Benchmarking involves comparison of one firm’s processes with that of other firm while reengineering is concerned with redesign of operational processes. Benchmarking involves thorough research into the best practices followed by other organisations in the industry where the company operates and it helps in breaking down the organisations’ activities down to process operations and modifies them to the best-in-class for a particular operation. The word benchmarking has been derived from the set of activities used by cobblers to mark the size of the foot of their customers. For measuring the size of the foot they used to ask the customer to put their foot on the “bench” so that they can “mark” the foot using a pen. In Benchmarking processes of one company are compared with the processes of the industry leader to see the practices and the ways in which these industry leaders operate and to modify their own Continue reading
Strategic Management Concepts
Concepts of Windows and Corridors for New Ventures
A window is time horizon during which opportunities exist before something else happens to eliminate them. A unique opportunity, once shown to produce wealth, will attract competitors, and if the business is easy to enter, the industry will become rapidly saturated. Bicycles did not become viable commercial products until people needed them as transportation. When that need occurred, hundreds of bicycle manufactures rushed to take advantage of the “window of opportunity.” Literally every successful product and service has had an optimal period of time for commercialization. Those introduced too early have usually failed, and those introduced too suffered from crowded markets. A brief period of opportunity opened for electronic spreadsheets when micro-computer hit the fast growth curve. Several entrepreneurs entered the market with good spreadsheet products. The first, VisiCalc was designed for the Apple PC. VisiCalc was quite successful, and later versions for Ms-Dos systems were even more successful. But Continue reading
The Competing Values Framework
Competing models of management refer to those models that attempt to explain the competing value framework of organizational management. The organizational management sometimes faces the management challenge of balancing between two or more important processes that affect the operation of an organization. The competing values framework is a model that was developed by Robert Quinn and Kim Cameron to assess the organizational culture. The theory of competing values framework, in essence, shows the interrelationship between processes that enable the organization to focus on the internal environment or external environment. The area of focus of an organization leads to the development of the organizational culture and often results in a balancing of two or more competing value factors. This implies that the organizational competing values framework models have a role in the success of an organization. The competing values framework can be used in constructing an organizational culture profile. An organizational Continue reading
Case Study: America Online (AOL) Merger with Time Warner (TWX)
A merger between America Online (AOL) and Time Warner (TWX) was announced on January 10, 2000. A new company named AOL Time Warner Incorporated was planned outcome of the merger. AOL shareholders would receive 1 new share for each AOL share, and TWX shareholders would receive 1.5 new shares for each TWX share. The merger captured the imagination of the public. AOL agreed to pay stock worth about $165 billion for Time Warner, a 70% premium. At the announcement, it was estimated that the market value of the combined companies would be $350 billion. As important as the large value of the deal was the combination of “new economy” and “old economy” companies. AOL’s stock prices boomed in the late 1990s as a hot Internet stock. Investors saw its potential for the significant future earnings growth based on its implementation of technology. Meanwhile, Time Warner (TWX) was a leader of Continue reading
Downsizing – A Corporate Restructuring Strategy
Downsizing or layoff is a widespread strategic decision and change practice since 1970’s and during the economic downturn in the year 2016 it became a more common phenomenon. Changing patterns in reasons cited for job loss support this impression of the rising importance of restructurings. Differences in factors such as the state of the economy and the signal sent by job loss could make the process of downsizing and the effects of job loss differ between restructurings of healthy organizations and downsizing due to financial distress. Downsizing Approaches There are many kind of approaches in downsizing. The reasons for the firm to undertake such approaches also varies. They include restructuring, closing or selling of a business unit, cost reduction, cost savings, increased productivity through greater efficiency and effectiveness and coping with external pressure including recessions and economic downturn, economical change, increased competitive pressures through greater globalization of business and technological Continue reading
McKinsey’s 7S Model – A Great Strategic Management Tool
The McKinsey’s 7S Model was created by the consulting company McKinsey and Company in the early 1980s and subsequently has become the de facto standard used by practitioners and academics alike in analysing the performance of an organization. The McKinsey’s 7S model is a value based management (VBM) model that describes how one can holistically and effectively organize a company and together, these factors determine the way a company operates. There are seven variables in the model which include structure, strategy, systems, skills, style, staff and shared values. All beginning with ‘s’, justifying why it was termed as the 7S model. These seven variables can be classified as soft components and hard components. Strategy, structure and system were hard components which are usually feasible and easy to identify because they are usually in the policy statements, business plans, organizational charts, organizational structures and systems as recorded in the report. The 7S Continue reading