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Strategic Management Essay

Identifying a wide range of organisational change, models or frameworks is extremely important when implementing strategic management techniques, because there are many different types of organisational change, thus it is important to decide which will work best for the specific situation at hand. In using a multinational steel organisation as an example, change can be planned or unchanged; however, management must be ready to deal with both. By identifying and anticipating changes, which may occur, all parties involved will be able to handle and deal with the change more appropriately.

Different types of organisational change include organisation-wide verses subsystem change, transformational verses incremental change, remedial verses developmental change and unplanned verses planned change. Management must first identify which type of change they are planning to implement or have already begun implementing. Likewise, it is just as important that management learn to correctly apply an array of creative problem solving solutions in order to address all challenges associated with their organisational changes.

To begin with, no two change processes are identical. In most cases, change management techniques will not manifest the same way twice. In this case, it is important that leaders throughout the organisation band together in order to not only guide the transformation process, but also to develop creative solutions to problems. Once leadership has developed a solution plan, it’s important to talk to staff within the organisation so that concerns can be heard and addressed.

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It will be very helpful for management leaders to not only discuss upcoming and current changes with organisation staff, but also to accept feedback and to introduce suggested problem solving solutions to staff, allowing staff to vote, discuss and choose which solution(s) they feel will work best within their organisation. In some cases, rapid change solutions will need to be implemented and will produce a more positive affect than if slowly executed.

Overall, it is important for organisational leaders to put their heads together to not only identify problems and several solutions, but also what type of organisational change the company is truly going through. Finally, it’s worth mentioning that specific solutions may be implemented and may not work, so teams should be re-connecting regularly to discuss current organisational change plans, making adjustments as needed. Understand how to apply solutions to organisational change: According to Porter and the Five Forces model, a competitive analysis can be made by identifying the five fundamental competitive forces.

This includes the entry of competitors, threat of substitutes, bargaining power of buyers, bargaining power of suppliers and rivalry among the existing key players. This business strategy has proven to be extremely useful in understanding how to properly apply solutions to organisational change. Porter’s model calls for looking from the outside-in, rather than from the inside-out. In this case, existing strengths within the steel organisation should be carefully weighed and considered when applying the five forces framework of Porter.

Supplier power is extremely important in this instance. The volume of the supplier and supplier concentration should be considered. Whether or not substitute inputs are available should also be investigated. Are there threats of forward integration? Is cost relative to the total purchases within the industry? Substitutes can also be a treat, because of switching costs, buyer’s inclination to switch to a substitute, price performance and trade-off substitutes. Finally, according to Porter, buying power has a great deal of leverage and this concept can be used within the steel industry.

It’s important to consider whether or not the buyers have leverage within the steel industry. Buyer volume, information and brand identity should also be compared, as well as price sensitivity. Kotter’s 8-Step Change model best describes examples of creative problem-solving. This model suggests that the world is ever-changing and evolving. That being said, it’s unrealistic to implement one specific strategic management plan long-term. Ultimately, as the world and situations change, the plan will have to evolve and change as well.

This change may address a system-wide change or may be subject to one or two processes within the steel organisation. One creative aspect of Kotter’s 8-Step Change model is to create a sense of urgency within the company. In order for a company to implement change, everyone within the company must be on board. Management must use open and honest dialogue in order to get through to staff members. In creating a sense of urgency within the steel organisation, it’s important to do more than to show workers poor sales statistics or to talk about the increase of company competition.

It’s better to communicate with employees and to listen to their thoughts regarding the organisation. Once many people begin talking to one another about changing purpose, the organisation will build a sense of urgency, feeding on itself. Organisation managers should start by pointing out potential threats to the company and developing theoretical plans to stop the threats in the future. Discussions within the organisation should be started and should remain open and honest.

Managers should also think about requesting customer support and support from outside stakeholders and industry people in order to strengthen the argument of necessary change. All participants should have a clear understanding of the business. By having a clear understanding, participants can quickly and efficiently identify challenges as they occur, but before they get out of hand. The strategy of their specific steel organisation must remain innovative, so that creative solutions can be identified and used within the organisational strategic planning process.

Rothschild, Dye and Sibony all highlight the benefit of keeping a tailored planning cycle. Strategic planning teams identify which businesses could benefit from strategic planning and the process is revisited every two years or so, rather than each year. This gives plans the opportunity to thrive or fail while allowing management to identify and justify specific change solutions. According to Kotter, the world is ever-changing and so should strategic management plans. Again, open and honest communication within the steel organisation will be the most beneficial to this change.

