culture and people
TRANSCRIPT
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CONTENT PAGE
1.0 EXECUTIVE SUMMARY 2
2.0 BACKGROUND 3
2.1 STRUCTURE OF THE COMPANY 3
2.2 COMPANY CULTURE 4
2.3 THE NEED FOR CHANGE 5
2.4 ANALYSIS OF COMPANY 6
2.4.1 PORTERS FIVE FORCES ANALYSIS 6
2.4.2 SWOT ANALYSIS 6
3.0 STRATEGIES TO BE ADOPTED 10
3.1 CHANGE MANAGEMENT PROCESS 11
3.2 IMPLEMENTING AND EVALUATING CHANGE 14
3.3 BARRIERS TO CHANGE 17
4.0 CONCLUSION 19
REFERENCES 20
BIBLIOGRAPHY 20
APPENDIX 1 POWERPINT PRESENTATION 21
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1.0 EXECUTIVE SUMMARY
The desire for management of Salfordia to move towards newer forms of procurement in other
to become more responsive to the needs of the industry has brought about the need to
prepare this report. It will provide appropriate analysis of the current stage of the company and
also present recommendation that will make the company better in this regard.
The first part of this report outlines the background of the company and also analyses the
current organization and culture within the company and also establishes the need for a change
process within the company. SWOT analysis and Porters five-force analysis have been for the
analysis and identification of opportunities.
It has been recommended that management should pursue diversification strategies and
vertical integration strategies to improve its standing on the construction market. It is also
recommended that management should train staff appropriately and give them the required
motivation to allow them carry out their duties very well. A reward and recognition system has
also been proposed. Managing change is a difficult process therefore the change management
process has been proposed and discussed in detail giving modes to implement and evaluate the
change. Some barriers that could be face during the implementation process have also been
identified and discussed.
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2.0 BACKGROUND
Salfordia is a medium-sized family owned construction firm established in 1975. The company
has its office in Manchester and undertakes construction projects throughout the North West
region. Over the years, the company has stuck with the traditional method of procurement as it
has obtained all of its projects through this method and it has mainly worked on office and
industrial facilities. In its early years of establishment, the senior partners of the company were
the parents who had responsibility for all decisions; while the junior members participated in
decision making without the right to vote. The company works with a network of contractors
and suppliers with the subcontractors providing all of the labour needed for the construction
work. However, over the past few years, the company has been dwindling in its profits as can
be seen from the table below
year turnover(Million) profit loss
2007 20 300,000
2008 18 220,000
2009 16 180,000
2010 10 75,000
Table 1: annual estimates
2.1 STRUCTURE OF THE COMPANY
The company has a flexible structure, which is divided, into commercial and industrial parts. It is
characterised by short lines of command. The CEO who is the founder of the company as well
as the head of the company acts the final authority for all decisions though he acts in
consultation with the board of directors of which majority are family members. The
administrative manager ensures the success of the day-to-day activities of the company and the
chief finance officer who doubles as quantity surveyor heads the accounting division of the
company. Based on the categorization of organisations by Minzberg et al (1998), the company
can be said to be an entrepreneurial organisation because it has the following characteristics
The structure is simple, organic and lean consisting of one or a few top managers
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The organization must be flexible because it operates in a dynamic environment The organization is often young and often small, since size too drives the structure
toward bureaucracy
The small entrepreneurial firm, controlled tightly and personally by its ownerFurthermore, Salfordia can be said to have adopted a defender orientation according to miles
et al (1978) because it has a narrow range of building types and obtains its contracts through a
single type of procurement type. The company does not involve in research and development
in other to search for new opportunities. As a result, Salfordia has not adjusted its technology,
structure and methods of operation in a long while.
2.2 COMPANY CULTURE
Salfordia have been established as a family business and therefore has values and traits which
are related to the values of the family. Management ensures that communication is open and
effective at all levels, thus ensuring a high degree of transparency within the company.
