Consists of activities such as task coordination, allocation and supervision, which are directed towards getting of organizational aims. It can be considered as the glass or outlook through which individuals see their organization and its environment. Many organizations have hierarchical structures, but not all work specialization:
Manager gives the task to his employees and make the subgroups or division of labour, they will perform better according to their work experience and skill.
Honda car company makes the subgroups they will divide into many categories 1st worker will design the car 2nd worker will paint the car 3rd worker will put the front and back wheel in of the car another person will install the engine of the car and so on.
Workers get expert to his work and there will be rare chances of mistake.
By doing the repeated job again and again workers feel bored with what they do.
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Jobs are divided into many levels, There are many types of departmentalization which are given below:
1. Functional departmentalization:
In this type of departmentalization group of peoples combine together they preform common task that use common technology, and material.
HR, Finance, etc.
Skilled is mutual and related using same equipment, materials are accessed more powerfully.
One function is adopted by one department.
There is poor management in this department.
In this department communications problems will be arise.
2. Product departmentalization:
This is a type of departmentalization in which grouped jobs on the beginning of products manufactured by an organization.
Proctor and gambles company.
Work experience will be more improved many salesmen sell the product again and there work skill will be improved.
In this department management of another functional activities are pass of one person manager.
In this department administration cost will be raise because of extend beyond of specialize and services.
Another disadvantage of this departmentalization is that it cut of the department from the other parts of the process. This department may be became very extremely distributed with its individual task in its place performing arts in habits that will profit in generally production process and firms.
3. Geographical Departmentalization:
In this departmentalization grouping actions on the basis of field, if an organization's are geographically single it can group work on geography.
Coca Cola Company has focused the company's procedure in twice large
Geographic areas-the northern American sector and the international sector, which can be embraced the Pacific Rim, the European community, northeast Europe, Africa and Latin American groups.
In this departmentalization group of people's expert in his jobs they doing jobs every time they can achieve easily, what they can do they understand.
It has an advantage to get quick response of different markets.
Organization to attract the customers they will decrease the costs.
It has an disadvantage duplication problems will be create in firm cases.
Another disadvantage it has complex to manage across department.
4. Process departmentalization:
In this type of departmentalization they doing one specific task given they will performed. E.g. the process of converting cheque into cash in the bank.
5. Customer departmentalization:
Departmentalization in which task and jobs are performed according to the needs and wants of customers. E.g. A cross functional team consisting of managers from accounting, finance, and marketing is created to prepare a technology plan.
Chain of command:
Order in which power and authority in an organization is wielded and pass on top management to every employee at every level of the organization information flow downward along the chain of command and accountability flows upward. E.g. Military is an example of straight chain of command which extend in unbroken line from the top self confidence to in ranks. This is also called line of command.
Span of control:
Always on Time
Marked to Standard
The span of control is a word to make in organization theory, but now used more normally in business management, particularly human resource management span of control to refer the number of subordinates supervisor has.
There are two way of span of control
Tall and narrow
Flat and wide
Tall and narrow:
This type of organization size of structure is tall and narrow.
Large number of hierarchy level.
They can easily solve the problems.
Communication problems will be arising, as decisions take time to 'filter down'.
Same task passes trough too many levels.
Conflict with each others.
Flat and wide:
This type of organization size of structure is flat and wide.
Small number of hierarchy level.
More chances for delegation.
Small number of steps on promotional ladders.
Manager may have more than one of the numbers of employees.
Growth of organization may be limit or hinder.
The degree to which authority for making most decision at the top level of the organization.
Top level manager take the decision there will no interference of lower level of organization.
Procedures, policies and records can be standardized transition-wide.
The degree to which authority for making decision of all hierarchy levels of the organization.
In short time they can solve the problems easily.
Conflict with each levels of organization.
This type of structure in which organization hold team of people make the various section of business. When team makes the specific project for any purposes they will be guide by a project manager. Often the team will only exist for the time of project and structures are usually deployed to create a new products and services.
When the needs of project individuals can be select.
If the project manager creates a project teams a lot of costs can be increased.
