Strategic business management

Introduction:

Strategic business management has its roots in the thinking of the workforce; strategic thinking can no longer become a textual presence of words in the notebooks. The training programs and the meeting conducted at the sense of urgency do not mean that a company is on the right path. In the competitive era the stability of the market is doubted. Even though experts and analysts say the market is recovering from the slow down, the psychological impact that has changed the attitude of people had to be recovered, and it will take time on the long run. In this research of study certain tools and business strategies are used that exemplifies the impact that change bring in and how the company needs to manage the change. Resistance to chance would occur in the initial stages. The source of information that is used in this assignment.

Comprises secondary data s by means of white papers, journals, magazines and case studies of the company were also used. The analysis part of this assignment includes the interpretation of psychological attitudes that exists when a change is implemented. And when a company decides to grow itself strategically impacts would be demographics and all the functional areas of the management such as production, operations, finance, human resource, marketing etc… But all the outcomes of the results purely rely on the workforce and their attitude. The nature of the research is descriptive as the assignment examines the existing affairs of the company. And it also includes the Expost Facto method in sourcing of the data’s.

COMPANIES TAKEN IN TO CONSIDERATION FOR THE ASSIGNMENT:

In this assignment as per the instructions laid down, as a must I have taken in to account the strategies and the process of International Business Machines one of the pioneers in information technology and computer hardware. And for the optional choice of opting the other company o have taken HONDA – The power of Dreams, the reason I chose was personal and I always have a craze on the engine and the models of Honda. At the other end, Honda is known for its expansion and diversification in the recent past as they also pioneer in Intellectual Property Rights in getting the patent rights for their designs of engines. As this assignment needs a wide discussion on the change management I opted for Honda that has a strong workforce.

TASK – I

SOURCES OF CHANGE AND ITS IMPACT

“CHANGE IS THE ONLY THING THAT CANNOT BE CHANGED” without change it will be boredom for human beings and also for other living things. Liberalization, privatization and globalization all these have enhanced the frequency of occurrence of change. Competition exists everywhere smart people are defined by the way they adopt to change. Since the cultural impact plays a role in managing the change, traditional philosophy in the flow of communication in the management also defines the future. Information technology has created resistance to change, especially for the tradional and the baby boomers. As these generations of workforce stick on to the routine work and resist change. Not to blame them but it’s the responsibility for the management to sort out such things without dissatisfying.

SOURCES OF CHANGE IN AN ORGANIZATION:

PEST AND ITS ROLE ON CHANGE: Most of us would wonder the relation between a change and the PEST. _ SHAPE * MERGEFORMAT ____

POLITICAL:

Legislative norms to be abided by the companies on the run might create a change in any of the management process. For example, few of the acts that had come in to enforcement like Paternity act and more had to be implemented by the human resource department. But the intentional movement and implications that are laid down by the ruling party should be abided by a company. This involves sudden change in the norms and the standard operating procedures followed by a company. But when again another party comes to ruling in the next 5 years another set of implications will be laid down at this time when a company is undergoing expansion it will face lot of resistance at this juncture.

SOCIO CULTURAL:

The employment opportunity that prevails in the current scenario is the worst of all times. The impact of the slowdown has thrown its roots psychologically in the mindset of the people and thus it has an impact on the productivity too. And the socio cultural patterns might also reflect on this as companies like Honda, IBM have a diversified workforce problems might arise when downsizing is done. The life style choices of the employees coming from various origins might also be reason to accept or refuse a change when a company diversifies its portfolio. And the cultural fit of new hires is also a subset that falls under this.

TECHNOLOGICAL:

Technological boom has helped the companies to automate work up to a great extent and the impact of the emerging technologies might have the urge to bring about a change in the organization. Internet intranet, remote and Tele Commuting has helped the workforce to balance their work and life. In order to beat the rivals and compete with them the Research and Development department has the key role and its is more or less dependent on the information technology. Change might also be viewed especially in this area. The transfer of technology when a company is in an expansion mode might also cause change and bring about problems.

ECONOMICAL

When a company is undergoing change either it is in an expansion mode the existing business cycle stage has its part for sure. Companies like HONDA, IBM are in the matured stage and so these factors contribute to the decisions that they take to opt for diversification. Pink slips and the unemployment rates along with the inflation and the growth rate have gone down. The U.S mortgage loan i.e., the sub prime crises has also hit the other markets and this is because of the reason the impact of globalization. The Labour costs and the availability of the manpower vs. the vacancies are also to be considered as these might force to bring about a change in an organization.

