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Critical Success Factors

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Title: Critical Success Factors


1
Planning
Organizing
Critical Success Factors
Stakeholders
Marketing
Economic
Top Management
INTERNAL
Vision
Operations
Finance
EXTERNAL
Social
Political
Mission
Human Resources
Technological
Strategy
Middle Management
First-Line Management
Controlling
Directing
2
Process of Management
  • Planning
  • Strategy
  • Organizing
  • Directing / Leading
  • Motivating
  • Controlling
  • Change and Innovation

3
Planning Process
Determine Goals / Objectives
Develop Plans
Measure Results and Make Changes
Implement Plans
4
Purpose of Planning
  • set goals (the objectives the business hopes to
    achieve)
  • formulate strategy

5
Qualities of Goals / Objectives
  • clear and specific
  • objective and measurable
  • challenging but attainable
  • realistic wrt environment
  • time limit
  • prioritized
  • fit with other objectives - integrated
  • flexible
  • stated in terms of accomplishments not activities

S.M.A.R.T.
6
  • Levels of Planning

Long-term goals (5-10 yrs)
  • Top Management
  • organizational structure
  • strategy-structure-performance

Intermediate-term goals (1-5 yrs.)
Middle Management of functional areas
First Line Management
Short-term goals (lt1 yr.)
7
Thinking Strategically
  • decide where the business is going (direction)
    and how it intends to get there (strategy)
  • direction articulated in the Vision statement
  • and further refined in the Mission statement

target customers and markets principal products
or services geographic domain core technologies
survival, growth and profitability company
philosophy company self-concept desired public
image
8
Strategic Planning Process
at start-up
External Environment
Stakeholders
SWOT Industry Analysis Core Competencies
Competitive Advantage
Vision and Mission
Internal Environment
X as established org.
Goals / Objectives
Strategy
Action
Review
9
S.W.O.T. Analysis
Opportunities Threats
Economic
Marketing
Vision
Social
EXTERNAL
Political
Mission
INTERNAL
Operations
Finance
Strategy
Human Resources
Technological
Strengths Weaknesses
10
Industry Analysis
Number and power of
Buyers
Potential Entrants
  • Profitability
  • Growth

Suppliers
Competitors
Substitutes
11
Competencies and Competitive Advantages
  • Core Competence
  • Distinctive Competence
  • Competitive Advantage
  • Sustainable Competitive Advantage

12
Resource-Based View of the Firm
  • view firm as bundle of capabilities
  • actively seek ways to extract value from
    capabilities

13
Levels of Strategies
  • 3 levels of strategic planning
  • corporate
  • business (competitive)
  • unit / functional
  • Corporate Strategy
  • portfolio / master strategies - what
    business(es) should we be in?- SBUs
  • concentration
  • growth
  • integration
  • diversification
  • investment reduction

14
Corporate-level strategies
  • Concentration
  • focusing on one product or product line
  • Outcome
  • Growth
  • market penetration
  • new product development
  • geographic expansion
  • export management firm
  • licensing
  • foreign sales office
  • wholly owned subsidiary

15
Corporate-level strategies (contd)
  • Integration (Merger or Acquisition within value
    chain)
  • vertical integration
  • horizontal integration
  • Diversification
  • branching out into related or unrelated products
    or market segments
  • product diversification
  • market diversification
  • concentric diversification
  • conglomerate or portfolio diversification

16
Corporate-level strategies (contd)
  • Investment Reduction
  • retrenchment
  • divestiture (liquidation)
  • consolidation

17
Business-level strategies
  • how do we compete in the business(es) we are
    in?
  • Competitive Position
  • market/product/service emphasis
  • Michael Porters competitive strategy - the
    specific approach a business chooses to pursue
    for addressing its environment
  • generic competitive positions...
  • Low-cost Leadership
  • Differentiation
  • Focus

