Strategic Change And Business Transformation Commerce Essay

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All businesses in todays world must hold change with the changing environment. Every business has goals but its basic goal is to change with the changing market and its environment. (by John P Kotter).

Meaning of Change Management:- Change management is not very important to every working environments. Most of the leaders and managers use the skill of the this management just to compete in market. And they should keep 5 principles in mind while doing change management:-

Every people in organization react differently to changing environment.

All the employees have basic needs which mangers have to fulfil.

Often loss occurs when change is implemented and employees pass through loss curve.

Sales managers main motive is to increase the sales of organization and earn profit. Thus they play the role of intermediary between sales department and corporate strategy. Sales managers solve the problems of sales persons by giving them feedback and teach them effective selling skills. This motivates the sales person to achieve their targets and quotas and grow their skills in longer term.

Thus sales manager will have complete study of market, then he prepares his sales team, develop strategies to achieve the sales target, if there is no sales experts then hire him from outside the organization.

New Product development :-

Here the role played by middle managers are very important in new product development.

Here managers will:-

give contribution to companies growth and survival,

Manager will be treated and known as people developer,

He will be able to solve the conflicts among workers and teach good team work,

He will be respected by his own team employees,

He will be able to manage resources more adequately,

He will develop his skills like training and leadership etc.

Market driven change:-

In this the role of senior management teams is to understand the abilities of the organization and keep the customers happy and attract new customers. There are 3 features of market orientation

culture.

capabilities

and configuration

also the objectives is to give tools so that manager can bring the organization towards market- driven and give the guidance of the process of change at corporate, business, and functional level of strategy.

Task 2.

Critically evaluate the different methods of corporate growth in varying contexts.

2.1 Key drivers for origination growth are

1. mission statement- identify the task

2. vision- identify the aim of the organization.

3. organising values- motive of increasing the values of organisation.

4. strategy- planning a strategy.

5. workers are greatest assets- so that can achieve goals of organization

6. emphasis on creativity & innovation - in order to produce unique products

7. change with change………- to cope with the changing environments and achieve competitive advantage

Firm infrastructure M

Human resource management A

Development of technology R

Procurement

Inbound Operations Outbound Marketing Service G

Logistics Logistics and Sales I

N

2.2VALUE CHAIN:-

Supporting

activities

Primary Activities

Michael Porter suggested that the organisation is split into 'primary activities' and 'support activities'

PRIMARY ACTIVITIES

PROCESS IN WHICH RAW MATERAIL IS CONVWTED INTO FINAL PRODUCT

:-

SUPPORT ACTIVITIES-

it helps the company to fulfil its primary objectives

2.3 PORTER'S 5 FORCES MODEL:-

THREAT OF NEW ENTRANTS

COMPETITIVE RIVALRY WITHIN AN INDUSTRY.

BARGAINING POWER OF SUPPLIERS

BARGAINING POWER OF CUSTOMERS

THREAT OF SUBSTITUTE PRODUCTS

PORTERS THREE GENERIC STRATEGIES FOR ATTAINING COMPETETIVE ADVANTAGE:-

1. Cost leadership:- firm as lowest cost producer, if new technology is introduced then the firm may lose the position of cost leadership.

2. Differentiation--- offers something unique to the market in terms of design, technology, brand image etc, that is sufficiently valued by customers to permit the firms to charge premium prices.

3. Focus---firm either applies cost leadership or differentiation to a narrow segment of the market in order to gain advantage over the more broadly based competition, even customers are loyal to the firm because of this reason new competitor cannot enter into the market.

2.4 WHY IBM HAS LOST ITS DIRECTION:-

IBM (big blue) is the huge computer maker in the world. In 1986 they lose their direction because, their aim was to gain total domination of the market. IBM lost $5 millions on computer operating systems, because it was not changing from mainframe computers to personal computers. Also IBM moved to offer personal computers in market when its price was low and others were producing same computers and micro chip. Thus IBM could not cope with the competitive market. But later IBM went in a different direction by investing billions in their offerings of services. IBM did some biggest acquisitions and by such investments it created food-tracking systems, Stockholm's system and IBM worked with 30 partners and was known as leader to rework on London's system.

Market segmentation:-

It looks at the market in which there are different customers with different needs and wants.

Organizations adopt market segmentation as they lack to cope up in the competitive market. Anyhow market segmentation is treated as the best strategy. There are some levels of market segmentation:-

1. segment marketing- division of market in segments.

2. individual marketing- main focus on individual customers.

3. niche marketing- having a sub division of a segment were the needs are unsatisfied.

4. local marketing- having a clear idea about markets and making products to fulfil local needs.

