3.2 task environment
Task (operational) environment is the specific outside elements which an organization interfaces with in conducting its business. It is consists of five elements as shown below (Bartol et al, 2002, p89):
An organisation’s customer and clients are individual and organisations buying its products and/or services (Bartol et al, 2002, p70). Considering consumer behaviour is a key element in the process of satisfying firm’s target market need. Many firms lose market share as a result of assumptions made about target segments. Market research and industry surveys can help to reduce a firm’s chances of relying on illusive assumptions.
An organisation’s competitors are other organisations offering or potentially offering rival products or services. Organization must be concerned with known competitors and monitor for potential new entrants (Bartol et al, 2002, p70). Development of competitor profiles enables a firm to more accurately forecast both its short and long term growth and its profit potentials. Moreover, comparing the firm’s profile with competitors can relieve its managers in identifying factors that might make the competitors vulnerable to the strategies the firm might choose to apply.
Dependable relationships between a firm and its suppliers are essential to the firm’s long-term survival and growth. A firm regularly relies on its suppliers for financial support, services, materials and equipment. In addition, it infrequently is forced to make special requests for such favour as quick delivery, liberal credit terms. Thus, it is essential for a firm to have had an ongoing relationship with its suppliers (Bartol et al, 2002, p72)
An organisation’s labour supply consists of people employable by the organisation. The ability to attract, motivate and retain human resource to provide products and services is crucial for organization (Bartol et al, 2002, p72). For increase diversity, many companies have introduced program to help organisation member’s value and develop a more diverse workforce.
Various government agencies provide services and monitor compliance with laws and regulations at local, state or regional, and national levels. Usually a firm’s task environment involves interactions with representatives of specific government agencies. For example, tax consumer affairs, police and worker’s compensation (Bartol et al, 2002, p73).
4. Planning
4.1 planning process
Planning is process of determining goal and the ways and means of achieving those goals, the resources needed, establishing measurable standard of progress towards achieving those goals (study guide, 2003).
Planning process is following:
Bartol (2002) stated that goal will be used for broad statement of what the organization wishes to achieve. A goal will be less specific than a mission statement, but not as specific as an objective.
Plan is the means for trying to reach the goal. Planning, then, is the management function involving setting goals and deciding how best to achieve them. Setting goals and developing plans lead to goal achievement and, eventually, organizational efficiency and effectiveness (Bartol et al, 2002, p150).
Mission is defined as the organization’s continuing purpose or reason for being. (Gordon et al, 1990, p109)
4.2 Level of planning
Planning occurs at every level in the organization. At the top-management level, the primary concern is with strategic planning, relating to overall organizational purpose. Strategic plan are designed to implement or carry out the broader-based plans of top management. Strategic plans must be broken down into less generalized operating or tactical plans which are plans designed to implement or carry out the strategic plans of top management. As there are levels of plans also differ by organizational level. Thus there are strategic, tactical and operational plans (Bartol et al, 2002, p185).
Strategic plans are detailed action steps mapped out to reach strategic goals. These address such issues as responses to changing conditions, allocation of resource, and the actions to be taken to create unified and powerful organization-wide effort to achieve strategic goal (Bartol et al, 2002, p185).
These plan support strategic plan implementation and also focus on intermediate time frames, usually one to three years. Normally, they are more specific and solid than strategic plans (Bartol et al, 2002, p 186). They are developed by middle managers in consultation with lower-level managers, before making commitments to top-level management. Tactical plans are important to the success of strategic plans.
These plans support the implementation of tactical plans and operational goal achievement. These plans generally consider time frames of below a year, such as a few months, weeks or even days (Bartol et al, 2002, pp186). Operational-level plans are usually developed by lower-level managers in consultation with middle managers.
4.3 Step in developing a strategic plan
These steps produce a plan which builds on an organization’s strengths, mitigates against the weaknesses and takes advantage of external opportunities. Determining these strength, weaknesses, opportunity and threats is referred to as a SWOT analysis (study guide, 2003, p5-10). Strengths and weaknesses are essentially internal to the organization and relate to matters concerning resources, programs and organization in key areas. These include:
- Sale-marketing-distribution-promotion-support
- Management-system-expertise-resources
- Operations-efficiency-capacity-processes
- Products-services-quality-pricing-features-range-competitiveness
- Finances-resources-performance
- R&D-effort-direction-resources
- Costs-productivity-purchasing
- Systems-organization- structures
The external threats and opportunities confronting the company can exist or develop in the following areas:
- The company’s own industry where structural change may be occurring(size and segmentation: growth patterns and maturity: established patterns and relationships, emergence/contraction of niches; international dimension; relative attractiveness of segments)
- The marketplace which may be altering due to economic or social factors (customers; distribution channels; economic factor, social/demographic issues; political & environmental factors).