Furthermore, the company has tried in the past to motivate workers by giving then incentives
when targets are well met and this therefore boosts the morale of workers and enhances
teamwork as everybody wants to be a part of the big family picture. Within the company, the
practice over the years has been that, workers support one another towards the attainment of
company goals. Consequently, the work atmosphere is that of high commitment in which
workers give their beast in terms of time and energy and believe that the company will be
responsive to their needs and hence they feel obliged to work very hard for the company. As
such, trust levels are very high. Every worker, right from the CEO, appreciate the work of every
other person and workers therefore feel important and a part of the company as such there is a
sense of belonging and they feel accepted by those they work with and the company as a
whole. The company has therefore been seen to be dominated by trust among parties. Based
on the characteristics that have been explained above as being existent in the culture of
Salfordia, the company can be said to have a support culture (UoS , lecture package 3)
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2.3 THE NEED FOR CHANGE
Creating change starts with creating a vision for change and then empowering individuals to act
as change agents to attain that vision. Nothing is as upsetting to your people as change.
Management has realsied the fact the company needs to be turned around if it is to return to
profitable as such there is a justified need for change in the company.
Four types of changes may be identified in a company according to Lorenzi and Riley (1999) as:
operational change affecting the way the ongoing operations of the business areconducted,
strategic change occurs in the strategic business direction, cultural changes affecting the basic organizational philosophies by which the business is
conducted,
Political changes in staffing occur primarily for political reasons of various types.As a starting point, three (3) questions have to be answered that underpin the change process:
1. Where are we now?2. Where do we want to be?3. How are we going to get there?
Answering these questions provide the basic scope that lays out the case for change and the
benefits to be gained. It is only by introducing the appropriate changes and mechanisms that
Salfordia can become competitive. It is crucial for management to develop and widely
communicate a compelling case for change. In todays rapidly changing, highly competitive
environment, the ability to change rapidly, efficiently, and almost continually will distinguish
the winners from the losers. Specific changes in an organizations internal structure and
external markets often derive from wider changes in society, economies or technology. A
review of Salfordias business activities, culture and structure above will affecte the companys
organizational structure and culture, employment pattern, conditions and internal procedures
and skills and attitude. Therefore managing these changes is a very important factor in the
success of the business. One of the most difficult problems organization face is dealing with the
change.
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Generally, many things cause organizational change, including:
challenges of growth ,especially global markets changes in strategy technological pressures customer pressure, particularly shifting markets to learn new organizational behaviour and skills government legislation/initiatives
2.4 ANALYSIS OF COMPANY
Strategic analysis involves the research on an organisation and the environment in which it
operates to be able to formulate a suitable strategy (BNET, 2007). Two tools have been
employed in this report to give an in-depth analysis of the company; these are Porters five
forces analysis and SWOT analysis.
2.4.1 PORTERS FIVE FORCES ANALYSIS
The five forces to be analysed are
Power of clients Threats of mew entrants rivalry Substitute services Power of suppliers
Power of clients
Construction is an industry where supply is mostly and largely triggered by the demand of the
paymaster who is the client. Therefore, the client finds himself at an autonomous position
where his needs must be satisfied. They have an opportunity to request as many contractors as
they want to tender for a project so that they can select the best price and make the best deals.
The client, In recent years, has showed increased dissatisfaction levels before, during and after
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the execution of the project and there has therefore been the search for new and more
collaborative ways of procuring projects in other to increase satisfaction levels of the entire
project team. Salfordia has always met the expectations of the clients in the projects they have
undertaken in the past, however, to remain competitive, it is very important that the company
takes advantage of the good client references and reputation it has and make use of these
newer approaches.
Threats of new entrants
The entry barriers to the construction industry are very low. The possible barriers which are
experienced in other industries like lack of access to distribution channels and switching costs
are not major barriers in construction industry though the effects can be felt in a few aspects
mostly with suppliers. Construction has been labour intensive in the past, however, recent
developments have changed this trend towards a more technologically oriented approach, and
therefore, the possible barriers to entrant could be a capital-intensive technology. However,
Salfordia itself has not been involved in the use of technology which leaves the company at a
disadvantaged position though the company has three computers which are used mostly in
administrative an accounting functions. It is important to say that compared to the cost of a
project, information technology is relatively in expensive and therefore not a great barrier to
new entrants. As has been mentioned earlier, Salfordia has obtained a high reputation for itself
over the years and has satisfied its clients adequately. With these characteristics, it is
positioned to react better as it attempts to move towards more collaborative approaches.
Furthermore, entry to the construction industry for new entrants is difficult because of vertical
integration, as companies tend to own some of the other companies in the supply chain and
therefore putting existing companies in a very competitive position with respect to
collaborative approaches.
