Social
GEC was a place were workers and the communities surrounding them were able to feel secure in their jobs, especially during times of hardship, like the recession and provide families with a regular income.
GEC workers gain training and learnt life long skills.
Technological
As 50% of GEC’s business was defence, GEC would of invested a lot into research and development. This would ensure that the countries defences were at their best and its technologies were new and up to date.
This would ensure the continuity of contracts from the government.
Oticon
SWOT
Oticon’s PEST analysis
Political
Oticon was strong in state subsidised markets such as Scandinavia and North Europe, which provided them with state subsidisation and allowed the stability from the governments that provided them with these subsidies.
Economic
Oticon was not stable company and lost half of its equity in the 1980’s due to a demand for digital and ‘in the ear’ hearing aids. This also lost them their share in the market causing their fortunes to plummet. Oticon was also very weak in the USA and Far East buy out markets.
Social
Due to the lack of stability in Oticon, it was a great concern to its employees and their families as they wee unsure of their positions within the company and the long term ability to provide for their families.
Technological
Oticon was slow moving and therefore they were unable to keep up with the demand from the newer; more technological products that the market wanted and that other companies were providing. Oticon was still manufacturing analogue hearing aids whilst its competitors were producing digital ones.
Below is a SWOT and PEST analysis for both Marconi and Oticon before changes were introduced to these companies.
Marconi
SWOT
Marconi PEST analysis
Political
Once Simpson sold off the defence businesses, there was rarely any more dealings with the government.
There was a lengthy investigation by the UK’s financial watch dog, the Financial Services Authority (FSA), because there was concerns about the way Marconi handle the profits warning. The FAS reported that Marconi broke the FSA rules by not adhering to its legal obligation to keep the market informed in a timely manner of price sensitive information.
Social
To begin with, when Simpson took over there was a lot of confidence placed in him by the City of London. People believed he had the skills to move Marconi forward and bring it up to date with the times. Once shares began crashing so did peoples admiration for him and these left workers, working for a company with an unstable and uncertain future.
Economical
Marconi used all its stockpiled cash and sold all its profitable businesses as well as borrowed over £4billion to acquire new telecoms and internet related businesses. This meant that they had no safety net to fall back on, should things go wrong or to support them through bad financial times.
Marconi watched their shares escalate as high as £12.50 on the FTSE100 and then plummet to less than 2pence.
Technological
Marconi saw the technology of the telecoms and internet industry as the place to be in, so as to move forward and keep up with the future and make huge profits. Unfortunately, for Marconi, so did many others and they too, bought into it. A lot of the other companies had what Marconi didn’t and that was knowledge and experience in the technologies industry.
Oticon
SWOT
Oticon PEST analysis
Political
Once Oticon became a disorganised organisation and there was an explosion of changes but there were no changes politically.
Economic
The cost of restructuring and changing the culture of the business was high and very risky to a company that was already struggling. Fortunately it was very successful and Oticon’s sales were increasing at 20% a year, whilst everyone else was shrinking at 5% per year. Turnover increased 100% and Oticon saw a 4% increase in the market over 3 years.
Social
Oticon was no longer a company focusing on a product. They now worked towards improving the quality of life for people with hearing difficulties.
Within the company, staff were encouraged to socialise, even to the extent that stand up coffee bars where placed around the work place, to encourage staff to discuss projects and ideas. All barriers such as walls and static desks were removed and all aspects of the company were transparent, causing employees attitudes to their work to change.
Technological
Due to the changes, the discovery of the design for a digital hearing aid came about and with it the launch of the hearing aid. Oticon were able to leap into the future of digital technology and the digital market.
Stakeholder analysis
The strategy of an organisation involves many people and groups. These include those with an interest in the implementation of the strategy and those whose interest will arise as a result of the event or outcome.
It is important to understand the stakeholders and their influences on the organisations strategy, as it forms an assessment of the cultural/political dimensions of a strategy.
By understanding the stakeholders, an organisation is able to prioritise the influences and impressions of them, in the strategy and analyse how much power they have.
Conflict is likely to arise, so these should be considered beforehand and plans should be put into place to either divert them or pre-empt them.
Simpson had brought in his own people when he took over at Marconi, notably John Mayo as Finance Director. When they decided to move into telecoms they never really considered the stakeholders nor did they think any proper strategy through. It seemed as though they just went charging in buying any telecoms business.
