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Greenwich School of -1Management

Business Organisation and Policy

Organisation Planning

Planning types and innovation.

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-3From: Mr. Okikiola Imam To: T.Kersmo Stn: 121396

Contents

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Introduction
An assignment was given by my business policy and organisation lecturer and the question scenario was based on a Greenwich School Management (GSM) student who was asked to link strategic change with a significant innovation adopted by their organisation. The student based his response on the introduction of self-scanner checkout in supermarket. The student was said to have failed the assignment. The lecturer now ask to explain why the student failed by discussing differences between strategic, tactical and operational planning and to explain what strategic innovation is in relation to the economist Joseph Schumpeter theory linking business cycle to innovation.

Objective
The objective of this report is to write on the findings why the student failed the assessment, by discussing various types of planning and relate them with innovation and business cycles. In order to meet this objective, I will discuss what strategic innovation is and the effect of innovation in the business/economic cycle in relation to Joseph Schumpeter theory of Creative Destruction.

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Planning The MBA student failing the coursework is not surprising as he likely didnt explain what planning is and types of planning. Planning is the iterative task of setting goals, specifying how to achieve them, implementing the plan and evaluating the results (Schein, 2004). Planning is vital to all organisation. Planning help people to adapt by applying both ends (what to do) and means (how to do it). Planning add value to an organisation. Planning generally includes many functions that support the needs of employees and employers from hiring personnel, production to terminating employees (Moore, 2012). Benefits of Planning The followings are some of the benefits of planning: Encourage and motivates people doing the tasks. Helps bring orderliness to an organization. Let people know where their tasks fit in the larger picture; i.e. clarify direction. Ensure effective and efficient use of resources. Increase organization control by letting manager measure development against objective/targets (McNamara, 2012).

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-6Types of Planning

Source: Knotts, 2011.

Strategic planning A strategic plan sets out the overall direction for the business, is broad in scope and covers all the major activities (Mintzberg, 1979). Strategic planning affect the whole organisation and cover all major activities such as turnover/sales or market share. The students topic didnt meet any criteria for a strategic plan or change, as the innovation he choose didnt have any effect on the supermarket vision or mission. Strategic plan is worried about where the organisation should be, want to be and ways they going to get there, Strategy is future oriented and a game plan for the organisation. Self-scanner is not going to have a big effect on the company revenue or market share, strategy is emergent. . 6

-7Examples of strategic planning/changes

Source: Scribd, 2013.

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-8Strategic Element

Source: izone.hk, 2012

Source: Boddy, 2011

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Environmental Scanning/Strategic Analysis The success of any organisation depend on ability to spot and interpret signals from the environment in which they operate in, if an organisation can respond to these factor effectively/efficiently than their competition then they would be place for likely opportunities. There are 3 different layers to a business environment: Internal environment, competitive/industry environment and general/macro environment.

Source: Boddy, 2011.

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Source: Trinity, 2011. Environment Analysis The external environment consist of those forces/element which are outside of the organisation control. This external environment consist of political, economic, sociocultural, technological, environmental and legal that affect every organisation. The opportunities and threats are based on these external elements. This internal environment of corporation consists of variables (strengths and weaknesses) usually within the organisation itself, but not within short-run control of the top management (Kersmo, 2013). Organisations need to know what it does well and where it might have to improve, also to see if its resources are being used effectively and efficiently, also in making sure it has the structure, culture and resources to produce a preferred strategy. Culture: is a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, and that has worked well enough to be considered valid and transmitted to new member (Schein, 2004)

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- 11 Resources: this are finance, people, physical asset, knowledge, information and reputation. Strategic capability depends on managers being able to use their resources to perform at level required to prosper or survive. Structure: Organisation Structure is the sum total of the ways in which it divides its labour into distinct tasks and then achieves co-ordination among them (Mintzberg, 1979). Such as marketing, human resources, finance department etc.

SWOT Analysis
A SWOT analysis is a comprehensive look or overall evaluation of an organizations looking at the strengths and weaknesses in the internal environment and opportunities and threats in the external environment. (Philip Kotler, 2012) Organisation should be able to draw out and see key issues and elaborate on its strategic implication, because strategic decisions should be about internal capabilities and external changes. SHORT SWOT ANALYSIS.

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Strategy formulation This is how corporation and business Chooses the best method in the realisation of the corporation objectives and goals, in other to achieve the organisation vision. (managementstudy, 2008) Purpose and mission of the organisation such as does it

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Source: http://www.scribd.com/doc/131035693/planning, 2013

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- 14 Competitors/Industry Analysis Porters Five Forces

Source: investopedia, 2011. The five porter forces is a means of identifying and looking at those aspect of those five forces most important to the profitability of an organisation at a period in time. It is use to analyse the sexiness meaning how attractive or profitability is, it will also show action points manager need to consider in their strategy. Weaker the forces more attractive the industry, stronger the forces lesser profitable the industry. BCG MATRIX

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BCG matrix is an analytical technique used in product management, strategic management and helps business in analysing their product lines or business unit. A business in the low market growth and low market share is class as Dogs in the BCG matrix and businesses like that should be de-invested from. A cash cows is a market situation where there is low market but high market share, in this market business generate more cash than they consume.

