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MODULE 3B : STRATEGY MANAGEMENT CONTROL & PERFORMANCE MEASUREMENT…
MODULE 3B : STRATEGY MANAGEMENT CONTROL & PERFORMANCE MEASUREMENT
STRATEGY & PERFORMANCE MANAGEMENT PG266
MINTZBERG & WATERS 1985
- DEFINE STRATEGY AS A PATTERN IN A STREAM OF DECISIONS. HOWEVER THEY SEPARATED THE
INTENDED
FROM THE REALISED STRATEGY, ARGUING THAT DELIBERATE STRATEGIES PROVIDED ONLY A PARTIAL EXPLANATION, AS SOME INTENDED STRATEGIES WERE UNABLE TO BE REALISED WHILE OTHER STRATEGIES
EMERGED
OVER TIME
GALBRAITH & NATHANSON 1976
- VARIATION IN STRATEGY SHOULD BE MATHED WITH VARIATION IN PROCESSES AND SYSTEMS AS WELL AS IN STRUCTURE, IN ORDER FOR ORGANISATIONS TO IMPLEMENT STRATEGIES SUCCESSFULLY.
PG266
PORTER 1980 5 FORCES MODEL
THREAT OF NEW ENTRANTS TO THE MARKET
THREAT OF SUBSTITUTE
BARGAINING POWER OF CUSTOMERS
BARGAINING POWER OF SUPPLIERS
RIVALRY WITHIN INDUSTRY
PORTER 1980 3 GENERIC STRATEGIES FOR COMPETITIVE ADVANTAGES
COST LEADERSHIP
DIFFERENTIATION
FOCUS
PORTER 1985 VALUE CHAIN
AS A TOOL TO HELP CREATE AND SUSTAIN COMPETITIVE ADVANTAGE THROUGH RECOGNISING THE NEED TO ADD VALUE IN EACH OF THE ORGANISATION'S PRIMARY ACTIVITY
PG268
PERFORMANCE MANAGEMENT SYSTEM (FERREIRA & OTLEY 2009) PG270
8 CORE ELEMENT
VISION & MISSION
KEY SUCCESS FACTORS
ORGANISATION STRUCTURE
STRATEGIES & PLANS
KEY PERFORMANCE MEASURES
TARGET SETTING
PERFORMANCE EVALUATION
REWARD SYSTEM
INFLUENCED BY 4 OTHER FACTORS
PMS CHANGE
PMS USE
STRENGTH & COHERENCE OF THE CORE ELEMENTS
INFORMATION FLOWS, SYSTEM & NETWORKS
CHENHALL 2003 PG270
THE DEFINITION OF MANAGEMENT CONTROL SYSTEMS HAS EVOLVED FROM FORMAL FINANCIALLY QUANTIFIABLE INFORMATION TO INCLUDE
EXTERNAL INFORMATION RELATING TO MARKETS, CUSTOMERS AND COMPETITORS
NON FINANCIAL INFORMATION ABOUT PRODUCTION PROCESSES
PREDICTIVE INFORMATION
A BROAD ARRAY OF DECISION SUPPORT MECHANISM AND INFORMAL PERSONAL AND SOCIAL CONTROLS
LIMITATION OF TRADITIONAL CONTROLS PG271
RETURN OF INVESTMENT ROI PG271
THE LEVEL OF INVESTMENT TO USE;TOTAL CAPITAL EMPLOYED OR NET ASSET
WHETHER ASSETS SHOULD INCLUDE NON CURRENT, CURRENT OR BOTH
WHETHER ASSETS SHOULD BE VALUED AT COST OR BOOK VALUE
(SOLOMONS 1964)
WHETHER HIGH TATE OF RETURN ON A SMALL CAPITAL INVESTMENT WAS BETTER OR WORSE THAN A LOWER RETURN ON A LARGE CAPITAL
(JOHNSONS & KAPLAN 1987)
MANAGERS COULD INCREASE THEIR REPORTED ROI BY REJECTING INVESTMENT THAT YIELDED RETURNS IN ExcESS OF THEIR ORGANISATION'S COST OF CAPITAL, BUT THAT WERE BELOW THEIR CURRENT AVERAGE ROI
(JOHNSONS & KAPLAN 1987)
BEYOND BUDGETING PG271
CRITICAL OF BUDGETING AS A MEANS OF CONTROL
AN OVERLY BUREAUCRATIC AND INFLEXIBLE WAY OF " COMMAND AND CONTROL"
