business strategy 2e
TRANSCRIPT
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Student Name: Vaidas Bilkis
Course of Year: 2011-2012
Module: Business Strategy
Assignment title: Strategic Environment
Assignment Number: 2
Tutor Kieran Alcock
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Table of Content
Section 1 3Section 2 10
Section 3 15
Section 4 19
Section 5 23
Appendix 27
Bibliography 51
Sections
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Section 1 Organisational structure
The theories of organisational structure is on Appendix 2 and the theories of the
Managing at different level of the organisation is on Appendix 3
Mark & SpenceSince the 1900s Mark & Spenser company had applied “Simple organisational
structure” here are the evidence from the case study to support my proposition:
“Throughout most of the 1900s M&S was led by family members, who favoured close
control and meticulous attention to detail. Central edict was given for purchasing,
merchandising, layout etc. Hence every M&S was identical, resulting in consistent
image and guarantee of standard. “ From the evidence that have been demonstrated
from the case study, I will lay down the small hints and facts that support my
justification. As the above evidence has shown that the company was led by “ family
members, who favoured close control ” and “Central edict was given for purchasing,
merchandising, layout.” These facts lead us to the conclusion that was a small
company, because of how the company was led and controlled. This leads that the
leader of the company’s has wide span of the control over the decisions she/he made.
This supports the theory of Simple organisational structure. According to theory
“Simple organisation structure is characterized by low degree of differentiation of
subtasks, and leaders are having wide span of control. This means that the authority
often is centralized in a single person, who is often the boss of the company.
Formalization will also be low, and work will often be structured through direct
control and supervision.” ( Linehan M 2007:71) The simple organisational structure
according to the theory “The simple organisational structure is widely practiced in
small companies or organisations”(Linehan M 2007:71) As the evidence mentioned in
the case study that the company was led by the family member and comparing to the
organisational theory, I could justify that the company is small and uses Simple
organisational structure at that time. There are two theories of organisational structure
“Flat (small companies) and Tall (big companies)” in terms of the span of control and
division of labour. As the theory of the simple organisational structure mentioned “The
simple structure is referred to as flat structure.” (Linehan M 2007:71) And the above
case study supported this flat structure theory “who favoured close control and
meticulous attention to detail. Central edict was given for purchasing, merchandising,
layout” This means that the chain of the command from the top to the bottom is short
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and the spam of the control is wide. The role of the family members in the M&S is to
running the whole organisation in terms of the running the whole organisation to make
organisation’s goals, overall strategy and also operating policies. They are also have to
monitoring and coordinating the operational activities and how people are working,
they are also dealing with complains of the customers. The CEO of the company
responsible for the meeting the customer needs and wants and also guarantee for the
standards of the products and customer service for the pricing of the product.
Since 1900s the company has been growing in to bigger company, the previous
“Simple organisational structure is no longer suitable for the big company in terms of
coordination of work the direct control and supervision as the Simple theory states
“Simple organisation structure is nor relevant when the business or organisation grows
in size, and when surrounding environment of the company grows in
complexity”(Linehan M 2007:71) As the theory has stated that “Simple structure” is no
longer relevant to the bigger companies and M&S no exception. According to the
evidence from the case study I came up with the conclusion that M&S has applied
“Bureaucratic organisational structure” in 1990. Here is the following evidence from
the case study to support my proposition:
1. “The Bureaucracy hasn’t really changed. They had a go at it, but now it’s gone
back to the old ways.”
2. Holmes created an executive committee to deliver the board’s plans. Finally, he
promised a tightening of logistics, store refurbishments, downsizing of
headquarter staff. Rose also thought the process from drawing board to shop
floor was too slow.
3. “Rose brought with him colleagues Charles Wilson to run Logistics and Steven
Sharp to oversee operation”
4. In reacting Rose halved the board, to himself, Wilson and Ian Dyson (replacing
the ousted finance director), his aim being to move closer to the operating units,
get more control and increase speed and flexibility, as he admitted turnaround
was an uphill task.
According to the Bureaucratic organisational theory “bureaucratic structure maintains
strict hierarchies when it comes to people management. And it also helps when the
organisation is growing in complex and also large, bureaucratic structures are
required for management. This structure is suitable for tall organisations.” (Linehan M
2007:71) And also “The Weberian characteristics of bureaucracy are: Clear defined
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roles and responsibilities, hierarchical structure, Respect for merit.” (Linehan M
2007:71) The insider of the company has clearly defined the structure of the M&S in
the following sentence “The Bureaucracy hasn’t really changed”. There is also hinted
as hierarchical structure of the company “ Holmes created an executive committee to
deliver the board’s plans” and “ Rose brought with him colleagues Charles Wilson to
run Logistics and Steven Sharp to oversee operation” These two evidences from the
case study support the hierarchical structure, because everybody knows what are they
doing in the company, and also what are the responsibilities they have it. As I
mentioned in the previous sentence, M&S using bureaucratic organisational structure
and they are also clearly defined the roles of the people and also the responsibilities the
evidence from the case study is “ Holmes created an executive committee to deliver the
board’s plans” and “ Rose brought with him colleagues Charles Wilson to run Logistics
and Steven Sharp to oversee operation” From the support evidence there is clearly
defined the roles and responsibilities:
• Holmes is run CEO
• Charles Wilson is run Logistics
• Steven Sharp is run operation
Holmes is responsible for controlling the whole organisation. This means that his
responsibilities are to create the organisation’s goals, overall strategy and operating
policies. Charles Wilson responsabilities are to planning, implementing and controlling
the efficient, effective flow and storage of good and also service. Steven Sharp
responsibilities are to monitoring and coordinate the activities of operating employees.
Sony Corporation
Since the 1946 Sony company had applied “Simple organisational structure” here is the
evidence from the case study to support my proposition: “1946. Sony was started as
Tokyo Tsuchin Kyogo by Masaru Ibuka and Akio Morita in war ravaged Japan.
Initially, the company had 20 employees and capital of 190000 yen.” From the
evidence that have been demonstrated from the case study, I will lay down the small
hints and facts that support my justification. As the above evidence has shown that the
company was led by two founders of the company “ Masaru Ibuka and Akio Morita
“and they employed 20 people. These facts lead us to the conclusion that was a small
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company, because of how the company was led and controlled. This leads that the
leader of the company’s has wide span of the control over the decisions she/he made.
This supports the theory of Simple organisational structure. According to theory
“Simple organisation structure is characterized by low degree of differentiation of
subtasks, and leaders are having wide span of control. This means that the authority
often is centralized in a single person, who is often the boss of the company.
Formalization will also be low, and work will often be structured through direct
control and supervision.” (Linehan M 2007:71) The simple organisational structure
according to the theory “The simple organisational structure is widely practiced in
small companies or organisations” (Linehan M 2007:71) As the evidence mentioned in
the case study that two partners led the company and comparing to the organisational
theory, I could justify that the company is small and uses Simple organisational
structure at that time. There are two theories of organisational structure “Flat (small
companies) and Tall (big companies)” in terms of the span of control and division of
labour. As the theory of the simple organisational structure mentioned “The simple
structure is referred to as flat structure.” (Linehan M 2007:71) Event there is no
mentioned in the case study about the company’s span of control and division of labour,
but we can come logically to conclusion that the company’s chain of the command
from the top to the bottom is short and the spam of the control is wide, because they are
using “Simple organisational structure” and if they are using simple organisational
structure the theory of simple organisational structure stated “The simple structure is
referred to as flat structure”. (Linehan M 2007:71) The role of Masaru Ibuka and Akio
Morita are running the whole organisation in terms of the running the whole
organisation to make organisation’s goals, overall strategy and also operating policies.
They are also have to monitoring and coordinating the operational activities and how
people are working, they are also dealing with complains of the customers. The CEO of
the Sony was responsible for product innovation, high quality and meeting the customer
needs.
Since 1946s the company has been growing in to bigger company, the previous
“Simple organisational structure is no longer suitable for the big company in terms of
coordination of work the direct control and supervision as the Simple theory states
“Simple organisation structure is nor relevant when the business or organisation grows
in size, and when surrounding environment of the company grows in complexity”
(Linehan M 2007:71) As the theory has stated that “Simple structure” is no longer
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relevant to the bigger companies and Sony no exception. According to the evidence
from the case study I came up with the conclusion that Sony has applied “Divisional
structure” in 1996. Here is the following evidence from the case study to support my
proposition: “1996 Sony was organised into 10- company structure.” According to the
Divisional organisational theory “divisional structure, the teams are organised in set of
divisions, where each division corresponds to the end product or service provided by
organisation. Each division has its own set of functional units like research,
manufacturing, marketing etc. and is completely self-contained .” (Linehan M 2007:72)
There is no much mentioned about the “10-company structure” in Sony case, but we
can come to the conclusion used by the theory mentioned above about the divisional
structure. We can logically make a guess using the case why Sony has restructured the
company from “Simple” to “Divisional”. The CEO of the Sony’s company were
focusing on the strategic orientation, they are also made a better performance
accountability to the CEO. The divisional organisational structure allowed to Sony
Company to focus upon single product, with a leadership structure that supports its
major strategic objectives. Having its own president or vice president makes it more
likely the division will receive the resources it needs from the company. Role and
responsibility in the divisional structure in Sony was: the company had 10 different
product/service divisions within the company, and this means that they are targeting
with 10 different product different segments. Within the one division there are sales,
engineering and marketing department.
