Process of Assessment of the Strengths and Weaknesses of Organizations

Process of Assessment of the Strengths and Weaknesses of Organizations

 

In the article named “Defining Corporate Strengths and Weaknesses”, written by Howard H. Stevenson of Harvard University, strengths and weaknesses are defined as follows:

 

Business organizations have certain characteristics – strengths –   which make them uniquely adapted to carry out their tasks.  Conversely, they have other features – weaknesses – which inhibit their ability to fulfill their purposes.”

 

This article forms the basis of our research.  At another place, it is stated:

 

“The process of defining strengths and weaknesses should ideally  require the manager to test his assumptions and to analyze the  status quo in relationship to the requirements for future success given  the competition and the changing environment.”

 

In the article “Strategic Renewal  for Business Units”, John O. Whitney, elaborates on the process of assessment of an organization’s strengths and weaknesses.  He says:

 

“In this article, I present a method for conducting an orderly investigation of a business unit’s current health and welfare; the goal is to help companies find strategic focus and thereby

liberate their resources for growth.  The tool offered here is a process that evaluates customers, products and services along three dimensions:  strategic importance, significance and

 profitability.  The result of this exercise is a list of eight recommended actions or strategic imperatives.”

 

The strategic renewal process that this  article highlights  is  in the following steps:

 

  • Evaluate your customers, either one by one or in groups
  • Evaluate your products or services, either one by one or in groups
  • Use these analyses to make strategic-renewal matrices
  • Consider the recommended strategic imperatives- and start pruning

 

The article provides samples for Strategic Importance Evaluation Guide, Significance Evaluation Guide, and Profitability Evaluation Guide for customers as well as products and services.  It also  gives a sample Strategic-Renewal Matrix.

 

Companies can look for their strategic strengths and weaknesses in any of the following areas:

 

  • Organization
  • Personnel or Human Resource
  • Marketing
  • Technical
  • Finance

 

Once companies identify their strong areas, or  competitive strengths, they can build on those areas by a process called “strategic planning”.  The article “Many best ways to Make Strategy”, written  by Michael Goold and Andrew Campbell states:

 

“In a study of 16 large, diversified British companies, we identified three successful styles of managing strategy, which we call “strategic planning”, “financial control” and  “strategic control”.

 

“Perhaps the greatest strength of the strategic planning style is that it fosters the creation  of ambitious business strategies.  Strategic planning companies  are most effective in helping business units strive to gain advantage over competitors.  Once headquarters establishes the direction in which the business should be going, unit managers are free to develop bold plans to achieve whatever goal has been set.

 

“Proof of these strengths is evident from the records of the strategic planning companies, which experience more expansion of their existing businesses than other companies.  They also make more investments with long paybacks.”

 

Organizations  can follow a strategy using one or more or even all of these areas.  For instance, the article “How one Polish Shipyard Became  a Market Competitor”, describes how a shipbuilding company named Szczecin Shipyard used all these areas to gain competitive advantage.  The article is written  by Simon Johnson, David T. Kotchen and Gary Loveman.   The company went through rigorous restructuring.  For example, on the organizational front, new management was brought in:

 

“….. a management research committee turned to Krzysztof Piotrowski to help commercialize the yard, with the goal of privatizing it down the road.   …. He outlined two broad

objectives: First, the shipyard would have to reduce its massive debt; second, it will have to streamline its wasteful production operation.  The committee offered him the position  of managing director…”

 

On the HR side, there was the  new compensation  system: “Workers were assigned job classifications according  to their job classification,  and they could advance to  higher  levels by passing

occupational exams.  Each step up led to an automatic  50% increase in an employee’s hourly wage, while  each additional year of experience resulted in a 10% increase through  the eighth year of employment and every other  year thereafter….. The new compensation structure resulted in higher productivity and higher-quality workmanship at the shipyard.”

 

On the Marketing front:

 

“He formed a market research team, and he directed its members to analyze trends in the world shipbuilding industry in order to identify a niche market for Szczecin.”

