Module 3-Strategic Planning and Implementation

rdi
resource
development
international
Level 7 Diploma in Management Studies
Strategic Planning and

Implementation
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Strategic Planning and Implementation
Contents
How to use this workbook
Introduction
Module Objectives 0.1
Summary of learning outcomes 0.1
Unit 1
Management Strategy
Management strategy 1.3
Summary 1.39
Unit 2
Vision, mission, objectives and measures
Vision and mission 2.1
Objectives and measures 2.13
Summary 2.30
Unit 3
Implementation of the strategy
Planning 3.1
Summary 3.37
rdi How to use this workbook
How to use this workbook

This workbook has been designed to provide you with the course
material necessary to complete the module, Strategic Planning and
Implementation by distance learning. At various stages throughout the
module you will encounter icons as outlined below which indicate what
you are required to do to help you learn.
This Activity icon refers to an activity where you are required to undertake a
specific task. These could include reading, questioning, writing, research,
analysing, evaluating, etc.
This Activity Feedback icon is used to provide you with the information
required to confirm and reinforce the learning outcomes of the activity.
This Key Point icon is included to stress the importance of a particular piece
of information.
This icon shows where the Virtual Campus could be useful as a medium for
discussion on the relevant topic.
It is important that you utilise these icons as together they will provide
you with the underpinning knowledge required to understand
concepts and theories and apply them to the business and management
environment. Try to use your own background knowledge when
completing the activities and draw the best ideas and solutions you can
from your work experience. If possible, discuss your ideas with other
students or your colleagues; this will make learning much more
stimulating. Remember, if in doubt, or you need answers to any
questions about this workbook or how to study, ask your tutor.
Strategic Planning and Implementation i

Strategic Planning and Implementation: Introduction
Strategic Planning and Implementation
Introduction
Module Objectives
This module recognises the importance of effective forecasting and
planning in the current global economy. Organisations need to be
proactive, with their direction determined by logical analysis. It is not
always possible to calculate accurately future events but without any
sense of progression it is easy to lose competitiveness, market position
and customer loyalty.
Learners are required to plan and develop the implementation of a

management strategy for an organisation they know well. Learners will
need to interact with senior management and stakeholders as the
emphasis is on a participative approach.
Summary of learning outcomes

To achieve this module a learner must be able to:
1. Construct a management strategy.

2. Develop vision, mission, objectives and measures.
3. Plan for the implementation of the strategy.
Management Research – Project and Presentation 0.1

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Unit 1
Management Strategy
Unit Objectives
This unit concentrates on the involvement of those in the management of
strategic planning and implementation. The relevance of stakeholders to the
proposed strategy and the way in which they are able to determine the
feasibility and risks associated are discussed.
In addition, the unit examines issues related to costs and other resources. It
also looks at different techniques used to model the proposed changes and
their sensitivity to variations.
The potential opportunities brought about through globalisation and the use of
the Internet are also included.
Management strategy
Reviewing options
There is no fundamental agreement upon an accepted definition of the
term strategy, and different approaches by a wide variety of managers,
writers, etc. have been offered. However, what seems clear is that
strategic management involves diverse and often creative processes in
an attempt to address the increasing complexities facing organisations.
Business strategy embraces a range of concepts, models and

approaches used to manage a business. The overall strategy of a
business is what should give the particular business a direction or a way
forward. This, in turn, relates to the ability of a firm to identify how best
to match its competencies to the needs and opportunities that are
evident in its marketplace(s).
Bruce & Langdon (2000) relate strategy to military campaigns,

describing an original definition of strategy as:
‘The art of planning and directing military movements and

the operations of war.’
Strategic Planning and Implementation 1.3

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In terms of a business, their definition states:
‘A strategy maps out the future, setting out which products

and services you will take to which markets – and how.’
Norton & Irving (1999) also relate the origins of business strategy to a
military analogy:
‘Strategy has its origins in generalship and the art and

science of manoeuvring an army. The term ‘strategy’
entered business language only after the Second World War
when military leaders on both sides of the Atlantic came
together to see if some of the successful elements of waging
war could be applied to business.’
They go on to give a literal definition of strategy – as it originated from

ancient Greek:
· Strategia – generalship, command of an army.

· Stratos – an army.
· Agein – to lead.
From this military standpoint, Norton & Irving go on to establish a

definition for business strategy:
‘Strategy is about what we want to do, what we want our

organisation to be and where we want it to go.’
Whichever definition is used, it is evident that strategy is concerned

with a company’s attempts to plan for its future, using a variety of
techniques (as are seen in a war) in order to arrive at the desired state.
From this starting point, you should already be able to appreciate that
strategy can be both developed and delivered in a variety of ways, and
that there is a clear role for strategy in determining the future of
organisations. It is this role of strategy to which we will turn to first.
The broad term ‘strategy’ has come to be associated with a whole

plethora of terminology that is used to describe it. The actual adoption
of a particular strategy by an organisation will in turn be dependent on
the particular context of the firm in question.
In this section, we will consider the broad role of strategy and the
common terminology that is attached to this organisational approach to
business. A later section of this first unit will, then, consider the
different approaches that can be taken to strategy – both in terms of an
organisation’s context and in terms of the type of organisation being
considered.
1.4 Strategic Planning and Implementation

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Firstly though, we must examine in some detail what the role of strategy
is in a business organisation.
Without a strategy, it is argued that a firm will not know where it is

going. You can perhaps appreciate the tendency for all organisations to
get bogged down in the day-to-day operations of a business, alongside
the further tendency to continue operating in ways that have always
worked in the past.
A tendency to ‘just get things done’ in a firm can mean that the company
forgets what it is trying to achieve and where it is trying to go. Along the way
it can further mean that opportunities that arise in the company’s markets
are missed – with the competitive advantage going to a rival company.
Strategy provides an organisation with a framework for:
· Understanding its place and position in each of its

markets.
· A way to move forward – in terms of identified direction

and purpose, and with the speed of advancement that is
appropriate for its different markets.
· Identifying and developing the resources and capabilities

that are appropriate for the market(s) that the company is
‘playing’ in.
Having a strategy means that a company can ensure that its day-to-day
decisions and actions fit within the long-term ambitions and interests of
the organisation.
In turn, having a clear strategy means that the management and staff of
an organisation can appreciate where the company is heading, and the
role they have in ensuring that the firm arrives at the desired destination.
It can be considered that the central role of any business organisation is

the achievement of superior long-term return on investment –
otherwise why bother being in business at all?
In order to achieve this long-term aim, it is strongly advised – as we

have already seen – that a business should have a strategy. Such a
strategy is a set of guidelines that direct the managers in an organisation
to reach their desired long-term positions.
A strategy comprises the objectives that are sought for the business and
the strategic ideas that are required to accomplish the objectives. This
can be summarised as:
· Where do we want the business to be? – The objectives.

· How can we ensure the business gets there? – The
strategy or strategies.

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So, a strategy is used to direct a company. Prior to looking at how this
directing takes place, we can finish this section with a couple of
additional more comprehensive definitions:
Strategy is sometimes described as the direction and scope of an

organisation over the long-term: ideally, which matches its resources to
its changing environment, and in particular its markets, customers or
clients so as to meet stakeholder expectations.
Andrews (1989) offers a further definition of strategy
‘Strategy is the pattern of objectives, purposes or goals and

the major policies and plans for achieving these goals,
stated in such a way as to define what business the
company is in, or is to be in, and the kind of company it is,
or is to be.’
ACTIVITY
Read the extract entitled ‘Approaches to Strategic Management’ from
Thompson J L, Strategic Management and Awareness. Make notes as to whether
you recognise either of the approaches to strategic management in your own
organisation. Can you identify the reasons for this? Who is involved in these
approaches?
APPROACHES TO STRATEGIC MANAGEMENT

THE BIRD APPROACH
Start with the entire world – scan it for opportunities to seize upon, trying to
make the best of what you find.
You will resemble a bird, searching for a branch to land on in a large tree. You
will see more opportunities than you can think of. You will have an almost
unlimited choice. But your decision, because you cannot stay up in the air
forever, is likely to be arbitrary, and because arbitrary, it will be risky.
THE SQUIRREL APPROACH
Start with yourself and your company – where you are at with the skills and
experience that you have – and what you can do best. In this approach you will
resemble a squirrel climbing that same large tree. But this time you are starting
from the trunk, from familiar territory, working your way cautiously, tree fork
by tree fork, deciding at each fork the branch that suits you best.
You will only have one or two alternatives to choose from at a time – but your
decision, because it is made on a limited number of options, is likely to be more
informed and less risky.

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In contrast with the bird who makes single big decisions, the squirrel makes
many small ones. The squirrel may never become aware of some of the
opportunities the bird sees, but he is more likely to know where he is going.
ACTIVITY
Research the history and development of IKEA, or another well known
multinational retailer, and write a brief report detailing the strategic direction
adopted by the organisation.
1. In what way could the issues facing IKEA, or another retailer, be

described as strategic?
2. What sorts of decisions are strategic decisions, and what distinguishes

them from other decisions that were no doubt being taken in the
company?
Using your answers, summarise the key characteristics of strategic decisions.
ACTIVITY FEEDBACK
A summary of the key characteristics should read;
Strategic decisions are concerned with;
· The scope of an organisation’s activities.
· The matching of an organisation’s activities to its environment.
· Building on, or ‘stretching’, an organisation’s resources and

competences.
· The matching of the activities of an organisation to its resource

capability.
· The major allocation and reallocation of resources in an

organisation.
· The values and expectations of the organisation’s key stakeholders.
· The direction an organisation moves in the long term.
· Implications for change throughout the organisation – they are likely

to be complex in nature!

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Stakeholder participation and involvement
We can view the position of stakeholders by viewing a stakeholder map,
described below:
Purpose:
· Identifies all interested parties both inside and outside

the programme; may also include individuals or groups
outside the business.
· Used to ensure that all stakeholder interests are catered

for by the programme, including keeping them informed
and receiving feedback.
Fitness for purpose checklist:
· Have all the stakeholders and their interests been

identified?
· Is there agreement from all interested parties about the

content, frequency and method?
· Has a common standard been considered?

· Has time to carry out the identified communications been
allowed for in the stage plans?
Notes:
· It is important to determine the interests of all stakeholders,

who may represent different customer groups, and to
resolve conflicting requirements. The Cabinet Office is
developing guidance on customer focus, one of the Prime
Minister’s four principles of reform, for example.
Suggested content:
· Matrix showing individual stakeholders or groups of

stakeholders and their particular interests in the programme
· Communication route and frequency for each

stakeholder or group of stakeholders.
Source information:
· Blueprint.
· Programme Plan.
· Organisational structures of organisations involved in the
programme.

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ACTIVITY
Using the stakeholder map concept described here, what does your own
organisation offer its stakeholders?
What aspects of the stakeholder map might a stakeholder look for in your
organisation?
Each group of stakeholders will have a different set of views and

expectation from an organisation. For example, shareholders would
regard an organisation to be effective if it produced above-average
profitability and growth leading to rising share prices; customers would
emphasise things to do with value for money, quality and reliability of
goods, courtesy of service and punctuality of delivery; suppliers would
emphasise fair and prompt payment; employees would look at the
extent to which an organisation is a good employer – paying good
wages, providing good working conditions, scope for satisfying work,
security of employment, etc.
ACTIVITY
Read the following brief case study and answer the questions that follow it.
An organisation had arranged for some substantial building work to be

undertaken during a particularly hot summer period. As a concession
to its employees for the inconvenience caused, it installed water
coolers in each of their offices. When the building work was
completed, they removed the coolers. The response from the
employees was quite passionate – many felt very resentful towards the
management. They felt that the management did not really care for
them.
Spedan Lewis, the son of the founder of the John Lewis Partnership,
drew up a futuristic constitution which contained mission statements
such as, ‘The Partnership’s ultimate aim shall be the happiness in every
way of its members’ and ‘ The Partnership shall recognise that only
fools put business too far before pleasure, especially health and
happiness, and that there is almost infinite scope for imagination and
energy in the promotion of happiness in the more important sense of
that word.’
To what extent do you think the management of the first organisation should
consider the comments of Spedan Lewis?
What experiences do you have of similar stakeholder consideration within an

organisation?

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Stakeholder expectations will vary from one organisation to another. A
suggestion of the different expectations is provided in Figure 1.1.
Shareholders Customers
· Growth in dividend payments · Price always competitive
· Growth in share price · Emphasis on product/service quality
· Consistent dividend payments · Return and replacement policies
· Growth in net asset value · Product reliability
Suppliers Employees
· Timely payment of debt by company · Good compensation and benefits
· Adequate liquidity · Job security
· Integrity/public standing of directors · Sense of meeting or purpose in the job
· Negotiating ability of managers · Opportunities for staff development
· Amount of interesting work
Government Lenders
· Efficient use of energy and resources · Liquidity of company
· Adhering to country’s laws · Character and standing of management
· Paying taxes · Quality of assets available for security
· Provision of employment · Potential to repay interest and capital on due date
· Value for money in use of public funds
Figure 1.1. Possible stakeholder expectations.
Criteria for judging options

In order to gain maximum benefit from the process of strategic
planning, we must develop some sort of criteria by which we are able to
determine how effective different options will be. Obviously, this is not
a precise science, but the use of objective thinking and the benefit of the
joint experience of all the relevant stakeholders should enable valued
judgements to be made. Selecting the appropriate option from a range
of possibilities is an important part of the overall process.

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ACTIVITY
Consider an important strategic decision made by your organisation or one
that you are familiar with. By discussing it with the decision-makers involved at
the time, find out what other options were discussed and the means by which
the final decision was made.
Summarise your findings in a brief report.
Why carry out strategic planning in the first place? This question brings
us back to our opening thoughts at the beginning of the module.
The purpose of a strategy is to identify where the organisation is at the

moment and to help direct it towards the intended objective. In order to
achieve this it must be realistic in a number of ways.
The business strategy must concur with the overall corporate objectives
and strategy so that the organisation is truly pointing in the same
direction.
It must be designed to integrate all functions of the organisation. Each

function will need to have a clear understanding of the future goals, and
how they will affect each function.
The needs of the customer and the market must be fulfilled and
satisfied.
The strategy must achieve its objective in a simple and clear manner.
Unnecessary complexity will only increase the likelihood of strategic
failure.
The cost of implementation must be adequately measured to ensure

that there is a financial benefit of the new strategy. This will be
discussed later on in this unit.
Feasibility studies
A feasibility study is the term used to describe the initial piece of work
to recommend whether the organisation should invest resources to
carry out further procurement activity in a category of spend.
Depending on the size and complexity of the category, the study might
take the form of:
· A detailed report.
· A short study.
· Other forms.

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The output of a feasibility study might be to recommend:
· A detailed category management review of a category of

spend.
· Supplier management activity.

· Tactical “quick win” style activity.
· Other recommendations.
Typically, a feasibility study would be a preliminary assessment, rather

than a detailed investigation into a particular sub-category or product
line. For example, an organisation might investigate opportunities to
make savings in a particular category of spend. A brief review of spend,
suppliers and contracts might reveal that:
· A full category management cycle is likely to deliver real

savings.
· There is a short term opportunity to reduce waste by

buying in different quantities or by changing the process
slightly.
· There are inefficiencies in the way in which we are

working with the supplier, which could be addressed by
a supplier relationship management cycle
A feasibility study might follow a six stage process as shown in Figure

1.2.
Experience suggests that the most important elements are:
· Clear Terms of Reference defined up front.

· A brief “warts and all” interim report may be useful,
where the feasibility study is a large piece of work, to
establish whether the analysis is taking the expected
direction.
Recommendations are grounded in an agreed view of:
· The category spend.

· The scope and the structure of the category into
sub-categories.
· Baselines against which improvements or savings will be

measured.
· The current contractual situation for the category of

spend; for example, understanding when contracts are up
for renewal, and what legal constraints exist.

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· A clear understanding of the costs associated with the

recommendation, in particular:
- Resourcing costs and skill requirements.

- Team location.
- The likely return from any investment.
Communications - Stakeholder management - Project management
Review Review Review Undertake

spend and commercial Agree
Mobilisation current opportunity
categor- arrange- findings
practices analysis
isation ments
Confirm Generate Draft final Finalise

TQR interim report report report
Stop/ Stop/ Sign off

continue continue report
Review
report with
sponsor
Figure 1.2. Feasibility study example.
KEY POINT
The following documents will support this approach to a feasibility study:
· Terms of Reference that are agreed with the relevant stakeholders.
· A resource plan.
· A structure for reporting on risks, issues and against milestones.

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The output from this part of the process is a clear recommendation on if and
how to proceed.
This approach suggests that the recommendation is reviewed through

appropriate governance where a decision as to if and how to proceed is taken.
Risk assessment
In a perfect world, all managers would have all the necessary
information which, when combined with their own business ability,
would be sufficient to make perfect decisions at all times. Not only is
this truly unrealistic, it is also impossible. (Many managers would also
argue that the elements of challenge and expectation that would be
eliminated in such a situation would result in a very dull predictable
business world, where everything was predictable and the consequence
would be lower returns for those taking higher risks.)
Risk means that a decision has clear targets and that good information
is available to support it. However, the future outcomes of each option
are subject to a degree of chance. The degree of risk is usually the key
point in discussions, and it will be upon this that the final decision is
made. Statistical data will be sought to enable an optimum probability
of a successful outcome. In strategic planning, risk might be considered
to be the probability of a recipient honouring the terms of a financial
agreement, for example.
Uncertainty, however, means that decision-makers know the goals that

they wish to achieve, but information about future events and
alternatives is not complete. In this case, managers are not in possession
of enough information to make a clear estimation of the potential
probability of success.
Risk analysis is vital when committing funds for the long-term.
ACTIVITY
Risks are an important input to the investment decision. Read the following
case study on how the BG group evaluated risks in its investment analysis.
http://www.thetimes100.co.uk/case_study.php?cID=51&csID=218&pID=1
In developing a risk assessment policy, there are two parts to the

strategy:
1. Analysis of risk, which involves the identification and definition

of risks, plus the evaluation of impact and consequent action.

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2. Risk management, which covers the activities involved in the

planning, monitoring and controlling of actions that will address
the threats and problems identified, so as to improve the
likelihood of the project achieving its stated objectives.
The risk analysis and risk management phases must be treated

separately, to ensure that decisions are made objectively and based on
all the relevant information.
Risk analysis and risk management are interrelated and undertaken

iteratively. The formal recording of information is an important element
in risk analysis and risk management. The documentation provides the
foundation that supports the overall management of risk.
The strategy defines how risks will be managed during the lifecycle of
the programme and is used to plan the way risks are handled within the
programme.
The risk strategy and supporting plan must acknowledge actual and
potential threats to the successful delivery of a project and determines
the activities required to minimise or eliminate them. The risk plan
needs to be capable of integration into or co-ordination with the project
plan.
Probability
Very high
High
Medium Risk
tolerance line
Low
Very low
Very low Low Medium High Very high
Impact
= Risk
Figure 1.3. Example of a Summary Risk Profile.

