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Introduction & Company profile:

 Type of business
 Geographic domain
 Culture of senior management
 Competitive situation

A- Introduction
Background and historical information about the company under study
An introduction to the case: in it you outline briefly what the company does, how it developed historically, what problems
it is experiencing, and how you are going to approach the issues in the case write-up. Do this sequentially by writing, for
example, "First, we discuss the environment of Company X...Third, we discuss Company X’s business-level strategy... Last,
we provide recommendations for turning around Company X’s business."

Strategy Formulation

1. Vision (What do we want to become? COMPANY X Vision:


The organization vision is the dream to create or achieve in the future .Accordingly, the vision statement must be revised to be broad
enough and cover all company's stakeholders.
Company x vision is ?

2- Mission (What is our business?)


Components of a Mission Statement:
a. Customers: Who are the firm’s customers?
b. Products or Services: What are the firm’s major products or services?
c. Markets: Geographically, where does the firm compete?
d. Concern for Survival, Growth, & Profitability: Is the firm committed to growth and financial soundness?
e. Philosophy: What are the basic beliefs, values, aspirations, & ethical priorities of the firm?
f. Self-Concept: What is the firm’s distinctive competence or major competitive advantage?
g. Concern for Public Image: Is the firm responsive to social, community & environmental concerns?
h. Concern for employees: Are employees a valuable asset of the firm?
The company vision and mission reflects its tendency and hope to increase its international market existence and boost its sales locally
and internationally.

3- Objective comment whether it is realistic or not

The organization objectives directs activities toward key and specific results, the coming objectives are extracted from the case
describes and quantifies the organization operating objectives in the following fields :( extract from the case)
1. Cost reduction; highlighting the cost awareness of the organization with good improvement in figures.
2. Innovation; as one of the competitive advantage in the pharmaceutical business
3. Co-petition; as an objective to increase enthusiasm between different parts of the organization
4. Export; show with 20% of production as a strategic choice to secure hard currency.

As the objectives should be SMART??????????????????????????? Or smarter – extended/excited – rewarded/recorded


But the following objectives must be more elaborated to clearly describe the operating objectives of the company
1. Efficiency
2. Growth
3. Reputation
4. Contributions to the employees
5. Market leadership
6. Profitability
7. Utilization of resources
The achievement of corporate objectives should result in the fulfillment of the corporate mission.
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4. Strategies
 Concentric diversification or Cingular

Growth Strategy

It is the most appropriate strategy designed to achieve higher sales, assets, profits or combination of all. Continuing to
grow is increased sales, improve the per unit cost and a better experience curve with an increased profit and market share.
(If the company is intending to share the market, the company must peruse growth strategy)

Either growth is internally through expanding of operations both globally and domestically or it can grow externally
through mergers, acquisitions and strategic alliance.
The company is already applying a vertical growth through vertical integration with some of its distributors outside and
suppliers. It must increase both backward and forward integration to include or to add additional suppliers for more
material that is input to COMPANY X' products and to reduce the power of the suppliers over its business, also to include
more distribution channels either owned, or agents to ensure the distribution of COMPANY X's product all over the world
and to achieve its objective of increasing its exports to 50% by the year 2010 but without affecting the local market

Horizontal growth
is also an applied strategy in expanding COMPANY X's products in range and in other geographical locations and/or
increasing the range of products in the same location. The first step of acquisition of AMC is a very good example and start
for horizontal integration where COMPANY X would enriches its range of products with a unique and additional product
and applying its cost leadership strategy to the new product will result in a very good market position, also there are many
other options for growth strategy.
(Stability strategy:
if the company is operating in reasonably stable environment, stability strategy will be very appropriate for successful
operation)
(Retrenchment strategy: when the company is in a weak competitive position, some or all of its products results in a poor
performance, sales are down and profits are becoming losses. Therefore using retrenchment strategy to eliminate the
weakness that are dragging the company down)

5. Policies
State whether the firm has clear and written policies and fitting to its mission and objectives.

I. Corporate Governance

 Board of Directors
Who are they, are they internal or external, do they own shares, do they have different voting rights and for how long
they are serving on the board?

Do they contribute knowledge, skills and connections to the firm? And if the firm has international operations do they
have international experience?

What is there level of involvement in strategic management?(refer to board continuum

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 Top Management
 Who are the top managers and what are their characteristics in terms of knowledge, skills, background
and style? And if the firm has international operations do they have international experience?
 Are they responsible for the performance of the firm and how well they interact with the lower level and
the BOD?
 What is there level of involvement in the strategic management process?

