Chapter 3 Identifying the Right Work PDF

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Chapter 3: Identifying the “Right Work” ● Elements to defining the “right work”: (not always sequential) 1) Vision statement: states an organization’s purpose for existence a) Aspirations b) purpose 2) Mission statement: elaborates company will pursue vision → provides clarity a) Business descriptions (products/services) b) Describes why constituents (customers, employees, shareholders, communities) should support you 3) Identify Goals: identity outcomes company is trying to achieve a) Specific success/ achievements = indicators of success b) Creates measurables c) Two primary “for-profit” goals: i) Financial goals: (1) Return on capital employed (ROCE): level of profit earned relative to the capital invested to generate that profit (2) sales/ revenue earned (3) Profit (percent/ amount) (4) Net cash flow amount (5) Days sales outstanding (DSO)/ Days receivables outstanding: 𝑎𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 𝑑𝑎𝑖𝑙𝑦 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑠𝑎𝑙𝑒𝑠

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Days of inventory on hand:

𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 𝑜𝑓 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑑𝑎𝑖𝑙𝑦 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠

or inventory turnover:

𝑐𝑜𝑠𝑡 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑏𝑎𝑙𝑎𝑛𝑐𝑒

ii)

4)

Operational goals: (1) Market share vs. competitors (2) # of returning customers for a given time period (3) # of new customers for a given time period (4) Service levels: delivering the correct product/ service within a given time (5) Production levels: # of units produced to standard within a given time period (6) Error/ defect levels: # / % of non-conforming units/ errors Develop strategies: actions managers take to achieve the organization’s goals a) Core strategies: i) Dierentiation strategy: distinguishing products ii) Low-cost strategy: allows businesses to earn a higher profit margin than competitors / price products at a lower price than competitors iii) Combination strategy: selects a few dierentiation features for its products iv) Focus strategy: targets a specific market segment: geographic, demographic, or specialized product/service segment of the market b) Distinctive competencies: allows business to dierentiate products from competitors to achieve cost leadership + superior value for customers c) Strategy Model:

d)

i) Strategy development process: i) Develop/review/update the vision, mission, and goals of the organization ii) Conduct an external analysis of the business environment and the industry in which the business competes

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iii)

iv)

v)

5)

Porter’s Five Forces: an analysis tool that looks at how the following factors influence profitability in an industry → stronger these forces → more downward pressure there is on industry profitability → less attractive for new entrants (a) Intensity of the rivalry (b) bargaining power of buyers (c) bargaining power of suppliers (d) Threat of new entrants (e) The threat of substitute products/ service (2) Industry life cycle analysis: looks at typical stages of evolution of industries (a) Embryonic: new product begins formation of new industry (b) Growth: product is broadly accepted (c) Shakeout: industry growth flattens/ declines (d) Mature: industry growth slows + # of new entrants lessens (e) Decline: growth - negative + few remaining participants (3) Macroenvironmental analysis: (a) Macroeconomic factors: (b) Global trends (c) Technology (d) Demographics (e) Social values (f) political/legal factors Conduct an internal analysis of products and capabilities vs. competitors and world class standards (1) product/ service quality (2) Eciency (3) Innovation (4) Customer responsiveness (5) Distinctive competencies Based on the outcomes of steps 1-3, evaluate + select best strategy for achieving goals of the organization (1) Four core strategy options: builds on distinctive competencies + core competencies = things that an organization does well but other organization does it well too (a) Dierentiation (b) Low-cost leadership (c) Combination (d) Focus Implement the strategy (1) Three key elements to eective strategy implementation: (a) Organization structure: designing meaningful jobs + optimal organization model (grouping of jobs + delegation of authority) (b) Monitoring + control: creation of a system that periodically reviews progress + provides motivation/ incentives to employees (c) Culture: set of values, norms, beliefs + attitudes shared

Develop plans a) Specific steps + requirements for executing the strategies b) Types: should be aligned with chosen strategy + consistent with organization’s goals i) Strategic plans: core strategy steps + key initiatives ii) Business plans: key goals/ steps/ key initiatives + require resources + timeline iii) Marketing plans iv) Operational plans v) Functional plans vi) Financial plans vii) Research + development plans viii) Technology plans ix) Human resource plans...