a a

extend the marketing reach access needed information and resources build credibility with a particular

target market access new markets that would be inaccessible without the partner Provide companies with the opportunity to obtain capacity and
expertiseAllow companies to enter into related business or new geographic markets or obtain new technological knowledge
-{!

a a

Risk giving control of its technology to its partner Proftable retums maytake some time to achieve high level of commitment ot staff and management Cultural differences and communications difficuhies Difficult to get out of quickly

Working in a different legal and

commercial system Political risk in the country where the

- \\

\,\

joint venture is based Potential for conflict with your joint venture partner

lltlhy ?
- Marketing and advertising
- Gain

customertrust

Gainmorexprtise

- Expand busirms rapidly

-Spqd hss$rygardmonsy

StrategicAlliancs
Relationship formed between two or more parties to pursue a set of agreed upon goals or tg meet a crttical business need white remaining independent

'r'..-J..,-:

:::.:.

::

i:

:..-.

--:::.,.aj j

-:r :i;;.n.<"

ffi

a ,&"e

organidions
How??
- Each partner must contribute distinctive "core strengths"
- The alliance can be struck between rival companies.

- One compaaywill lead and the other become partners.

rebin business independence - Strategic alliarrces can h combined with otfier agrerrents,
- Each partners

*t

o o

Greaterresponsiveness

o
o

Payment difficulties

Opportunities for growth

Small company subsume by larger company

Risk sharing

lncreased leverage

Potentialforconflict o High commitment -time, money, people o Strategic priorities change over time

Mersers &Takeouers

o o

Mergers & acquisition are important option 4 larger businesses that wish to grow rapidly. When a one business buys another it is possible that the mergers or acquisition integrates the new product with the existing product.

\:\

Meroers
>> Integration
>> 2 or more firms agree to join togetherto become 1

.rsryryr
-':b-:--_:,. j* ::_-i,..: ":'

>> Acquisition
>> One firm buying anotherfirm

>> Each firm may retain some degree of identity (ex : Nokia +
Siemens)

>> The taken over firm may lose its identity ( e.g. Morrisons takeover of Safeway will eventually lead to the
disappearance of the name 'Safeway' )

combine, even if the target firm doesn't want to be purchased.

H,orizontal integration

at the same stage of the productive process/ acquire rival companies

who operate in the same industry.

Advantages

. r

Reduce cornpetitor Possible EOS

lncreased power over

Disadvantages Rationalization may bring bad publicity . May lead to monopoly investigation if exceeds certain limit.

supplier

Vertical integration

at different stages of the productive process/ manage the supply chain,

can be bachrard @ forward.

i.
Aduant4e

Forwards

towards the market

Able to control the promotion and

r r

Consumers may srrspect

pricing of its product Secures a secured outlet from the firm's product and mayexclude

uncompetitive activity and react

negatively tack of experience'good manufacturer doesnt necessarily make a eood retailer

Competitor's product.

Backwards

towards the source Disadvantages

Lack experience in managing

o o

Adr/anta3es Control over quality, price and delivery time of supplies

Encouraged joint research to improve qualityAf supplies of components

o o

supplyrr company.
Supplyrng business becomes complacent due to secured

Controfsuoolies to comoetitors

customer.

irawmaterial t-il

imanufacturinel i-..--..-.--..-;J

assemble

I i

UistriUution

I i enduser

Backward

Forward

Corglormerate mrgers & takeovers

The acquisition of firms in diffierent production areas

from its core market /acquire a new firm in an unfamiliar market @ industry

Advantage
rDiversifies in firm's industry and market. oSPread risk .Take the business intofast growins market

Disadanges
.Lack of experience in new sector rlack of clear focus and direction

Advantaees
a
a
EOS

mereer &

Eleorer

large scale production that lead to lower unit costs

Greater market sharc - the business, can often charge higher prices of monopoly power, control supply & searre otrtlets Oiversiftcation

Gain some form

- to spread

risks ard benefit from larger custorner base sltif,s and speciatist departments to the business

rl
a o

Redscs Gompetifon if a rival is taken over

Other business can bring

ts

It is easier to raise money in a larger hrsiness

t+3

Syneryy-The whole is more efftcient than the sum of the parts {2 + 2 = S!)lmprove technical, productive or allocative efficienry Dlsa$antaees
a DOS
q,f

mcrser & bkeWer

o a

Clashes of culture, reducing the effectineness of the integration.

