Reacing Strategic Edge


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Reacing Strategic Edge

  1. 1. Reaching Strategic Edge Prof. Prashant Mehta National Law University, Jodhpur
  2. 2. REACHINGSTRATEGICEDGE • Business Process Reengineering can be used as a Strategic Tool • Benchmarking • Basics of TQM and how it leads to organizational success. • Concept of Sigma Six Quality Standards • Overview of Some Contemporary Issues in Strategic Management
  3. 3. BusinessProcessReengineering • "... the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary modern measures of performance, such as cost, quality, service, and speed." • "encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions." • Business process is simply set of activities that transform a set of inputs into outputs for another person or process. • Business process involves purchasing raw materials, logistics movement of finished goods, developing new products etc.
  4. 4. Business ProcessReengineering UnderlyingPremises • The business process is a series of activities occurring within a company that lead to a specific end. • In many cases, the business process is actually a collection of interrelated processes that function in a logical sequence to achieve the ultimate goal. • Eg: Most often, the business process focuses on meeting the needs of the customer and delivering a good or service that will fulfill that need. • Business Process involves number of steps performed by different people in different departments that helps in analysis, appraisal and redesign for achieving higher efficiency and effectiveness in quality of output. • Set of interrelated processes comprise a business system and redesign of processes improves performance of the business enterprise.
  5. 5. Business ProcessReengineering UnderlyingPremises • BPR focuses on critical and core business processes of the company that creates value by the capabilities and it provides crucial competitive advantages to the firm. • Eg: In FMCG industry marketing and brand management are core processes. • In electronics/ semiconductor industry new product development is core process. • Core processes may change over a period of time . The operational excellence of company is a major basis for competitiveness. • The business strategy of company should be oriented towards leveraging its operational excellence into the market place. • Processes needs to be managed not the functions. • Customer focus organization should realign in terms of process orientation.
  6. 6. BusinessProcessReengineering UnderlyingPremises • For considering totally new ways of redesigning processes, each and every concept, assumption, purpose, and principle, needs to be abandoned temporarily. • Continuous improvement is a deficient approach when a company is far behind the industry standards, and needs rapid quantum leaps in performance. • Dramatic improvement in performance is the prerequisite for overcoming competition. • How to compete is more important than deciding about where to compete.
  7. 7. Definitionof BusinessProcessReengineering • Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed. This definition comprises four keywords: fundamental, radical, dramatic and processes. • Fundamental - Understanding the fundamental operations of business is the first step prior to reengineering. Business people must ask the most basic questions about their companies and how they operate: Why do we do what we do? and why do we do it the way we do? Asking these basic questions lead people to understand the fundamental operations and to think why the old rules and assumptions exist. Often, these rules and assumptions are inappropriate and obsolete.
  8. 8. Definition of Business ProcessReengineering • Radical - Radical redesign means disregarding all existing structures and procedures, and inventing completely new ways of accomplishing work. Reengineering is about business reinvention, begins with no assumptions and takes nothing for granted. • Dramatic - Reengineering is not about making marginal improvements or modification but about achieving dramatic improvements in performance. There are three kinds of companies that undertake reengineering in general. First are companies that find themselves in deep trouble. Second are companies that foresee themselves in trouble because of changing economic environment. Third are companies that are in the peak conditions.
  9. 9. Definition of Business ProcessReengineering • Processes - Process is the most important concept in reengineering. In classic business structure, organization are divided into departments, and process is separated into simplest tasks distributing across the departments. The preceding order-fulfillment example shows that the fragmented tasks - receiving the order form, picking the goods from the warehouses and so forth - are delayed by the artificial departmental boundaries. This type of task-based thinking needs to shift to process-based thinking in order to gain efficiency.
  10. 10. Rationalof BusinessProcessReengineering • Increase in process efficiency • Improvement in Customer Service • Reduction in Cost • Data and Information Sharing through use of IT • Reduction in redundant and duplicate processes • Reuse technology • Leverage new technology as key changers and efficiency enablers • Foster Fundamental Rethinking • Forster comprehensive and efficient effort where impact is high • Reorganize and improve inefficient business processes • Deal how business works rather than structure • Reposition as market leader and turn the companies position around • Become industrial leader
  11. 11. ImplementingBPR in Organizations • The two main approaches employed in BPR are process redesign and process re-engineering, and these are examined below. The approaches are based on taking a holistic and objective view of the core processes that are needed to accomplish specific business objectives without being constrained by what already exists (i.e. 'clean slate'). • BPR covers a range of activities that result in radical change, to either individual processes or to the total organization. The main differences between the two approaches are that the latter involves greater structural change and risk while the former is quicker and less costly to implement but with potentially fewer benefits and improvements. • A. System Redesign – identify and understand the existing processes and then work through them systematically to create new processes and deliver the desired outcomes • B. Clean Slate Approach – Fundamentally rethink the way that the product or service is delivered and design new process from scratch.