18
  • Low-Cost Leadership
  • focus on value and price
  • Differentiation
  • focus on specific market niche and its needs
  • Focus
  • selecting a market segment and serving its
    customers better than competitors either from a
    price or product (unique features) perspective

19
  • Business-Level Strategies
  • Lower Cost Differentiation
  • Broad
  • Target
  • Comp.
  • Scope
  • Narrow
  • Target

Cost Leadership
Differentiation
Focus
Cost Focus
Differentiation Focus
20
Organizing Process
Break Down the Work
Link the Parts Together
Monitor Results and Make Changes
Structure
21
  • Organizational Design
  • process of developing organizational structure
  • Break down the work to be performed (division of
    labour)
  • specialization
  • departmentalization-
  • function, geography, product, customer, process

22
Organization Chart(depicts the organization
structure)
23
Customer-Driven Organizational Design
  • restructuring
  • teams
  • cross-functional, participatory, self-managed
  • strategic rightsizing vs. downsizing
  • integrated structures vs. functional departments
  • matrix - cross-functional teams - networking
  • empowerment - decentralization
  • reengineering - continuous improvement - TQM
  • inside out - outsourcing

24
  • Evolution of organizational structures
  • growth via creativity crisis of leadership
  • growth via direction crisis of autonomy
  • growth via delegation crisis of control
  • growth via coordination crisis of red tape
  • growth via collaborationcrisis?

25
  • Whats not on the organization chart?
  • Culture
  • Informal organizations
  • old vs. new structures
  • importance of open communication
  • listening!
  • remove barriers
  • facilitate communication

26
The Role of Culture
  • the shared experiences, stories, beliefs, and
    norms that characterize a firm
  • powerful because
  • Purposes/Implications

27
Directing/Leading/Motivating Process
Determine Employee Needs
Establish Reward System based on Needs
Monitor Results and Make Changes
Reinvent Work
28
Gaining Employee Commitment
  • performance is a function of both talent and
    commitment
  • talent has to be energized and committed to
    achieve its full potential
  • level of commitment comes from degree of
    motivation

29
  • BUT motivation comes from inside
  • AND each worker is unique
  • managers must understand each workers needs and
    tailor approach to individual
  • must understand human motivation...

NEED AROUSAL
BEHAVIOUR CHOICE
BEHAVIOUR
FEEDBACK/ADJUST
30
NEED AROUSAL Theories
  • Abraham Maslow

self-actualization
self-esteem
social
safety and security
physiological
31
  • management implications?
  • Alderfers ERG model
  • reworked Maslow to align more closely with
    empirical research
  • 3 need categories

32
  • Frederick Herzberg
  • when asking people what causes them to be
    satisfied and what causes them to be dissatisfied
    - found that the factors were separate and
    distinct Two-Factor Theory

Job Dissatisfn --- NO job dissatisfn NO job
satisfn --- Job Satisfn
HYGIENE FACTORS
MOTIVATOR FACTORS
33
  • If hygiene factors fall below a certain level
    what will happen?
  • must build motivators into the job
  • achievement
  • recognition
  • advancement
  • responsibility
  • growth
  • challenging and interesting work

34
  • Job Enrichment and Job Redesign
  • combine tasks
  • create natural work units
  • expand vertically
  • open feedback channels

35
  • Hackman Oldham
  • redesign jobs to suit level of workers growth
    needs Job Characteristics Model
  • 5 core dimensions in every job
  • variety, task identity, task significance,
    autonomy, feedback

  • People are internally motivated when

36
  • critical psychological states necessary for
    motivation come from the core dimensions
  • Core Dimensions Critical Psych. States Outcomes
  • Variety
  • Task Identity
  • Task Significance
  • Autonomy
  • Feedback

Meaningfulness of Work
Responsibility for Outcomes
Knowledge of Results
depending on the level of growth needs
37
BEHAVIOUR CHOICE Theories
  • cognitive vs. acognitive
  • Cognitive - conscious decision
  • Victor Vroom - Expectancy Theory
  • motivation is a function of
  • management implications?