EXPECTS MANAGERS TO THINK AND ACT INDEPENDENTLY IN RESPONSE TO CHANGES
AIMS AT RELEASING PEOPLE FROM THE BURDEN OF STIFLING BUREAUCRACY AND SUFFOCATING CONTROL SYSTEMS, TRUSTING THEM WITH INFORMATION AND GIVING THEM TIME TO THINK, REFLECT, SHARE LEARN AND IMPROVE
(HOPE,BUNCE 2011)
12 PRINCIPLES
LEADERSHIP
PURPOSE
VALUES
TRANSPARENCY
ORGANISATION
ANATOMY
CUSTOMER
MANAGEMENT
RHYTHM
TARGETS
PLAN AND FORECAST
RESOURCE ALLOCATION
PERFORMANCE EVALLUATION
REWARDS
BEYOND BUDGETING APPROACH
ABANDONS FIXED TARGETS IN FAVOUR OF RELATIVE GOALS FOR CONTINUOUS IMPROVEMENT
MAKE RESOURCES AVAILABLE AS NEEDED, NOT THROUGH ANNUAL BUDGETING ALLOCATIONS
REWARDS SHARED SUCCESS BASED ON RELATIVE PERFORMANCE, NOT FIXED TARGET
BASES CONTROLS ON RELATIVE INDICATORS AND THRENDS, NOT VARIANCES AGAINST A PLAN
MODELS OF PERFORMANCE MEASUREMENT PG274
OPERATIONAL & STRATEGIC PERFORMANCE
STRATEGIC PERFORMANCE PG274
CONCERNED WITH SUSTAINABLE PERFORMANCE OVER TIME AT THE WHOLE ORG LEVEL, OVER MULTIPLE TIME PERIODS, TAKING INTO ACCOUNT STRATEGIC GOALS,ECONOMIC CONDITIONS AND THE COMPETITIVE ENVIRONMENT
CONCERNED WITH PRODUCT LIFE CYCLE AND SUPPLY CHAINS, MAINTAIN/INCREASE MARKET SHARE THROUGH COMPETITIVE STRATEGY
LINKED TO RISK MANAGEMENT THROUGH RISK RETURN TRADE OFF AND ORG'S RISK APPETITE AS DETERMINED BY BOD
OPERATIONAL MEASURES
- MEASURES SHORT TERM PERFORMANCE
STRATEGIC MEASURES
- FOCUS ON IMPLEMENTATION OF THE ORGANISATION'S LONG TERM STRATEGY
STRATEGIC MEASURES KEY ATTRIBUTE PG275
STRATEGIC AND OPERATIONAL LINKAGES
: CAPTURES THE OVERALL EXTENT OF INTEGRATION BETWEEN STRATEGY AND OPERATIONS AND ACROSS ELEMENTS OF THE VALUE CHAIN
CUSTOMER ORIENTATION
: LINKAGES TO CUSTOMERS INCLUDING FINANCIAL AND CUSTOMER MEASURES
SUPPLIER ORIENTATION" : LINKAGES TO SUPPLIES AND INCLUDES BUSINESS PROCESS AND INNOVATION MEASURES
(CHENHALL 2005)**
LEADING AND LAGGING MEASURES PG276
LIMITATION OF FINANCIAL PERFORMANCE MEASURES
FINANCIAL MEASURES FOCUS ON SHORT TERM PERFORMANCE,EXPENSE OF LONGER TERM PERFORMANCE
LAGGING RATHER THAN LEADING MEASURES OF PERFORMANCE ( ONLY PROVIDE INFORMATION AFTER THE EVENT HAS OCCURRED THUS IT MAY BE TOO LATE TO TAKE CORRECTIVE MEASURES
LEADING MEASURES - PROVIDES "HERE & NOW" VIEW OF PERFORMANCE & IS LIKELY TO HELP EXPLAIN OR PREDICT OR EVEN CAUSE THE RESURT OF A LAGGING MEASURES
POSSIBLE MEASURES FOR OPERATION FUNCTION FALLS UNDER 5 BROAD CATEGORY PG277
QUALITY PASS RATE
DEPENDABILITY
SPEED
FLEXIBILITY
COST (NEELY 2007)
FRAMEWORK FOR PERFORMANCE MEASURE PG278
FRENCH TABLEAUX DE BORD
- A SET OF PERFORMANCE MEASURE USED IN FRENCH FACTORIES THAT RELYS ON THE DEFINITION OF A CAUSAL MODEL AT EACH ORGANISATIONAL UNIT BY ITS MANAGER
2.
