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ORGANIZATIONAL ANALYSIS THEORY.
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Develops theory for the analysis of an organization in the context of corporate strategic planning. Models, assessment plan, firm classifications, etc.... More...
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Paper Abstract:
Develops theory for the analysis of an organization in the context of corporate strategic planning. Models, assessment plan, firm classifications, etc.
Paper Introduction:
A THEORY FOR THE ANALYSIS OF AN ORGANIZATION WITHIN THE CONTEXT OF CORPORATE STRATEGIC PLANNING
Introduction
This research develops a theory for the analysis of an organization in relation to corporate strategic planning and for the preparation of a report based on such analysis. The major components of such an analysis should be (1) an industry and market assessment, (2) an assessment of the firm’s capabilities, and (3) a business opportunity assessment.
Industry and Market assessment
In this segment of the analysis, (1) industry and market characteristics, and (2) an analysis of the industry within the context of Porter’s five-forces framework should be included.
Industry and Market Characteristics
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Thecorporate parent must either come up with a plan to make the SBU a star ormove it to the dog category and get out of the business" (Kopf, Kreuze, &Beam, 1993, p. First, a budget may beconsidered as a noun. The four points of the diamond that affect these competitiveforces are (1) the potential for new entrants into the market, (2) theexercise of bargaining power and economic leverage by customers, (3) theprovision of substitute products from firms in other industries, and (4)the exercise of bargaining power and economic leverage by suppliers.Porter (1995) pointed out that rivalry among existing competitors canbecome intense as each competitor attempts to improve industry positionthrough the use of price competition, advertising, product introductions,and increased customer service.Figure 1Industry Analysis--------------------------------------------------------------- 1. Dogs: These companies are characterized by a lower growthrate than that of the industry within which the company competes, togetherwith a market share lower than that of its nearest competitor. Capacity requirements planning determines how many people, machines,and physical resources are required to perform the tasks of production(Groover, 1992). (1991 Autumn). According to theBCG model, the corporate parent should direct monetary support to stars,since they often need more cash than they can generate" (Kopf, Kreuze, &Beam, 1993, p. A variety ofapproaches exist to assess market standing through market share. Buyer Characteristics Assessment. Two ofthe more widely procedures used within this context are the Bostonconsulting Group's (BCG) portfolio analysis and life-cycle analysis.Portfolio analysis in diversified organizations is performed within thecontext of the BCG growth-share matrix model (Parkinson, 1991). Degree of bargaining power sellers & vendors possess: Suppliers ________________X_________________ Purchasers dictate terms dictate terms 8. A Theory for the Analysis of An Organization Within the Context of Corporate Strategic Planning Introduction This research develops a theory for the analysis of an organization inrelation to corporate strategic planning and for the preparation of areport based on such analysis. Bargaining Power of Customers. Journalof Accountancy, 175(7), 97-1 . Management performance is essential to an effective strategy. J. The bargaining power of suppliers isassessed in relation to that of the producers in the industry. (1998a). B. References Bart, C. When considered as a noun, a budget is a detailedfinancial plan for an organization, that (1) describes financial resourcesexpected to be available to an organization during the period covered bythe budget, (2) identifies anticipated sources of the financial resources,and (3) provides a plan for the allocation and use of the identifiedfinancial resources. Cash Cows: These companies are characterized by a slowergrowth rate than that of the industry within which the company competes,together with a market share higher than that of its nearest competitor. The extent to which technology is a drivingforce also should be explained. Gagging on chaos. Quality improvement is sought in contemporary organizations throughthe implementation of strategies based on concepts with names such as TQM(total quality management), CQI (continuous quality improvement), andothers. Finkler, S. Marketing led strategic change.Journal of General Management, 17(1), S1 -S21. Substitute products are those thatcould be used in place of the industry's products without too great asacrifice in quality and utility. A businesswith an SBU with a small market share in an industry with flat or decliningsales (called a dog) should consider disposing of it. Intensity of competition among firms: Extreme ______X____________________________ Almost none 4. (2nded.). Philadelphia: W. Profits should be states both as a percentage of sales and as a returnon capital. Budgets and budgeting must be considered in two conceptual contexts,each of which is applied in the budgeting process. Threat of Substitute Products. Essential technologies in theindustry should be identified. These performance measurement areas are (1) debt-to-equity and (2) current position. Industry Opportunities and Threats. 98). Question Marks: These companies are characterized by ahigher growth rate than that of the industry within which the companycompetes, together with a market share lower than that of its nearestcompetitor. If an SBU "has significant market share ina fast-growing industry, the SBU is considered a star. (1994 September-October). Degree of product substitutability: Many ______________________________X______________ None 5. G., & Beam, H. Capacity requirements planning, thus, defines, measures,and adjusts the levels of capacity to assure that the levels are consistentwith the production requirements. Key successfactors also should be identified. The major components of such an analysisshould be (1) an industry and market assessment, (2) an assessment of thefirm's capabilities, and (3) a business opportunity assessment. Both the opportunities availableto the industry and potential treats to the industry should be identifiedand explained. Competitor Rivalry for Position. There exist a variety of budget types, and a varietyof processes by which budgets may be created (Finkler, 1992). Potential rate of growth of industry: O-3% _____ 9-12% _____ 18-21% _____ 3-6% __ __ 12-15% _____ >21% _____ 6-9% __ __ 15-18% __X__ 2. Business Opportunity Assessment