  12. 12. ImplementingBPR in Organizations • Steps in BRP are as Follows: • Determining Objectives and Framework – Objectives are the desired end results of redesign process and they provide focus, direction, and motivation for the redesign process. • Identify Customers and Determine their Needs – The purpose is to redesign business process that clearly provides added value to customers. • Study the Existing Process – Provides base for reengineering and understand what and why of the targeted process. • Formulate and Redesign Process Plan are real crux of reengineering process. In this step alternative processes are considered and the best is selected. • Implement the Redesign process to achieve dramatic improvements. This is joint responsibility of designers and management to operationalise the new process.
  13. 13. Roleof InformationTechnologyin BPR • Information technology has transformed business processes to great extent today with faster response to change. • A reengineered process has speed, accuracy, adaptability and integration of data and service points, is focused on meeting customers needs expectations quickly and adequately. IT has resulted in: • Compression of time • Overcoming restriction of Geography and Distance • Restructuring Relationships • Thus IT improves business value by increasing EFFICIENCY (by way of improved productivity), EFFECTIVENESS (by way of better management), INNOVATION (by way of improved product or service)
  14. 14. Central Trust of BPR • Reduction in total cycle time of a business process by removing unwanted and redundant steps and simplifying systems and procedures and eliminating transit and waiting times, Improvement in quality and reduction in cost • Reengineering is not partial modification or marginal improvement in the existing business process, it is redesigning the process entirely and radically. • BPR aims at utilizing IT for evolving network processes, instead of automating existing processes which are based on certain assumptions about technology, people and goals of the organizations which may be no longer relevant in today's context. • Reengineering requires viewing process from cross functional perspective. • BPR involves massive organizational change with changes in all areas of operations beyond recognition. Commitment of top management is critical for success of BPR.
  15. 15. Problemsof BPR • Process Simplification is Common - True BPR is Not • Desire to Change Not Strong Enough and Reliance on existing process too strong • The Existing Process Not a Blank Slate • Process under review too big or too small • The Costs of the Change Seem Too Large • BPR Isolated Activity not Aligned to the Business Objectives • Allocation of Resources • Poor Timing and Planning • Keeping the Team and Organization on Target
  16. 16. Benchmarking • Benchmarking is the continuous, systematic process of measuring one’s output and/or work processes against the toughest competitors or those recognized best in the Industry. • Benchmarking is the process of improving performance by continuously identifying, understanding, and adapting outstanding practices found inside and outside the organization. • Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. • Why are others better, How are others better, What can we learn, How can we catch up, How can we become the best in our sector……………………
  17. 17. Benchmarking • Benchmarking helps organizations get ahead of competition by using information and applying it to improve their processes and systems. • Concept of benchmarking is much boarder than controlling as there are major strategic dimensions involved. • Benchmarking is the continuous search for and adaptation of significantly better practices that leads to superior performance by investigating the performance and practices of other organizations (benchmark partners). In addition, it can create a culture to facilitate the change process. • Benchmarking means to measure the best practices of leading businesses, and learn and adapt them for use in your business. Benchmarking is Making Best Practices Your Daily Practice.
  18. 18. Benchmarkinghas Three Main Features Continuous method of measuring and comparing a firm’s business processes against those of another firm. Discover performance gaps between one’s own processes and those of leading firms. Incorporate leading firm’s processes into one’s own strategy to fill the gaps and improve performance.
