1. Certification Study Group Managing Change

2. The Nature of Organization Change Organization Change Any substantive modification to some part of the organization (e.g., work schedules, machinery, employees). Forces of Change External and Internal

3. The Nature of Organization Change Forces for Change External forces in the organization’s general and task environments that force the organization to alter the way in which it competes. Internal forces inside the organization that cause it to change its structure and strategy; some internal forces are responses to external pressures.

4. The Nature of Organization Change Planned Change Change which is designed and implemented in an orderly and timely fashion in anticipation of future events Reactive Change Change which is a piecemeal response to circumstances as they develop

5. Managing Change in Organizations Steps in the Change Process (Lewin Model) Unfreezing – Individuals must be shown why the change is necessary. Implementing change – The change itself is implemented Refreezing – Involves reinforcing and supporting the change so that it becomes a permanent part of the system.

6. Steps in the Change Process Establishment of goals for the change Recognition of the need for change Evaluation and follow-up Diagnosis of relevant variables Planning for implementation of the change Selection of appropriate change technique Actual implementation A Comprehensive Approach to Change

7. Reasons for Resistance to Change Barney, Jay B. and Ricky W. Griffin, The Management of Organizations. Copyright © 1992 by Houghton Mifflin Company. Used with permissions.

8. Resistance to Change Uncertainty about the extent and effects of change. Threats to self-interests, power, and influence. Different perceptions of change effects and outcomes. Feelings of loss in disrupted social networks, power, security, and familiarity with existing procedures.

9. Overcoming Resistance to Change in Organizations Barney, Jay B. and Ricky W. Griffin, The Management of Organizations. Copyright © 1992 by Houghton Mifflin Company. Used with permissions.

10. Overcoming Resistance to Change Encourage active participation in the change process. Provide education and communication about the change process. Facilitate the change process by making only necessary changes, announcing changes in advance, and allowing time to adapt to change.

11. Overcoming Resistance to Change Force-field analysis, in which the forces for and against the change are delineated and the forces against the change are minimized, can be used to reduce resistance to change.

12. Overcoming Resistance to Change Force-Field Analysis for Plant Closing at General Motors Outmoded production facilities Excess capacity Need to cut costs Reasons for Closing Possible future needs Concern about worker welfare Resistance from unions Plant closing Reasons Against Closing Figure 7.2

13. Certification Study Group Logical Thinking Patters

14. Characteristics of Inductive Reasoning Unlike deductive reasoning, Inductive reasoning is not designed to produce mathematical certainty. Induction occurs when we gather bits of specific information together and use our own knowledge and experience in order to make an observation about what must be true. Inductive reasoning does not use syllogisms, but series of observations, in order to reach a conclusion.

15. Characteristics of Inductive Reasoning Consider the following chains of observations: Observation: John came to class late this morning. Observation: John’s hair was uncombed. Prior experience: John is very fussy about his hair. Conclusion: John overslept

16. Characteristics of Deductive Reasoning A deductive argument offers two or more assertions that lead automatically to a conclusion. Though they are not always phrased in syllogistic form, deductive arguments can usually be phrased as "syllogisms," or as brief, mathematical statements in which the premises lead inexorably to the conclusion. The following is an example of a sound deductive sullogism.

17. Characteristics of Deductive Reasoning Premise: All dogs have four legs. Premise: Rover is a dog, Conclusion: Rover has four legs.

18. Characteristics of Deductive Reasoning As long as the first two sentences in this argument are true, there can be no doubt that the final statement is correct--it is a matter of mathematical certainty. Deductive arguments are not spoken of as "true" or "false," but as "sound" or "unsound." A sound argument is one in which the premises guarantee the conclusions, and an unsound argument is one in which the premises do not guarantee the conclusions. A deduction can be completely true, yet unsound. It can also be sound, yet demonstrably untrue.