- Competition which may be creating new threats or opportunities (identities, performances, market shares, likely plans, aggressiveness, strengths & weaknesses);
- New technologies, which maybe, causing fundamental changes in products, processes, etc. (Substitute products, alternative solutions, shifting channels, cost savings etc.)
Once the SWOT review is complete, the future strategy may be readily apparent. SWOTs can be used to help identify possible strategies as follows;
- Build on strengths,
- Resolve weaknesses,
- Exploit opportunities,
- Avoid threats.
4.4 Formality of the strategic planning process
Research generally concludes that the strategic planning process should be far more informal in small and medium size companies than it is in large corporations. It has even found that too much formalization of the strategic planning process may actually result in reduced performance (Regan & Ghobadian, 2002, p665). It is possible that a heavy emphasis on structured, written plans can be dysfunctional to the small and medium companies firm because it detracts from the very flexibility that is a benefit of small and medium size (Thomas et al, 2002, p286).
4.5 Strategic plans required for the firm
Good strategic planning is vital to the survival and growth of an organisation. There are some examples of strategic plan which might be appropriated with this organization:
- BCG matrix: the BCG matrix is only specific parts of the strategic plans and in this case the marketing strategy. One would expect that a complete strategic plan would include financial, R&D, human resources, production plans as well(Bartol et al,2002,p217-223 cite in study guide,2003,p5-11)
- Porter’s five forces provide a means of analysing the competitiveness of an industry (Robbins et al, p2003, p237).
- Prospector strategy: this strategy is to be innovative, by seeking out new opportunities, taking risk, and expanding. The prospector strategy is well suited to a dynamic, growing environment, where creativity is more important than efficiency. The internal organization is flexible and decentralizes (Gordon et al, 1990, p157).
- Management by objectives (MBO): A philosophy of management that emphasizes the setting of agreed-on objectives by superior and the use of these objectives as the primary bases of motivation, evaluation, and control efforts. Moreover, MBO provides an effective overall planning system. MBO helps the manager avoid management-by-crisis and fire-fighting (Gordon et al, 1990, p123, p129).
- Diversification strategy: is increasing the variety of products of service made or sold (Gordon et al,1990,p153).
5. Leadership
Leadership is an interactive process, the collective energy of a group, organization, or nation is focused on the attainment of a common objective or goal. Through leadership, clarity of purpose, direction, and means is achieved. There is also a perception of shared commitment by members.
5.1 Leadership theories
Recently, definitions have focused on leadership and change, vision building and empowering others. This section contains information on a number of leadership theories and models
5.1.1 Hawthorne Studies and Kurt Lewin and Likert
Participation styles of leadership lead to increased job satisfaction and higher performance (Air University).
5.1.2 Normative leadership model
A model of leadership developed by Vroom and Yetton which helps leaders assess important situational factors affecting the extent to which subordinates should be included in decision making (study guide,2003,p7-7).
5.1.3 Instrumental theories
Stress task and person oriented behaviour (e.g. participation, delegation) by the leader to gain effective performance from others (Air University).
5.1.4 Inspirational theories
Include charismatic leaders, transformational leadership. The leader appeals to values and vision and enthuses others raising confidence in others and motivating them for change (Air University).
5.1.5 Informal leadership
Looks at behaviours associated with those who are not appointed to authority but assume leadership in other ways (Air university).
5.1.6 Path-goal theory
Look at hat leader must do to motivate people to perform well and to get satisfaction from work. It draws on the expectancy theory of motivation. Four leadership styles: supportive, directive, participative and achievement oriented. The choice of style depends on the task and the individual for example, routine task need supportive style and complex task might choice directive leadership (study guide, 2003, p7-7).
5.1.7 Fielder
One of the leaders of the contingency school offered a continuum ranging from task-focused to people-focused leadership. The most effective style depended on the quality of relationships, relative power position between the leader and the led and the nature of the task. In addition the style adopted is relatively stable and a feature of a leader's personality and could therefore be predicted (study guide, 2003, p7-7).
5.1.8 Hersey and Blanchard situation theory or life cycle theory
Situational leadership where dimensions are linked to task and relational behaviour. Task behaviour focuses on defining roles and responsibilities whereas relational behaviour is more about providing support to teams. The extent to which either is used depends on the person's job maturity and psychological security. Their test looks at elements around delegate (low relationship, low task), participate (high relation, low task), selling (hight task, hight relationship) or telling (hight task, low relationship) (Gordon et al, 1990, p572).
5.1.9 Charismatic leaders
This leadership comes from the compelling vision that draws in commitment and acceptance of change, and offers a potential for anyone to grow and develop with the vision. Words used are trust, loyalty, devotion, commitment, inspiration, admiration, outstanding, exceptional. A recent overview comes from House & Shamir (cite in Air university) who see it as ability of person to get an intense moral commitment and a strong identification from subordinates. They list a number of behaviours ranging from articulating the vision, passion, self sacrifice, risk taking, symbolic behaviours etc (Air University).