The business opportunity is assessed within the contexts of (1) abusiness opportunity analysis, and (2) firm/market match. Groover, M. Englewood Cliffs, New Jersey: Prentice-Hall, Inc. By contrast, an SBU with significant market share in an industry "withflat or declining sales is termed a cash cow. Bargaining Power of Suppliers. (4th ed.). The fourclassifications are as follows: 1. Some formal processes improveoriginal thinking. Rate of innovation in industry: Rapid _X___________________________________ Almost none 1 . These performance measurement areas are return on total assets (1) andsales (2) asset turnover (3), expenses/cost of sales (4), R&D/sales (5),G&A/sales (6), inventory (7) fixed assets (8) accounts receivable (9) andcash (1 ) turnover. Ease of entry of new firms into the industry: No ___________________X______________________ Virtually barriers impossible to enter 3. M., Kreuze, J. The financial ratios are analyzed in two performancemeasurement areas. Marszalek-Gaucher, E., & Coffee, R. Transforming healthcare organizations. Degree of dependency on complementary or supporting produ4cts or services: Highly __________X_______________________ _ Virtually dependent independent 6. According to the BCG growth-share matrix model, the two primaryconsiderations when deciding what businesses to be in are relative marketshare and industry growth rate. Competitive Strategy. Ratios Analysis The operating ratios are analyzed in 1 performance measurement areas. A corporate parent can use acash cow to generate some of the cash needed for star SBUs. Automated production systems, and computer-aided manufacturing. Investigations of organizational commitment have attempted toestablish linkages between organizational performance and organizationalcommitment. Barriers to entry into an industry affect thethreat of new entrants. Parkinson, S. Public responsibility refers to corporate citizenship. (1993 July). K. When budgeting is considered as a verb, budgeting is the process by whicha budget is created. 28). Budgeting concepts for nurse managers. (1992). Degree of bargaining power buyers & customers possess: Buyers ____________X___________________________ Sellers dictate terms dictate terms 7. Saunders Company. These eight interest areas should be as follows: (1) purposes andobjectives; (2) purpose areas; (3) an analysis of the firm's operating andfinancial ratios; (4) an assessment of the strengths and weaknesses of thefirm; and (5) a five-year forecast of the sales for the firm.Purposes and Objectives Purposes and objectives should be stated separately.Purpose Areas A total of eight purpose areas should be assessed. 98). The characteristics of buyers whichdefine the industry's target market should be defined. BusinessHorizons, 37, 26-36. Market standing is a manifestation of market share. A sample of such a chart is presented on the following page asFigure 1. Operating under the generic label of "creative problemsolving," these processes are "designed to bring discipline to the messymadness of innovation" (Bart, 1994, p. (1995). E. Industry and Market assessment In this segment of the analysis, (1) industry and marketcharacteristics, and (2) an analysis of the industry within the context ofPorter's five-forces framework should be included.Industry and Market Characteristics These focus areas in this subsection of the analysis should be (1)resources required by the industry, (2) an operations technologyassessment, (3) an assessment of buyer characteristics (4) a summarystatement of industry opportunities and threats, and (5) a five-yearforecast of industry revenues. Each step in the process encouragesdivergent thinking, and then provides for convergent thinking. Creative problem solvingprocesses are "organized forms of brainstorming that culminate in a formalplan of action" (Bart, 1994, p. This factor assesses the intensityof competition within the industry. 29). (1991). The industry sales forecastmay be presented in either tabular or chart form.Porter's Five Forces Industry Assessment Michael Porter's (1995) Five-Forces Model of Competition is frequentlyreferred to as the "Diamond Model." At the center of this model are thecompetitive forces created by the strategic actions of rival firms within amarket. This discussion should state how theindustry defines its key resource requirements in relation to its abilityto create value through effective stewardship of key assets. Thismatrix classifies companies in quadrants related to the combination of acompany's (1) market share position related to those of its competitors and(2) growth rate in relation to the industry growth rate. Operations Technology Assessment. Porter, M. P. T. Form 1 -K, 31 December 1997. H. i2 Technologies. Irving, Texas:i2 Technologies. While all innovations begin with a creative idea, the process need notbe a haphazard and sporadic exercise. 3. San Francisco: Jossey-Bass Publishers. The factors that affect capacityrequirements planning include plant facilities, machines, tooling,personnel work schedules, labor productivity, and a host of otheroperational activities. 2. Stars: These companies are characterized by a higher growthrate than that of the industry within which the company competes, togetherwith a market share higher than that of its nearest competitor. The bargaining power of customers isassessed in relation to that of the producers in the industry. Kopf, J. Degree of technological sophistication in industry: High _X_______________________________________ Very low 9. Assessment of the Firm's Capabilities The capabilities of the firm should be assessed in eight interestareas. 4. A. These purposeareas should be (1) market standing, (2) profitability, (3) physical andfinancial resources, (4) innovation, (5) product/service quality andproductivity, (6) worker attitude and training, (7) management performance,and (8) public responsibility. Using astrategic planning matrix to improve a firm's competitive position. These various concepts are highly interrelated, and qualityimprovement in most organizations is dependent upon strategies that embracea combination of two or more of these quality improvement concepts(Marszalek-Gaucher & Coffee, 1991). New York: TheFree Press. (4th ed.). General level of management capability: Many _______X_________________________________ Very few very capable managers capable managers--------------------------------------------------------------- Threat of New Entrants. (1992). Additionally, budgeting must be considered as a verb. An assessment of the industry in chart form also should beprovided. Five-Year Forecast of Industry Revenues. Finally, an SBU witha small market share in a fast-growing industry is a question mark. Resources Required by Industry.
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