Rivalry
The construction industry, because of the very low entry barriers, has so many companies that
vary greatly in size. The industry is very fragmented and companies have applied various forms
of competitive strategies available to remain competitive. Some of the strategies have been the
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adoption of new technologies to allow economies of scale and the acquisition of other
companies strengths. However, the rivalry in the construction industry is ethical and non-
destructive. In other to stand up to these competitive forces, Salfordia needs to re-organise
itself and up its game taking advantage of every opportunity that has been mentioned in the
SWOT analysis. Most competitors in the industry have diversifies and work with all other forms
of procurement as w ell as on all project types.
Substitute services
As already mentioned, clients have become increasingly dissatisfied as such there have been
research into ways to better procure services for the industry. This has led to the gradual shift
from the sequential and linear form of the traditional approach to more integrated and
overlapping forms like design and build and management systems. Recently, the shift has been
towards more collaborative approaches like framework agreements, partnering and alliancing.
In other to match up with the competition in the industry, Salfordia has to move with these
shifts to win more contracts. The company is well placed to take advantage of these new forms
of approaches because of its characteristics as a family business that reveals trust and
openness.
Supplierpower
The strength of the supplier mostly depends on the extent of competition he has in regard to
his line of business. Over the years, Salfordia has ensured cordial relationship with its suppliers
and have issued prompt payments for supplier. They can therefore easily enter into partnering
arrangement with these suppliers as well in other to keep their prices more competitive
2.4.2 SWOT ANALYSIS
SWOT is an acronym for examining an organization strengths, weaknesses, opportunities, and
threats, and using the results to identify priorities for action (Ansoff, 1995). The main principle
underlying SWOT is that, internal and external factors must be considered simultaneously,
when identifying aspects of an organization that need to be changed.
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Strengths
y Good client referencesy Good long term relationshipsy
experience
Weaknesses
y Low presence in other markety Concentration on northwesty
Low use of technologyOpportunities
y Shift towards collaborative approachesThreats
y Unstable markety Economic conditionsy Advancing technology
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3.0 STRATEGIES TO BE ADOPTED
With over 35 years experience, the management of Salfordia have become experts in their
limited area of operation and have not searched for new opportunities outside what they are
currently practicing. The company therefore has a concentrated growth strategy, as it has not
adjusted its structures, technology and mode of operations for a very long time rather focussed
on increasing the efficiency of the existing operational modalities. The company can also be
said to be pursuing a defender perspective according to Miles et al (1987). In other to be
overcome the current problems the company the company is experiencing and become more
responsive, Salfordia needs to continually search for opportunities, come of which have been
identified in the swot analysis above. The company needs to diversify its operations to take
advantage of the new markets that are coming up in the construction industry in other to be
able to stand up to the challenges of customer demand and become a prospector Miles et al
(1987). In other to expand its line of business, the company should also embark on a vertical
integration strategy as this will allow the company to gain control of some other companies
within the supply chain.
In other to effectively use newer forms of procurement, the company has to train all workers
especially those whose operation will be directly affected by the newer forms of procurement.
Training should be continuous and the focus should be on the adoption of the collaborative
forms of procurement the have been learnt. Training is important because the workers form
the central pivot of the company and their co-operation and effective participation is very
important for the continued success of the company. Closely related to this is motivation, this
refers to the encouragement of all staff to develop positive attitudes towards the work while
allowed to use their own potential to the latter. The company should also increase a rewards
and recognition system in which members who have shown outstanding qualities and have
contributed exceptionally to the office are reward. These rewards can vary from promotions to
monetary returns.
Salfordia has invested very little in technology, as it is evident by the fact that the company has
just three microcomputers. Technology in construction is fast advancing and the company has
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to invest more in the latest construction technologies in other to remain competitive. More
softwares have been developed which aid the planning and control of projects. Though, the
initial cost of the technology related products may be high. The cost is offset in the ease and
efficiency it adds to the companys processes.
3.1 CHANGE MANAGEMENT PROCESS
The process of managing change is concerned with how people can be encouraged and
empowered to work with the new resources; what support strategies are needed to help
overcome resistance to change; methods of consultation; the roles of mangers at different
points in change process. Change management is the process by which an organization gets to
its future state, its vision. It encompasses the effective strategies and programs to enable these
change agents to achieve the new vision.
