather than statically accepting the status quo.

Consequently it becomes possible to play around with different futurecompetitive scenarios and to use these to test different propositions to tryand guess how the market will change. Your strategy can then includecontingencies and responses to changes that might affect you, or changesthat you might make to the market.

BENCHMARKING


http://www.notanant.com/

http://www.notanant.com/




Q3: Suppose you are running a large scale businessorganization, how will you use the technology to leveragehuman capital and knowledge?

Answer)Businesses are racing to gain and sustain advantage in today's globallycompetitive business environment. Digital age technology is rapidly shiftingwhere and how business is done. The pressure for profitability, to decreasethe cost of production and increase revenues, fuels the need to leverage allof the sources of capital a company can access--including human capital.HR's response has been to become HR strategic business partners. This is agreat and necessary step, but the stakes are high and we need to shift gearsfaster--and think bigger! Either we move up the business value chain, or weslide down it driven by the twin and intertwined forces of technology andoutsourcing that are already reshaping HR.

The term human capital management (HCM) is entering our lexicon of change. Most use the term interchangeably with HR, but HCM can and shouldbe more than HR with a new name. HCM is a C-suite business discipline thatdevelops enterprise human capital strategies and ensures the human capitalportfolio is effectively managed. Just as the chief financial officer (CFO) is afull senior partner in identifying and solving business issues from a financialperspective, the chief human capital officer (CHCO) is a full senior partner inidentifying and solving business issues from a human capital perspective. AsC-suite members, the CFO and CHCO are accountable for overall enterpriseperformance. Both also have responsibilities for enabling business operations

and the performance of their organizations.

HCM provides decision support by combining business and workforceintelligence to the development of enterprise human capital strategies: howto leverage people and their ideas effectively to achieve bottom-linebusiness goals such as growing the business, increasing market share,margins, share price, and decreasing SG&A costs, as well as improvingbusiness processes, benefiting from technology investments, and increasingproductivity.

The future of HR and the emergence of HCM are big topics. In this article we

touch on a few starter points, hoping to open up further dialogue.Human Capital Management--Strategic DomainsLeadership Capital: Executive performance and credibilityStructural Capital: Governance, business structure, processes, andtechnologyWorkforce Capital: Employees, contingent labor, outsourcers,suppliers, and partnersCultural Capital: Ethics, values, relationships, and reputation


http://www.entrepreneur.com/tradejournals/article/166051337.html#%23





Intellectual Capital: Innovations, inventions, and knowledgemanagementLeadership Capital: Strategy

Determining strategies for growth is a significant component of leadership

performance. Growing the business is as much a human capital decision as itis a product/service and financial decision. Organic growth throughextending existing products, adding new products, opening sales channels orexpanding into new markets requires human capital resources. HCMconsiders the state of the enterprise innovation engines, SG&A impact, andthe leadership and workforce options and costs of expanding and operatingin new channels, markets, or geographies.

Perhaps it is time to "buy" growth through a merger or acquisition (M&A).Have you noticed when a major M&A deal is initially announced the stock of the acquired company usually goes up and the stock of the acquiring

company goes down? Shareholder skepticism is justified, as many mergersdo not produce all the promised results. The wheeling and dealing of an M&Ais heady, but the aftermath is often simply a headache. If the M&A valueproposition is based on anything more than merely buying the tangible bookvalue assets and market footprint, then increased HCM due diligence andpreplanning for the post merger integration is critical before deal fever kicksin.

STRUCTURAL CAPITAL: GOVERNANCEOperating structure and governance exist to facilitate achievement of thebusiness goals in the current environment and at each stage of the business

life cycle. To be public or private, centralized, decentralized, or a holdingcompany should be based on how well the needs of the business are metnow, not on just the preferences of the current management team or whatworked in the past.

Structuring the board and senior leadership team, defining managementroles and responsibilities, designing total executive compensation packagesand employment contracts are among the most powerful domains of HCM,and are currently under intense public and stakeholder scrutiny.

Public companies need a balance of internal power and controls between the

C-suite members and the board of directors. Without better corporatediscipline, plenty of regulatory and legislative bodies are ready to step inwith more regulations and legislation, and overreaching requirements, likeSarbanes Oxley, will continue to drive up compliance costs. Part of thatbalance could be a strong CHCO backed by a professional body of HCMethics and standards.Workforce Capital Strategy and structure are only as valuable as the resultsproduced. The "make vs. buy" decision extends to more than products and







services. An employee-based workforce is only one of today's many choices.HCM critically assesses the competitive advantage of any work done in-house and explores an extended workforce portfolio to determine theoptimum mix of full- and part-time employees, contingent workers,outsourced work, and suppliers or partners.

HCM includes influencing external workforce sourcing, contracting, andmanagement to ensure vendor capabilities and controls in areas such astraining, turnover, and incentive transparency, in addition to competitivepricing and service levels.

In telecommunications, when a telemarketer's employees make bad sales inyour name ("slamming"), it is your company that will be in the news and payfines to regulatory agencies. If your customer care outsourcer has poortraining and high turnover, your company's customers will be dissatisfied

and perhaps lost. In business process outsourcing (BPO), you are buyingperformance and results; you are not managing the vendor's processes, butyou do need to know that they are!