  19. 19. OperationalDefinitionof Benchmarking Benchmarking is a technique of identifying, understanding and adapting superior practices from organizations locally and world wide to improve performance and achieve priority business results. Comparing business processes, not only performance measures Improvement, not evaluationExternal focusLearn from others A structured technique
  20. 20. Benchmarking= Copying • Benchmarking is not a method for 'copying' the practices of competitors, but a way of seeking superior process performance by looking outside the industry. When Benchmarking a System, Adapt What You Find, Don’t Just Copy It • Benchmarking is not just making changes and improvements for the sake of making changes, benchmarking is about adding value. Benchmarking makes it possible to gain competitive superiority rather than competitive parity. • Benchmarking is a tool for continuous improvement of the management of processes in companies to help them to gain world leadership. • Benchmarking is critical to formulating a knowledge-based plan of action to achieve objectives. A benchmark is a standard that provides a measuring- stick for relative performance.
  21. 21. Benchmark • A benchmark is an organization recognized for its exemplary operational performance. • There are many benchmarks in the world including: Toyota for Scandinavian Airlines for Motorola for Intel for Honda for Processes Design Training Service Rapid product development
  22. 22. Benchmarkingand ManagementFunctions • Maintenance Operations • Assessment of Total Manufacturing Costs • Product Development • Product Distribution • Customer Service • Plant Utilization Levels • Human resource Management
  23. 23. Benchmarking • Benchmarking is a tool for Total Quality Management (TQM). • Benchmarking is basically learning form others. • Bench marking is time and cost efficient because it involves imitation and adaptation rather than pure invention. • Benchmarking helps in: • Performance Improvement • Creative Thinking • Meeting Quality Standards • Meeting Customers Expectations • Coping with Competitive Markets • Product and Process Improvement • Cost Reduction
  24. 24. TheBenchmarkingProcess • Benchmarking Process lacks Standardization. The important steps are: • Determine which functional areas within your operation are to be benchmarked -- those that will benefit most from the benchmarking process, based upon the cost, importance and potential of changes following the study. • Identify the key factors and variables with which to measure those functions -- usually in the general form of financial resources and product strategy. • Select the best-in-class companies for each area to be benchmarked -- those companies that perform each function at the lowest cost, with the highest degree of customer satisfaction. Eg. FedEx or Wal-Mart in logistics).
  25. 25. TheBenchmarkingProcess • Measure the performance of the best-in-class companies for each benchmark being considered -- from sources such as the SEC, companies themselves, articles in the press or trade journals, analysts in the market, credit reports, clients and vendors, trade associations, the government or from interviews with other organizations willing to share their prior research or "swap" it with you. • Measure your own performance for each variable and begin comparing the results in an "apples-to-apples" format to determine the gap between your firm and the best-in-class examples. Always feel free to estimate results, as exact measures are usually disproportionately difficult to obtain and often do not significantly add value to the study.
  26. 26. TheBenchmarkingProcess • Specify those programs and actions to meet and surpass the competition based on a plan developed to enhance those areas that show potential for compliment. The firm can choose from a few different approaches -- from simply trying harder, to emulating the best-in-class, changing the rules of the industry or leapfrogging the competition with innovation or technology from outside the industry. • Implement these programs by setting specific improvement targets and deadlines, and by developing a monitoring process to review and update the analysis over time. This will also form the basis for monitoring, revision and recalibration of measurements in future benchmarking studies. • Most of the measures in a benchmarking process are in financial resources and product strategy
  27. 27. Levelsof Benchmarking • There are three levels of benchmarking: • Internal benchmarking (within the company) • Competitive or strategic benchmarking (Industry and competitors) • Benchmarking outside the industry.
  28. 28. Total Quality Management(TQM) • TQM is people focused management system that aims at continual increase in customer satisfaction at continually lower real cost. • TQM is total system approach which is integral part of high level strategy. • TQM works horizontally across all functions, departments, involves all employees from top to bottom, extends backward and forward to include supply chain and customer chain. • TQM is a set of management practices throughout the organization, geared to ensure the organization consistently meets or exceeds customer requirements. TQM places strong focus on process measurement and controls as means of continuous improvement.
  29. 29. Total Quality Management(TQM) • The concept of TQM emerged in USA where quality control was simply to control or limit the creation of defective items in an industrial processes. • Total quality management is based on the ideas of W. Edward Deming, Philip B. Crosby, and Joseph M. Juran, quality-control experts in the United States and Japan (associated with the Toyota production system). • A more effective focus was to prevent a defective product from being created, rather than screening out. • Quality need not be restricted to production management rather be extended to include administrative process, service industry and all spheres of organizational activity. • Most quality problems are system induced and not related to workmanship.