 Shareholders

Marketing Audit:
External environment - Macro environment (PEST)
The company's internal and external environmental scanning reflects its strengths over its weaknesses and its opportunities over its
threats.

B- External Audit
The key external factors can be divided into five broad categories:

1-Political, Government & Legal Forces


• Government Regulation / Deregulation
• Tax law changes
• Special tariffs
• Environmental protection laws
• Level of Government subsidies
• Global relationships
• Political conditions in foreign countries / stability
• Changes in patents(‫ )التراخيص‬laws
• Import/export regulations
• Facilities for the entrance for new foreign investment,
• Location and severity of terrorist activity
• Voter participation rates
• Number, severity and location of government protests
• Level of defense expenditures
• Size of government budget
• The relations with other countries

2- Economical Forces
 Monetary policies
 Fiscal policies
 Tax rates
 Money market rates
 GDP trend
 Consumption patterns
 Availability of credit
 Interest rtes
 Inflation rates
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 Worker productivity levels
 Price fluctuations
 Income differences by region/customer
 Stock Market trends
 Foreign countries economic conditions
 Unemployment trends
 Propensity of people to spend
 Import / export factors
 Demand shifts for different categories of goods and services
 Level of disposable income
 investment laws and regulations,

3-Social, Cultural, Demographic & Environmental Forces


• Major Impact –
 Products
 Services
 Markets
 Customers
• Childbearing rates
• Immigration & emigration rates
• Per capita income
• Avg. disposable income
• Consumer behavior
• Attitudes toward saving
• Avg. educational level
• Governmental regulation
• Attitudes toward quality
• Attitudes toward customer service
• Waste management
• Air & water pollution
• Ethical concerns
• Buying habits
• Marriages, divorces, death and birth rates
• Number of women and minority workers
• Ozone depletion
• Endangered species
• Social Security programs.
• Lifestyle.
• size, structure, and regional distribution of the population
• Cultural fear or freedom level
• Population changes by race, age, and sex

4- Technological Forces
Major Impact –
• Internet (changing the nature of opportunities and threats)
• Communications
• Semiconductors

Significance of IT
• Chief Information Officer (CIO)managing the overall external audit
• Chief Technology Officer (CTO)focus on technical issues

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Essential for nearly every strategic decision

 Internet availability and usage


 E-commerce
 The rate of development
 The presence of skilled persons
 Presence of technological capabilities.
 Substitute might replace the organization’s product.

5-Competitive Forces
• Collection & evaluation of data on competitors is essential for successful strategy formulation
• Identifying Rival Firms
 Strengths
 Weaknesses
 Capabilities
 Opportunities
 Threats
 Objectives
 Strategies
 Response to external factors

 The relation among these factors is significantly affected our company’s service, market and the organization
structure.
 any change in the external factors translate into change in customer demand for our product and service , also it will
affect our service developed , nature of positioning and market segmentation ,the choice of business to acquire or to
sell.
 the external factors also affect both suppliers and distributors of our business

External (Task) environment (Competitive Analysis)


Porter’s Five-Forces Model of Competition

External environment -Task environment


(1) Markets
 Size, growth rate and geographical distribution of the organization’s market.
 The existing market segment
 The new emerging market segment
 The existing or future market development

(2) Distributors and dealers


 The structure of the distribution network.
 The efficiency level and growth potential of each channel.
 The cost and availability outlook for warehousing and transportation facilities.

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(3) Suppliers
 The structure of the supplier’s network.
 The new source of supply
 The objectives and strategies of the major suppliers
 The efficiency level.
 The cost and availability

(4) Public relation


 The effective efforts of the organization’s advertising and public relations.

(5) Competitors
 The structure, bases and intensity of competition.
 The existing major competitors.
 The major strengths and weakness of each competitor.
 The objectives, strategies and the level of profitability of each competitors.
 The market share level.
 The entry barriers.