Offshoring work? HCM goes beyond labor arbitrage to review the decisiondrivers and business implications of where work is done. Would an offshoreinvestment add needed HCM capability and flexible capacity? Would yourecommend expansion via a "captive," an acquisition, or an outsourcer? Dothe risk management calculations of using a low-cost country and weigh thebusiness impact of outsourcing back office, mid office, and front office work. The question must be asked: Why use people at all? HCM looks for cost-

effective technology to enable direct access and self-service across the valuechain. Technology displacement of labor is a fact of life in most industries(including HR). Use people where complexity, judgment, and personalinteraction add competitive advantage. Get ahead of the curve by ensuringtechnology investments are made in alignment, managing the total cost of labor and the value propositions of the business.

CULTURAL CAPITALNow more and more of a company's market value is in "intangibles" ratherthan book value. Today's performance results and tangibles such as cashand inventory on the balance sheet are easy to understand, measure, and

manage--at least easier than concepts that drive stakeholder actionsfounded on beliefs about the future. Belief in the sustainability of profitablegrowth and competitive advantage drives much of the intangible marketvalue. Perceptions about culture, operational values, ethics, and behaviors of the leaders and the workforce influence customer, investor, and employeedecisions.







Effective cross-functional and organizational collaboration can increasespeed to market and in turn support external brand reputation. Cultural fitsupports strategic alignment and interdependence of action acrossincreasingly diverse people and places, businesses and supply chains.Cultural compatibility between alliance partners, or the talent acquired in an

M&A, may mean the difference in finishing first or worst.Intellectual Capital

Human capital management is about people and their ideas, and thecapability to leverage both in achieving business strategies and goals. Agreat salesperson is a valued asset. But one salesperson can only reach andserve so many clients, no matter how capable. People have built-in capacityconstraints. If you leverage the learning and competencies of the one to trainothers or to improve staffing selection criteria, you can achieve a greaterlevel of performance for many.

The common thread across income from patents and new products,proprietary processes that enable competitive advantage (think Wal-Martand eBay), or operational efficiencies that increase productivity and reduceexpense is people and the leveraging of their ideas to increase transferableknowledge, repeatable results, and sustainable advantage.

What HCM Brings to the TableHuman capital decisions are made all the time in businesses. Why add HCMas a discipline? Because a series of scattered one-off decisions maysuboptimize the overall workforce portfolio, and missteps with people in onearea often have negative public consequences for the whole company. The

CHCO does not own or make sole decisions in every area mentioned. The keyis to have the enterprise HCM strategic view and management of the totalcost of human capital led by a responsible and accountable senior leaderwith the authority of a C-suite seat at the CEO's table.

HCM strategic decision support requires extensive authoritative external andinternal business and workforce intelligence with a credible understanding of business financials and operations. The CHCO should be the first and mostinformed source of what is going on externally with the world of work relatedto your company, competitors, and industry. Internal business intelligence requires data mining, metrics, and analytics. HR is too often well back in the

pack in terms of producing metrics at the business impact level. It is hard tohave business intelligence without intelligent IT systems and the analyticcapabilities to interpret the data. When upgrading the enterprise ERP or theinternal HR technology infrastructure, or embarking on comprehensiveplatform outsourcing, be sure to design in (and invest in) the diagnostic andreporting capabilities to identify, analyze, and measure performance of theenterprise's use of human capital.







Where Does HR Fit? The Push and the PullWe have been looking at the pull: the strategic aspects and advantages tobe gained, such as business growth, improved productivity, and profitability.Leadership development and succession planning, talent management,performance management, employee development, compensation, and

benefits are as important as ever. Depending on the company and culture,the HCM elements may be led by HR, or the CHCO may be a separate office. The push is on as well. HR technology that enhances employee and managerself-services at less total cost is a win for our clients and customers, and HRoutsourcing is an increasingly viable option. But if HR technology is selectedpiecemeal and if outsourcing is based only on cost cutting, you may end upperpetuating treatment of HR as a cost center to be driven down to thelowest cost. Done well, technology and outsourcing (or a centralized sharedservices center) will free up more of HR to be strategic business partners.But time availability does not equal HCM capability. These twin forces willbetter serve HR and our businesses if they are part of an overall HR strategy

and transformation plan.

HCM is about the enterprise, about human capital options expressed indollars and data. This is a hot-seat position, not one for the faint of heart. Noris it a position for a cold, numbers-only bottom liner. Each race is run andwon, or lost, with real people with real lives. Trading the car I drive does nothurt the feelings of the car--I have no obligation to it. Cutting jobs, adding jobs, investing in a global extended workforce all carry obligations--moral,financial, legal, political--and the entire enterprise network of customers,employees, shareholders, and communities may be affected.

HCM is a cross-functional, cross-enterprise leadership discipline withoversight and decision-making responsibility and accountability. It requiresbusiness and financially savvy, technology-aware, data-embracing, seniorleaders who bring strategic human capital expertise, business intelligence,and judgment to the C-suite table. There is much overlap with HR, but there is a core difference. Today's HRconcentrates on employees and not enough on the broader workforce andissues that impact the enterprise's success. HCM increases the scope toinclude all of the sources of human capital, wherever they reside in thehuman capital value chain.

The good news is that HCM is not yet fully defined. We can define it, shape it,and bring it into creation--if we shift gears faster and think bigger!


http://www.entrepreneur.com/tradejournals/article/166051337_2.html#%23







Q4: For any government Organization in Pakistan, Whatwill be the challenges and implications for the strategydevelopment of Human Resource Management? Discuss indetail.

Answer)

INFORMAT ION AND SERVICESGovernment of Pakistan provides services in almost all departments of life. Thissection is about facilitating citizen access to public services in a way that issignificantly more convenient than what has traditionally obtained. It is dedicated tothe management of information and services related to different departments of thecountry.

