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extend the marketing reachaccess needed information andresourcesbuild credibility with a particulartarget marketaccess new markets that would beinaccessible without the partnerProvide companies with theopportunity to obtain capacity andexpertise-Allow companies to enter intorelated business or new geographicmarkets or obtain new technologicalknowledge-{! \\- \,\

Risk giving control of its technology toits partnerProftable retums maytake some timeto achievehigh level of commitment ot staff andmanagementCultural differences andcommunications difficuhiesDifficult to get out of quicklyWorking in a different legal andcommercial systemPolitical risk in the country where thejoint venture is basedPotential for conflict with your jointventure partner

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lltlhy ?- Marketing and advertising

- Gain customertrust- Gainmorexprtise

- Expand busirms rapidly-Spqd hss$rygardmonsy'r'..-J..,-: : : :::.:. :: :..-. --:::.,.a -:r :i;;.n.

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o Greaterresponsivenesso Opportunities for growtho Risk sharingo lncreased leverage

o Payment difficultiesSmall company subsume by larger company

o PotentialforconflictHigh commitment -time, money, peopleo Strategic priorities change over timeoo

Mersers &Takeouerso Mergers & acquisition are important option 4 larger businesses that wish to grow

rapidly.o 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 jointogetherto become 1>> Each firm may retain somedegree of identity (ex : Nokia +Siemens)

.rsryryr:b-:--_:,. j* ::_-,..: ":>> Acquisition>> One firm buying anotherfirm>> The taken over firm may lose itsidentity ( e.g. Morrisons takeover ofSafeway will eventually lead to thedisappearance of the name 'Safeway' )combine, even if the target firm doesn'twant to be purchased.

H,orizontal integration - at the same stage of the productive process/ acquire rival companieswho operate in the same industry.Advantages Disadvantages. Reduce cornpetitoro Possible EOSr lncreased power oversupplier

o Rationalization may bring bad publicity. May lead to monopolyinvestigation if exceeds certain limit.

Vertical integration - at different stages of the productive process/ manage the supply chain,can be bachrard @ forward.

i. Forwards - towards the marketAduant4e

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Able to control the promotion andpricing of its productSecures a secured outlet from thefirm's product and mayexclude

Competitor's product.

r Consumers may srrspectuncompetitive activity and reactnegativelyr tack of experience'good

manufacturer doesnt necessarilymake a eood retailerBackwards - towards the source

Adr/anta3es Disadvantageso Control over quality, price and deliverytime of supplieso Encouraged joint research to improvequalityAf supplies of componentso Controfsuoolies to comoetitorso Lack experience in managing

supplyrr company.o Supplyrng business becomescomplacent due to securedcustomer.

irawmaterial I imanufacturinel i assemble I i UistriUution I i enduser It-il i-..--..-.--..-;J

Backward Forward

Corglormerate mrgers & takeovers - The acquisition of firms in diffierent production areasfrom its core market /acquire a new firm in an unfamiliar market @ industry

Advantaees d mereer & EleorerEOS - large scale production that lead to lower unit costsGreater market sharc - the business, can often charge higher prices - Gain some formof monopoly power, control supply & searre otrtletsOiversiftcation - to spread risks ard benefit from larger custorner baseRedscs Gompetifon if a rival is taken overOther business can bring ts sltif,s and speciatist departments to the businessIt is easier to raise money in a larger hrsiness

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

.Lack of experience in new sectorrlack of clear focus and direction

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Syneryy-The whole is more efftcient than the sum of the parts {2 + 2 = S!)lmprovetechnical, productive or allocative efficienry

Dlsa$antaees q,f mcrser & bkeWerDOSClashes of culture, reducing the effectineness of the integration.May need to make some uorkers redutdant, especially at management level -this rnayhave an effect on mdivationMay be a conflict of obiectives between different business, meaningdecisions are moredifficultto make & causing disruption in the running of the business.

