Establishment Of Businesses And Its Maintenance Business Essay


A few years ago, a business could be established and maintained by reacting to and meeting changes in tastes, costs and prices. The business could be kept going with this reactive style of management. In today's world, however, changes happen at lightning speed and can come from many directions: by the time a reactive manager can make the necessary adjustments, he may lose customers - possibly for good.

In the modern world the business environment is technology-driven and less stable than it once was: instead of being reactive, businesses need to be proactive. Businesses must anticipate future trends and events and plan for them, rather than try to react to various crises (and even, perhaps, opportunities) as and when they occur. Proactive planning is making resource-allocation decisions based on the constant analysis of environmental forces. By doing this, predictions can be made about where the business might by this time next month, next year, or the next 10 years. Today's companies must have a sound business plan or Corporate Strategy to take them forward.

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Once a number of strategic options have been carefully considered, the chosen option(s) need to be implemented. This is usually the most difficult part because there will almost certainly be opposition to change - especially if it is imposed on the workforce. This opposition needs to be tempered using some of the methods discussed in this document.


"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations". (Prof Gerry Johnson, 2006)

Over a period of time it has been shown that one of the most popular and successful Management Tools has been Strategic Planning (Darrell K. Rigby, 2009). In its simplest terms, strategy is about identifying:

Where you are?

Where you want to be?

How you are going to get there?

Fleshing this out a little bit more, we need to know:

Where do we want to be in the long-term?

What is our target market and what kind of activities are involved in those markets?

How can we perform better than our competitors in those markets?

What resources (skills, assets, finance, relationships, technical competence and facilities) do we need in order to be able to compete?

What external, environmental factors affect our ability to compete?

What are the values and expectations of the stakeholders of the business?

The implications for change throughout our organization - they are likely to be complex in nature

It is worth noting here that "Operational Effectiveness is not Strategy" (Porter, 1996). Porter states that being more effective than your competitors is - although necessary - not sufficient:

Operational Effectiveness means performing activities better than rivals perform them. Operational Effectiveness includes but is not limited to efficiency. It refers to any number of practices that allow a company to better utilize its inputs by, for example, reducing defects in products or developing better products faster. In contract, strategic positioning means performing different activities from rivals' or performing similar activities in different ways. (Porter, 1996)

Maybe have examples here illustrating this: RyanAir and SW Airlines, perhaps?

How Strategy is Managed - Strategic Management

In its broadest sense, strategic management is about taking "strategic decisions" - decisions that answer the questions above.

In practice, a thorough strategic management process has three main components, shown in the figure below:

Strategic Analysis

This is all about analysing the strength of a business's position and understanding the important external factors that may influence that position. What changes are going on in the environment and how will they affect the company and its' activities?

The company exists in a complex commercial, economic, political, technological, social and ethical world. Understanding this environment is of essential importance to strategic analysis. Historical, present-day and future changes in environmental variables must be considered and - because there are so many - this is no easy task. Many of these variables will give rise to business opportunities but, equally, many could give rise to threats.

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The resources of the company also influence the choice of strategy. Just as there are external environmental influences, there are internal ones. Every company has strengths and weaknesses: these could be its physical plant, directors and/or workforce, products and/or services, or its financial strength. The aim of the analysis is to get a picture of the internal influences on strategic choice.

The third influence on strategic analysis is the expectations and objectives of different stakeholder groups: these are clearly important because they will directly affect what will be seen as acceptable in terms of the strategies advanced by management. Also, the embedded culture of an organisation, though not as explicit, will also have an influence. Two different managers, perhaps working in two different departments, may come to completely different conclusions on strategy, even though they both have the same environmental and resource influences. The one whose decision prevails is likely to be the one with the most power or, if not, the one who recognises why the company follows, or is likely to follow, the strategy it does.

There are a number of tools that can help in the process of Strategic Analysis, and these are discussed in the following section.