It is an idea in the field of management and organizational studies which can be describes the experience, attitudes, beliefs, psychology and value (cultural values and personal) of an organization. the values and norms that are shared by groups and peoples in an organization they control the path of which they can relate with each others and with stakeholders exterior of organization.
There are four types of cultures which can be below.
Power culture is a culture in which one organization has more authority over another organization. .e.g. state bank has more authority over all the banks of Pakistan. If SBP takes changes in their laws or regulations then the banks all over Pakistan will follow the SBP.
Role culture is a culture in which each company divide themselves into many functions and after that they give every employee a specific role. Every employee got specialized in that role which increases organization productivity.
Person culture is a culture which emphasize on aim of organization. The target of the organization is to complete their aim. These cultures are found in those organizations which are not profit oriented.
Task culture is a culture which is submitted to a team to perform a specific task. The task is performed according to a due date. Task culture has some benefits because an employee feels inspired because he/she is selected in team to perform a task.
P2:- Discuss how the organizational structure and culture affect the organization positively and negatively.
Affect of organizational culture:
The affect of organizational culture depends upon the organization. If an organizational culture will be strong then it will make every employee to work hard or to become more efficient. It includes workers, staff, CEO Etc. some people get bored while doing their job which can affect the organization. By having strong culture it creates the enjoyment in job which leads to do more effort. Organization culture helps the employee to keep them on top, if the workers are satisfied according to the culture of organization then they won't leave the job, which leads to stay in their own organization. A strong organizational culture attracts more talented people towards itself. So if the organization culture will be strong then it will create positive affect and if it is weak then it will be negative.
Affect of organizational structure:
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The structure of an organization is important to the performance of the organization.
Two basic features of an organization structure are its width i.e. spans of control & its height i.e. the levels of decentralization.
From different observations done by different researchers it is stated that the change in the organizational structure, through its shape in terms of width and height, would affect the whole organizational performance.
According to researchers and theorists there are two possible models of structures.
1-Flat: It consists of cross-functional team, with low formalization, possessing broad information and relying on fast decision making.
2-Tall: Its structure would be the opposite i.e. widespread departmentalization, high formalization, limited information and centralization.
Therefore, the Flat model of structure would have the maximum width (span of control) but the minimum height (level), while the Tall model of structure would have the reverse, minimum span of control and maximum level. These are illustrated in Figure 1.
P3:- Analyze the factor which influence the behavior at work.
In this area discuss the factors that influence behavior at work, your answer should focus on personality, traits and types, its relevance in understanding self and others
According to John Ivancevich and Michael Mattson, the major factors that influence individual differences in behavioural patterns are demographic factors, abilities and skills, perception, attitudes and personality as discussed below:-
1. Demographic Factors: The demographic factors depend on someone's background, education, nationality, race, age, sex, etc. Organisations prefer those persons that belong to good socio-economic background, well educated, young and energetic etc as they can perform better than the others. The young and dynamic professionals that have good knowledge and perfect communication skills are always in great demand by the organisations. The study of demographic factors is significant as it helps managers to pick the suitable candidate for a specific job.
2. Abilities and Skills: The physical capability of an individual to do something is called ability. Skill can be defined as the ability to act in such a way that allows a person to carry a job well & perfectly. The individual behaviour and performance is highly influenced by the level of ability and skills. A person can perform well in the organisation if his or her abilities and skills are matched with the job requirement. The managers plays vital role in matching the abilities and skills of the employees with the particular job requirement.
3. Perception: Every individual on the basis of his/her reference can organize and interpret environmental stimuli. There are many factors that influence the perception of an individual. The study of perception plays important role for the managers. It is important for mangers to create the favourable work environment so that employees perceive them in a best way, in other words they should consider the organisation as their own. The employees or workers are likely to perform better if they are going to perceive it in a positive & justified way. They will start working hard once they become satisfied by the environment and their managers.
4. Attitude: According to psychologists, attitude can be defined as a tendency to respond favourably or unfavourably to certain objects, persons or situations. The factors such as family, society, culture and organisational factors influence the formation of attitude. The managers in an organisation need to study the variables related to job as to create the work environment in a favourable way that employees are willingly form a positive attitude towards their respective jobs. The employees can perform better in the organisation if they form a positive attitude. It helps in organisation's growth and development.