1. The role of the CEO is to run and control the whole organisation. The
responsibilities of CEO are the organisation’s goals, overall strategy and also
operating policies. (Linehan M 2007:3)
2. The role and responsibilities of sales manager are to meeting the sales target of
organisation through effective planning and budgeting. Sales manager
responsibility is to achieve the company’s goals and to develop the people
reporting to them. Sales manager responsible for motivating and also building a
strong team. The Sales manager is accountable to the company’s CEO
3. Role and responsibilities of Marketing manager are to develop the department’s
marketing strategy. They are estimating the demand for the product or service
offered by the firm. Developing pricing strategy to help the department to
maximise profits. They are also responsible to work with the advertising and
promotion. Marketing manager is accountable to the Sony’s CEO
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4. Role and responsibility of engineer marketing is to allocating engineering
resources to the project. Participating in managing and developing the
engineering personnel. Engineering department manager is accountable to the
Sony’s CEO
Until 2003 Sony Corporation has been used “Divisional organisational structure”, but in
October 2003, Idei came up with another restructuring plan called “Transformation 60”
this is 3 years transformation. According to the evidence from the case study I came up
with the conclusion that Sony has applied “Strategic Business unit” as the structure of
the Sony’s company. Here is the following evidence from the case study to support my
proposition: “The company was reorganised into seven business entities four network
companies and three business groups. Above plans were not successful mainly due to
the significant drop in sales of conventional televisions and portable audio products.
Games division also did not fare well with sales of PlayStation 2 consoles falling
rapidly. In March 2005 Stringer became CEO to lead Sony. Stringer was head of
Sony’s North American business”. According to the Strategic business unit theory
“Strategic business is understood as business unit within the overall corporate identity
which distinguishable from other business because it serves a defined external market
where management can conduct strategic planning in relation to product and markets.
When the company or organisation becomes large, they are best thought of as being
composed of number of businesses. These organisation entities are large enough to
exercise control over most strategic factors affecting their performance.” ( Linehan M
2007:72) In the case study there are mentioned that the company “reorganised into
seven business entities”, and according to the exhibit 1 in the case study, the company
consist of four levels. According to the organisation structure in terms of the span of
control and division of labour, this is tall organisational structure. The theory of tall
organisational structure states, “Tall structured organisation has many levels of
management and supervisors. There is long chain of command running from the tops
(CAO) to the bottom (Employees)”. ( Linehan M 2007:69p) According to the matrix
organisational structure “The organisational structure is very
flat”(http://www.slideshare.net) and matrix organisational structure is not suitable for
Sony organisation, and there is only one option left and this is Strategic business unit.
Strategic business units are small enough to be flexible and large enough to exercise
control over most of the factors affecting its long-term performance. Sony’s strategic
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business units have different missions and objectives, they allow the owning
conglomerate to respond fast to changing economic or market situations. Roles and
responsibilities
• The role of the CEO is to run and control the whole organisation. The
responsibilities of CEO are the organisation’s goals, overall strategy and also
operating policies (Linehan M 2007:3)
• Vice president or middle manager of the business unit is responsible for
applying the policies and also the plans developed by the group of executives
and monitoring and coordinating the activities of lower level managers.
(Linehan M 2007:3)
• Operational manager of the business unit is responsible for monitoring and
coordinate the activities of operating employees. Operational manager most of
the time spends supervising the work of subordinates. (Linehan M 2007:3)
• Staffs of the business unit are ensure machinery are safe and that safe systems
of work are set and followed, they are also have to make sure the workplace
safe and eliminated or control risks to health.
On 2005 Sony organisation decided to reorganise the SBU from 7 business units to
5 business units. According to the case study 5 business units are: ”the Electronics
Business Group, Games Business Group, Entertainment Business Group the Personal
Solutions Business Group, and the Sony Financial Holdings Group.” The whole
organisation structure still remains “Strategic business unit organisational structure”
the evidence of the remained organisational structure is “On 2005 March 7, Sony
announced new organisational structure. Stringer assumed responsibility as chairman,
group CEO and Representative Corporate Executive Officer, Sony Corporation, to run
Sony’s overall group business operation. We are battling on many fronts against many
competitors a number of whom have at times proved more agile and more nimble. We
can and will compete vigorously. We are going to achieve our goals by breaking down
the existing silo walls and eliminating the highly decentralized structure we’ve
maintained in the past. Sony adopted the new organisational structure from 1 st of
October 2005. Sony was reorganised into five business groups, which included the
Electronics Business Group, Games Business Group, Entertainment Business Group
the Personal Solutions Business Group, and the Sony Financial Holdings Group.”
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Sony since 2003 has been using decentralised “Strategic business unit” this means that
daily operations and decision making responsibilities are delegated by top management
to middle and lower level managers within the organisation, allowing the top
management to focus more on major decisions. But Stringer has decided to centralise
“Strategic business unit” this means that the top management will retain the major
responsibilities and power.
Comparison
• Similarities
At the beginning of the M&S and Sony Corporation, both companies have been using
Simple organisational structures. Both of the companies were small at that time and
most suitable structure for them was to use simple organisational structure.
• Differences
As the companies have started to grow, M&S and Sony corporation decided to apply
different organisational structures. M&S has applied bureaucratic organisational
structure were there are clear defined roles and responsabilities, hierarchical structure
within the company and decisions were made very slowly. Sony has applied 2 different
structures such divisional and SBU. Divisional structure helped to Sony to organised
the teams in the divisions, where divisions corresponds to the end product or service
provided by organisation. Sony applied SBU because they become very large
organisation, and they thought of as being composed of number of businesses.
Section 2 Organisational cultures
The theories of organisational culture is on Appendix 5
Mark & Spencer
During the period 1990s-1998, I have identified different organisational cultures
within M&S and these organisational cultures are:
• Routine culture
The evidence of the routine culture within M&S organisation is: “St Michael working
with suppliers to ensure quality control, and providing a friendly, helpful service.” The
theory of routine culture states “Ways members behave toward one another and
towards outsiders “the way we doing things around here.” (Jason Martin 2006:1) The
behavior of the members of the M&S toward the outsiders of the company is according
to the evidence from the case study to” Ensure quality, providing a friendly and helpful
service”
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• Collaborative
The evidence of the collaborative culture within M&S organisation from the case study
is: “This was enhanced by close-knit family atmosphere in the stores, which was
compounded by employing staff whom M&S believed “fit in”. The theory of collaborative culture states “very friendly place to work where people share a lot of
themselves. It is like and extended family” (Jason Martin 2006:2) According to the case
study there was “Close knit family atmosphere” within the organization. This means
that M&S has been using collaborative culture within organization to design a friendly
place to work for the employees.
• Conservative culture
The evidence of the conservative culture within of M&S organisation from the case
study is: “ M&S no longer understood its customer needs, was preoccupied with its
traditional risk averse formula thus ignoring changes in the marketplace.” According
to the literature conservative is “holding to traditional attitude and values and cautious
about change or innovation’ (Soanes C, Stevenson A 2005: 300p) According to the
case study there was “was preoccupied with its traditional risk averse formula thus
ignoring changes in the marketplace” within the organisation. This means that M&S
had conservative culture according to the case study and they had difficulty to be more
innovating according to the changes in the market.
• Routine culture
The evidence of the routine culture within M&S organisation is: “ M&S had inward
culture as executive were promoted internally, after immersion in M&S’s routine and
tradition”. The theory of routine culture states “Ways members behave toward one
another and towards outsiders “the way we doing things around here.” (Jason Martin
2006:1) The behavior of the members of the M&S toward the outsiders of the company
is according to the evidence from the case study to “ M&S had inward culture as
executive were promoted internally” M&S has the routine of promotion someone
within the organisation, instead of hiring someone to the executive position outside the
company.
During the period 2002-2006, I have identified three different organisational
cultures within M&S and these organisational cultures are:
• Conservative
The evidence of the conservative culture within of M&S organisation from the case
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study is: ” Holmes had spoken to customer and was struck by how inwardly focused
M&S had remained.” According to the literature conservative is “holding to traditional
attitude and values and cautious about change or innovation’ (Soanes C, Stevenson A
2005: 300p) According to the case study there was “how inwardly focused M&S had
remained” This means that M&S had conservative culture according to the case study
and they had difficulty to change and instead of organization is customer focused, but
they are more inwardly focused. Holmes had stated his conclusion in the case study
“ His conclusion was to return to passion for product.” This means that the company
had no innovation to attract the customers. According to the case study Holmes had
tried to change culture by “ Injected innovation into food ranges”
• Control system culture
The evidence of the control system culture within of M&S organisation from the case
study is: “He began by making culture changes improving decision-making
accountability.” The theory of control system culture states, ” Performance
measurement and reward, this means that there is supervisor who checks the
performance.” (Jason Martin 2006:2) This means that Rose has changed the culture
within the organization to improve the decision-making accountability.