Tools Used for Strategic Analysis

There are a number of tools that can ensure that the analysis is methodical and balanced. These tools invariably rely on historical data to make assumptions about the future. Also, caution should be exercised when interpreting the results to avoid being influenced by preconceptions or pressures from within the organisation which want to validate preconceived ideas. A single tool is unlikely to be completely comprehensive, so a combination of option-generating tools should be used: a key skill of a strategic analyst is in understanding which analytical tools or techniques are most appropriate to the objectives of the analysis.

The following are some of the more commonly used strategic analysis tools:

SWOT Analysis

A simple but widely used tool to help identify and understand the strengths, weaknesses, opportunities and threats involved in a project or business activity. It starts by defining the objective of the project or business activity and identifies the internal and external factors that are important to achieving that objective. Strengths and weaknesses are usually internal to the organisation, while opportunities and threats are usually external (see appendix 1 for an example).


PEST analysis is a useful tool for understanding the political, economic, socio-cultural and technological environment that an organisation operates in. It can be used for evaluating market growth or decline, and, as such, the position, potential and direction for a business. PEST has been expanded upon over the years and there are many variants, one of which is LEPESTCC (Fearey, 2011), and this is explained as follows:


Changes in the law that have a marked impact on business, an example being the smoking ban in countries across Europe.


Economic factors affect the cost of capital and purchasing power of an organisation. They include economic growth, interest rates, inflation and currency exchange rates.


Government regulations such as employment laws and tax policy. Other political factors are trade restrictions and political stability.


This is becoming more important as public awareness of global warming and other "green" issues increases.


Social factors impact on the consumer's need and the potential market size for an organisation's goods and services. Social factors include population growth, age demographics and attitudes towards health.


The unrelenting rate of technological change influences decisions and investment in innovation.


You cannot have a compete grasp of the marketplace you are in unless you understand what your competitors are doing.


A major change to the way people buy things has evolved alongside the growth of the internet. Keeping an eye on how, when and why customers purchase what they do is necessary to retain a competitive edge.

PEST factors can be classified as opportunities or threats in a SWOT analysis. It is often useful to complete a PEST analysis before completing a SWOT analysis. See appendix 2 for a PEST template.

Mind Maps

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Mind Mapping is a very quick and easy way to start gathering information. Popularised by Tony and Barry Buzan in The Mind Map Book (Buzan, 2000), Mind Maps do away with conventional note-taking and replace it with a "map" of interlinking thoughts and ideas (see appendix 3).

Mind Maps are very good for summarising information, consolidating information from different sources, and thinking through complex problems. They are very quick to review because they usually present all the information on one side of paper, often in a distinct and easily remembered shape.

Force Field Analysis

Force Field Analysis is a technique for looking at all the forces for and against a decision.

By carrying out the analysis you can plan to strengthen the forces supporting a decision, and reduce the impact of opposition to it. According to Kurt Lewin (Lewin, 1976) the analysis also allows you to:

â- investigate the balance of power involved in an issue

â- identify the most important stakeholders and target groups

â- identify opponents and allies

â- identify how to influence each target group

Typically, the following steps are taken to conduct a Force Field Analysis:

1. Describe the current situation.

2. Describe the desired situation.

3. Identify where the current situation will go if no action is taken.

4. List all the forces driving change toward the desired situation.

5. List all the forces resisting change toward the desired situation.

6. Discuss and interrogate all of the forces: are they valid? Can they be changed? Which are the critical ones?

7. Allocate a score to each of the forces using a numerical scale e.g. 1 = extremely weak and 10 = extremely strong.

8. Chart the forces by listing (to strength scale) the driving forces on the left and restraining forces on the right.

9. Determine whether change is viable and progress can occur.

10. Discuss how the change can be affected by decreasing the strength of the restraining forces or by increasing the strength of driving forces.

See appendix 4 for an example of a Force Field Diagram.

Five Forces Analysis

Michael Porter's Five Forces of Competitive Position model provides a simple perspective for assessing and analysing the competitive strength and position of a corporation or business organization.