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A major concern is the appropriate communication of risk information,
in particular where escalation is required. The ‘summary risk profile’
(SRP) is a simple mechanism to increase visibility of risks. It is a
graphical representation of information normally found on a risk
register. This graph should be updated in line with the risk register on a
regular basis. The profile shows risks in terms of probability and
severity of impact with the effects of mitigating action taken into
account.
The SRP is often referred to as a probability/impact matrix. Each risk

(indicated by · on the diagram) would normally have a number or other
reference and supporting details. The position of the risk tolerance line
would depend on the organisation and its project. See Figure 1.3 for an
example SRP.
A risk management check would assess an organisation’s risk provision

by considering :
· What risks are to be managed.

· How much risk is acceptable.
· Who is responsible for the risk management activities.
· What relative significance time, cost, benefits, quality and
stakeholders have in the management of programme
risks.
A risk assessment framework defines how management of risk will be

handled within the associated context (could be organisation-wide or
for a specific activity such as a project). It covers the lifetime of the
activity. It provides information on roles, responsibilities, processes and
procedures, standards, tools, facilities and documentation to be
produced. It sets the context in which risks are managed, in terms of
how they will be identified, analysed, controlled, monitored and
reviewed. It must be consistent and comprehensive with processes that
are embedded in everyday management.
Fitness for purpose content:
· Does the framework identify relevant standards, policies

and legal requirements?
· Does the framework identify (or validate) the context and

perspective for the situation (e.g. strategic, operational?
which stakeholders’ views are of primary importance?)?
· Are the stated management of risk objectives, constraints

and concerns agreed (or validated)?
· Has the framework established how a successful outcome

is to be judged?

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· Does the framework identify the tools and techniques to

be adopted?
· Does the framework identify the scale for evaluation of

risk?
Suggested content:
It addresses how:
· Risks are identified.

· Information about their probability and potential impact
is obtained.
· They are quantified, taking into account expert advice

and the degree of uncertainty.
· Options to deal with them are identified, taking into

account constraints, such as internal obligations.
· Decisions on risk management are made. This includes

the criteria used to decide when further risk reduction is
necessary, taking into account costs and benefits.
· These decisions are implemented. This includes the

principles guiding the choice of how to intervene (such as
education, information, inspection) and on whom to
target any intervention.
· Actions are evaluated for their effectiveness.

· Appropriate communication mechanisms are set up and
supported.
· Stakeholders are engaged throughout the process -

especially suppliers and partners.
Where partners and/or suppliers are involved, it is essential to have

shared understanding of risks and agreed plans for managing them.
KEY POINT
There are three broad types of risk -
Business Risk
This covers the threats associated with a project not delivering products that
can achieve the expected benefits. It is the responsibility of the Project Owner
to manage business risks.

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Project Risk
This is the collection of threats to the management of the project and hence to
the achievement of the project’s end results within cost and time. The Project
Sponsor/Project Manager may manage these on a day-to-day basis.
Operational risk
This covers ongoing risk to service delivery, which could include anything from
major disaster to minor technical breakdown. These risks are managed in a
day-to-day basis by the organisation’s service manager and the service
provider. Note that although the client may not have hands-on responsibility
they must have the capability to understand what is being done on their behalf
and to take appropriate action if required.
Case study
Consider a typical risk management policy, which might state the
following points:
Areas to probe Best Practice
1. Are there processes to identify, assess, allocate and monitor

current, anticipated and emerging risks?
- There must be a risk management strategy, with

named individuals who have responsibility for
managing specific risks. For more information, see
the workbook on managing risk.
- For IT-enabled projects, the risk assessment should

include information security risks.
- For construction projects, risks relating to health and

safety should be included in the project brief.
2. Have the risks for each of the options been evaluated?
- See the risk management workbook for

recommended approaches to risk evaluation.
3. Have the risks for the preferred option been fully assessed?
- Assessment of costs, benefits and risks should be

documented in the options appraisal section of the
business case.
- There should be plans for managing and allocating

the risks associated with the preferred option.

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4. Have the ‘worst case’ implications associated with these risks

been assessed?
- Details should be set out in the Project Plan, Project

Initiation Document or equivalent; for construction
projects this information should be in the updated
Project Execution Plan.
- Risks should be financially assessed and an

allowance quantified for the risks.
5. Are the costs and time implications of managing the risks
included in the cost and time estimate or treated as a separate
risk allocation?
- Costs and time for managing risks should be

identified as a separate risk allocation.
- For construction projects, residual risk will also have

to be considered.
6. Has the project assessed whether it is breaking new ground in
any areas?
- To make a meaningful comparison, carry out a high

level assessment of similar projects in departments
and/or relevant private sector projects; seek expert
advice if required, where innovation is identified as
high risk.
- Consult with the market to help refine the approach,

identify risks and ways in which risks might be
mitigated.
7. Should the project be broken down into a series of small steps?
(Note this is mandatory for IT-enabled projects and
recommended for complex projects.)
Modular or incremental approaches to the project help to break it down

into manageable components and reduce risk. Seek guidance on this
topic for more information on how to break the project down - and,
importantly, how to reassemble the components as a coherent whole.
ACTIVITY
How might this risk management policy be adapted for use in your
organisation?

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Reviewing additional recent material
During recent years, there has been a cumulative process of change in
the economy and corresponding changes in the nature of competitive
advantage. Consequently, approaches toward strategic planning have
also changed. These are too lengthy to discuss in this module, but for
completeness are briefly listed in this section.
Significant changes in the economy:
· Increasing importance of networks.

· The Internet and the separation of information flows
from physical flows.
· The deconstruction of the economy and its value chains

into a greater number of separable layers, some of which
are ‘sweet spots’ of much greater value than other layers.
· The prominence of ‘increasing returns’ and ‘winner takes

most’ economics, as opposed to the traditional view that
markets and companies are subject to diminishing
returns.
Changes in the nature of competitive advantage affecting strategic

planning:
· The identification of ‘sweet spots’ in the value chain.

· The race to establish dominance in a ‘sweet spot’.
· The establishment of dominant standards.
· The development of skills in orchestration.
· The struggle with rival orchestrators.
· The struggle with the orchestrated.
· Increased danger that competitive advantage is
temporary.
· The need to find the next frontier of customer value

creation.
· The emergence of a new type of player – the ‘navigator’.

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ACTIVITY
Have you observed any changes in the approach to recent strategic planning
within your own organisation or one with which you are familiar?
Summarise these observations and your opinions of them.
Cost benefit analysis

Cost Benefit Analysis is a relatively simple technique for deciding
whether it is economically viable to make a change. To use the
technique, simply add up the value of the benefits of a course of action,
and subtract the costs associated with it.
In its simplest form, cost/benefit analysis is carried out using only

financial costs and financial benefits. A more sophisticated approach to
cost/benefit analysis is to try to put a financial value on the intangible
costs and benefits. This can be highly subjective and difficult to forecast.
The procedure for performing a cost/benefit analysis involves a few

simple steps which are outlined below:
1. Identify the costs. Costs may be ongoing or a one-off.

Adjustments must be made to ensure that they are included in
the calculation in a compatible way.
Costs:
10 network-ready PCs with supporting software @ £1,225 each
3 printers @ £600 each
Cabling and Installation @ £2300
Training costs:
Computer introduction - 10 people @ £ 200 each
Keyboard skills - 10 people @ £ 200 each
Other costs:
Lost time: 40 man days @ £ 100 / day
Total cost: £24,350
2. Identify the benefits. Benefits are most often received over time.
Benefits:
Increasing productivity: estimate £20,000 / year
Ability to obtain Grade 1 in inspection: estimate £10,000 / year
Improved staff efficiency and confidence estimate: £25,000 / year
Total Benefit: £55,000/year
3. The effect of time can be built into the analysis by calculating a
payback period. This is the time it takes for the benefits of a
change to repay its costs. Many companies look for payback over
a specified period of time - e.g. three years.

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Payback time: £24,350 / £55,000 = 0.44 of a year = approx. 3
months
4. Analyse the results and assess whether the projected payback
period is sufficiently small to make the undertaking worthwhile.
Consistency with organisational values

If an organisations wishes to develop its strategic management in an
efficient and effective way, it will need to adopt consistency in all that it
seeks to achieve. It is important that all areas of the organisation are able
not only to ‘pull together’, but to ‘pull in the same direction’. This
applies to organisational values as much as other areas, such as
decision-making.
There is agreement that consistent decisions would be good thing.

Concern centres on making it happen because in many organisations
there is no history of consistent decisions ever being made. This seems
like a reasonable concern. But most organisations have never had a
specific goal of achieving consistent decisions. Perhaps that’s one
reason why so many inconsistent decisions are made.
The key to making consistent decisions is a reference document with

short, simple measurable goals that can be widely used as a touchstone
to help all employees make good decisions easily and confidently. In
short, they need a plan.
Mention plans in many companies and you get one of the following
responses. The first response is that they are intending to work on a plan
when the immediate business pressures come off. Translation: they are
never going to do it because they don’t understand the value. The
second type of response is a smug, knowing smile followed by a
statement about how long they have spent crafting their plan. When the
forklift truck delivers the plan and the desk groans under the weight
you can see why it took so long to write. Unfortunately, the end result is
that no one is ever going to read it, let alone act upon it.
The traditional, weight tested (often content free), strategic plan is of

limited or no value to help employees make decisions. So if the strategic
plan is of limited value, and organisations are delaying producing them
anyway, something else is needed.
The best results come when people work together with whoever in the
organisation can help them meet their goals. Making the majority of
goals public inside the organisation really helps and a further boost is
delivered by linking goals to the compensation and appraisal systems.
There are other essential steps to join up the plans but a key factor is
getting people talking.
To me one of the best things about this methodology is that

organisations experience an increase in the consistency of decisions

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being made before the plans are even completed. That is the power of
people working together. In many cases significant cost reductions are
achieved by relatively minor actions. This method works.
In future, whenever anyone in the organisation is faced with making a

decision, they will have a touchstone to help them make the best
decision. It’s “their” plan. Equally importantly the plan also helps
people explain why they made a particular decision. A great help in
reducing “discussions”.
The whole process of getting agreement suddenly becomes much

easier. Decisions are no longer just driven by the person who can argue
their position longest. Now they are made based on a logical plan and
clear principles structured into about a dozen PowerPoint slides. Now
organisations can make consistent decisions.
Case study
A good example is provided by the Lanarkshire health care trust. The
following extract from their website shows this:
NHS Lanarkshire will work in partnership with the people of

Lanarkshire to fulfil a commitment to improving heath, reducing health
inequalities and building trust and confidence in our relationships with
the public, staff and organisations with whom we work.
In support of this commitment, we have developed a set of

Organisational Values through meaningful public and staff
contribution.
The context for the influence of values is complex and challenging. NHS
Lanarkshire will manage the balance between public and staff
aspirations for the NHS with our responsibility and accountability for
the proper stewardship of resources.
The values will exert significant influence over Strategy Development,

Re-design and Modernisation of Clinical Services and over our
priorities and performance as we strive for continuous improvement as
an exemplar employer.
In pursuit of improvement we will value:
· Quality, patient-focused services.

· Quality, healthcare environment.
· Continuous improvement.
· Involvement.
· Communications.

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· Respect.
· Fairness and consistency.
· Competence and continuous learning.
Market position and share

To better understand the effect of strategy, it is useful to learn about a
technique of analysis known as the Ansoff matrix. This well known
model is a classic in strategy building. Its primary purpose is to analyse
the organisation’s approaches to its products and to its market to assure
that an appropriate marketing strategy is being pursued and possibly to
reveal opportunities.
Within this model is an assessment of the risks involved in pursuing

given strategies. The model also prompts consideration of synergy
which might exist on both the product and the market axes. See Figure
1.4.
Let us unpack the model a bit and interpret some of the implications of
positions in each of the boxes.
Current New
products products
Current Market Product

markets penetration development
New Market Diversification

markets development
Figure 1.4. The Ansoff matrix.
Market penetration
This strategy involves the firm looking to increase its products’ share of
the markets currently served by the company. Various methods are
available to the firm under this broad market penetration strategy:
More purchasing and usage from existing customers – new products are
added to the existing product line; for example, Coca Cola and cherry
coke, Kellogg’s crunchy nut cornflakes, Virgin bank and Virgin trains.

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Gain customers from competitors – marketing and strategic efforts

directed primarily at taking customers away from the competition. For
example, the recent attempts by new entrants to the gas and electricity
industries trying to take customers from British Gas and other
established ‘players’.
Convert non-users into users – special offers for people to try Health
Club membership serves as a good example of this.
Market development
Offering existing company products to new markets is referred to as

market development strategy. Again, two broad areas of market
development can be examined:
New market segments – examples could include McDonalds offering

their products with special add-on offers to the teenage market, or
solicitors offering their services to non-traditional customers –
particularly the ‘no win no fee’ segment of the market.
New distribution channels – Mercedes offering their vehicles and brand

through shop outlets rather than just dealerships, as seen at Blue Water
shopping centre in Kent. A further example could include the
large-scale development of home shopping and smaller Express stores
by Tesco.
Product development
Product development incorporates three broad areas of activity. These

can be described as:
Product modification via new features – examples include, fan assisted

ovens, combined TV and DVD, car breakdown recovery services
incorporating hotel accommodation for customers with an
un-serviceable car, mobile telephones incorporating web and photo
technology, and ready meals that are microwaveable in the packaging.
Different quality levels – some product modifications can be said to

offer different quality levels to different customers. Other examples
could include car tyres, Tesco selling their basics (own label) and finest
brands of goods in the same store, and British Gas offering customers
different levels of service care to its customers – from 3-star to 5-star
cover.
New products – the home bread maker, DVD technology and vehicle
telematics could all be considered to be new products.
Market leadership
If a company pursues a strategy of market leadership, it is trying to get

to a position where competing companies are always ‘playing

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catch-up’. Research strongly suggests that market leaders enjoy not
only higher sales, but also higher profits as well.
Market leadership presents many disadvantages to rival companies in

the industry. These include:
· Economies of scale.
· Research and development costs.
· Recruitment of the ‘best’ employees.
· Advertising and promotional spending capabilities.
· Access to market research.
· Brand management and brand proliferation.
The level to which these disadvantages will show themselves will

largely be dependent on the industry being considered. As an example,
market leadership in an oligopolistic industry (where there are a large
number of competing firms) that is also facing over-supply, can actually
bring advantages to followers in the industry.
Ford Motor Company serves as a good example of this, where its

pursuit of market share and retention of market share leadership is
placing the advantage in many of its rivals hands. The company is
facing rapid erosion of its market share by smaller, better customer and
product-focused companies, who are very satisfied if they can move
their market share from 4 to 5 per cent, for example. For this example
company huge gains have been made. Ford, meanwhile, is facing an
erosion over the past ten years of around 15 percentage points.
Diversification
This involves a company looking at entering new areas of business. For

example, Building Societies buying Estate Agency businesses, or the
train and bus company Arriva buying car dealerships (which were
re-sold in 2003).
The Ansoff matrix is a very clear and easily understood model, widely
known and widely used.
While the benefit of the Ansoff matrix lies primarily in examining

strategic product/market strategy, it also has value in:
· Causing long-term evaluation of markets.

· Revealing the potential opportunities for product synergy
and for market synergy.
· Focusing on competitor activity.

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Survival
This strategy can be considered the opposite of profit, and can be

described in terms of the avoidance of loss.
Survival may be for the short or the long term. In the short term, it could
be a strategy that is pursued because of difficult market conditions. In
the long term, the company may well have curtailed profits as they
innovate and grow. The intention being that they actually begin to
achieve profitability further ‘down the road’.
Marks and Spencer is a company that has had to put survival on the
agenda in recent years. Though still profitable through its ‘difficult
years’ it did have to go back to basics in order to ride the wave of bad
fortune. Even though there are still some issues, the company is
beginning to see sales growth again – even if profits are not yet back to
their previous level.
Mergers and acquisitions
Merging with, or acquiring, another company can often be an attractive

proposition for a company strategy wise. Either to build on core
competencies or to buy in required core competencies to meet the
demands of a changed external environment, a company pursuing this
kind of strategy will be looking to gain advantage in the marketplace.
The main ways to deliver integration – vertical, backward and so on –

were considered in the activity included in the earlier section on Ansoff
growth strategies. In this section we will not re-visit your findings from
the activity.
One area that you possibly didn’t consider though, was the strategy
defined as ‘business redefinition strategy’.
Needham et al (2002) cite the example of ICI using the business

redefinition strategy:
‘ICI has redefined its main focus of business activities from

being focused on heavy industrial chemicals to one on high
value-added consumer-oriented chemicals. It made this
switch because of the weakness in its older market and the
potential in its newer market.’
Using the Ansoff matrix in conjunction with the BCG matrix, described
in the next section of this unit, the organisation can conduct a useful
strategic review of production/market strategy and what that implies
for achieving the organisation’s vision. In this way we are able to make a
seamless transition towards techniques that are more directly
concerned with strategic evaluation.

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ACTIVITY
Using a suitable source of reference, find out the different types of
diversification that can be pursued by a company.
For each of the types make some brief notes to explain what each type covers.
ACTIVITY FEEDBACK
Diversification involves a company entering a new line of business outside their
normal scope of operations.
You should have been able to find information covering the different types of
diversification. These include:
· Forward integration.
· Backward integration.
· Vertical integration.
· Horizontal integration.
· Total diversification.
Costs and investments

An understanding of the nature of costs and investments is necessary
for an organisation to be able to make decisions. If the aim is to expand
production to meet rising demand, then it will be necessary to know
how much that extra production will cost. Without this information, it
will have no way of knowing whether or not it will make any profit as a
result of this expansion.
Costs will include all the expenses that must be met in the process of
completing an organisation’s activities. These will be either fixed (costs
which stay the same at all levels of output) or variable (costs which are
directly related to the output).
ACTIVITY
The student is recommended to research the topic of costs for him/herself. It
is advisable to spend some time gaining a more thorough understanding of this
area of financial management, which will be dealt with in a later module.
There are a number of suitable texts available on the subject.

