Diversification and Stakeholder's Objectives

Stake holder’s Objective: 
Organization deals with many stakeholders. They have      their own needs & objectives.

-          Stakeholders can be – employees, suppliers, customers, shareholders, society, government etc.

-          It is difficult to cater all stakeholders & make them all happy because their objectives are not aligned with org objectives & strategies.

Current Competencies: 
Every org. maintains its distinctiveness quality mainly based on their current competencies.

-          They make an org. “the”

-          They are the collective learning in the org. skills especially how to coordinate diverse production & integrate multiple streams of technologies.

Competencies give competitive advantage because they are done by an org. better than other competitors

Diversification Strategies

-          Diversification is the crucial for all organizations.

-          It is used to aquire resources, new market and adopts new environment and technologies.

-          Managers are also in dilemma to diversify or not to diversify.

Some questions might help managers to go for diversifications.

1.      What can our company do better than any of its competitors in its current market?

2.      what strategic assets do we need in order to succeed in new market?

3.      Can we catch up to or leap frog competitors at their own game?

4.      Will diversification break-up strategic assets that need to be get together?

5.      Will we be simply player in the new market or will we emerge a winner?

6.      What can our company learn by diversifying and our we sufficiently organized to learn it?

     Some questions need to be answered?

• Which are our key stake-holders?
• How we can make every stake holders happy?
• List out the priority stake holders?
• How stakeholders affect our strategic decisions?

When we try to link stake holders, current competencies & diversification strategy we need to ask some important questions.

1. Whether we are going for related diversification or unrelated diversification?
2. If we are going for related diversification, which are the current competencies we can leverage in this diversification?
3. If require how we can achieve some competencies for this diversification?
4. Which are the stake holders need to be taken care of, what will be their reaction?
5. What will be their expectation from this diversification?
6. If we are going for unrelated diversification, whether our current competencies help us to move forward?
7. Which are the new competencies should be brought & cultivate & how they could be source of competitive advantage?
8. To cultivate these competencies which are the stake holder’ s needs we are going to ignore?
9. How the key stake holders react & which are their expectations from this unrelated diversification?
10. How these diversifications help us to grow & learn?
11. Whether they align with org. ultimate goal & vision?

Illustrations

GCMMF-Gujarat Corporative Milk Marketing Federation

Gujarat Corporative Milk Marketing Federation was started with the philosophy of:

1)      To serve the interest of milk producers.

2)      To provide quality product that offer the best value to customers for money spend.

3)      Its primary objective was not maximizing profit so, its primary stake holders where milk producers and milk consumers. It was started for the benefit of society.

4)      Its competencies lie in;

a.       Management of supply chain at low cost of operations

b.      Managing efficient cold chain and distribution route for perishable items

c.       Brand image of trust and quality among customers as well as farmers.

d.      Innovative market strategy

- It always been in business of milk & milk related products but new emerging market of food processing it decided to go into field of fruit & vegetable based products.

- In this diversification whether it can leverage its old competencies or it requires to develop new competencies.

- It needs also to ask that how this diversification affects its market position in food processing industry & whether it also achieve success that it had achieved in milk business.

China Netcom

-   The stakeholders were major govt. bodies.

-         The main objective of the org. is to be the telecom backbone provider to China to keep up with the technology revolution & increase connectivity of that nation’s people.

-         The current competencies lie in providing backbone infrastructure & financing & managing large scale technology Projects at low costs.

-          The current technology that china Netcom has allowed it to provide cheaper as well as better quality transmission of VOIP as compared to its competitors.

-          The diversification strategy could include moving into:

1.      End to end bandwidth solutions.

2.      VOIP & VPN connectivity.

3.      Data centers for storage.

4.      Connectivity & solutions to SMEs.

-          None of these are in line with the firm’s mission, stake holder’s objectives nor are they in any way arising out of similar competencies as what the firm already has. The chances of the firm emerging as a leader in any of these other businesses also cannot be easily justified.

Intel

-   Intel’s strategy has been centered on technological innovation & leadership.

-          Intel was in memory business earlier then it moved to Microprocessor Company at the center of the PC revolution that eventually came to drive the PC industry.

-          Its main stakeholders were shareholders & technology partners with whom it needs to maintain long term profitable relationship.

-          Its core competencies lie in product differentiation in memory & processor business.

-      Big brand reputation & relationship with Dell, Sony, Compaq & other technology partners.

-          Intel is deciding to enter into an internet building block company.

-         Here Intel comes into information technology business which requires different capabilities & whether this diversification will help intel to maintain its current growth & profit. 

Articles on Strategic Management

Leadership and Management Processes

          Leadership

•    Leadership is to face challenge of developing or reestablishing a clean strategy.
•          The leader must provide the discipline to decide which industry changes & customer needs, the company will respond to, while avoiding organizational distractions & maintaining the company’s distinctiveness.
•          One of the leader’s jobs is to teach others in the org. about strategy, to say ‘No’ & to set limits.
•      The leader taking a company from nearly good to truly great.
•       He also includes right people with him & kick out wrong people from the org
•      A Leader allocates resources & brings new methods & processes into Org. This gives an opportunity to improvise & learn.
•       Changing processes & bringing best practices motivates the employees
•      He provides flexibility to his employees that bring innovation & autonomy in org. culture that is also big motivation for employees.
•       He believes transparent work culture & incentives are given on the basis of performance, employees should be part of org. change & innovation & recognition & growth opportunity also should be provided to them.
•     He should be good in environment scanning and he needs to change org. according to changing environment & he also needs to prepare employees to support him for that.