TASK – II

INTERNATIONAL BUSINESS MACHINES AND ITS CHANGE (STRATEGIC MANAGEMENT)

International Business Machines pioneering in hardware, software and also in IT service this baby was born in the year 1896. Herman Hollerith being the founder he maintains about 398,455 employees globally. With enormous diversifications across the world it has one if the best strategic team that opens its ears across the changes form time to time.

Recession is said to occur recently, but IBM had learnt on how to cope up the changes that occurs due to recession. In the late 1986, IBM faced a recession this is sadi to be one of the worst time the company had faced but to be

“http://www.time.com/time/magazine/article/0,9171,1075217,00.html” http://www.time.com/time/magazine/article/0,9171,1075217,00. (date:21-12-09, time: 3.35p.m)

IBM – The recession in 1986:

In 1986, the IBM has slum down its market capability. Since 1981, the sales have slipped about 35% to 29%. It has sales around 3 million in personal computer in the year 1981. The market has continuously slipped in the year of 1986. The profit has comes down as 4% and the sales also move slowly. The market share ranges as 133% to 125% in a week.

9,370 computers are launched for the customer during the period of 1986. But it is inefficient to transport the computers to other branches. The customer should not wait till the computer reach to them. Only Loyal customer may wait for that.

The IBM has decreased the retail sales during this period and they sales to the NYNEY, the New York based company.

The recession was followed by the launch of nearly 9370 computers in the market. In this case the value chain got struck as the lead time to reach the customers got delayed. The primary stream of the value chain was good still the secondary chain including the retailers, dealers was having some problem. This might be because of the mass production that the company was in to. This led to dissatisfaction among the new customers as the word of mouth turned bad and at the other end the loyal customers might also get dissatisfied.

And this led to a decision of destructing the sales that IBM was handing over to retail sales.

http://www.time.com/time/magazine/article/0,9171,1075217,00.html (date:22-12-09, time: 5.15p.m)

The EXIM norms that were laid down at south Korea and Japan led to imports at low tariffs and the logistics returns were not good’s the other end the rivals were opting for smart thinking with the emergence of laptops and mini computers the rivals were capturing the market share and at the end of the day IBM was forced to push down the selling of computers.

http://www.encyclopedia.com/doc/1G1-158239452.html (date:23-12-09, time: 3.45p.m)

DEMOGRAPHIC FACTORS:

In the case of IBM the fame that it had in its own origin was relatively high. It is very usual that the local market and the perceptions among the retailers and the customers would be positive. And at the other end, the corporate social responsibility that IBM has served to the origin would also serve as a catalyst for further prospects in the same region.

And when it comes to the products competitive strength even though the value chain of IBM has proved to be poor, the product fitness is said to be quiet good an even it could be considered as a competitive edge.

INFERENCE:

The marketing strategies of IBM solely rely on the 4P’s Product, Price, Promotion, and Place. Hence, the inference from the analysis is that the competitors for IBM is more and even in the period of 1987, besides the decline they have grabbed lot of eco friendly awards for ensuring the hazardous wastes to be low. And to the surprise, IBM made it to a percentage of 96% which none of them scored. And the recent initiative that IBM had made in the name of GO GREEN IBM, in which when a project head shouts GO Green all the employees under his belt switches off the monitor they by reducing the green house gas content to the maximum. Coming to the market growth IBM is making ways to expand its market to a greater extent in the presence of competitors the strategies should be focusing on converting the strength at ease by making use of the opportunities. And also the intelligence team and the Research and development team should keep itself updated right starting from the job cuts and the cost cutting impacts and its relation with the consumer behavior.

IBM goes Green” Business Week”,29/12/09,06.00.p.m

IBM IN THE EXPANSION MODE:

The strategic team consisting of around 6-8 people in the IBM strategic department devised a growth strategy for expanding its services in all directions. At this juncture the management was much more concerned about ensuring the following things:

1. Setting up a new R & D plant in the areas to be diversified.
2. The workforce at these places might consist of experts and also few people with a diversified mixture.
3. The expansion should ensure that the resources by all means should be utilized effectively and efficiently.
4. No room for psychological deviations should exist at the time of expansion.
5. Headhunting a competent workforce candidates from the rivals at the area where the company is expanding

After considering the golden rules IBM decided to sketch the road map for calking out the expansion. At the time of expansion IBM was concerned about achieving the growth by means of hike in sales, profits, assets and also the stake holder satisfaction by enhancing the value of returns. Cost cutting at the same of expansion was also a challenge that was hiding behind. Implementation of Total quality Management tools such as 6 sigma, 5S were the areas where IBM ensured perfection. For this a team of quality circles were also appointed and expenses over the Training and development were turning high but they were continuing it expecting Return on Investment through Proper Reinforcement that as possible only when IBM provides a conducive climate for working. This task was then focused towards the Human Resource Department. Several research and surveys were conducted to measure the existing working climate at IBM plants and necessary changes were also made to ensure the reinforcement is witnessed

VERTICAL AND HORIZONTAL GROWTH PLANS OF IBM

Soon after the plans got devised IBM started working at full phase, it was concentrating on enhancing the value chain in the secondary stream especially in the distributors and suppliers (retailers)and at the recent statistics IBM has gone for serving the customers at the door step. The use if SAP by means if ERP made the suppliers and the retailers to get connected directly.