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Potential Entrants

Threat of New
Entrance
Relative power of
Unions,
Governments, etc.
Industry Competitors
Other Stakeholders

Rivalry among Buyers


existing Firms
Bargaining
Suppliers power of Buyers

Bargaining power
of Suppliers
Threat of
substitute product
or service

Substitutes

Porter 5 forces:
1- Rivalry among existing firms
 Number of firms, few equally balanced giants
 Industry growth rate
 Very high or fixed storage cost
 Commoditization, low differentiation
 Capacity
 Diversity of rivalry
 High exit barriers
2- Threats of new entrants
 Barriers to entry:
 The need to gain economic of scale quickly
 The need to gain technology and specialized knowhow
 The lack of experience
 Strong customer loyalty
 Strong brand preference
 Large capital requirements
 Lack of adequate distribution channels
 The potential saturation of market.
 Government regulatory
3- Threats of substitutes
 Availability of substitute products
 Relative price of substitute products declines
 Consumers’ switching cost decreases
4- Bargaining power of suppliers
 Product Dominated by few companies, more concentrated than the target industry
 The target industry is NOT important to the supplier

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 Supplier product is unique, or high switching cost
 Substitutes are not easily available
 Product is critical for the business
 Real threat of backward integration from buyer
5- Bargaining power of Buyers
 When customers are:
 concentrated
 large
 buy in volume
 Buyer is in low profit business (sensitive to cost)
 Product standards (undifferentiated)
 Real threat of backward integration from buye.

C- Internal Audit
A. Corporate structure: describe the current organization structure of the company
The organization is the process of arranging people and other resources to work together to accomplish a goal
and as a result of the company strategy the organization structure must be adjusted to cope with the new
strategy and achieve its goals.
The organization's strategy to grow and go more international must be reflected on the organization structure to
achieve the required result.

1- SIMPLE STRUCTURE:
 Owner-manager makes decisions.
 Little specialization of tasks.
 Few rules, little formalization.
ADVANTAGES:
 Provides high flexibility
 Rapid product introduction
 Few coordination problems

2- FUNCTIONAL STRUCTURE:
The company rather being lead by an entrepreneur, he is replaced by as team of managers who have functional specializations. The
entrepreneur must learn now to delegate his responsibilities; otherwise, the new structure will yield no benefit

ADVANTAGES
 Centralized control of operations
 Promotes in-depth functional expertise
 Enhances operating efficiency where tasks are routine

DISADVANTAGES
 Functional coordination problems
 Inter-functional rivalry
 Overspecialization and narrow viewpoints
 Hinders development of cross-functional experience
 Slower to respond in turbulent environments

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3- DIVISIONAL
STRUCTURE:

It occurs especially
when the

organization is managing diverse product line or when the organization is expanding to cover wider geographical areas

ADVANTAGES:
 Decentralized decision making
 Each business is organized around products
 Puts profit/loss accountability on manager
 Facilitates rapid response to environmental changes
 Allows efficient management of a large number of units

DISADVANTAGES
 May lead to costly duplication of functions
 Inter-divisional rivalry
 Corporate managers may lose in-depth understanding

4- MATRIX STRUCTURE
The matrix structure (some times called the matrix organization) it combines the functional and divisional structure. It is designed to
gain the advantage and minimize the disadvantages of the functional and divisional structures.

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The matrix is formed by using permanent cross functional teams to integrate functional expertise in support of a clear divisional focus
on project, product or program.
The matrix structure in the multinational organizations offers a flexibility to deal with the regional differences as well as the multi
products, programs or regional needs.
The matrix structure is the common solution for the organizations that pursues the growth strategies in a dynamic and complex
environment
 Functional & product form are combined simultaneously at the same level.
 Employee have 2 superior, functional superior & horizontal product manager
WHEN TO USE?
 Scarce resources
 Ideas need to be cross fertilized across projects
 External environment is very complex and changeable

3. Distinct phase exist in the DEVELOPMENT OF matrix structure


1. Temporary cross functional task forces: Project manager is in charge as the key horizontal link
2. Product or brand management: The functional is still the primary organizational structure, product manager act as
integrator of semi permanent product or brand.

3. Mature matrix: A true dual authority structure, functional & product structure are permanent

5- NETWORK STRUCTURE
 many activities are outsource
 series of independent firms or business units that are linked together by computers in an IS
 Used when the environment is unstable
Nike, Reebok, Benetton use the network structure on there operation functions by subcontracting manufacturing to other companies in
low cost location around the world.

ADVANTAGES:

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 Rapid response time
 Firm’s emphasize their own core competencies
 Very flexible
 Reduces capital intensity

Leadership Style

The founder (SA) at this point is following a telling leadership style, which is characterized by giving a specific task directions and closely
supervising tasks. At this point of time and according to the current circumstances the leadership style must be adapted to match the
near future circumstances.