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Investment refers to the purchase of capital goods. These are used in the
production of other goods, directly or indirectly. For example, a
building contractor who buys a cement mixer, some scaffolding, a lorry
and five shovels has invested. These goods are used directly in his
production process. If the contractor then buys a computer and printer
for the company’s office, this is considered an indirect investment.
Although these items will not be used in production, the organisation
would not run as efficiently without them.
Investment might also refer to expenditure by a business which is likely

to yield a return in the future. For example, a business might spend
£2million on research and development into a new product or invest
£500,000 in a promotion campaign. In each case, money is spent on
projects now in the hope that they will generate a greater amount of
money in the future as a result of that expenditure.
There are two type of investment:
· Autonomous - where an organisation buys capital goods

to replace ones which have worn out.
· Induced – where an organisation purchases new

equipment, etc. as a result of pressure from rising sales or
expansion.
Opportunity costs
In the context of making financial decisions, opportunity costs refer to
the value of an alternative decision that has been sacrificed in order to
pursue a particular course of action.
Consider this example, which may relate to you as a student studying

on this course. To complete this course, you may find it necessary to
take a number of days off from your employment. If you are employed
on a PAYE basis, the taking of holiday days will not result in any lost
income for you but if you are self-employed, you would be losing a
certain amount of income per day taken as a result of having to study.
The opportunity cost of studying would, therefore, be the income that
you are losing.
ACTIVITY
From a business perspective, consider the following examples:
1. A company, which specialises in providing vintage cars for weddings,

has a booking, which is in jeopardy because one of their cars has
broken down. The owner of the company, therefore, has to make the
decision as to whether it to cancel the booking or hire a car from

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another company which has surplus vehicles. The cost of hire plus
driver is £250.00 and the cost of hiring a car from another company is
£150.00. In both instances, therefore, the opportunity cost is the
income forgone.
What is the opportunity cost if:
a) The owner decides to cancel the booking.
b) If the owner decides to honour the booking but hire a car from
another company.
2. An organisation has been offered the chance to invest in a new

product. They will need to buy a new machine at a cost of £50,000.
They currently have £50,000 in a deposit account which has earned 5%
interest per annum. Calculate the opportunity cost.
3. An organisation is to use a factory to produce a new line of products,

which otherwise would have been sold for £500,000. What is the
opportunity cost?
ACTIVITY FEEDBACK
1a) If the owner decides to cancel the booking, the opportunity cost is the
total fee of
£ 250.00
b) If the owner decides to honour the booking but hire a car from
another company, the opportunity cost will be £ 250.00 - £ 150.00 for
car hire = £ 100.00
2. The opportunity cost would be £50,000 + £2,500 per annum interest

= £52,500
3. The opportunity cost will be the sale of the factory = £500,000
A development during the late 1970s and early 1980s by Bain and Co
was the Opportunity/vulnerability matrix. This was later refined by the
LEK Partnership to provide a means of describing the profitability of an
average business segment in a particular industry. Whereas the BCG
matrix had shown that high relative market share led to high
profitability, the opportunity/vulnerability matrix set out to prove that
it should be possible to produce a ‘normative curve’ to investigate
average segment profitability.

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100
Vulnerability
Return on
capital
employed
(%)
Normative
band
Opportunity
0
10X Relative market share 0.1X
Figure 1.5. Opportunity/vulnerability matrix.
Figure 1.5 shows the relationship between return on capital employed

and relative market share, leading to a normative band in a convenient
banana-shaped curve.
Scenario planning
Scenario planning is a technique that allows practitioners to prepare for
the future by looking at trends in the present and mapping how these
interrelate with each other. From this, a number of scenarios picturing
possible future worlds are drafted, along with a description of how
these futures could arise. Businesses then plan around these - with
contingency plans for undesirable elements. Key change indicators are
monitored and used to gauge how events are turning out. Companies
using the technique have reported remarkable successes - the oil
company Shell, for example, predicted the Oil Crisis of the 1970s, and
the changes that took place prior and immediately after the fall of the
Soviet Union in the early 1990s.
Many people believe that in today’s rapidly changing world it is

becoming impossible to plan for the future. Some would even view it as
a waste of time. Within the UK there is a debate about whether the UK
should enter European Monetary Union and embrace the euro. In other
markets different issues are hot topics. The common feature is that the
future is uncertain. Nevertheless businesses do need to anticipate the
future. And they need to look 5, 10 or more years ahead. Pharmaceutical
companies do this on a routine basis - planning for when a key patent
expires. But all businesses need to look forward.

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Traditional methods for anticipating the future extrapolate from the
present. The problem with this approach is that the further forward one
goes the greater the error - and thus the greater the risk of making a
mistake. With the speed of change in some industries, extrapolation
beyond two or three years is not even possible.
KEY POINT
“A scenario is an internally consistent view of what the future might turn out
to be - not a forecast, but one possible future."
Michael Porter
“Scenario planning is that part of strategic planning which relates to the tools
and technologies for managing the uncertainties of the future."
Gill Ringland
Scenario planning is not about predicting the future. It is about

exploring the future. If you are aware of what could happen, you are
better able to prepare for what will happen.
Scenario planning exercises involve identifying trends and exploring

the implications of projecting them forward – probably as high,
medium and low forecasts. These can include political, economic, social
and technological. As different trends are chosen and different
combinations of forecast levels are combined, a whole spectrum of
possibilities can be identified.
Well-known examples include the end of the Berlin Wall, OPEC oil
price rises, bombs and terrorist attacks.
Simulation modelling
Simulation modelling allows managers to investigate the behaviour of a
situation so that they can gain a clear understanding of the
“cause-and-effect” relationships that underpin the operations in any
organisation.
It allows managers to:
· Simulate and plan the financial effects (costs and profits)

of a range of scenarios such as:
- change in demand for products and services,

- changed product volume and mix,

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- anticipated economies of scale,

- process improvements,
- outsourcing or changes to resource costs,
- step changes and the effect of capacity constraints.
· Make accurate plans for resources required, such as the
number of full-time employees, on the basis of how your
organisation plans to perform and what it needs to
deliver.
· Analyse resource allocation and identify areas with

bottlenecks and areas with excess capacity
· Facilitate the process of creating, updating and

maintaining your annual budget or rolling forecasts.
· Test alternative “what if” analyses to assess the likely

impact on resourcing levels and future performance.
As a result, it allows managers to explore a range of possible reactions

quickly and easily, allowing the preferred option to emerge more
quickly than more conventional approaches to planning and budgeting.
Simulation and planning is based upon actual cause-and-effect

relationships. The solution adds “intelligence” to your simulation and
planning. It does so by using an Activity Based Costing approach to
establish a cause-and-effect link between the organisation’s use of
resources and the products and services provided.
This relationship is often absent in traditional planning methods.
Sensitivity analysis
Once a situation has been suitably modelled and simulated, a further
exercise that is useful for decision-making is to attempt to find out what
differences in output there will be for a selection of minor conditional
changes. It might be important to know, for example, what change in
costs might be observed if a supplier is changed. By inserting different
quoted prices from a number of alternative suppliers into the model, it
will become apparent if there are any advantages (and, equally, any
serious disadvantages) to be found.
It is possible that key variables such as volume of unit, sales price,

project life span and materials and labour costs may change. The
function of sensitivity analysis is to measure how these variables may
change, and so affect investment decisions. It is usually used in
conjunction with NPV or IRR computations and works on the basis that
each variable is manipulated (pessimistically or optimistically) to find
what the impact will be on the NPV, or IRR. Using a standard

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spreadsheet package to analyse ‘what if?’ scenarios can best use the
application of sensitivity analysis.
KEY POINT
The basic assumption here is that the estimates made for future revenues and
costs for a particular project are valid and that there are is no uncertainty
involved.
A simple use of sensitivity analysis is seen when the projected accounts

for a small organisation or department are presented with slight
variations in some of the variables. This allows decisions to be made
based on the probable outcomes. Perhaps a restaurant might wish to
determine the effect of changes of customer numbers, and subsequent
variations in staffing, on predicted profits. By using this so-called ‘what
if?’ method, usually within a spreadsheet, it should be possible to find
the optimum customer and staffing levels to maximise profits.
This method suffers from some drawbacks as it is only as valuable as the

information available. If estimates become too fanciful then solutions
will be unreliable. Decisions subsequently made will then be of little
use. However, used with appropriate caution, sensitivity analysis can
be particularly helpful.
ACTIVITY
Seek out the finance director/manager of your organisation. Ask if it is possible
for you see how sensitivity analysis (or the ‘what if?’ method) is used in the
decision-making process.
Try to obtain a sample document and describe the process used. Can you
describe one actual decision that has been made as a result of the use of this
method?
Balanced scorecard approach

A new approach to strategic management was developed in the early
1990s by Drs. Robert Kaplan (Harvard Business School) and David
Norton. They named this system the ‘balanced scorecard’. Recognising
some of the weaknesses and vagueness of previous management
approaches, the balanced scorecard approach provides a clear
prescription as to what companies should measure in order to ‘balance’
the financial perspective.

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The balanced scorecard is a management system (not only a

measurement system) that enables organisations to clarify their vision
and strategy, and translate them into action. It provides feedback
around both the internal business processes and external outcomes in
order to continuously improve strategic performance and results. When
fully deployed, the balanced scorecard transforms strategic planning
from an academic exercise into the nerve centre of an enterprise. This is
shown in Figure 1.6.
Kaplan and Norton describe the innovation of the balanced scorecard as

follows:
“The balanced scorecard retains traditional financial

measures. But financial measures tell the story of past
events, an adequate story for industrial age companies for
which investments in long-term capabilities and customer
relationships were not critical for success. These financial
measures are inadequate, however, for guiding and
evaluating the journey that information age companies
must make to create future value through investment in
customers, suppliers, employees, processes, technology and
innovation.”
The balanced scorecard suggests that we view the organisation from

four perspectives, and to develop metrics, collect data and analyse it
relative to each of these perspectives:
· The Learning and Growth Perspective.

· The Business Process Perspective.
· The Customer Perspective.
· The Financial Perspective.
The Balanced Scorecard was developed to provide a new form of

strategic management. The key features of the Balanced Scorecard
approach are that it:
· Has a limited number of measurements.

· Focuses on the important factors for strategic success.
· Is not overly complex.
· Does not confuse, or diffuse focus, by containing too
many objectives or too much information.
· Is broad-ranging (including strategy, customers, financial

management, business processes and
learning/development).

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· Relates the diverse areas together in a dynamic
relationship.
Objectives
Initiatives
Financial
Measures
Targets
“To succeed
financially, how
should we
appear to our
customers?”
Objectives
Objectives
Initiatives
Initiatives
Customer Internal
Measures
Measures
Targets
Targets
Business
“To achieve our Vision Processes
vision, how should and “To satisfy our
we appear to our shareholders and
customers?” Strategy customers, what
business processes
must we excel at?”
Objectives
Initiatives
Learning
Measures
Targets
and Growth
“To achieve our
vision, how will
we sustain our
ability to
change and
improve?”
Figure 1.6. The Balanced Scorecard.
The balanced scorecard provides a simple but effective answer to the

questions “what does the organisation need to do to succeed?” and
“how can we get every employee working in the same direction?”
The balanced scorecard can play a key role in achieving real change in
organisational teamwork. Although team/organisational performance
is dependent on many things, a major part is played by:
· The degree of collective focus on the overall goal.

· Simplicity of that goal.
· Clarity of visible measurement of that goal.
· Speed of communication of measurement results.
These principles makes it easier, for example, for sports teams to build a
performance culture than many businesses because:

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· The goals of sports teams are very clear (e.g. to win the
league).
· Measurement is simple, both in the short term (by goals

scored) or long term (by position in the table).
· Communication of progress to organisational members,

and their supporters, is clear and instant (everyone sees
when a goal is scored, or the team wins a match, and the
updated tables are reported within minutes of each
match finishing).
It is often difficult to improve overall organisational performance in a

business because the collective goals are unclear. Employees are often
only aware of the aims of their own “team island”, and regard other
team islands as having a different job. Individuals are often motivated
to “do their bit”, but they lack the overall understanding of where the
organisation is going or how the various team islands are supposed to
work together for collective good. Whereas a sports team is often
characterised by a focus on goals, results and league tables, businesses
are often characterised by an absence of such a unifying force.
The balanced scorecard can help overcome such difficulties by

providing a focus that unifies all parts of the business. It provides a
methodology that turns the eyes of all employees to a single direction.
The balanced scorecard can, therefore, be a very effective tool for
changing the organisational culture, breaking down the barriers
between team islands, creating an overall team culture and thereby
improving organisational performance.
Potential globalisation and internet advantages

In recent years, the potential to operate in a global market has become a
reality for a large number of organisations. This has been due partly to
the ease with which products can be transported across the world, and
partly to the access made possible by the Internet for communication.
Globalisation is the process whereby worldwide tastes and product

offerings converge and are increasingly satisfied by global products
rather than local ones.
In reality, few global products truly exist, but it can be said that through
many organisations globalisation has enabled the distribution and
subsequent success of many products. The global perspective on
customers, technology, costs, sourcing, strategic alliances and
competitors allows organisations to think in terms of a worldwide
audience. The market for these organisations’ products is wherever
there are affluent consumers or significant industrial customers. These
organisations must appeal to their customers wherever they are
(regardless of borders), the organisation’s nationality or where its
factories are.

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Globalisation is driven by hard economics. To compete effectively,
organisations have to incur high fixed costs, forcing executives to
spread these costs over higher volumes, which means trying to gain
market share in all market economies. New technologies also get
dispersed globally very quickly, so that innovators must exploit their
property on a global scale, if necessary by means of strategic alliances,
or risk seeing it adopted or adapted by rivals.
Global competition has accelerated sharply. Between 1987 and 1992, US

direct investment outside the US rose 35 percent to $776 billion, while
the value of foreign direct investment into the US more than doubled, to
$692 billion.
The Internet has accelerated the strategic processes by separating the

physical flows and the information flows. Traditionally, these used to
be part of the same system. Amazon.com provides an excellent example
of this. Historically, a book supplier would be both a physical entity, a
warehouse taking stock from the manufacturer and supplying it to the
consumer, and a source of information, what is on the shelves
indicating what is available. However, amazon.com has managed to
separate these two flows. By providing a service that links customer
needs with suppliers, it is now in the situation of having infinite stock
with zero inventory!
ACTIVITY
Visit amazon.com and investigate the wealth of books (and other products)
available from the website.
If you are able, select a book from the website and make a purchase. Follow the
stages from the visit to the website through to the delivery of the book.
Describe the stages of the process, including a diagram to show them.
Explain the advantages of the Internet to an organisation such as Amazon.
REVIEW ACTIVITY
Select a product of your choice that is in common use.
For this product, attempt to analyse any advantages that can be gained from a
hypothetical improved version of it. Consider the application of some of the
techniques described in this unit in the determination of its potential success
for its manufacturer.
What strategic planning considerations might be appropriate?
How might modelling and analysis be useful in the decision-making process?

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What relevance could globalisation have on the future of the new product?
Describe how the Internet could be used to provide strategic direction.
Summary
Management strategy is determined by a wide range of factors,
including stakeholder involvement and expectations. These determine
the support for proposed change and provide an indication of the likely
outcome. Such techniques as feasibility studies, cost benefit analysis
and sensitivity analysis enable management to make the correct
decisions for maximum growth and profit.
By using scenario modelling, it is possible to predict the behaviour of an

organisation and its market as a result of the changes that are being
anticipated.
This unit has looked at these topics and related them to strategic
planning. It has also looked at the potential benefits of globalisation and
the advantages of developing strategy that uses the Internet’s
capabilities.
Further reading
Andrews, K. (1989) Concept of Corporate Strategy, Richard D. Irwin
Bruce, A. & Langdon, K. (2000) Strategic Thinking, Dorling Kindersley
Johnson, G & Scholes, K (2003) Exploring Corporate Strategy. Prentice

Hall
Mintzberg, H (2000) The Rise and Fall of Strategic Planning. Prentice

Hall
Norton, R. & Irving, R. (1999) Understanding Strategy, Hodder &

Stoughton
Pettigrew, A., Thomas, H. & Whittington, R. (2001) The Handbook of

Strategic Management. Sage

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Unit 2
Vision, mission, objectives and

measures
Unit Objectives
When an organisation sets out to develop a new strategy, it must have clear
goals that are to be attained. In most cases these will evolve from corporate
vision and a corresponding mission statement. Both of these will, in one way or
another, state the aim and intent of the organisation’s activities themselves. In
this unit, we shall look at the purpose of these public statements.
The key strategic objectives of an organisation then become the focus of the
organisation’s efforts and need to relate to a range of secondary issues. These
are discussed in the second part of the unit.
Vision and mission

KEY POINT
An effective strategy will need to be based on each of the following
characteristics:
· It should be sustainable – once established it should be able to run

and be built on over time.
· It should be distinctive from competitors – the strategy should set

out to help the organisation and its activities to be different from
rivals.
· It should enable the organisation to gain a competitive advantage.
· It should exploit links with the business environment. Organisations

need to change and adapt with the environment, and make effective
links with the environment – for example, by developing close
relations with customers.
· It should be based on a vision that enables the organisation to

develop better links with the environment - for example, helping

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the organisation move into bigger and better markets.
Although all these characteristics are considered in this unit, it is the

final one that is of immediate importance here.
Core organisational values

The business environment within which an organisation is active
imposes a number of pressures that are likely to have significant
influence. Whilst an organisation can turn its back on such pressures
and operate within its own self-imposed vacuum, it is highly unlikely to
gain general support and, therefore, succeed in the market place.
The objectives of any organisation should reflect its awareness of these

contributory influences and, by adopting a policy of compliance,
incorporate them into its core values. These will in turn form the
framework for the organisation’s vision.
Johnson & Scholes (1998) identify three key steps in understanding the
nature of core organisational values. These relate to:
· Identifying those environmental influences which have

affected the organisation’s development and performance
in the past and trying to identify those that will have
significant effect in the future.
· Determining the certainty of the environment in which

the organisation is operating. If it can be considered
static, then a historical analysis may prove useful.
However, if the environment is dynamic, then any
analysis must be forecast-based.
· A structured analysis of environmental influences should

confirm that core values are appropriately aligned.
An organisation’s core values will be influenced by a number of diverse

factors. These may be summarised as:
· The internal environment, including the organisation’s

own assets, expertise, staff qualities, etc, and the way in
which it operates.
· The local environment, including areas in which it

operates.
· The competitive environment and markets, including the

manner in which it sustains and develops its competitive
position.

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· The global environment, including the potential for

opportunities, threats and competition from all possible
quarters.
They may, in turn, be viewed as the consequences of the following

forces and pressures that the environment constantly brings to bear:
Social – the customs and priorities of the society or societies in which

the organisation operates; the wider social respect and regard in which
the organisation is held; social perceptions of particular objectives.
Political – in which the organisation is under pressure from political

drives; and also shapes its policies according to political drives (e.g.
increased concern for the environment in recent years).
Economic – the availability of financial resources; the propensity to use

these resources; the order of priority in which financial resources are
apportioned; external financial pressures such as inflation, interest rates
and currency exchange rates.
Technological – the opportunities that accrue from technological

invention and development; the availability of technology; the
availability of expertise to use and exploit the technology.
Legal – the limitations placed on activities by law; the variation of legal

pressures within communities and in different parts of the world.
Ethical – the pressures brought about by what societies, and groups

within those societies, consider to be right and wrong; the prevalence
and dominance of religious and sectarian interests; concern for issues
that are, by common consent, important (e.g. waste disposal and
pollution).
Competition – awareness of the actual and potential activities of

competitors; pressure brought about as the result of command or
scarcity of resources and expertise.

