Leadership
BSB61015 ADVANCED DIPLOMA OF LEADERSHIP AND
MANAGEMENT
Vision
CHANGE
onment
Reinforcing
Behaviours
Accountability
Resource
Management
Organisation
Management
BSBINN601 Lead and Manage Organisational Change
BSBMGT615 Contribute to Organisation Development
ii
This workbook has been designed for use in conjunction with
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sessions.
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Contents
Unit of Competency............................................................................................ v
BSBINN601 Lead and Manage Organisational Change...................................... v
BSBMGT615 Contribute to Organisation Development....................................... v
Grading System................................................................................................. v
Assessment 1................................................................................................... vi
Assessment 2.................................................................................................. vii
Legend............................................................................................................ viii
1. Introduction................................................................................................... 1
Activity 1.1..............................................................................................................2
Activity 1.2..............................................................................................................4
2. Identify Change Requirements/Opportunities............................................. 10
Activity 2.1............................................................................................................11
Activity 2.2............................................................................................................12
Activity 2.3............................................................................................................14
Activity 2.4............................................................................................................15
Activity 2.5............................................................................................................17
Activity 2.6............................................................................................................22
3. Identify Change Requirements/Opportunities (Continued).......................... 27
Activity 3.1............................................................................................................29
Activity 3.2............................................................................................................31
Activity 3.3............................................................................................................34
4. Develop Change Management Strategy....................................................... 39
Activity 4.1............................................................................................................41
Activity 4.2............................................................................................................45
Activity 4.3............................................................................................................50
5. Develop Change Management Strategy (Continued).................................... 57
Activity 5.1............................................................................................................60
Activity 5.2............................................................................................................61
6. Implement Change Management Strategy................................................... 67
Activity 6.1............................................................................................................70
Activity 6.2............................................................................................................76
7. Implement Change Management Strategy (Continued)............................... 81
Activity 7.1............................................................................................................83
Activity 7.2............................................................................................................86
Activity 7.3............................................................................................................88
8. Develop Organisation Development Plan..................................................... 90
Activity 8.1............................................................................................................92
Activity 8.2............................................................................................................97
Activity 8.3..........................................................................................................105
Activity 8.4..........................................................................................................109
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Activity 8.5..........................................................................................................115
Activity 8.6..........................................................................................................122
9. Implement Organisation Development Activities....................................... 123
Activity 9.1..........................................................................................................132
Activity 9.2..........................................................................................................136
Activity 9.3..........................................................................................................143
10. Maintain Organisation Development Program......................................... 144
Activity 10.1........................................................................................................147
Activity 10.2........................................................................................................152
Activity 10.3........................................................................................................158
Activity 10.4........................................................................................................162
Activity 10.5........................................................................................................167
Appendix 1. Glossary..................................................................................... 168
Appendix 2. References................................................................................. 170
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UNIT OF COMPETENCY
BSBINN601 Lead and Manage Organisational
Change
Elements
1. Identify change requirements and opportunities
2. Develop change management strategy
3. Implement change management strategy
BSBMGT615 Contribute to Organisation
Development
Elements
1. Develop organisation development plan
2. Implement organisation development activities
3. Maintain organisation development program
GRADING SYSTEM
High Distinction (HD)
85% and above
Distinction (D)
75-84%
Credit (Cr)
65-74%
Pass (P)
50-64%
Not yet competent (NYC)
Below 50%
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ASSESSMENT 1
Course Name
BSB61015
Advanced Diploma of Leadership and Management
Subject/module
Organisation Management
Assessment method
Part A – Cost-benefit Analysis
Part B – Risk Analysis
Part C – Case Study
Weighting
50%
Units of Competency
BSBINN601
Lead and Manage Organisational Change
BSBMGT615
Contribute to Organisation Development
Instructions
1. Assessments should be completed as per your trainer’s instructions.
2. Assessments must be submitted by the due date to avoid a late
submission penalty.
3. Plagiarism is copying someone else’s work and submitting it as your
own. You must write your answers in your own words and include a
reference list. A mark of zero will be given for any assessment or part of
an assessment that has been plagiarised.
4. You may discuss your assessments with other students, but submitting
identical answers to other students will result in a failing grade. Your
answers must be yours alone.
5. Your trainer will advise whether the assessment should be digitally
uploaded or submitted in hard copy. Assessments that are digitally
uploaded should be saved in pdf format.
6. You must pass both assessments in the subject to pass the subject.
7. All assessments are to be completed in accordance with WHS regulatory
requirements.