According to behavioral approach, there are four styles:

1. Laissez-faire shows low concern for both people and task. Turn most decisions over the work group and show less interest in
the work process or its results.

2. Directive or Autocratic, High concern for task and low concern for people. Make most of the decisions, gives directions
and expect his orders to be followed.

3. Supportive or human relations leader shows high concern for people and low concern for tasks. Warm in interpersonal
relationships, avoid conflict, and seek harmony in decision-making.

4. Participative or democratic, shows high concern for both people and task. Share decisions with the work group,
encourage participation and support the work efforts of others.

B. Corporate Culture: if available highlight the main corporate cultural aspectsAre shared beliefs, expectations
and values well defined? And do the firm has diversity of cultures?
How the corporate culture perceive quality and adaptability to change in conditions.

B: Corporate Culture
Organization culture can be defined as “a pattern of behavior developed by organization as it learns to cope with its problems of
external adaptation and internal integration, and to be taught to new members as the correct way to perceive, think, and feel.”
It is the collection of beliefs, expectations and values learned, shared by a corporation's members, and transferred from one generation
of employees to another. It might be changing or elaborating but hardly completely fades away. It gives the corporation its identity.

There are thee main forces help to sustain the organization culture, these forces are; selection, actions of top management and
socialization methods.

The selection method to identify and hire individuals' lies within human resource practices such as the selection process, performance
evaluation criteria, training and career development, and promotion activities, which will ensure that the hired persons will fit into the
culture.

The action of top management through what they say and how they behave establish the norms that filter down through the
organization in which defines how much freedom mangers should give to their employees, the acceptable dress code by the
companion different locations, what is being rewarded at what is of a good value to the organization and the like.

Socialization is one of the most important factors to adapt employees to the organization culture no matter how good is the hiring and
selection process as long as the selected persons do not fit into the same organization culture; the new employees need to be adapted
to the company's culture.

Taking into consideration the above three factors the organization can sustain its organization culture with a minimum changes for the
change in the leadership.

Strong culture:
 Clear/ well defined
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 Widely shared among members
 Encourage positive work behaviours
 Performance oriented
 Emphasize teamwork
 Allow risk taking
 Encourage innovation
 Changing a firm’s culture to fit a new strategy is usually more effective than changing a strategy to fit an existing
culture.

The following elements are most useful in linking culture to strategy:


 Role modelling
 Leader reactions to critical incidents
 How the organization is designed and structured
 Criteria used for recruitment, training……
 Reward and status system

Culture should support the following objectives:


Relevance: support key performance objectives
Pervasiveness: known by all members in the organization
Strength: accepted by everyone involved.

Organization culture.
Managing workforce diversity( if the organization is going internationally)
Enhance employee participation: in implementing our strategy, all employees from different organizational levels must make a
meaningful contribution in decision-making .this will increase employee's involvement and enhance their working life balance.

Enhance employee organizational commitment : by increasing job involvement, which results in lower levels of
absenteeism and turnover.
Implementing employee recognition programs: starting with personal attention and ending with appreciation for a job well
done.

Develop effective staffing plans supporting the organizational strategies by allowing to fill job openings proactively (in
terms of number and the quality of the workforce for the short and long term) VIP in case of international operations.( if the
company is multinational)

Managerial skills
Technical skill: is the ability to use a special proficiency or expertise in one’s work ( lower level)
Human skill: is the ability to work well in cooperation with other people (all levels)
Conceptual skill: is the ability to think analytically & solve complex problems (top management) management process?
Personal competencies: Leadership: ability to influence others to perform tasks
Self objectivity: Ability to evaluate people realistically.
 Analytical thinking
 Flexibility
 Oral/written communication
 Personal impact
 Resistance to stress
 Tolerance to uncertainty

C. Corporate Resources
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According to the Resource Based View; resources are classified into 3 categories:
1. Physical resources (assets, equipments…)
2. Human resources (Employees, Training,.etc.)
3. Organizational resources (Structure, planning,.etc.)
Resources to be valuable it must:
1. Rare
2. Hard to imitate
3. Not easily substituted
The following list represents the main functions that should exist and analyzed within any organization:
1- Management 2- Marketing 3- Finance 4- R&D
5- Operations 6- Human Resources 7- Information Systems

(EACH ONE MUST START WITH HIS/HER MAJOR)

1. Management
The following chick list questions can help determine specific strengths and weaknesses in the functional area of business. If the
answer of any question is “no” ; this might indicates a potential weakness.