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Political/Legal Economic
· Employment law · Interest and inflation rates
· Taxation policy · Consumer confidence
· Company law · The business cycle
· Privatisation/deregulation policies · Economic growth prospects
· Environmental legislation · Unemployment rates
· Health & Safety regulations · Disposable incomes
· Public expenditure controls · Labour costs
· European Union directives · Energy availability and cost
· Government stability
Socio-cultural Technological
· Demographics (population and household numbers) · New product potential, creating new competition
· Values in society · Alternative means of providing services
· Changing lifestyles (family composition, changing · New discoveries
attitudes to work and leisure)
· Rates of government and industry expenditure on
· Changes in consumer tastes and preferences research and development
· Levels of education · Changing communications technology
· New product technology
· Rate of technological transfer
Figure 2.1. Identifying influences. (Adapted from Johnson & Scholes.)
The use of a PEST (or PESTLE) analysis as a technique for identifying

these influences will already be known to you. However, Figure 2.1
serves as a reminder of the basic concepts.
ACTIVITY
Carry out a PESTLE analysis for your own or a similar organisation.
What do you consider the key influences on your organisation core values?
Growth
There are numerous examples of markets that have shown considerable
growth in recent years, usually due to developments in the technologies
used. Perhaps one of the best examples comes from the world of
telecommunications. Some fifty years ago, the telephone provided a

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means for people to communicate in real time with many other parts of
the world with a fairly satisfactory degree of success. Today, we can use
a wide range of methods for such communication: cordless telephone,
mobile phone, VoIP internet telephony, text messaging, and so on.
Many organisations involved in this market have seen substantial
potential for growth. Those who have established themselves as serious
contenders in this market have been rewarded with enormous
organisational growth. The market is already huge and is getting bigger
all the time. The range of services, as we have identified, has grown to
such an extent that patterns of use are rapidly changing. The UK
communications sector, alone, was worth over £50 billion in 2005 (a 5%
growth from the previous year), with households spending an average
£87.67 per month, which includes £30.50 on mobile phones. With such a
growth market, organisations have the opportunity for significant
growth.
Case study
Organisations that aim to grow can do this in a number of ways. They
can sell more of what they produce; they can move into other markets;
or they can move into other products. If they move into other products,
this is known as diversification.
Stelios Haji-Ionnou established a single brand that has allowed him to

diversify into a range of products beyond his core business. His first
business idea was easyJet – a low-cost, no frills airline, which proved so
successful that it has changed the shape of air travel for good.
By moving into other products he has diversified the business. Ventures

include the car rental business easyCar, the mobile phone business
easyPhone and the easyInternetcafe. His latest venture, using the
distinctive corporate colour of bright orange, is a cruise liner called
easyCruise 1. It is based on the same principles as easyJet – no frills and
low prices. Passengers pay on a ‘room only’ basis and have to buy their
own food and drink. If it proves successful, Haji-Ionnou will have
diversified, and his organisation grown, once again.
ACTIVITY
Find three other examples of significant growth into new markets for
well-known organisations.
Write a short summary of each organisation’s activities.

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An organisation grows to take advantage of new markets, to compete
with rivals, to increase its market share and to gain economies of scale.
Such savings come about through decrease in unit cost from production
or operation on a greater scale. The usual scale economies are:
· Financial – it is easier and cheaper to borrow money.

· Technical – mass production lowers the average cost of
producing a single item.
· Marketing – national television and poster

advertisements are used by large organisations and are
extremely effective; they are , however, beyond the reach
of smaller businesses.
· Mangerial – the best managers can be employed, and

sometimes even tempted away from other organisations.
· Risk-bearing – losses can be made on new products or

ideas until they are established and successful.
Growth is often called integration. This means vertical (merging with a

business at a different stage of production in the market) or horizontal
(merging with a business at the same stage). Growth in the
telecommunications industry has been horizontal and has taken the
direction of more ‘bundled’ services, usually as a result of takeovers and
mergers by existing operators. The first bundles, available in 2005,
paired just two services – Internet and television, television and mobile
phone, or television via the Internet. These quickly grew to the ‘triple
play’ or even ‘quad play’ services of today.
It is important to evaluate whether you want to consolidate your

business’ position or find ways to grow.
If you decide that your priority is growth then you need to plan
carefully if it is to succeed. It can be risky, but the right strategy can
deliver stability, security and long-term profits. Once you’ve assessed
the current strengths, weaknesses, opportunities and threats to your
business and how well it’s equipped to handle them, you can move on
to the next stage - building a strategy for growth.
This section describes how to choose the right strategy for your
business, when to launch it and what finance options suit which
businesses. It looks at the pros and cons of diversifying and what other
considerations you must think of to ensure development is smooth, on
time and on target.
Your business focus changes as it moves beyond the start-up phase.

Identifying opportunities for growth becomes a priority to ensure the
enterprise’s sustainability.
You can measure growth by looking at numbers such as:

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· Turnover.
· Market share.
· Profits.
· Sales.
· Staff numbers.
However, determining which measure delivers the most accurate

picture of your business performance depends on both your type of
business and what stage it has reached.
For example, a retail business may have a high sales volume, but narrow
margins on stock. These could mean low profits that undermine the
business viability.
In general, a combination of sales and profits is the preferred way of

measuring growth.
Profit
The prime aim of almost any business is to make profits if they intend to
grow. However, an organisation has responsibilities that extend
beyond its accepted commercial intentions. It should, therefore,
construct its activities in such a way that it can meet all these
responsibilities and still enjoy some level of profitability.
In the Practice of Management (1995), Drucker states, ‘It is the first duty
of a business to survive. The guiding principle of business economics, in
other words, is not the maximisation of profits; it is the avoidance of
loss.’
Without building up funds, through profits year on year, for

development, it will not be possible for an organisation to grow. It will,
therefore, be unable to fulfil its social responsibilities, including those to
its own stakeholders. However, Drucker views that, ‘… profit is not a
cause. It is the result of the performance of the business in marketing,
innovation and productivity.’
The amount of profit a business makes is a measure of how well it is

performing. Those businesses that supply quality products which are
efficiently produced and sold at prices which are attractive to
consumers will tend to be more profitable. However, there are other
factors which affect the performance of a business, such as amount of
market power a business enjoys. From an accountant’s point of view,
profit is the money left over in a particular trading period when all
business expenses have been met. Profit can then be:

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· Retained.
· Distributed to the owner of the business.
· Used to pay tax.
KEY POINT
Profit can be found from the following relationship:
Profit = total turnover – all associated costs
ACTIVITY
What is the difference between an organisation achieving maximum profits and
satisfactory profits? Give examples of organisations for each extreme.
In which category would you place your organisation? Explain why.
Customer orientation
Customer orientation means focusing on meeting the needs of one’s
customers; both internal or external. This service establishes specific
customer satisfaction standards and actively monitors client
satisfaction, taking steps to clarify and meet customer needs and
expectations (both expressed and unexpressed). At lower levels the
service involves courteous and timely responsiveness to the requests of
customers, while at the higher levels, it involves developing the
relationship of partner and trusted advisor.
For example:
People with this competency work with a genuine understanding of the

“customer’s” needs and have a strong desire to provide for him/her.
They are proactive in helping and in adding value. Such people often
understand the needs of the customer better than the customer does and
they use this wisdom to create a win-win impact on the organisation.
ACTIVITY
What might customer orientation mean when related to the operation of a
public library? Describe the key factors that you have considered.

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ACTIVITY FEEDBACK
Getting the right book, the right service, the right piece of information or
multimedia item to the right person at the right time - this is the idea of
customer orientation. Public library customers expect attractive offerings and
information services for education and training, leisure and entertainment.
Libraries have to develop effective strategies in order to contend with today’s
and tomorrow’s demands. Marketing, strategic management, customer
retention, personalised and value-added services are just some of the
challenges public libraries have to face.
Workforce expectation
During the process of change there will inevitably be many concerns
expressed by the employees of the organisation. These are likely to be
centred around doubts and uncertainties that the forthcoming change
presents.
In the normal course of events, members of the workforce are likely to

respond in nine different areas:
· Process – the right processes are in place to support the

business.
· Role challenge – roles are perceived to be challenging

and motivating.
· Values – organisational values are clear, and clearly

subscribed to by the management.
· Work/life balanced – workloads are full but not

excessive.
· Information – managers and CEO provide workforce

with appropriate level of information.
· Stake/leverage reward/recognition - people have

significant long-term stakes, and rewards/recognition
and career leverage are competitive.
· Management – performance objectives are clear;

performance is regularly reviewed and fairly managed
for ongoing improvement.
· Work environment – the work environment is

supportive and empowering.
· Product – largely internal responsibility, but may need

coaching, team development and mentoring.

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If, during the process of strategic change, these nine factors can be
considered as important from the workforce’s point of view, there is a
strong chance that the management will win workforce support.
Without such consideration there will almost certainly be some form of
resentment to the changes proposed.
However, there are also some expectations made by the workforce of

the management itself. Employees have high behavioral expectations of
their managers, and managerial behaviour meets this expectation only
half of the time, according to a study by the Brussels-based company
Krauthammer.
In the core areas of management behaviour that were surveyed,

amongst the biggest gaps between the expectations of employees and
reality were the following:
· 95% would like their manager to analyse their task

problems together with them, 41% experience this.
· 86% would like their manager to create the right context

prior to implementing a decision, this is the case 42% of
the time.
· 82% would like their manager to listen to their ideas, and

encourage them to continue, 56% experience this.
Employees want to be heard, and they want more involvement.

Managers need to develop listening and mentoring skills.
Managers are a bit closer in meeting the expectations of their employees

in the following areas:
· 94% would expect their manager to spontaneously admit

their mistakes, and 69% actually do this.
· 90% would like to be fully involved in the definition of

their development goals, and this is the case 68% of the
time.
· 83% would expect their manager to arbitrate conflicts,

and 65% of the time this indeed happens.
ACTIVITY
Read the following extract from a key note speech entitled ‘Work life balance:
Managing changing workforce expectations in today’s environment.’
www.acwa.asn.au/Conf2006/Wed_Barnes.doc
Summarise your thoughts about workforce expectation in a paper of no more

than 400 words.

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Management style
Within any organisation someone has to make the decisions about what
the business will produce, whom it will employ, what markets it will
target, and so on. Making these decisions and, just as importantly,
communicating them to people further down the organisation is the job
of managers. The style that they choose to use will have considerable
impact on how efficiently the business operates and how the staff reacts
to their decisions.
KEY POINT
Managers make decisions, set targets and check progress.
· Top managers make strategic decisions – they have an overview and

decide on the general direction of the organisation.
· Middle managers make tactical decisions – they decide on

intermediate targets and how they will be reached.
· Other managers make operational decisions – these involve the

day-to-day running of the business.
In terms of staff, for instance, a strategic decision might be that the

organisation should have more specialist staff; the tactical decision will be
where and when to hire them; and the operational decision will come down to
things like hours of work and when holidays can be taken.
The type of management is important for an organisation. Employees

are likely to work much better if they are motivated, i.e. they want to
work. Giving employees a say in decision-making, for example, is a
good example of motivating them. For this reason, many organisations
include employee representatives on their management boards.
Managers can use a number of different styles of management. The

most common of these are:
Autocratic – managers make decisions on their own and tell others what
to do. This has the advantage of showing clear leadership but may upset
other people.
Democratic – managers involve others in decision-making. This helps

people to feel involved but could lead to less effective decisions.
Laissez-faire – managers allow subordinates to make their own

decisions. This gives workers power, but runs the risk of poor decisions
being made.

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Bureaucratic - managers follow the rulebook. This is inflexible, but
everyone knows where they stand.
The style adopted may depend on the situation and the type of decision
being made. For example, to meet an order, a manager may have to
enforce the method that he feels is most appropriate at the time. On the
other hand, if the decision involves deciding between a number of
different new products, a manager might do better asking a group to
make their own selection based on their experience and knowledge. The
first would be autocratic, whilst the second is laissez-faire.
KEY POINT
Successful managers adopt different styles of management to suit different
situations.
Styles Decisions
Autocratic Strategic
Democratic
MANAGEMENT Tactical
Laissez-faire
Operational
Bureaucratic
Figure 2.2. Management styles and decision types.
ACTIVITY
Considers some managers within your own organisation. Using examples of
situations that you have been involved in, decide what style of management
they have used.
Can you give an example of a situation that you feel could have been handled
more effectively by using a different style? Describe the situation, what style
was chosen, and how you might have used a different style to achieve better
results.

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Objectives and measures
SMART(ER) objectives
SMARTER is an acronym; that is, a word composed by joining letters
from different words in a phrase or set of words. In this case, a
SMARTER goal or objective is:
Specific:
For example, it’s difficult to know what someone should be doing if

they are to pursue the goal to “work harder”. It’s easier to recognise
“Write a paper”.
Measurable:
It’s difficult to know what the scope of “writing a paper” really is. It’s
easier to appreciate that effort if the goal is “write a 30-page paper”.
Acceptable:
If I’m to take responsibility for pursuit of a goal, the goal should be

acceptable to me. For example, I’m not likely to follow the directions of
someone telling me to write a 30-page paper when I also have to five
other papers to write. However, if you involve me in setting the goal so I
can change my other commitments or modify the goal, I’m much more
likely to accept pursuit of the goal as well.
Realistic:
Even if I do accept responsibility to pursue a goal that is specific and

measurable, the goal won’t be useful to me or others if, for example, the
goal is to “write a 30-page paper in the next 10 seconds”.
Time frame:
It may mean more to others if I commit to a realistic goal to “write a

30-page paper in one week”. However, it’ll mean more to others
(particularly if they are planning to help me or guide me to reach the
goal) if I specify that I will write one page a day for 30 days, rather than
including the possibility that I will write all 30 pages in last day of the
30-day period.
Extending:
The goal should stretch the performer’s capabilities. For example, I

might be more interested in writing a 30-page paper if the topic of the
paper or the way that I write it will extend my capabilities.

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Rewarding:
I’m more inclined to write the paper if the paper will contribute to an
effort in such a way that I might be rewarded for my effort.
ACTIVITY
What are the key objectives of your organisation for the next year?
See if you can find out sufficient information to carry out your own SMARTER
assessment.
Tabulate your comments on each of the seven categories.
Business ethics
Business ethics examine the ethical rules and principles within a
commercial context, the various moral or ethical problems that can arise
in a business setting, and any special duties or obligations that apply to
persons who are engaged in commerce.
In the increasingly conscience-focused marketplaces of the 21st century,

the demand for more ethical business processes and actions (known as
ethicism) is increasing. Simultaneously, pressure is applied on industry
to improve business ethics through new public initiatives and laws (e.g.
higher UK road tax for higher-emission vehicles).
Business ethics can be both a normative and a descriptive discipline. As

a corporate practice and a career specialisation, the field is primarily
normative. In academia, descriptive approaches are also taken. The
range and quantity of business ethical issues reflects the degree to
which business is perceived to be at odds with non-economic social
values. Historically, interest in business ethics accelerated dramatically
during the 1980s and 1990s, both within major corporations and within
academia. For example, today most major corporate websites lay
emphasis on commitment to promoting non-economic social values
under a variety of headings (e.g. ethics codes, social responsibility
charters). In some cases, corporations have redefined their core values
in the light of business ethical considerations (e.g. the “beyond
petroleum” environmental tilt used by BP).
General business ethics
· This part of business ethics overlaps with the philosophy

of business, one of the aims of which is to determine the
fundamental purposes of a company. If a company’s
main purpose is to maximise the returns to its

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shareholders, then it could be seen as unethical for a

company to consider the interests and rights of anyone
else.
· Corporate social responsibility or CSR: an umbrella term

under which the ethical rights and duties existing
between companies and society is debated.
· Issues regarding the moral rights and duties between a

company and its shareholders: fiduciary responsibility,
stakeholder concept v. shareholder concept.
· Ethical issues concerning relations between different

companies: e.g. hostile take-overs, industrial espionage.
· Leadership issues: corporate governance.

· Political contributions made by corporations.
· Law reform, such as the ethical debate over introducing a
crime of corporate manslaughter.
· The misuse of corporate ethics policies as marketing

instruments.
Professional ethics
Professional ethics covers the myriad of practical ethical problems and

phenomena which arise out of specific functional areas of companies or
in relation to recognised business professions.
Ethics of accounting information concern:
· Creative accounting, earnings management, misleading

financial analysis.
· Insider trading, securities fraud, bucket shop, forex

scams: concerns (criminal) manipulation of the financial
markets.
· Executive compensation: concerns excessive payments

made to corporate CEO’s.
· Bribery, kickbacks, facilitation payments: while these

may be in the (short-term) interests of the company and
its shareholders, these practices may be anti-competitive
or offend against the values of society.
Example cases: accounting scandals involving Enron and WorldCom.

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Ethics of human resource management:
The ethics of human resource management (HRM) covers those ethical

issues arising around the employer-employee relationship, such as the
rights and duties owed between employer and employee.
· Discrimination issues include discrimination on the bases

of age (ageism), gender, race, religion, disabilities, weight
and attractiveness.
· Issues surrounding the representation of employees and

the democratisation of the workplace: union busting,
strike breaking.
· Issues affecting the privacy of the employee: workplace

surveillance, drug testing.
· Issues affecting the privacy of the employer:

whistle-blowing.
· Issues relating to the fairness of the employment contract

and the balance of power between employer and
employee: slavery, indentured servitude, employment law.
· Occupational safety and health.
Example; Ethics of sales and marketing
Marketing which goes beyond the mere provision of information about

(and access to) a product may seek to manipulate our values and
behaviour. To some extent society regards this as acceptable, but where
is the ethical line to be drawn? Marketing ethics overlap strongly with
media ethics because marketing makes heavy use of media. However,
media ethics is a much larger topic and extends outside business ethics.
· Pricing: price fixing, price discrimination, price skimming.

· Anti-competitive practices: these include but go beyond
pricing tactics to cover issues such as manipulation of
loyalty and supply chains.
· Specific marketing strategies: greenwash, bait and switch,

shill, viral marketing, spam (electronic), pyramid scheme,
planned obsolescence.
· Content of advertisements: attack ads, subliminal

messages, sex in advertising, products regarded as
immoral or harmful
· Children and marketing: marketing in schools.

· Black markets, grey markets.
Example case: Benneton

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Ethics of production
This area of business ethics deals with the duties of a company to ensure
that products and production processes do not cause harm. Some of the
more acute dilemmas in this area arise out of the fact that there is
usually a degree of danger in any product or production process and it
is difficult to define a degree of permissibility, or the degree of
permissibility may depend on the changing state of preventative
technologies or changing social perceptions of acceptable risk.
· Defective, addictive and inherently dangerous products

and services: tobacco, alcohol, weapons, motor vehicles,
chemical manufacturing, bungee jumping.
· Ethical relations between the company and the

environment: pollution, environmental ethics, carbon
emissions trading
· Ethical problems arising out of new technologies:

genetically modified food, mobile phone radiation and
health.
· Product testing ethics: animal rights and animal testing,

use of economically disadvantaged groups (such as
students) as test objects.
Example cases: Ford Pinto, Bhopal disaster
Ethics of intellectual property, knowledge and skills
Knowledge and skills are valuable but not easily “ownable” objects.
Nor is it obvious who has the greater rights to an idea: the company who
trained the employee or the employee themselves? The country in
which the plant grew, or the company which discovered and developed
the plant’s medicinal potential? As a result, attempts to assert
ownership and ethical disputes over ownership arise.
· Patent infringement, copyright infringement, trademark

infringement.
· Misuse of the intellectual property systems to stifle

competition: patent misuse, copyright misuse, patent
troll, submarine patent.
· Even the notion of intellectual property itself has been

criticised on ethical grounds.
· Employee raiding: the practice of attracting key

employees away from a competitor to take unfair
advantage of the knowledge or skills they may possess.

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· The practice of employing all the most talented people in
a specific field, regardless of need, in order to prevent
any competitors employing them.
· Bioprospecting (ethical) and biopiracy (unethical).