ERP & VERTICAL GROWTH OF IBM:

The need of Enterprise Resource planning across the service points was very high. IBM understood this and soon it acted on the opportunity. The extent of interaction went to such a level where the suppliers could place an order from the desktop of their service point to the production plant. This growth base was not easy as the implementation of ERP brought about psychological barriers.

ERP implementation and Change Management:

Both the backward and the forward integration was possible was IBM on the use of ERP. Still, resistance to change occurred at IBM and the company was pushed to the process of managing change.

IBM CHANGE MANGEMENT STRATEGY & THE LEWINS 3 STEP MODEL:

IBM was in the process of managing the resistance to change that raised in the diversification of the plants as well as the implementation of ERP.

UNFREEZING: IBM mad the communication transparent and so it also conveyed the plans for the growth in the individual career growth plan and devised ways to unfreeze the change.

MOVEMENT: IBM ensured that the new state will reach soon and it also happened as per the devised plan.

REFREEZING: IBM ensured the HR practice and the climate after their companies expansion at different areas did not affect the emotional quotient of the employees. Counseling and work life policies were also designed and certain fringe benefits also were provided

Horizontal Growth:

IBM also moved through the phase of horizontal growth and the acquisitions with the other companies like TOKYO OKHLOA and KOGYO CO LTD turned to be one of the successful strategic alliances by means of working through low consumption of solar energy.

Diversification @ IBM:

IBM devised new product lines and perfect products with the help of research and development dept .The diversification was a combination of both concentric as well as conglomerate. As the first involved in enhancing the production process with marketing strategies through the sales force and the later involved the merger in to the solar business industry. The new products at IBM after the year 1986 and the recent collaboration with LENOVO has also paved way for the emergence of laptops and other devices. IBM now is trying to capture the market where it has been lagging earlier the restructuring process at IBM under the guidance of CEO Louis U. Gerstner who rearranged the brand and the logos and also incorporated the GO GREEN.

TASK – III

An international company and pioneer in manufacturing of engines. Equal competitor for the German automobile companies when no one dreamt of it this company right now stands as a leader in the automobile industry. The company surprised the customers and delighted them by selling its product CIVIC HYBRID. Yes of course it’s HONDA – THE POWER OF DREAMS. These dreams were made true when a simple mechanic named Soichiro Honda founded the company in the year 1940 at Japan. Incepting with a normal 50 cc bike Honda has now emerged as the core competitor for the rivals.

http://www.oppapers.com/essays/Honda-Passenger-Car-Industry/206913

http://www.1stgencivic.org/(date: 23-12-09, time: 5.45p.m)

THE DOWNFALL OF HONDA:

When we are asked to comment about HONDA we would say its leading company in the automobile industry, but the fact is like any other company Honda also faced a downturn and this was said to happen when the company failed to invest actual funds in to Research and development at the right time. This paved advantage to its competitors like Toyota and Nissan. As Honda was keen in designing the engine it failed to take in to account the customer perceptions and taste of the customers in other countries. Later, the company decided to opt for a strategic alliance to enhance the productivity and to capture the market share in the other countries other than its origin.

When Honda’s strategic alliance team was analyzing on which of the action to select it went for a mutual beneficial consortium with DONGFEN a Chinese company as this resulting in capturing of markets with cost cutting in the process that minimized waste of time and resource at certain levels.

http://www.telegraph.co.uk/finance/newsbysector/transport/6259440/Hondas-UK-plant-is- leading-the-car-industrys-revival.html(date:24-12-09, time: 6.21p.m)

OTHER ALLIANCES:

Honda did not stop with a mutual consortium it also decided to take along step of opting for a Joint Venture with Siel Siddhartha and it produced nearly 38,849 and nearly 15.5 million engines and this decision turned to be one of the most important moves that actually leveraged the financial risk of Honda. Honda also opted for a joint venture with siel followed by a value chain partnership which actually has now made Honda to be one of the pioneers in automobile manufacturing with one of the best in class total quality management and it has now captured the customers and had made them to be at the top of ladder of loyalty.