• Hierarchical culture
The evidence of the control culture within of M&S organisation from the case study is:
“ In reacting Rose halved the board, to himself, Wilson and Ian Dyson (replacing the
ousted finance director), his aim being to move closer to the operating units, get more
control and increase speed and flexibility, as he admitted turnaround was an uphill
task.” The theory of control system culture states: “ Hierarchical organization share
similarities with stereotypical large, bureaucratic corporation. As in the value matrix,
they are defined by stability and control as well as internal focus and integration. They
value standardization, control, and a well-defined structure for authority and decision-
making. Effective leaders in hierarchical cultures are those that can organize
coordinate, and monitor people and process. In other word hierarchical culture is very
formalized structured place to work.” (Jason Martin 2006:2) As we discussed in the
previous section on the organization structure, we have identified that M&S have used
bureaucratic organizational structure. Hierarchical culture as the theory stated can be in
“ share similarities with stereotypical large, bureaucratic corporation”. According to
the case study there was well-defined structure for authority in the organization “ Rose
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halved the board, to himself, Wilson and Ian Dyson (replacing the ousted finance
director).” There is also well defined authority for decision making “ his aim being to
move closer to the operating units, get more control and increase speed and flexibility”
this means that the Rose has completely authority to make decisions and apply these
decisions in the organisation.
• Ritual culture
The evidence of the ritual culture within of M&S organisation from the case study is:
“ He wanted them to understand M&S implemented a 10 million training initiative
aimed at creating a “can do” attitude.” The theory of ritual culture states “ An event
through which organization emphasizes what is important. Example of this is the
company provides an open days or graduation.” (Jason Martin 2006:1) This means
that the company has provided the formal training on the attitude. As the theory of
rituals continues states “This can be formal training and recruitment or informal such
as drinks in the pub or gossip in the canteen” According to the case study M&S
company has provided 10 million pounds to provide the formal trainings to the
employees and staff. This is my justification why I think they have used ritual culture in
the M&S organization.
Sony Corporation
During the period 1946-2006, I have identified different organisational cultures within
Sony and these organisational cultures are:
• Complete culture
The evidence of the complete culture within of Sony organisation from the case study
is: “Sony planned to reduce the costs by downsizing and consolidating manufacturing,
distribution, customer service and also by streamlining procurement .” The theory of
complete culture states “The complete or market culture organizations are similar to
the control cultures in that they value stability and control. The organizations with the
complete culture are focusing on the external orientation and they value differentiation
over integration. Complete culture organizations are focusing on relationship more
specifically, transactions with suppliers, customers, contractors, unions, legislators.”
(Jason Martin 2006:2) There is solid evidence from the case study related to complete
culture and this is “and consolidating manufacturing, distribution, customer service
and also by streamlining procurement .” This means that the company is focusing more
on external relationship and building a stronger relationship with customers, through
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customer service also with suppliers, manufacturers etc. This means that Sony is major
concern is with getting the job done and also people are more competitive and goal
orientated.
•
Create or Adhocracy cultureThe evidence of Adhocracy culture within of Sony organisation from the case study is:
“Stringer brought with him new leadership style. On the whole he felt that being an
outsider was an advantage. According to Stringer: In the end there was an advantage
to being an outsider. Sony is built up on a web of interpersonal relationship that go
back to the dawn of history. The old boys never go away. But that also makes it very
difficult for the insider who has to attack the problems of too much management, and
turning around .” The theory of adhocracy culture states ” dynamic entrepreneurial,
and creative place to work. People stick their necks out and take risks." Good evidences
from the case study of Adhocracy culture in the Sony is “ But that also makes it very
difficult for the insider who has to attack the problems of too much management, and
turning around” (Jason Martin 2006:2) This means Stringer has set up a creative place
to work for the employees and staff. In other word Stringer gives them an opportunity
to solve the problems by themselves and take some risks in making decisions in the
company. As in the next section (Leadership style) I have mentioned that Stringer is
using laissez faire style of leadership within Sony organisation. This means that
Stringer gives the general instruction and set the objectives for the company and
delegates decision making to the staff and allows them to handling the problems in their
own way.
• Routine culture
The evidence of the routine culture within Sony organisation is “Stringer identified five
main challenges for Sony. These were getting rid of silo (underground) culture in
Sony.” “We are going to achieve our goals by breaking down the existing silo walls
and eliminating the highly decentralized structure we’ve maintained in the past.” The
theory of routine culture states “Ways members behave toward one another and
towards outsiders “the way we doing things around here.” (Jason Martin 2006:1) This
means that Sony organization run in silos they are not looking at other aspects and the
cause and effect of various activities.
Comparison
• Similarities
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Similarities between M&S and Sony Corporation in terms of organisational culture
were on routine culture. M&S was considering that routine culture is important,
because it shows how they behave toward each other and also toward the outsiders such
customers, unions etc. Sony had silo culture within the organisation that Springer
decided to get rid of.
• Differences
Differences between M&S and Sony Corporation in terms of organisational culture
were that these companies had different understanding of the cultures. M&S were more
cultural company, because they had variety of culture within the organisation such
hierarchical culture, rituals, control systems etc that shapes the organisation. Sony had 3
cultures within the organisation that shapes organisation. In comparison M&S is more
cultural company than Sony Corporation.
Section 3 Leadership style
The theory of leadership style is on Appendix 6
Mark & Spencer
1900-1998
Since the 1900s the CEO of the M&S Company’s had applied Autocratic leadership
style. From the case study there is the evidence supporting my proposition:
“Throughout most of the 1900s M&S was led by family members, who favoured close
control and meticulous attention to detail. Central edict was given for purchasing
merchandising layout.” The theory of Autocratic leadership style states:” Autocratic
leadership is characterized by individual who controls over all decision and little input
from group members. The autocratic leader is commonly making all the decisions on
their own ideas and judgments and rarely accepts any advice from the employees or
outsiders. This means that the autocratic leader has an absolute control over a group
of employees. The autocratic leader is dictates all the work methods and process. There
is no trust to the group members with decision or important tasks.” ( Linehan 2007:54-
56) From the evidences mentioned above in the case study we can determine small
hints that’s leads me to the conclusion that there was Autocratic leadership style. As I
mentioned in the section 1 organisational structure, M&S structure at that time was
Simple. This means that the company is small enough for the CEO to take all the
responsibilities and determine the goals, objectives etc. As the theory of the Simple
structure states, “Simple organisation structure is characterized by low degree of
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differentiation of subtasks, and leaders are having wide span of control. This means
that the authority often is centralized in a single person, who is often the boss of the
company” this leads to the evidence from the case study to support my conclusion
“Central edict was given for purchasing merchandising layout.” In other words the
boss of M&S makes all the decisions in terms of the coordination, span of control and
division of labour.
1999-2003
Since 1900s M&S Company has changed the structure of organisation, but the style of
leadership has not changed and still remains autocratic leadership. From the case study
there is the evidence supporting my proposition: “Senior and middle management were
reported to be disappointed with the lack of progress. Holmes was seen as the problem:
blamed for being too nice, taking too long to make decisions, and lacking relevant
experience.” The theory of Autocratic leadership style states:” Autocratic leadership is
characterized by individual who controls over all decision and little input from group
members. The autocratic leader is commonly making all the decisions on their own
ideas and judgments and rarely accepts any advice from the employees or outsiders.
This means that the autocratic leader has an absolute control over a group of
employees. The autocratic leader is dictates all the work methods and process. There is
no trust to the group members with decision or important tasks.” ( Linehan 2007:54-56)
From the evidences mentioned above in the case study we can determine small hints
that’s leads me to the conclusion that there was Autocratic leadership style. The
evidence that justify my proposition is “blamed for being too nice, taking too long to
make decisions, and lacking relevant experience”. The evidence has shown that
Holmes was using autocratic leadership style, he makes all the decisions as Senior and
middle managers have stated. To support my proposition I am going to use part of the
theory of autocratic leadership style “The autocratic leader is commonly making all the
decisions on their own ideas and judgments”
2004-2006
Since 1999 M&S Company has not changed the structure of organisation, and the style
of leadership has not changed and still remains autocratic leadership. From the case
study there is the evidence supporting my proposition: “Colleagues described him
(Rose) as “nice, quiet and ruthless”. “Rose acknowledged there had been little
communication with employees, as he had undertaken action without debate.” The
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theory of Autocratic leadership style states:” Autocratic leadership is characterized by
individual who controls over all decision and little input from group members. The
autocratic leader is commonly making all the decisions on their own ideas and
judgments and rarely accepts any advice from the employees or outsiders. This means
that the autocratic leader has an absolute control over a group of employees. The
autocratic leader is dictates all the work methods and process.” ( Linehan 2007:54-56)
From the evidences mentioned above in the case study we can determine small hints
that’s leads me to the conclusion that there was Autocratic leadership style. The first
hint is that Rose as described their colleagues was “ruthless”, the second hint was
““Rose acknowledged there had been little communication with employees, as he had
undertaken action without debate” The second hint gives very good description, that
Rose did not communicate with the employees about the decisions he made, this leads
that Rose made all decisions by himself and also there was no trust to the employees
with decision or important tasks. The first hint gives a good concern about his
behaviour toward the employees in terms of completing the tasks.
