Discuss about the Business Integration, The seven variables are measurable with the organization's past performance, the industry within which it operates and its main competitors.
Where should the organization head? (Formulating Strategy)
Australian Volunteer Capricorn Coast Guard is a non-profitable company whose primary functions are embedded on social factors rather than economic variables. The report will critically analyze important dimensions of the company while placing into perspective crucial determinants of the company and its strategic plan to become more futuristic and successful (McLennan, Whittaker & Handmer, 2015). The paper will be organized in a strategic format that comprises, an elaborative executive summary, an introduction, the body of the paper in which three strategic questions that revolve around the company are answered, recommendations and finally a comprehensive conclusion. Everyone has a role to play towards guiding the honor and value of an organization. In the same perspective, the paper will dissect through different administrative abilities of the organization as a system, the roles of the managers and leaders towards achieving institutional goals, as well as the responsibilities of the subordinates towards achieving the set objectives (Avolio & Yammarino, 2013). Variables such as control, evaluation, and measurement occur continuously so as to determine if indeed the organization is making the needed steps towards achieving its blue print. Consequently, what gets measured gets done and also helps in the process of identifying which areas still lack widespread attention. Simply put, the paper is a walk through the formulating strategy, the implementing strategy as well as the evaluation and control measures of Capricorn Coast Guard.
Where should the organization head? (Formulating Strategy)
To efficiently determine a blue print for the company’s vision regarding where it desires to be, it is important to analyze the existing gap between strategic opportunity and capacity to execute (Malik, 2014). Consequently, this aspect helps in analyzing the need to clarify ambitions and abilities. In particular, the discussion is generalized on the concept of scale and scope which will be used to evaluate the similarities and differences in strategic decision making for Capricorn Coast Guard. In this case, the best alternative for strategic decision making is rational decision making which is known to produce more accurate results (Lanyon & Janetzki, 2016). The criteria used in making the decisions are also relatively applicable in several organizations an inclusive of both profitable and non-profitable organizations. Subsequently, here is a list of the procedure of rational decision making:
- Should be fully informed in that there is no missing data
- The Company should set specific end-goals or outcomes
- Should be conscious, deliberate, explicit and also measurable
- Assume causality between the means and the ends
- Allow flexibility through involving choices between alternative means and ends so as to achieve the most desirable outcome
It is significantly important to understand the ideology behind rationality in decision making so as to understand why the procedure is important for the company. Strategic decisions work as a road map for the future success or failure of a company. The decision is made from the highest level in an organization and requires accurate, current and relevant information. Simply put, the future can be analyzed from the extending current strategic plan. However, just as any other decision making the approach, the rational model has limitations and in this particular scenario, an organizational limitation is the paper’s primary focus. Some of these limitations include talk traps, compromised ethics, and values, decision-making rules and groups as decision makers. Identifying emerging decision drivers and also stress-testing through strategic plotting facilitates the making a clear call, this is typically a representation from simplicity from complexity.
How might it get there? (Implementing Strategy)
On the other hand, managing the downside requires an incorporation of, seeking evidence to pose a challenge to the emerging blind-sided mindset. Developing and testing a different range of alternatives that can be considered is also effectual. The use of up-front planning, gathering of the best possible data and also seeking an independent assessment of risk evaluations are also technically important (Mitchell, Ware & Bambach, 2014). Finally, the company can share the downside risk by outsourcing the risk to the existing willing members found in the supply chain. Other risk assessment strategic options include learning from organizations that specialize in high-risk markets. Technically, this strategy helps in looking for signs of changes in sensitive strategic indicators and hence allowing for time to take decisive actions. Also, it is important to provide dashboard measures of real-time performance through smart information systems.
In general, the influence of scale is comprehensively significant. This is because as the scale increases, there is the threat that the senior management is at risk of being distant from the front-line. However, there exist strategies through which this can be counteracted. The strategies include:
- Seeking the services of more professionally experienced and educated managers
- Investing resources in areas that aligns with the organization’s strategic direction
- Develop systems that measure critical operational performance
On the other hand, however, the influence of scope is more strategic. Technically, as the organization's scope increases, the primary risk is that strategic focus strays from delivering the organization’s mission. As a result, the tie-up can hold the organizational; resources in non-value adding activities (Renz, 2016). However, a counter mechanism for the same exist, example, a scope can be comprehensively managed through JV arrangements so as to ensure that the core operations remain core and that ancillary activities are outsourced in levels that are required.
How might it get there? (Implementing Strategy)
To effectively address the question, this section will analyze concepts such as how the selected strategy can be implemented. Areas to be covered include the concept of shared vision and leadership in management, funding mechanism, operational capital and system structure of the company as well as the concept of culture change.