PERFORMANCE PYRAMID OF LYNCH & CROSS 1991
- CONCERNED WITH MARKET PERFORMANCE (CUSTOMER SATISFACTION, FLEXIBILITY, QUALITY, DELIVERY), AND THE OTHER SIDE TO FINANCIAL PERFOMANCE ( FLEXIBILITY, PRODUCTIVITY, CYCLE TIME, WASTE)
RESULT AND DETERMINANTS FRAMEWORK (FITZGERALD JOHNSON 1991)
- RESULTS (COMPETITIVENESS AND FINANCIAL PERFORMANCE) ARE DISTINGUISHED FROM THE DETERMINANTS OF RESULTS (QUALITY, FLEXIBILITY, RESOURCE UTILISATION, INNOVATION)
EUROPEAN FOUNDATION FOR QUALITY MANAGEMENT (EFQM) EXCELLENCE MODEL
- SEPERATES 5 ENABLES (LEADERSHIP, PEOPLE, POLICY/STRATEGY, PARTNERSHIP/RESOURCES,PROCESSES) WITH 4 RESULT AREAD (PEOPLE, CUSTOMER, SOCIETY, KEY PERFORMANCE) ALL UNDERSCORED BY INNOVATION ANF LEARNING WITH PERFORMANCE MEASURES IDENTIFIED FOR EACH ENABLER AND RESULT AREA
SIX SIGMA - RECOGNISES THE COST AND IMPACT OF FAILURE IN ANY SINGLE PROCESS ON THE OVERALL YIELD USING "DMAIC (DEFINE, MEASURE , ANALYSE, IMPROVE, CONTROL)
PERFORMANCE PRISM (CRANDFIELD UNI ACADEMICS ) - FOCUS ON STAKEHOLDER SATISFACTION THAT TAKES MULTI STAKEHOLDER APPROACH TO PERFORMANCE MEASUREMENT REFLECTING THE IMPORTANCE OF CORPORATE SOCIAL RESPONSIBILITY
SIX STIGMA PG 278
LEADER & PROFITABILITY
MANAGEMENT AND IMPROVEMENT
EMPLOYEES AND INNOVATION
PURCHASING AND SUPPLIER MANAGEMENT
OPERATIONAL EXECUTION
SALES AND DISTRIBUTION
SERVICE AND GROWTH
PERFORMANCE PRISM 5 FACETS
STAKEHOLDER SATISFACTION (WHAT THEY WANT)
STAKEHOLDER CONTRIBUTION (WHAT THE ORGANISATION NEEDS FROM THEM)
STRATEGIES
PROCESSES
CAPABILITIES THAT AN ORGANISATION NEEDS TO SATISFY THE WANTS AND NEEDS
PUBLIC SECTOR & NOT FOR PROFIT PERFORMANCE MEASUREMENT BALANCE SCORE CARD PG284
HAVE MULTIPLE STAKEHOLDERS
MULTIPLE OBJECTIVES
NON FINANCIAL MEASUREMENT IS NORMALLY MORE IMPORTANT THAN FINANCIAL MEASUREMENT