Source:
E-mail dt. 7 December 2011
EMERGING
PARADIGMS IN BUSINESS STRATEGY FOR ORGANIZATION DEVELOPMENT
Dr. R. Karuppasamy M.Com., MBA. M.Phil.,
Ph.D
Director, SNS
and
C. Arul Venkadesh MBA, PGDPM,
(Ph.D)
Assistant Professor, Coimbatore Institute of Engineering and
Technology, Coimbatore, India.
ABSTRACT
“Business, that's easily
defined - it's other people's money”
~ Peter Drucker
The increase in the competition on the markets changed in
the last ten years the approach to business management. Today companies are more process-oriented than
in the past; in fact, in order to reduce the costs and keep pace with the
market, they are adopting an end-to-end strategy that involves both customers
and suppliers to synchronize all the business activities. At the same time,
companies have understood the importance of enforcing achievement of the goals
defined by their strategy through metrics driven management. Thus, the new
requirement of managers is to ensure that all processes are effective by
continuously measuring their performance through Key Performance Indicators (KPIs) and score cards.
Communication and enforcement of the strategy is obtained
by sharing goals and measurements at all the company levels, thus promoting the
so-called information democracy. Translating the company strategy into a detailed
set of indicators that are closer to the operational
Tasks allows employees to better understand the desiderata of managers.
As stated before the neologism often used to refer to this new picture in BI is exactly BPM.
Describing BPM requires to understand how
management is carried out within a process-oriented enterprise where, beside
the classical organizational structure, a set of inter-division processes are
present.
INTRODUCTION
Business Strategy and Business Performance Management
(BPM). helps organizations to optimize business
performance by encouraging process effectiveness as well as efficient use of
financial, human, and material resources.
BPM includes DW but it also requires a brand new set of solutions that
rely on different technologies and deeply impact on the overall architecture of
the BI platform The organizational structure is a hierarchy of divisions, aimed at defining
their duties and responsibilities, and is usually organized on three different levels. At the strategic level, the global strategy
of the enterprise is decided.
The tactical level is usually composed by multiple
divisions, each controlling a set of functions; the decisions taken here are
related to the corresponding functions
and must comply with the strategy defined at the upper level. Finally, at the operational
level, the core activities are carried out; the decision power is limited to optimizing
the specific production activities in accordance with the main strategy. On the other hand, a process identifies a set of logically related tasks performed to accomplish a
defined goal.
Tata Quality Management Services Business Models
Business Processes are orthogonal to organizational
structure, in fact they
usually include tasks carried out by different divisions and require decisions at different levels. The key point of processes is that the focus
is on the global business goals rather than on the single tasks. Of course, employees
involved in processes must share the business strategy in order to synchronize
their behavior. This result can be
achieved by translating the top-level strategy into multiple goals at the lower
levels, each defined by a target value for a given indicator; each indicator
measures a specific task and should be easily understood by the employer who is in charge. This approach, depicted in Fig. 1,
is based on a closed-loop where:
1. The strategy and the corresponding targets on indicators
are influenced by the enterprise performance as inferred from the information
system;
2. The actions/decisions taken at the tactical and operational
levels are aimed at matching current and target values for indicators;
3. The actions/decisions fulfill the company strategy and determine its
performance. The closed-loop in the BPM approach Note that, while a business
strategy is with no doubt more than a simple set of target values.
The attempts made until now to share strategy policies and
directives among other levels failed owing to how every single
employee perceives the company. At least
KPIs allow managers to get results without Misunderstandings
and personal definitions, while it resulted that implementing
behavioral business rules or application code limits the autonomy of the
employees with potential loss of
flexibility.
SCOPE OF BUSINESS STRATEGY
Each separates ‘businesses should have its own business
strategy so that a multiple business enterprise will have a number of separate
business strategies. This raises the practical question of how to define the scope for each such business. Mathur and Kenyon (1997) have examined this question
rigorously. They suggest that there should be a separate competitive strategy
for each ‘offering’ defined as the unit of customer
choice.
The unit of customer choice depends on what the customer is
comparing when he or she makes the buying decision. Their many examples of offerings
suggest, for instance, that a 100g jar of Nescafé
might be a separate offering from a 200g jar of Nescafé
if the closest substitute for the customer is the same size jar of another make
of instant coffee. They see the two different sizes of jar as being different
offerings and therefore requiring different business strategies. This is
certainly theoretically elegant but may present a few problems in practice. To
divide businesses so finely is likely to be too
much work and it is unlikely that it would be possible ever to implement such fine-grained strategies. There is often a conflict between theoretical rigour
and practical constraints.
