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CHAPTER- 12
THE WHOLE PICTURE
The chapter covers
Internal Analysis
External Analysis
Stakeholder Analysis
Confirm or Change Goal
Formulating Strategy
Implementation
RULE 3: CORPORATE GOVERNANCE AS AN INTEGRAL PART OF THE STRATEGY PROCESS
The third Golden Rule is that good corporate governance requires an effective
strategic management process .
By this we mean that the company is organized and run according to rules which ;
Set a goal matching the duly considered expectations of the stakeholders.
Workout a feasible strategy to achieve the goal.
Put in place an organization which can carry out the strategy and attain the
goal.
Establish a control and reporting function to permit management to drive the
organization effectively.
A comprehensive strategic management model including corporate governance
Weighted
Stakeholder
stakeholder
analysis
model
Position Measure
Confirm or change Strategy Allocate resources
Goal (Point B) Analysis Performance
goal options
(Point A)
Report
Business plan
Internal analysis
Select Strategy Evaluate progress
Internal analysis will show the areas in which the company can improve and what
it is capable of potentially. By analyzing our resources, both internal and
external, an identifying the strengths and weaknesses of value chain, we
highlight GCGs current competitive positions .
In carrying out an internal analysis, we aim to:
Understand existing and potential resources available to GCG
Evaluate the businesss strategic capability
Assess its potential strengths and weaknesses
Identify opportunities for short term performance improvement within the
existing strategy
Internal analysis and strategic capability
This analysis aims to produce a statement of all the resources available to GCG. These will cover:
a) Trading contracts
b) Customers
c) Shareholders
Highlights :
This analysis will start to highlight those resources which are likely to confer a distinctive
competitive advantage in the market place. For instance these might be:
Shareholders
Bankers
Employees
Suppliers
Customers
Local community
Analyze Value Chain
All organization in an industry have a similar value chain and will be profitable so long
as revenues exceed costs. Management should understand both their own value
chain and those of their competitor. It will not in itself help us understand how
well these resources are being employed which is key to success of a strategy.
Primary activities
Supporting activities
In the following these approach, we will therefore:
Identify our primary and support activities
Identify sources of competitive advantage
Assess cost efficiency, and
Analyze the effectiveness of the whole operation
The Value Chain
Analyze Value Chain
Identify primary activities
We will group these into five main areas:
Supply chain management
Operations
Distribution
Marketing and sales
Customer services
We have used the value chain approach to understand and assess how well the company is managing its
activities to sustain its competitive advantage. This will give an insight into how the relationships
with the various groups of stakeholders has evolved which can be illuminating. We will make three
broad comparisons :
a) Past performance
Financial Ratios
-Turnover/capital employed
-Sales/employee
Nonfinancial measures
- Quality and service level
-Geographical distribution and customer profile
- employee age skill level
b) Industry
c) Best practice
Assess balance of resources
We have considered the resources available to the business and the they are
developed into producing and selling the companys products and services
through its value chain and have compared the trends over a number of
years, both internally and its relation to its competitors. The three aspects to
this examination are:
Product balance
People balance
Organizational / cultural balance
Identify key issues
The last part of the internal analysis is to pull out the key issues from all the
detailed analysis and express them into summary analysis.
a) Strengths and weakness
b) Competitive advantage
Next
Definition:
Aims to:
Understand our business environment
Evaluate GCG within its industry structure
Summaries the key issues which will enable us to assess our competitive position
Congruence of goals
Influence on Competitors
Nature of the Structure of the Competitive Identify
the and the
marketplace marketplace position key issues
marketplace marketplace
To assess the nature of the marketplace, how stable and predictable is the
marketplace is measured. Two important measurers are:
Static vs Changing
Simple vs Complex
Influence on the marketplace
Two analytical techniques:
1. PEST analysis:
Political/legal Economic
Ethics Goal
Organization Reporting
At this stage all we have is truly raw data, which we can use for diagnostic
purposes.
All the figures must be kept for the model within the grouping used in
research. Before averaging between groups is done, to arrive at overall, and
more meaningful figures, these groups will have to go through the weighting
process, with the help of information from internal and external analysis.
Weighting
The weighting process is based on the premise that individuals will exercise influence
through belongings to one or more groups which share their expectations. Through
these groups they will attempt to influence the organizations strategy.
There will always be conflicts of expectations between the various interested parties.
Compromise have to be made, and it is important to understand the expectations of
different stakeholder groups and to weigh these in terms of the power they exercise.
The key to the whole stakeholder approach is that we keep in mind at all times:
A good balance of power
The overall survival of the company
The common goal.
The Power/Influence matrix
With all the scores weighted and in place in the model structure we are
effectively constructing, we can now plot this data in charts which clearly
show how well or poorly GCG is performing on a number of different issues.
These helps to compare and adjust the weighting to reflect fundamental
principles ( Balance, survival and common goal) of stakeholder approach.
Continuously monitor the whole process.
Next
The last three stages have comprised the position analysis which has enabled
us to understand where we are now. Here we can look again at the board goal
decided on in the goal discussion meeting to see if:
We have the necessary strategic capability to achieve it
It is feasible given the nature of the marketplace
It reflects congruence of the expectations of all our stakeholders.
The Key influences before making a decision the first step is the SWOT analysis.
Market attractiveness and business
strength
Business strength Market attractiveness
In studying the information, our choice of the type of goal and strategy is
clear.
Reputation of quality and reliability and excellent customer service make
customers loyal to the company.
Large growing market dominated by a few big companies putting pressure
through effective cost leadership.
We can effectively dominate Niche market.
Sound balance sheet strengthened our position.
Co-operative new supply arrangements improve the whole value chain.
We have a loyal workforce which believes in us.
Next
1. Clear Objectives
2. Business Definition
3. Competition Scenario
4. Acquisition and Allocation of necessary Resources
5. Implementation Route
# Desired Future position Point B
Decorum the chronological path for making the run into the filed
smooth
** Allocate Resources
** Organizational Change
** Business Plan
** System to Monitor Progress
** Project Management Process
** Long term Strategy Evaluation
Planning to Allocate Resources
Corporate Level
# Develop
value chain and allocate resources as per
requirements and importance.
# Emphasize on the important operational level
Stakeholder Level
# Satisfy
the stakeholders with resource
allocation strategy information
Planning Organizational change
Check Milestones
Attention to stakeholders
Long-term Strategy Evaluation
Continuous Review
** External and Internal factors
** Stakeholders weighting model reconsideration
** Performance Measure
** Corrective Actions
Two Challenges
# Potential changing Business Environment
# Success can be inherited by Business nature
Long-term Review
# Inconsistency Checkout
# Consideration of all factors
# Strategies are being suit in the marketplace or not
Thank You