Corporate vision This is the intended future, the dream this is where organisation desired to be in future in relative to its goals, objectives and strategic direction. Vision are long-term and mainly concentrate on the future. Example Oxfam vision statement Oxfam is a global movement of people working towards a world without poverty. And we won't rest until we get the job done (Oxfam, 2013).

Corporate mission A mission statement is a broader statement of a corporations purpose, reason and scope. It also tell the world what it does. a broad mission statement helps guide those setting goals and strategies to achieve them (Philip Kotler, 2012) A good mission tell anyone reading it the fundamental purpose of the organisation, what makes it different from its competition and domain of the organisation operation/ product offer and path the business taking.

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- 16 Strategies Hierarchy of strategy

Sources: emeraldinsigh, 2011. Corporation strategy forms the comprehensive master plan that dictate how the corporation will achieve its mission and objectives. (Kersmo, 2013)

Policies A policy can be describe as the guideline or process that turns strategy formulation into implementation. Policies made by companies set out what every stakeholder, employees throughout the organisation to take actions that fit with the corporation mission, strategies and operation. This is the phase of the process where what to be done is made known.

Strategy Implementation Strategy implementation can be describe as the process where strategy are turn into action, moving it from corporate level to operational through the development of procedures, budgets and programs. The implementation process might involve painful changes such as organisation structure (delayering), culture (discipline), resources (finances). Strategy implementation is normally carried out by middle and lower level management and does get reviewed by senior managers.

Evaluation and Control This is the final process where corporation activities and performance are monitored, so progress can be compared with desired outcome. Investors, shareholders, managers 16

- 17 and financial analyst have to compare their performance or progress with their proposed plans and this could be in the form of profits or return on capital employed, by doing this interested parties can know if performance is to the organisation target. Senior managers use the result from the information to alert management if their targets wont be achieve and operational changes needed. Even though evaluation is shown as the last process, this is not a rigid process but continuous as organisation have to adjust to changes in the business environment they operate in.

Tactical Planning
Tactical plan details how the overall objectives are to be achieved, by specifying what senior management expects from specific departments or functions (Philip Kotler, 2012). Tactical plan can be an ongoing plan or could be single use such as promotional or sales plan, this is what managers use to do his/her job duties. Team leaders, supervisor and line managers develop tactics that will support their tactical plan and tactical plan deals more with efficiency. Introduction of self-scanner, for example, is more of efficiency issue than effectiveness. This type of plan is narrower in scope, letting all department know to achieve the corporation strategy, tactical plan involves specifying action plan and objectives. Tactics are the foundation to strategy. They are the actual doing aspect that follows the planning part. Tactics can be said to be the action. In the strategy phase of a plan, the thinkers decide how to achieve their goals. In other words they think about how people will act, i.e., tactics. They decide on what tactics will be used to achieve the said strategy.

Objectives The believes are managers favour action above planning, but not until objective of doing a task is clarify then they might make little progress, as the best strategic plan

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- 18 depend on the clarity of the task to those carrying it out. Objectives/goals gives focus to a given task.

Operational Planning
An Operational plan is said to be what is needed to activate or kick-off strategy and make sense of it. This type of planning is typically interested what the lower section of an organization must do, the process they must follow to do it and who is in control/charge at all stages. Operational plan is only concern with shorter time objective (normally a year or less) and narrower in scope compare to tactical plan or strategic plan.

Compare and contrast planning type Time-scaling: strategy planning is futuristic looking at three, four, ten or more years to get the organisation where it want to be and strategy starts with the end in mind, while tactical planning average about eighteen months, finally operational planning is very short term ranging from hours to weeks. Management involvement strategic planning decision is made by supper managers because they know the organisation, line/middle managers have better understanding of day to day running of the organisation so they made tactical plan, operational plan is made by supervisor/team member. Decision making level: strategy planning is done at corporate/organisation level. Tactical planning is at department, division, market or function and operational plan is within teams. Effect of change: strategic plan change direction of the whole organisation, while tactical plan have functional changes and market activities and operational changes the actions required to deliver services and product.

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- 19 Planning nature: strategic plan is general direction and very broad, tactical planning detail on required changes and operational planning is very specific providing details on goals and tasks.