· Business intelligence and industrial espionage.
Example case: private versus public interests in the Human Genome

Project
Raising awareness
The development of a strategic plan needs a high level of awareness
amongst those stakeholders likely to be affected by the proposed
changes. Steps must be taken to ensure that this awareness is achieved.
The following extract is taken from the Cox Review, which looked at the
benefits of creativity in organisations undergoing change:
‘Lack of awareness of the role that greater creativity might play in the
business was identified as one of the key barriers to SMEs making
greater use of creative skills. Research for the review by Durham
University Business School showed that creativity and design are
mostly seen as optional extras – ‘add ons’ to products or services being
developed or marketed for other reasons. It is also important to
recognise that creativity is not the sole province of the specialist.
Creative businesses are creative throughout. Executives who think
imaginatively are those who also understand when to call upon the
specialists and how to work with them. Creativity needs to be skilfully
managed, not simply embraced. What is required isn’t just a readiness
to consider new ideas but the ability to recognise and assess their
potential, to decide which to back and to put them into effect.
A key task is, therefore, to tackle the issue of awareness and

understanding in today’s businesses, particularly targeting those
companies with immediate potential. Of all the actions that might be
taken, this would be likely to provide the quickest result.
Experience shows that smaller companies do not respond well to

generalised ‘awareness’ programmes; rhetoric washes off them. Nor do
they necessarily take advantage of government support initiatives, no
matter how well intentioned. The recent pruning of DTI schemes
acknowledged that fact. SMEs need to be reached on a local basis, with
active support and a practical demonstration of the benefits on offer.
This has been shown with, arguably, the most successful of the DTI’s
support schemes, the Manufacturing Advisory Service.
The challenge is to reach as many SMEs as possible, demonstrating the

practical benefits of taking greater advantage of creative skills. There is,
fortunately, a tool already available. Over the past four years, the

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Design Council, working closely with businesses and Regional

Development Agencies (RDAs), has developed a programme
specifically aimed at helping smaller companies identify where such
skills could help significantly to improve their performance and then
take action based on this awareness.
It is called the Design for Business programme. Significantly, it is aimed

not only at the SMEs themselves, but also at those who guide them and
provide the necessary specialist support. There are undoubtedly other
ideas around aimed at the same general objective, but none so
comprehensive or so fully developed in terms of tools and processes,
and therefore suited to wide-scale application
Piloted with over 150 companies, the results have been impressive. Of
the 118 that have been through the initial workshop stage, 97 per cent
rated the experience highly and found it of value. Of more importance,
the majority of the 61 companies that have so far gone through the full
two-year programme have already reported significant improvements
in performance, with several showing the high degree of
transformation that can be achieved.
The Engineering Employers Federation (EEF) describes the programme

as a unique business improvement tool. “It illustrates how, by moving
design up the boardroom agenda, companies can achieve cultural and
strategic change, thus delivering a substantially better competitive
position”.
Aga Rayburn developed several new ranges of product, and its sales of
kitchen utensils rose from £1.5 million to £5 million per annum. This
reinforces the point that it is companies with unrecognised potential
that should be targeted, not just those with problems. As Geoff Harrop,
Aga Rayburn’s Managing Director, said, “When you’re successful, it is
easy to become complacent and this has helped us to renew our focus”.
At Minky, sales of cleaning products rose from £500,000 to over £1.8

million over 12 months. Dan Trowsdale, the company’s Design
Manager, described the outcome as, “A wave of new ideas and ways of
working, with world-class products on the way”.
Participants were all in different industries and at different stages in

their development, and the benefits accrued in different ways. This
reflects the fact that the programme is concerned with ‘design’ in its
widest sense, from strategy to product design, packaging, production
processes, market positioning and communication, among others. One
of the most pleasing aspects was that several companies reported that
they found it easier to raise capital – the result of presenting a much
clearer and more coherent picture of where they were going.’
In many organisations, awareness is not perceived to be a two-way

process and subsequent complications arise as a result. It should not be
thought only as a ‘top-down’ communication from management to the
workforce. As discussed earlier in this module, both formal and

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informal channels of communication offer great rewards to an
organisation that is prepared to make awareness a priority among all its
stakeholders.
The process of developing a strategy of learning through dialogue is

crucial to ensure an atmosphere of trust - and the stakeholder
awareness and action that trust can support.
Promoting good practice

Best practice means finding - and using - the best ways of working to
achieve your business objectives. It involves keeping up-to-date with
the ways that successful businesses operate - in your sector and others -
and measuring your ways of working against those used by the market
leaders.
Best practice through benchmarking
Applying best practice means learning from and through the experience
of others. One way of doing this is through benchmarking, which allows
you to compare your business with other successful businesses to
highlight areas where your business could improve.
Best practice through standards
Standards are fixed specifications or benchmarks, which are established

by independent bodies such as the British Standards Institution (BSI).
The BSI develops both technical and management standards. Technical
standards are precise specifications against which a business can
measure the quality of its product, service or processes. Management
standards are models for achieving best business and organisational
practice.
Applying the appropriate standards to your business will enable you to

apply best practice across the organisation, and to work against
objective criteria to achieve manufacturing or service quality.
What are the benefits to an organisation?
A best practice strategy can help your business to:
· Become more competitive.

· Increase sales and develop new markets.
· Reduce costs and become more efficient.
· Improve the skills of the workforce.
· Use technology more effectively.

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· Reduce waste and improve quality.

· Respond more quickly to innovations in your sector.
ACTIVITY
As an example of good practice, view the list provided of aspects of good race
relations practice. The points shown form the starting points for some more
thorough research of the subject.
Select a number of these points and find out more for yourself.
Criminal justice: the Stephen Lawrence Inquiry and the CRE’s formal
investigation into the prison service.
Education; two codes of practice, Learning for all: standards for racial equality
in schools, and a report on OFSTED.
Health and social care: codes of practice for primary health care and maternity
services.
Housing: the CRE’s new statutory code of practice, which took effect in
Ocsetober 2006.
Local government: a standard for local government and auditing advice.
Politics: good practice and conduct for political campaigners.
ACTIVITY
Visit the website shown and read the article about diversity and equal
opportunities in the voluntary sector.
http://www.volunteering.org.uk/managingvolunteers/goodpracticebank/Core
+Themes/equalopportunitiesdiversity/diversity-overview.htm
Role modelling
There is undoubtedly some benefit to be gained in organisations for the
provision of role models. This might be for management or for members
of the workforce. If a person can command respect from others then it is
worth dwelling on that respect and attempting to recreate it in other
related areas of the organisation amongst other groups.
The following article appeared on the BBC News website in February

2006.

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Beatles ‘are business role model’
Businesses should adapt to the modern world as quickly
as the Beatles did during the 1960s, the trade and industry
secretary is expected to say.
Alan Johnson will call on firms to “recreate the spirit of
Abbey Road” - acknowledged as one of the band’s best
albums - and show constant creativity.
Industry must show globalisation is a “force for good”, he
will argue.
Otherwise, it could become “what Vietnam became for the
baby boom generation”, according to Mr Johnson.
In the speech, to the Lord Mayor’s dinner at the Mansion
House in London, the 55-year-old minister will call for
“Sergeant Pepper Economics”, a reference to the Beatles’
1967 album.
Beatles fan Mr Johnson is expected to say: “If the Beatles
had carried on producing albums like Please Please Me,
they’d have ended up with a dwindling catalogue,
dwindling sales and a dwindling audience.
“But, by drawing from global influences on the one hand -
like the sitar, Californian harmonies and gospel; and
scientific advances on the other - like multi-tracking, back
loops and flanging, they made every album sound fresh
and new.
“We need to recreate the spirit of Abbey Road in British
industry.
“We also need a more creative approach in government.”
This will be particularly important with the rise of economic
competitors like China, according to Mr Johnson.
He will say that “in some of our universities, globalisation is
a dirty word. We need to cleanse it”.
Globalisation has increased life expectancy, reduced
poverty and made wars less likely, he will argue.
Britain must be the “creative hub of the world”, Mr Johnson
is expected to say.
Story from BBC NEWS:

http://news.bbc.co.uk/go/pr/fr/-/1/hi/uk_politics/4744834.stm

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Stakeholder involvement
An organisation’s relationship with its stakeholders is clearly
influenced by two fundamental issues:
1. The power of stakeholders; for example
- Possession of resources such as supplies, labour, etc.

and the possible monopoly over such resources.
- Authority, e.g. the government or regulatory

agencies.
- Influence, e.g. lobbying, etc.

2. The level of interest which is shown by stakeholders, e.g. do they
prefer to adopt a distant approach in terms of the organisation’s
development or are they actively involved in the organisation’s
affairs.
Greater knowledge of the position of key stakeholders leads to more

focused predictions and scenarios, and enables clearer strategies for
managing the key stakeholders to be formulated and implemented.
In terms of stakeholder involvement in the strategic direction of an

organisation, there is a need to find answers to these important
questions;
· Do we accurately know what the key stakeholders’

expectations are, or are we making assumptions?
· What are the conflicts and possible political responses?

· What are the organisation’s current responses?
· What could/should they be?
ACTIVITY
Look at an organisation well known to you, and take a view over as long a
period of time as possible. Estimate the impact of the environmental changes
listed in terms of their impact on this organisation. Have these triggers for
change been for the better or for the worse?
From where the organisation is now, what adjustment to these should now be
made?

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Managing diversity
Most people have heard of the term ‘equal opportunities’ at work, and
this can be broken down into three different perspectives:
A moral perspective – a concept created by society in order that the

society in which we live is considered to be fair to all. This means that no
one should suffer because of personal or external characteristics, such as
their gender or the colour of their skin. To some, the concept of equal
opportunities is comparable to the principles of natural justice and to
some of the tenets of the world’s most practised religions. It is, however,
important to remember that morality is often very subjective.
A legal perspective – the Sex Discrimination Act (1975), the Race

Relations Act (1976) and the Disability Discriminations Act (1995) are all
examples of legislation introduced to provide a minimum acceptable
standard of behaviour for employers and workers.
A perspective of change – organisations have used hierarchical

approaches to management throughout history, considering people
only as resources. Nowadays, such an approach is no longer accepted as
effective or successful. New ways of working have been adopted, and
considerable competitive advantage can be gained by an organisation
that values and encourages the diversity of its employees, suppliers,
customers, etc.
Diversity describes the differences between people. This may be in

terms of race, gender, age, and other demographic categories, as well as
differences in value, abilities, organisational function, tenure and
personality. Diversity does not set out to label or stereotype people, it
deals with people as individuals as opposed to simply belonging to a
group.
The understanding and integration of sound diversity practices is one

of the key challenges that will determine those who achieve long-term
value and success, and those who only achieve short-lived results. It
allows organisations to focus on dealing with the spread and spectrum
of human culture within the work environment; in other words, healthy
human relations.
Managing diversity needs to look at fundamental values, and

understanding that all human beings are truly individuals no matter in
which field or capacity they may operate. Effective diversity practice
‘ensures that social capital factors such as trust and empowerment are
demonstrably woven into the fabric of management.’ (D Wood 2006)
Equality and diversity have always been and will always be

fundamental principles affecting organisational success – it is only
fairly recently that we have started to recognise and explore this in a
more structured way. They impact upon every single activity that every
single organisation undertakes. They are implicit elements in the

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journey towards excellence, and when we learn to apply these

principles as an everyday habit, as opposed to any additional
consideration, there are many ways in which both individuals and
organisations can benefit. Indeed, increasingly organisations are being
required by their customers, suppliers, employees, volunteers, funders
and society in general, to demonstrate that equality and diversity
considerations are central to their policies and practices.
Figure 2.3 compares equal opportunities and diversity.
EQUAL OPPORTUNITIES DIVERSITY
Is a social construction to create a fairer society, where Is a natural tendency – think of biodiversity, everyone
all people can contribute and participate. is different.
Is something that we strive for continuously. Diversity alone does not ensure equality of
opportunity.
Is a journey not a destination. Valuing diversity is a way of working towards equal

opportunity.
Is backed up by legislation. Focuses on the benefits of utilising the potential and

strength of different people in the organisation.
Focuses on under-represented groups, such as gender, Focuses on treating people as individuals.

race, and disability.
Figure 2.3. The relationship between equal opportunities and diversity. (D Wood 2006)
ACTIVITY
Identify any measures that your organisation takes to accommodate equality
and diversity in its practices.
Comment on your findings. Could more emphasis be placed on equality and

diversity?

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Organisational
Benefits
Increased Efficiency
Reduced cost of Reduced cost of

failure implementation
Increased Profitability
and Effectiveness
Greater end-user
Increased revenue satisfaction
Figure 2.4. Benefits of diversity.
Spiritual and cultural issues

A well-known business consultant, coach, speaker and author,
Lawrence Miller discloses the spiritual principles that have made his
business such a success and which lie behind all successful modern
organisations. In a bold step, he sets out his conviction that there is not
necessarily any contradiction between pursuing material progress,
whether in the form of a nation’s economy or personal wealth, and the
teachings of religion. In fact, he states, it is the great challenge of one’s
personal spiritual struggle to remain centred in spiritual reality while
pursuing success in business.
He identifies and explores new principles of management for a new age:
· Honesty and trustworthiness.

· The spirit of service.
· Justice.
· Consultation.
· Unity.
· Moderation.
· World citizenship.
· Universal education.

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There is a saying that “some minds are like concrete - all mixed up and
set.” When interacting across cultures, it is important to keep an open
mind to other possibilities so that your mind doesn’t become set in only
one way of seeing things. With the diversity found in the world
workplace, there are often opportunities to view a project, idea or
proposal from a different point of view. The next time an idea comes up
that is different from yours - pause and ask yourself “what can I learn
from this” before responding. One excellent response would be to say “I
hadn’t thought about it that way, can you tell me more?” This
demonstrates to others that you are willing to listen and to be open to
their way of viewing the world.
The Executive Planet guides to doing business worldwide, for example,

each contain the following articles:
Let’s Make a Deal - negotiating tactics, the value of connections,

recommended business card style and content, business card protocol,
sitting and presenting yourself in meetings, language for brochures and
promotional material, pace of business, preferred presentation styles,
final agreements, thinking styles, adherance to company policy, and
more business culture info ...
Prosperous Entertaining - typical mealtimes throughout the day, best

venues for business entertaining, punctuality for social events, dinner
table seating etiquette, mealtime etiquette, importance of alcohol,
toasting, guidelines for hosting a banquet/social event, what foods
should be served/avoided, accepting and declining invitations, and
more business etiquette info...
Appointment Alert! - typical vacation times, recommended

appointment times, length of the lunch hour, signals that indicate
beginning or end of an appointment, best arrival time (early, late, right
on time), and more on business culture info...
Gift Giving - recommended gifts, gifts to avoid, good and bad colours
for wrapping paper, how to present a gift to individuals and groups,
guidelines for receiving gifts, and more on business etiquette info. . .
First Name or Title? - using titles such as ‘Doctor’, naming conventions

to avoid, when to use first names, and more business etiquette info...
Public Behaviour - how to greet strangers and introduce yourself, the

rules for men shaking hands with women, acceptable demeanour, rules
for eye contact, gestures/sayings to avoid, and more on business
culture info...
Business Dress - is dress modest, conservative, etc., specific dress

requirements for men and women, what visitors should wear to social
functions, and more on business etiquette info...

Unit 2
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Conversation - welcome and unwelcome topics of conversation, the
role of compliments, the tone of voice to be used, whether your hosts are
physical or more reserved, and more on business culture info.
Today’s organisations cannot get away with unacceptable labour

practices. Procuring components or services from countries that do not
respect reasonable labour practices is no longer an acceptable policy.
Nike has suffered a great deal of adverse publicity for it use of cheap
overseas child labour. Other areas of concern are the lack of respect for
acceptable working hours, forced labour and the exploitation of
migrant workers.
Multinational companies are often held accountable for their direct or

indirect involvement in human rights abuses. Both Google and Yahoo
have come under heavy criticism for the alleged collaboration with the
Chinese government in monitoring Internet access and, thus, curbing
human rights.
Some large corporations, such as oil companies, pharmaceuticals and

tobacco companies, have received criticism for techniques that have
lead to opportunities to buy their way into power within their host
countries. Global entities funding projects that induce a degree of
cultural and political control within the country concerned is seen to be
against the best interests of the population in general. Already there is
ample evidence of similar practices within major industrial powers,
such as the United States and many European nations.
Environmental considerations
As globalisation increases its hold on modern business, its effects on
society and the environment are constantly being challenged. There are
deep environmental consequences from operating in a global context,
and every modern and forward-thinking organisation must be sensitive
to these issues and promote responsible policies.
The focus on the environmental responsibility of organisations is

ever-increasing. Public awareness is far higher than it ever was.
Particular areas of focus include:
· Destruction of the ozone layer.

· Emission of greenhouse gases.
· Persistent organic pollutants.
· Radioactive waste disposal.
· Deforestation.
· Unsustainable agriculture.