5. Personality: Personality comes from the Greek word "persona", meaning "mask"
Personality can be defined as the study of the characteristics and distinctive traits of an individual, the inter-relations between them and the way in which a person responds and adjusts to other people and situations. The several factors that influence the personality of an individual are heredity, family, society, culture and situation. It implies to the fact that individuals differ in their manner while responding to the organizational environment. Personality can be termed as the most complicated aspect of human beings that influences their behaviour in big way. It can be determined that the study of personality traits offers an opportunity to understand the individuals. It helps them properly in directing their effort and motivating them for the completion of the organisational goal. It refers to the fact that different environmental factors may generate different responses. The study of these responses is very important for the organisation. Every organisation demands a particular type of behaviour from their employees and such behaviours can be discovered through observation, learning, exposure, training, etc.
P4:- analyze how organizational theory underpins principles and practices of organizing and of management.
Organization theory refers to the study of the phenomena of organizational Functioning and performance and of the behavior of Groups and individuals working in them.The main theories to study the organization are:-
Efficiency and productivity can be improved by improving the efficiency of the workers. F.W.Taylor is considered as the father of scientific management. He considered men also as machines, well maintained machines produce more so also men. He assumed there is one best method for every job. He introduced division of labour. Standardization of task. Analysis work ,and work and time measurement. He introduced the concept of fair day wages for fair days.
According to him production is improved by cooperation and not by discord. The goal is maximization of output and not restriction. The best method of doing a job needs for appropriate tools, motivation and fair wages.
Organization designed to accomplish large scale administrative tasks by systematically coordinating the work of many individuals. A German sociologist Max Weber introduced the idea of Bureaucracy.
A person is said to have power or authority, If within the social framework his will can be enforced on others despite resistance for structuring human groups, becomes a special instance of power called "authority" or domination.
Organization is as a system in which coordinated personal activities of two or more persons held together by a capacity to generate a common purpose, by willingness on the part of its members to contribute to its processes and by effective communications.
It is a class of behavioral theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation. It is also called a situational theory.
Functions of Management:
It is the first tool of the functions in the management process. The difference between a successful and unsuccessful manager lies within the planning procedure. Planning is the logical thinking through goals and making the decision as to what needs to be accomplished in order to reach the organizations' objectives.
A manager must know their subordinates and what they are capable of in order to organize the most valuable resources a company has, its employees. This is achieved through management staffing the work division, setting up the training for the employees, acquiring resources, and organizing the work group into a productive team.
Organizational success is determined by the quality of leadership. "A leader can be a manager, but a manager is not necessarily a leader," says Gemmy Allen. Leadership is the power of persuasion of one person over others to inspire actions towards achieving the goals of the company.
The process that guarantees plans are being implemented properly is the controlling process. According to Gemmy Allen 'Controlling is the final link in the functional chain of management activities and brings the functions of management cycle full circle.'
According to Henry Mintzberg there are ten roles which are briefly developed here:
All social, inspiration, legal and ceremonial. The manager is seen as a symbol of status and authority.
Duties are at the heart of the manager-subordinate relationship and include structuring and motivating subordinates, overseeing their progress, promoting and encouraging their development, and balancing effectiveness.
Describes the information and communication obligations of a manager. One must network and engage in information exchange to gain access to knowledge bases.
Duties include assessing internal operations, a department's success and the problems and opportunities which may arise. All the information gained in this capacity must be stored and maintained.
Highlights factual or value based external views into the organisation and to subordinates. This requires both filtering and delegation skills.
Serves in a PR capacity by informing and lobbying others to keep key stakeholders updated about the operations of the organisation.
Roles encourage managers to create improvement projects and work to delegate, empower and supervise teams in the development process.
A generalist role that takes charge when an organisation is unexpectedly upset or transformed and requires calming and support.
Describes the responsibility of allocating and overseeing financial, material and personnel resources.
Negotiator: Is a specific task which is integral for the spokesman, figurehead and resource allocator roles.