The five forces are:

1. Existing competitive rivalry between suppliers

2. Threat of new market entrants

3. Bargaining power of buyers

4. Power of suppliers

5. Threat of substitute products (including technology change)

Porter's Five Forces model can be used to good analytical effect alongside SWOT, PEST and other analysis tools. See appendix 5 for Five Forces diagram.

Other tools include:

Competitor Analysis

A wide range of techniques and analysis that seeks to summarise a business's overall competitive position.

Critical Success Factor Analysis

A technique to identify those areas in which a business must outperform the competition in order to succeed.

Market Segmentation

A technique which seeks to identify similarities and differences between groups of customers or users.

Strategic Choice *

Strategic choice is the third logical element of the strategy formulation process. Strategic choices are those decisions made about a company's future that are a response to the outside pressures and influences. But there will always be, in practice, limits on the range of possible choices. In general, small companies tend to be limited by their resources, whereas large enterprises find it difficult to change quickly and so tend to be constrained by their past. In large corporations, managers may find their range of choice limited because some choices are made at a higher level or in another country. In the public sector, the genuine strategic choices may be made by politicians so that the role of the manager is limited to devising how best to implement strategies rather than to ponder fundamental choices of future direction for themselves.

Even when managers are apparently free to make strategic choices, results may eventually depend as much on chance and opportunity as on the deliberate choices of those managers. When considering future strategies, it may seem that there are clear choices to be made. When reflecting on outcomes in retrospect, it is often clear that events, and particularly unexpected events, played a major role in determining results. When considering choice, it is necessary to take a prescriptive view. Descriptive ways of thinking may help to explain the outcomes after the event.

In a tidy logical world, any process of choice could be rationally divided into four steps-identify options, evaluate the options against preference criteria, select the best option, and then take action. This suggests that identifying and choosing options can be done purely analytically. In practice, it may be difficult to identify all possible options with equal clarity or at the same time. Unexpected events can create new opportunities, destroy foreseen opportunities, or alter the balance of advantage between opportunities. Identifying and evaluating options is a useful approach but it has limitations. It is necessary to remember that the future may evolve differently from any of the options.

Good strategic choices have to be challenging enough to keep ahead of competitors but also have to be achievable. Analysis has an important role in making strategic choice but judgement and skill are also critical. For instance, sometimes it may be better to delay making a decision whereas at other times a wrong decision may be better than no decision. Strategic choices that keep options open may be preferable in an uncertain future to defined strategies that depend for their success on uncertain events happening. Such judgements require wisdom as much as analytical skill.

* This page (or most of it) has been lifted from an unknown source. It will be replaced in the next version with my own words (but the points made will be the same).


So, you've decided on your strategy - now it's time to translate it into organisational action. This is almost always the most difficult part: there will inevitably be opposition to change - no matter how small or seemingly trivial - within the workforce.

Enforcing change from above - "It's my way or the highway" - is a recipe for disaster. Each change can be accompanied by tension, stress, squabbling, sabotage, turnover, subtle undermining, behind-the-scenes foot dragging, work slowdowns, needless political battles, and a drain on money and time - in short, symptoms of that ever-present bugaboo resistance to change (Kanter, 1985).

If even minor, expected changes can see a decrease in organisational effectiveness, imagine the problems that might be encountered by, for example, departmental restructuring or the move into new sales channels. Research has shown that change needs to be managed well in order to minimize the resistance to it, and in order to manage it well we need to understand why there is resistance in the first place.

Good Measure Consulting Incorporated is a company that has worked with the change-related problems of over 100 major organisations in the USA. Here are some of the most common reasons managers dealing with change encounter, along with the tactics used for dealing with them:

Loss of Control

Change is exciting when done by us, threatening when it is done to us. People need to feel in control of their environment: the more you involve them in the planning and implementation of change policies, the more likely they are to commit to them.