.\. \> Ht EXIENSION: PORTEtrs GENEBrc SIRAIEGIESo Business can gain a competitive advantager Rivals may also offer an improved product or offerthe product at morecompetitive priceso Porter argued that every successful business must have a competitiveadvantage to prevent profrts being eroded by rivals entering the market

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

e Become the lowest cost supplier of a product within the market, but highlyprofitable and market leaders.o Do not compete with firms that offer higher-quality products since thiswould require pricet Directly compete by using penetration or predatory pricing strategies whichmay be prohibited by certain governmentsDifferentiation:

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Focus:

When a firrn makes its mass-markets productsdistinctfrom those of itscompetitorsDone by packagrng or branding to make the product seem uniqueFocuses on quality ra&er than the cost of the productSuccessful differentiation will allow a business to charge a premium price, togain higher profit marginDrawback; expensive

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When a firm targeB a niche or single s(ryment of the marketFocus on highly profiable stratery due to the high prices that can be chargedand the lack of competitionDrawbac*: marketsize is very limited

> THE ANSOfF MATRIXDefnition: Analyticaltool that helps managers to devise their product and market growthstrategies.

PRODUCTMARKET Existing New

Existing Market penetration Product developmentNew Market dwelopment Diversification

Market oenetrationo Focus on selling existing products in existing marketsr To increase their market share of the current productso Achieved by : improving marketing mix, advertising brand reposition

Adrantages:r Use markets and prducts that are hmiliar with, market expenditure minimized

Product dnG.hpmeilto Aims to sell new products in existing marketso Relies heavily on produet elGension or product derrelopmento For products that hane reactrcd decline or saturation phase of the PLCr Lower risk as it is laurrcH under a knovn brand

Market develooment

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. Medium riskgrowth strategYr Selling existing products on new marketo using neuv distribution channels to sell the product ( diff bcation ' overseas )o Prices could be changed to attret ne$t customers' Business is fumiliar uriththe product beirgrnarketedo Does notguarantee suooess

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

o To spread its {$qr suitable for firm who has reached saturation for its markel seeking new opportunitiesto growo Ways : becoming a holding company/ parent companyr Riskiest since its not fumiliar territory, and has little experience

> GROWTI{ & EVOTUTION & BUSINESS STRATEGYo A keY reason to seek growth is for the benefits of EOSr Which acts as barrier to entry into a market

Sttategies that business use tp achieve growth :oUniguesellingpoint{USP)-standtheproductcornparedtoothers.First.moveradvantage-establishgoodrep*ationandlovaltyo Branding - well established and recognizationo Diversification- spread risks and gain revenue from a new market

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1.8 change and managernent ofchange

ChangeCharge and the man4ement ctEnge

i. The rate of change is acaler:ating and no business is immuneii. Every change is a challege to the management of a businessiii. A desire bV the senbr man4ers to have some methods to avoid the quicksand of adynamic business erwirorlmem

Causeof clu4est.ii.

The drivers fo ctrange can come both from internal and external environmentAffectiue rnnagers undrshrd that change in the strategc environment is a continuousprocess ard that succesful hsirss are those that anticipate and plan for changeManagiTg chage; longterm swvtval of the bminessOrganizdignalcharge : nemarywtren extemal environrnents are uncertain,cornplexand dynar[hL-Significant or iipia c*rarge may require an organization to reconsider its structure,purpose, mission cutturelmplementation of strategic cfiarge is clearly a period of significant danger for anybusiness

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Facts ExplanationsI Globalization

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i.ii.i ii.iv.

v.vi.vii.

Significant opportunities in terms of largermarkets ard gronrtlr possibilitiesOpportunttyto th firm to producestandardized productsBenefitfrom EOSBUTThneats ; gfeater l'national competitionAffects the range o goods ard servicesDifferent nationalities : diff.tasre,preferences,btryirg habitsHave to increasingly aware of responsive tothegrowing and evofuing needs of emergingcompaniesMNCfaced HR issues; diff.skills,attitudes,needs of worHorce worldwideCommunication prob. - difficult to maintaincommon purposeChallenge of expansion - more biz functionoutsourcedoften overseas

New techno i.ii.,il,

iv.v.