  30. 30. Total Quality Management (TQM) • Total Quality Management (TQM) is a management strategy aimed at embedding awareness of quality in all organizational processes. • TQM requires that the company maintain this quality standard in all aspects of its business. This requires ensuring that things are done right the first time and that defects and waste are eliminated from operations. • TQM is • Total - made up of the whole • Quality - degree of excellence a product or service provides • Management - act, art or manner of planning, controlling, directing,…. • “Do the right things right the first time, every time.”
  31. 31. Modelfor TQM Outstanding Leadership Product, Services and Process Systems and Procedures People power CONTINUOUS SYSTEMATIC IMPROVEMENT BENCHMARKING CUSTOMER FOCUS MEETING/ EXCEEDING CUSTOMER EXPECTATI ONS
  32. 32. PrinciplesGuidingTQM • Implementing TQM required organization wide support: • A sustained top management commitment to Quality which is sustained and real. • Focusing on Customer and satisfaction of customer • Preventing poor quality of products and services rather than Detecting and sorting out defects. This saves cost and time • Universal Quality Responsibility shared by everyone in the organization. • Quality Measurement means Where are we and where are we going • Continuous Improvement and Learning is needed in order to focus o improvement efforts appropriately. Continuous improvement refers to both incremental and breakthrough improvements both in product and services, developing new business opportunities, reducing errors, defects, and wastes, improving responsiveness and cycle time improvement, effective use of resources.
  33. 33. PrinciplesGuidingTQM • Identifying root cause of problems and implementing corrective actions that address problems at root cause. • Employee Involvement in TQM process and Empowerment will provide with necessary tools and authority to achieve organizational goals and objectives effectively. • The Synergy Team will help address the problems and challenges of continuous improvement and by developing quality circles. Improving quality requires the establishment of effective metrics. We must speak with data and facts not just opinions. • Thinking Statistically means reducing process or product design variation, and statistical methods ideally suited to support this objective. • Inventory Reduction and Just in Time inventory that is by reducing the inventory levels quality improved.
  34. 34. Principles Guiding TQM • Value Improvement means the ability to meet or exceed customer expectations while removing unnecessary cost. • Supplier teaming means developing long term relationship with few high quality suppliers, rather than simply selecting those suppliers with lowest initial cost. • Training is basic to TQM process where employees are trained and empowered continuously. • “A Customer’s impression of quality begins with the initial contact with the company and continues through the life of the product.” • Customers look to the total package - sales, service during the sale, packaging, deliver, and service after the sale. Quality extends to how the receptionist answers the phone, how managers treat subordinates, how courteous sales and repair people are, and how the product is serviced after the sale.
  35. 35. TQM and Traditional Management Practices • Organizational Structure – TQM views the enterprise as a system of interdependent interconnected processes, linked laterally over time through a network of collaborating internal and external suppliers and customers. • Organizational Change – TQM environment changes constantly and so management should provide leadership effectively for success of TQM. • Team Work – It is through Quality circles, Steering Committees, Self Directed Teams in departments work together towards self optimization through cross functional teamwork. • Motivation and Job Design – TQM managers provide leadership rather than intervention in processes. People are motivated to make meaningful contribution.
  36. 36. TQM and Traditional Management Practices • TQM requires changes in organizational processes, beliefs, attitude, and behavior. The differences are: • Strategic Planning and Management – Quality planning and strategic planning cannot be distinguished in TQM. Measures such as customer satisfaction, defect rates, and process cycle times receive as much attention in the strategic plan as financial and marketing objectives. • Changing Relationship with Customers and Suppliers – Traditional management places customer outside the enterprise and within the domain of marketing ad sales, whereas in TQM everyone inside the enterprise as customer of internal / external supplier, and a supplier of an external / internal customer.