There exist a distinct difference between a vision shared and a shared vision. The difference sets the organizational diversity; the difference is the catalyst for successful implementation. A shared vision is the most effect-full because it invites personal and team-based initiatives that interdependently work to enact the set vision. In this case, the leader takes the time to communicate and also ensure a shared understanding and commitment by all the involved subjects in the organization. Technically, there is no major difference between leadership and management; however, there exist some differences such as those based on involvement and control. Other examples include: while leaders provide a vision of the future, managers carry out organizational policies and procedures, leaders set directions and inspire other to follow while managers instruct subjects on what to do (Jenkins, 2016). Leaders also lead by personal credibility and one has to be accepted by subjects, but as for managers, they use positional authority to govern over the rest. Also, as leaders guide and couch, managers monitor and control subjects.
According to John Kotter, leaders should exercise three basic skills: Setting a comprehensive and adaptable direction for the organization, align subjects or followers with the direction and motivate the subjects to carry out the direction. Other expandable skills and traits associated with leaders include capacity for achievement, interpersonal skills, diplomacy, conceptual skills, dependability and also assertiveness (Goldberg, D’Iorio & McClintock, 2016). However, it is important to acknowledge that Australian leaders differ from the American model of leadership. In Australia, leadership is team based rather than reliant of a single leadership. Australian leaders also lead a cause for the organization and also use a captain approach rather than the commonly used stretch goals approach. Also, leadership styles have key determinants such as the existing environment, the resources and the time available in the organization, the nature of the changes required and whether the changes needed are in line with the current culture and values of the organization.
The funding mechanism of Capricorn Company being that it is a non-profitable organization and the company runs on charity money is a crucial aspect that must be comprehensively covered. The following is a tabulation table that represents some of the funding mechanism behind the operations of Capricorn in the financial year 2015/2016.
Membership and capitation fees
Operational capital is comprised of systems, structure, infrastructure and also financial capital. These variables are crucial in the operations of an organization, and it is important to examine the influence each independently has on operations (Ramadani, 2017). Consequently, the external environment of a company is imperative since its dictates the potentiality of the company through leveraging internal strengths.
Subsequently, operational capital takes into perspective the concept of McKinsey’s systems and structure as well as financial capital or capacity. Systems and procedure, on the other hand, comprises daily activities that are engaged by the staff members to get the job done. The two concepts are divisible into two equal levels that are, at the macro and micro levels. Regarding structure, however, the aspect of operational capital focuses on how the organization is structured so as to analyze who reports to whom. Other important areas include the organizational hierarchy, the division of the company or existing teams, the mechanisms through which departments coordinate activities, ways through which team members organize and also align themselves and also explicit and implicit lines of communication. Regarding financial capital, the world of organizations acknowledges that adequate levels of capital are a secured foundation in which an organization can not only survive but also thrive. In relation, capital budgets are important since it builds organizational capability through enhancing infrastructure. On the other hand, revenue budgets are important since it helps in maintenance as well as growth specifically through the use of free cash flow, which is considered the life-blood of the organization. Subsequently, regarding managing operational risks, it is important to consider two fundamental aspects, vertical integration magnifies the risks and also, horizontal and concentric diversification is known as an agent that reduces the risks involved. Simply put, operating capital can be optimized through what is considered as the lean principles.
How might the organization best measure success? (Evaluation and control)
The concept of evaluation and control will take into perspective performance indicators to guide in achieving the strategic priorities for the nonprofit organization and also generally measure all the factors that will help the organization to be and keep on track. Subsequently, this section answers the question, how do we measure success?
Critical success factors (CSFs) defines what an organization needs to achieve so as to deliver on its mission. They are determined by what is considered as key to the organization's success now and in the future. In relation, CSFs ensures a company maintains a successful competitive performance. Sources of CSFs have large impacts on the future and current trend of an organization’s performance. Strategy CSFs deals with the position of the organization in the industry and oversees the organization’s strategy, capabilities as well as resources. Industry CSFs, on the other hand, examines what the organization must exhibit to compete with rival companies within the same industry. Also, situational CSFs portray themselves as short driven and event driven situations that result from internal organizational changes and needs. Changes in the economy and regulatory environment are some of the environmental CSFs that the organization must respond to so as to actively stay in business.
Objectives prepared during the process of strategic planning are what is used to access performance measures. Some of the lead indicators of future performance also known as steering control include customer satisfaction and inventory turnover. Dashboard software is relatively popular because it provides an integrated display of key performance. Consequently, the types of controls dictate what is to be accomplished through different strategies.
The primary focus of output control is the result of the performance behaviors through a channeled use of performance targets, objectives and also milestones.
Input controls come into perspective when output is difficult to measure and also when cause-effect relationships seem unpredictable and unclear. Examples of input controls include the number of years of education and also experience.