The section provides accurate information on government policies, programmes,services and activities, with a view to generating public support for thesegovernment policies, programmes, services and activities, thereby creating the

environment of mutual success.

Why is HRM Strategy needed? The HRM Strategy is the basic document of the HRM Function, whichdescribes the desired state of the human capital in the organization and thedesired state of the HRM Function. The HRM Strategy has to be developed based on the overall businessstrategy and it has fully followed the main initiatives included in the businessstrategy. The HRM Management Team has to focus on the clear design anddefinition of the HRM Strategy. The HRM Strategy has two main goals:

• Helping the organization to understand to the priorities and initiatives of theHRM Function;

• Helping to the employees of the HRM Function to prioritize the activities of the function.

The HRM Strategy is the main document to make a good promotion of theinitiatives and plans of the HRM Function among the management populationin the organization. The HRM Strategy defines the final desired state of theHRM Function and the way how to get there. The managers can support the initiatives of the HRM Function when theyfully understand the whole concept and can provide the employees with the

correct explanation. The managers cannot support any activities, when theydo not know or understand the next steps to be taken. The HRM Employees need the same as the managers. The HRM Strategyprovides HRM Employees with the common basis for the discussions with theemployees, managers and other members of the HRM Team. The employeesof the HRM have to find their place in the HRM Strategy and their ownpossible contribution. The employees of the HRM Function can use the HRM





Strategy as the basis for their own development and the possibility to findthe gaps in their skills and competencies. The main role of the HRM Strategy is to provide the basis for the decisionmaking in the HRM Function, but the role of the main communication tool of the HRM Function is also very important.

SUCCESSFUL HR STRATEGY HR Strategy is a much misused term in many HRM Departments. HRStrategy is the basic document for Human Resources demonstrating themost important goals in the future. It is derived directly from the BusinessStrategy and must be agreed by the top management of the company.HR Strategy is a document to show the employees in HRM and the rest of the organization the main imperatives and key initiatives of HumanResources to be achieved and how they will impact the whole organization.HR Strategy can be completely new and innovative, but many times the HRStrategy uses the basic blocks, which can be found on the market and

putting just different priorities. Generally, there are about 10 different HRStrategies, which are used and the priorities and initiatives differ.Also, the HR Strategy is very dependant on the sector, in which theorganization operates. The manufacturing company can have very differentHR Strategy from the financial institution.

HRM STRATEGIC CHALLENGES The HRM Function has some strategic challenges, which will affect thewhole organization in the future. The strategic challenges will change theorganization of the HRM Function and its role in the organization. The current role of the HRM Function is about providing services to the

organization and the managers are clear clients of the HRM Processes. TheHRM Function usually do not provide challenging questions and initiatives tothe organization and the business leaders do not have to worry about theHRM Function as the salaries are paid correctly at every pay date defined bythe organization. The main HRM Strategic Challenges can be defined in four main areas:

• Leadership Development;• Management Development;• Globalization;• Outsourcing.•

The Leadership Development is one of the biggest HRM Challenges. Theleadership development is the only way to secure the organization for thefuture. The supply of the leaders is very limited and the organization has tofocus on the growth of the potential available inside the organization. TheHRM Function has to take the responsibility for the initiatives to identify andgrow the potential inside the organization and to secure the best potential tostay in the organization. The leadership development initiatives are





extremely costly, but the organization has to recognize the need to invest insuch initiatives. This is a major HRM Challenge.

The line management is another HRM Challenge. The line managementis the main user and client of the HRM Value Added processes and they have

to be able to use the processes correctly. The HRM Function can be seen asthe enemy, but the HRM Challenge is to develop and train the linemanagement in the daily usage of the value added HRM Processes to makethe organization more efficient.

The globalization is another HRM Challenge. The HRM Function has tomake its policies, procedures and processes to work on the global level.Currently, most of the HRM Policies is focused on the concrete country, butthe employees have to start to move from the country to another countryand the HRM Processes have to be able to support such a need in theorganization. The globalization has a huge impact on the HRM Function and

the it is usually not ready to take more responsibility in the movement of theworkforce around the Globe.

The outsourcing is the main issue for the HRM Function. The HRM Functionhas to be able to outsource its non-core services for the organization and ithas to be able to keep the service level for the organization. The outsourcingHRM Challenge is pretty huge as it requests a lot of standardization andpractice from the HRM Function.

IMPACT OF CORPORATE CULTURE ON HR STRATEGY Corporate Culture is one of key elements for Human Resources. Corporate

Culture is a very difficult complex of corporate values, decision processesand human behavior in each organization.Generally, the Corporate Culture consists of 4 main building blocks:

• The attitudes,• Experiences,• Beliefs.• Values

The Corporate Culture is not born, it evolves and develops over a longer period of time and it is not created by the single person. The corporate culture forms thenorms in the organization. The corporate culture is the most important aspect, whenevaluating the formal and informal decision processes in different organizations.

The corporate culture with the stress on informal behavior of employees willdefinitely lead to less formal decision processes and will support the quick reactionto the external changes on the market.

It is not possible to say, that one Corporate Culture is better than the otherone. Each Corporate Culture is very unique and the external observer can just make a judge about the general approach and stresses inside thecorporate culture.





HRM is responsible for recognizing the competitive advantages in thecorporate culture. On the job market the corporate culture can be anexcellent opportunity for the company to differ from the competitors. In casethe other competitors are really formal companies, the informal companycan win a lot of excellent candidates, just based on the fact of the informal

corporate culture.