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ASSESSMENT 2
Course Name
BSB61015
Advanced Diploma of Leadership and Management
Subject/module
Organisation Management
Assessment method
Part A: Written or Oral Questions
Part B: Written or Oral Questions
Weighting
50%
Units of Competency
BSBINN601
Lead and Manage Organisational Change
BSBMGT615
Contribute to Organisation Development
Instructions
1. Assessments should be completed as per your trainer’s instructions.
2. Assessments must be submitted by the due date to avoid a late
submission penalty.
3. Plagiarism is copying someone else’s work and submitting it as your
own. You must write your answers in your own words and include a
reference list. A mark of zero will be given for any assessment or part of
an assessment that has been plagiarised.
4. You may discuss your assessments with other students, but submitting
identical answers to other students will result in a failing grade. Your
answers must be yours alone.
5. Your trainer will advise whether the assessment should be digitally
uploaded or submitted in hard copy. Assessments that are digitally
uploaded should be saved in pdf format.
6. You must pass both assessments in the subject to pass the subject.
7. All assessments are to be completed in accordance with WHS regulatory
requirements.
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LEGEND
Not all ICONS are used in this workbook
Research/Investigate
This tells you to go and find out some information
Activity/Provide notes
This indicates that you need to take notes and/or complete
an exercise/activity in this workbook
Reference material/manuals
This means you should look to sample of organisations’
policies and procedures or to some other learning material,
resources to complete this exercise/activity.
Think
Take some time to think about the information and record
your own ideas
Talk
Talk to your peers, colleagues – swap ideas.
Reading
Selected extra reading requirements.
You
Sydney Ferries
Tube
Youtube
Selected Youtube requirements.
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1. INTRODUCTION
At the end of this training session, you should be able to:
ff Explain why change is essential
ff Define and describe change management
ff Know and understand the steps in the change management process
Important terms to remember:
ff Change management
ff Change management process
Change is Essential
“It must be considered that there is nothing more difficult to carry out, nor more
doubtful of success, nor more dangerous to handle, than to initiate a new order
of things. For the reformer has enemies in all those who profit by the old order,
and only lukewarm defenders in all those who would profit by the new order, this
lukewarmness arising partly from fear of their adversaries, who have the laws in
their favour; and partly from the incredulity of mankind, who do not truly believe
in anything new until they have had actual experience of it. Thus it arises that on
every opportunity for attacking the reformer, his opponents do so with the zeal of
partisans, the others only defend him half-heartedly, so that between them he runs
great danger.” From his book – “The Prince”
Change can be a natural and an essential part of life. It is a simple concept, yet
deep within the veneer of its simplicity lies the complexity of its introduction, and
consequently, its implementation. Initiating a new order of things is not easy, as
statistics show that 70% of change initiatives in the organisation fail (Cole 2010).
Yet we cannot underestimate its importance.
Charles Darwin once wrote:
“It is not the strongest species that survive, nor the most intelligent, but the ones
most receptive to change.”
Change is therefore essential to every organisation if they are to survive and
thrive in a dynamic business environment where they operate.
As Cole (2010) wrote,
“Organisations must adapt, transform, or die.”
To successfully introduce and manage change, the organisation must have an
effective change management strategy.
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Activity 1.1
Think and list all the changes you have experienced from the last 12 months.
It could be personal and/or a career change. For example, you might have
changed jobs, ended a personal relationship, changed your diet etc.
After you have listed those changes, answer the following questions:
1. Which did you find easy to deal with? Which did you find difficult?
2. How did you respond to the challenge of change?
3. What did you do right? What did you do wrong?
4. If you are to do it all over again, how would you do it differently?
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Definition of Change Management
What is Change Management?
Change management can be defined as ‘the coordination of a structured period
of transition from situation A to situation B in order to achieve lasting change
within an organisation’.1
Looking at the definition of change management above, the introduction and
management of change in the organisation requires a coordinated approach
and a structured methodology which will serve as a guide for the successful
implementation of the required change.
This approach is commonly called the change management process.
1 . (BNET Business Dictionary)
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Activity 1.2
In a group of 2-3 or with a partner discuss
‘What is your personal definition of change management?’ and be prepared
to present your ideas
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The Change Management Process
According to Stone (2008), the five steps of change are:
ff Determining the need for change
ff Determining the obstacles to change
ff Introducing change
ff Implementing change
ff Evaluating change
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Selected Reading 1a
Read the following article to learn more about Change
Management: SDNET. (2003). Six Steps to Change Management.
Retrieved 15 June 2010, from http://www.sdnet.com.au/six-stepsto-change-management-120281524.htm
Six Steps to Change Management
By Change Tech Solutions Inc, TechRepublic on December 2nd, 2003
Change management deals with how changes to the system are managed so
they don’t degrade system performance and availability.