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Businesses that place a high emphasis on environmental protection, and

integrate environmental issues into their strategies are more likely to
succeed than those that do not.
Environmental issues are dealt with in a wide range of ways. As

examples, the following approach is commonly found:
‘Be aware of the environmental issues that may affect your business.
Are you ozone friendly?
If your business uses refrigeration or air conditioning equipment, fire

fighting equipment or solvents for cleaning, check to see if they contain
ozone depleting substances, i.e. CFC’s, HCFC’s or halons. Your
equipment supplier should be able to help. You will be affected by
legislation controlling or banning these substances. A series of free DTI
leaflets is available.
Consult:
DTI leaflets in series ‘Advice on Alternatives and Guidelines for Users’

(Don’t read it in public-people will think you’re a junky) contact 020
72155830 or 020 72151018. Environment and Energy Helpline 0800 585
794. In Scotland apply to Scottish Environment Protection Agency on
01786 457700.
If your business produces, imports, exports, stores, transports, treats,

disposes of or recovers waste. Waste regulations apply.
For further information :
Read the Department of Environment, Transport and the Regions

(DETR) leaflets: ‘Duty of Care’ Ref:99EP0131; ‘Waste Shipments
Regulation’ Ref:94EP245; ‘A Guide to the UK Management Plan for
Exports and Imports of Waste’ Ref:96EP139; ‘Applying for a Waste
Management License’ Ref:94EP126; ‘Special Waste Regulations 1996-
The Controls on Special Waste’ Ref:95EP147.
If you produce, import or export packaging, or if you have packaging

waste at your back door for recycling. You are likely to be affected by the
Producer Responsibility Obligations (Packaging Waste) Regulations.
Consult: DETR leaflets:
Producer Responsibility Obligations (Packaging Waste)

Regulations-Summary Leaflet 96EP274, Users Guide 96EP288, Ready
Reckoner 97EP102. Environmental and Energy Helpline 0800 585 794. ’

Unit 2
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ACTIVITY
Do you know of any organisations that produce clear and well-documented
policies on the type of environmental issues discussed here?
If so, collect some of these policies and determine how much of each policy is
designed for the employees and how much is there to impress an outside
audience.
REVIEW ACTIVITY
Select a well-known organisation.
Define its key objectives and its mission statement.
How do these relate to the workforce and other important stakeholders?
Carry out a PEST (or PESTLE) analysis of the organisations principle activities.
Summarise the organisation’s views on diversity and environmental issues.
VIRTUAL CAMPUS
Post your answers to the review activity and compare them with those of
other students.
What similarities or differences do you observe?
Summary
This unit has examined the development of the initial organisational
vision into a formal mission statement, and the relationship between
these and its key objectives.
The importance of core organisational values has been described, along

with an explanation of the relevance of management style and
workforce expectation.
Spiritual and cultural issues, combined with diversity and

environmental concerns, are also important factors to consider in the
development of the objectives of a strategic plan.

rdi Unit 2
Further reading
Drucker, P. (1995) The Practice of Management,
Butterworth-Heinemann
Johnson, G. & Scholes, K. (2003) Expl
oring Corporate Strategy, Prentice Hall
Wood, D. et al (2006) Global Business Citizenship, M.E. Sharpe

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Unit 3
Implementation of the strategy
Unit Objectives
The implementation stage of a new strategy is the point in the strategic
planning where action occurs. Up until now, the development of the strategy
has involved discussion and decision-making: now the first steps are taken to
apply the chosen strategy to the organisation in order to obtain the desired
results.
Working alongside all the stakeholders makes the process much easier and,
with their collaboration, more likely to produce a successful outcome. Careful
timetabling enables a smooth transition from old to new methods, and
organised and structured channels of communication allow an effective
monitoring and evaluation control system to operate.
This unit shows the importance of all these factors and how they fit into the
overall picture of strategy implementation.
Planning
Gaining general organisational agreement

With all related sections of the organisation (or, indeed, organisations
jointly) working together, strategic change can be achieved with a
minimum of problems arising. If all those involved are prepared to
accept the proposed changes, there is a greater possibility of ironing any
difficulties before they become significant problems. After all, because
of the willingness to work together in a spirit of cooperation, it is in
everyone’s best interest to make sure the changes are successful.
Collaborative working, also known as joint or partnership working, is
such a mechanism for organisations to work together to achieve goals
and aims.
Voluntary and community organisations can work together in a

spectrum of ways, from informal networks and alliances, through to
joint delivery of projects and full mergers. Collaboration can be on any
area of work, whether on ‘frontline’ activities directly enabling mission

Unit 3
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fulfilment, or on supporting ‘back office’ functions. It can last for a fixed
time or be permanent.
Although collaboration can bring great benefits, working with other

organisations is more complex than working alone. Its success rests on a
combination of formal and informal ways of achieving good working
relationships on both an organisational and an individual level. It is not
right for every organisation in every case. Carefully identifying and
addressing issues of concern helps establish if it is the right way
forward.
The decision-making process should encourage you to think through all

the implications before you start working collaboratively. With
planning, you can manage the risks. What is best for your beneficiaries
should be the primary consideration which underlies all your thinking.
Allow yourself enough time to make an informed decision for your
organisation. Here is a list of questions you should think about before
you decide to collaborate with another organisation.
About your organisation:
· What are you hoping to achieve by collaborating with

another organisation and is collaborative working the
best way to achieve this aim?
· Does it fit within your organisation’s charitable objects,

your strategic vision, values and current priorities?
· Do your Directors and Chief Executive support the idea?

· Does your governing document include a power
allowing you to establish and support, co-operate with,
join or amalgamate with other voluntary organisations?
· Will collaborative working ‘add value’ to your

organisation’s work which justifies the time, effort and
money invested in the collaboration?
· Will the structure of your organisation be affected by the

change and, if so, how will you deal with the long-term
implications?
· Will collaboration change your organisation’s other

existing relationships?
About your potential partner:
· You may have in mind a potential partner that you

already know and trust. It is still worth asking key
questions to ensure that your assumptions about the
organisation are correct.

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· How might formal collaboration change an existing

relationship with your partner? Do you have clear shared
aims for the collaboration?
· Think about the other organisation’s charitable objects,

philosophy, culture, governance, organisational
structure, decision-making processes, policies, financial
resources, assets and funding base. Is your organisation
compatible with the potential partner? What are the
organisational strengths and weaknesses of each
organisation?
Management Structure
Think about who you want to involve in the project, who will manage
the process, what skills and qualities are needed for the role, who needs
to be involved in each stage of decision-making. Managers not used to
joint decision-making may find the process time consuming and
counter-cultural. The key is to discuss and agree roles and
responsibilities.
Also think about how you are going to lead and manage your joint
project. Many partnerships are led by a project co-ordinator from the
accountable body, with a joint steering group overseeing the work.
Staffing Joint Projects
The staff who deliver collaborative projects may do so as part of their

existing post or they may be employed to work on a specific project.
They may remain based in their own organisation or they may work in
more than one location. In each case, careful planning and regular
communication are essential for the arrangement to work well.
Clarifying the roles and responsibilities of individuals will limit the
likelihood of conflict.
It is important that staff and volunteers understand why their

organisation is working collaboratively and have an insight into
partners’ aims and values. Time spent developing understanding of
partners’ culture can help people from different organisations work
together.
Funding and finances organisations vary in the funding mix they rely
on to support their work, so a funding plan is needed for any joint work.
This should clarify whether you aim to support the work with funding
secured for that particular project and how much you intend to draw on
each organisation’s existing funds or unrestricted income. It is
important to decide in advance who will be responsible for
co-ordinating fundraising and which partner will act as the accountable
body for the receipt of funding.

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Structures for Joint Projects
Collaborative working can be achieved in different ways; each

organisation can maintain its own identity, partners can together create
new organisations to run common projects and activities or they can
decide to merge. Different structures are right for different
organisations depending on their aims for the collaboration.
It is essential to discuss how you will work together, defining roles,

responsibilities and contractual or other legal obligations, and to get this
in writing in a joint working agreement. Even where you have a
pre-existing relationship and trust on which to build, preparation,
planning and a written agreement can help you avoid
misunderstandings.
Written agreements in formal partnerships aid clarity and help to

manage conflict. It is important to set out exactly what will happen if the
collaboration ends. In all but the simplest cases, a properly drafted legal
agreement is recommended.
Potential risks:
· Outcomes do not justify the time and resources invested.

· Beneficiary confusion.
· Loss of flexibility in working practices.
· Complexity in decision-making and loss of autonomy.
· Cultural mismatch between organisations.
· Diverting energy and resources away from core aims.
· Change management challenges.
· Lack of consistency and clarity on roles and
responsibilities.
· Dilution of your brand.

· Damage to organisation if collaboration is unsuccessful.
· Legal obligations.
Potential benefits:
· Improved or wider range of services.

· More integrated approach to beneficiary needs.
· Financial savings and better use of existing resources.
· Knowledge, good practice and information sharing.

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· Sharing the risk in new and untested projects.

· Capacity to replicate success.
· Stronger, united voice.
· Better co-ordination of organisations’ activities.
· Positive PR opportunities around reduced duplication.
· Mutual support between organisations.
Practical hints:
· Carry out a risk assessment.

· Have a properly drafted legal agreement, stating terms
and conditions of the partnership.
· Clearly define roles and responsibility to avoid conflict.
· Remember that 60 per cent of organisations responding
to a survey on collaboration between voluntary
organisations said that ‘working with other charities
takes more time than we expected’.
Organisational development
Organisational development (OD) is concerned with an organisation’s:
· Health.
· Effectiveness.
· Capacity to solve problems.
· Ability to adapt and change.
· Ability to create a high quality of life for its employees.
Organisational development uses a number of strategies to intervene in

organisations in order to facilitate learning and to help the organisation
with any it may have.
The steps involved in organisational development are
1. Needs assessment
2. Diagnosis
3. Design
4. Implementation
5. Evaluation

Unit 3
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To solve organisational problems first involves a thorough diagnosis.
This diagnosis is usually based on a needs assessment. This needs
assessment could involve one or a combination of the following
methods of collecting information.
· Interviews.
· Focus Groups.
· Questionnaire.
· ‘360’ Assessment.
Once organisational need is determined a variety of methods and

programmes can be used to help, such as:
· Teambuilding.
· Strategic planning.
· Intergroup problem solving.
· Confrontation meeting.
· Goal setting.
· Alignment of systems (i.e. performance management,
human resources, communication, leadership, etc.).
· Third party facilitation.

· Peer learning.
· Coaching.
· Mentoring.
· Training.
“Change is the only constant", they say. Organisational change comes in

a variety of flavours from incremental improvements to major
transformations. It is necessary to work with all kinds of change and try
to help organisations be realistic about the possibilities.
Organisation consultancy is key to New Paradigm approaches.

Managers accept the insights from the developing sciences of complex
systems and try to apply them to organisations. It is recognised that
organisations are like living systems and the relationships between
individuals lie at their heart. When these relationships are appropriate
to its purpose and its environment the organisation will flourish. When
they are not - either because they are dysfunctional or because the
environment has changed - it is necessary to review and reform them. In
other words, the paradigm needs to be changed.

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Incremental improvement
Because organisations exist in changing environments they, too, need to

change just to stand still. Adaptability has become a key organisational
competency in almost every sector. Sometimes this requires a major
organisational transformation; usually it requires the ability to be
ever-flexible, able to change constantly in almost imperceptible ways.
Traditional organisations had structures and procedures which were
intended to prevent incremental change. Today such structures hinder
more than help yet it is hard to move to a more flexible approach.
ACTIVITY
What details of organisational development are you familiar with through your
own organisation?
Timetable for implementation
KEY POINT
Strategic implementation is the stage of strategic management that involves the
use of managerial and organisational tools and techniques to direct resources
toward achieving strategic outcomes.
Managers may, at this stage use persuasion, new equipment, changes in

organisational structure or some form of reward system to ensure that
employees and resources are used to make formulated strategy a
reality.
Targets need to be set and are very effective in establishing defined

points to measure progress, as well as holding project managers and
their team accountable. Each target will have clearly defined and
achievable milestones. These need to be tied to strategies to have real
meaning and they have to be clearly communicated and accepted by the
teams who are to reach them.
Examples of the sort of timetables for strategic implementation can be

found at
http://www.scotland.gov.uk/Publications/2005/05/12141846/19026
and from government sources at
http://www.cio.gov.uk/transformational_government/implplan/

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Business process re-engineering
KEY POINT
Business process re-engineering (BPR) attempts to remove obstacles placed in
the way of satisfying customer needs by traditional, hierarchical management.
The conventional idea of an organisation is one where a structural chart

can be drawn to provide a clear and definitive picture of the different
functions and their respective employees.
By contrast, BPR combines both a process view and a skills view:
The process view shows how the organisation’s employees interact in

order to produce something that the customers want. This might be
how marketing and R&D jointly develop new products, or how
customers’ orders are fulfilled.
The skills view considers how effective the organisation’s employees

are at doing what the customers want. This includes how pleased the
customers are with the way that they are treated and what they receive,
how quickly and efficiently goods are produced and delivered, or how
effectively new products are developed.
ACTIVITY
Research the topic of business process re-engineering.
Find evidence from at least one major company. Use this to produce a brief
report describing its benefits to your chosen organisation.
Management by objectives
Management by Objectives (MBO) is a process in which a manager and
an employee agree upon a set of specific performance goals, or
objectives, and jointly develop a plan for reaching them. The objectives
must be clear and achievable, and the plan must include a time frame
and evaluation criteria. For example, a salesperson might set a goal of
increasing customer orders by 15 percent in money terms over the
course of a year.
MBO is primarily used as a tool for strategic planning, employee

motivation, and performance enhancement. It is intended to improve
communication between employees and management, increase
employee understanding of company goals, focus employee efforts

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upon organisational objectives, and provide a concrete link between

pay and performance. An important factor in an MBO system is its
emphasis on the results achieved by employees rather than the activities
performed in their jobs.
KEY POINT
Management by Objectives (MBO) is a system in which specific performance
objectives are jointly determined by subordinates and their superiors,
progress toward objectives is periodically reviewed, and rewards are allocated
on the basis of this progress.
MBO principles:
· Cascading of organisational goals and objectives.
· Specific objectives for each member.
· Participative decision-making.
· Explicit time period.
· Performance evaluation and feedback.
MBO is an approach used in the control and direction of many projects.

The philosophy can be described as follows:
· Is proactive rather than reactive management.

· Is results oriented, emphasising accomplishment.
· Focuses on change to improve individual and
organisational effectiveness.
In a project environment, employees are evaluated according to

accomplishment rather than according to how they spend their time.
Since the project manager has temporarily assigned personnel, many of
whom may have never worked for him, it is vital that employees have
clearly defined objectives and sub-objectives. In order to accomplish
this, they should have a part in setting their own objective and
sub-objective. Thus, based upon effective project/functional
communications and working relations, Management by Objectives
acts as a framework to promote the effective utilisation of time and
other project resources.
Management by Objectives is a systems approach for aligning project

goals with organisational goals, project goals with the goals of other
subunits of the organisation, and project goals with individual goals.

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Management by Objectives can thus be regarded as a tool for planning
and obtaining project results for an organisation. It is a strategy devised
to meet individual needs and the project needs at the same time.
Moreover, it serves as a method of clarifying what each individual and
organisational “unit” contribution to the project should be.
To be successful, an MBO program should be part of a small business’s

overall system of planning and goal setting. The first step in
implementing MBO is to establish long-range company goals in such
areas as sales, competitive positioning, human resource development,
etc. A small business owner may find it helpful to begin by defining the
company’s current business and looking for emerging customer needs
or market trends that may require adaptation. Such long-range
planning provides a framework for charting the company’s future
staffing levels, marketing approaches, financing needs, product
development focus, and facility and equipment usage.
The next step in establishing an MBO system is to use these long-range

plans to determine company-wide goals for the current year. Then the
company goals can be broken down further into goals for different
departments, and eventually into goals for individual employees. As
goal-setting filters down through the organisation, special care must be
taken to ensure that individual and department goals all support the
long-range objectives of the business. Ideally, a small business’s
managers should be involved in formulating the company’s long-range
goals. This approach may increase their commitment to achieving the
goals, allow them to communicate the goals clearly to employees, and
help them to create their own short-range goals to support the company
goals.
At a minimum, a successful MBO program requires each employee to

produce five to ten specific, measurable goals. In addition to a statement
of the goal itself, each goal should be supported with a means of
measurement and a series of steps toward completion. These goals
should be proposed to the employee’s manager in writing, discussed,
and approved. It is the manager’s responsibility to make sure that all
employee goals are consistent with the department and company goals.
The manager also must compare the employee’s performance with his
or her goals on a regular basis in order to identify any problems and take
corrective action as needed.
Formulating goals is not an easy task for employees, and most people
do not master it immediately. Small business owners may find it helpful
to begin the process by asking employees and managers to define their
jobs and list their major responsibilities. Then the employees and
managers can create a goal, or goals, based upon each responsibility and
decide how to measure their own performance in terms of results. In the
Small Business Administration publication Planning and Goal Setting
for Small Business, Raymond F. Pelissier recommended having
employees create a miniature work plan for each goal. A work plan
would include the goal itself, the measurement terms, any major
problems anticipated in meeting the goal, a series of work steps toward

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meeting the goal (with completion dates), and the company goal to
which the personal goal relates.
Small business owners may also find it helpful to break down employee
goal setting into categories. The first category, regular goals, would
include objectives related to the activities that make up an employee’s
major responsibilities. Examples of regular goals might include
improving efficiency or the amount and quality of work produced. The
second category, problem solving goals, should define and eliminate
any major problems the employee encounters in performing his or her
job. Another category is innovation, which should include goals that
apply original ideas to company problems. The final category is
development goals, which should include those goals related to
personal growth or the development of employees. Dividing goal
setting into categories often helps employees think about their jobs in
new ways and acts to release them from the tendency to create
activity-based goals.
Another requirement for any successful MBO program is that it provide

for a regular review of employee progress toward meeting goals. This
review can take place either monthly or quarterly. When the review
uncovers employee performance that is below expectations, managers
should try to identify the problem, assign responsibility for correcting
it, and make a note in the MBO files.
Implemented correctly MBO can provide a number of benefits to a small

business. For example, MBO may help employees understand how
their performance will be evaluated and measured. In addition, by
allowing them to contribute to goal setting, it may increase the
motivation and productivity of a small business’s employees. MBO also
stands to provide a small business’s employees with the means to
prioritise their work on a daily basis. Although employee performance
evaluation is still a complex task, MBO can also provide an objective
basis for evaluation. However, it is important to note that an employee’s
failure to meet pre-established goals can be attributed to many things
besides personal failure. For example, the failure to meet goals could
result from setting the wrong objectives, not taking into account
company restrictions that may impinge upon performance, establishing
an improper measures of progress, or a combination of all of these
factors.
Overall, establishing an MBO system in a small business may be

difficult, but it is usually worth it. The most difficult aspect of
implementing MBO may be simply getting people to think in terms of
results rather than activities. Even when an MBO system is
implemented well, a small business may encounter problems. For
example, employees may set low goals to ensure attainment. Similarly,
managers’ objectives may focus on the attainment of short-term rather
than long-term goals. Finally, employees and managers alike may fall
victim to confusion and frustration. Some of the most common reasons
for the failure of an MBO program include lack of involvement among
the top management of a small business, inadequate goal setting on a

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company-wide basis, implementation of an MBO system that occurs too
rapidly, or the failure to instruct a company’s managers and employees
in the basics of MBO. But even though establishing an MBO program
may be problematic, it can also offer significant rewards to small
businesses.
VIRTUAL CAMPUS
What is your opinion on Management by Objectives?
Summarise your views and post them on the Virtual Campus.
Compare them with the views of other students.
Action planning
Action planning is a process which will help you to focus your ideas and
to decide what steps you need to take to achieve particular goals. It is a
statement on paper of what you want to achieve over a given period of
time. Preparing an action plan is a good way to help you to reach your
objectives in life.
An effective action plan should give you a concrete timetable and set of
clearly defined steps to help you to reach your objective, rather than
aimlessly wondering what to do next. It helps you to focus your ideas
and provides you with an answer to the question ‘‘What do I do to
achieve my objective?’’.
It’s OK to have several objectives, but you will need to make a separate
action plan for each, otherwise things get confused.
Although here we shall be applying the techniques to careers, it can be

used effectively to help you to reach your goals in many aspects of your
life; for example, to pass your driving test.
The following are all valid goals for an action plan:
· To get more involved in a student society to get to know

more people.
· Deciding what skills I need to improve and deciding how

I will improve them.
· To investigate the different tools available to help me to

choose a career, such as computer-aided careers
guidance.

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When action planning in a career's sense there are likely to be three

main areas in which you want to develop action plans. These are:
· Choosing the career you wish to enter.