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Rate of org. change is acceleratingAffucts business function - marketing toproductionAllcwed increasing dcentralization anddownsizing - power shifting away from centreto local or regional officesOrg. structure has flattenedrequire employees to develop new skills andon extra responsibilitiesBt,TPower often shifts from centralized functionto local operating unitsChanging the management as well

Demographic changes t.ii.iii.iv.v.vi-

Changes in the size and structure poputationThe nature and needs of employees changeThe needsand wants of consumersCause skill shortagesChanges to recruitment training and retentionpoliciesWorking pattern - reassessed ,flexiblewor*irg introducedvii. Affects consumption patterns and purchasebehavior

viit. Hoticeableingrowingmarketscateringfor

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older agegroups

Social and cultural change i. Co*sumer behavior,attitude,expectationchange overtimeii- Devebped country: women have iobs- Changed the ray retailers offer ttreir

services; 24 hour in convenient locationiii. lncreasing migration,'- Changes the social and cultural mix of acountry- Change nature of demand- Provides new market opportunitiesChanges in legiqlation\\a\ \.

i. Force changes in business practice andactivityii. Law of health n safety, working hours anddiscrirn ination have affected- Working conditions- The nature of workplaceiii. Consumer protection law- Force biz to change the way they marketandselltheirG&S

Economic trends i. Sienificant effects on business activityii. As org and countries more independent; criselike the US "credit crunch" in 2008 had globaleffectsiii. Ripples in a pond and causing worldwiderecession

iv.Competition i. highly competitive market, innovation and

change initiated bV one business willtrigger aresponse from the competition to protectmarket shareii. garne console market :- each manufacturer attempts to gaincompetitive advantage orrer its rival byfrequently upgrading the functionality ofits products

1.8 change and management of change

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Facts ExplanationsChanges in HR and skill levels i. as the markets and products changes, so dothe needs for specific HR skills

New management approaches i. turnover of senior managers is becomingmore rapidii. desire for quick success- consider changing their managementteams rather than waiting forirnprovementChanges in employees

expectations,motivation a ndbehaviori. "job for life" is goneii. Few oryanizations reward loyahy, in return

employees are rnore fickle- Moving hetween jobs more quickly- Staying in positions for shorter periodsiii. Economic boom periods,- the bargaining position of skilledem$oyees is stronger- managers will have to reviewremuneration packages more often toretain their better staff

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1.8 change and management ofchange

New product development i. Require charges inthe nature of anorganization's prodtrction and marketingapproachesii. t{ew products;- May require increased autornation ofproductbniii- l,lew services;- May require different ways of sellingiv. The target market for new pncdulcts may notbe the same

Financial requirement andavailability of funds

i. Changes in G&5- Additional invstment- Cash flow that a business may not haveii. Have to raise rw funds thru loans,shareissues or integration with other orsanizition

Resistance to change:by Nur AzreDespite the potential positive outcomes, drange is nearly always resisted. A degree ofresistance is normal since change is:

. Disruptive, and. StressfulManagement tryingto implement change willoften come across other people in thebusiness responding with phrases such as:

. "My needs are already being met',. "\ffe don't need to do this". 'This sounds like bad news". "The risks outweigh the benefits'r "What does this rnean for me?"Of course a degree of scepticisrn can be healthy especially where there are weaknesses inthe proposed changes. However resastance will also impede the achievement of businessobjectives.Some cornmon reasons why change is resisted include:

T" - *'- iiParochial self interest ilndividuals are concerned with the implications for!i ithemselves; their view is often biased by their perception of aitI iParticular situationlHabit ilrli, provides both comfort and securityi ;Habits are often well-established and difficult to changeIf""**--*---""jMisunderstanding iCommunications problemsI; ilnadeouate information -tiIl

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1.8 change and management ofchange

IlLow toleranoe of tlrangeii *'* -'-" **iDifferent assessrnent of theIlsituationIr- * "'"i Economic implicationsiII,iII

ifmpnyees are likely to resist change rA'hich is perceived asiaffe*ing their pay or other rewardsitstablished pattems of rrorking and reward create a vestedlinterest in maintaining the status quoProposed cfranges Btridt confront peopletend to generatefear and anxietylntrducing nry tedrnobgy or working practlces creates

Wehavetouched barlieron personal barriersto drange-there are also severalorganisational bani&qq to change. inctuding:':::o Structural inertiao Existing power structureso 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 relationsAs a result of change resistance and poorly managed change projects, many of thernultimately failto achieve their objectives. Amongst the reasons commonlyassociated withfailed change programmes are:

. Employees do not understand the puryose or even the need for changer Lack of planning and preparationo Poor communication. Employees lack the necessary skills and/ or there is insufficient training anddevelopment offered. Lack of necessary resourcesr lnadequate/inappropriate rewards