HRM is many time responsible for corporate culture, but this is a nonsense. The corporate culture is not set by Human Resources and it is not set by anyinternal procedure. The corporate culture is set by the behavior of topmanagement and the potential change of the corporate culture is a very longrun, which fails many times as the top management does not demonstratethe will to change the corporate culture by its own decisions and examples.

For Human Resources the corporate culture is a huge challenge to adjustits own behavior and style – internally and externally. The corporate culture

is in many cases the most important factor to sell the organization as thebest employer in the neighborhood. For HRM, the corporate culture is a veryimportant input for setting the HR Strategy.

THE ORGANIZATIONAL CLIMATE The organizational climate was defined by two psychologists ... Litwin andStringer. Later Mr. McClelland redefined their original version of the theory of the organizational climate. The whole concept of the organizational climate refers to the main 6 keyfactors of the working environment.Generally, the organizational climate is not a topic to ignore in the seriousbusiness discussions as the studies conducted bring the amazing results. The

organizational climate has the overall impact of 33, 3% on the success of theorganization in the changing world around us.T h e 6 k e y f a c t o r s o f t h e O r g a n i z a t i o n a l C l i m a t e The organizational climate has 6 key elements:

• Flexibility – how free the employees are to innovate• Responsibility – degree to which the employees feel free to work without

asking for the permission and guidance from the manager• Standards – the sign the organization emphasizes the excellence, that the

goals for the employees are really high but attainable• Rewards – the employees have to receive regular feedback and that they

are rewarded accordingly• Clarity – the employees know, what is expected from them and how their

efforts relate to the organizational goals• Team Commitment – the employees have to know they belong to the

winning team or the winning organization and that all of the employees worktowards the same goals or objectives.

The Organizational Climate Paradox





The manager or the leader cannot fulfill all the 6 key elements immediately.But out of 6 key elements of the organizational climate, the three ones arereally key from the real beginning:

• Standards• Clarity• Team Commitment

When these three elements are not met, the motivation of employees is lostand the position of the manager is in the danger as the team can start thesearch for the informal leader. Also, you can read more about the corporate culture as this is also very important for the organizational climate.


http://hrmadvice.com/hrmadvice/hr-strategy/corporate-culture.html







Q. 5: (A) How an International organization develop itsdifferent strategies? Explain the factors effectinginternational strategies.

Answer)Globalization was the buzzword of the 1990s, and in the twenty first century,there is no evidence that globalization will diminish. Essentially, globalizationrefers to growth of trade and investment, accompanied by the growth ininternational businesses, and the integration of economies around the world.According to Punnett (2004) the globalization concept is based on a numberof relatively simple premises:

o Technological developments have increased the ease and speed of

international communication and travel.o Increased communication and travel have made the world smaller.o A smaller world means that people are more aware of events outside of their

home country, and are more likely to travel to other countries.o Increased awareness and travel result in a better understanding of foreign

opportunities.o A better understanding of opportunities leads to increases in international

trade and investment, and the number of businesses operating acrossnational borders.

o These increases mean that the economies around the world are more closely

integrated.

Managers must be conscious that markets, supplies, investors, locations,partners, and competitors can be anywhere in the world. Successfulbusinesses will take advantage of opportunities wherever they are and will

be prepared for downfalls. Successful managers, in this environment, needto understand the similarities and differences across national boundaries, inorder to utilize the opportunities and deal with the potential downfalls.

The globalization of business is easy to recognize in the spread of manybrands and services throughout the world. For example, Japanese electronicsand automobiles are common in Asia, Europe, and North America, while U.S.automobiles, entertainment, and financial services are also common in Asia,Europe, and North America. Moreover, companies have becometransnational or multinational-that is, they are based in one country but haveoperations in others. For example, Japan-based automaker Honda operates

the largest single factory in the United States, while U.S. based Coca-Colaoperates plants in other countries including France and Belgium—with about80 percent of that company's profits come from overseas sales.

During the early1990s, there were reasons to feel that globalization wasworking. The economic success of Singapore, the rapid economic growth inthe Asian Tigers (as the Asian countries that grew rapidly were called), theindustrializing of countries, such as Brazil and Mexico, and a variety of other





positive economic events around the world suggested that the results of globalization were indeed good for development in poorer countries, as wellas in richer ones. During the 1990s, the United States experienced one of itsmost sustained periods of growth as well, and there was much talk of a "neweconomy", based on globalization, which was immune to economic shocks

and recession.

Unfortunately, this rapid growth was not without consequences. The Seattlemeetings of the World Trade Organization turned into a fiasco, with anti-globalization groups demonstrating against globalization on all fronts—fromanimal rights to environmental concerns, poverty alleviation, and jobs forAmericans. The anti-globalization forces have not coalesced into a coherentwhole because they represent such diverse and often contradictory views. The vehemence of their protests, however, makes it clear that globalizationis not a panacea for the world's problems. In addition, the Asian Tigerssuffered major economic setbacks in the late 1990s. In 2002, Argentina's

economy, which had been one of the stars of the 1990s, crashed, when thecountry could no longer maintain its currency at par with the U.S. dollar.

Further problems occurred in the Triad economies. Japan, Europe, and theUnited States, often referred to as the Triad, dominated international tradeand investment for much of the second half of the twentieth century. The Japanese economy went into a severe period of recession and deflation inthe late 1990s, and in 2001 both the European and the U.S. economies tooka downward turn as well. In turn, the rest of the world was negativelyaffected by the economic situation in the Triad. The terrorist attacks in theUnited States in September, 2001, exacerbated this already negative

economic situation.

