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PART B: STRATEGY, MANAGEMENT CONTROL AND PERFORMANCE MANAGEMENT :star: …
PART B: STRATEGY, MANAGEMENT CONTROL AND PERFORMANCE MANAGEMENT
:star: :beer_mugs:
PERFORMANCE MANAGEMENT AND CONTROL - THEIR ROLE IN STRATEGY
:tada:
Michael Porter's 5Forces Model
1. Threat of New Entrants
: How easy is it for new companies to enter the market? If it's easy,
competition increases.
2. Threat of Substitutes
: Are there alternative products or services that customers can switch to?
More substitutes mean more competition.
3. Bargaining Power of Customers
: How much power do customers have to drive prices down? If customers have many choices, they have more power.
4. Bargaining Power of Suppliers
: How much power do suppliers have to drive prices up? If there are few suppliers, they have more power.
5. Industry Rivalry competition)
: How intense is the competition among existing companies? High rivalry can lead to price wars and reduced profits.
3 ‘generic strategies’ for competitive advantage
1. Cost Leadership
: Becoming the lowest-cost producer in the industry. This allows the company to offer lower prices than competitors.
2. Differentiation
: Offering unique products or services that stand out from competitors. This can justify higher prices.
3. Focus
: Targeting a specific market niche (phân khúc). This can be done through cost focus (being the lowest-cost producer in that niche) or differentiation focus (offering unique products for that niche).
Performance Management
: Different strategies require different performance measures. For example,
cost leadership focuses on efficiency
, while
differentiation emphasizes innovation and brand reputation
.
Contingency Theory
: Performance measures depend on strategy, competitive position, technology, and size.
Strategy and decision-making
Strategy
:recycle:
Focuses on achieving organizational objectives.
Involves allocating resources (property, equipment, people, finances) to effective and cost-efficient activities.
Decision-Making
:recycle:
Involves choosing from alternative actions.
Requires understanding objectives, knowing alternatives, and estimating results.
Balances conflicting objectives (short-term vs. long-term, financial vs. non-financial).
Strategy and management control
Cybernetic Control:
Based on
feedback
cycles to
correct performance
.
Compare target and actual sales performance.
Use
feedback
to take
corrective actions
like training or marketing.
Core Elements of PMS
1. Vision and Mission
Define the organization's purpose and long-term aspirations.
Guide the overall direction and strategic planning.
2. Key Success Factors:
Identify critical areas that must be managed well for the organization to succeed.
These could include customer satisfaction, innovation, or operational efficiency.
3. Organization Structure:
The way the organization is arranged, including roles, responsibilities, and reporting lines.
Ensures that the structure supports strategic goals.
4. Strategies and Plans:
Detailed plans on how to achieve the vision and mission.
Include specific actions, timelines, and resource allocations.
5. Key Performance Measures:
Metrics used to assess how well the organization is achieving its goals.
Can be
financial
(e.g., revenue, profit) or
non-financial
(e.g., customer satisfaction, employee engagement).
6. Target Setting:
Establishing specific, measurable goals for performance measures.
Helps to focus efforts and track progress.
7. Performance Evaluation:
Regularly reviewing performance against targets.
Identifying areas for improvement and recognizing achievements.
8. Reward Systems:
Incentives and rewards to motivate employees to achieve performance targets.
Can include bonuses, promotions, or recognition programs.
Influencing Factors
1. PMS change:
Adapting the PMS to reflect changes in the organization or its environment.
Ensures the system remains relevant and effective.
2. PMS Use:
How the PMS is utilized by managers and employees.
Effective use involves integrating PMS into daily operations and decision-making.
3. Strength and Coherence of Core Elements:
Ensuring all elements of the PMS are aligned and support each other.
Creates a cohesive system that drives performance.
4. Information Flows, Systems, and Networks:
The processes and technologies used to collect, analyze, and share performance data.
Efficient information flows enable timely and informed decision-making.