Strategic Control & Innovation and Entrepreneurship

Week-8: DQs

1.      Why is strategic control important in the strategy implementation process? What are the four major types of strategic control? What are the pros and cons of each?

Strategic control refers to the process of tracking a strategy whether it is being implemented properly or not under the premises, and making necessary adjustments if required (Pearce II, J.A.,& Robinson, R.B., 2012). Strategic control tries to monitor the key activities, provide platform for interacting with people, help in allocating the various resources, and organizing the major activities, people and resources within the company. It is inevitably true that strategic control strives to answer the two basic questions which reflect the strategic importance in implementing the strategic process:

1.      Are we moving in the proper direction?

It is inevitably true that the main purpose of strategic control is to steer the organization towards the right direction so that everything can be achieved as planned. Strategic control, thus, provides the right direction or road-map to the organization for future growth and profitability.

2.      How are we performing? 

Strategic control helps to measure the performance of the company so that corrective action can be taken to reduce the gap between the standard performance and achieved performance. Indeed, it could be helpful to minimize the risks by improving the quality and productivity of the performance within the company.

The four major types of strategic control and their respective pros and cons are highlighted on the following table:

Types of Strategic Control	Pros	Cons
1.      Premise Control: Premise control is devised to examine thoroughly and relentlessly whether the strategy-based premises are still valid or not.	·         Useful for planning premises and projections ·         High degree of focus ·         Consider environmental and industry factors	·         Centralized data gather ·         Do not consider strategy-specific and Company specific factors ·         Expensive and time consuming
2.      Strategic Surveillance: It is designed to monitor a broad range of events inside and outside the firm that are more inclined to affect the course of its strategy. It must be kept as unfocused as possible.	·         Provide an ongoing, broad based vigilance in all of daily operations ·         Covers a wide range of areas and events for updated information.	·         Lacks accuracy, accountability and is time consuming
3.      Special Alert Control: This control is quite through, quick and reconsideration of the firm’s strategy because of a sudden, unexpected event.	·         Support the strategies even during an unexpected event	·         Impractical to change the strategies every time once it becomes invalid.
4.      Implementation Control: It is designed to assess whether the overall strategy should be changed in light of the results associated with the incremental actions that implement the overall strategy (Pearce II, J.A.,& Robinson, R.B., 2012). It includes monitoring strategic thrusts and milestone reviews.	·         Provide key strategic thrusts and milestones ·         Monitors if the strategies are being implemented as planned	·         Time consuming and a lengthy process

                                                                                                             

References

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

(n.d.) Retrieved from https://managementinnovations.wordpress.com/2008/12/10/strategy-implementation-strategic-control/

(n.d.) Retrieved from http://www.yourarticlelibrary.com/organization/importance-of-strategic-controls-in-an-organisation/44902/

2.      The balanced scoreboard approach has gained popularity in recent years. What is this approach and how does it integrate strategic and operational control?

The balanced Scorecard refers to an approach that provides a set of measures which are directly linked to company’s strategy (Pearce II, J.A.,& Robinson, R.B., 2012). This approach was developed by Harvard Business School Professors, Robert Kaplan and David Norton. It allows managers to evaluate the company from four major perspectives such as:

1.      Financial perspective – From this perspective, it deals with how a company should appear to its stakeholders. It basically includes measures such as operating income, return on capital employed, economic value added, and earning per share an.

2.      Customer perspective – It deals with how a company should appear to its valuable customers. It includes measures such as customer satisfaction, customer retention, and market share in target segments.

3.      Internal Business process perspective – It deals with which business processes a company excel at. It comprises the measures such as cost, quick delivery time and quality.

4.      Learning & growth perspective – It basically talks about how a company will sustain our ability to change and improve. It includes measures such as employee satisfaction, employee retention rate, employee skill sets and so forth.

It is common these days for balanced scorecard to gain much more popularities because it provides an analytical tool for business managers to gauge the company’s performance and refine the long-term plans so as to assist the management with decision making and identify the areas for improvement. While there are four different measures, all of these are linked together logically to create the company’s value, and achieve a competitive edge in the marketplace.  

It is also useful approach for integrating the strategic and operational control by facilitating the following activities:

·         Clarifying strategy –This approach is likely to translate the strategic objectives, measures, targets and initiatives into actions by clarifying appropriate strategies for a company.

·         Communicating strategic objectives – The Balanced Scorecard plays a pivotal role in translating the high level objectives into operational objectives and communicating them in all layers of the company.