Regular meetings should be held between upper executives and management as well as with all employees. All feedback should be considered and strategies should remain creative. Creative strategies tend to lend an upper hand to an organisation, because these strategies are typically ahead of other similar organisations. Creative ideas draw in more customers, because this is more appealing to buyers. For example, a steel organisation may use creative advertising to get through to potential customers or may offer incentives to current customers.

One rather beneficial incentive for current buyers is to offer an incentive for referrals. Understand how to develop a change strategy using implementation models: Most change initiatives fail regardless of the good intentions or the positive roles key players implement. In looking at a 90 percent failure rate, the majority of failure can be attributed to not looking into the communication and influences associated with each specific project and by not studying specific role changes resulting from newly implemented roles.

Again, this goes back to all key team members having a clear understanding of the role each individual plays and being on board with upcoming changes. Failure should be anticipated, because many obstacles will come up, which no one will be able to foresee. If strategic management teams have generalized backup plans available, unforeseen failures may be obstacles overcome using one of the generalized backup plans. Backup plans are essential to avoid failure. A backup plan should be creative for every possibly scenario, even if the company feels some scenarios would never occur.

Backup plans should also be written into a manual for easy reference if the need for a plan should arise. Supervisors should receive training on a regular basis to go over these plans and those supervisors should be in charge of passing the information onto staff under their management and making sure each and every individual understands the possibility of what-if’s and how to properly handle each situation. There are 9 steps in the implementation model, which can help key players to identify and select a change implementation, which supports organisational change.

The first step is understanding and identifying the actual need for change. After that, those needs must be clarified and validated. After levels of preparation are properly assessed, it’s important for the management team to ask if the organisation is ready for the change. Once the change has been identified and agreed on, the organisation must prepare for the change. Goals and strategies must be refined and a project structure must be created. At this point, change capacity may need to be increased and then it will be time to implement the initiative.

When the above eight steps have been accomplished, the plan must be re-evaluated and measured in order to make sure the plan is sustaining the organisation’s intentions and goals. If the steel organisation feels that there is a need for change, this idea must be investigated before the company jumps into implementing the change. Start by researching gaps which may be found against internal and external benchmarks. Initial goals need to also be re-evaluated at this time. At this point, the need for change will have been established. It is also important to properly assess the level of preparation.

Is everyone within the organisation ready to dive into an immediate change? Is everyone on board and okay with the change? Current processes, policies and practices must also be evaluated and management needs to make sure that the proposed changes still support current processes and policies. Be able to analyse an organisational response to change: It’s important for a company, such as a multinational steel organisation, to structure their organisation in a way that its people are arranged so that work can be performed while meeting goals.

With small organisational groups, face-to-face communication and interaction is quite common, however, a formal structure may not be as necessary as a large organisation (such as a multinational organisation). In organisations of all sizes, job duties are defined by what tasks the employee completes within their job. The best analytical tool that can be used in a large organisation such as this is an internal situation analysis. This is important because it can generate a great deal of information, even if the results are found to be irrelevant to the strategy formulation.

Internal analysis typically includes company culture, organisation structure, key staff members, operational efficiency and capacity, market share, financial resources and exclusive contracts. Internal analysis can then be categorized as strengths and weaknesses. Again, talk to staff and listen to staff regarding what they feel are the company’s strengths and weaknesses. If the entire company is going to be on board, it is essential that management take staff recommendations seriously. Most staff members have a very different point of view than management who is higher up and in a different position.

It’s important that employees are happy and if something can be changed to make their job easier, management should listen to staff and attempt to make those requested changes. Any time an organisation measures performance of any kind, it’s to improve overall performance within the organisation. Technology should be closely monitored and performance should be measured. In order to do this, company managers must be aware of what their organisation is supposed to be accomplishing. This is necessary in order to formulate clear mission, strategy and objectives (Kravchuk & Schack 1996).

The results of the assessment and monitoring should answer a few key questions: • Were the required results produced? • If the organisation is working efficiently, is this efficiency cost-effective? • What value to the steel community does the organisation provide? • In evaluating internal operations, compare core performance to the most efficient and effective process in the steel industry. This type of evaluation should be ongoing and company executives should be meeting regularly to discuss whether or not the above list has been implemented.

Give the changes time to work their magic, so to speak, but if something isn’t working, don’t continue with it. No company wants its workers to walk in place. It’s important that the steel company is moving forward and that strategic management plans are working appropriately. All goals should either be achieved or it should be clear that they will be achieved in the near future. Even though all management should be working on this change implementation plan, it’s important to have one small team overseeing the entire plan. This will ensure that the change objective is satisfied.