· Working out a strategy to help you enter this career; e.g.
application and interviews.
· Developing skills that you need to acquire to allow you to

enter the career of your choice and to be successful in it.
Action planning model

There are many different models of action planning, but a good starting
point is the one shown below. As you can see, action planning is a
cyclical process, and once you have been through one cycle, you can
start again at the beginning. Of course, in real life it’s not quite as simple
as this. The process is more organic and stages will sometimes overlap,
or you may change your goals as you progress, and you must be
prepared to revise your plan as circumstances dictate. In more detail,
the stages are as follows:
· WHERE AM I NOW? This is where you review your

achievements and progress, and undertake
self-assessment.
· WHERE DO I WANT TO BE? This is where you decide

your goals.
· HOW DO I GET THERE? This is where you define the

strategy you will use to achieve your goals, and to break
down your goal into the smaller discreet steps you will
need to take to achieve your target.
· TAKING ACTION. This is the nitty gritty where you

implement your plan!
· WHERE AM I NOW?
The cycle begins again with a redefinition of your goals........
The main steps in preparing an action plan are as follows:
· Have a clear objective. (‘‘Where do I want to be?’’)

· Start with what you will do NOW. There is no point in
having an action plan that will start in six months time.
· Define clearly the steps you will take. (“How do I get

there?’’) Think of all the possible things you could do to
take you closer to achieving your goal, no matter how

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small. Break down any large steps into smaller
components, so it doesn’t seem so difficult to achieve.
· Arrange the steps in a logical, chronological order and

put a date by which you will start each step. Try to set
yourself weekly goals: what research you will do into
jobs, what skills you will concentrate on learning, etc. It’s
also a good idea to get into the habit of planning a
timetable each evening listing your tasks for the next day
or two.
· Decide when you will review your progress. Keep a

diary or logbook of your daily activities and record in it
your progress as things happen. A good time to start
your review is about two weeks after you have begun.
Review how far you have got towards your objective,
identify any mistakes you made and what you can learn
from them, look at any new ideas or opportunities that
may have presented themselves and then revise your
plan to incorporate these.
An example of a basic action plan for a student attempting to plan out

his/her futue career might look like this:
COMPLETED EXAMPLE ACTION PLAN
MY OBJECTIVE IS: To choose my future career!
TO ACHIEVE THIS I NEED TO DO:
· I will use the Prospects Planner computer guidance

system to help me to identify jobs of interest. By 4th
March
· I will use the Careers Service “Signposts” sheets to find

out what jobs graduates from my subject can enter. By
6th March
· I will pick up booklets from the Career Service on some

of the careers suggested by Prospects Planner and browse
through these. By 9th March
· I will see my careers adviser to discuss the ideas I have

got from the above and to narrow these down. By April
· I will try to arrange a day shadowing the work of a

graduate in the career that seems to be most of interest.
By mid-April
· I shall watch videos in the Careers Service video room on

the careers that seem to be of most interest.
I WILL START MY ACTION PLAN ON 3rd March

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ACTIVITY
Detailed examples of personal development action plans can be found at:
http://www.aber.ac.uk/careers/cdp/skillanal&ap.html
or
http://www.careers.ed.ac.uk/CPP/Making_Plans/action_plan.htm
Performance appraisal
Performance appraisal is an important part of performance

management. In itself it is not performance management, but it is one of
the range of tools that can be used to manage performance. Because it is
most usually carried out by line managers rather than HR professionals,
it is important that they understand this and how performance
appraisal contributes to performance management.
The performance appraisal or review is essentially an opportunity for

the individual and those concerned with their performance – most
usually their line manager - to get together to engage in a dialogue
about the individual’s performance, development and the support
required from the manager. It should not be a top down process or an
opportunity for one person to ask questions and the other to reply. It
should be a free flowing conversation in which a range of views are
exchanged.
Performance appraisals usually review past behaviour and so provide

an opportunity to reflect on past performance. But to be successful they
should also be used as a basis for making development and
improvement plans and reaching agreement about what should be
done in the future.
The performance appraisal is often the central pillar of performance

management and the CIPD performance management survey carried
out in 2004 found that 65 per cent of organisations used individual
annual appraisal, 27 per cent used twice-yearly appraisals and 10
percent used rolling appraisals.
However, it is a common mistake to assume that if organisations

implement performance appraisals, they have performance
management. This is not the case. Performance management is a holistic
process bringing together many activities which collectively contribute
to the effective management of individuals and teams in order to
achieve high levels of organisational performance. Performance
management is strategic in that it is about broader issues and long term

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goals and integrated in that it links various aspects of the business,
people management, individuals and teams.
Performance appraisal on the other hand is operational, short to

medium term and concerned only with the individual and their
performance and development. It is one of the tools of performance
management and that data produced can feed into other elements of
performance management but in itself can never be performance
management.
ACTIVITY
Read the following extract from the CV Centre Consultancy website. It
provides a further description of the performance appraisal process.
The thought of a forthcoming annual performance appraisal is enough to send

shivers down the spine of even the most hardened professional. Appraisals can
be seen as an opportunity for the manager to voice their gripes and
dissatisfaction and to generally criticise their employees. However, the true
aim of an annual performance appraisal is to motivate and develop an employee
and, if approached correctly by the manager and the employee, there is no
reason why the whole experience cannot be both rewarding and positive.
You should be given plenty of time to prepare for your performance appraisal
and you should use this time constructively rather than just anxiously waiting
for the day to come. Remember also that your manager should try to make the
experience as relaxed and positive as possible by choosing a suitable venue and
arranging the layout of the room in a way that is informal and
non-confrontational.
It is important to remember that, although formal performance appraisals are

generally carried out on an annual basis, your performance and achievements
throughout the entire year will be under assessment. Evidence of an
individual’s overall contribution to the business will be reviewed as will their
level of success in the achievement of their targets and objectives. To help
yourself prepare for your annual performance appraisal, it is helpful for you to
keep comprehensive records of exactly what you have achieved throughout
the year and anything relating to your individual performance. Another useful
preparation tip is to read through your formal job description, highlight how
you have fulfilled your responsibilities and what work you have done that you
feel exceeds your job role. Pay particular attention to any challenges that you
were faced with detailing exactly how you were ale to overcome them. Indeed,
the performance appraisal is also a useful opportunity to discuss aspects of
your role in which you have not been particularly successful so that you can
discuss with your manager how you can improve for the future.
Throughout the year, it is important to take a proactive approach to your own

career development. Go out of your way to take part in any available training,
workshops or seminars that may help you to develop your skills and
knowledge and seek to obtain support from your employer for any external

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training or professional qualifications. An employer is keen to see their staff

taking an active interest in the development of their career as this can mean
that they are able to make a more positive contribution to the overall
improvement of the organisation. Again, make sure that you keep complete
records of all the development opportunities you have undertaken and bring
these with you to the annual performance appraisal.
By reading through the report from your previous performance appraisal, you
will be able to assess whether or not you have achieved the specific targets and
objectives set for you by your manager. Your level of performance will be used
as a benchmark in your next appraisal to enable your manager to discuss with
you what your future expectations and objectives should be. It is to the
advantage of yourself and your manager that the targets you agree are realistic
otherwise you can become de-motivated, resulting in an overall decline in your
performance. The specific targets and objectives that are set for you will be
used to form the basis of your overall action plan. This should also take into
account your long term career aspirations which you should discuss with your
manager to help you decide the most appropriate course of action to enable
you to effectively develop your career in the appropriate direction. Your
manager may be able to provide you with company literature and information
that will help you and should also be able to advise you on appropriate training.
Your finalised action plan from your annual performance appraisal is a very
important document and you should refer back to it on a regular basis in order
to monitor your performance and ongoing development.
Because a performance appraisal should really be a positive activity, it is not the

appropriate time to discuss serious grievances or disciplinary matters.
However, it is a good opportunity for you to raise any questions or concerns
that you have regarding your specific role, your department or the company in
general. You can also work closely with your manager to identify any
weaknesses you may have and to select an appropriate method for overcoming
them. It is never pleasant to have to face criticism from your employer but, as
long as this criticism is well-founded and constructive, you should try to handle
this as positively and professionally as you can. Don’t be seen to be on the
defensive but try instead to co-operate with your manager and pay close
attention to any advice they may give you.
A performance appraisal is a valuable tool for your ongoing career

development and can even by used to assess your suitability for promotion or a
salary increase so, although it should be a positive experience, it should still be
taken very seriously. If handled effectively, positive relationships should
develop with your manager and improved channels of communication should
be achieved. Don’t be too shy – if you think that you succeeded particularly
well in a certain field, be comfortable discussing it. Feel free to ask any
questions of your manager and take on board their positive and negative
evaluations.

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How to conduct a performance appraisal
The five key elements of the performance appraisal are:
1. Measurement – assessing performance against agreed targets

and objectives.
2. Feedback – providing information to the individual on their
performance and progress.
3. Positive reinforcement – emphasising what has been done well
and making only constructive criticism about what might be
improved.
4. Exchange of views – a frank exchange of views about what has
happened, how appraisees can improve their performance, the
support they need from their managers to achieve this and their
aspirations for their future career.
5. Agreement – jointly coming to an understanding by all parties
about what needs to be done to improve performance generally
and overcome any issues raised in the course of the discussion.
There is no one right way to conduct an appraisal. Some companies

develop an appraisal form with space for appraisers to rate appraisees
on aspects of their work such as their contribution to the team, role
development, effectiveness, etc. The approach will depend on the
nature of the business and the people involved. However as a minimum
it is helpful to have a form to collect consistent information on the
appraisal. This may be in the form of a free dialogue from appraisers
with the opportunity for appraisees to reply and comment.
As a general rule it is helpful to have some information on the following:
1. Objectives - whether they were achieved and if not the reasons

why.
2. Competence – whether individuals are performance below,
within or above the requirements of the role.
3. Training – what training the individual has received in the
review period and what training or development they would like
to receive in the future.
4. Actions – a note of any actions that need to be carried out by the
individual or the appraiser.
There is a view that the content of appraisal discussions should be

confidential to the individual and the appraiser. But increasing pressure
to provide information to assess the contribution of people to
organisational value makes it desirable that performance data be
recorded and stored in such a way that it can be used to feed into
indicators of human capital value.

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Increasingly organisations are putting more emphasis on the kind of

behaviour they want their employees to exhibit. Behaviour, particularly
management behaviour, has been identified as a significant source of
value. They are, therefore, not solely concerned with the achievement of
objectives but how these were achieved. Some organisations are
identifying a set of positive management behaviours, for example, and
then rating against them. Others are identifying the behaviours
associated with excellent service and rating against these in the
appraisal process. Again, the design of the process will depend on what
is important to the particular business and the achievement of their
business objectives and will, therefore, be influenced by the wider
performance management process. It is important that people don’t
achieve their objectives at the expense of their colleague’s morale.
Preparing for the meeting
Both parties should prepare for the meeting beforehand if a successful

outcome is to be delivered. The person conducting the meeting or the
appraiser should:
· Consider how well the individual has performed since

the last meeting.
· Consider to what extent any agreed development plans

from the last meeting have been implemented.
· Think about the feedback to be given at the meeting and

the evidence that will be used to support it.
· Review the factors that have affected performance, both

within and outside the individual’s control.
· Consider the points for discussion on the possible actions

that can be taken by both parties to develop or improve
performance.
· Consider possible directions the individual’s career might

take.
· Consider possible objectives for the next review period.
The individual, or appraisee, should consider the following points:
· What they have achieved during the review period, with

examples and evidence.
· Any examples of objectives not achieved with

explanations.
· What they most enjoy about the job and how they might
want to develop the role.

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· Any aspect of the work in which improvement is
required and how this might be achieved.
· Their learning and development needs with arguments to

support their case for specific training.
· What level of support and guidance they require from

their manager.
· Their aspirations for the future both in the current role

and in possible future roles.
· Objectives for the next review period.
Self-assessment
In some instances it may be helpful to guide appraisees through a

self-assessment process encouraging them to assess and analyse their
own performance as a basis for discussion and action. This can improve
the quality of the appraisal discussion because individuals feel actively
involved in the process and is encourages them to work through the
points above beforehand. This can be particularly useful with more
junior staff or those not used to appraisals.
However, self assessment can only work if individuals have clear

targets and standards against which to assess themselves. It can also
only be effective in a climate of trust where individuals believe their
appraisers will not take advantage of an open self-assessment.
What a good appraisal looks like
A good and constructive appraisal meeting is one in which:
· Appraisees do most of the talking.

· Appraisers listen actively to what they say
· There is scope for reflection and analysis.
· Performance is analysed not personality.
· The whole period is reviewed and not just recent or
isolated events.
· Achievement is recognised and reinforced.

· Ends positively with agreed action plans.
A bad appraisal meeting:
· Focuses on a catalogue of failures and omissions.

· Is controlled by the appraiser.

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· Ends with disagreement between appraiser and

appraisee.
Appraisal skills
All managers expected to carry out performance appraisal should have

some training. Ideally this should not just be on the skills of
performance appraisal – the ‘how’ to do it – but also on the reasons for
performance appraisal – the ‘why’ we do it. Managers should
understand how it fits into the wider strategic process of performance
management and how the information and data generated contributes
to the understanding of the capacity of the human capital of the
organisation to contribution to business strategy and value.
A basic requirement is that appraisers have the skills to carry out an

effective appraisal as described above. This means they ask the right
questions, listen actively and provide feedback.
Asking the right questions
The two main issues are to ensure that appraisers ask open and probing
questions.
Open questions are general rather than specific; they enable people to
decide how they should be answered and encourage them to talk freely.
Examples include:
· How do you feel things have been going?

· How do you see the job developing?
· How do you feel about that?
· Tell me, why do you think that happened?
Probing questions dig deeper for more specific information on what

happened and why. They can show support for the individual’s answer
and encourage them to provide more information about their feelings
and attitudes and they can also be used to reflect back to the individual
and check information. Examples would be:
· That’s very interesting. Tell me more about ….?

· To what extent do you think that …?
· Have I got the right impression? Do you mean that ….?

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Listening
Good listeners:
· Concentrate on the speakers and are aware of behaviour,

body language and nuances that supplement what is
being said.
· Respond quickly when necessary but don’t interrupt.

· Ask relevant questions to clarify meaning.
· Comment on points to demonstrate understanding but
keep them short and do not inhibit the flow of the
speaker.
Giving feedback
Feedback should be based on facts not subjective opinion and should

always be backed up with evidence and examples. The aim of feedback
should be to promote the understanding of the individual so that they
are aware of the impact of their actions and behaviour. It may require
corrective action where the feedback indicates that something has gone
wrong. However, wherever possible feedback should be used
positively to reinforce the good and identify opportunities for further
positive action. Giving feedback is a skill and those with no training
should be discouraged from giving feedback.
Feedback will work best when the following conditions are met:
· Feedback is built in with individuals being given access

to readily available information on their performance and
progress.
· Feedback is related to actual events, observed behaviours

or actions.
· Feedback describes events without judging them.

· Feedback is accompanied by questions soliciting the
individual’s opinion why certain things happened.
· People are encouraged to come to their own conclusions

about what happened and why.
· There is understanding about what things went wrong

and an emphasis on putting them right rather than
censuring past behaviour.
(Source: Chartered Inst of Personnel and Development)
http://www.cipd.co.uk/subjects/perfmangmt/appfdbck/perfapp.htm

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ACTIVITY
Using the notes in this section and in the previous activity, compile your own
description of the performance appraisal process. Include information about
the process from your own experiences.
Structure and strategic fit

Strategic fit implies a convergence of the right set of partners, organised
in the right structure, with the right goals to achieve the desired product
and/or process developments that actually yield lasting economic
value. Unfortunately, right must be defined by the context. This means
that a deep understanding of collaborative relationships must underpin
any successful effort. This section will focus on lessons from the field
drawn from over 20 years experience in university/industry,
industry/industry and consortia collaborative activities.
Strategy of an organisation is the roadmap towards attainment of its

long term goals and objectives. Strategic management process facilitates
in the operationalization of strategy. Organisational Structure (OS) is
the framework that defines the formal reporting system and control
mechanism between employees in the organisation. OS is very
significant towards the strategic development and exception process in
the organisation.
An organisation is a social entity composed of two or more persons who

work together towards the attainment of common goals. For the
organisation to work as a cohesive unit, it is essential that a formal
structure of reporting and control be established among the different
members of the organisation. This gives a definite direction to the
corporate strategy of the organisation and facilitates the strategic
management process. This formal structure is known as Organisational
Structure (OS). For OS to be in place, certain characteristics have to be
evolved. They include division of labour, hierarchy of authority, and
span of control.
Case study
An interesting case study is provided be the LSE and can be found at
http://www.lse.ac.uk/collections/decisionConferencing/caseStudies
/decisionAnalysisSoftware/headOfficeCosts.htm
You are recommended to study this in detail.

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Developing policy
Policies are general statements which direct the thinking and action in
the process of strategy implementation. They provide a definition of the
area in which change is to be made and then ensure that such a change
focuses on the attainment of a specific objective. Examples for a large
organisation would include strategic policies on equal opportunities,
health and safety, handling customer complaints, etc.
Policies need to be formal documents that have standing within the

organisation. Management will expect all members of staff to comply
with them, and have sufficient respect for the process of their
development that this will be possible. This will only be possible if the
process of policy development is seen to be appropriate, purposeful and
fair.
· It must be seen to be appropriate in so much as it is

relevant to the operations of the organisation and its
stakeholders.
· It must be purposeful in that it provides direction to the

organisation’s objectives of future success and
profitability.
· It must be fair for all the employees, who will feel that
management listens to their ideas and concerns.
An example of the process of policy development is reproduced here

from an Improvement Unit based in Scotland:
Strategic policy direction
The Business Improvement Unit supports the Council in developing

its strategy and policies for the Scottish Borders.
To be effective in providing the services you need, the Council aims to

follow a clear customer focused strategy for achieving this purpose.
Relevant policies based on your present needs and expectations are
required to support Council strategy. With the right policies for the
Scottish Borders, the Council’s service portfolios can draw up the
detailed plans, objectives and activities which will deliver the right
services to you - our customers - when you need them.
The Business Improvement Unit supports the Council in developing its

strategy and policies by:
· Providing well researched and informed policy direction

in a number of strategic areas such as Rural
Development, Regeneration, Social Justice and
Community Safety.

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· Ensuring that the varied needs of the Scottish Borders

communities are recognised in the preparation of Council
policies.
· Promoting consistent policy direction and practice across

Council service portfolios and with our partners’ policies.
· Encouraging information sharing within the Council and

with our partners.
· Managing the Scottish Borders Peoples Panel and the

process for consulting our stakeholders.
Ideas about the importance of developing policy are important

throughout all walks of life – even the Prime Minister must follow a
systematic strategic policy. A sample of this is provided in the following
extract from the Prime Minister’s Strategy Unit:
The Prime Minister’s Strategy Unit has three main roles:
· To carry out strategy reviews and provide policy advice

in accordance with the Prime Minister’s policy priorities.
· To support government departments in developing

effective strategies and policies - including helping them
to build their strategic capability.
· To identify and effectively disseminate thinking on

emerging issues and challenges for the UK Government,
e.g. through occasional strategic audits.
The Strategy Unit works closely, and often jointly, with other
government departments and external stakeholders on a broad range of
domestic policy issues, published through a range of outputs including
Green and White Papers. The Unit puts strong emphasis on analytical
rigour and an evidence based approach to developing strategy, looking
at issues from first principles. While some of its work is one-off, other
work on issues such as public service reform and home affairs tends to
be ongoing.
This is not dissimilar to other policies to be found in business

environments!
ACTIVITY
By discussion with senior management, try to establish your own
organisation's ideas on policy development.
Summarise your findings in a brief report. Comment on your observations.