 

On the technical  side:

 

“Piotrowski turned his attention to reducing product cycle time – the time required to build a single vessel.  To  decrease cycle time the

management had to institute major operating changes.  ….To eliminate pockets of unutilized time it needed to perform manufacturing

operations serially, rather than as it used to, in parallel.  To facilitate these changes, two of the yard’s six slipways were removed from

operation.”

 

Finally, on the Financial front:

 

“…..Piotrowski proposed a plan that called  for cancellation of a third of the  shipyard’s $190  million   debt as well as an  extended repayment schedule that allowed the remaining  two-thirds  to be amortized over  five years.  The deal was touted in the national press as a resounding success, and Poland’s finance ministry expressed hope that it would become a restructuring model for other financially-troubled state-sector enterprises.”

 

Same is the case for  JC Penney’s.  They have found their competitive advantage in  more than one of the aspects.  For example, on the Technical side, they believe in quality assurance:

 

” From a quality control aspect, we are a driving force behind technology in the apparel manufacturing industry. Our suppliers’

status reports are online, everyday. Our buyers and suppliers have immediate access to everything from factory evaluations to the

status of the EDI transactions. At JCPenney, 99 per cent of all orders and 100 per cent of all invoices are transmitted electronically,

helping us get desired merchandise in the hands of customers more quickly.

 

“Forty per cent of our merchandise volume is in categories controlled by our automated replenishment system, improving our in-stock position and increasing our sales without increasing our levels of inventory in basic,  year-round items such as towels, shirts, and hosiery.”

 

On the Marketing side also, they have achieved a competitive advantage by rigorous planning and marketing :

” We communicate to our target customers with a consistent and singular voice. We will communicate our uniqueness and value equation, as described above. We use an appropriate mix of advertising media and in-store special events to communicate value and a sense of urgency that will drive traffic and increase sales. Relationship marketing builds and strengthens loyalty among our target-customer segments. Regular and off-price advertising is used to offer value, and increase traffic.”

 

To deepen relationships with target customers, we are using a new medium called customer publishing. This is a magazine format giving JCPenney the opportunity to establish a point of view with customers. In the Spring of 1999, we announced an agreement with a customer publisher and a sales and promotion agency to publish a magazine specifically designed for teens.

 

The article “Value-based Hiring Builds Commitment” written by Gary Dessler shows the importance of HR as a competitive strength of Toyota:

 

“Toyota’s hiring process has two distinguishing  features: its exhaustiveness and the extent to which it identifies not just candidates who have technical  skills, but rather candidates whose intelligence, interpersonal  skills, flexibility, desire to learn, and problem-solving skills are compatible with the basic values  of the  firm……

“…. Toyota’s hiring process is value-based in that it aims to select people not just on the basis of  technical skills or work history but on traits and values such as co-operativeness,  learning ability and quality orientation  that fit best with Toyota’s basic ideology – its missions, aims and values.”

 

Toyota’s hiring process is based upon six distinct phases:

 

  1. Applicants fill out application blanks summarizing their work experiences and skills and view a one-hour video describing Toyota’s work environment and selection system.

 

  1. Applicants take the Situation Judgement Inventory (SJI), which is a test measuring applicants’ ability to work in a team environment, and his interpersonal skills.

 

  • The applicants’ decision-making skills are assessed. They participate in four hours of group and individual problem solving and discussion activities in the firm’s assessment centre.

 

  1. Applicants have to take one-hour group interviews. Groups of candidates discuss their accomplishments with  Toyota’s interviewers.

 

  1. Those who successfully complete Phase IV then undergo two and a half hours of physical and drug/alcohol

 

  1. Finally, now the selected employees are closely monitored, observed and coached on the job to assess their job performance and to develop their skills during their first six months at work.

 

In the article “Getting Things Done” written by Maurice Hardraker and Bryan K. Ward we find the competitive advantage of IBM, that is, Process Quality Management.  Being a technology-based organization, IBM’s strongest point is in its Technical area:

 

“At IBM, …… PQM or Process Quality Management grew out of many studies with customers to determine their needs and from internal studies as part of IBM’s business quality programs….. In PQM managers go back to the often overlooked basics of an endeavour.