5.1.10 transformational leadership
This is a new paradigm and can offer a distinction between transformational (take people beyond self interest, raise motivation and moral commitment) and transactional (exchange of rewards / threats for compliance).The transformational leader is associated with change management and motivates individuals to perform beyond normal expectations. The transformational leader is considered to have three traits: charisma, individualised consideration and intellectual stimulation (study guide, 2003, p7-7).
5.2 Motivation
Motivation is the force boosting or giving direction to behaviour (Bartol et al, 2002, p366P). The relationship between performance and ability, motivation and working conditions as shown below
Ability * motivation*environmental condition = performance
Source: management a Pacific Rim Focus
If the leader has ability to motivate the employee then the organization will reach to the goal.
5.3 Innovation
Leader innovates (do the right things), bring in major changes, and inspire followers to produce high effort levels (Bartol et al, 2002 p416).
5.4 Strategic skills and abilities
Specific leadership tasks to be performed differ from level to level in organizations. Leaders at all levels require skills and abilities in three broad areas:
- Technical knowledge and skills
Technical skills are required at all levels. However, at the lower levels, technical skills consist of using or operating a system; at upper levels, technical skills are more about employing systems within systems in order to create synergy.
- Interpersonal/communication knowledge and skills.
Because the relationships at the strategic level are much more lateral and without clear subordination than at lower levels, the interpersonal skills involved in persuasion, negotiation, and collaboration are more crucial. These processes operate on a base of effective reasoning and logic. Strategic leaders -- especially when consequential decisions are being made -- must be able to build the perception that their ideas are rational and deserve support.
- Conceptual skills which allow the strategic leader to make decisions and cope with the level of complexity associated with a particular position.
Environmental Scanning. Scanning is purposeful search in the environment for relevant information. The skill lies in knowing what may be important, where to look, who to ask, and what to ask, to obtain needed information. Not all environmental scanning is done by strategic leaders. In today's environment, the task has such enormous scope that whole departments, branches, or organizations maintain environmental scans.
Decision Making. Decision makers must isolate and identify key issues, visualize and predict potential problems, and formulate least-risk solutions. The complexity may be too great, and the consequences of possible courses of action too uncertain. For these complex and ill-structured problems, most organizations make use of an executive team, composed of the leader and his/her advisors. The assembled wisdom of the team members enables a broader scope to be considered, and permits a more careful analysis of the information relevant to the issue.
Reducing Complexity. The complexity and uncertainty of the strategic environment exceeds that which can be tolerated at the lower levels. Decision makers at these levels- nominally the mid-levels-develop concrete plans for allocating resources to operations. The strategic role is to comprehend the complexity and uncertainty in the strategic environment, and then to set understandable azimuths for the mid-levels of the organization that can be used as a rational basis for resource allocation to operational units.
Understanding Indirect Effects. A strategic leader's frame of reference and vision must be broad enough to predict the indirect-second-, third-, and fourth-order effects of decisions. Without this capacity, changes in policy, regulation, or action may produce effects neither anticipated nor desired.
6. Recommendation
Even though, planning process and leader have been required for this report, other factor should be concerned. There are summarised as following:
- As organizations more complex with more uncertain environments, decisions making should be decentralised.
- Market research and industry surveys can help to reduce a firm’s chances of relying on illusive assumptions.
- Moreover, comparing the firm’s profile with competitors can relieve its managers in identifying factors that might make the competitors vulnerable to the strategies the firm might choose to apply.
- Training - The literature suggests (Wiersema and Bantel, 1992) that education, training, and effective comprehension are important factors in effective strategic planning. Training should be provided to strategists in external assessment, evaluation, situation analysis, and reporting techniques.
- Under a product differentiation strategy, the R&D department might accelerate the innovation process to provide new products in advance of competitors. Similarly, to support new product lines, marketing might develop a plan calling for premium prices, distribution through prestigious locations and a special promotion scheme aimed at targeted market segment.
7. Conclusion
The necessary requirements for the company if the company would like to remain the competitive in the changed environment are:
- Planning process are the organization’s mission, goals and plans. Planning strategic required SWOT, BCG matrix, Porter’s five forces, Prospector strategy and Diversification strategy
- Leadership is the process of influencing other to achieve organizational objective. Leader strategic required supportive, facilitative, motivation. innovation,
- Decision making required more decentralization.
- DO the market research for new product
- Training for improve potential employee
- R&D department require the innovation process to provide new products in advance of competitors.
- For the small and medium size organization the strategic planning should informal. Otherwise, performance might be reduced.