How employee motivation increases & their performance becomes better by learning, improvisation & innovation brought by leader?

-     There are mainly five levels

1.  Highly Capable individual

2.      Contributing team member.

3.      Competent manager.

4.      Effective leader

5.      Level 5 executives

 Level 5 executives are mostly combination of personal humility plus professional will.

 Management Processes: 


There are many management processes are used to improve efficiency, to reduce cost, to achieve better product quality & greater customer satisfaction. Some of them are

1.      Best Practices: They should be properly identified & implemented keeping in mind our org. culture & system.

2.      Total Quality Management: TQM is a commitment to continuous improvement in all phases of operations.

3.      Process Reengineering: Reengineering can be used first to produce a good basic design that yields dramatic improvement in performing business process.

4.      Motivational Practices for employees: Motivational practices cultivate commitment & winning attitudes among employees.

5.      Resource Allocation: All resources should be allocated properly to all divisions & proper planning should be done to arrange resources.

6.      Learning : All management processes at the end of the day lead to learning & experiencing new methods, systems.

           
Illustrations: 

General Electric: 


As a leader Jack Welch created mark in corporate world in the century.

-He gave direction to the company & set targets to be either “no.1 or no.2” or Fix, sell or close.

- He has retrenched some non performers & sold non profitable business.

- He included best people with passion & commitment, set stretched targets for them, gave autonomy & good incentives & rewards on good performance.

- He was risk takers & experimental. He introduced some ‘Best Practices’ of other org. in to GE. He introduced Six Sigma practice.

- He brought transparency & atmosphere of communication into GE through “Workout”.

- Not only top management but lower level employees also should be listened.

- Some of these practices were good to increase motivation of the employees.

- As per level 5 leader’s qualities he lacks humility in his character.

- “Best Practices”, “Work Out”, “Hire & Fire” & “Six Sigma” were some of the processes he brought & that played major role in GE’s success.

China Netcom: 


Edward Tian was brought into the company with specific target- the fulfillment of the very reason for existence of China Netcom.

- He through the company had the mandate of preparing China for the internet boom by breaking the monopoly of public limited giants.

- His strategy of creating a backbone & then ensuring that he capitalized on it is an example of how he brought about changes, without loosing sight of the core reason-preparing china for internet boom.

- He successfully implemented this strategy. Since he himself believed in the mission & ensured that the others believed in that as well.

TCIL: 


TCIL was witnessing significant quality problems apart from financial troubles, loss of market share.

-          Bhusan Raina closed down the loss- making HDP, introduced VRS, focused on the customers such as the organized market etc.

-          He also introduced changes in the organization structure, was responsible for challenging conventional thinking & introduced incentive schemes.

-          He also used his good officers to ensure that banks did not take the company into BIFR etc.

-          Some Processes were introduced & changed in diff functional areas.

-          Finance: It had gone for Debt restructuring.

-         H&R: It did downsizing, introduced effective VRS schemes, & managed union & labors very well.

-          Operations of the plant: To enhance the capacity utilization, it started

1.      Competing TBEM Award

2.      Implementing Total Operating Performance Initiatives.

3.      Implementing Total Productivity Management

-          Marketing : It started

1.      Price initiatives

2.      Market Choice

3.      Product development effort.

A rare Gujarati muslim at IIM-A

At a time when minority affairs minister Salman Khurshid has called quota for Muslims a double-edged sword, here is a man who has defied the odds and stereotypes. Abrarali Saiyed is a rare Muslim from Gujarat to get admission to Indian Institute of Management, Ahmedabad. Muslim students in IIM-A so far have been from outside Gujarat. Saiyed has been admitted to the Fellowship Programme in Management (FPM), IIM-A's doctoral programme, after clearing CAT with high marks.
Although IIM-A can't tell from records if he is the first ever Muslim from Gujarat to make it to the institute, Justice Sachar Committee report on Social, Economic and Educational Status of the Muslim Community of India states, "There were only 63 Muslims out of 4,743 candidates that made it to various IIMs in 2004-05 and 2005-06." Saiyed comes from a middle class family - his father was a class II government officer who funded his education by giving tuitions to scores of youngsters, mainly Muslims. He used a bicycle for cover long distances between tuitions.
"I was a first class student, until my last year in engineering college in 2002," he says with a smile. "I wasn't able to attend college for four months because of the post-Godhra riots. So, my teachers downgraded me to second class." But Saiyed was undeterred. He became an academic associate with IIM-A in 2006.
IIM-A professor Rakesh Basant, who was a member of the Sachar Committee, says, "It is heartening to see that this candidate came through a rigorous selection process. The Sachar committee had found that very few Muslims clear CAT, but those who do, have an equal chance of getting admission."
Despite making it to the most prestigious management school in the country, Saiyed says he has stopped making future plans. "They never work out," he says. "I prefer to go with the tide and see where it takes me."
Read more: A rare Gujarati Muslim at IIM-A - The Times of India http://timesofindia.indiatimes.com/city/ahmedabad/A-rare-Gujarati-Muslim...