Managerial authority is the position that empowers a manager to exercise command and control over those placed under him for realization of the assigned role in an organisation. Originally, the overall authority is centrally vested in person of the manager. However, it is not possible for a single man to effectively execute and monitor each and every task. Therefore, various functions with a suitable authority are devolved downwards to concerned subordinates for better output. The practice also provides a rationale for 'organisational tree' specifying various powers and responsibilities in both vertical and lateral hierarchy.
P5: This will be the comparative analysis of the two organization, you will do the comparison with another organization (assigned to another group). This will be covered through the presentation. You must give soft and hard copy of your presentation to the teacher.
The organisation that I have chosen to represent is the Alokozay Group Of Companies. It's Headquartered in Jebel Ali Free Zone, Dubai's extensive free trade zone, the Group has offices in over 40 countries in the Middle East, Central Asia, Asia, Europe & Africa.
With a solid base of over 5000 committed and professional staff and each branch having its own extensive distribution network, The Alokozay Group efficiently runs its operations worldwide.
Believing strongly in the 'Art of Business', the company's mission of becoming a leading global brand is a continuing saga. With considerable expertise in areas of FMCG, Real Estate, Hospitality & Petroleum, The Alokozay Group aims to further expand by building lasting partnerships with international brands on a mutually beneficial platform.: http://www.alokozay.com/pro_alogrp/frontend_en/content_det.php?contid=2) The other organisation that I chose to compare my organisation with is Haleeb Foods.
Haleeb Foods Limited, the largest Dairy Processing company in Pakistan, is the first dairy unit to acquire ISO 9002, HACCP and ISO 14000 certification. Haleeb Foods is committed to satisfy its consumers with wholesome and healthy food products of the highest international standards. (Reference: http://haleebfoods.com/haleeb/)
Now according to the management approaches , both organisation varies.
Division of labour :
Alokozay group of companies is situated all across the continent and specializes in various products therefore having many different fields of job so taking division of labour to new heights.
Haleeb food's is also a major company although it's only situated in Pakistan but still it has managed to successfully achieve division of labour.
Authority and Responsibility :
Alokozay, as it is situated all across the world, having many different products, various branches and a lot of employees so the authority and responsibility has been divided into many sub-ordinates managing that particular area or that specific product.
Haleeb food's, as it is only situated in Pakistan therefore their burdens are much less and their authority and responsibility is divided into less sub-ordinates, but still their authority and responsibility is carried out righteously.
Now according to human relations approach;
Focus on human beings rather than mechanics or economics.
Alokozay group of company and haleeb food's both have the same main objective irrespective of one being a global organisation and the other only domestic. They aim to satisfy the human needs and solely focus on humans and their need's in the modern world.
Now according to system approach ;
Organisation are open systems that are constantly interacting with external environment.
Alokozay, as it is a global organization and can afford particularly anything and also want to become a leading company so they keep in check with the people and today's demand and what the people want. They then would think of bringing a new product that would be in demand.
Whereas, haleeb food's is an organization which is already satisfied with its progress and would only aim on improving its quality standards.
Organizational culture creates a number of various concepts, strategies, and situations which affect every level of planning when it comes to any type of hierarchical institution. The implications of organizational structure and culture apply to companies, corporations, charitable organizations, governments, and even sports teams/organizations.
Organizational culture and the organizational structure that both partially defines, and is partially defined by, that very culture. Understanding how the internal structure and culture operates, and machinery behind the scenes that runs it, will allow those within the organizational culture to organize and strengthen the good, cut away the bad, and actually manufacture an environment that breeds and encourages success among its members.
Why are the culture and the internal processes so important? Many leadership theorists and coaches have found that ineffective leadership often tends to be one of the major causes of an organization's diminishing and weakening. Even a government example from history can be ancient Rome. During a series of terrible emperors, the structure and culture was strong enough to often overcome it, even for decades at a time-but without strong top end leadership eventually the mid level governing and organizational culture collapsed, resulting in the eventual failure of the culture.
To be healthy for the long term, a corporation must have strong leadership and a strong organizational culture. Even though some of the strongest companies or organizations may be able to tread water for a long period of time, or even do well, if the culture starts to erode, it's only a matter of time until the larger structure collapses.
So if top leadership is so important, why does the rest of the organizational culture also have to be functional in order to have an efficient governing body? Great leadership is needed for an organization to have strong culture, but the reversal is also true. Even great organizational culture will eventually dull, and then erode completely without strong leadership to help keep everything running smoothly.