38
  • Acognitive - subconscious decision
  • B.F. Skinner - Reinforcement Theory

39
FEEDBACK Theories
  • Douglas McGregor
  • a managers assumptions about workers will
    influence his/her management style which in turn
    influences motivation
  • Theory X / Theory Y
  • Theory X behaviour... organizational problems
  • mistaken notion of cause and effect
  • Theory Y assumptions... organizational design
    Theory X behaviour problems
  • management implications?

40
  • Blake Moutons Managerial Grid

concern for production
Team Leader
Country Club
HI
Middle of the Roader
concern for people
Early Retirement
Sherman Tank
LOW
HI
LOW
41
Controlling Process
Set Performance Standards Indicators
Measure Actual Performance
Compare Actual vs. Plans
Take Corrective Action / Making Changes
42
  • Standards Critical Success Factors
  • achieving financial performance
  • meeting customer needs
  • building quality products and services
  • encouraging innovation and creativity
  • gaining employee commitment
  • Measuring Results
  • what are the indicators?
  • Making Changes...

43
  • Types of Controls
  • preventative
  • steering
  • corrective
  • Principles
  • economy
  • efficiency
  • effectiveness
  • timeliness
  • usefulness

44
Customer Perspective
  • Meeting customer needs
  • Customer sensitivity and service
  • Timeliness

45
Meeting Customer Needs
  • more complicated to assess than financial
    performance
  • impossible to make comparisons with other firms
  • if unmeasured - problem will not be corrected
    until it is too late!
  • perform a Gap Analysis

46
  • Steps
  • 1. Determine real gap
  • 2. Determine sources and causes of gap
  • 3. Take corrective action

47
Customer Sensitivity and Service
  • customer service
  • can be measured using gap analysis
  • customer sensitivity (how well the business
    reacts to customer communications)

48
Timeliness
  • important efficiency and customer service measure

49
Quality and Value Perspective
  • benchmark indicators against other firms
  • Product Quality indicators
  • reliability
  • durability
  • ease of maintenance
  • ease of use

50
  • Service Quality indicators
  • knowledgeable staff
  • responsiveness
  • empathy
  • tangibles

51
Innovation and Creativity Perspective
  • measure processes (creativity) as well as results
    (innovations)
  • partly objective
  • partly subjective
  • ambience
  • excitement

52
Employee Perspective
  • measure how well the business utilizes its
    workers, how good their performance actually is,
    and how committed they are
  • Workforce Utilization and Productivity
  • Performance Appraisal
  • Employee Satisfaction and Commitment

53
Workforce Utilization Productivity
  • important for efficiency
  • easy to measure if workers are producing tangible
    products and individual input is identifiable and
    controllable
  • must measure underutilization, overutilization,
    allocation/mix of workers

54
Performance Appraisal
  • process used to measure productivity
  • measure and communicate to employee
  • focus on activities an outcomes critical for
    performance
  • objective and subjective

55
Employee Satisfaction and Commitment
  • fundamental for building business culture
  • objective indicators
  • absenteeism and turnover rates
  • morale/opinion surveys and exit interviews
  • subjective approaches
  • staff meetings to discuss problems
  • recruitment and retention committees

56
Making Changes
  • Innovation and change are necessary for success
  • random change vs. planned change
  • Planned change
  • intentional movement
  • key is to begin when things are still going well

57
  • Resistance to Change
  • why?
  • this is NORMAL!
  • Philosophy of Change
  • Kurt Lewin
  • unfreezing, moving, refreezing

58
  • Process of Planned Change

Awareness of the need for change
Leaders who will champion change
Vision of the desired future state
Plan and manage the action steps
Monitor and modify
59
Building Innovative Organizations
  • encourage risk and experimentation
  • tolerate and learn from mistakes
  • embrace diversity and differences
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