Can you contribute any constructive ideas about your organisation’s
approach?

Unit 3
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Communication systems
Communication is a two-way process. A message needs not only to be
sent but also to be received. Any form of effective strategic
implementation requires effective communication.
ACTIVITY
Provide three examples of the type of problems that can arise as a result of
inadequate communications.
ACTIVITY FEEDBACK
Good communication is essential for the efficient running of any organisation.
There are countless examples that you might have thought of. Here are three
simple cases which are useful starting points for discussion:
· A business exporting goods abroad is likely to have major

problems if it fails to give appropriate details of time of
departure to its despatch department.
· Failure to provide accurate details of a customer’s address will

have disastrous results for a courier company.
· Inaccurate information about cost price of materials and the

extent of overheads is more than likely to lead to problems
assessing a true market selling price for a product.
ACTIVITY
Think of an example where communication between two people failed. Note
down why you think that happened. Can you identify the key reasons for the
failure?
Now look at a more complicated example. This time consider where

communication between three or more people failed. Were there other
factors involved in this case?
Conclude this activity by providing a generalisation of the reasons for

communication failure based on these two examples.
It is generally agreed that the best approach to effective communication

within an organisation is through an emphasis on employee
involvement. This can take the form of simple informal discussions

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where managers listen to the thoughts of a range of employees, or it can

be a more structured plan that incorporates employee input in the
decision-making process. Where this takes place, the term
empowerment is used, and structured channels of communication will
be required.
The communication process essentially has to answer four key

questions in order for the organisation to be able to use it effectively.
These are:
· Who sends and receives information?

· What message is being communicated?
· What channel is being used?
· What medium is being used?
A simplified communication process is shown in Figure 3.1, whilst

different channels of communication are shown in Figure 3.2.
Decision to Via Union A written Shopfloor

Managers reduce shift representatives statement with employees in
working (formal) explanation factory
FEEDBACK
Figure 3.1. An example of a simple communication system.
Board of directors
Downward communication Upward communication
Marketing department Production department Finance department
Lateral communication
Marketing employees
Figure 3.2. Channels of communication.

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Within an organisation there will be both formal and informal channels
of communication.
Formal channels are recognised and approved by employers and

employee representatives. An example would be the HRM department
of an organisation giving notice to an employee about redundancy.
Informal communication channels are those which acknowledge the

existence of such structures as the ‘grapevine’ which provides a
dissemination of information through general conversation, chat and
gossip. Mostly this is beneficial and allows a positive flow of
information without formal organisational barriers. However, it must
be realised that there is some risk of unfounded and negative
information and opinions circulating through the organisation. Whilst
of considerable value, care must be taken with any information
gathered from informal sources without some form of validation.
It has been found that a truly effective communication system within an

organisation is likely to place value on both styles of communication.
ACTIVITY
Within your own organisation, examine the value of both formal and informal
communications channels.
Provide a summary of your findings, and make any suggestions that you feel
might lead the way to future improvements.
Guidelines
The delivery of implementation guidelines will reflect the goals and
plans of the strategy. These will be broken down into strategic and
tactical elements as follows:
Strategic goals are broad statements of where the organisation wants to

be in the future. These will be of relevance to the organisation as a whole
rather than to specific departments.
Strategic plans are the action steps by which an organisation intends to

attain these strategic goals.
Tactical goals define the outcomes that departments must achieve in

order for the organisation to reach its overall goals.
Tactical plans are those planes designed to help execute major strategic
plans and to accomplish a specific part of the organisation’s strategy.

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Focus and realignment

Before one can begin to measure performance, there must be an
understanding of the company’s strategic focus. There are three general
strategic focuses a company may employ and they are described as
cost-, product- or customer-based. A cost-focused strategy emphasises
supplying a standard product that meets many customers’ needs
without customisation at the lowest cost possible. A product-focused
strategy includes custom or niche products or specialised services
delivered to its customers. Customer-focused companies place their
emphasis on world-class customer service.
To effectively measure corporate performance corresponding to its

strategic focus, Key Performance Indicators (KPIs) should be created.
These KPIs are metrics of how well the company is performing, and can
be at the enterprise level or specific to departments. KPIs should contain
both lagging and leading indicators as it is important for the business to
know how well and in what areas it has performed in the past, while
recognising the significant value in understanding how business
decisions today will impact performance in the future. Lagging
measures indicate the state of the company today; such as balance sheet
data, customer retention rate and market share. Leading measures
forecast future performance; such as customer satisfaction, training
budget and time to market. Each strategic focus has KPIs that are
beneficial specifically to that type of focus. Figure 3.3 lists some of the
more important KPIs for each strategic focus.
Cost-focused Product-focused Customer-focused
· Cost measurement · New products in the pipeline · Knowledge of customers

· Cycle time · Research and Development · Environmental appearance
budget
· Standards conformance · Complaint management
· Quantity
· Time to market · Employee empathy
· Quality
· Product customisation · Product expertise
· Responsiveness
Figure 3.3. Key Performance Indicators by strategic focus.
Case study
The following details of strategic realignment show how one particular
organisation has approached the process. Europ Assistance is a
continent-wide supplier of vehicle recovery and other related travel
services.

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EUROP ASSISTANCE COMPLETES STRATEGIC REALIGNMENT
Final realignment completed on the new EA Structure
Europ Assistance, the medical, motor, travel and domestic assistance

and insurance organisation, has completed the final stage of the
strategic realignment of its UK Board of Directors and Commercial
Department, to achieve an even tighter, more efficient structure.
At the heart of the changes is a reorganisation of the Commercial

Department – which previously managed all corporate client liaison
from the initial sales process through to underwriting. It has now been
regrouped, under the auspices of three Europ Assistance directors.
Charles Walckenaer, Managing Director of Europ Assistance UK and

Ireland, will now oversee the total Sales and Marketing function. Within
this framework, the sales and commercial business development teams
will report to Giorgio Daboni - Managing Director, Europ Assistance
Insurance Ltd – who will be responsible for the development of
commercial opportunities sourced by the sales and marketing team.
Overall responsibility for client services, encompassing existing EA

clients and business, will be placed with Paul Everett, Client Services
and Operations Director. The responsibilities of Finance Director Trevor
Chrismas and Company Secretary Dave Crapnell remain unchanged.
Charles Walckenaer comments, “Over recent months EA has

undergone changes at Board level, to enable us to maximise the
opportunities presented by a fast-developing market. With this
restructure, the final piece of the jigsaw is in place, and I believe the
future of Europ Assistance in the UK and Ireland is very exciting.”
“The one unfortunate consequence of this restructure and reassignment

of responsibilities is that the post of Commercial Director is no longer
required, so I would like to thank Chris Reynolds for the contribution he
has made to EA and wish him well for the future.”
Europ Assistance continues to build on its heritage as the pioneer of the

assistance concept in the UK and, with its reorganisation now complete,
it is better able to develop its range of services both to the corporate and
consumer markets.
Issued on 28/02/2006
http://csrc.lse.ac.uk/asp/aspecis/20020049.pdf
Contingency planning
Most organisations operate in markets where there will be some degree
of uncertainty. This will vary considerably between different markets,

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but it is unlikely that an organisation will ever find itself in a truly

certain business environment.
The greater the level of uncertainty, the more difficult it will be to

implement new strategies. The chances of a successful implementation
are reduced as the market becomes more volatile. With such fluctuation,
long term objectives become harder to attain and it is not surprising that
many involved in strategic planning will feel that much time is wasted.
However, planning is essential and should never be dismissed, no
matter how many times it is interrupted by market changes.
What is essential, however, is an awareness of the likely risks and some

degree of planning for events that may occur. Managers need to be
flexible and prepared to react to changes enforced by the market. Such
planning has already been discussed in a previous module, but it is
useful to reinforce some of the ideas.
Contingency planning helps organisations respond appropriately in the

cases of emergencies, setbacks and unexpectedly adverse conditions.
To develop these plans, managers try to identify uncontrollable factors,

such as recession, technological developments or safety accidents, and
then forecast the worst-case scenarios. They might, for example,
consider how the organisation should respond in the event of a
significant drop in sales coinciding with a sudden increase in material
costs due to inflation. Managers might, in this case, consider a fresh
sales drive or employee lay-offs in order to overcome the problems
faced.
ACTIVITY
Consider the possible threats facing your own organisation that could have
serious impact on its success in the next two to three years. List these and
briefly described the possible effect on the organisation.
Now add to this list four more serious (albeit less likely) risks, such as large
increase in interest rates, political instability or loss of consumer confidence,
that would pose a major threat.
For each of the risks identified suggest a contingency plan to deal with it.
Describe what measures you feel would be necessary to ensure the continued
operation of the organisation.
Monitoring and evaluation control systems

The final stage of the strategy process is to monitor its implementation.
In order to do this satisfactorily, management needs to set standards

Unit 3
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and targets in respect of the key objectives. It also needs to ensure that
all communication systems used are effective.
All stakeholders will want to compare performance results over time in

order to reveal trends in business activities. It is only by tracking these
trends that an evaluation can be made of the organisation’s
performance against its objectives, and whether corrective action is
needed.
Figure 3.4 shows examples of types of analysis that are used and the
areas for which they can help strategic control.
Targets will generally focus on financial and other quantitative

performance, such as sales turnover, operating costs, profit margins and
productivity. Many of these can be found in the published annual report
of an organisation. The wide range of stakeholder interests will also
mean that other important information is made available.
Types of analysis Used to control
Financial analysis
Ratio analysis Aspects of profitability
Variance analysis Costs or revenues
Cash budgeting Cash flow
Capital budgeting Investment
Market analysis
Demand analysis Competitive position
Market share analysis Competitive position
Sales analysis
Sales budgets Effectiveness of selling
Human resource analysis

Labour turnover Workforce stability
Work/output measurement Productivity
Physical resource analysis

Product inspection Quality
Figure 3.4. Uses of analysis for strategic control.

rdi Unit 3
ACTIVITY
Consider the figures published for a large retail organisation shown here:
Indicator 2004 2005
Turnover £6,125m £5,873m
Profit before tax £512m £480m
Earnings per share 32.5p 31.6p
Annual dividend
per share 22.3p 21.9p
What general observations would you make?
ACTIVITY FEEDBACK
You might have spotted, amongst other things, that despite a drop in turnover
of 4.2%, annual dividends dropped by only 1.8%.
Similarly, profit before tax was down by 6.25%, yet earnings per share was only
2.8% lower.
Although monitoring is thought of as the last stage of an implemented

strategy, it is not by any means the end of the strategy process. Strategy
formulation is a continuous process as organisations adapt and adjust
to all the factors bringing change to the environment. Regular
monitoring of performance allows management to view changes in
direction away from their organisational objectives.
Drucker, in The Practice of Management, explains that to be able to

control performance managers must be capable of measure
performance against objectives. Therefore, it is essential to provide
managers with adequate knowledge of the meaning of common
measurements in all key areas of the business.
KEY POINT
The creation of objectives, systematic appraisal and measures of performance
enable the general aims of the organisation to be translated into operational
programmes and activities which can be controlled by individuals at all levels
within the organisation.
Needham (2001)

Unit 3
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ACTIVITY
Obtain annual reports from three well-known organisations. These are readily
available on the Internet. Look particularly for the summary financial
statements, not the detailed accounts.
What are the main ways that each organisation measures its performance in
different parts of the business?
What measures does it use in respect to its ‘commitment to society’?
Is the emphasis on quantitative or qualitative data?
To whom are the measures that you have considered likely to be of most
interest?
Dissemination and cascading processes

As stated in an earlier section, communication is a key element to the
success of any strategic development and, indeed, to any organisation.
Without effective communication, an organisation will be unable to
operate efficiently and there are likely to be a number of significant, if
not disastrous, breakdowns.
Having made strategic decisions, the organisation must use its channels
of communication to disseminate the information necessary to those
departments and their managers who need to receive it. This must be
done in such a way that it is distributed rapidly and to the right people.
There have been many occasions where information has not been
current because of delays and this has led to wastage in terms of both
cost and labour. Also, information falling into the wrong hands can lead
to confusion and cause dispute, as well as undermining the positions of
responsibility of those managers who failed to receive it. Dissemination
of information must, therefore, be considered as an important business
function.
To facilitate the process of dissemination, it is common for organisations

to develop a simple cascading process which ensures that everyone in
need of any particular information does, in fact, receive it. Leaving
someone out of the knowledge area can have serious consequences,
both in terms of business efficiency and personal resentment.
Consider a simple example of a coach hire business which has been

hired to take a school group to London for a day trip. Certain factors
may arise that would have an impact on the success of the trip. These
will include motorway traffic congestion, reliability of timing involving
the school and the knock-on effects of a delayed return on further
bookings later in the day. If there is any likelihood of a delay, this
information will need to be passed on the head office of the coach hire

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company, the school and any later clients. For this to happen, it will be
useful for a cascade to be established which will identify specific people
who will be responsible for keeping others further down the cascade up
to date with developments and subsequent delays.
Leaving both school and other clients uninformed will ruin customer
relations and probably risk the loss of any future custom.
A documented policy for information dissemination should be a

carefully considered document. An example is given here:
A summary of National Patient Safety Agency’s dissemination

process
The National Patient Safety Agency (NPSA) was established to manage

the national reporting system for the NHS. Part of the NPSA’s role is to
issue advice and solutions to NHS staff on specific safety problems.
Below is a summary of the Agency’s dissemination process.
Publication formats
The NPSA has developed the following three formats to disseminate its
advice and solutions to NHS staff:
· A patient safety alert requires prompt action to address

high risk safety problems.
· A safer practice notice strongly advises implementing

particular recommendations or solutions.
· Patient safety information suggests issues or effective

techniques that healthcare staff might consider to
enhance safety.
The NPSA has consistent criteria in place for determining the subject
matter appropriate for each format and a process for handling
dissemination. In each case, a lay version is developed summarising the
issue and action taken to enable the NPSA to respond to any enquiries
from patients and the public. Where an issue is likely to be high profile
or to cause anxiety, NHS Direct and relevant patient groups are notified
in advance.
Distribution methods
The formats are distributed electronically to the NHS via the Safety
Alert Broadcast System in England, and emailed directly to NHS
organisations in Wales (normally via a director who covers the relevant
area). An entry is always included in the chief executives’ bulletin in
England, and chief executives are notified directly in Wales.
Information is submitted to other relevant government and royal
college bulletins, and a press release is issued to the media.

Unit 3
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Where the safety issue is likely to be high profile, the NPSA will hold a
press briefing to put the problem in context.
Key principles defining content and dissemination
In issuing these formats, the NPSA is committed to:
· Developing content with relevant partner

organisations/individuals which represent the
professional and patient groups affected.
· Sharing the evidence available about the patient safety

problem.
· Calling for actions that are clear and unambiguous and

practically achievable.
· Detailing the patient safety and other associated benefits

of the recommended actions.
· Risk-assessing the impact of any recommended changes.

· Referencing other relevant national guidance and
standards.
· Providing a timescale for national review/evaluation.

· Agreeing the final version with the Department of Health
and Welsh Assembly Government (this takes a minimum
of three weeks and timescales can vary).
· Notifying all audiences about where the information has

been sent.
· Including a named contact point at the NPSA for further

information.
ACTIVITY
Describe the process of information dissemination in your own organisation
or one with which you are familiar.
How is information cascaded?
REVIEW ACTIVITY
If an organisation has decided to implement a new strategic plan, how would
you describe the importance of effective communication to ensure the smooth
running of the project?

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What steps would you identify as being of considerable importance?
For each step that you have identified, explain its significance and what advice
you would give to the strategic planner.
Summary
In this unit, we have looked at some of the elements of the strategic
implementation process. The importance of working with the support
and agreement of stakeholders to an accepted timetable is an important
initial step. Business Process Re-engineering and Management by
Objectives have been identified as two key methods.
Care taken over planning is time well spent and will allow the
implementation to proceed. The relationship between the existing
policies and methods and those proposed should be analysed to ensure
that the strategic focus and alignment is attainable and realistic.
Despite all the time spent planning, unexpected things can crop up, and
contingency planning is essential if these are not to pose a problem.
Finally, the value of well-planned and effective communication,

including dissemination and cascading processes has been explained.
Further reading
Drucker, P. (1995) The Practice of Management,
Butterworth-Heinemann
Macmillan, H. & Tampoe, M. (2000) Strategic Management: Process,

Content and Implementation, OUP
Needham, D. et al (2001) Business for Higher Awards. Heinemann
Pearce, J. (1996) Strategic Management: Formulation, Implementation

and Control, McGraw-Hill

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Strategic Planning and

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First published in 2007 for RDI Consultants Ltd

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How to use this workbook

Strategic Planning and Implementation i

Strategic Planning and Implementation

Learners are required to plan and develop the implementation of a

Summary of learning outcomes

1. Construct a management strategy.

Management Research – Project and Presentation 0.1

Business strategy embraces a range of concepts, models and

Bruce & Langdon (2000) relate strategy to military campaigns,

‘The art of planning and directing military movements and

Strategic Planning and Implementation 1.3

‘A strategy maps out the future, setting out which products

‘Strategy has its origins in generalship and the art and

They go on to give a literal definition of strategy – as it originated from

· Strategia – generalship, command of an army.

From this military standpoint, Norton & Irving go on to establish a

‘Strategy is about what we want to do, what we want our

Whichever definition is used, it is evident that strategy is concerned

The broad term ‘strategy’ has come to be associated with a whole

1.4 Strategic Planning and Implementation

Without a strategy, it is argued that a firm will not know where it is

Strategy provides an organisation with a framework for:

· Understanding its place and position in each of its

· A way to move forward – in terms of identified direction

· Identifying and developing the resources and capabilities

It can be considered that the central role of any business organisation is

In order to achieve this long-term aim, it is strongly advised – as we

· Where do we want the business to be? – The objectives.

Strategic Planning and Implementation 1.5

Strategy is sometimes described as the direction and scope of an

Andrews (1989) offers a further definition of strategy

‘Strategy is the pattern of objectives, purposes or goals and

APPROACHES TO STRATEGIC MANAGEMENT

THE SQUIRREL APPROACH

1.6 Strategic Planning and Implementation

1. In what way could the issues facing IKEA, or another retailer, be

2. What sorts of decisions are strategic decisions, and what distinguishes

Using your answers, summarise the key characteristics of strategic decisions.

Strategic decisions are concerned with;

· The scope of an organisation’s activities.

· The matching of an organisation’s activities to its environment.

· Building on, or ‘stretching’, an organisation’s resources and

· The matching of the activities of an organisation to its resource

· The major allocation and reallocation of resources in an

· The values and expectations of the organisation’s key stakeholders.

· The direction an organisation moves in the long term.

· Implications for change throughout the organisation – they are likely

Strategic Planning and Implementation 1.7

· Identifies all interested parties both inside and outside

· Used to ensure that all stakeholder interests are catered

Fitness for purpose checklist:

· Have all the stakeholders and their interests been

· Is there agreement from all interested parties about the

· Has a common standard been considered?

· It is important to determine the interests of all stakeholders,

· Matrix showing individual stakeholders or groups of

· Communication route and frequency for each

1.8 Strategic Planning and Implementation