·         Planning, setting targets, and aligning strategic initiatives –This approach is quite useful in setting achievable targets for each perspective and initiatives so as to align organizational efforts with strategic planning.

·         Strategic feedback and learning – This approach helps to get feedback or information about whether the strategy is being implemented as per planned.  

In a nutshell, it can be said that it has been gaining as one of the powerful tools for managing control and measurement systems that enables companies to communicate their strategies, translate them into actions, and offer appropriate feedback in order to create a company’s value by leveraging core competencies, satisfying its customers, and providing a financial rewards to its shareholders.

References

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

(n.d.) Retrieved from http://smallbusiness.chron.com/balanced-scorecard-approach-integrate-strategic-operational-control-77503.html

3.       Total quality management involves a continuous improvement approach. How is continuous improvement related to innovation? What is breakthrough innovation? What are the risks and rewards associated with innovation?

Toyota’s extraordinary success the last five years is one good example of a cost-oriented continuous improvement effort

Total Quality Management (TQM), Continuous Improvement Approach and Innovation:

TQM is the philosophy that is committed to use all of the quality elements so as to satisfy the customer through continuous improvement within the company. It involves a continuous improvement approach, also called Kaizen in Japanese, which is the process of relentlessly trying to find out ways to improve and enhance a company’s products, services and processes (Pearce II, J.A.,& Robinson, R.B., 2012). In addition, this approach is more like an operating philosophy striving to find slight improvements or refinements in each and every aspect of company’s activities so as to produce lower costs, higher quality and speed or more rapid responses to customers. Toyota, for instance, has gained an extraordinary success in the field of cost-oriented continuous improvement through the use of this approach the last five years. Having said this, hence, there is a positive relation between the continuous improvement and innovation, which means that higher the improvements, higher will be the chance for innovation being made. Weston, a famous expert, explains how both continuous improvement and continuous innovation are necessary for business survival and growth.

Breakthrough innovation:

A breakthrough innovation is such kind of innovation in which a product, process, service, technology associated with them reflects a quantum leap forward in one or more of those ways (Pearce II, J.A.,& Robinson, R.B., 2012). For instance, Apple’s innovation with iPod and iTunes is a breakthrough innovation because now it became dominant after using of the microprocessor technology with Apple’s computers, deployed in a totally different industry. Due to this breakthrough innovation, Apple has become as the top music retailer worldwide within five years of its iTunes launch.

Risks and Rewards associated with innovation:

Some of the major risks associated with innovation are as follows:

1.      Innovation involves creating something that doesn’t now exist so there is high risk of not being adopted by the customers.

2.      Long odds for success, once it became failure may cause the image and reputation of the company for long-term.

3.      Market risk, the risks or uncertainty whether markets accepts our products, process and services.

4.      Technology risk, there is a huge risk in terms of R&D on its technology that could be outdated soon from the markets.

Some of the major rewards associated with innovation are increased efficiency, productivity, quality enhancement, stronger competitiveness. Apart from them, others include the following:

1.      Moderately new to the marketplace

2.      Based on tried and tested methodology

3.      Saved money for users of innovation

4.      Met customers’ needs

5.      Supported existing practices

References

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

(n.d.) Retrieved from http://asq.org/pub/qmj/past/vol8_issue4/cole.html

(n.d.) Retrieved from http://www.processexcellencenetwork.com/innovation/articles/six-sigma-and-innovation

5.       What is an entrepreneur? How is the entrepreneur different from the inventor, promoter, and administrator? What is intrapreneurship? How can it be enabled in an organization?

An entrepreneur is someone who starts an enterprise with new ideas, products, market or technologies. In other words, an entrepreneur is an individual who sets up his own industry or business undertaking with a view to make a profit. In addition to this, whatever an entrepreneur does is called entrepreneurship. According to Hirich and Peters-“Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying risks and receiving the resulting rewards.”

Inventors: Those people who are exceptional for their technical talents, creativity and insights are considered as investors. While it is true that they are creators or inventors, they do not know how to become successful in the market because they do not have interests and skills that would create value for the customers.

Promotors: Those people who are clever at devising schemes or programs to sell a product or service in order to aim for at a quick profit rather than long term profit.

Administrators: Those people who are good at developing managerial skills, knowledge, abilities so that they can organize people and take pride in overseeing the efficient functioning of operations as they are.

Entrepreneurs: Those people who are good at the combination of talent such as creativity, management skills and marketing kills for selling the goods or services in the market. Entrepreneurs can achieve success from effectively managing three elements such as opportunity, entrepreneurial teams, and resources.