  37. 37. TraditionalApproachvsContinuousImprovement Traditional Approach • Market-share focus • Individuals • Focus on ‘who” and “why” • Short-term focus • Status quo focus • Product focus • Innovation • Fire fighting Continuous Improvement • Customer focus • Cross-functional teams • Focus on “what” and “how” • Long-term focus • Continuous improvement • Process improvement focus • Incremental improvements • Problem solving
  38. 38. Value-basedApproach Manufacturing Dimensions • Performance • Features • Reliability • Conformance • Durability • Serviceability • Aesthetics • Perceived quality Service Dimensions • Reliability • Responsiveness • Assurance • Empathy • Tangibles
  39. 39. Benefitsof TQM • Advantages unique to TQM: • It makes the company a leader and Fastens the team work. • Makes the company more sensitive to customer needs. • Makes the company adapt more readily to changes. • Benefits to company • Quality improves. • Increased productivity. • Staffs are more motivated. • Cost reduced. • Benefits to customer • Fewer problems with product/services. • Better customer care, Greater satisfaction. • Benefits to staff • Empowerment, More training and more skills. • More recognition of achievement.
  40. 40. CompetitiveBenefits of TQM
  41. 41. TQM ImprovesProfitability:
  42. 42. Six Sigma and Management • Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects in any process from manufacturing to transactional and from product to service. • The word Sigma is a statistical term that measures how far a given process deviates from perfection. The central idea behind Six Sigma is that if you can measure how many "defects" you have in a process, you can systematically figure out how to eliminate them and get as close to "zero defects" as possible and minimizing the variability in manufacturing and business processes that does not meet customer specifications. Specifically it means a failure rate of 3.4 parts per million or 99.9997% perfect.
  43. 43. Whatis Six Sigma • Six Sigma's aim is to eliminate waste and inefficiency, thereby increasing customer satisfaction by developing and delivering near-perfect products and services as per the customer expectation. • Six Sigma follows a structured methodology, has defined roles for the participants, is a data driven methodology, and requires accurate data collection for the processes being analyzed and putting results on Financial Statements. Six Sigma is a business-driven, multi-dimensional structured approach to: • Improving Processes, Lowering Defects, Reducing process variability, Reducing costs, Increasing customer satisfaction, and Increased profits
  44. 44. GE’sKey Conceptof Six Sigma At its Core, Six Sigma revolves around a few key concepts: Critical to Quality Attributes most important to Customers Defect Failing to deliver what customer wants Process Capability What your process can deliver Variation What the customer sees and feels Stable operations Ensuring consistent, predictable, processes to improve what the customer sees and feels Design of Six Sigma Designing to meet customer needs and process capability
  45. 45. Six Sigma Methodology • Six Sigma has following two key methodologies: • DMAIC: refers to a data-driven quality strategy for improving processes. This methodology is used to improve an existing business process. • DMADV: refers to a data-driven quality strategy for designing products & processes. This methodology is used to create new product designs or process designs in such a way that it results in a more predictable, mature and defect free performance. • There is one more methodology called DFSS - Design For Six Sigma. DFSS is a data-driven quality strategy for designing design or re-design a product or service from the ground up.
  46. 46. Six Sigma Methodology • DMAIC Methodology: • This methodology consists of following five steps. • Define --> Measure --> Analyze --> Improve -->Control • Define : Define the Problem or Project Goals that needs to be addressed. • Measure: Measure the problem and process from which it was produced. • Analyze: Analyze data & process to determine root causes of defects and opportunities. • Improve: Improve the process by finding solutions to fix, diminish, and prevent future problems. • Control: Implement, Control, and Sustain the improvements solutions to keep the process on the new course. • In the subsequent session we will give complete detail of DMAIC Methodology.
  47. 47. Six Sigma Methodology • DMADV Methodology: • This methodology consists of following five steps. • Define --> Measure --> Analyze --> Design -->Verify • Define : Define the Problem or Project Goals that needs to be addressed. • Measure: Measure and determine customers needs and specifications. • Analyze: Analyze the process for meet the customer needs. • Design: Design a process that will meet customers needs. • Verify: Verify the design performance and ability to meet customer needs.
  48. 48. Six Sigma Methodology • DFSS Methodology: • DFSS - Design For Six Sigma is a separate and emerging discipline related to Six Sigma quality processes. This is a systematic methodology utilizing tools, training and measurements to enable us to design products and processes that meet customer expectations and can be produced at Six Sigma Quality levels. • This methodology can have following five steps. • Define --> Identify --> Design --> Optimize -->Verify • Define : Identify the Customer and project. • Identify: Define what the customers want, or what they do not want. • Design: Design a process that will meet customers needs. • Optimize: Determine process capability and optimize design. • Verify: Test, verify, and validate design.