It is proposed that Salfordia uses a 6- step process outlined below for effective change:
1) Establish a clear direction a compelling case for change, involving employees in thediscussion
2) Create clear ownership and leadership3) Communicate the case for change and progress early and often4) Create and maintain a workable change plan5) Empower broad-based action - maintain and measure progress6) Anchor new approaches
Managing change is a critical component of any major transformation. It is a necessary process
that helps companies successfully implement new strategies. Change usually involve three
aspects; people, processes and culture (Daft, 2008) as shown below
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Fig.2 aspects of change
Management should the communication of the change; employees have to understand the
context, and the organization s clear expectations for their changed roles and responsibilities.
The crucial factor in all successful change management is the way that the people involved are
handled. It is essential that the human dimension to managing change is recognized right form
the outset. In managing change, it is important to remember that management perceptions of a
change and its effects on staff may not be the same as staff perceptions. Reality may be
markedly different to its perception. Communication is very important if change is to be
managed effectively. It is the only way to prevent rumors taking procedure over fact. If staff
have access to facts, then rumors will not be as likely to become their main source of
knowledge. Communication should be frequent, repeated, honest, relevant and most
importantly two way. It is particularly important for senior managers to be in agreement about
the process and to be seen and heard to be in agreement. Management needs to understand
that the success of any transition depends on the understanding of the challenges associated
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with the change process and, moreover know how to successfully address them (see fig.4
below)
Fig. 3 Change Associated Issues, Mercer (2000)
Any large-scale change initiative will involve summoning support for the change from across the
organization. Staff may take a number of different roles in relation to the change process. The
change manager has responsibility for the day-to-day implementation of the change:
y Designs the change process, strategy and approach, and agrees these with the changeteam
y Takes responsibility and manages the change progress on a day-to-day basisy Designs the communication strategy and contingency plans for the changey Monitors progressy Facilitates key events to build commitment for the changey Liaises up and down the organizational structure.
The human resource strategy for managing staff through the change process will be to develop
and put in place as soon as decisions have been made, on what change is needed and before
anything is communicated to staff. Importance will be given to the human and emotional
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aspect of change. Staff will automatically fear change and this fear will be encouraged by
rumour, worries about job security and pensions and concerns over working practices and new
management. Access to senior staff or to counseling will be available to staff who feel anxiety
about the future and their role in it.
3.2 IMPLEMENTING AND EVALUATING CHANGE
When change is mot implemented properly, it could be very costly and everlasting and actually
move the organization backwards. How you introduce change that impact on the whole
organization and the people who work in it is not easy. There are a number of issues
surrounding the process, which include but not limited to re -organizing the operation,
motivating staff staff, changing the corporate culture, changing the decision making structure
of the organization, and the quality of communication. Effective change is not imposed on
employees, therefore management should motivate and encourage to entire workforce in the
direction of the change process, convincing them of the righteousness of the process and the
goal. Managers have to be able to introduce and mange change to ensure the organizational
objectives of change are met and they have to ensure that they gain the commitment of their
people both during and after implementation. Assess the readiness of your organization to
participate in the change vision which forms the basisi of the overall plan and timeline. By
taking a systematic approach to implementing change, managers can be more successful in
taking collogues with them and achieving their objectives.
The four key factors for success when implementing change within an organization are:
1. Pressure for change demonstrate senior management is essential.2. A clear, share vision- you must take everyone with you. This is a shared agenda that
benefit the whole organization.
3. Capacity for change you need to provide resources: time and finance.4. Action and performance- plan, do, check, act, and keep communication channels
open.
Change have often failed because of the absence or presence of some paramenters, therefore,
before looking at the four factors of success, recognizing the four factors for failure in managing
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change can help identify problems more rapidly, and can show where initial action should be
concentrated:
1. Lack of consistent leadership2. Demotivated staff kept in the dark3. Lack of capacity: budget cuts, short-term approach to investment, stressed out staff
working hard to stand still.
4. Lack of initiative to do something differentBoutall T. (1994) argues that, planning is essential prior to implementing any change. Change
planning may be carried out as detailed below:
1.
Provide clear and accurate information.
Let those affected know about the proposedchange in time for them to prepare effectively.