Lars Kolind followed a stakeholder analysis before implementing his strategies. he discussed the current problems with the owners and what they didn’t want to happen, there fore he stabilised the company before identifying the major stakeholders and introducing the new mission statement and objectives.
Kolind knew that with change a lot of conflict and reluctance would arise, but these changes needed to be made. So although he considered these conflicts he resolved them by encouraging employees to get involved and put the ideas and thoughts into it. For those that remained reluctant were asked to leave. Kolind wanted to move Oticon forward and needed the help and support of everyone.
- Identify and discuss the strategic plan of both organisations
For an organisation to develop a strategy so as to move in any direction it needs to know what direction it is heading for. This means it needs a goal, mission or objective etc.
Once the organisations goals have been set it then needs to develop a strategy on how to achieve these goals and ensure that all involved understand and agree it.
Both Marconi and Oticon had goals. Marconi’s was to move the company into the modern era and be the best in the market. Oticon’s goal was to turn the company round so as to make a profit.
The table below shows how Marconi developed a divestment strategy and the similarities in the divestment strategy that Germany used in operation Barbarossa when they invaded Russia.
Divestment strategy definition:
“Plan whereby a product line (or product division of a business) is liquidised or sold so as to limit either real or anticipated losses and to redirect the resources behind that product or division to other company products or divisions”
http://www.answer.com/topic/divest-strategy
12/3/2010
With the appointment of Lars Kolind as president of Oticon and Winston Churchill as prime minister of Great Britain, it is easy to see the similarities in their strategies to change the situations they faced.
These strategies are shown in the table below.
Kolind could have sat back once Oticon had turned around and profits increased, but he went on to implement a growth strategy to enable Oticon to progress and grow even more.
Using what resources were already in the company, Kolind exploded the company and reorganised it.
Through the reorganisation, an old discard idea for a new hearing aid was discovered, invented and marketed. This put Oticon as one of the three best hearing aid companies in the world. To prevent the company sliding back into the old ways, Kolind left Oticon, so some one new could take over and keep the running of the company fresh.
- Evaluate possible alternative strategies for both organisations
Marconi could have used other strategies than that of the divestment strategy.
One option would have been to invest into established telecom companies. Although this would mean that they would not generate as much revenue, it would have given Marconi a foot in the door on the telecom market.
Marconi could then gain knowledge and experience in this field allowing them to be able to grow and expand. Eventually they would be able to buy telecom businesses and be able to control them appropriately.
This would be a long, slow process, but would have a lower risk attached to it. The chance of being successful would be better, as even when the market did crash, they would still have their other assets to either fal back on or to support them through the crash.
Kolind could have used other strategies to turn Oticon around. These include:
Divestment strategy – Oticon could have sold off its hearing aid business and used the monies to fund a new different business. The draw back to this is that Oticon had no experience of anything else other than hearing aids. This would have been a huge risk and could have ended up with the loss of everything.
Forming alliances – as Oticon was a family run business, they were unwilling to use the strategy of forming an alliance with its competitors and loosing their identity.
Re-establishing itself as a distributor – Oticon could have stopped researching and developing hearing aids and instead they could have just produced hearing aids designed by bigger companies.
For such a traditional company with a good history and a strong name it would see it as a great loss of Oticon’s identity.
- Discuss the strategies of both organisations identifying resource requirements in order to implement the strategy. Provide and discuss the implementation plan (key milestones) used by both organisations
Marconi’s strategy was to change its business environment altogether, going from engineering and defence to telecoms.
In order to do this Marconi sold off all its businesses and assets. They then went on to purchase over 20 telecoms related businesses in quick succession. These were bought at the highest prices causing Marconi to use all the money from the sale of their businesses, the £2bn cash and another £4bn that was borrowed.
Oticon’s strategy was to prevent the company from closing and to turn it around to a profit making business. Kolind first stabilised it by cutting costs. Next he restructured the company, work culture and environment. This was to enable the company to turn around and start making a profit. Finally the changes were implemented through out the organisation, so as to allow it to grow and become a worthwhile competitor.
There were many key milestones in the strategies used, by both Marconi and Oticon. These can be seen in the table below.
6.0 Compare the roles and responsibilities for the strategy implementation in both organisations
The leaders of Marconi and Oticon both decided what strategies were to be implemented.
Simpson decided that Marconi was to be the number one company in telecoms as he believed that that was were the future of business was.