Strategic Innovation and business cycle


British supermarket introducing self-checkout is not a strategic innovation as the innovation doesnt have sustainable basis for the supermarket growth and wont be part of its innovative strategy, self-checkout will help customer have a better shopping experience but it wont have much impact on sale. A strategic innovation should have one or more of this characteristics: Innovation that redefine customer base or market share example is Apple making computers for individual at a time when it was only use by corporation and governments. Innovation that reinvent the idea of customer value example is IBM going into supplying business solution while selling adware, finally a strategy innovation should have Dramatic redesign of the end-to-end value chain. Introduction of self-checkout in supermarket doesnt possess any of the above characteristics, as strategy innovation is vital to adapt to change. . Not to innovate is to die (Freeman, 2008). Innovation can be define as the development of new value by providing solution that meet new needs, old customers, market needs and inarticulate needs in a new way. Innovation could be radical or incremental, increment meaning small modification in a product that bring minor improvement, while radical is a large change. Sources of innovations are eureka moments, knowledge push, demand (need) pull, regulation changes, accidental innovation etc. types of innovation according to Schumpeter: introduction to a new market, changes in strategic institutions such as banks, discovery of new natural resources. Innovation has been studied and even argued to be the powerhouse of economic growth by numerous economists. The importance of innovation had been discuss by economist for hundreds of years and the observation was the increase in economic growth was down to innovative technological advances. 19 Okikiola Imam121396

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Joseph Schumpeter was one of the first economist to realize the important of invention and innovation as stimuli for economic growth and his argument was that competition posted by new invention or innovation was important to an economic than marginal changes in exiting product, Schumpeter believes that organization with R&D sectors are the central innovative actors. Example is the UK shows increase economic growth during industrial revolution, increase in technology and innovation high economic growth. Business cycle refer refers to all activity in the economic fluctuations in production, trade, over a period of time (Rees-Mogg, 2008).

(justingcampbellecon., 2011) Schumpeter is very important for his development of a theory for business cycles which relate growth to innovations rather than monetary (banking). Schumpeter believes economical peaks The recurring and fluctuating levels of economic activity that an economy experiences over a long period of time. The five stages of the business cycle are growth (expansion), peak, recession (contraction), trough and recovery. (investomedia, 2012) are that of the doing of innovation by organisation and commercial factors, Schumpeter said By innovations I understand such changes in the combinations of the factors of production as cannot be effected by infinitesimal steps or variations on the margin. They consist primarily in changes of methods of

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- 21 production and transportation, or in changes of industrial organisation, or in the production of a new article, or in the opening up of new markets or of new sources of material. The recurring periods of prosperity of the cyclical movements are the form progress takes in a capitalist society. (Rees-Mogg, 2008) Schumpeter continue and argue from economic past relating a boom time to a period of big technological advancement and this was an unquestionable argument for his critic, mainly because looking back at 17centuries till today, you will find that every major world boom are generally revolutionised by some technology/industry changes e.g. the railway of the forties or steel introduction in eighties and nineties electricity.

(naturaledgeproject, 2012)

Conclusion
In order to find out why the student failed the exam, this report has gone into critical analysis into what planning is, types of planning, focusing on strategic planning and finally looking at what tactical and operational planning is. Finally the report looks at

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- 22 what strategic innovation is, in the contest of the question asked of the student relating it to Joseph Schumpeter theory on innovation and economic growth strategy. This report hereby conclude the student failed the assessment mainly because he doesnt understand the basic difference between strategic changes in organisation to operational changes or tactical changes. The introduction of self-scanner checkout in organisation is more of tactical change than that of strategic change. Finally on the research of innovation and its link to business cycle, this report conclude that depressions and time of peaks are not down to monetary factors such as banks or interest rate alone, but activities of innovators/entrepreneurs too.

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References
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- 24 McNamara, D. C., n.d. managementhelp.org. [Online] Available at: http://managementhelp.org/strategicplanning/index.htm#anchor4293674666 [Accessed 21 February 2012]. mdcegypt, 2012. www.mdcegypt.com. [Online] Available at: http://www.mdcegypt.com/Pages/Management%20Approaches/Strategy, %20Business%20Plan/Strategy%20Business%20Plans/Basic%20Elements %20of%20the%20Strategic%20Management%20Process.gif[Accessed 23 February 2013]. Mintzberg, 1979. Management. In: j. c. Hadyn bennett, ed. An intrduction fifth edition. Essex: Pearson, p. 173. Moore, M., 2012. www.ehow.com. [Online] Available at: http://www.ehow.com/about_6193445_value-human-resourceplanning.html[Accessed 21 February 2012]. mystrategic, 2012. mystrategicplan.com. [Online] Available at: http://mystrategicplan.com/resources/internal-and-externalanalysis/[Accessed 22 November 2013]. naturaledgeproject, 2012. www.naturaledgeproject.net. [Online] Available at: http://www.naturaledgeproject.net/Keynote.aspx [Accessed 11 March 2013]. Oxfam, 2013. www.oxfam.org.uk. [Online] Available at: http://www.oxfam.org.uk/what-we-do/about-us/our-visionvalues-and-goals[Accessed 23 February 2013]. Philip Kotler, G. A., 2012. Principles of Marketing. In: E. Svendsen, ed. Global Edition, Fourteenth Edition. Harrow: Pearson Education, p. 77. Rees-Mogg, W., 2008. www.dailyreckoning.com. [Online] Available at: http://www.dailyreckoning.com.au/business-cycle-josephschumpeter/2008/10/02/[Accessed 26 February 2012]. Schein, 2004. Management. In: An introduction fifth edition. Essex: Pearson, p. 17. Trinity, 2011. trinitywebworks.com. [Online] Available at: http://trinitywebworks.com/blog/swot-analysis-overview.html [Accessed 11 April 2013].

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