  49. 49. What’s New About Six Sigma • The Customer: Customers define quality. They expect performance, reliability, competitive prices, on-time delivery, service, clear and correct transaction processing and more. Today, Delighting a customer is a necessity. Because if we don't do it, someone else will! Hold the Customer • The Processes should produce ROI: Defining Processes and defining Metrics and Measures for Processes is the key element of Six Sigma. Quality requires to look at a business from the customer's perspective, In other words, we must look at defined processes from the outside-in. • How Employees/ Management Operates: The company must involve all employees and must provide opportunities and incentives for employees besides having a well defined role with measurable objectives. •
  50. 50. Six Sigma as a Systemof Management • A business is a collection of processes, including the leadership process and each business process has inputs that include suppliers, assets, resources (capital, material, people), and information. The process also has a vision, measures, policies and procedures, and output that include products or services for customers. Every business has variances and there must be a process to handle excessive variances in the organization which lowers profitability. • Six Sigma is essentially a comprehensive yet flexible system for achieving, supporting, and maximizing business profits. It takes place at front lines of the organization. Better understanding of customers, clearer processes, meaningful measures, and powerful improvement tools are important.
  51. 51. Six Themes of Six Sigma 1. Genuine Focus on the customer is top priority. The measures of six sigma performance begins with the customer. Six sigma improvements are defined by their impact on customer satisfaction and value. 2. Data and fact driven management - Six sigma takes the concept of" management by fact" to a new more powerful level. Six sigma managers will know what data or information do they really need and how to use them for maximum benefit . 3.Process focus, Management, and improvement - In six sigma , process are where the action is, whether designing the products and services, measuring performance, improving efficiency, customer satisfaction or even running the business, six sigma positions the process as the key vehicle of success.
  52. 52. Six Themes of Six Sigma 4.Proactive management signifies acting in advance of events the opposite of being "reactive". Six sigma has tools and practices that replace reactive habits with a dynamic , responsive proactive style of management. 5.Boundary-less collaboration means breaking down barriers and improve teamwork, up, down, and across organizational lines. It expands opportunities for collaboration as people learn how their roles fit into and can recognize and measure interdependence of activities in all process. 6.Drive for Perfection; Tolerance for Failure - No company will get anywhere close to six sigma without launching new ideas and approaches, which always involves some risk. Any company that makes six sigma its goal will have to constantly pushed to be ever-more-perfect (since the customer's definition of "perfect" will always be changing) while being willing to accept and manage occasional setback.
  53. 53. Strategies for Internet Economy • Impact of Internet and rapidly changing e-commerce environment is profound. • Internet has changed everything / driving force of revolutionary proportions. • E-commerce has changed the character of markets, created new driving force which has enormous potential for reconfiguring its value chain and affects companies competitiveness. • Internet economy presents opportunities and threats that demand strategic response and requires managers to craft bold strategies.
  54. 54. What Is Internet Technology • Internet is integrated network of servers, high speed computers, digital switches and routers, telecommunication equipment and lines (fibre optical lines criss-crossing the world), individual users computers that allows transfer of data in digital form at very high speed. • The bandwidth of the line determines the capacity / speed of data transfer. • Digital switched moves the traffic along the lines and routers decided which way to direct the traffic and how to handle requests of users effectively. • Users gain access to network through LAN server or internet service provider. Many specialized software's are required to make internet function and infuse it with e-commerce capabilities.
  55. 55. Impact of the Internet and E-Commerce • Impact on external industry environment • Changes character of the market and competitive environment • Creates new driving forces and key success factors • Breeds formation of new strategic groups • Impact on internal company environment • Having, or not having, e-commerce capabilities tilts the scales toward valuable resource strengths or threatening weaknesses • Creatively reconfiguring the value chain will affect a firm’s competitiveness vis-à-vis rivals
  56. 56. Characteristics of Internet Market Structure • Internet is composed of • Integrated network of users’ connected computers • Banks of servers and high-speed computers • Digital switches and routers • Telecommunications equipment and lines
  57. 57. Supply Side of the Internet Economy • Major groups of Internet and e-commerce firms comprising the supply side include • Makers of specialized communications components and equipment • Providers of communications services • Suppliers of computer components and hardware • Developers of specialized software • E-commerce enterprises • Business-to-business merchants • Business-to-consumer merchants • Media companies • Content providers
  58. 58. Strategy Shaping Characteristics E-COMMERCEENVIRONMENT • Internet makes it feasible for companies everywhere to compete in global markets • Competition in an industry is greatly intensified by new e-commerce strategic initiatives of existing rivals and by entry of new, enterprising e- commerce rivals • Entry barriers into e-commerce world are relatively low. On-line buyers gain bargaining power because they confront far fewer obstacles to comparing the products, prices, and shipping times of rival vendors. • Internet makes it feasible for firms to reach beyond their borders to find the best suppliers and, further, to collaborate closely with them to achieve efficiency gains and cost-savings.