Excess Uncertainty

Not knowing what change is planned, or what the consequences of it will be, makes people uncomfortable. Not sharing enough information with employees at every step of the change process is a mistake. Information is key in building commitment to change, with step-by-step scenarios, timetables and milestones. Dividing a big change into a number of small steps can make it seem less risky and threatening.


People are easily shocked by decisions or requests suddenly sprung on them without warning. The first, natural response to something new and unexpected, that they are not mentally prepared for, is resistance. Companies often wait until all organisational change decisions have been made, then spring them on the workforce. As with points 1 and 2 above, people need to be involved - or at least kept informed.

Loss of Face

Sometimes there the assumption that the reason for change is because the way things have been done in the past has been wrong: this can cause embarrassment and resentment - no one likes to lose face in front of their peers. It is important to put past actions into perspective - it was the right thing to do then, but now things are different. This way people look strong and flexible. They have been thanked for what they once did, and you are entrusting them implementing new way of doing things.

Concerns about Future Competence

People sometimes resist change because they are concerned that they may not have the skills or competence to work in a new way. This is especially true of older employees: they have taken years to build up their skills, only to be told that these are no longer (as) important in the organisation. No-one wants to feel that they have to "start over". When managing change it is essential that people feel competent and that education and training is provided where it is needed. Support and encouragement is the key here.

More Work

It is reasonable for employees to assume that change will inevitably mean more work. People are busy enough already without having to devote more time and energy to new tasks. Managers need to show their appreciation for the extra sacrifices people make to support the change: this could be in the form of bonuses, or the provision of extra facilities (e.g. a crèche), or flexi-time, and so on. While an employee is working harder, it makes it easier if the manager shows his or her appreciation.

The Threat to Jobs and/or Status

As well as a perceived threat, there is sometimes a real threat that some will either lose their jobs or be "relegated" in some way. There are going to be winners, and there are going to be losers. The important thing here is not to shy away from the reality: don't provide false hopes or give people straws to clutch on to. People appreciate knowing their fate early rather than constantly worrying about it. The sooner they know, the sooner they can move on with their lives. It can come as a great relief to know that the thing you feared the worst is true.

For some people, change can be a tremendous opportunity for career advancement, job security, etc, but it can still carry a small feeling of loss. It may be a loss of routine, friends, comforts, or something else that, although they may be minor, is still important. By definition, change means that things will never be the same.

It is up to the manager to analyse the sources of resistance and come up with the best solutions to counter it and, even better, getting people to commit to it. Having a "my way or the highway" policy is a recipe for disaster and is highly unlikely to succeed in today's environment.

See appendix 6 for people's experiences of change.


Project Management has grown since the 1950's as a major discipline used by corporate companies to achieve strategic objectives. A project is not like day-to-day work: it is used to provide a "one-off" deliverable using an often complex process flow. Project management used to form the backbone in the fields of civil engineering, defence, aerospace engineering and infrastructure development. In the ever-increasing drive to be more competitive, more and more companies in general have adopted a project-oriented approach to working, often employing people on a project-by-project basis, sometimes as specialists, often on a temporary, part-time or contract basis.

For projects to be successful there must be rigorous planning and project management. The project needs to be defined, planned, scheduled and controlled to achieve its goals. Project Management can also be viewed as the process of balancing project objectives against constraints of time and budget. To neglect planning "because it just gets in the way of doing things quickly" is to risk (guarantee?) project failure: "Failing to plan is planning to fail" (Effie Jones). Projects are managed to:

Achieve project objectives: a project plan ties a project to specific objectives, so everyone stays focused on those goals. A documented objective also helps project managers know the scope of the project.

Achieve timely completion: one of the most important factors in project management is finishing a project on time and as stated in the project schedule. If projects are not completed on time (and they never are, plan or no plan), cost increases which leads to cost overrun.

Achieve better financial performance: most top management are concerned about financial performance, so many projects have financial objectives - increasing sales, lowering costs, reducing expensive recalls.