 Does firm use strategic management concepts


 Company objectives well measurable & communicated
 Do managers at all hierarchical levels plan effectively
 Do managers delegate authority well
 Is the organization structure appropriate
 Clear job descriptions and specifications
 Is employee’s moral high
 Rates of employees turnover and absenteeism
 Effectiveness of organizational reward and control mechanisms

 Does the firm use strategic management concepts?


 Are company objectives and goals measurable and well communicated?
 Do managers at all hierarchical levels plan effectively?
 Do managers delegate authority well?
 Is the organization’s structure appropriate?
 Are job descriptions and job specifications clear?
 Is employee morale high?
 Are employee turnover and absenteeism low?
 Are organizational reward and control mechanisms effective?

2. Marketing

 Customer analysis (needs, desires, demographics, buying patterns)


 Selling products / services (advertising, promotions, dealers, sales force)
 Product & service planning (test marketing, brand positioning, devising warranties, packaging, options, features)
 Pricing affected by consumers, government, suppliers, distributors & competitors
 Distribution (channels, warehousing, coverage, inventory levels)
 Marketing research
 Opportunity analysis(uncover critical weaknesses and strengths)
 Are markets segmented effectively
 Is the organization positioned well among competitors
 Has the firm’s market share been increased
 Are present channels of distribution reliable and cost effective
 Does the firm have an effective sales organization
 Does the firm conduct market research
 Are product quality and consumer service good
 Are the firm’s products and services priced appropriately
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 Does the firm have an effective promotion, advertising and publicity strategy
 Are marketing planning and budgeting effective
 Do the firm’s marketing managers have adequate experience and training

A. Marketing Issues

Market segmentation
Subdividing of a market into distinct subsets of customers according to needs and buying habits. Directly affect marketing mix
variables:
Product
Place
Promotion
Price
Basis of Segmentation
Geographic
 Region
 County size
 City size
 Density
 Climate

Demographic
 Age
 Family Size
 Family Life Cycle
 Income/Occupation
 Education
 Religion
 Race/Nationality

Psychographic
 Social Class
 Lifestyle
 Personality

Behavioral
 Use occasion
 Benefits sought
 User status
 Usage rate
 Loyalty status
 Readiness stage
 Attitude toward product

Targeting
- evaluate attractiveness of each segment
- select the target segment(s)

Product positioning
-- Schematic representations that reflect how products/services compared to competitors’ on dimensions most important to success in
the industry
Product positioning guidelines
 Look for vacant niche
 Avoid sub optimization
 Don’s serve 2 segments w/ same strategy
 Don’t position in the middle of the map
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Choosing a Specific Positioning
• Best quality
• Best performance
• Most reliable
• Most durable
• Safest
• Fastest
• Best value for the money
• Least expensive
• Most prestigious
• Best designed or styled
• Easiest to use

Marketing audit check list


1. Are market segmented effectively?
2. Is the organization positioned well among competitors?
3. Has the firm’s market share been increased?
4. Are present channel of distribution reliable and cost effective?
5. Does the firm have an effective sales organization?
6. Does the firm conduct market research?
7. Are product quality and customer service good?
8. Are the firm’s products and services priced appropriately?
9. Does the firm have an effective promotion strategy?
10. Are marketing planning and budgeting effective?
11. Do the firm’s marketing managers have adequate experience and training?

3. Finance: (GO TO FINANCIAL RATIO’S)

The organization from the available financial information shows a strong and improving financial position in all aspects (liquidity, debt,
etc.)
Financial ratio analysis is the most widely used method for determining an organization’s strengths and weaknesses in the investment,
financing, and dividends area.
Financial ratios can be classified into the following five types:

calculate financial ratios highlighting the changes over time of each ratio, compare to industry norms and to key competitors such as

Liquidity Ratios : Firm’s ability to meet its short-term obligations


Leverage Ratios: Extent of debt financing
Activity Ratios: Effective use of firm’s resources
Profitability Ratios: Effectiveness shown by returns on sales & investment
Growth Ratios: Firm’s ability to maintain economic position

Financial Audit check list

 Strong or weak financial position


 Can firm raise needed short term capital
 Can firm raise needed long term capital through debt / equity
 Sufficient working capital
 Effectiveness of capital budgeting procedures
 Reasonable dividend payout policy
 Good relations with investors and stockholders
 Experienced and well trained financial mangers