2. Get people involved. Give people the chance to comment on the proposed change andhelp in the planning.
3. Make the case for change. Give a clear and convincing rationale for the change andsupport this with sound evidence.
4. Identify potential obstacles to change. And find effective ways of avoiding orovercoming these obstacles.
5. Develop a detailed plan, including:y the rationaley the aim and objectives of the changey how it will be implementedy who will be involved and their individual rolesy the resources requiredy the time scaley how the plan will be monitoredy how you will know that the change has been successful.
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From the above, the Change implementation and Evaluation Plan as outlined below has been
proposed to be adopted formanagement to ensure a successful transition
1. Present details of implementation plans to all concerned. Make sure that you briefeveryone involved, or affected by, the changes on their role in the changes and the
possible impact on their area.
2. Encourage people to seek clarification. Check on their understanding of their role andencourage them to ask questions.
3. Use resources in the most effective way. Plan carefully so that you meet the newrequirements as cost effectively as possible.
4. Maintain quality of work. Ensure that work is maintained to a satisfactory standardduring the period of change.
5. Monitor the changes. Check to see that the changes have been implemented accordingto plan and that they result in the improvements anticipated.
6. Modify implementation plans and activities in the light of experience. You may need tomodify the way you implement changes to cope with unforeseen problems.
7. Evaluate the benefits of the changes. Compare the new way of working with the old;are the benefits as expected?
8. Keep records. Keep clear and accurate records of your monitoring and evaluationactivities and the results.
9. Review the change process. Review the whole process of identifying, assessing,negotiating, agreeing, implementing and evaluating change; note ways of doing it better
next time and make appropriate recommendations to senior managers, colleagues and
specialists.
Frequent and accurate assessment of progress is essential to ensure that a change programme
is effective. Compare actual progress, in terms of product quality and quantity, with planned
progress. external measure, too, such as customer satisfaction, to chart the result of the
programme can be good measure to peformance. For most companies, sales performance,
customer loyalty, and market share are basic hard indicators of the success of a change.
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3.3 BARRIERS TO CHANGE
People are naturally resistant to new things, and successful, long-term change wont come
easy. An individuals degree of resistance to change is determined by whether they perceive the
change as good or bad, and how severe they expect the impact of the change to be. Resistance
to change is an ongoing problem, at both the individual and the organizational levels; resistance
to change impairs concerted efforts to improve performance. Resistance to change comes from
fear of the unknown or expectations of loss. The front end of an individuals resistance to
change is how they perceive change. The back-end is how well they are equipped to deal with
the change they expect. All change involves loss. In many cases, change requires at minimum
that individuals give up familiar routines. In some cases, the loss is substantial, affecting
position, power; network of friends and colleagues suggested reasons for resistance to change
includes Loss of control, shock of new, uncertainty, inconvenience, threats to status etc.
Insufficient, relevant training, change management skills and leadership skills, can all impact
negatively on the effectiveness of any change initiative. Lack of effective leadership has been
identified as an inhibitor of effective change. The strategies for overcoming the barriers to
change are quite diverse and touch on every aspect of the organization. No organization can
begin using all the strategies at the same time or even in a short period. A better approach is to
focus on one or two until they become part of the normal way operating; i.e. until they
become engrained in peoples habits .Only then it is time to introduce another strategy. In this
way, over time the organization gradually improves its ability to learn rapidly, to adapt to new
conditions, and to embrace change. Generally speaking the principle factors that cause
resistance to change are:
y Loss of security or statusy Inconveniencey Distrust or uncertaintyy Cognitive Dissonance.
In view of the above, Salfordia could put in place the following measures in overcoming any
resistance to the change:
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y A safe forum will be provided for staff to voice their concerns and work on the changey Communication and education to help staff appreciate the need and logic behind
proposal change.
yInvolve staff in the design and implementation of the new ways to create ownershipof the change process.
y Staff will be supported through training and counseling.