In developing appropriate global strategies, managers need to take thebenefits and drawbacks of globalization into account. A global strategy mustbe in the context of events around the globe, as well as those at home.

International strategy is the continuous and comprehensive managementtechnique designed to help companies operate and compete effectivelyacross national boundaries. While companies' top managers typicallydevelop global strategies, they rely on all levels of management in order toimplement these strategies successfully. The methods companies use to

accomplish the goals of these strategies take a host of forms. For example,some companies form partnerships with companies in other countries, othersacquire companies in other countries, others still develop products, services,and marketing campaigns designed to





Table: 1 Differences between Domestic and International Strategy

Source: World Bank Appeal to customers in other countries. Some rudimentary aspects of international strategies mirror domestic strategies in that companies mustdetermine what products or services to sell, where and how to sell them,where and how they will produce or provide them, and how they willcompete with other companies in the industry in accordance with company

goals.

The development of international strategies entails attention to other detailsthat seldom, if ever, come into play in the domestic market. These otherareas of concern stem from cultural, geographic, and political differences.Consequently, while a company only has to develop a strategy taking intoaccount known governmental regulations, one language (generally), and onecurrency in a domestic market, it must consider and plan for different levels


actors

Domestic Conditions Global Conditions

ulture Homogeneous Heterogeneous

urrency Uniform Different currencies and exchange rate

conomy Stable and uniform May be variable and unpredictable

Government Stable May be unstable

abour Skilled workers available Skilled workers may be hard to find

anguage Generally a single language Different languages and dialects

Marketing Many media, few restrictions May be fewer media and more restricti

ransport Several competitive modes May be inadequate




and kinds of governmental regulation, multiple currencies, and severallanguages in the global market.

The most recent wave of globalization by U.S. companies began in the1980s, as companies began to realize that concentrating on the domestic

market alone would lead to stagnant sales and profits and that emergingmarkets offered many opportunities for growth. Part of the motivation forthis globalization stemmed from the lost market share in the 1970s tomultinational companies from other countries, especially those from Japan.Initially, these U.S. companies tried to emulate their Japanese counterpartsby implementing Japanese-style management structures and quality circles.After adapting these practices to meet the needs of U.S. companies andrecapturing market share, these companies began to move into new marketsto spur growth, enable the acquisition of resources (often at a costadvantage), and gain competitive advantage by achieving greatereconomies of scale.

The globalization of U.S. companies has not been without concerns anddetractors. Exporting U.S. jobs, exploiting child labor, and contributing topoverty have all been charges laid at the doors of U.S. companies. Thesecharges have been accompanied by demonstrations and consumer boycotts.

Nor have U.S. companies been the only ones affected. Companies in the restof the developed world have globalized along with U.S. companies, and theyhave also faced the sometimes negative consequences.

Interestingly, in the late twentieth and early twenty-first century, there has

also been a growth in international companies from developing andtransitional countries, and this trend can be expected to continue andincrease. Exports and investment from the People's Republic of China are anotable example, but companies from Southeast Asia, India, South Africa,and Latin America, to name some countries and regions, are makingthemselves known around the world.

T Y P E S O F G L O B AL B U S IN E SS AC T IV IT IE SBusinesses may choose to globalize or operate in different countries in fourdistinct ways: through trade, investment, strategic alliances, and licensing orfranchising. Companies may decide to trade tangible goods such as

automobiles and electronics (merchandise exports and imports).Alternatively, companies may decide to trade intangible products such asfinancial or legal services (service exports and imports).Companies may enter the global market through various kinds of international investments. Companies may choose to make foreign directinvestments, which allow them to control companies and assets in othercountries. In addition, companies may elect to make portfolio investments,





by acquiring the stock of companies in other countries in order to gaincontrol of these companies.Another way companies tap into the global market is by forming strategicalliances with companies in other countries. While strategic alliances come inmany forms, some enable each company to access the home market of the

other and thereby market their products as being affiliated with the well-known host company. This method of international business also enables acompany to bypass some of the difficulties associated withinternationalization such as different political, regulatory, and socialconditions. The home company can help the multinational company addressand overcome these difficulties because it is accustomed to them.

Finally, companies may participate in the international market by eitherlicensing or franchising. Licensing involves granting another company theright to use its brand names, trademarks, copyrights, or patents in exchangefor royalty payments. Franchising, on the other hand, is when one company

agrees to allow a company in another country to use its name and methodsof operations in exchange for royalty payments.

OVE RVIE W OF INTE RNAT IONAL STRATE GY DEVELOPMENT

Generally, a company develops its international strategy by considering itsoverall strategy, which includes its operations at home and abroad. We canconsider four aspects of strategy: (1) scope of operations, (2) resourceallocation, (3) competitive advantage, and (4) synergy. The first componentencompasses the geographic locations—countries and regions—of possibleoperations as well as possible markets or niches in various regions. Since

companies have limited resources and since different regions offer differentadvantages, managers must select the markets that offer the company theoptimal opportunities.

The second component of the global strategy focuses on use of companyresources so that a company can compete successfully in the chosenmarkets. This component of strategy planning also determines the relativeimportance of various company functions and bases the allocation of resources on the relative importance of each function. For instance, acompany may decide to allocate its resources based on product lines orgeographical locations.