There are several concepts considered to be central to strategy implementation:


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Acquiring needed capital,
- Developing projected financial statements.
- Preparing financial budgets
- Evaluating the worth of a business

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4- R&D
 Are R&D facilities available and adequate
 Cost effectiveness of outsourced R&D
 R&D personnel well qualified
 Effective allocation of R&D resources
 Adequate management information and computer systems
 Effective communication between R&D and other units
 Are present products technologically competitive

5- Operations / Production
 Are suppliers of raw materials … reliable and reasonable
 Are facilities machinery and offices in good condition
 Are inventory control policies and procedures effective
 Effectiveness of quality control policy and procedures
 Are facilities resources and markets strategically located
 Does the firm have technological competencies

6- Human Resources
Human resource management is one of the most important key success factors in organization, which is not totally
implemented in Egypt, and its improvement will greatly improve the organization performance
1. Human Resource Objectives
The human resource objective reflects the intention of the senior management (strategy) with a balance to the related topics such as
HR functions, society, governing rules, etc.
There are four major objectives for the Human resource management;
1. Organizational objectives: to achieve the required organization effectiveness and objectives and ensure that the
organization always has people with the right abilities available to do the right work

2. Functional Objectives: maintain the department’s contribution at a level appropriate to the org. needs
3. Societal Objective : respond ethically and socially to the challenges of the environment while minimizing the negative
impact of such demands on the organizations

4. Personal objectives: to assist retain and motivate the employees for achieving their personal goals and guide them to
better achievement (most important )

2. Human Resource Strategy:


The human resource Strategy addresses the issue of whether to recruit a low skill, low paid, high turnover employees or higher a high
skill, high paid, low turnover employees. The organization policy to go international must be a highly paid high skill, low turn over
employees to improve creativity of the employees and the turnover must be kept at its minimum levels.

3. Human Resource Policies and Programs


a. Preparation and selection: Review of the employees' job description, job specification and job performance standard to
match the change of the organization.

b. Succession Planning: the preparation of the company succession plan will enable the organization to stand any future
challenges.

c. Career Path and development: the preparation of the career path for the employees will help the stability and minimize the
turnover of the employees.

d. Recruitment: designing a good recruitment process (Selection, interviews) with a high level of orientation to ensure the
compatibility of the new recruited employees with the existing culture to achieve organizational objectives.

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e. Training and development: on-the- job” training, Off-the-Job training and Provide career planning assistance for employees.

f. Incentive system will ensure the motivation of the employees to better performance (linking incentive to production)

g. Compensation Policies and protection: What employees get in exchange for their contribution to the organization 
maintains, retain productive workforce, achieve the org. objectives.

h. Managing workforce diversity ( if the organization is going internationally)

i. Enhance employee participation : in implementing our strategy, all employees from different organizational levels must make
a meaningful contribution in decision-making .this will increase employee's involvement and enhance their working life balance.

j. Enhance employee organizational commitment : by increasing job involvement, which results in lower levels of
absenteeism and turnover.

k. Implementing employee recognition programs : starting with personal attention and ending with appreciation for a job
well done.

l. Develop effective staffing plans supporting the organizational strategies by allowing to fill job openings proactively (in terms
of number and the quality of the workforce for the short and long term) VIP in case of international operations.( if the company is
multinational)

7- Information Systems

1. Is it used by all managers to make decisions


2. Is CIO or director of IS position in the firm
3. Data on IS updated regularly’
4. All functional areas contribute input to IS
5. Effective passwords for entry to IS
6. Familiarity of strategists with rival firms IS
7. IS user friendly
8. Do all users of IS understand the competitive advantages that information can provide firms
9. Computer training workshops for IS users
10-Continually improvements of IS content and user friendliness

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SWOT Matrix
Internal Organizational strengths Organizational weaknesses
External
Strategic options
Environmental SO: Strengths can be used to WO : The strategies developed need to
opportunities (and capitalize or build upon existing or overcome organizational weaknesses if
risks) emerging opportunities existing or emerging opportunities are
to be exploited

Environmental threats ST : Strengths in the organization can WT : The strategies pursued must
be used to minimize existing or minimize or overcome weaknesses and
emerging threats as far as possible cope with threats

D- Objectives & Strategies


Objectives:
Objectives are specific results that organizations try to accomplish, may include the following;
SMART