May need to make some uorkers redutdant, especially at management level

have an effect on

-this

rnay

mdivation

May be a conflict of obiectives between different business, meaningdecisions are more

difficultto make & causing disruption in the running of the business.

.\.

>
o r o

\
Ht EXIENSION: PORTEtrs GENEBrc SIRAIEGIES
Business can gain a competitive advantage Rivals may also offer an improved product or offerthe product at more competitive prices Porter argued that every successful business must have a competitive advantage to prevent profrts being eroded by rivals entering the market

Strategies to sustain a competitive,advanta&e: Cost leadership:

e o t

Become the lowest cost supplier of a product within the market, but highly profitable and market leaders. Do not compete with firms that offer higher-quality products since this

would require price Directly compete by using penetration or predatory pricing strategies which may be prohibited by certain governments

Differentiation:

a a a a Focus:

When a firrn makes its mass-markets productsdistinctfrom those of its competitors Done by packagrng or branding to make the product seem unique Focuses on quality ra&er than the cost of the product Successful differentiation will allow a business to charge a premium price, to gain higher profit margin Drawback; expensive

a a

When a firm targeB a niche or single s(ryment of the market Focus on highly profiable stratery due to the high prices that can be charged and the lack of competition Drawbac*: marketsize is very limited

> THE ANSOfF MATRIX

Defnition: Analyticaltool that helps managers to devise their product and market growth
strategies.

'i-"

.\\
PRODUCT

MARKET

Existing Existing

New Product development Diversification

Market penetration Market dwelopment

New

Market oenetration

o
r o r

Focus on selling existing products in existing markets

To increase their market share of the current products

Achieved by : improving marketing mix, advertising brand reposition

Adrantages:
Use markets and

prducts that are hmiliar with, market expenditure minimized

Product dnG.hpmeilt

o
o o r

Aims to sell new products in existing markets

Relies heavily on produet elGension or product derrelopment For products that hane reactrcd decline or saturation phase of the PLC

Lower

risk

as

it

is

laurrcH under

knovn brand

Market develooment

tls

. r o o ' o

Medium riskgrowth strategY

Selling existing products on new market

product ( diff bcation ' overseas ) using neuv distribution channels to sell the
Prices could be changed to

attret

ne$t customers

Business is fumiliar uriththe product beirgrnarketed Does notguarantee suooess

Divercificatign

..bBusinessm{ketingnewproductsinnewmarkets(Es,virE'n}

o r o r

To spread its

{$q

for its markel seeking new opportunities suitable for firm who has reached saturation to grow
parent company Ways : becoming a holding company/

little experience Riskiest since its not fumiliar territory, and has

>
o r

GROWTI{ & EVOTUTION & BUSINESS STRATEGY

A keY reason to seek growth is for the benefits of EOS

Which acts as barrier to entry into a market

:

growth Sttategies that business use tp achieve

oUniguesellingpoint{USP)-standtheproductcornparedtoothers .First.moveradvantage-establishgoodrep*ationandlovalty

o o

Branding

well established and recognization

new market Diversification- spread risks and gain revenue from a

1.8 change and managernent ofchange

Change
Charge and the man4ement ctEnge

i. ii. iii.

The rate of change is acaler:ating and no business is immune

Every change is a challege to the management of a business A desire bV the senbr

man4ers to have some methods to avoid the quicksand of a dynamic business erwirorlmem

Causeof
t.

clu4es

The drivers fo ctrange can come both from internal and external environment

ii.
ilt.
iv.

Affectiue rnnagers undrshrd that change in the strategc environment is a continuous

process ard that succesful

hsirss

are those that anticipate and plan for change

ManagiTg chage; longterm swvtval of the bminess

v.
vt.