Sony Corporation
1946-2004
Since the 1946s the CEO of the Sony Company’s had applied democratic leadership
style. From the case study there is the evidence supporting my proposition: “1946. Sony
was started as Tokyo Tsuchin Kyogo by Masaru Ibuka and Akio Morita in war ravaged
Japan. Initially, the company had 20 employees and capital of 190000 yen. Since
inception, Sony focused on product innovation and high quality” The theory of
democratic leadership style states:” Democratic leadership is characterized by the
individual who allows the members of the group take a more participative role in the
decision making process. Ideas move freely amongst the group and are discussed
openly. Everyone is given a seat at the table, and discussion is relatively free flowing.
This style is very good adapted in the dynamic and rapidly changing environment
where little can be taken as a constant.” ( Linehan 2007:56-58) From the evidences
mentioned above in the case study we can determine small hint that’s leads me to the
conclusion that there was democratic leadership style. The evidence I will use is this
from the case study “Sony focused on product innovation and high quality” This means
to be innovative make changes in something established or introducing new methods,
ideas or products. In autocratic leadership style the boss of the company cannot be
always innovative especially in the high technology. This means to be more innovative
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you need to generate new ideas to create or design the product. Democratic leadership
helps the members of the company to sit at the table and share the ideas and discuss
openly these ideas.
2005-
Since the 2005 the CEO of the Sony Company’s had applied laissez faire leadership
style. From the case study there is the evidence supporting my proposition: “Stringer
brought with him new leadership style. On the whole, he left that being outsider was an
advantage. In the end there was an advantage to being an outsider. Sony is built up on
a web of interpersonal relationship that go back to the dawn of history. The old boys
never go away. But that also makes it very difficult for the insider who has to attack the
problems of too much management, and turning that around.” The theory of democratic
leadership style states: ” Laissez faire leadership is known as delegate leadership style
in which leaders are hands-off and let the group members to make the decisions
themselves. The leader gives a little instructions and complete freedom to the followers
to came and make the decision.” ( Linehan 2007:59-61) From the evidences mentioned
above in the case study we can determine small hint that’s leads me to the conclusion
that there was laissez faire style. The evidence I will use is this from the case study “ In
the end there was an advantage to being an outsider.” and “ But that also makes it very
difficult for the insider who has to attack the problems of too much management, and
turning that around.” The first and second hints from the case study are very clear
described, that the CEO of the Sony company does not really make all the decisions, he
makes the general decisions and set the clear objectives and goals of the company, but
gives the freedom to make the decisions themselves. This means that the leader of the
company gives the general instruction and complete freedom to followers to came and
makes the decision.
Comparison
• Similarities
As I comparing two different styles of leadership I did not fin any similarities between
M&S style of leadership of the company’s and Sony style of leadership of the
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company’s.
• Differences
Sony and M&S has applied different style of leadership throughout the organisational
existence. M&S from the beginning has applied the autocratic style of leadership andhas remained until present time. Sony has applied different style of leadership
throughout the existence of the company. At the beginning of the Sony existence the
company applied democratic style of leadership and remained until 2005 when Springer
become the CEO of Sony’s company. Springer has applied laissez fare style of
leadership, when the member of Sony has to solve the problems, instead of all decision
making left to the CEO.
Section 4 Strategic Approaches
Theory of strategic approach is in Appendix4
Mark & Spencer
1900s-1998
During this period I have identify two strategic approaches that M&S has been using.
• Differentiation and cost leadership
The evidences of differentiation and cost leadership from the case study is: “ M&S
stocked generic essential clothing and priced its products at reasonable level, while
emphasising their high quality.” The theory of differentiation states: “To be different, is
what organisations strive for. Having a competitive advantage, which allows the
company and its products ranges to stand out, is crucial for their success. With a
differentiation strategy the organisation aims to focus its effort on particular segments
and charge for the added differentiated value.” ( Jain C S 2000:24-39) The theory of
cost leadership states “This strategy involves the organisation aiming to be the lowest
cost producer within their industry. The organisation aims to drive cost down through
all the elements of the production of the product from sourcing, to labour costs”. ( Jain
C S 2000:24-39) M&S has been using hybrid strategic approaches; this means that two
strategies are applied to have competitive advantage with the rivals. The M&S tries to
pricing the product logically to the customers, this means that they are trying to lower
the price for the product to win over the customers to buy the products. The other aim
of the company is to differentiate themselves from the competitors, and they trying this
by emphasising on high quality of the product.
• Growth strategy (Acquisition)
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The evidence of growth strategy (acquisition) from the case study is: “To counter these
problems successive CEOs implemented many strategies, including refurbishment,
store acquisition, restricting, new ranges, overseas sourcing.” The theory of
acquisition states: “One firm purchasing part or all of another firm” ( Jain C S 2000:24-
39) M&S has been using acquisition strategy to grow by purchasing the store, there is
no mention in the case study what store they have purchase, but the evidence from the
case study that they bought the store.
1998-2003
During this period I have identify three strategic approaches that M&S has been using.
• Cost leadership
The evidence of cost leadership from the case study is: “Continuing the turnaround
Holmes streamlined M&S logistics by halving its contractors, and sourcing directly
rather than through third parties.” The theory of cost leadership states: “This strategy
involves the organisation aiming to be the lowest cost producer within their industry.
The organisation aims to drive cost down through all the elements of the production of
the product from sourcing, to labour costs” ( Jain C S 2000:24-39). Holmes have
realised that sourcing directly is cheaper than sourcing through the third parties,
because they are adding the cost of supplying and the product price is increased.
Holmes came to conclusion to apply the cost leadership strategy; they have to sourcing
directly the products from first parties instead of sourcing through the third party.
• Product differentiation
The evidence of product differentiation from the case study is: “Hence he planned to
renew the food ranges, and promote them based on their unique qualities.” The theory
of differentiation states: “To be different, is what organisations strive for. Having a
competitive advantage, which allows the company and its products ranges to stand out,
is crucial for their success. With a differentiation strategy the organisation aims to
focus its effort on particular segments and charge for the added differentiated value.”
( Jain C S 2000:24-39) According to the case study M&S have focused to promote the
product based on their unique qualities. This means that M&S aim is to differentiate the
product from the rivals product based their quality.
2004-2006
During this period I have identify three strategic approaches that M&S has been using.
• Acquisition
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The evidence of growth strategy (acquisition) from the case study is: “ Acquiring Per
Una from Davies for 125m.” The theory of acquisition states: “One firm purchasing
part or all of another firm” ( Jain C S 2000:24-39)M&S has purchased Per Una shop,
and this is Horizontal unrelated acquisition. The theory of horizontal unrelated
acquisition states: “ Acquire a firm in unrelated industry” According to the case study
Per Una is “Women’s wear shop”. M&S is working in the food industry, but they
purchased Per Una shop which works in the clothes industry, this is unrelated
industries.
• Retrenchment
The evidence of Retrenchment from the case study is: “Cancelling more than 500food
products”. and “Closing or upgrading stores, which likened to hospitals.” The theory
of retrenchment states: “The company applying retrenchment strategy is seeking to
reduce the size of organisation in terms of employees, production or assets.” ( Jain C S
2000:24-39) According to the case study M&S has been cancelled 500 products and
also closing or upgrading stores, this is very clear description of the retrenchment. The
theory stated that the company reduces “Production or assets” and the case study clearly
stated that M&S reduced the number of products and also closed stores.
• Restructuring (downsizing)
The evidence of restructuring (downsizing) from the case study is: “ Restructuring and
redundancy.” The theory of restructuring (downsizing) states: “Wholesale reduction of
employees.” M&S is using downsizing strategy to reduce the number of employees
within the company.
Sony Corporation
1946-1998
During this period I have identify one strategic approach that Sony has been using.
• Prospector strategy
The evidence of prospector strategy from the case study is: “Since its inception, Sony
focused on product innovation and high quality.” The theory of prospector strategy
states: “this means that the company is focuses on new product development,
innovation and market opportunities and typically has number of product lines.” ( Jain
C S 2000:24-39) Sony at that time developed prospector strategy, because as the
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company started, they have to take high risk to expand in the new market. As we looked
at the evidence from the case study, that Sony focuses on the product innovation and
high quality of the product. As the theory stated that the company applied the
prospector theory is focusing on the new product development and innovation, and this
is what Sony was focusing on.