  59. 59. Strategy Shaping Characteristics E-COMMERCEENVIRONMENT • Internet and PC technologies are advancing rapidly, often in uncertain and unexpected directions • Internet results in much faster diffusion of new technology and new ideas across the world. • E-commerce environment demands that firms move swiftly - “at Internet speed”. • Internet and e-commerce technology open up a host of opportunities for reconfiguring industry and company value chains • Capital for funding potentially profitable e-commerce businesses is readily available
  60. 60. Strategy Shaping Characteristics E-COMMERCEENVIRONMENT • The internet makes it feasible for companies to reach beyond their borders to find the best suppliers and further to collaborate closely with them to achieve efficiency gains and cost savings. • E-commerce technology opens up a host of opportunities for reconfiguring industry and company value chains. • The internet can be economical means of delivering customer service. • Needed e-commerce resource in short supply is human talent, in the form of both technological expertise and managerial know-how.
  61. 61. Effects of the Internet and E-Commerce • Can produce important shifts in an industry’s competitive forces • Alters industry value chains, spawning substantial opportunities for increasing efficiency and reducing costs • Affects a company’s resource strengths and weaknesses • Rapid pace of technological change with an often uncertain direction
  62. 62. Overview of E-commerceBusiness Models and Strategies • Provide new opportunities to put a globally-connected Internet infrastructure in place • Build out telecommunications system • Install millions of servers • Provide high-speed Internet connections to billions of businesses and households • Develop software and networks to create a wired global economy • Offer potential to exploit business opportunities in a globally wired e-commerce environment • Business-to-business sales • E-procurement • Business-to-consumer sales • E-retailing • Provide content • Provide services to users
  63. 63. StrategicManagement in Non Profit and GovernmentOrganization • Business organizations can be classified into commercial (profit is main aim)and non commercial (social, charitable, educational) on the basis of interest they have. Eg. Help Age India, Child Relief and You etc. • The main aim is to provide service to members, beneficiaries or public at large. • Non commercial organizations helps to meet the needs not met by business organizations and may not have owner in true sense. • Through innovative approach, motivation, productivity, and strategic management non profit organizations out perform business organizations. • Non profit firms often functions as monopoly and depend totally on outside finance justifying requests for needed financial support based on strategy.
  64. 64. Educational Institutions • Education plays a vital role in shaping the future of the nation. In higher education, stakeholders include students, employers, funding agencies, and society, as well as internal stakeholders such as faculty and staff. The strategic plan should chart the broad course for the entire institution for the next five years. • Educational institutions, like other service organizations, can differentiate themselves based on types of programs, delivery systems, student clientele, location, and the like. Joining hands with industry to deliver value based education and make graduates more employable. • Emerging global trends, new economic challenges and the rapid growth of information technology has placed higher education in a much sharper focus and hence its performance assessment becomes essential.
  65. 65. Medical Organizations • Advances in diagnosis and treatment of chronic diseases are creating entirely new servicescape to deliver day care service right at your door step. • Deep and effective collaboration with doctors with reallocation of resources from acute to chronic area in home and community setting. • Backward integration of services like ambulance service, waste disposal service, and diagnostic services. • Internet has changed the strategic landscape of healthcare services and healthcare delivery by sharing information, test reports etc. • Free standing out patient centres, home health services, cardiac rehabilitation, preferred service provider, skilled nursing, etc.
  66. 66. GovernmentAgencies and Departments • Central, State, Municipal agencies, Public sector units, are responsible for formulating, implementing, and evaluating strategies that uses tax payers money in most cost effective way to provide services and programs. • Government organizations have less strategic autonomy as compared to private organizations. • Strategic issues get discussed and debated media and legislatures. Sometimes issues get politicized resulting in fewer strategic alternatives. • Government agencies use strategic management approach to develop and substantiate the formal request for funding of projects.