19. Certification Study Group Organizational Planning

20. Plans By Level Strategic Tactical Operational

21. Strategic Tactical Operational Planning by Organizational Level

22. Time Frames for Planning The Time Dimension of Planning is based on the principle of commitment. Planning must provide sufficient time to fulfill the managerial commitments involved. Long-range Plans Intermediate Plans Short-range Plans

23. The Nature of Strategic Management Strategy A comprehensive plan for accomplishing an organization’s goals. Strategic Management A way of approaching business opportunities and challenges A comprehensive and ongoing management process aimed at formulating and implementing effective strategies.

24. The Components of Strategy Distinctive Competence Something an organization does exceptionally well. Resource Deployment How an organization will distribute its resources across the areas in which it competes. Scope Specifies the range of markets in which an organization will compete.

25. Types of Strategic Alternatives Business-level Strategy How the organization conducts business in a particular industry. Corporate-level Strategy The set of strategic alternatives that an organization chooses from as it manages its operations simultaneously across several industries and several markets.

26. Types of Strategic Alternatives Strategy Formulation The set of processes involved in creating or determining the organization’s strategies; it focuses on the content of strategies. Strategy Implementation The methods by which strategies are operationalized or executed within the organization; it focuses on the processes through which strategies are achieved.

27. Formulation and Implementation Across Strategic Alternatives Corporate Strategy Formulation Decisions about which markets to compete in Business Strategy Formulation Decisions about how to compete in each market Functional Strategy Formulation Decisions about how to address each function within the organization Implementation Carrying out the functional- level strategies chosen for each business function Implementation Carrying out the business- level strategies chosen for each business Implementation Competing in the markets via existing operations, mergers, acquisitions, new ventures, divestitures

28. SWOT Analysis Strengths Weaknesses Opportunities Threats Mission An organization’s fundamental purpose Best Strategies SWOT Analysis To formulate strategies that support the mission Those that support the mission and exploit opportunities and strengths neutralize threats avoid (or correct) weaknesses Internal Analysis Strengths (distinctive competencies) WeaknessesThreats External Analysis Opportunities

29. Using SWOT Analysis to Formulate Strategy Evaluating Organizational Strengths Organizational strengths Distinctive competencies Sustained competitive advantage Evaluating Organizational Weaknesses Organizational weaknesses Competitive disadvantage

30. Using SWOT Analysis to Formulate Strategy Evaluating an Organization’s Opportunities and Threats Organizational opportunities are areas in the organization’s environment that may generate high performance. Organizational threats are areas in the organizations environment that make it difficult for the organization to achieve high performance

31. Using a SWOT Analysis to Formulate Strategy … An Example Opportunities High growth in market for low-cost lodging Strengths Solid hotel business Solid food services Weaknesses Poor performance in cruise ship, travel agency, and theme parks Weak cash position Threats Low growth in the market for high- cost lodging Environmental Analysis AnalysisOrganizational

32. Porter’s Generic Strategies Differentiation strategy Overall cost leadership strategy Focus strategy

33. Porter’s Generic Strategies … Examples Differentiation Nordstrom’s Overall Cost Leadership Wal-Mart Focus Gucci

34. Strategies Based on Product Life Cycle The Product Life Cycle Introduction Time Stages GrowthMaturityDecline High Low Sales Volume Figure 3.3

35. Strategies Based on the Product Life Cycle Product life cycle: a model that portrays how sales volume for products changes over the life of products. Introduction Stage Growth Stage Mature Stage Decline Stage

36. Formulating Corporate – Level Strategies – Base Concepts Each business or set of businesses within such a firm is frequently referred to as a strategic business unit, or SBU. Diversification The number of businesses an organization is engaged in The extent to which these businesses are related to one another

37. Formulating Corporate – Level Strategies Single Product Strategy No diversification involved Organization sells one product/service in a single market

38. Formulating Corporate – Level Strategies Related Diversification A strategy in which an organization operates in several different businesses, industries, or markets that are somehow linked.

39. Related Diversification Bases of relatedness — bases include common technology, common distribution networks, common marketing skills, common brand names and reputation, and common customers.

40. Related Diversification Advantages of Related Diversification Reduces organization’s dependence on any one of its business activities and thus reduces economic risk. Reduces overhead costs associated with managing any one business through economies of scale and economies of scope.