1999-2006
During this period I have identify three strategic approaches that Sony has been using.
• Restructuring (Downsizing)
The evidence of Restructuring (downsizing) from the case study is: “ In October 2003,
Idei came up with yet another restructuring plan called Transformation 60.
Transformation plan was three year restructuring plan, which Sony to lay off 13% of its
workforce or about 20000 people by March 2006. Sony planned to reduce costs by
downsizing and consolidating manufacturing, distribution, customer service facilities
and also by streamlining procurement.” The theory of restructuring (downsizing)
states: “Wholesale reduction of employees. The outcomes in the short term are to
reduce labour costs. Outcome in the long term is to loss of human capital and lower
performance.” ( Jain C S 2000:24-39) As we looked at the evidence in the case study, I
found that Sony “which Sony to lay off 13% of its workforce or about 20000 people by
March 2006.” This was restructuring in terms of reduction of employees and this is the
evidence that supports my proposition that was downsizing restructuring.
• Restructuring (downsizing and down scoping)
The evidence of Restructuring (downsizing) from the case study is: “ In September 2005
Stringer announced restructuring plan for Sony. As part of the plan, Sony announced
reduction of the global workforce by 6.6% and sales of non-core assets valued at 120bn
yen.” The theory of restructuring (downsizing) states: “Wholesale reduction of
employees. The outcomes in the short term are to reduce labour costs. Outcome in the
long term is to loss of human capital and lower performance.” ( Jain C S 2000:24-39)
Sony has applied two restructuring strategies such downsizing and down scoping. As
the evidence has shown that downsizing take a place by reducing of the global force by
6.6%. As the theory stated the company applying this strategy is reducing the number
of employees in the organisation.
• Strategic alliance
The evidence of strategic alliance from the case study is: “Sony planed to invest around
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240bn yen in the chip business over a span of two years. A new division being
developed in association with IBM and Toshiba Corporation was created cell chips.”
The theory of strategic alliance states: “Strategic Alliance- corporation between two or
more firms in a selected venture” ( Jain C S 2000:24-39) As the evidence cleared shown
that Sony and other two companies participate in creating cell chips; this means that
Sony has applied strategic alliance strategy to especially consortia strategy. This means
that Sony Company is participating with Toshiba and IBM to work on particular
venture.
Section 5 BSG
The theory of BSG is on Appendix 1
Sony Corporation
Stars
Based on the information from the case study and I compared with the theory of stars
that states “Stars have high market share and high growth in the market. Company has
to invest a lot of money into this product and also requires an investment on the
product advertisement. After a while the product growth will slow down and they will
turn into cash cows.” ( Jain C S 2000: 251-252p) I have not recognised any star
products from Sony case study.
Cash cows
Based on the information provided in the case study I have recognised cash cow
product of Sony’s Corporation “ During 2000-2001, despite the increase in revenue due
to higher sales of the PlayStation, net income dropped to 16.75bn yen from 121.83b
yen.” The theory of cash cows states: “Cash cows have low growth in the market, but
have high market share of the products. Company does not have to invest a lot of
money in product advertisement to hold their share market” ( Jain C S 2000: 251-252p)
There is no mentioned that Sony’s Corporation has investing the money to advertising
or promoting the PlayStation to attract the customers to buy. And as it mentioned in the
case study their revenue has been increased.
Based on the information provided in the case study I have recognised cash cow
product of Sony’s Corporation “Sony planned to introduce the PlayStation 3 and
position it as the ultimate portable entertainment player, through which Sony aimed at
increasing its market share in the computer entertainment market.” According to
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theory of cash cow mentioned above, I have recognised that PlayStation 3 is cash cow.
PlayStation 3 helped to the Sony Corporation increased their market share in the
computer entertainment market. As we know that PlayStation had significant increase
in the market share as the computer entertainment and also increased revenue to Sony
Corporation. Because of the PlayStation was popular among the people and also
recognised, this leads to the conclusion and the evidence support from the case study
that PlayStation 3 was cash cow as well.
Question mark
Based on the information from the case study and I compared with the theory of
question marks that states “Question marks are low share business units in high growth
markets. They require cash to hold their share, let alone increase it.” ( Jain C S 2000:
251-252p) I have not recognised any star products from Sony case study.
Dogs
According to the evidence from the case study I have recognised that Trinitron TV was
a dog “ In 1968, it introduced Trinitron Colour TV, which was highly successful .” The
theory of dog states, “ Dogs have low market rate and also low market share of the
product.” ( Jain C S 2000: 251-252p) According to the case study Trinitron colour TV
was highly successful at that time, but there was development in the TV industry.
Trinitron Colour TV is old fashion TV and compare to the new flat screen, 3d, there is
significant different. Old fashion type TV is no longer popular among people, because
of the wider variety of newer TV’s sets.
Section 5a Ansoff Matrices
The theory of Ansoff Matrices is on Appendix 1
Sony Corporation
Market penetration
According to the evidence from the case study market penetration is “Sony started off
manufacturing telecommunications and measuring equipment and went on to
manufacture transistor radio and tape recorders” The theory of Market penetration
states “ Market penetration is a strategy for company growth by increasing sales of
current products to current market segments without changing the product.” (Kotler,
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Armstrong, Wong, Saunders 2008:146p) Sony has already manufacturing
telecommunication equipment. Tape recorder is type of telecommunication product that
helps people transfer the message to others. This means that Sony has not came with
new products in the same market, but same product in the same market.
Product development
According to the evidence from the case study product development is “The key
underlying theme was the need to create convergence between separate products.
Example in the electronics business, converging television and games” The theory of
product development states “ Product development is strategy for company growth by
offering modified new products to current market segments.” (Kotler, Armstrong,
Wong, Saunders 2008:146p) According to the evidence from the case study, that Sony
wants to make hybrid product in the electronic business. This means that Sony wans to
make a new product for the existing market.
According to the evidence from the case study product development is “ PlayStation
portable, which was released in December 2004.” The theory of product development
states “ Product development is strategy for company growth by offering modified new
products to current market segments.” (Kotler, Armstrong, Wong, Saunders
2008:146p) According to the case study, that PlayStation was introduced in 1994. In
2004 Sony has developed PlayStation into PlayStation portable, this leads that Sony has
already supply PlayStation to this market. This means that in 2004 PlayStation Portable
is modified product or in other word this is new product supplied at the current market.
According to the evidence from the case study product development is “Sony planned
to introduce the PlayStation 3” and “ Playstation3 was the first product where cell
chips were used” The theory of product development states “ Product development is
strategy for company growth by offering modified new products to current market
segments.” (Kotler, Armstrong, Wong, Saunders 2008:146p) According to the evidence
form the case study, we already know that PlayStation was introduced in 1994.
PlayStation 3 was developed product.
My Action Plan
Last week of Dec-Jan Searching the theory
11th
of January First draft of Section 1-5 checked by Tutor 12th of January Meeting with Tutor
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13th of Jan Submission day
Appendix 1
BSG
Definition of Business Portfolio: The collection of businesses and products that make
up the company.
(Kotler, Armstrong, Wong, Saunders 2008:139p)
Business portfolio is a link between general strategy of the business or company and
those its parts. The company should:
• Analyse its current business portfolio and decide which businesses should
receive more, less or even no investment
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• Develop growth strategies for adding new products
Portfolio analysis will help the managers to assess the businesses making up the
company. The company’s manager desire to invest the good resources into its more
profitable businesses and to drop its weaker ones. Management’s first step is to identifythe key businesses making up the company. These are strategic business units.
Definition of strategic business units: SBU is unit of company that has a separate
mission and objectives, and which can be planned independently from other company
businesses. An SBU can be a company division, a product line within a division, or
sometime jus a single product or brand.
(Kotler, Armstrong, Wong, Saunders 2008:139p)
The next is important step in business portfolio analysis calls for management to assess
the attractiveness of its various SBUs and decide how much support each deserves. This
means that the leaders will look at company’s collection of products and uses judgment
to decide how much each SBU should contribute and receive.
The best-known portfolio planning methods are from Boston Consulting Groups, a
leading management consulting firm, and by General Electric and Shell. By using the
Boston consulting group approach, the company could classify all its SBUs according
to the growth-share matrix. Market growth is on vertical axis and provides the
measurement of market attractiveness. Market share is on horizontal axis and provides
the measurement of company’s strength in the market. There are 4 types of SBU are on
the BCG matrix.
Stars
Stars have high market share and high growth in the market. Company has to invest a
lot of money into this product and also requires an investment on the product
advertisement. After a while the product growth will slow down and they will turn into
cash cows.
Cash Cows
Cash cows have low growth in the market, but have high market share of the products.