Make customers happy: when projects are completed to time, within budget and scope, the customers would like to come back to patronise you. When project are managed effectively and efficiently it brings about more productive and happier workers as well as customers

There are a number of distinct stages to project planning, and these are described below:

Define the Goal

A business goal is a clear target that solves a business problem effectively. It must have a target that is measurable. In other words, the goal must define what is meant to change, how it is meant to change, a unit of measure for the change, and a target for change. A target date for the goal to be met is often specified as well.

Planning the Work Breakdown Structures

The Work Breakdown Structure (WBS) is defined as:

"A deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables." (Project Management Institute, 2004)

A quality Work Breakdown Structure (WBS) requires a substantial amount of time and effort, often by a lot of people. This is what less-enlightened souls consider to be a waste of time: "because it just gets in the way of doing things quickly". And this is why they are wrong:

Firstly, it helps to specifically and accurately define and organise the scope of the total project, usually by using a hierarchical tree structure (appendix ??). Each level of the tree structure breaks the projects objects down into more specific and measurable chunks. The second reason is because it helps with assigning responsibilities, resource allocation, monitoring, costing and controlling the project. The third reason is because it allows everything to be double-checked and approved and signed-off with the stakeholders.

The WBS is a list of broken-down deliverables, i.e. what the stakeholders will get when the project is complete. It is not a list of tasks that will be used to accomplish the deliverables. The WBS is also not a plan or schedule - it does not need a chronological order - it is just a simple breakdown of deliverables. A WBS looks remarkably similar to an Organisational Hierarchy chart, but it is very different. The Organisational Hierarchy shows things like chain of command and lines of communication, but the WBS is restricted simply to a project and shows only the deliverables and scope of that project.

The WBS is the foundation for planning a project: the project probably depends more on this document than any other for success - it cannot be ignored to "speed things up a bit".

Deciding the Order of Work and Time-Scales

For each deliverable identified in the WBS, identify who will carry out the task and the time it will take them to complete it. By identifying the timescale for each task, you can calculate the timescale required for each deliverable.

It is not uncommon to discover at this point that the stakeholder has imposed an unrealistic delivery date: options to overcome thus are a) renegotiate the deadline, b) employ additional resources or c) reduce the scope of the project.

Network Analysis or Project Evaluation Review Technique (PERT) diagrams help to analyse the inter-relationships between the tasks identified by the WBS and to define the dependencies of each task. Whilst laying out a PERT chart it is often possible to see that assumptions for the order of work are not logical or could be achieved more cost effectively by re-ordering them. This is particularly true whilst allocating resources; it may become self evident that two tasks cannot be completed at the same time by the same person due to lack of working hours or, conversely, that by adding an extra person to the project team several tasks can be done in parallel thus shortening the length of the project.

Critical Path Analysis

Critical path analysis (CPA) is used in conjunction with PERT analysis to identify the tasks that are critical in determining the overall duration of the project.

Milestone Planning

Network diagrams can help to find the key, significant checkpoints - milestones - on the way to the project's goal. Milestone planning is often used at senior manager reviews.

Preparing the Schedule

Gantt Charts are extremely useful project management tools. The Gantt Chart is named after US engineer and consultant Henry Gantt (1861-1919) who devised the technique in the 1910s. They have become an industry standard and a key project management tool for representing the phases, tasks and activities that are scheduled as part of a project WBS or timeline of activities.

A Gantt chart is a bar chart that aims to show the timing of tasks or activities as they occur across time (see appendix ??). Although the Gantt chart did not initially indicate the relationships between activities, this has become more common in current use as both timing and interdependencies between tasks can be identified.

Every activity on a Gantt chart has a separate line. A time-line for the duration of the project (normally weeks, or for very big long-term projects, months), the time blocks can be shaded or colour-coded to denote each type of activity, and break points can be inserted to signal review dates. It is usual to include columns for costs which helps to keep track of progress for each activity and how the costs are running. The time blocks can be moved around to report on planned versus actual, and to reschedule and update timescales.