Intrapreneurship, and the ways it can be enabled in an organization:

Intrapreneurship is nothing but an entrepreneurship within a large company, established in order to create something new valuable to its customers. In other words, it refers to the process of attempting to identify, encourage, enable, and assist entrepreneurship within a large, established company so as to create new products, process, or services that become major new revenue streams and sources of cost savings for the company (Pearce II, J.A.,& Robinson, R.B., 2012). Unlike entrepreneurship, an intrapreneurship does not focus on the entire company but rather it focuses on particular product, service or process within the company to solve a specific problem.  

Gordon Pinchot suggests 10 freedom factors that encourage and enable the intrapreneruship within the company are as follows:

1.      Self-Selection: Companies should be able to give innovators the opportunity to being something new, ideas rather than making the generation of new ideas.

2.      No hard-offs: Managers should allow the innovators to generate new ideas to pursue it rather than guiding them to turn it over to others.

3.      The does decides: Companies should give the innovators some freedom to make decisions about their new projects or development rather than passing them through multiple levels of approvals for even a small decision.

4.      Corporate “Slack”: Companies foster the resources such as time, money and other resources to facilitate innovation.

5.      End the “home run” philosophy: Companies not just give importance for major breakthroughs but they should create a culture to foster even an interest in innovative ideas.

6.      Tolerance of risk, failure, and mistakes: It is often misunderstood that risk, failure and mistakes are not good, but without them it is almost impossible to create innovations so that managers should be tolerated and chalked up to experience.

7.      Patient money: It is necessary for companies to invest money on R&D so as to innovate from intrapranerial activities within a company.

8.      Freedom from turfness: Companies should avoid the turfness and cross-fertilization should be fostered in order to produce successful entrepreneurial teams.

9.      Cross-functional teams: Companies should create a cross functional team so that people can communicate and interact with each other.

10.  Multiple option: It is better for companies to create as many options as possible because doing this encourages for more discussions about the innovative ideas within a company.       

References

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

(n.d.) Retrieved from http://www.forbes.com/entrepreneurs/#451a11e76ce7

(n.d.) Retrieved from  http://www.inc.com/murray-newlands/10-things-entrepreneurs-need-to-know-about-intrapreneurship.html

Organizational Structure & Leadership and Culture

Week-7 DQs

1.        What are the five traditional organizational structures? What are the pros and cons of each? Explain what organizations of the future will look like. Why do you think they will develop as you predict?

Organizational Structure refers to the formalized arrangement of interaction between and responsibility for the tasks, people, and other resources in an organization (Pearce II, J.A.,& Robinson, R.B., 2012). It is true that no organization can be formed without organizational structure so it must be designed in such a manner to achieve the organizational objectives.

There are basically five types of traditional organizational structure which are explained along with its pros and cons as follows:

1.      Simple Organizational Structure: This is the simplest form of organizational structures in which there is an owner who arranges the tasks, responsibilities and communicates them informally among a few employees under direct supervision. The pros of this include direct supervision, quick decision, cheaper in terms of cost and so on. On the contrary, its cons include requirement of a multitalented, resourceful owner, no flexibility, and unsystematic activities.

2.      Functional Organizational Structure: It refers to an organizational structure in which the tasks, people and technologies necessary to do the work of business are divided into separate functional groups such as finance, marketing, operating and Human resource with high formal procedures in order to coordinate and integrate their activities for providing the business’s goods and services. The major pros of this include, efficiency through specialization, functional tactics, delegation of day-to-day operating decisions, and tightly connected structure to strategy by designating key activities as separate business units. On the other hand, the major cons of this include narrow specialization and functional conflict, difficulty in functional coordination, no larger scope for general managers, and pressure for outsourcing.

                                    

3.      Divisional Organizational Structure: It refers to an organizational structure in which a set of relative units or divisions are controlled by a central corporate office and each of these functional division has its own functional specialists, providing goods and services differently from those of other divisions. This structure fosters the coordination and necessary authority down to the appropriate level for quick response, and broader strategic decision. It provides platform for strategy development and implementation according to different divisions by retaining functional specialization within each division. However, it is difficult to determine the level of authority to each division managers so that there is dysfunctional competition and policy inconsistencies among divisions. In addition, it may also increase costs in terms of duplication functions and corporate image.

4.      Matrix Organizational structure: This structure is likely to combine the specialization provided by a functional structure and the focus provided by a divisional structure. Each employee belongs to at least two formal groups; one is a functional group, and the other is a project, product or program team, and they have to report to both bosses. This structure increases the employees’ motivation and allows training across functional areas. However, this type of structure is difficult to implement, and this may create misunderstanding or confusion among subordinates because it involves negotiating the use of resources, shared responsibilities, and important priorities.

