Beruflich Dokumente
Kultur Dokumente
advantage EA firm also need to assess their internal strengths and weaknesses.
This is done through SWOT analysis. SWOT, is acronym where: S Strengths W
Weaknesses , O - opportunity
T Threats.
Firm have been using SWOTA for long, whether for general business S or for
marketing S. In SWOT, S and W relate to internal competence factors,& O and
T pertain to external environment. S is a resource, skill, capability or any other
advantage relative to competitors and in relation to markets. A weakness is a
limitation or deficiency in resource, skills and capabilities or any other disadvantage
relative to competitors which impedes performance of an organization.SWOTA can
be a useful tool to analyse the extent to which S of firm & its more specific strength
& W are capable of dealing with the changes in the business environment. And, this
would decide whether a particular factor in the environment is an opportunity or
threat with reference to the particular strengths . For systematic SWOTA, major S &
W of firm for the S should be worked out. Then, key factors in the environment
relevant to this S should be identified. Finally,
S & W should be matched with the environmental factors through matching analysis
or a matrix.Matrix has 4 cells as:.
Cell 1 is the most favourable situation ; there are many opportunities & firm has
substantial internal strengths to exploit opportunities. Such condition suggests
aggressive growth strategies to take advantage of favourable match between S &
W . IBMs intensive market development strength in PC market was driven by a
favourable match
between its strengths (reputation and resources) and ample opportunity for
market growth.
In Cell 2, firm with key strengths faces an unfavourable environment.
In such situation, strategist(sist) should use current strength to create opportunities
in other products/ markets, that is, to go for diversification.
Firm in Cell 3 has plenty of market opportunities, but, is constrained by
major internal weaknesses. Businesses in this cell are like question marks in
the BCG Matrix. The focus of strength here should be to remove internal
weaknesses to capitalize on existing opportunities, that is, to follow some kind of a
turnaround strength .
Cell 4 is the least favourable situation with environment posing major threats & firm
suffering from major weaknesses. The most immediate strength in this situation is to
defend or sustain current position.Firms here should also work on internal
weaknesses or competences to be able to negotiate environmental threats as
Chrysler Corporation did in the 1980s when analysis revealed that it was in Cell 4.
performance is focussed and so on. How bloody this sort of turnaround can be may
be seen from in US video games manufacturer Atari, which, among other actions, cut
its labour by two-thirds to 3500 to turn itself around. At British Leyland, 84,000
employees (40 per cent) were axed to complete the surgery. At GE, 1,00, 000 of a
workforce of 4,00, 000 lost their jobs; at Imperial Chemical Industries (ICI), the
labour force was reduced from 90,000 to 59, 000; half the staff at Chrysler
Corporation disappeared; at British Steel, half the companys production capacity
and 80 per cent of workforce were gone.
Turnaround management of the humane type may involve negotiated & humane
layoffs and divestiture, but, not a bloodbath. This type of turnaround also is generally
brought about by the new helmsman. But, he spends a great deal of time in trying to
understand organizational problems and deliberating on them. He takes all the
stakeholders including unions into confidence; forms groups within firm to brainstorm
together on what needs to be done to get over the crisis; tries to create a new work
culture; and, generally infuses a strong sense of participation among employees and
many critical decisions become participative decisions. There are many examples of
successful turnarounds of the humane type including Enfield, Volkswagen, Lucas, Air
India, SPIC, BHEL and SAIL.
In SAIL, losses were about `100 crore during 198283 and `200 crore in 198384. A
price rise during 198485 saw SAIL break even in that year. But, rapid increases in
coal prices and freight rates threatened a loss in 198586. The steel ministry and
SAIL management then called for another price hike. Krishnamurthy entered the
scene as Chairman, SAIL in mid-1985. He promptly lobbied against price increase
on the ground that efficiency had to be improved. Indian steel was already the
costliest in the world and any further increase in steel price would have ruinous
effects on the economy, contended Krishnamurthy. He spent several months talking
to small groups of executives, officials, staff and workers in SAIL. He estimates
that he talked to over 25,000 employees to identify operating problems, got
perception of how firm was doing and what employees thought should be done to
improve performance & turn around the company. The turnaround strategy finally
emerged from discussions at all levels.
6 What are the major characteristics of an effective strategy evaluation system(ES)?
Analyse these characteristics.
Motivations are required to induce employees/managers to perform. ES or appraisals
are necessary to ascertain whether they are actually performing or performing
satisfactorily. So, ES has a role almost parallel to the motivation system. ES system
assesses managerial performance in terms of organizational objectives, priorities,
and strategies. The purpose of a positive ES is to remind managers
how they are discharging their tasks and responsibilities, particularly in relation
to the strategy implementation. In a progressive organization, this is a continuous
process.
For the development of an effective ES , choice of factors to be used for appraisal
becomes a critical issue. It is generally advisable to use manyfactors or multiple
criteria to make the assessment system more objective and broad based. This
indicates the need for inclusion of a good number of quantitative factors in addition to
the subjective or qualitative factors. Several
ES are available; some are purely quantitative or objective, some
are totally subjective or qualitative, and, some are mix of the two. Most of the
actual ES are based on an appropriate mix of the two types of
factors to make the system more acceptable and reliable.
Also, relevance or suitability of ES method to the corporate
strategy adopted by firm should be considered.e.g, if stability strategy is followed, the
objective of ES should be to focus on improving efficiency in current operations.
Improvement of efficiency in current operations, combined with initiative, can also
help to achieve shortterm
growth. For long-term growth, i.e., growth through expansion or
diversification, focus should be on long-term managerial characteristics of
initiative, aggressiveness, risk taking attitude, etc. ES should lay emphasis on these
factors and be structured accordingly.