Company does not have to invest a lot of money in product advertisement to hold their
share market. Cash cow product produce cash for the company that they could pay their
bill, taxes and also support other SBUs that requires investment.
Question Marks
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Question marks are low share business units in high growth markets. They require cash
to hold their share, let alone increase it. The company’s management have to consider
about the question marks, which one of them should be build as the stars and which one
of them should be phase out.
Dogs
Dogs have low market rate and also low market share of the product. Dogs could
generate enough money to maintain themselves, but not promise to generate large
source of cash.
Table 1.1
( Jain C S 2000: 251-252p)
Ansoff Matrices
Definition of Ansoff Matrices: The Ansoff growth matrix assists organizations to map
strategic product market growth.
(http://www.ansoffmatrix.com/)
Ansoff development growth matrix is useful device for identifying growth
opportunities. There are four routs to growth: Market development, new markets, new
products and diversification.
Market penetration
Definition of Market penetration: Market penetration is a strategy for company growth
by increasing sales of current products to current market segments without changing
the product.
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(Kotler, Armstrong, Wong, Saunders 2008:146p)
For example, if there are 300 million people in a country and 65 million of those people
have cell phones then the market penetration of cell phones would be approximately
22%. This would mean in theory there are still 235 million more potential customers for
cell phones, which may be a good sign of growth for cell phone makers. In general, the
older the offering or industry, the greater the market penetration.
( Kotler, Armstrong, Wong, Saunders 2008:146p)
Product development
Definition of Product development: Product development is strategy for company
growth by offering modified new products to current market segments.
(Kotler, Armstrong, Wong, Saunders 2008:146p)
In this growth strategy involves, where business aims to introduce new products in
current market. This strategy may require the development of new competencies and
requires the business develop modified products, which can appeal to existing markets.
Market development
Definition of Market development: Market development is strategy for company growth
by identifying and developing new market segments for current company product.
(Kotler, Armstrong, Wong, Saunders 2008:146p)
This strategy tries to target non-buying customers in currently targeted segments. In
other word market development means that the company selling the present products or
service in new markets. This means that the managers of a company takes action like
targeting promotion, opening sales office and creating alliance to opetionalize a market
development. There are many ways of doing this strategy, this include:
• New geographical markets
• New product dimensions or packaging
• New distribution channels
• Different pricing policies
Diversification
Definition of Diversification: Diversification is a strategy for company growth through
starting up or acquiring businesses outside the company’s current products and
markets.
(Kotler, Armstrong, Wong, Saunders 2008:147p)
In this strategy the company introduce new products in the new markets. Example
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Mitsubishi is well known for the cars, but they have developed the plan to
manufacturing TV sets. This means that Mitsubishi is entering with new product in the
new market. This is an inherently more risk strategy, because business is moving into
the new waters (Market) in which the company has little or nor previous experience at
all.
Table 1.2
Appendix 2
Organisational Structure
Definition of organisational structure: The framework, typically hierarchical, within
which an organisation arranges its lines of authority and communication, and
allocation rights and duties. Organisational structure determines the manner and
extent to which roles, power, and responsibilities are delegated, controlled and
coordinated, and how information flows between levels of management
(http://www.businessdictionary.com )
This means that that organisation structure depend entirely on organisation’s objectives
and the strategy chosen to achieve them. There are two different type of organisational
structure in terms of span of control and division of labour: Flat and Tall.
Flat
Definition of flat structure: A denormalized file structure where each line in the file
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represents a row of data.
( http://www.nppesdata.com )
Flat organisation structure will have relatively few layers of management. This means
that the chain of command from the top (CEO) to the bottom (employees) is short and
the spam of control is wide. Because of the small number of management layer, flat
organisation is small companies.
( Linehan M 2007:69p)
Table 2.1
Table 2.1.1
Advantages Disadvantages
• Better team spirit
• Less bureaucracy and easier
decision making
• Greater communication between
management and workers
• May limit the growth of the
organisation
• Structure limited to small
organisations such as partnership,
cooperatives and some private
limited companies
(Linehan M 2007:69p)
Tall
Definition of tall structure: Organisations with narrow spans of control with many
managerial levels called tall structure.
(Linehan M 2007:69p)
Tall structured organisation has many levels of management and supervisors. There is
long chain of command running from the tops (CAO) to the bottom (Employees)Table 2.2
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Table 2.2.1
Advantages Disadvantages
• There is clear management
structure
• Clear progression and promotion
ladder
• There is narrow span of control i.e.
The manager has a small number
of employees under his control
• Decision making is slowing down
as approval may be needed by each
of the layers of authority
• Communication has to take
through many layers of
management
(Linehan M 2007:69p)
There are 6 types of organisational structures.
• Simple
• Functional
• Geographical
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• Divisional
• Strategic
• Matrix
Simple
Simple organisation structure is characterized by low degree of differentiation of
subtasks, and leaders are having wide span of control. This means that the authority
often is centralized in a single person, who is often the boss of the company.
Formalization will also be low, and work will often be structured through direct control
and supervision. The simple structure is referred to as flat structure. The simple
organisational structure is widely practiced in small companies or organisations, in
which the coordination of work can be very effectively structured around a narrow setof activities and decision makers, who are able to coordinate activities quickly and
effectively. Simple organisation structure is nor relevant when the business or
organisation grows in size, and when surrounding environment of the company grows
in complexity.
(Linehan M 2007:71)
Table 2.3
Table 2.3.1
Advantage Disadvantage
• Control of all business operation
• Frequent communication
• Lack of specialization and hence,
complex tasks deterrent
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• No coordination problems
• Rapid decision making
(http://www.slideshare.net ) by Rotator Platform Software Consulting c.a accounting
manager on August 2009
Bureaucratic
“The fully developed bureaucratic mechanism compares with other organizations
exactly as does the machine compare with the non-mechanical modes of production.
Precision, speed, unambiguity, … strict subordination, reduction of friction and of
material and personal costs- these are raised to the optimum point in the strictly
bureaucratic administration. Bureaucratic structures have a certain degree of
standardization. They are better suited for more complex or larger scale organizations,
usually adopting a tall structure. The tension between bureaucratic structures and non-
bureaucratic is echoed in Burns and Stalker's distinction between mechanistic and
organic structures.
The Weberian characteristics of bureaucracy are:
• Clear defined roles and responsibilities
• A hierarchical structure
• Respect for merit.
Table 2.4
In other word bureaucratic structure maintain strict hierarchies when it comes to people
management. And it also helps when the organisation is growing in complex and also
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large, bureaucratic structures are required for management. This structure is suitable for
tall organisations.
(Linehan M 2007:71)
Functional
In a functional structure, teams are created based on the common function in bottom up
manner. The result is a set of functional units such engineering, marketing etc., that are
controlled and coordinated from the top-level management. Functional structure is the
most common type of structural design and has evolved from the concept of high
specialization, high control framework of manufacturing organisations tuned toward
high efficiency. Functional management is more technical orientated and less product
or business orientated while they are skilled in taking decisions in their functional areas,
they are weak in the areas of product business plans, market study and product release
management. If the organisation does have multiple product lines, then functional
hierarchy at lowest level does get divided along product lines, therefore creating deeper
hierarchies.
(Linehan M 2007:71)
Table 2.5
Table 2.5.1
Advantages Disadvantages
• Efficiency through specialization
• Retains centralized control of
strategic decisions
• Promotes narrow specialization
and potential functional rivalry or
conflict
• Difficulty in functional
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• Differentiates and delegates day to
day operating decisions
coordination and inter functional
decision making
(http://www.slideshare.net )
Divisional
In a divisional structure, the teams are organised in set of divisions, where each division
corresponds to the end product or service provided by organisation. Each division has
its own set of functional units like research, manufacturing, marketing etc. and is
completely self-contained. Divisional structure is less hierarchical than functional; it is
formed by decomposing the functional structure along the product lines. Divisional
management is more skilled along product business and lesser in core technical
competencies than functional structure management.
Table 2.6
Table 2.6.1
Advantages Disadvantages
• CEO focus on strategic orientation
• Performance accountability
• Divisions unique environment
hence unique strategic orientation
• Divisions Manager’s line of
Authority
• Policy inconsistencies between
divisions( Linehan M 2007:72)
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Strategic
Strategic business is understood as business unit within the overall corporate identity
which distinguishable from other business because it serves a defined external market
where management can conduct strategic planning in relation to product and markets.
When the company or organisation becomes large, they are best thought of as being
composed of number of businesses. These organisation entities are large enough to
exercise control over most strategic factors affecting their performance. Multidivisional
structure consisting of three levels, the top level being the corporate headquarters. The
SBU groups, and final level division grouped by relatedness. Divisions within groups
are related, but groups are largely unrelated to each other. Each SBU is profit centre
controlled by firms’ corporate office.