Change is generally met with enthusiasm when staff:
y Propose the change ,trust ,respect, like the group ,person proposing the changey
Are involved in the design of the design of changey feel that their opinion /views are heard, and contribute to the new realityy benefit from changey understand the organization and the wider community benefit from changey are confident about their competence in the new contexty believe the change is important and necessaryy are given support and time to adjust to changes
Change often fails to capture intended results due to the following reasons:
y Lack of a compelling case often far too little effort is put into developing the case forchange, particularly the effective involvement of employees.
y Failing to understand what change really is far too often change is still seen as asingle event, effectively moving from one steady state condition to another. But this is
rarely the reality today; change is nearly always a journey, and it can take several
iterations to get to the right structure / alignment
y Failing to engage with employees although senior managers normally develop thevision and case for change, involvement of employees or groups of employees is vital to
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effective implementation and also solutions that will actually work! An effective balance
between top-down and bottom-up is critical
y Ineffective implementation so often implementation is seen, erroneously, as the easypart. However, in reality it is the most difficult part to get right. The real test of
implementation is how robust the organization is to deal with the challenges and to re-
adjust as necessary flexibility is critical.
4.0 CONCLUSION
It has been outlined that Salfordia has been experiencing problems. There are a number of
reasons for these problems; some are attributed to the current way of doing business by the
company and others are external factors like the global economic crunch. The current
organization and culture within the company has been analysed and proposals put forward to
enable the company to become more responsive to the client demands and return to
profitability.
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REFERENCES
Ansoff, H. I (1995) corporate strategy: An Analytic Approach to Business policy for growth and
Expansion. New York: McGraw-Hill
Boutall T. (1996) Managing Change: Good Managers Guide. London: Management Charter
Initiative
BNET (2007) Competitive Analysis, New York CNET Networks Inc
Daft, R (2008), Organizational Theory And Design, South Western Cengage Learning, USA
Mercer D (2000) Transition Leadership: A Guide to leading Change initiatives. New York: Mercer
Delta Consulting LLC.
Miles R. E., Snow C. C. and Meyer A. D. (1978) Organizational Strategy, Structure, and Process,
McGraw Hill: New York, ISBN 0070419329, 274 pages.
Mintzberg H. (1979) The structuring of organizations: a synthesis of the research, Englewood
Cliffs, N.J.; London: Prentice Hall, ISBN 0138552703, 512 pages.
Porter M.E. (1985) Competitive Advantage: Creating and sustaining superior performance.
London: Free Press
BIBLIOGRAPHY
Mintzberg H Ahlstrand B. and Lampel J. (1998) Strategy Safari. London: FT Prentice Hall
Osterwalder, A. and Pigneur Y. (2004) An Ontology for e-business models in value creation from
e-business models. Butterworth- Heinemann.
Osterwalder, A., Pigneur Y & Tucci L.C. (2005) Clarifying Business models: Origins, Present, and
Future of the concept. Communications of AIS, Volume 15
Osterwalder, A. (2004) The Business model ontology- a proposition in a design science
approach. Dissertation, University of Lausanne, Switzerland: 173
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APPENDIX 1
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The structure is simple, organic and leanconsisting a few top managers
The organization is flexible The organization is small, and not bureaucratic
It is a small entrepreneurial firm, controlledtightly and personally by its owner
This slide describes the nature of Salfordia in terms of its organisation
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Open communication at all levels
Transparency
Support High commitmentto company goals
High level of trust
As a family company, the above listed have been identified as cultural characteristics within the
company
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Falling company figures Reduced number of projects won
The company has recorded falling annual figures as well as the fact that there is a gradual
reduction in the number of projects won by the company. These have resulted in the need for
change
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Porters five force analysis
SWOT analysis
The above tools have been chosen to be used in the analyses of the company
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These have been considered and discussed indetail
Power of clients
Threats of mew entrants
rivalry Substitute services
Power of suppliers
This was chosen because it extensively covers all aspect of factors that have an effect on
Salfordia
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STRENGTHSGood client referencesGood long term relationshipsexperience
WEAKNESSESLow presence in other marketConcentration on northwestLow use of technology
OPPORTUNITIESShift towards collaborativeapproaches
THREATSUnstable marketEconomic conditionsAdvancing technology
SWOT is chosen to compliment porters five forces because it analyses the internal and external
environments
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Diversify its operations into new areas and takeup the opportunities identified
Vertical integration to take control of comesupply chain functions
Training and motivation of staff
Invest in technology
The above have been proposed in other to turn the company around and bring it to profitability
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Establish a clear direction
Create clear ownership and leadership
Communicate the case for change and progressearly and often
Create and maintain a workable change plan
Empower broad-based action - maintain andmeasure progress
Anchor new approaches
The above change management plan have been proposed to enable the implementation of the
changes proposed