Next, management must decide where the company can achievecompetitive advantage over other companies in the industry. Managementcan identify their competitive advantage by determining what the companydoes better (or can do better) than its competitors. Companies may realizethis advantage through a host of techniques such as using superiortechnology, implementing more efficient organizational practices and





distribution systems, and cultivating well-known brands. This component of the strategy involves not only identifying existing or potential areas of competitive advantage but also developing a plan for sustaining areas of competitive advantage. Finally, global strategy should involve establishing aplan for the company that enables its various functions and operations to

benefit one another. For example, a company can use one line of products toencourage sales of another line of products and thereby enabling differentparts of a business to benefit from each other.

Many companies are now outsourcing many of their operationsinternationally. For example, if you call to get information on your creditcard, you may well be talking to someone in India or Mexico. Equally,manufacturers often outsource production to low labor cost countries.Concerns over ethical issues, such as slave and child labor, have led tocompanies outsourcing under controlled conditions—offshore productionmay be subject to surprise visits and searches and outsourced factories are

required to conform to specific criteria.

Stages o f In t er nat iona l S t r a tegyD eve lop m en t

Strategy development itself generally takes places in two stages: strategyformulation and strategy implementation. When planning a strategy,companies identify their international objectives and put together a strategythat will enable them to realize their goals. During the planning stagemanagers propose, revise, and finally ratify plans for entering new marketsand competing in them.

After a strategy has been agreed on, managers must take steps to have itimplemented. Consequently, this stage involves determining when to beginglobal operations as well as actually starting operations and putting intoaction the other components of the global strategy.

More specifically, the first stage—strategy formulation—entails analysis of the company and its environment, establishing strategic goals, anddeveloping plans to achieve goals as well as a control framework. Byassessing itself and the global business environment, a company candetermine what markets, products, services, etc. offer opportunities forgrowth. This process involves the collection of data on a company and itsenvironment, including information on global markets, regulation,productivity, costs, and competitors. Therefore, the collection of data shouldsupply managers with economic, financial, political, legal, and socialinformation on various countries and their markets for different products orservices. Based on this information, managers can determine what marketsand products offer economically feasible opportunities for global expansion.





Once this analysis is complete, managers must establish strategic goals,which are the significant goals a company seeks to achieve through aparticular pursuit such as entering a new regional market. These goals mustbe practicable, measurable, and limited to a specific time frame. After thestrategic goals have been established, companies should develop plans that

allow them to accomplish their goals, and these plans should concentrate onhow to implement strategic plans. Finally, strategy formulation involves acontrol framework, which is a process management uses to help ensure thata company remains on the right course when implementing its strategicplans. The control framework essentially responds to various developmentswhile the strategic plans are being implemented. For example, if sales arelower than the projected sales that are part of the strategic goals, then acompany might increase its marketing efforts and temporarily lower itsprices to stimulate additional sales.

I n te r n a t ion a l M a r k e t E va lu a t ion

While many aspects of international strategy and its formulation are similarto their domestic counterparts, some key aspects are not, and hence call fordifferent methods and different kinds of information. Gaining knowledge of international markets is one of these key differences—and a crucial part of developing an international strategy. In order for a company to enter a newmarket, capture market share, and thereby increase sales and profits, itmust know what that market is like. At a basic level, a company mustexamine different markets, evaluate the advantages and disadvantages of entering each, and select only the markets that show the greatest potentialfor entry and growth.When examining different international markets, a company should consider

the market potential, competition, regulation, and cultural factors of each.Company managers can assess market potential by collecting data on thegross domestic product (GDP), per capita GDP, population, transportation,and other figures of various countries. This kind of information will enablemanagers to determine the spending power of the consumers in eachcountry and determine if that spending power allows them to purchase acompany's





Table: 2 Differences between Domestic and International Strategy





CountryGDP per Capita (2003 Estimate in

US$)

Luxembourg 55,100

United States 37,800

Norway 37,700Bermuda 36,000

Cayman Islands 35,000

San Marino 34,600

Switzerland 32,800

Denmark 31,200

Iceland 30,900

Austria 30,000

Products or services. Managers also should consider the currency stability of

the different markets, which can be done by using documents from the homecountries to determine currency value and fluctuation over a period of years.

To select the best markets for entry, managers also should consider thedegree of competition within different markets and should anticipate futurecompetition in them as well. Determining the degree of competition involvesthe identification of all the companies competing in the prospective marketsas well as their sizes, market shares, and prices. Managers then shouldevaluate a prospective market by considering the number of competitors andtheir characteristics as well as the market conditions—that is, whether themarket is saturated with competition and cannot support any new entrants.

Next, managers should evaluate the regulatory environment of theprospective markets, since knowing tax, trade, and other related policies isessential for a successful international business. This step entailsdetermining the respective tariffs and trade barriers of prospective markets.Different types of trade barriers may influence the kind of business activity acompany chooses for a particular market. For example, if a prospectivemarket has trade barriers that restrict the entry of foreign-made goods, acompany might decide to access the market through foreign directinvestment and manufacture its products in that country itself. Ownershiprestrictions also may limit a company's interest in a particular market; some

countries permit foreign companies to set up local operations only if theyestablish a partnership with a local company. In addition, managers shouldfind out if prospective countries charge foreign companies higher taxes or if they offer tax breaks and incentive to encourage economic development. Afinal consideration companies must make concerning government is stability.Since some countries have rough government transitions resulting fromcoups and uprisings, companies must countenance the possibility of politicalturmoil that could substantially disrupt business.