Simpson was very autocratic in the way he implemented this strategy. He told everyone what was to be done and how they were to do it. So all the businesses were sold off without a thought of the consequences. Then any telecoms business was bought, in what looked a very irrational way, such as overpriced, no experience, no research of the company performed and all done in such a rapid manner.
Kolind was similar to Simpson in that it was him that came up with the strategy for Oticon. He also went in as an autocratic manager, he told people of the changes to be made and the alternative choice was to leave if they didn’t like it. That it were the similarities end.
Once Oticon was stable, Kolind discussed what needed doing to turn the company around. Although Oticon stayed with its expertise in hearing aids, there was an understanding, throughout the company of the changes. Opinions were always welcome and often implemented. In summary, everyone from Oticon was singing from the same song sheet.
Kolind recognised that for Oticon to continue growing then he needed to leave. This would allow for someone new to take over and introduce new fresh ideas and strategies.
- Conclusions and Recommendations
In reviewing the assignment it is east to see that all strategies carry risks.
It is these risks that need to be weighed up and though about when implementing any strategy.
A company needs to consider the consequences of any of the risks and what can be done should any of them come about. If this is not done then it is likely that the strategy will fail.
Before Weinstock retired the general feeling around GEC was that the organisation needed to move into the modern era.
The appointment of Simpson was probable for him to implement the strategy to do this. Simpson had a good background in this but unfortunately he did not have a experience in telecoms.
Simpson should have took more time to research and investigate different strategies before implementing them. If he had formed alliances and invested in businesses with the expertise like; AOL, Amazon, Hotmail etc, and then things would have been very different. The company would have survived the dot com crash and became very successful. Marconi would have gained experience and continued to grow progressively. Marconi could have done this whilst still making a profit with its existing businesses.
Although it is easy to point out were Marconi went wrong and that they should have entered into the market in stages, it could have also been very different. As mentioned earlier the risks were high but so too would the profits had been if the strategy had been successful. An example of this strategy working for another person and company is Richard Branson and Virgin Atlantic Airways (VAA).
Branson was mainly known for Virgin Records, this was his area of expertise. In 1984, to the horror of his directors, Branson announced to the world that he would be launching a High quality value for money airline. Branson sold of most of his other businesses and invested them in to VAA. VAA is now a very lucrative and successful company.
For Oticon things were different. It was a company that was close to closing down. The risks were not that high for them as they were about to loose everything anyway.
The alternatives, as discussed earlier, were not strategies that the Oticon family wanted to implement and take Oticon in those directions.
Kolind had experience of using the strategies that he put in place at Oticon and knew that they could work.
Oticon is a Danish company, were the culture is that country is informal and in favour of equality, making it a lot easier to introduce that culture into the workplace. This is probably the reason for the speed and pace that Oticon saw the turnaround in the profit margins. That said it could also be the reason for it not to work in other countries.
- Bibliography
Aldred Rod, Handouts and student pack, Wirral Met College 2009/2010
www.google.com
www.news.bbc.co.uk/2/hi/business/4373934.stm
www.oticon.com
Piers Morgan’s Life Stories: Richard Branson, ITV 1, Sunday, 1 March 2009, 10:00PM -11:00PM
www.wikipedia.com
http://www.youtube.com/watch?v=WNG8OqSPw5Y
- Reference
http://www.answer.com/topic/divest-strategy
12/3/2010
- Self evaluation
Self Evaluation
I struggled with this assignment, but it gave me more of an understanding of the subject; by making me research and study the concepts and different strategies.
By, attending lessons regularly and receiving handouts from my tutor and also by searching the internet I gained more knowledge of the companies in the case studies and relating to the different strategies. I also learned how these strategies have been used in other areas not just businesses but in war too.
I felt I was able to explain different strategies and when best to implement them but also that just because a strategy does not work for one does not mean that it will not work for someone else too.
I feel that the study and research used for this assignment and the knowledge and experience gained will help me in the future, particularly when making a business plan for when I hope to start up a business and being able to strategise which way I would like to go with the business and the future direction of it, as I would eventually like to start my own business providing a service, as an events organiser
I completed the assignment by reading the course notes and using the internet and discussions with fellow course members provided further information.
I have worked hard on this assignment and feel that I have completed it to the best of my ability. I am satisfied with the assignment and can now only hope that the marks reflect this.
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