Leadership and organizational culture are seen by theorists and practicing business executives alike as being tightly intertwined. Leaders must have a deep understanding of the identity and impact of the organizational culture in order to understand what kind of management and adjustment is needed within the company, as well as knowing how to communicate their vision to the rest of the company.
The model and study of how organizational structure and organizational culture works makes the practical study of implications of organizational structure and culture important. From corporations to government to sports teams, the study of how structure and culture impacts the overall picture can show a better way to make an entity work. Use a sports team as an example: most teams who have the head coach as the GM doesn't do as well as the teams who split the duties between two individuals who can work together towards the same common goal.
This has shown that an excellent organizational structure with good personnel that has everyone looking at the same goal is better than excellent but conflicted personnel. Those are only a few of the implications that result from a close study of corporate culture and structure.
M2:- Discuss what approach of management adopted by the organization, with
focus on management functions, roles and authority.
Ufone is a wholly owned contributory of PTCL established to operate cellular telephony. The company commence its operations, under the name of Ufone, from Islamabad on January 29, 2001.
During the year, as an end result of PTCL's privatization, 26% of its shares were acquired by Emirates Telecommunication Corporation (Etisalat). Being part of PTCL, the management of Ufone has also been handed over to Etisalat. During the year July 2005 to June 2006, Ufone sustained on the path to success. The Company further spreader its coverage and has added new cities and highways. Ufone has network coverage in more than 3475 locations and across main highways of the country.
Responsibility towards owners the primary responsibilities of management is to assure a fair and reasonable rate of return on capital and fair return on savings can be firmed on the basis of difference in the risks of business in different fields of activity. With the growth of business the shareholders can also expect admiration in the value of their capital.
Responsibility towards employees:-
Responsibility towards employees relate to the fair-haired wages and salaries, satisfactory work environment, labor management relations and employee interests. Fair wages should be based on labor efficiency, the existing wage rates in the same or bordering areas and relative importance of jobs. Manager's salaries and allowances are expected to be related with their responsibility inventiveness and skill. The spread between minimum wages and highest salaries should be reasonable. Employees are expected to build up and maintain good relationships between superior and subordinates. Another aspect of responsibility towards employees is the provision of welfare facilities like safety and security of working conditions, medical facilities, and housing, canteen, leave and retirement benefits.
Responsibility towards consumers:-
in a competitive market, serving consumers is supposed to be a prime concern of management. But in reality perfect competition does not succeed in all product markets. In the occasion of lack of supply there is no mechanical correction. Besides consumers are often victims of unfair trade practices and unprincipled conduct of business. Buyer interests are thus protected to some extent with laws and pressure of organized consumer groups. Management should look forward to these developments, satisfy consumer needs and protect consumer interests. Goods must be of appropriate standard and quality and be available in sufficient quantities at reasonable prices. Management should avoid resorting to signpost or creating artificial scarcity as well as false and deceptive advertisements.
Managerial Role in Ufone:-
Mangers of Ufone take surveys and collect the information from different sources regarding the competitator's, want of the customers. Mangers collect all these data from different newspaper, magazines, etc. Managers are the internal and external information providers to their organization.
Basically spokes man is a man who speaks on behalf of his organization. Spokesperson of Ufone has the responsibilities to transmit the information, data, policies and instruction's of the organization to the outsider's.
Functions of Management:-
Managers of Ufone have the responsibilities to check on the employees of the organization and give them tasks. Managers give orders, instruction; announce the policies etc to their subordinates. All of them obey their orders/instructions properly without any objection.
Problems in Organizational Cultures
1. Don't oversimplify culture or confuse it with climate, values, or corporate philosophy. CultureÂ underliesÂ and largelyÂ determinesÂ these other variables. Trying to change values or climate without getting at the underlying culture will be a futile effort.
2. Don't label culture as solely a human resources (read "touchy-feely") aspect of an organization, affecting only its human side. The impact of culture goes far beyond the human side of the organization to affect and influence its basic mission and goals.