Change management is especially critical in today’s highly decentralised,
network-based environment where users themselves may be applying many
changes. A key cause of high cost of ownership is the application of changes
by those who don’t fully understand their implications across the operating
environment.
In effective change management, all changes should be identified and planned
for prior to implementation. Back-out procedures should be established in case
changes create problems. Then, after changes are applied, they are thoroughly
tested and evaluated. This article describes the process steps for change
management and factors critical to its success.
Step 1: Define Change Management Process and Practices
As you would with other systems management disciplines, you must first craft a
plan for handling changes. This plan should cover:
ff Procedures for handling changes – how changes are requested, how they
are processed and scheduled for implementation, how they are applied, and
what the criteria are for backing out changes that cause problems
ff Roles and responsibilities of the IT support staff – who receives the
change request, who tracks all change requests, who schedules change
implementations, and what each entity is supposed to do
ff Measurements for change management – what will be tracked to monitor
the efficiency of the change management discipline
Tools to be used
ff Type of changes to be handled and how to assign priorities – priority
assignment methodology and escalation guidelines
ff Back-out procedures – Actions to take if applied changes do not perform as
expected or cause problems to other components of the system
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Review Questions
1. Explain why change is essential in the workplace.
2. What is change management?
3. What are the steps in the change management process?
References
ff Cole, K. (2010). Management Theory and Practice. 4 edn. Pearson, Australia.
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Step 2: Receive Change Requests
Receive all requests for changes, ideally through a single change coordinator.
Change requests can be submitted on a change request form that includes the
date and time of the request.
Step 3: Plan for Implementation of Changes
Examine all change requests to determine:
ff Change request prioritisation
ff Resource requirements for implementing the change
ff Impact to the system
ff Back-out procedures
ff Schedule of implementation
Step 4: Implement and Monitor the Changes; Back out Changes if
Necessary
At this stage, apply the change and monitor the results. If the desired outcome is
not achieved, or if other systems or applications are negatively affected, back out
the changes.
Step 5: Evaluate and Report on Changes Implemented
Provide feedback on all changes to the change coordinator, whether they were
successful or not. The change coordinator is responsible for examining trends in
the application of changes, to see if:
ff Change implementation planning was sufficient.
ff Changes to certain resources are more prone to problems.
When a change has been successfully made, it is crucial that the corresponding
system information store be updated to reflect them.
Step 6: Modify Change Management Plan if Necessary
You may need to modify the entire change management process to make it more
effective. Consider reexamining your change management discipline if:
ff Changes are not being applied on time.
ff Not enough changes are being processed.
ff Too many changes are being backed out.
ff Changes are affecting the system availability.
ff Not all changes are being covered.
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Other Process Issues
Other process-related issues are also critical to the success of change
management. Changes are evaluated and tested prior to implementation. It
is practically impossible to predict the outcome of all changes, especially in
a complex, interrelated system architecture. You must carry out a thorough
evaluation of all changes, especially those dealing with critical system
resources. We also highly recommend that you test all changes prior to fullscale deployment. For minimum impact on the system, test with a user not on
the critical path, with test data, during off hours, and on a test system.
All changes, big and small, should be covered. Minor changes can have
major effects on system performance and availability. A simple change in a
shared database’s file name could cause all applications that use it to fail. An
additional software utility installed in the user’s workstation could cause the
user’s system to become unstable. Or a move of a user’s workstation from one
department to another could prevent it from properly accessing the network.
You might occasionally need to bypass certain change management processes,
like emergency changes required to recover from a fault condition. But, even
in these cases, document the change thoroughly, and have it approved after
implementation, to ensure that system records are updated.
Document all changes. Perhaps the hardest part of change management is
documenting all actions performed before, during, and after the change has
been applied. Technical people often fail to document changes, and we have
seen many problems caused because not everyone knew about earlier changes.
Many IT organisations are familiar with the Monday Morning Crisis—that most
problems occur on Monday mornings because someone implemented a change
over the weekend without following correct change management procedures.
Communicate the Benefit
Many people mistakenly view change management as more IT red tape. They fail
to realise that good change management acts like a traffic light that regulates
the smooth flow of changes and does not stop all change from happening. With
a well-planned and well-deployed process, you can ensure that changes do not
negatively affect system performance as a whole.2
2. Harris Kern’s Enterprise Computing Institute and Change Technology Solutions, Inc. represent the
industry’s leading minds behind the design and implementation of world-class IT organisations.
TechRepublic is the online community and information resource for all IT professionals, from support
staff to executives. We offer in-depth technical articles written for IT professionals by IT professionals.
In addition to articles on everything from Windows to e-mail to firewalls, we offer IT industry analysis,
downloads, management tips, discussion forums, and e-newsletters. ©2003 TechRepublic, Inc.