Thus these strategic alliances with the other companies by means of value chain partnerships and joint ventures followed by a mutual consortium. The following were the pros that Honda acquired because of the strategic alliance.

Research and development team got stronger and the company was able to make focus on a specific target of customers that also paved way to a decline in the risk that is to be bared individually rather it turned to be mutual risk and profit sharing decision. Thus by holding hands through strategic alliance Honda was able to strengthen its base and acquire more of the market.

http://www.myautoupdater.com/a29182-world-class-honda-car-parts-sold.cfm(date:24

-12-09, time: 5.35p.m)

TASK – IV

ASSESSMENT OF RISK INVOLVED IN RUNNING A NBFC BUSINESS

Risk is there everywhere, with out proper assessment of risk even a traditional company would collapse in a short span of time. Risk management has been given more importance in the field of non banking financial corporation. The recent slow down that has rooted out from the sub prime crises has made all the industry to rethink of its strategies in opening and sustaining in the existing market. The initial investments that is required to run the business is relatively high. Some of the risk factors are discussed below:

1. The nature of the financial product might not be very attractive as the rivals will be more in number. Finding out the small gap in this segment would be the challenge.
2. The negative of financing would be the competition that the company would face form the banking industry as customers are more aware of the shortcomings in this regard.
3. In the team of marketing the attrition rate has witnessed to be very high amidst the financial crises. The fancy incentives are not stable and so the income and the job security are also not constant.
4. The marketing department would sell of the loans to the consumers but the problem rises when the collection team keeps on insisting the customers to repay the amount when fails leads to loss in the concern.
5. The present rates that is prescribed by the government of u,k to run a business related to non banking financial industry is quiet tough to maintain. And moreover the issues of the corporate governance and the disclosure of the financial statements are the issues.
6. The policies are now made stringent rather it was lenient those days that led to the recession.
7. The task of processing the loan for a new commercial vehicle becomes an important risk factor as the appraisal of the customer and his pay back ability could fail at any time and more over the loss incurred in case of the customer failing to repay the amount is relatively high than in that of refinancing.

RECOMMENDATIONS:

The recommendations that I would put forward in this issue would be to follow the risk management and assessment tools usage and also the use of porter’s competitive strategy would be an optimal solution for the NBFC business.

Cost Leadership:

The NBFC is a service oriented sector and so the cost would be much more on the interest rates and the IRR value that the company would yield on the long run. The implications that are laid down by the government should be followed strictly. And also the mortgage loans would have an impact.

Differentiation:

In order to differentiate the products the NBFC industry is all complicated with lot of products and the mode reaching the customers and converting them in to a loyal customer by offering special loans based on the track records would be the solution on this function.

Cost Focus:

Nothing much on the cost focus is needed provided the interest rates are low.

The above strategies would find out an optimal solution for the business to run successfully.

Sekaran Uma, “Strategic Management”, published by Tata Mc Graw Hill, 2005(date: 23-12-09, time: 6.14p.m)

BIBLIOGRALPHY:

• Mcshane L. Steven VonGlinow Ann Mary Sharma R. Radha, “Organizational Behaviour”, Published by Tata McGraw Hill, 2006 (date: 22-12-09)
• Robbins Stephen P, “Organisational Behaviour”, 12th Edition, published by Prentice Hall Pvt. Ltd, 2000(date: 22-12-09)
• Sekaran Uma, “Strategic Management”, published by Tata Mc Graw Hill, 2005(date: 23-12-09)
• http://www.time.com/time/magazine/article/0,9171,1075217,00.html#ixzz0aFfXIqNW (date:21-12-09, time)
• http://www.1stgencivic.org/(date:21-12-09)
• http://www.time.com/time/magazine/article/0,9171,1075217,00.html (date:22-12-09)
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• http://www.oppapers.com/essays/Honda-Passenger-Car-Industry/206913
• http://www.1stgencivic.org/(date:23-12-09)
• http://www.telegraph.co.uk/finance/newsbysector/transport/6259440/Hondas-UK-plant-is- leading-the-car-industrys-revival.html(date:24-12-09)
• http://www.carazoo.com/article/2908200801/Hondas-New–Players-in-the-Indian-Car-Industry(date:24-12-09)
• http://www.myautoupdater.com/a29182-world-class-honda-car-parts-sold.cfm(date:24-12-09)
• http://www.sme-blog.net/sme_blog/mediumsized_companies/(date:24-12-09)
• http://rd.kpmg.co.uk/mediareleases/19475.htm(date:24-12-09)
• http://www.pr-inside.com/financial-services-firm-edward-jones-sells-r1542966.htm(date:25-12-09)