According to Porter’s 5 Forces, large organisations can gain the advantage over competition by introducing several competitive moves. A large steel organisation can raise or lower prices to gain a temporary advantage over competition. Product lines can be improved and innovations in the manufacturing process may also provide a competitive edge. Channels of distribution can be used creatively. For example, if a high-end market becomes saturated or difficult to get into, a company may target the lower-end market to gain the advantage.

Set high quality standards, requiring suppliers to meet the demand of the organisation for product specifications and prices. A good example of this is the Sears Corporation. For many years Sears built a name for itself within the appliance arena. They held manufacturers to high standards and have been known throughout the years to offer very good quality products. Because of this, consumers do not mind paying a little bit more money for a Sears product, because they know that the product they are getting is good quality and that it will last. The same concept can be used within the steel industry.

If the company only uses good quality and sets high standards, consumers will eventually begin to understand that the product the company is offering will most likely outlast the competition. This can also be accomplished by offering good solid warranties for products and through advertising this concept to buyers. Understand how to evaluate the impact of change strategies: Strategic management is based on the initiative taken by the managers. In the case of reviewing the impact of change, it’s important to utilise resources in order to enhance the performance of the firm. This should be done by analysing their external environment.

The organisation’s mission should be identified, along with the vision, objectives, developing policies and plans. In this case, the steel organisation might use a balanced scorecard (BSC) to evaluate the overall performance of the business, as well as its progress towards objectives. The BSC is a strategic performance management tool. The BSC uses a mixture of financial and non-financial in comparison to a target value. The BSC is really about choosing appropriate measures and targets. Various design methods are chosen and are meant to help identify the measures and targets.

The scorecard itself is not very complex and should be no more than 20 measures spread throughout a mix of financial and non-financial topics, which can easily be reported manually. In reviewing the BSC, it may be possible to determine whether current performance meets industry standard expectations. Managers are alerted to areas where deviates from expectations. Managers are alerted to areas where performance deviates from expectations, so they can be encouraged to focus attention on areas. If all goes as planned, the result should be an improved performance within the organisation.

This strategy helps to focus managerial attention on the important strategic issues. The BSC has no real role in the formation of the strategy, however, the BSC can co-exist with strategic planning systems and tools. Kaplan and Norton’s original four perspectives of financial, customer, internal business processes and learning and growth would not be helpful in analysing a large corporation, such as a multinational steel organisation. After the measures and targets have been chosen, various design methods are proposed. This may help identify measures and targets by the process of abstraction, thus narrowing the search for space and measure.

The measure helps to inform a specific objective within customer perspective. This process may be more beneficial than finding measures for customers. This can be reported manually on paper or using some type of Office software. However, this can be an extremely labour-intensive process and may produce procedural problems. One individual should be assigned to this task, having several employees turning in data via e-mail, phone, on paper, fax, etc. Vertical integration is a style of management control. Vertically integrated companies, such as large steel conglomerates, are typically united through one common owner.

Each member of the supply chain usually produces a different product or market-specific service. Products typically satisfy a common need. The process is contrasted with horizontal integration. Horizontal integration is a type of ownership and control strategy. Horizontal integration is used by a business or corporation seeking to sell a specific type of product. Horizontal integration marketing is more commonly used than vertical integration marketing. In the case of a multinational steel organisation, horizontal integration marketing will most likely be more effective.

Conclusion Overall, communication is the biggest key to a solid strategic management plan. It’s important that superiors don’t make plans for the organisation without first speaking to employees. Managers should first meet to discuss the negatives of the business and may throw some ideas and suggestions around as to why the company is failing (or not doing as well as they would like) and what can be done to make it better. After that, company executives should meet with employees both in a group setting and one-on-one to identify company downfalls according to employees.

In a large organisation, this will mean that each manager will meet with employees one-on-one and will pass findings onto superiors. After everyone has been spoken to and heard, superiors can then meet again to go over the data and suggestions. It’s important that they then come up with a basic strategic management change plan on their own. The company should then meet as a whole to discuss these ideas and to take other recommendations from employees. The bottom line is that it is important to include all employees in the implementation of the change plan in order to be successful.

References

http://www.valuebasedmanagement.net/methods_porter_five_forces.html

http://www.mindtools.com/pages/article/newPPM_82.htm

http://www.referenceforbusiness.com/management/Ob-Or/Organizational-Structure.html

http://www.quickmba.com/strategy/porter.shtml

http://www.netmba.com/strategy/process/

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