Organizdignalcharge : nemarywtren extemal environrnents are uncertain,cornplex and dynar[hLSignificant or iipia c*rarge may require an organization to reconsider its structure, purpose, mission cutture
lmplementation of strategic cfiarge is clearly a period of significant danger for any
business

*?

Facts

Explanations Significant opportunities in terms of larger

Globalization

Itt.

markets ard gronrtlr possibilities Opportunttyto th firm to produce standardized products Benefitfrom EOS
BUT

i.

ii. i ii. iv.

Thneats ; gfeater l'national competition Affects the range o goods ard services Different nationalities : diff. tasre,preferences,btryirg habits

to increasingly aware of responsive to thegrowing and evofuing needs of emerging

Have

v.

vi.
vii.

outsourcedoften overseas
New techno i. ii. ,il,

companies MNCfaced HR issues; diff. skills,attitudes,needs of worHorce worldwide Communication prob. - difficult to maintain common purpose Challenge of expansion - more biz function

iv. v.

production Allcwed increasing dcentralization and downsizing - power shifting away from centre to local or regional offices Org. structure has flattened require employees to develop new skills and on extra responsibilities
Bt,T

Rate of org. change is accelerating Affucts business function - marketing to

[.

il-

Power often shifts from centralized function to local operating units Changing the management as well

Demographic changes

t.

ii. iii.
iv. v. vi-

Changes in the size and structure poputation The nature and needs of employees change The needsand wants of consumers Cause skill shortages Changes to recruitment training and retention policies Working pattern - reassessed ,flexible

vii. viit.

wor*irg introduced

Affects consumption patterns and purchase behavior

Hoticeableingrowingmarketscateringfor

1.8 change and management of change

older agegroups

Social and cultural change

i. iiiii.

Co*sumer behavior,attitude,expectation
change overtime

Devebped country: women have iobs Changed the ray retailers offer ttreir services; 24 hour in convenient location
lncreasing migration,' Changes the social and cultural mix of a

Changes in legiqlation

country
Change nature of demand

Provides new market opportunities

\\

i. ii. iii. i. ii. iii.

iv.

a\

\.

Force changes in business practice and activity Law of health n safety, working hours and discrirn ination have affected - Working conditions - The nature of workplace Consumer protection law - Force biz to change the way they market

andselltheirG&S
Economic trends Sienificant effects on business activity
As org and countries more independent; crise like the US "credit crunch" in 2008 had global

effects
Ripples in a pond and causing worldwide recession

Competition

i. ii.

highly competitive market, innovation and change initiated bV one business willtrigger a
response from the competition to protect market share garne console market : each manufacturer attempts to gain competitive advantage orrer its rival by frequently upgrading the functionality of

its products

4?

1.8 change and management of change

Facts Changes in HR and skill levels

Explanations

i. i. ii.

New management approaches

as the markets and products changes, so do the needs for specific HR skills turnover of senior managers is becoming more rapid desire for quick success - consider changing their management teams rather than waiting for irnprovement

Changes in employees

expectations,motivation behavior

nd

i. ii. iii.

"job for life" is gone Few oryanizations reward loyahy, in return employees are rnore fickle - Moving hetween jobs more quickly - Staying in positions for shorter periods Economic boom periods, - the bargaining position of skilled em$oyees is stronger - managers will have to review remuneration packages more often to retain their better staff

1.8 change and management ofchange

New product development

i. ii. iiiiv. i. ii.

Require charges inthe nature of an organization's prodtrction and marketing approaches

Financial requirement and availability of funds

t{ew products; - May require increased autornation of productbn l,lew services; - May require different ways of selling The target market for new pncdulcts may not be the same Changes in G&5 - Additional invstment - Cash flow that a business may not have Have to raise rw funds thru loans,share issues or integration with other orsanizition

Resistance to change:by Nur Azre

Despite the potential positive outcomes, drange is nearly always resisted. A degree of resistance is normal since change is:

. .

Disruptive, and Stressful

Management tryingto implement change willoften come across other people in the business responding with phrases such as:

. . . . r

"My needs are already being met', "\ffe don't need to do this" 'This sounds like bad news" "The risks outweigh the benefits' "What does this rnean for me?"