Table 2.7
Table 2.7.1
Advantages Disadvantages
• Channels accountability to distinct
business units
• Coordination between divisions
with similar strategic concerns and
• Degree of autonomy for each SBU
• Dysfunctional competition for
corporate resources may increase
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products/market environments
( Linehan M 2007:72)
Matrix
Matrix structure is organisational design that the team of employees by both function
and product. The organisational structure is very flat, and the structure of the matrix is
differentiated into whatever functions are needed to accomplish certain goals. The
employee at the functional department is reporting to the functional heads, but do not
working under their supervision. The employees are supervised and controlled by the
membership of the certain project. This is the way in matrix structure the employees has
two superiors who will jointly ensure the progress of the project. When the project is
accomplished the team of the project is dissolved, and workers from different functional
areas may get reassigned to other projects and tasks
Table 2.8
Advantages Disadvantages
• Creativity and multiple sources of
diversity
• Efficient use of functional
managers
• Middle management exposure to
strategic issues
• Dual accountability can create
confusion and contradictory prices
• Necessities tremendous horizontal
and vertical coordination
(http://www.slideshare.net)
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Appendix 3
Managing at different level of the organisation
In the organisations there are three levels of management, represented by top managers(CEO), middle managers and first line managers.
Top Managers
This is small group of executives who are controlling the whole organisation or the
company. In this group includes president, vice-president and also chief executive
officer. The group of executives creates the organisation’s goals, overall strategy and
also operating policies
(Linehan M 2007:3)
Middle Managers
The middle mangers are responsible for applying the policies and also the plans
developed by the group of executives and monitoring and coordinating the activities of
lower level managers. Examples of middle managers are: Human resource manager,
finance manager.
(Linehan M 2007:3)
First line managers
The first line managers of operational managers are responsible for monitoring and
coordinate the activities of operating employees. Operational manager most of the time
spends supervising the work of subordinates.
( Linehan M 2007:3)
Appendix 4Strategic Approaches
As the literature formulate there are three level of strategies:
• Corporate
• Business
• Functional
Corporate level strategy
Corporate strategy may be viewed as grand plan for an organisation which describes the
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general action to be taken to achieve long-term objectives. The grand strategy
represents the company’s overall direction. According to the literature there are three
grand strategy options:
•
Retrenchment strategy: The company applying retrenchment strategy is seekingto reduce the size of organisation in terms of employees, production or assets.
This could the result of decline in demand for an organisation product, the
introduction of new technology or from increased competitors. In other words
the company cutting back on the range of the products or markets. This means
that the company’s management recognise that the organisation is performing
badly. In retrenchment the company usually selling off parts of business or
liquidation of an entire organisation.
• Stability strategy: The company tries to remain the same size or to grow in a
very slow controlled way. This strategy may be applied after a period of rapid
growth in order to take stock and ensure that the expansion is viable. This
means that the company is seeking to continue with the same products and
markets. This means that the management recognises that its organisation is
performing well and opts for low risk and little change in stable environment.
• Growth strategy: The organisation developing its market position, through
increased investment, new product development, and diversification in to new
markets. This means that organisation is seeking to add new products in the new
market. This means that that the management of the company or business
desired its organisation to perform much better, preferring high risk and change.
In Growth strategy there are three different acquiring:
1. Mergers- Two or more firms combine usually because of
complementing strength
2. Acquisition- One firm purchasing part or all firm. There are five
different type of acquisition, and these are:
I. Horizontal Integration. This means that the firm buys other
firm in the same line of business, and their aims is to
increase the market share
II. Horizontal Related acquisition. This means the firm biys
another firm outside present scope of operation, but related.
III. Horizontal unrelated acquisition. This means that firm
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acquire other firm in unrelated industry. Example of this is
that Supervalue purchase petrol service station
IV. Vertical related acquisition. This means that firm is acquire
other firm with complementary competencies in the vertical
value system
V. Vertical unrelated acquisition. This means that the firm
acquire other firm in unrelated industry.
3. Strategic Alliance- Corporation between two or more firms in a
selected venture. There five forms of strategic alliance, and these
are:
I. Joint venture. This is new jointly owed organisation, and
when the partners remain independent.
II. Consortia. This is when two or more organisation on a
particular venture
III. Networks. Informal collaboration on mutual advantage and
trust.
IV. Opportunistic. Informal market relationship focused on
particular venture.
V. Intermediate. Subcontracting or in other words employ
business or person outside the company to do the work as
part of larger project.
( Jain C S 2000:24-39)
Business level strategy
According to the “Miles and Snow (1976)” Business level strategy can be identify as
one of the four categories:
• Defender strategy- this means that the company has limited product line and its
management focus is on improving the efficiency of existing operations. The
company with this strategy tries to protect the current market share, maintaining
stable growth and serving current customers.
• Prospector strategy- this means that the company is focuses on new product
development, innovation and market opportunities and typically has number of
product lines. The company with strategy is continuing to expand into new
markets and also be high-risk taker.
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• Analyser strategy- this means that the company is commonly working in two
distinguished markets. One of the markets is stable and one is variable (thus
creating new market opportunities). The company implementing this strategy is
focuses on the efficiency in the stable market and also innovation in the variablemarket.
• Reactor strategy- this means that the company has no clear strategy and also
reacts in changes in the environment very slowly.
( Jain C S 2000:24-39)
Functional level strategy
Functional level strategy is concerned with the on-going functional operations of an
organisation. Functions represented in an organisation depend on the type of business,
its size and its structure, but may include: marketing, sales, research and development,
finance and human resources. The question at this level of strategy is “How do we
support the business level competitive strategy?” All these functions need to follow the
strategic plans of an organisation and must be integrated to ensure the overall success of
an organisation.
( Jain C S 2000:24-39)
Restructuring
There are eight restructuring activities:
• Downsizing- Wholesale reduction of employees. The outcomes in the short term
are to reduce labour costs. Outcome in the long term is to loss of human capital
and lower performance.
• Down scoping- Selectively divesting or closing non core businesses. Reducing
scope of operations. Outcome in the short term is reducing the debt costs and
emphasis on strategic control. Outcomes in the long term are higher
performance.
• Leveraged buyout- a party buys a firm’s entire assets in order to take the firm
private. Outcomes in the short term are emphasis on strategic controls and high
debt costs. Outcome in the long term are higher performance and higher risk.
• Networking- it refers to the process of breaking companies into smaller
independent business units for significant improvement in productivity and
flexibility. The phenomenon is predominant in South Korea, where big
companies like Samsung, Hyundai and Daewoo are breaking themselves up into
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smaller units. These firms convert their managers into entrepreneurs.
• Virtual Corporation- It is a company that has taken steps to turn itself inside out.
Rather than having managers and staff sitting inside in their offices moving
papers from in basket to out basket, a virtual corporation kicks the employees
outside, sending them to work in customer's offices and plants, determining
what the customer needs and wants, then reshaping the corporate products and
services to the customer's exact needs. This is a futuristic concept wherein
companies will be edgeless, adaptable and perpetually changing. The
centrepiece of the business revolution is a new kind of product called a Virtual
Product Some of the these products already exist, camcorders create instant
movies, personal computers and laser printers have made instant desktop
publishing a reality. And for all these we can obtain cash instantly at ATMs.
• Verticalization- it refers to regrouping of management functions for particular
functions for a particular product range to achieve higher accountability and
transparency. Siemens in 1990 moved from a "function-oriented" structure to a
vertical "entrepreneur-oriented" structure embracing size business and three
support divisions.
• Delayering- Flat organization: In the post world war period the demand for
goods was ever increasing. Main objective of the corporations was production
and capacity build up to meet the demand. The classical, pyramidal structure
was well suited to this high growth environment. This structure was scalable
and the corporations could immediately translate their growth plans into action
by adding workers at the bottom layer and filling in the management layers. But
the price paid in the whole process was much higher. The overall process
became complicated; number of middle managers and functional managers
grew making the coordination of various functions complex. Senior/top
management was alienated from the front-line people as well as the end users of
the product or service. Decision-making became slower. Hence, a need is felt to
attack the unproductive, bulky and sluggish network of white-collar staff. A
powerful strategy would be to remove the layers of senior and middle
management i.e. making the organization structure flat.
• Business Process Reengineering- The Business Process Reengineering method
(BPR) is defined by Hammer and Champy as 'the fundamental reconsideration
and radical redesign of organizational processes, in order to achieve drastic
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improvement of current performance in cost, service and speed'. Value creation
for the customer is the leading factor for BPR and information technology often
plays an important enabling role. Business process reengineering is also known
as BPR, Business Process Redesign, Business Transformation, or Business
Process Change Management.
( Jain C S 2000:24-39)
Michael Porters generic strategies
Cost leadership
This strategy involves the organisation aiming to be the lowest cost producer within
their industry. The organisation aims to drive cost down through all the elements of the
production of the product from sourcing, to labour costs. The cost leader usually aims at
a broad market; so sufficient sales can cover costs. Low cost producers include Easyjet
airline, Ryan air, Asda and Walmart. Some organisation may aim to drive costs down
but will not pass on these cost savings to their customers aiming for increased profits
clearly because their brand can command a premium rate.