The last step in international market evaluation is the assessment of culturalfactors. To avoid difficulties associated with cultural differences, somemanagers look for new markets that have cultural similarities to their homemarket, especially for initial international market penetration endeavors.

Unlike market potential, competition, and regulation, cultural differences aremore difficult to evaluate. Nevertheless, managers must try to determine theconsumer needs and preferences in the prospective markets. Managers mustalso account for cultural differences in labor relations such as workermotivation, compensation, hours, etc. if planning foreign direct investment inan overseas company. Moreover, a thorough understanding of a prospectivecountry's culture will greatly facilitate any kind of global business enterprise. This cultural knowledge should include a basic understanding of aprospective country's beliefs and attitudes, language and communicationstyles, dress, food preferences and customs, time and time consciousness,relationships, values, and work ethic. This kind of cultural information is

essential for developing an effective and realistic global strategy.

Since conducting primary research is labor intensive and time consuming,managers may obtain preliminary information on prospective markets frombooks such as Dun & Bradstreet's Guide to Doing Business Around the World and Business Protocol: How to Survive and Succeed in Business, or theEconomist's "Doing Business in…" series, which list potential tradeopportunities, policies, etiquette, taxes, and so on for various countries.

After examining the prospective markets in this manner, managers are readyto evaluate the advantages and disadvantages of each potential market. One

way of doing so is the determination of costs, advantages, anddisadvantages of each prospective market. The costs of each market includedirect costs and opportunity costs. Direct costs are those a company payswhen establishing a business in a new market, such as costs associated withpurchasing property and equipment and producing and shipping goods. AnOpportunity cost, on the other hand, refer to the costs associated with theloss of other opportunities, since entering one market rules out or postponesentering another because of a company's limited resources. Hence, theprofits that could have been earned in the alternative market constitute theopportunity costs.

Each prospective market usually has a variety of advantages, such as thepossibility for growth, which will lead to greater revenues and profits. Otheradvantages include relatively low material and labor costs, new technologygaining strategic advantage over competitors, and matching competitors'actions. However, each prospective market also usually has a number of disadvantages, including opportunity costs, greater business complexity, andpotential losses stemming from unforeseen aspects of prospective markets





and from currency fluctuations. Other disadvantages might result frompotential losses associated with unstable political conditions.

An a lys i s o f T wo In te r n a t ion a l S t r a teg iesIn the late 1990s after a significant amount of globalization had taken place,business analysts began to examine the success of various strategies for

doing business in other countries. This examination led to the distinctionbetween various orientations of international strategies. The main distinctionwas between multi-domestic (also called multi-local) international strategiesand global strategies. Multi-domestic international strategies refer to thosethat address competition in each country or region on an individual basis,whereas global strategy refers to addressing competition in an integratedand holistic manner across country and regional boundaries. Hence, multi-domestic international strategies attempt to appeal to the needs of customers in different countries or regions, while global strategies attempt tostandardize products and marketing to work across boundaries. Instead of relying on one of these strategies, multinational companies might adopt a

different strategy for different products or services. For example, a companymight use a global strategy for its electronics and a multi-domestic strategyfor its appliances.

Critics of the standardization approach argue that it makes two questionableassumptions: that consumer' needs are becoming more homogenousthroughout the world and that consumers prefer high quality and low pricesover advanced features and functions. Nevertheless, standardized globalstrategies have some significant benefits. Companies can reduce theirmarketing expenditures, for example, if they use the same ads in all theirmarkets. PepsiCo, for example, uses the same televisions ads in all of its

national markets, saving an estimated $10 million a year. Besides marketingsavings, global strategies can lead to other kinds of benefits and advantagesin areas such as design, packaging, manufacturing, distribution, customerservice, and software development.

Some people argue that companies must customize their products orservices to meet the needs of various international markets, and hence mustuse a multi-domestic strategy at least in part. For example, KFC planned astandardized approach to its foray into the Japanese market, but thecompany soon realized it had to change its strategy to meet the needs of Japanese consumers and customize its operations in Japan. Consequently,

KFC introduced smaller pieces of foods to cater to a Japanese preference,and located restaurants in crowded areas along with other restaurants,moving away from independent sites. As a result of these changes, the fast-food restaurant experienced stronger demand in Japan.

The development of regional trading blocs has promoted an emphasisregional strategy as companies develop plans to take advantage of theconditions within various trading blocs such as the North American Free





Trade Agreement (NAFTA), the European Union, the Asia-Pacific EconomicCooperation (APEC) and the Association of Southeast Asian Nations (ASEAN).In addition, the United States has signed 16 different trade agreements withSouth American countries, creating a foundation for a trading bloc consistingof all North and South American countries. Consequently, companies have

been establishing regional strategies designed around these trading blocs.Nike, for example, established central warehouses for its Europeandistribution, just as it has a central warehouse for its U.S. distribution. Thisstrategy has enabled Nike to reduce its inventory, cut down on redundancy,reduce costs, and enhance availability. In addition, News Corporationoriginally relied on a global strategy with its STAR-TV satellite televisionnetwork; attempting to provide the same television shows across Asia inEnglish. The company quickly switched to a multi-domestic strategy,providing programming in local languages after receiving low ratings andadvertising dollars with its first approach.

5: (b) Describe the growth of any international businessthrough related diversification and through unrelateddiversification.