 

“…. PQM begins with a person who is the leader of the management team, the boss, the  one whose job depends on getting the team’s mission accomplished.  He or she should then involve everyone on the immediate management team and no one else – nobody missing   and  no  hitchhikers. At most there should be 12 people, since more than that is just too unwieldy. And if even one member of the team cannot attend the study, wait.  PQM requires a buy-in from everyone not only to identify what is needed but also to commit to the process.

 

“…. The first step in the PQM effort is to develop a clear understanding of the team’s mission, what its members are collectively paid to do……. Now the team should be  ready  to identify the critical success factors, a term used for many years in corporate planning to mean the most important sub-goals of a business,  business unit or project…….. The third step in PQM is to identify and list what has to be done so that a company can meet its critical success factors.  This might mean being more responsive to the market, exploiting new technologies, or whatever is necessary to accomplish  the CSFs.

 

“That’s the PQM process – one way to conduct what is, in truth, a never-ending journey to zero  defects.”

 

 

ANALYSIS AND FINDINGS

 

Research Problem

 

The research problem was to find out the various corporate strengths and weaknesses of the organizations in Pakistan.  The research objectives are:

 

  • to uncover any differences between the local and foreign firms in terms of determining their corporate strengths and weaknesses.

 

  • to bring out the organizational attributes most frequently reported as strengths or weaknesses among the organizations

 

  • find out the common criteria used by all the companies in assessment of their relative positions in the market.

 

Research Methodology

 

The research was based on a survey of 12 companies, both foreign and local.  We constructed, rather modified a very comprehensive questionnaire and made it user friendly so that the managers of various companies were willing to answer the questions.  They were asked to  rate the importance of various factors in their success as well as the various factors that hinder their progress.  They were asked to disclose their avenues of growth and their channels of feedback and most important, the factors that they consider their strengths and weaknesses.  The following companies were interviewed:

 

  • Philips Electrical Industries
  • PARCO
  • ABN Amro Bank
  • Reckitt and Coleman
  • Indus Motors
  • Orix Leasing
  • Orient Mc Cann Erickson
  • Habib Bank A.G. Zurich
  • National Refinery
  • Allied Bank of Pakistan Limited
  • Nagaria Textile Mills

 

The companies do not have anything in common.  Some of them are local, some foreign and still, they belong to diverse industries and  professions.  For instance we have chosen from banks, consumer products companies, electrical products companies, car manufacturers, textile factories, etc deliberately to provide a mix of respondents.  This way we can generalize our results to see the overall differences between strategic planning in foreign subsidiaries versus that in Pakistani companies.

 

Analysis

 

We are analyzing the data collected keeping in mind our research objectives.  We have coded the data and made them into tables for ease of analysis.  From the data we have tried to find out the differences between the local and the foreign firms and also certain commonalities between the two.  We have shown graphs to visually depict our findings.

 

Basis of Analysis

 

Our basis of analysis is the forces specified by Michael Porter and this helped us in developing our questionnaire.  In accordance with the theory of competitive strategy given by Michael Porter, we have analyzed the between industries differences in the following terms:

 

  • Economies of Scale
  • Product Differentiation
  • Capital Requirements
  • Access to Distribution Channels
  • Government Policy
  • Number of competitors and intensity of rivalry
  • Market supply and demand conditions

 

According to Michael Porter a different set of competitive strategies are used for competing within an industry.  The following dimensions are specified by him and covered by us in our questionnaire which captures all strategic options:

 

  • Specialization
  • Brand identification
  • Push versus pull
  • Channel selection
  • Product quality
  • Technological leadership
  • Vertical integration
  • Cost position
  • Service
  • Price policy
  • Relationship with parent company
  • Relationship with government

 

 

Each of these dimensions can be described for a firm at differing levels of detail, however, we added other dimensions to refine the analysis, such as raw material costs, quality of personnel, taxes, Management Information System and Accounting System, etc.

 

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