41. Related Diversification Advantages of Related Diversification Allows an organization to exploit its strengths and capabilities in more than one business. Synergy exists among a set of businesses when the businesses’ value together is greater than their economic value separately.

42. Formulating Strategy - Unrelated Diversification Unrelated Diversification When an organization operates several businesses that are not associated Advantages Stable performance over time Resource allocation spread over more than one industry Reduced business cycle risk

43. Formulating Strategy Unrelated Diversification Disadvantages Strategy does not usually lead to high performance due to the complexity of managing a diversity of businesses Firms with unrelated strategies fail to exploit important synergies, thus are at a competitive disadvantage to firms with related diversification strategies Most organizations have now abandoned this strategy

44. Managing Diversification Major Tools for Managing Diversification Portfolio management techniques Methods that diversified organizations use to make decisions about what businesses to engage in and how to manage these multiple businesses to maximize corporate performance. Two important portfolio management techniques The BCG Matrix The GE Business Screen

45. BCG Matrix Provides a framework for evaluating the relative performance of businesses in which a diversified organization operates. Uses two factors to evaluate a firm’s set of businesses: market growth rate and market share. The matrix classifies the types of businesses that a diversified firm can engage in.

46. BCG Matrix It helps managers to develop a better understanding of how different strategic business units contribute to the overall organization. By assessing each SBU on the basis of its market growth rate and relative market share, managers can make decisions about whether to commit further financial resources to the SBU or to sell or liquidate it. SBU stands for …………………………….

47. The BCG Matrix Relative market share Cash cowsDogs High Low HighLow Question marks Stars Market growth rate Source: Perspectives, No. 66, “The Product Portfolio,” Adapted by permission from The Boston Consulting Group, Inc., 1970.

48. BCG Matrix Dogs are businesses that have a very small share of a market that is not expected to grow. Cash cows are businesses that have a large share of a market that is not expected to grow substantially. Question marks are businesses that have only a small share of a quickly growing market. Stars are businesses that have the largest share of a rapidly growing market.

49. GE Business Screen A method of evaluating businesses along two dimensions: (1) industry attractiveness and (2) competitive position The GE Business Screen is a more sophisticated approach to portfolio management than the BCG Matrix

50. GE Business Screen A method of evaluating business in a diversified portfolio along two dimensions, each of which contains multiple factors: Industry attractiveness. Competitive position (strength) of each firm in the portfolio. In general, the more attractive the industry and the more competitive a business is, the more resources an organization should invest in that business.

51. The GE Business Screen Competitive position Low Winner Medium High Good Competitive position 1.Market share 2.Technological know-how 3.Product quality 4.Service network 5.Price competitiveness 6.Operating costs Industry attractiveness 1.Market growth 2.Market size 3.Capital requirements 4.Competitive intensity PoorMedium Winner Profit producer Winner Average business Loser Question mark Loser Industry growth rate In general, the more attractive the industry and the more competitive the position, the more an organization should invest in a business.

52. Tactical Planning An organized sequence of steps designed to execute strategic plans Tactical plans are to battles what strategy is to a war Strategy focuses on resources, environment, and mission, whereas tactics focus primarily on people and action

53. Tactical Planning Developing and Executing Tactical Plans Developing tactical plans Recognize and understand overarching strategic plans and tactical goals Specify relevant resource and time issues Recognize and identify human resource commitments Executing tactical plans Evaluate each course of action in light of its goal Obtain and distribute information and resources Monitor horizontal and vertical communication and integration of activities Monitor ongoing activities for goal achievement

54. Operational Planning Single Use Plans – A plan that is not likely to be used again in the near future. Program plan Project plan Standing Plans - a plan for activities that recur regularly over a period of time Policy Standard Operating Procedure Rules and Regulations

55. Contingency Planning The determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate.

56. Action Point 1: Action Point 2: Action Point 3: Action Point 4: Develop plans, considering contingency events Implement plans and formally identify contingency events Specify contingency event indicators and develop plans for each event Successfully complete each plan or contingency plan The Contingency Planning Process - An Ongoing Process