Gantt charts are probably the documents most referred-to on a project, but they do not very easily or obviously show the importance and inter-dependence of related parallel activities, and they won't obviously show the necessity to complete one task before another can begin. However, used in conjunction with a PERT diagram and a Critical Path Analysis they are indispensible for large, complex projects.

Risk Management and Contingency

Contingency planning is vital in any task when results and outcomes cannot be absolutely guaranteed. Project management must include planning for and anticipating the unforeseen: there must be fall-back plans that make sure that time, activity and resources exist to rectify anything that goes wrong.

Risk management is basically common-sense: everyone involved in the planning of a project should keep on asking the question: "What can go wrong?" and acting on the answers.

There are a number of tools to help with Risk Management, an example being a Risk Impact/Probability Chart (Anon, n.d.).

The Risk Impact/Probability Chart is based on the principle that a risk has two primary dimensions:

Probability - A risk is an event that "may" occur. The probability of it occurring can range anywhere from just above 0% to just below 100%. (Note: It can't be exactly 100%, because then it would be a certainty, not a risk. And it can't be exactly 0%, or it wouldn't be a risk.)

Impact - A risk, by its very nature, always has a negative impact. However, the size of the impact varies in terms of cost and impact on health, human life, or some other critical factor.

The chart allows you to rate potential risks on these two dimensions. The probability that a risk will occur is represented on one axis of the chart - and the impact of the risk, if it occurs, on the other.

You use these two measures to plot the risk on the chart. This gives you a quick, clear view of the priority that you need to give to each. You can then decide what resources you will allocate to managing that particular risk.

The basic form of the Risk Impact/Probability Chart is shown below.

The quarters of the chart have these characteristics:

Low impact/Low probability - Risks in the bottom left corner are low level, and you can often ignore them.

Low impact/High probability - Risks in the top left corner are of moderate importance - if these things happen, you can cope with them and move on. However, you should try to reduce the likelihood that they'll occur.

High impact/Low probability - Risks in the bottom right corner are of high importance if they do occur, but they're very unlikely to happen. For these, however, you should do what you can to reduce the impact they'll have if they do occur, and you should have contingency plans in place just in case they do.

High impact/High probability - Risks towards the top right corner are of critical importance. These are your top priorities, and are risks that you must pay close attention to.

Attention should be focused on middle-to-high priority risks (those with a high probability and/or high impact), while those at the very bottom (low probability and/or low impact) can often be ignored.


The project plan has identified who is responsible for each activity, including timescales, costs, and deliverables. Activities need to be SMART: Specific, Measurable, Agreed, Realistic, and Time-bound. Using proper delegation methods is vital for successful project management involving teams. Tasks need to be explained clearly (to all members of the team, not just those responsible for the particular task), agreed with each other, and supported and checked while in progress.

Useful theories which help in understanding team delegation are Tuckman's group performing model and the Tannenbaum and Schmidt Continuum.

The progress of activities should be checked regularly, preferably at pre-planned target points, against the project plans and the plans revised if necessary. Stakeholders, as well as everyone on the team, should be kept informed of the progress being made.

Post-Project Reviewing

It is important to hold a review with the project team (and probably the principal stakeholders too) shortly after its completion. It is a time for reflecting on and learning from the inevitable failures and mistakes that will have been made.

Almost always, project management will involve change management too, which is difficult even when justified. Quite often there will be a need for education and/or training: there will always be the need to explain why there was a need in the first place.


Sum up the document here, re-emphasising the points needed in the assignment - strategic planning good, dealing with change sympathetically, Project Management good.