5.      Product-Team Structure:  In this type of organizational structure, different functional managers and specialists are assigned into an objective-based group to make major decisions about product or services. Members from each of different departments work together to solve problems and discover new opportunities. It can help remove barriers between departments and foster effective problem-solving relationships. It can also motivate employees and increase decision-making times. However, there is a high possibility of making decisions with firsthand understanding of the issue in regards to the product or process.

In the future, it seems that there will be highly use of an agile organization which identifies a set of business capabilities central to high-profitability operations and then builds a virtual organization around those capabilities (Pearce II, J.A.,& Robinson, R.B., 2012). This trend is likely to be as per predicted because it allows firms to build its business around the core, high-profitability information, services and products. It also helps strategic managers to form an agile, virtual organizational structure which involves outsourcing, strategic alliance, boundary-less structure, an ambidextrous learning, and Web-based organization.

References

David, F. R. (2011 (13th ed.). Strategic Management: CONCEPTS AND CASES. New Jersey: Pearson Education,Inc.

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

2.        What are the pros and cons of outsourcing? When is it desirable and necessary?

While it is true that there are many ways to cut the cost of the companies, outsourcing always comes at first in the mind that can reduce the cost substantially. Then you may be thinking that what actually outsourcing means? Outsourcing simply means the process of obtaining work previously done by employees inside the companies from sources outside the company (Pearce II, J.A.,& Robinson, R.B., 2012). However, deciding whether to outsource or not is always strategic challenge so that it is necessary to calculate its pros and cons before deciding it is as a right option for any businesses. For example, in one of the largest U.S. outsourcing venture companies, DuPont hired Computer Science Corp. (CSC) and Andersen Consulting for $4 billion over a 10-year period to develop and manage its IT. On the same way, Xeroxs dealt $3 billion with EDS and the McDonnell Douglas dealt $3 billion with ISSC (YVONNE LEDERER ANTONUCCI, FRANK C. LORDI AND JAMES J. TUCKER III, 1998).

The pros and cons of outsourcing:

Pros: Outsourcing plays a pivotal role to create an agile, virtual organization so that it possess the following advantages:

1.      It can lower costs.

2.      It can reduce the amount of capital a firm must invest in production or service capacity.

3.      The company can focus on the most critical activities rather than doing so on less expertise activities. When a company does so, there is more possibility that the source of competitive advantage can be controlled and enhanced.

4.      It is also possible that when a firm selects the outsourced partners carefully then the potential learning and development of knowledge, skills and abilities can enhance the expertise of the firm.

Cons: Although there are several advantages of outsourcing, it is not free from its cons which are as follows:

1.      Outsourcing includes loss of some control and more reliance on “outsiders.”

2.      It can create future competitors.

3.      There is a possibility of losing the skills, abilities and so forth to a product or service.

4.      It can cause negative reaction from the public and investors.

5.      Outsourcing service or intellectual property in terms of crafting legal agreement is difficult.

6.      It can lead to increasingly fragmented work cultures with unfair treatment among employees such as low wages, labor issues, discrimination etc.

The desirability or necessity of outsourcing:

A recent study has shown that it is necessary or desirable when a company wants to gain access to specialized skills which are done by outsider with more expertise or efficiency. In addition to this, if a business needs to act quickly to take advantage of a market opportunity but doesn’t have the internal talent to respond then there is need for outsourcing. Indeed, this is quite useful when a company wants to improve business processes and workflow, flexible staff allocation and the ability of internal staff to focus on other important business areas. In a nutshell, it can be said that pros of outsourcing outweigh the cons of it so that outsourcing can be considered as a right option to gain a competitive advantage if analyzed properly.

References

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

(n.d.) Retrieved from http://smallbiztrends.com/2009/12/the-pros-and-cons-of-outsourcing.html

(n.d.) Retrieved from http://www.journalofaccountancy.com/issues/1998/jun/antonuci.html

3.        What are sources of power for managers? How does power relate to emotional intelligence? How can they both be used in providing vision and direction for an organization and its employees?

There are seven sources of power available for managers. The first four powers are derived from the organization and remaining three powers are from personal influence (Pearce II, J.A.,& Robinson, R.B., 2012). The brief discussion of each of these is outlined as follows:

1.      Position Power: Position power refers to a formal establishment determined according to the manager’s position in the organization. Managers are entitled to use their authority and responsibilities for decision making to get things done.