3. Don't assume that the leader can manipulate culture as he or she can control many other aspects of the organization. Culture, because it is largely determined and controlled by the members of the organization, not the leaders, is different. Culture may end up controlling the leader rather than being controlled by him or her.
4. Don't assume that there is a "correct" culture, or that a strong culture is better than a weak one. It should be apparent that different cultures may fit different organizations and their environments, and that the desirability of a strong culture depends on how well it supports the organization's strategic goals and objectives.
5. Don't assume that all the aspects of an organization's culture are important, or will have a major impact on the functioning of the organization. Some elements of an organization's culture may have little impact on its functioning, and the leader must distinguish which elements are important, and focus on those.
Curing the flaws in organizational analysis will require a sustained emphasis on rebuilding analytic capabilities, refocusing on human cognitive strengths enhanced by innovative support tools, and restoring professional standards and ethos among the analysts themselves. Most of the recent reform recommendations notwithstanding, more guidelines and tighter management oversight are no substitute for analytic expertise, deep understanding, and self-imposed professional discipline all achieved not only by formal education and training, but also through assimilation from following experienced mentors. Moreover, neither curiosity nor expertise on the part of the individual analysts can be restored by directives from the top; they must come from an appropriate recruiting profile, effective training, continual mentoring at all levels, time to learn and practice the craft of analysis both individually and collaboratively and constraining the "tyranny of the tasking" that prevents analysts from exercising curiosity and pondering more than the obvious answer.
To ensure that the organization can provide more effective capabilities to meet the increasingly complex challenges of 21st-century security issues, this study recommends rebuilding the overall paradigm of intelligence analysis from its foundations. The essential components of this effort are:
1.Â A revamped analytic process;
2.Â An entirely revised process for recruiting, educating, training, and ensuring the professional development of analysts (including the essential aspect of mentoring);
3.Â Effective mechanisms for interactions between Organization's analysts and users;
4.Â A proper process for "proof," validation, and review of analytic products and services;
5.Â An institutionalized lessons-learned process;
6.Â Meaningful processes for collaboration within the Organization's Community.
Furthermore, although implementing each of these processes separately would produce significant improvements in the quality of analysis, a more effective approach would be to mount a broad-gauged, systematic, and integrated effort to deal with the entire analysis process.
An understanding of culture, and how to transform it, is a crucial skill for leaders trying to achieve strategic outcomes. Strategic leaders have the best perspective, because of their position in the organization, to see the dynamics of the culture, what should remain, and what needs transformation. This is the essence of strategic success.
ForÂ successÂ in the present world, one need to consider not only the internal environment of the company consisting of its resources and employees, but also needs to consider the external factors. These aspects cannot be stopped but one can adjust accordingly as per the changes in the economical, social or political pressures. These are theÂ external factorsÂ which consist of:
â€¢ Opponents or competitors
â€¢ The changing economic structure
â€¢ Impact of the society
â€¢ Financial arrangement
â€¢ Legal or political system
â€¢ The impact of the environment
Opponent's procedures influence the capability of work in earningÂ profits, as the basic aim of the opponent is to get advantage over the other which is obtained by either diversifying the existing products and services or by finding means to offer better options for the same worth of money. There are three stages of opposition existing in the present worldÂ organizationsÂ which can be either having a straight competition when the associations are challenging for the similar customers with the analogous products for example grocery or bakery items. Or when there is aÂ rivalry existing between goods that can be replaced with one another for example butter or margarine. Similarly when consumer's purchasing power is the main attraction for the producers it results in competition between organizations for example the entertainment sector.Â
The allocation of the scarce resources is handled by theÂ organizationÂ comprising the economic system. Economy is part of a nation which is expected to undergo phases of progress by leaps and bounds. When theÂ economyÂ is in a flourishing stage lifting the standards of living resulting in the growth of the business.
On the other hand the society is a foundation of inspirations, outlook and activities which are a part of the human affairs. However the business is subjective to change by the actions ofÂ customerÂ because of their approach and activities which alter depending on various factors such as maturity level, populace, type of vocation, and spare time activities.