Appendix 1 - SWOT Analysis Example

Appendix 2 - PEST Analysis Template

PEST analysis (political, economical, social, technological) assesses a market, including competitors, from the standpoint of a particular proposition or a business.

criteria examples

ecological/environmental current legislation

future legislation

international legislation

regulatory bodies and processes

government policies

government term and change

trading policies

funding, grants and initiatives

home market pressure- groups

international pressure- groups

wars and conflicts



criteria examples

home economy

economy trends

overseas economies

general taxation

taxation specific to product/services

seasonality issues

market/trade cycles

specific industry factors

market routes trends

distribution trends

customer/end-user drivers

interest/ exchange rates

international trade and monetary issues

criteria examples

lifestyle trends


consumer attitudes and opinions

media views

law changes affecting social factors

brand, company, technology image

consumer buying patterns

fashion and role models

major events and influences

buying access and trends

ethnic/religious factors

advertising and publicity

ethical issues



criteria examples

competing technology development

research funding

associated/dependent technologies

replacement technology/solutions

maturity of technology

manufacturing maturity and capacity

information and communications

consumer buying mechanisms/technology

technology legislation

innovation potential

technology access, licencing, patents

intellectual property issues

global communications

Note: PEST analysis can be useful before SWOT analysis because PEST helps to identify SWOT factors. PEST and SWOT are two different perspectives but can contain common factors. SWOT stands for strengths, weaknesses, opportunities, threats.

This SWOT analysis explanation and templates are at

Appendix 3 - Mind Maps

Appendix 4 - Force Field Analysis Example

The following example shows a fictional Force Field Analysis for a self-service Human Resources system. The number against each arrow is the weighting given to that particular point.

Appendix 5 - Porter's Five Forces of Competitive Position

© alan chapman 2005, based on Michael PorterHYPERLINK ""'HYPERLINK ""s Five Forces of Competitive Position Model.

Not to be sold or published. More free online training resources are at Alan Chapman accepts no liability.

New Market Entrants, eg:

entry ease/barriers

geographical factors

incumbents resistance

new entrant strategy

routes to market

Supplier Power, eg:

brand reputation

geographical coverage

product/service level quality

relationships with customers

bidding processes/capabilities

Buyer Power, eg:

buyer choice

buyers size/number

change cost/frequency

product/service importance

volumes, JIT scheduling

Competitive Rivalry, eg:

number and size of firms

industry size and trends

fixed v variable cost bases

product/service ranges

differentiation, strategy

Product and Technology Development, eg:

alternatives price/quality

market distribution changes

fashion and trends

legislative effects

Appendix 6 - Styles of Managing Change

Executives use different styles of managing change (Prof Gerry Johnson, 2006).

Start with the truth

Carly Fiorina is (was) chairman and CEO of Hewlet-Packard in Palo Alto, California:

I remember my first meeting with 700 of our senior leaders, when we underwent this very realistic self appraisal...You can't do your own interpretation of what's wrong and beat people up; to motivate them to change, you have to show them a mirror....I wrote down comments these managers had themselves made two years earlier about the company, including the comment that HP was too slow and indecisive. I also wrote down things customers had said about us, both good and bad. When confronted with the inescapable facts of what they had said about themselves and what customers had told us, managers accepted the truth.

Once you have the truth, people need aspirational goals. To cross that uncomfortable gap between the truth and the goal, you must set very achievable, step-by-step measures. The process of doing begets progress; along the way, you must remind people of how far they've come already and how much closer they are to achieving the goal. That's when you see the light in their eyes.

Set different incentive levels

Lui Chuanzhi is chairman of Legend Group of Beijing:

Our executive team needs a sense of ownership in the company. Many state-owned enterprises in China face a special challenge: They cannot give their senior executives stock. But we took an untraditional approach; we reformed our ownership structure to make Legend a joint stock company, enabling us to give all our executive team members stock. In addition, senior executives need recognition, so we provide them with opportunities to speak to the media....

Midlevel managers want to become senior managers, so they respond best to challenges - to opportunities to display and hone their talents. We set very high performance standards for our middle managers, and we let them participate in strategic processes, in designing their own work, and in making and executing their own decisions. If they get good results, they are handsomely rewarded.

Line employees need a sense of stability. If they take responsibility and are conscientious, they earn a predictable bonus. We also tie team performance to company or unit performance, and individual performance to team performance.