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1-8 changeand managementof drange

rEffi1$ FORCE ff,tD tIrAtYStSDeve&sped byfirtlflirl in 1!)51He argued that *reesful bus.ircsses tend b be constantly adapting & changing"An issue is teld in balance by dre inErction of tuo opposirg sets of forces - thoseseeking to prornote charge t&iriry Soisl & those attempting to maintain the status quo(rcstrainiq fumesf - Kurt Lsin.STAGES [T CARRNilG (X'TA FOffiE HEI}ATALTT6:

ra weight to each forces. 1-5 {l:weak, S:strong}

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L.8 change and managementofchange

roncE FtELo lxrl.Ytrt - t(uET LEnixORIVBTIGFOftCES(Fos*ve torces for chafispi RISTRAI\UIE FOf,CES{obstacies t* change)n+ finr+ uil+ fiu

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

FOR AGAINST5 ' Plan: Uoorade ' 3lnformatron -+ "-"'-t''".-.- a- Cosi ofavarlable more Company wloe ' technoiogy. qurcklY i information : z, 4 ; :*- Staff deslrkernformatron process ffom ,-1 Drsruptron during: _ 4 manual to ,- changeFree up ----),optes trme - ' autOtnated e Compteted ro: tO.Co more i r rmgrimentrnterrstrng tasks

Total:13 Total: IiiAction planjI For no acton rquired1 Against:j lnvolve tey staff in designing flew procassr, Review new process vdilh experls !O ensurg .Best Practice"JI Key staff to coacn otier during chargg

Example of o force field analysis (sources: http://www.mftrou.comlADVANTAGES & DISADVANTAGES OF USING FORCE FIELD AilAIYSIS:

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1-8 change and management ofchange

DISABVAffIAGES AOVA$TAGES

The effects of rapid changeRapid changes, whether in internal environment or external envirgnment may affect the business inmany ways. The business need to know the effects so that they can respond to the changes wisely.The examples are:

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. becotrle rtrore important. b identi& changing tferds that will affectsthebusines aJrd its products or services

. rnore emphasised to create srnpetitiveadvantageandrmaintain a position in thsmarket.r beachmark agai*st cornpetiiors , I j

. PLC gettinB shorter. require greater focus on innovation and RnDo to keep one step ahead of the market. provide business with the first moveradvantage. this will impact on recruitment and

trElrnrng. organizations are more to take parttime staffs and maintain fewer corestaffu

r orAnizations are developing this toembrace change

How the process of drange can be manage properly?L. Plan as ahead as possible. 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.2. Be produ,ctiye.rather than reactiver Don't wait the thing {change} untilit happenr Create the culture earlier by training the workers and give the people time to

practise

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5.


3- lnfornr.people of plan changeo Briefing every once a while, communicate with them, rnake them awareabout the changes and wtry we have to change

4. Encograge cgnsultation and particioation in varigus wavo Not only give instruction, consuhation and participation of the manager mustbe there to

Provide clariw and support as much as oossible regardine the {e effuct of thechanqe'. 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 ttremt i.\Emphasi-s the +rle effects of the change. To rnotivate them

Provide tr,ainine when pgssibleo lf theY need to rnove to other departments or other countries due to thechanger To train them so they will more prepared

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By Ai m o n, I q b a [, Aiza d,Yass e r

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MI'LflISTrc'ilAI. COMP$TES

A corporation orento.p{ise thatmanaget fodsctisrestablishments o{defive's sen ices in atleast two countri6-

Corporationthat lravettleir hadquarter inone coirntry butoperaUng [anche,factories, aqdassemHy pbn'tlin

t{ot rnerelyimportrslsporteG{produce 9oo6 andsenicesin mtrethanone country-Deir*enotmdtlatatdcotpa.tiq!

Some MNCs haveannual $les turnovetsexceeding the size ofmaflycountries' efitireecooomaes.

They can hare apowerfuliaffueffie inifiernational relatioasand local economi$"

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:/8y :Ai ma n, Iqbo l,Aiza d,Y osse r

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fokacrsbGr*lrtlatCrol.tterc.3- 8tter mrtetinform&lon regardogcocsumertasteSat arsult ofcbseness tothmAuridnrtad

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BMS IRP P3