Alternatively fiscalÂ classificationÂ smoothes the progress of trade alternates. Activities dealing with money basically move around producing, having a loan, expenses and banking. For the lubrication of the wheels of commerce, capital is considered to be the main oil.Â MonetaryÂ doings engross production in a network of contacts linking fiscal bodies which consists of banks, people or companies who grant loans or to whom money is given as advance, clients and contractors. A main factor affecting the business is the interest rate because it isÂ directly proportionalÂ with the cost of the company. The elevated the rate, more will be the expenditure to act as a stop on payments in the economy.Â
The rules andÂ regulationsÂ created by the legal system provide the framework on which the organization runs. Administration policy of any nation shores up by promoting activities like ventures while puts off others which result in polluting the natural environment. InÂ contrastÂ the environment is made up of all the nature's gifts bestowed upon us ranging from land to water and to air which has any sort of life in it. Progressively more productions have turned out to be alert of the affiliation between their cost-effective movements that is composing produces and providing assistance for earnings making sure the environment is not at stake at any cost.
SWOT is an acronym used to describe the particular Strengths, Weaknesses, Opportunities, and Threats that are strategic factors for a specific company. A SWOT analysis should not only result in the identification of a corporation's core competencies, but also in the identification of opportunities that the firm is not currently able to take advantage of due to a lack of appropriate resources.
The SWOT analysis framework has gained widespread acceptance because it is both simple and powerful for strategy development. However, like any planning tool, SWOT is only as good as the information it contains. Thorough market research and accurate information systems are essential for the SWOT analysis to identify key issues in the environment.
Assess your market:
What is happening externally and internally that will affect our company?
Who are our customers?
What are the strengths and weaknesses of each competitor? (Think Competitive Advantage)
What are the driving forces behind sales trends?
What are important and potentially important markets?
What is happening in the world that might affect our company?
What does it take to be successful in this market? (List the strengths all companies need to compete successfully in this market.)
Assess your company:
What do we do best?
What are our company resources - assets, intellectual property, and people?
What are our company capabilities (functions)?
Assess your competition:
How are we different from the competition?
What are the general market conditions of our business?
What needs are there for our products and services?
What are the customer-market-technology opportunities?
What are the customer's problems and complains with the current products and services in the industry?
What "If onlyâ€¦." Statements do a customer make?
OpportunityÂ an area of "need" in which a company can perform profitably.
Threat Challenge posed by an unfavorable trend or development that would lead (in absence of a defensive marketing action) to deterioration in profits/sales.
An evaluation needs to be completed drawing conclusions about how the opportunities and threats may affect the firm.
EXTERNAL: MACRO- demographic/economic, technological, social/cultural, political/legal MICRO- customers, competitors, channels, suppliers, publics INTERNAL RESOURCES: the firm
Competitor analysis is a critical aspect of this step.
Identify the actual competitors as well as substitutes.
Assess competitors' objectives, strategies, strengths & weaknesses, and reaction patterns.
Select which competitors to attack or avoid.
The Internal Analysis of strengths and weaknesses focuses on internal factors that give an organization certain advantages and disadvantages in meeting the needs of its target market. Strengths refer to core competencies that give the firm an advantage in meeting the needs of its target markets. Any analysis of company strengths should be market oriented/customer focused because strengths are only meaningful when they assist the firm in meeting customer needs. Weaknesses refer to any limitations a company faces in developing or implementing a strategy (?). Weaknesses should also be examined from a customer perspective because customers often perceive weaknesses that a company cannot see. Being market focused when analyzing strengths and weaknesses does not mean that non-market oriented strengths and weaknesses should be forgotten. Rather, it suggests that all firms should tie their strengths and weaknesses to customer requirements. Only those strengths that relate to satisfying a customer need should be considered true core competencies.Â (Marketing and Its Environment, pg 44)
The following area analyses are used to look at all internal factors affecting a company:
Resources: Profitability, sales, product quality brand associations, existing overall brand, relative cost of this new product, employee capability, product portfolio analysis
Capabilities: Goal: To identify internal strategic strengths, weaknesses, problems, constraints and uncertainties
The External Analysis examines opportunities and threats that exist in the environment. Both opportunities and threats exist independently of the firm. The way to differentiate between a strength or weakness from an opportunity or threat is to ask: Would this issue exist if the company did not exist? If the answer is yes, it should be considered external to the firm. Opportunities refer to favorable conditions in the environment that could produce rewards for the organization if acted upon properly. That is, opportunities are situations that exist but must be acted on if the firm is to benefit from them. Threats refer to conditions or barriers that may prevent the firms from reaching its objectives.Â (Marketing and Its Environment, pg 44)
The following area analyses are used to look at all external factors affecting a company:
Customer analysis: Segments, motivations, unmet needs
Competitive analysis: Identify completely, put in strategic groups, evaluate performance, image, their objectives, strategies, culture, cost structure, strengths, weakness
Market analysis: Overall size, projected growth, profitability, entry barriers, cost structure, distribution system, trends, key success factors
Environmental analysis: Technological, governmental, economic, cultural, demographic, scenarios, information-need areas Goal: To identify external opportunities, threats, trends, and strategic uncertainties
The SWOT Matrix helps visualize the analysis. Also, when executing this analysis it is important to understand how these element work together. When an organization matched internal strengths to external opportunities, it creates core competencies in meeting the needs of its customers. In addition, an organization should act to convert internal weaknesses into strengths and external threats into opportunities.