Conclusion:-

Thus IBM didn't focus on these market segmentation and product development in order to compete in the competitive market.

Task 3

Critically evaluate failure, consolidation and recovery strategies in different contexts.

3.1 Reasons for corporate failure:-

organisations lose its competitive advantage over its competitors,.

organizations do not change with the changing environment mainly competitive markets,

the decision making management may not be ready to change their decisions, as how they make decisions and implement the processes cannot be changed immediately when inertia exists,

organizations may have prior strategic commitment, which limits to be competent in market,

Thus, many successful companies do not change their strategies with a thought that their success is for life time and no one can compete with them, but due to this mentality they think they are specialised in their field and inner locked but reality is something else.

3.2 Steps to avoid failure:-

1. managers has to focus on key elements of achieving competitive advantage.

2. there are four key elements of competitive advantage they are efficiency, innovation, quality and

response to customers.

3. organisations has to develop different capabilities so that they can compete with others.

4. last and not the least organization's ability to change with the changing environment.

3.3Definition of joint ventures:-

Two or more companies combine together for their mutual benefits. It is a long-term commitment among that companies.

Advantages and disadvantages of joint venture:-

Advantages

Disadvantages

imports from other companies are restricted by trade barriers.

More capital investment is needed

More foreign investment is generated.

Employees and management do high level of commitment

Relationships should be long term in order to create demand.

It is too of time consumption

In order to increase market share company need to focus on its position in market

Differences in culture and difficulties in communication.

3.4 Definition of strategic alliances:-

Strategic alliance means collaboration of two or more companies, including following:-

1. contracts designing,

2. transfer of technology agreement,

3. there will be product development jointly,

4. purchasing and distributing agreements and good advice.

Advantages of Partnering

There is more capital investment in business.

Risk is reduced in partnership business

Ability of credits are more

Each others technology is used

Expenses are divided among companies

There is more flexibility in the actions of the organization

More time can be spend on research and developments

Focuses more on customers.

Disadvantages of Partnering

Profit has to be divided into partners accordingly.

There is less opportunities.

Also there are several other obstacles like partnership laws.

Advantages of Alliances:-

It is less costly than Buying another company

Cost saving

It has better supply of chain management

Has the capability of manufacturing

Risk is reduced

If already invested once it avoids the need of reinvestment

Increases the relationship of business and territory

Also focuses on the weak areas of the company.

Disadvantages of Alliances

There is a chances of more Distraction

It divides the whole market and also there is chances of future competition.

Advantages of collaboration

It has the effect of synergy in business, which is 2+2=5.

Company enter to a wide area of knowledge, skills and contacts

It gives more attention to the centre part of the business.

It is very easy to get the resources.

When two company collaborates they can compete better in competitive market as both have better resources and also good and more experience

Disadvantages of collaboration

It also divide the market and also increase the future competition

There is increase in distraction and responsibility and also restriction of opportunities.

3.5 Example of car industry :-

TATA MOTORS FORM A JOINT VENTURE WITH BRAZIL-BASED MARCO POLO

MARCOPOLO, THE BRAZIL-BASED GLOBAL LEADER IN BODY-BUILDING FOR BUSES AND COACHES

IT IS AN INTERNATIONALLY RENOWNED BUS BODY MAKER. IT MAKES HIGH-END LUXURY COACHES.

IT IS A RENOWNED SUPPLIER. SOMETIME BACK MARCO POLO WAS TRYING TO ENTER THE INDIAN MARKET.

ONE OF THE LARGEST MANUFACTURERS OF BUS BODIES IN THE WORLD

TATA MOTORS, INDIA'S LARGEST AUTOMOBILE COMPANY

IT IS ALSO THE WORLD'S FIFTH LARGEST MEDIUM AND HEAVY TRUCK MANUFACTURER

AND THE SECOND LARGEST HEAVY BUS MANUFACTURER. TATA CARS, BUSES AND TRUCKS

WITH OVER 3 MILLION TATA VEHICLES PLYING IN INDIA, IT IS THE LEADER IN COMMERCIAL VEHICLES AND THE SECOND LARGEST IN PASSENGER CARS

Manufacture and assemble buses and coaches

49% of stakes

51% of stake

ADVANTAGES OF THE JOINT VENTURE

TATA MOTORS & MARCOPOLO both are leaders in their respective field. Tata is known for its Tata Motors to strengthen its bus business and emerge as an internationally renowned bus manufacture. It also have nineteen year of experience in this sector of bus industry. but now due to ever increasing competition in Indian market it was hard to sustain and keep their market position

On the other hand MARCOPOLO which is the leading manufactures IT IS AN INTERNATIONALLY RENOWNED BUS BODY MAKER. IT MAKES HIGH-END LUXURY COACHES was finding its extremely difficult to inter in INDIAN domestic market.