In practice, the problem is more often the reverse of the Nescafé example in that a business is defined
too broadly and, consequently, a single strategy is expected to apply to all
its facets. One reason for this is that a division or region considers a ‘business
strategy’ for its business that includes several distinct offerings. If the
genuinely different needs of the different offerings are not separated, the
resulting strategies can only be muddled and less useful than they might have
been. There is a need for a balance in choosing the scope for each ‘business’.
If the scope of the business is defined at too
low a level, the work becomes too much. If the level is too high, the analysis
loses its rigour. In Practice, the problem is usually
that this question of scope is never clearly posed, not that it would be difficult to provide a workable answer.
EMERGING BUSINESS STRATEGIC
INITIATIVES
a) Meeting the real needs of
customers
The needs of customers are one major driver of business
strategy. It is essential to understand the needs and to identify how to
satisfy these needs more fully, more exactly, or more portably than
competitors. Business strategy is therefore about beating competitors in
meeting customer needs; beating competitors for other purposes may be fun but
it is a distraction. It follows from this that a deep analysis and
understanding of customers’ Needs inessential to produce a good business
strategy. It is necessary to understand the nature and scope of customers’
needs, how these needs differ between different groups or Individuals, and how
these needs are changing. It is normally the responsibility of the marketing
function to understand these needs. Business strategy is therefore market driven
and likely to have very heavy involvement of marketing people. This does not,
however, mean that a business strategy is the same thing as a marketing strategy.Business strategy is also heavily influenced by strategic intent, by financial and human constraints, and in fact by
everything that makes the chief executive’s job different from the marketing
director’s.
In the BMW case example, there is no evidence that BMW defined clearly exactly how the BMW/Rover combination
was expected to look from the customers’ point of
view or how it would help BMW to meet customers’ needs better.
Five years after the
take-over, the BMW’s brand strategy still looked like two separate
companies. In1999, Rover launched the Rover 75 that appears to compete almost
directly with its executive models. At the same time, BMW was developing the
MX5, a four-wheel drive vehicle, in apparent competition with Rover’s Land
rover range. BMWmay have had a clear strategy for how
the merged entity would meet customer needs but we cannot detect it.
b) Exploiting genuine competence
in business strategy
The major driver of business strategy is the competence of
the enterprise. We have described various analytical techniques for measuring
resources and identifying capabilities.
The ultimate goal is to identify a unique core competence that
can provide the basis for differentiating ourselves from our competition. This
is not easy to do and probably more business strategies go wrong because they
failed to be honest in their assessment of their own capabilities than because
they misunderstood customer needs. In the Nolan, Norton case example, the
widening impact of information technologies caused the scope of Nolan, Norton’s
consulting assignments to broaden and to require larger teams with broader
skills in people and change management. This was recognized during the process
of formulating strategy and one of the reasons for selling out to Peat, Marwick
was to provide this wider skill base.
C) Providing
sustainable competitive advantage
The best business strategies are those which use the
capabilities of the firm to address customer
needs in a way which leads to sustainable competitive advantage. Chapter 8
described how competitive advantage may be assessed, but also suggested that
competitive advantage had some of the elusive qualities of the Holy Grail.In practice, business strategies may have to tolerate
less lofty achievements thanlong-term sustainable
advantage.
The business strategy has to address the issue of
competitive advantage realistically
in the context of that business. This may require an admission
that former competitive advantages are being eroded so that the strategy is as
much defensive asoffensive.As John Kay (1999) has
pointed out, businesses, like people, have to go
through good times and bad times. It is probably impossible to achieve competitive
advantage permanently and the excellent corporation that can achieve a
permanent and irreducible lead is a myth. The business strategy must describe
what the basis of competition is, how this basisis
changing, and how the strategies take advantage of these changes.
CONCLUSION
The initial task in Business management is typically the
compilation and dissemination of a mission statement. This document outlines,
in essence, the raison d'etre of an organization.
Additionally, it specifies the scope of activities an organization wishes to
undertake, coupled with the markets a firm wishes to serve & Performing a
situation analysis, self-evaluation and competitor analysis: both internal and
external; both micro-environmental and macro-environmental with this
assessment, objectives are set. These objectives should be parallel to a
time-line; some are in the short-term and others on the long-term. Business
Strategy - is concerned more with how a business competes successfully in a
particular market. It concerns strategic decisions about choice of products,
meeting needs of customers, gaining advantage over competitors, exploiting or
creating new opportunities etc
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