Focus on your strengths. Shore up your weaknesses. Capitalize on your opportunities. Recognize your threats.
Against whom do we compete?
Who are our most intense competitors? Less intense?
Makers of substitute products?
Can these competitors be grouped into strategic groups on the basis of assets, competencies, or strategies?
Who are potential competitive entrants? What are their barriers to entry?
What are their objectives and strategies?
What is their cost structure? Do they have a cost advantage or disadvantage?
What is their image and positioning strategy?
Which are the most successful/unsuccessful competitors over time? Why?
What are the strengths and weaknesses of each competitor?
Evaluate competitors with respect to their assets and competencies.
Size and Growth:
Â What are important and potentially important markets? What are their size and growth characteristics? What markets are declining? What are the driving forces behind sales trends?
Â For each major market considers the following: Is this a business are in which the average firm will make money? How intense is the competition among existing firms? Evaluate the threats from potential entrants and substitute products. What is the bargaining power of suppliers and customers? How attractive/profitable are the market now and in the future?
Â What are the major cost and value-added components for various types of competitors?
Â What are the alternative channels of distribution? How are they changing?
Market TrendsÂ What are the trends in the market?
Key Success Factors:
Â What are the key success factors, assets and competencies needed to compete successfully? How will these change in the future?
Â An environmental analysis is the four dimension of the External Analysis. The interest is in environmental trends and events that have the potential to affect strategy. This analysis should identify such trends and events and the estimate their likelihood and impact. When conducting this type of analysis, it is easy to get bogged down in an extensive, broad survey of trends. It is necessary to restrict the analysis to those areas relevant enough to have significant impact on strategy.
This analysis is divided into five areas: economic, technological, political-legal, socio-cultural, and future.
Â What economic trends might have an impact on business activity? (Interest rates, inflation, unemployment levels, energy availability, disposable income, etc)
Â To what extent are existing technologies maturing? What technological developments or trends are affecting or could affect our industry?
Â What changes in regulation are possible? What will their impact be on our industry? What tax or other incentives are being developed that might affect strategy development? Are there political or government stability risks.
What are the current or emerging trends in lifestyle, fashions, and other components of culture? What are their implications? What demographic trends will affect the market size of the industry? (Growth rate, income, population shifts) Do these trends represent an opportunity or a threat?
What are significant trends and future events? What are the key areas of uncertainty as to trends or events that have the potential to impact strategy?
Internal Analysis:Â Understanding a business in depth is the goal of internal analysis. This analysis is based resources and capabilities of the firm.
A good starting point to identify company resources is to look at tangible, intangible and human resources.
Tangible resources are the easiest to identify and evaluate: financial resources and physical assets are identifies and valued in the firm's financial statements.
Intangible resources are largely invisible, but over time become more important to the firm than tangible assets because they can be a main source for a competitive advantage. Such intangible recourses include reputational assets (brands, image, etc.) and technological assets (proprietary technology and know-how).
Human resources or human capital are the productive services human beings offer the firm in terms of their skills, knowledge, reasoning, and decision-making abilities.