Profitability: Producing net profit in the business =


Market share: Gaining a specific market share =
Human talent: Recruiting & maintaining a high quality workforce
Financial health: acquiring financial capital & earning positive returns =
Cost efficiency: using resources well to operate at low cost
Product quality: Producing high quality goods or services
Innovation: Developing new products or processes
Social responsibility: making a positive contribution to society

1- Growth Strategy
It is the most appropriate strategy designed to achieve higher sales, assets, profits or combination of all.
Continuing to grow is increased sales, improve the per unit cost and a better experience curve with an increased
profit and market share.
(If the company is intending to share the market, the company must peruse growth strategy)
Either growth is internally through expanding of operations both globally and domestically or it can grow
externally through mergers, acquisitions and strategic alliance.

Financial vs. Strategic Objectives


 Maximize short-term financial objectives – harm long-term strategic objectives
 Pursue increased market share at the expense of short-term profitability
 Tradeoffs related to risk of actions; concern for business ethics; need to preserve natural environment; social
responsibility issues

Types of Strategies
 Corporate Level = 75% long term – 25% annual objectives
 Division Level = 50% long term – 50% annual objectives
 Functional Level = 25% long term – 75% annual objectives

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1- Integration Strategies
 Forward Integration – distributors and retailers
 Backward Integration – suppliers
 Horizontal Integration – competitors

2- Intensive Strategies
 Market Penetration
o Current markets not saturated
o Greater marketing efforts with present products / services
o Usage rate of present customers can be increased significantly
o Shares of competitors declining; industry sales increasing
o Increased economies of scale provide major competitive advantage

 Market Development
o New channels of distribution – reliable, inexpensive, good quality
o New geographic areas
o Firm is successful at what it does
o Untapped/unsaturated markets
o Excess production capacity
o Basic industry rapidly becoming global
 Product Development
o Products in maturity stage of life cycle
o Industry characterized by rapid technological development
o Competitors offer better-quality products @ comparable prices
o Compete in high-growth industry
o Improving present product or developing new ones

3- Diversification Strategies
o Concentric Diversification
 New & related products/services
o Conglomerate Diversification
 New & unrelated products/services
o Horizontal Diversification
 New & unrelated products/services for current customers

4- Defensive Strategies
o Retrenchment = regrouping through cost and asset reduction to reverse declining sales and profit
o Divestiture = selling a division or part of an organization
o Liquidation = selling all of a company’s assets in parts for their tangible worth

Michael Porter’s Competitive Strategies


 Cost Leadership Strategies
 Differentiation Strategies
 Focus Strategies

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Type of strategies Ways to achieve the strategy Benefits Possible problems

Cost Leadership Size and economies of scale The ability to: Vulnerability to even lower
Globalization outperform rivals cost operators
Relocating to low-cost parts of erect barriers to Possible price wars
the world entry The difficulty of sustaining it
Modification/simplification of resist the five in the long term
designs forces
Greater labor effectiveness
Greater operating effectiveness
Strategic alliances
New source of supply
Focus Concentration upon on or a A more detailed Limited opportunities for
small number of a strong and understanding of sector growth
specialist reputation particular segments The possibility of
The creation of outgrowing the market
barriers to entry The decline of the sector
A reputation for A reputation for
specialization specialization which
The ability to ultimately inhibits growth
concentrate efforts and development into other
sectors
Differentiation The creation of strong brand A distancing from The difficulties of sustaining
identities others in the marketthe bases for differentiation
The consistent pursuit of pursuit The creation of a Possibly higher costs
of those factors which customers major competitive The difficulty of achieving
perceive to be important advantage true and meaningful
High performance in one or Flexibility differentiation
more of a spectrum of activities

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- Conclusion & Recommendation :

Assuming that the implementation of the above recommendations is an easy, and risk free process is undoubtedly
irrational…

Any change in the way the organization runs its business, manages its people and processes is surely a difficult task for all
parties concerned. Most difficult of all are the people and culture related changes. These, in most cases require a
paradigm shift to bring changes into life

Below are some limitations that would be expected to accompany changes recommended for xxx company:

- The general tendency to have a hard time distinguishing between the cost of paying people and the value of investing in them.
- Need for sufficient capital that secures gaining and sustaining a superior level of innovation and on R&D.Resistance to change
is one of the factors that is commonly overlooked while planning and implementing a new organization style, structure and
culture.

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