Of course a degree of scepticisrn can be healthy especially where there are weaknesses in the proposed changes. However resastance will also impede the achievement of business

objectives. Some cornmon reasons why change is resisted include:

T" -

*'-

iParochial self

interest

i it I

ilndividuals are concerned with the implications for ithemselves; their view is often biased by their perception of a iParticular situation
provides both comfort and security ;Habits are often well-established and difficult to change

lHabit i
I

ilrli,

f""**--*---""
I

jMisunderstanding ;

iCommunications problems ilnadeouate information

-t
i I

1.8 change and management ofchange

lLow toleranoe of tlrange i *'* -'-" ** i iDifferent assessrnent of the lsituation r- * "'" ifmpnyees are likely to resist change rA'hich is perceived as i Economic implications pay or other rewards iaffe*ing their itstablished pattems of rrorking and reward create a vested i linterest in maintaining the status quo
I
I

i
I

I ,
I I

Proposed cfranges Btridt confront peopletend to generate fear and anxiety lntrducing nry tedrnobgy or working practlces creates

Wehavetouched barlieron personal barriersto drange-there are also several organisational bani&qq to change. inctuding:
':::

o o o .

Structural inertia Existing power structures Resistance from rrnork groups Failure of previous change initiatives

Change is ako resisted because of the poor way in which change is managedl For example, a failure by management responsible for the change to:

. . . . . .

Explain the need for change

Provide information Consult negotiate and offer support and training lnvolve people in the process Build trust and sense of security Build employee relations

As a result of change resistance and poorly managed change projects, many of thern

ultimately failto achieve their objectives. Amongst the reasons commonlyassociated with failed change programmes are:

. r o . . r

Employees do not understand the puryose or even the need for change Lack of planning and preparation Poor communication Employees lack the necessary skills and/ or there is insufficient training and development offered Lack of necessary resources lnadequate/inappropriate rewards

r:

1-8 changeand managementof drange

rEffi1$
Deve&sped

FORCE

ff,tD tIrAtYStS

byfirtlflirl

in 1!)51

*reesful bus.ircsses tend b be constantly adapting & changing "An issue is teld in balance by dre inErction of tuo opposirg sets of forces - those seeking to prornote charge t&iriry Soisl & those attempting to maintain the status quo
He argued that

(rcstrainiq fumesf - Kurt Lsin. STAGES [T CARRNilG (X'TA FOffiE HEI}ATALTT6:

ra weight to each forces

. 1-5 {l:weak, S:strong}

St

L.8 change and managementofchange

roncE
ORIVBTIGFOftCES

FtELo

lxrl.Ytrt

- t(uET LEnix
RISTRAI\UIE FOf,CES {obstacies t* change)

(Fos*ve torces for chafispi

n+ r+
il+

fin

fiu
AGAINST
Cosi of technoiogy Staff deslrke
Drsruptron during change

Force Fietihaolysis Diagram {sources: http://www.valuebasedmanagement.netl

: 4 i; information :*-z process ffom ,-1 rnformatron 4 manual to ,:_ Free up poptes trme ----), ' autOtnated tO.Co more : i re
rnterrstrng tasks

. qurcklY ,

5 ' Plan: Uoorade 'a-3 "-"'-t''".-.lnformatron -+ avarlable more Company wloe '

FOR

Compteted ro rmgriment

Total:13
j

Total:

iAction plan
I For no acton rquired

Against:

j lnvolve tey staff in designing flew procass

r,
J

Review new process vdilh experls !O ensurg .Best Practice" I Key staff to coacn otier during chargg

Example of

force field analysis (sources: http://www.mftrou.coml

ADVANTAGES & DISADVANTAGES OF USING FORCE FIELD AilAIYSIS:

5t

1-8 change and management ofchange

DISABVAffIAGES

AOVA$TAGES

The effects of rapid change

Rapid changes, whether in internal environment or external envirgnment may affect the business in

many ways. The business need to know the effects so that they can respond to the changes wisely.
The examples are:

5f,

1.8 change and management of change

. becotrle rtrore important . b identi& changing tferds that will affects

thebusines
aJrd

its products or services

. rnore emphasised to create

srnpetitive advantageandrmaintain a position in ths

market
r

beachmark agai*st

cornpetiiors , I j

. PLC gettinB shorter . require greater focus on innovation and RnD

o

. provide business
advantage

to keep one step ahead of the market with the first mover

. this will impact on recruitment and

trElrnrng

. organizations are more to take part

time staffs and maintain fewer core
staffu

r orAnizations are developing this to embrace change

How the process of drange can be manage properly?