2.      Reward Power: It is managers’ power available to confer rewards to their subordinates in return for desired actions and outcomes.

3.      Information Power: It refers to a set of information available for managers to access and control over it in the organization.

4.      Punitive Power: It refers to the power of managers that is exercised through coercion or fear of punishment for mistakes or undesired actions by a manager’s subordinates.

5.      Expert Influence: Expert influence refers to a manager’s knowledge and expertise in a particular area or situation so as to influence other subordinates (Pearce II, J.A.,& Robinson, R.B., 2012).

6.      Referent Influence: This power can stem from others who identify the managers by their personal attributes such as their charisma, personality, empathy, and the like.

7.      Peer Influence: This refers to the power available for managers to influence the behavior of other subordinates with the help of peers in the organization.

An emotional intelligence refers to a person’s ability to communicate, influence and make a change within and outside their organizational setting. It is believed that managers who do not develop their emotional intelligence properly have difficulty in making good relationships with their peers, subordinates, superiors and clients (Goleman, 2016).  Hence, having said this, it can be true that there is a positive relation between the power and emotional intelligence. In other words, it is necessary for managers to have both power and emotional intelligence to empower their subordinates effectively in achieving organizational goals.

On the other hand, both power and emotional intelligence can be used in providing vision and direction for an organization and employees through different mechanisms. For example, these powers help to direct, control and coordinate with their subordinates so as to prepare them for achieving the company’s vision and direction. In addition to this, they can be used to provide the intrinsic and extrinsic motivation such as reward, bonus, appreciation, apprising, self-realization, achievement for an organization which could be used as a power of the managers to empower towards achieving and directing the company’s overall vision, mission, objectives, strategies and tactics.

References

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

Goleman, D, (2016) What Makes a Leader. Harvard Business Review. January -February, pp. 93-102.

Mechant, P. (n.d.). 5 Sources of Power in Organizations. Retrieved from http://smallbusiness.chron.com/5-sources-power-organizations-14467.html

4.        Is corporate culture an important element in an organization and its strategic direction? How can organizational culture be created, influenced, and changed?

Organizational culture is the set of important assumptions (often unstated) that members of an organization share in common (Pearce II, J.A.,& Robinson, R.B., 2012). It is true that assumptions will be shared assumptions when they are internalized and institutionalized among an organization’s individual members. It cannot be refuted that each and every organization has its own culture and that is paramount in an organization and its strategic direction.

Generally speaking, Corporate culture is the pattern of fundamental assumptions or beliefs that a specific group has developed through learning to deal with its problems of internal assimilation and external adaptation, and that have been approved to work effectively, and therefore it can be taught to new members as the correct way to perceive, feel and behave in relation to those problems (Schein 2009).

There are many ways for shaping organizational culture such as creating, influencing, and changing the culture within a corporate culture which are as follows:

·         The organization should emphasize on key themes or dominant values so that its culture can be created, influenced and changed to fit the organizational resources and capabilities.

·         The company should encourage in disseminating the different stories and legends about core values that will have a greater impact on their employees’ motivation.

·         The company should institutionalize practices that systematically reinforce desired beliefs and values of the company so as to direct, control and coordinate its strategic direction with employees.

·         The company should use or adapt the common themes in their own unique ways so that they would realize their value as strategic ones to be achieved.

·         The organization should focus on managing organizational culture globally by delivering and communicating organizational norms, values, attitudes, religion and education about products or services of the company.

·         It is also possible to create, influence and change the organizational culture by formulating, implementing and controlling of different policies, strategies, and tactics. It is important to make them to fit with the organization and support their employees for organizational change.

In a nutshell, it can be concluded that organizational culture plays an important role to protect and sustain their competitive advantage from their competitors. As organizational culture keeps creating, influencing and changing their culture, I strongly believe that applying above ways successfully, company will be able to direct their company's vision and achieve their goals.

References

Pearce II, J.A.,& Robinson, R.B. (2012). Strategic Management: Formulation, Implementation, and Control. New York: McGraw-Hill Irwin.

Solomon, M. (2014, September 27). 9 Leadership Steps For Corporate Culture Change. Forbes. Retrieved from http://www.forbes.com/sites/chrismyers/2016/04/14/learning-to-let-go-how-i-evolved-from-founder-to-ceo/#3d8a946438a0

(n.d.) Retrieved from https://www.ukessays.com/essays/business/the-importance-of-organizational-culture-in-strategic-management-business-essay.php