Behavior controls are more complex. They work with cause-effect variables like IS09000 standards which directly influences the quality of manufacturing.
Enterprise Risk Management, on the other hand, is also relatively important since it plays the role of managing uncertainties that impact the achievement of organizational goals, be it positively or negatively. The first process involves rating the risk which takes the shape of three steps: using scenario analysis or brainstorming to identify the risk. The second step involves ranking the risk through the use of a scale of impact or likelihood. The final step is measuring the risk through the use of an agreed standard. Enterprise Risk Management measures include Value-at-Risk which measures the impact of the financial risks confronted by the organization, as well as the Earning-at-Risk (EAR) which quantifies the effect of risk on achieving a set earning target. The success or failure of a strategy can be evaluated through a broad range of methods such as traditional measures which include Earnings per share and free cash flow. For non-financial measures, evaluation techniques include stickiness, which is the length of time visitors stayed hooked on the web site and also MUUs which deals with monthly users used to determine valuation multipliers.
Also, the balanced scorecard is an important variable that must be tackled in the field of performance measures. The balanced scorecard that was developed by Norton and Kaplan combines variables such as internal business processes, financial, customer, innovation, and improvement activities. The mentioned measures are considered as key performance indicators and can be effectively used as measures that are essential for attaining desired set outcomes. The aspect of customer takes the keen interest in things such as the percentage of new sales from new products, customer satisfaction and also ambitious position goal. Internal business processes include cycle time and unit costs in manufacturing. On the other hand, the variable financial deals with ROE as well as cash flow in the system. Subsequently, benchmarking is also imperative since it involves learning how others do things in a better way than one’s organization so that the organization in need may imitate and perhaps improve upon the learned techniques (Rosenzweig, 2016). One of the problems encountered in measuring performance includes short-term orientation e.g. EPS can misleadingly induce managers to avoid making long term investment since their focus is on short term EPS. Another problem is behavior substitution which takes place when individuals substitute activities that do not lead to achievement of set objectives or goals since the wrong activities are being rewarded
Critical success factors (CSFs) is another major variable that needs effective implementation and organization. Subsequently, this is because it defines what an organization needs to achieve so as to deliver on its mission (Ryan, 2014). It is important for organizations to lay more emphasis on the factors that attribute to the success and failures of CSFs. On the other hand, it is equally important for organizational leaders to look at three crucial concepts, that is, team maintenance, individual followers and the task involvement. The three concepts work interchangeably to achieve set objectives. The difference between leaders and managers is that managers ensure that things are done right while leaders aim to ensure that the right things are done (Goetsch & Davis, 2014). Consequently, it is important to borrow operational skills from managers but technically uphold the skills and values of leadership such as integrity, enthusiasm, leading by example, visionary, organization as well as administrative skills. All the values and skills joined enable the organization to work at a competitive advantage. Also, it is important to acknowledge that sources of CSFs impact both the future and current trends of organizational success. Technically, this makes the sources equally important.
Also, dynamic adjustments are considered recalibrations of fundamental variables that support the critical success factors. Conversely, as mentioned in the paper, the external environment will relatively shape what an organization is capable of achieving. This is possible through leveraging internal strengths. In relation, it is important for the organization to first of all work on its external environment then technically emphasize on enhancing its internal strengths. Simply put, it is the organizational strategic focus that is suitable for the speed revamp of the industry revolution. Strategic improvements can also arise through seeking new business models, coopetition, multisided markets as well as supply chain and value networks. Conversely, cultural dimensions also impact strategic recalibration (Hayton, 2015). Some of the important questions that need to be considered are the changing nature of the shared values, prevailing attitudes and the behavior of groups, the level of commitment of employees and the concept of cultural intensity.
In conclusion, the use of McKinsey 7-S illustrates the seven fundamental variables that are internal to the organization. These factors are the foundation of the organizational success. The seven variables work interchangeably to maximize the potentiality of the organization, and in relation, it is important for any firm to take the keen interest in all of the seven variables. Subsequently, these seven variables include staff, management style, strategy and structure, systems and procedures, skills and shared values (Hayton, 2015). Technically, the seven elements are divided into two sections, that is, hard and soft elements. The soft elements are considered as difficult to define and include variables such as management style, staff, shared values, and skills. On the other hand, hard elements are easier to define and include aspects of system, strategy, and structure. While soft elements are defined by the organizational culture, hard elements are influenced by management. The seven variables are measurable with the organization's past performance, the industry within which it operates and its main competitors. Following the process, it is important to identify which of the seven variables are strategic factors to be considered in strategic decisions. The seven elements form some of the basic components that influence the operations of a company and advancing the corporation between the seven variables will automatically lighten the operations of other departments.
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