So with this mutual symbiosis relation Tata get the competitive edge over its competitor as it have now the support of one of the best manufacturing company so Tata can assess the technology its java company.

& Marco polo can easily enter into Indian market and use the experience of Tata and its business is almost set he don't have to go for looking new customers.

3.6 ALLOCATION OF RESOURCES:-

When allocating resources there are three basic categories :-

1. to put all resources in order to fulfil the organization's objectives.

2. key strategies are like its support.

3. strategy covered with risk.

Always we have to keep in mind is that when we do allocation of resources, it may not take into account the resources which are existing in organization effectively and strategically.

3.7Resources of organization are as follows:-

Task 4

Recommend appropriate strategies for action having assessed the risk arising from that decision.

4.1Definition of risk analysis:-

Risk analysis is the study of all the uncertain factors and risks that an organization faces in many areas of its own business.

First of all every organizations or businesses identify the risks, have a clear picture of how and when risk is to be arise, and its impact. Risk managers first of all analyse the risk then take actions which will eliminate these risks.

The main role played by risk management in the firms, is to measure the financial risks involved in all the investment done by the firm, trading, or other activity, and distribute a risk budget to all of these activities. 

4.2Review of risk models:-

Models and Simulation

By performing an experiment, we can learn how to deal with uncertainty. It is very dangerous if we perform an experiment in real world. Most of the people bring in uncertainty into their own life experiments like tossing of coin, rolling of dice etc. Only one experiment may not tell very much, but if an individual perform a simulation which has many experiments and collect its results then he or she can learn more.

If an individual have skills and knowledge to create a mathematical model or software tools to process on computers then he or she can perform simulation at a very less cost and time, with so many trials. As we all know computer based simulation is so popular in this real world.

For example:-

IT Failure Statistics because of the following reasons:-

About 50% of systems are failed

30% of its success rates are low.

At least 80% of warehousing projects, ERP projects. CRM projects are failed.

Sources of risk

Context understanding is totally failed.

Main focus on technology rather than work in progress and goals.

Complexity is fully underestimated.

Diversity and deviation is ignored .

Models of leadership is used such as command.

Communication style and amounts are inappropriate.

There is less trust and faithfulness.

There is less number of people.

Development of risk

Whilst the profile of risk management has undoubtedly risen in the last decade, there has been no huge breakthrough or development of a high profile 'must have' management technique. In the 1990s the idea of managing risk throughout the organisation was relatively novel and most companies still focused on specific, mainly financial and insurable risks. The development of risk management has been characterised by a gradual acceptance that a good risk management process is an essential part of being in business. The role of the risk manager has developed and has been refined, although it is still relatively new and appointments of board-level risk directors are only just starting to be made.

Products for managing risk have developed too. Financial and insurance markets are no longer so clearly delineated and products cross into both areas. Insurance is no longer seen as the automatic solution to deal with risk. There is more discussion of companies choosing their 'risk appetite' and a greater understanding that companies need to look at their own risk culture. There is a better appreciation that good communication and a learning culture, with openness, lack of blame and analysis of mistakes, is the key to effective risk management.

4.3 RISK MANAGEMENT

Management of risk can be done in 6 step process

1) Establish the context

2) Identify the risk

3) Analyze the risk

4) Evaluate the risk

5) Treat the risk

6) Monitor and review

RISK ANALYSIS MATRIX

LIKELYHOOD

CERTAIN

7

14

21

28

35

42

49

56

63

ALMOST

CERTAIN

6

12

18

24

30

36

42

48

54

PROBABILITY

5

10

15

20

25

30

35

40

45

LIKELY

4

8

12

16

20

24

28

32

36

MAY HAPPEN

3

6

9

12

15

18

21

24

27

IMPROVABLE

2

4

6

8

10

12

14

16

18

UNLIKELY

1

2

3

4

5

6

7

8

9

KEY

NOT SIGNIFICANT

1-3

VERY LOW

4-11

MODERATE

12-24

HIGH

25-36

VERY HIGH

37 & above

RISK MANAGEMENT PROCESS

RISK CLASSIFICATION

QUANTATIVE RISK PROJECT

RISK IDENTIFICATION

RISK ANALYSIS

RISK MANAGEMENT

CALCULATED CONTEGENCY

RISK PLANNING

ACCEPTABLE

RISK

RISK MANAGEMENT PLANNING

RECORD & REVIEW

REPORT ON SITUATIONAL RISK

RECORD & REVIEW

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