Answer)

Diversification is a form of corporate strategy for a company. It seeks toincrease profitability through greater sales volume obtained from newproducts and new markets. Diversification can occur either at the businessunit level or at the corporate level. At the business unit level, it is most likely

to expand into a new segment of an industry which the business is alreadyin. At the corporate level, it is generally and it is also very interestingentering a promising business outside of the scope of the existing businessunit.Diversification is part of the four main marketing strategies defined by theProduct/Market Ansoff matrix:

Ansoff pointed out that a diversification strategy stands apart from the otherthree strategies. The first three strategies are usually pursued with the sametechnical, financial, and merchandising resources used for the originalproduct line, whereas diversification usually requires a company to acquirenew skills, new techniques and new facilities.


http://en.wikipedia.org/wiki/File:Ansoff_diversification.JPG




The different types of diversification strategies The strategies of diversification can include internal development of new productsor markets, acquisition of a firm, alliance with a complementary company, licensingof new technologies, and distributing or importing a products line manufactured byanother firm. Generally, the final strategy involves a combination of these options.

This combination is determined in function of available opportunities andconsistency with the objectives and the resources of the company.

There are three types of diversification: concentric, horizontal and conglomerate:

Concentric diversification This means that there is a technological similarity between the industries, whichmeans that the firm is able to leverage its technical know-how to gain someadvantage. For example, a company that manufactures industrial adhesives mightdecide to diversify into adhesives to be sold via retailers. The technology would bethe same but the marketing effort would need to change. It also seems to increaseits market share to launch a new product which helps the particular company to

earn profit. However, there's one more example, Addition of tomato ketchup andsauce to the existing "Maggi" brand processed items of Food Specialties Ltd. is anexample of technological-related concentric diversification.

Horizontal diversification The company adds new products or services that are technologically orcommercially unrelated (but not always) to current products, but which may appealto current customers. In a competitive environment, this form of diversification isdesirable if the present customers are loyal to the current products and if the newproducts have a good quality and are well promoted and priced. Moreover, the newproducts are marketed to the same economic environment as the existing products,which may lead to rigidity and instability. In other words, this strategy tends to

increase the firm's dependence on certain market segments. For example companywas making note books earlier now they are also entering into pen market throughits new product.

Another interpretationHorizontal integration occurs when a firm enters a new business (either related orunrelated) at the same stage of production as its current operations. For example,Avon's move to market jewelry through its door-to-door sales force involvedmarketing new products through existing channels of distribution. An alternativeform of that Avon has also undertaken is selling its products by mail order (e.g.,clothing, plastic products) and through retail stores (e.g., Tiffany's). In both cases,Avon is still at the retail stage of the production process.

Conglomerate diversification (or lateral diversification) The company markets new products or services that have no technological orcommercial synergies with current products, but which may appeal to new groupsof customers. The conglomerate diversification has very little relationship with thefirm's current business. Therefore, the main reasons of adopting such a strategy arefirst to improve the profitability and the flexibility of the company, and second toget a better reception in capital markets as the company gets bigger. Even if this





strategy is very risky, it could also, if successful, provide increased growth andprofitability.

Why Diversification? The two principal objectives of diversification are

1. Improving core process execution, and/or

2. Enhancing a business unit's structural position. The fundamental role of diversification is for corporate managers to create value forstockholders in ways stockholders cannot do better for themselves1. The additionalvalue is created through synergetic integration of a new business into the existingone thereby increasing its competitive advantage.

Forms and Means of DiversificationDiversification typically takes one of three forms:

1. Vertical integration – along your value chain2. Horizontal diversification – moving into new industry3. Geographical diversification – open up new markets

Means of achieving diversification include internal development, acquisitions,strategic alliances, and joint ventures. As each route has its own set of issues,benefits, and limitations, various forms and means of diversification can be mixedand matched to create a range of options.

Capitalizing on Core Competencies Your company's core competencies – things that you can do better than yourcompetitors – can often be extended to products or markets beyond those in whichthey were originally developed. Such extensions represent excellent opportunitiesfor diversification.Any core competence that meets the following three requirements provides a viablebasis for your corporation to create or strengthen a new strategic business unit(SBU):

1. The core competence must translate into a meaningful competitiveadvantage.2. The new business unit must have enough similarity to existing businesses to

benefit from your corporation's core competencies.3. The bundle of competencies should be difficult for competition to imitate.

Case in Point Philip Morris When it considered diversification targets, Philip Morris believed that the core

competence it had developed in marketing cigarettes could apply to other, similarmarkets. Based on this belief, the company purchased Miller Brewing and then usedthe Philip Morris marketing skills to move the Miller brand from seventh place tosecond in its market.

Case in Point Toyota, Nissan, and Honda In late 1980s, Toyota, Nissan, and Honda moved into adjacent market segments.

They launched luxury cars Lexus, Infinity, and Acura respectively to compete withBMW and Mercedes. The Japanese cars were priced about one-third lower and had asuperior service network. The value proposition was solid enough to win overpotential and current BMW and Mercedes customers, despite the power of theirbrands. Yet the Japanese also expanded this profitable segment as a whole





Case in Point GE Jack Welch transformed GE from a purely manufacturing company into a morediversified company with an increasingly important service component. In his 1996annual report, Welch wrote: "Services is so great an opportunity for the Companythat our vision for the next century is GE that is 'a global service company that alsosells high-quality products.'" When asked if GE was going to become a more

product-oriented or service-oriented company, Welch replied, "It's got to be a bigcombination... It's an integrated game." In 1996, GE Capital Services earned US$4billion. In 2005, GE services agreements increased to $87 billion, up 15% from2004. In particular, financial services revenues increased 12% to $59.3 billion.


assignment ist 887 bp&m

Documents