L.

Plan as ahead as possible

. .
2.

start the process early

e.g. if the change want

to be done next year, from now onwards(this year)

you have to the workers involved.

Be produ,ctiye.rather than reactive

r r

Don't wait the thing {change} untilit happen Create the culture earlier by training the workers and give the people time to practise

1.8 change and management of change

3-

lnfornr.people of plan change

o
4.

Briefing every once a while, communicate with them, rnake them aware

about the changes and wtry we have to change

Encograge cgnsultation and particioation in varigus wav

Not only give instruction, consuhation and participation of the manager must
be there

to

5. Provide clariw and support as much as oossible regardine the

{e

effuct of the

chanqe

'. .

E.g- redundancy: erylain

to them that thery will get the compensation

Provide training so that they can practise finding other rrork oreven find

them a work before redundant ttrem t

6. Emphasi-s the +rle effects of the change

.\

. o r

To rnotivate them

7. Provide tr,ainine when pgssible

lf theY need to rnove to other departments or other countries due to the change
To train them so they will more prepared

s?

'\

To"iitA.l: CWiorv
8g grtby, XY ltt*,

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til*,

io ao*

abr*

lq,ar fs4* gau)72, itu tt"t, r&r-o, br*

;*w

god* Utaia,U*

ddtn;aa*ioa.

f;nih;a

-11,ys

7u-d'

By Ai m o n, I q b a [, Aiza d,Y a s s e

MI'LflISTrc'ilAI. COMP$TES

A corporation

or

ento.p{ise that managet fodsctisr establishments o{ defive's sen ices in at least two countri6-

Corporationthat lrave ttleir hadquarter in one coirntry but

operaUng [anche, factories, aqd assemHy pbn'tlin

t{ot rnerely

importrslsporteG {produce 9oo6 and senicesin mtrethan

one country-

mdtlatatd
cotpa.tiq!

Deir*enot

They can hare a

powerfuliaffueffie in ifiernational relatioas and local economi$"

Some MNCs have

annual $les turnovets exceeding the size of

maflycountries' efitire
ecooomaes.

l|v Nota*

:/
8y : Ai ma n, I qbo l,Aiza d,Y oss e r

fokacrsb Gr*lrtlatCrol.t terc.3

Auridnrtad<letio

ho{re@rntv
avdded by the

ir

- 8tter mrtet inform&lon regardog cocsumertasteSat a rsult ofcbseness to thm

&orrhaolire
.- A company rmy harreached a phtea{
setisfyirg dofiEstic dematd, wtddr is not growir. Lookiognor
new maatets.

- LBgr'slatioo or other restrictions can be multinadonal basing rorne ofits operatiofts in a different coufitry

Advantages of being
Hidr Tranrotrbtior
!

C6t! i..

- Transportation coits are Ske tarif& in that they are bartirs whidr raise consumer price

multinational corporation

Mati(6 tanoe{iton
- The most certa'o method of preventing actual or potential competition is to

acquire foreign businessee

&rram.ntratt3
and tar inanliyi. ' The favorabk tax rates ifl an dtshore country are de$Bned to prornde a healthy

Ayoidfrnrct Rrtic6ort
.- When production is
done ifl host countrY, thre is no ned to pay import duties/import restrictioo

investment
enYironment that attracts ostside uafth.

,
.

l4v Notup

,'-.;

.-.:a./ a"'/ | __
_

.,:.?

-.,-,-

_, _.-.._....i!

By : Ai ma n, t q ba l, Ai z o d,Y asse