Differentiation
To be different, is what organisations strive for. Having a competitive advantage, which
allows the company and its products ranges to stand out, is crucial for their success.With a differentiation strategy the organisation aims to focus its effort on particular
segments and charge for the added differentiated value. If we look at Brompton folding
cycles their compact design differentiates them from other folding bike companies.
New concepts which allow for differentiation can be patented, however patents have a
certain life span and organisation always face the danger that their idea that gives the
competitive advantage will be copied in one form or another.
Niche strategies
Here the organisation focuses its effort on one particular segment and becomes well
known for providing products/services within the segment. They form a competitive
advantage for this niche market and either succeeds by being a low cost producer or
differentiator within that particular segment. Examples include Roll Royce and Bentley.
With both of these strategies the organisation can also focus by offering particular
segments a differentiated product/service or a low cost product/service. The key is that
the product or service is focused on a particular segment
Middle of the road
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The danger some organisation face is that they try to do all three and become what is
known as stuck in the middle. The have no clear business strategy, be all to all
consumers, which adds to their running costs causing a fall in sales and market share.
‘Stuck in the middle’ companies are usually subject to a takeover or merger.
( Jain C S 2000:24-39)
Appendix 5
Organisation culture
Definition of organizational culture:
A pattern of shared basic assumptions that the group learned as it solved its problems
of external adaptation and internal integration, that has worked well enough to be
considered valid and, therefore, to be taught to new members as the correct way to
perceive, think, and feel in relation to those problems.
(Schein 1992:12)
There are numbers of visible sign of strong culture and they are divided as follows:
• Routine
Ways members behave toward one another and towards outsiders “the way we doing
things around here. May provide distinctive competence or typical ability. May provide
a taken for grantedness about things are done (this is difficult to change)
(Jason Martin 2006:1)
• Rituals
An event through which organization emphasizes what is important. Example of this is
the company provides an open days or graduation. This can be formal training and
recruitment or informal such as drinks in the pub or gossip in the canteen
(Jason Martin 2006:1)
• Stories
The stories that have been told by members of organization to each other and to
outsiders (new recruits). Flag important events, personalities. Indicate the essence of the
organization’s past and types of behavior that are acceptable
(Jason Martin 2006:1)
• Symbols
There are the symbols that the new recruits have to be aware such titles, logos, cars,
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uniform, language, and office layouts, how people address each other. Symbols of
hierarchy indicate possible barrier levels when implementing strategic change.
(Jason Martin 2006:2)
•
Power structureMost powerful groups within an organization are likely to be closely attached to the
taken for granted assumption and beliefs.
(Jason Martin 2006:2)
• Control system
Performance measurement and reward, this means that there is supervisor who checks
the performance. Indicate what is important to the organization (organizational focus).
(Jason Martin 2006:2)
According to the literature there are four types of culture in organization relating to the
characteristics of organization:
• Control (hierarchy)- Hierarchical organization share similarities with
stereotypical large, bureaucratic corporation. As in the value matrix, they are
defined by stability and control as well as internal focus and integration. They
value standardization, control, and a well-defined structure for authority and
decision-making. Effective leaders in hierarchical cultures are those that can
organize coordinate, and monitor people and process. In other word hierarchical
culture is very formalized structured place to work. Procedures govern what
people do.
• Complete (market)- The complete or market culture organizations are similar to
the control cultures in that they value stability and control. The organizations
with the complete culture are focusing on the external orientation and they value
differentiation over integration. Complete culture organizations are focusing on
relationship more specifically, transactions with suppliers, customers,
contractors, unions, legislators. In other words Market culture organization
whose major concern is with getting the job done. People are competitive and
goal orientated.
• Collaborate (Clan)- A very friendly place to work where people share a lot of
themselves. It is like and extended family.
• Create (Adhocracy)- dynamic entrepreneurial, and creative place to work.
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People stick their necks out and take risks.
(Jason Martin 2006:2)
Power Culture
A power culture emanates from centralized power in a charismatic leader. This leader
acts decisively and unilaterally, but always with the best intentions for the organization
in mind. Power cultures are demanding of the people within the organization. Late
nights and weekends in the office often are the norm. Generally motivation is not a
problem since expectations are clear and loyalty is recognized and rewarded. In a
dysfunctional stage power cultures can produce inefficient organizations where
everyone waits for approval before moving forward on an idea. This is seen in
organizations that have become too large for one person to maintain all the control and
authority. Employees may also spend too much time playing political games and trying
to curry favour with the boss instead of actually working. Members of this type of
culture often become burned out, and disloyal employees face a hostile and oppressive
environment.
(Jason Martin 2006:4)
Role Culture
A role culture is a highly structured environment where clear objectives, goals, and
procedures exist. An employee is judged almost solely on how well they meet these
objectives and goals. In a functional stage role cultures operate highly efficiently and
include built-in checks and balances of power. This culture rewards dependability and
consistency and, due to its well-articulated procedures, produces little stress. However,
taken to extremes role cultures can create an organization of automatons that simply
follow the rules and have very little concern for that which is not in their prescribed
area. This mentality creates an environment where cooperation and collaboration are
non-existent and a person’s talent may go unused. Change comes very slow in role
cultures and those within the culture, especially a dysfunctional one, may become afraid
to take risks.
(Jason Martin 2006:4)
Achievement Culture
An achievement culture is one where people work hard to achieve goals and better the
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group as a whole. This culture generally consists of highly motivated people who need
little to no supervision. Rules and procedures are limited as they may interfere with the
accomplishment of work. When a rule gets in the way of achieving a goal the rule is
simply ignored. The best tools and methods for producing results are utilized, and when
one goal is met, everyone quickly moves on to another. Because of this environment
and mind-set, achievement cultures tend to be highly adaptive. Unfortunately members
of an achievement cultures tend to burn out on their work. It may be difficult to
establish control if the need arises as the culture cultivates individuals. Members may
also become highly competitive with each other and the mind-set of “whatever it takes”
can lead to dishonest and illegal behaviour.
(Jason Martin 2006:5)
Support Culture
A support culture acts like a tiny community where people support and trust each other.
Members of this culture will cooperate, make sure everyone is together on an idea, and
do all that they can to resolve conflict. Support cultures consist of good communication
and excellent service both internal and external. This culture creates a nurturing
environment where members like to spend time together and sometimes personal and
professional lives can become blurred. When a support culture becomes dysfunctional
the needs of the individuals are placed over the needs of the organization. Due to a
commitment to consensus decisions come slowly. Support cultures tend to not be very
task oriented. And too much time spent together fosters personal differences that often
hinder work and ruin the excellent service that is a hallmark of support cultures.
( Jason Martin 2006:6)
Appendix 6
Leadership style
There are many leadership styles in the organisation, but the most common leadership
types are:
Autocratic
Autocratic leadership is characterized by individual who controls over all decision and
little input from group members. The autocratic leader is commonly making all the
decisions on their own ideas and judgments and rarely accepts any advice from the
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employees or outsiders. This means that the autocratic leader has an absolute control
over a group of employees. The autocratic leader is dictates all the work methods and
process. There is no trust to the group members with decision or important tasks.
( Linehan 2007:54-56)
Democratic
Democratic leadership is characterized by the individual who allows the members of
the group take a more participative role in the decision making process. Ideas move
freely amongst the group and are discussed openly. Everyone is given a seat at the
table, and discussion is relatively free flowing. This style is very good adapted in the
dynamic and rapidly changing environment where little can be taken as a constant. In
these fast growing organisations, every small detail even little opinion for improvement
can be taken in to consideration. This helps to keep the group from falling out of date.
Democratic leadership style encourages the members of the group to share their ideas
and then synthesizing all the available information into the best possible decision.
Democratic leader has to have skills to communicate the decision has been made to the
group of people.
( Linehan 2007:56-58)
Bureaucratic
Bureaucratic leadership is when the managers managing the whole organisation
according to the rules and policies. This type of leader is making sure that the
employees also strictly follow the rules and procedures. Promotion takes place on the
basis of employees’ ability to adhere to organisational rules. This type of leadership is
suitable when there is need of safe work conditions and quality is required.
( Linehan 2007:58-59)
Laissez faire
Laissez faire leadership is known as delegate leadership style in which leaders are
hands-off and let the group members to make the decisions themselves. The leader
gives a little instructions and complete freedom to the followers to came and make the
decision. The leader gives all the tools and also the resources needed to the followers.
Leader is expecting the followers to solve the problems on their own.
( Linehan 2007:59-61)
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BibliographyBooks
1. Kotler P, Armstrong G, Wong V, Saunders J., (5th Eds.) (2008) Principle of
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Dublin
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Bass, San Francisco
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Oxford
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Western Pub
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1. http://www.ansoffmatrix.com/
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1. Martin J. (2006)., Electronic Journal of Academic Special Librarianship
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