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2. IDENTIFY CHANGE REQUIREMENTS/
OPPORTUNITIES
At the end of this training session, you should be able to:
ff Identify strategic change needs through an analysis of strategic plans
ff Review existing policies and practices against strategic objectives to identify
change requirements
Monitor trends in the external environment to identify events or trends which
impact on the achievement of organisation’s objectives
ff Important terms to remember:
ff Strategic change needs
ff Strategic planning
ff Strategic plan
ff PEST analysis
Identify Strategic Change Needs through an Analysis of Strategic
Plans
Strategic change needs are actions arising from strategic planning activities
to bring about major change in the organisation (they may relate to people,
processes, technology or structure). What is strategic planning?
Strategic planning can be defined as ‘a systematic process of envisioning a
desired future, and translating this vision into broadly defined goals or objectives
and a sequence of steps to achieve them. The decisions made in the strategic
planning process will have a major impact in the organisation’s destiny for years
in the future. It could result in substantially different organisational structure,
competitive position, or strategic partners of the organisation.
Strategic change needs can be identified through an analysis of strategic plans.
A strategic plan is a set of statements made up of specific strategies aimed at
achieving set targets. The strategic planning process results in the production of
a strategic plan.
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Activity 2.1
In a group of 2-3 or with a partner discuss the following scenario and be
prepared to present your ideas
You are the CEO of Lemonade King, a lemonade stand business located in
front of a primary school complex. The school has three gates, the main, side
and the back entrance gates. Your stand is positioned right in front of the
main entrance gate. You recently obtained funding from an investor that will
enable you to open stands in both the side and back entrance gates. What
strategic change need can you identify to successfully implement your plan in
this scenario?
Your lemonade stand business has grown rapidly and you find yourself
overwhelmed with work to maintain the smooth running of your business.
You are so busy taking care of the day-to-day operations that you are
neglecting the strategic aspects of your business. What strategic change
need can you identify to successfully implement your plan in this scenario?
Your business has a seasonal demand as lemonade is only popular during
summer months. You realised that if you expand the product range to include
hot soup, you should be able to resume business even during the winter
months. The only challenge you face is the absence of cooking utensils
and stoves required to cook soups, including the lack of expertise in soup
preparation. You heard that a soup business is currently operating near a
busy playground on an adjacent street. What strategic change need can you
identify to successfully implement your plan in this scenario?
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Activity 2.2
In a group of 2-3 people, analyse the following excerpts from Healthy Salad’s
Strategic Plan below:
1. Healthy Salad is a successful, multinational business with various stores and
franchises conveniently located in street corners, malls and arcades of major
cities in Australia and overseas.
2. The founder started the first store with $200,000 and raised $1.5 million to
realise a franchising opportunity.
3. The main target market of Healthy Salad are busy city workers looking for a
quick healthy alternative to fast food.
4. Strong, powerful and fun brand.
5. Markets salads as main meals with a distinct Asian flavour.
6. Does not spend any money marketing, relies on word-of-mouth.
7. $25 million in turnover for the year.
8. More than 30 franchises.
9. 25 direct employees (the founder’s mother works as the office manager
although she does not have much management experience, she always
voices her ideas on which direction the company should take), may need to
hire more staff especially in accounts.
10. May need partners from overseas countries to establish operations there.
11. Targeting to establish 180 stores in Australia by 2012.
12. Current challenges include finding franchisees with a suitable cultural fit
with the business, improve the supply chain and create win-win situations
with suppliers, cultivating long-term relationships with customers by
providing strong value proposition to them.
Recently, a competitor installed a franchise management intranet, an online
system which franchisees can access to manage their business and analyse
trends. HealthySalad does not have that level of technology sophistication.
After analysing the strategic plan, identify strategic change needs that may
relate to people, processes, technology or structure of HealthySalad.
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Review Existing Policies and Practices against Strategic Objectives to Identify
Change Requirements
A policy is designed to influence decisions and actions that the business makes.
It is usually a written document that outlines a required process or procedure
within the business. Good policies are important because they demonstrate
that the business is being operated in an efficient manner, informs everyone
as to what approach to take when dealing with certain business issues, and
ensure that there will be uniformity and consistency in decisions and in how the
business operates.
Policies are established to achieve some purpose which reflects a set of beliefs
or values on the issue concerned. For example, the business might formulate a
professional development policy which expresses the company commitment to
staff continuous improvement.
Existing policies and practices may provide insights as to what changes are
required in the business to achieve their strategic objectives.
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Activity 2.3
In a group of 2-3 people or with a partner discuss ‘What is your personal
definition of change management?’ and be prepared to present your ideas
ff Fair Trade is an organised social movement and market-based approach
that aims to help producers in developing countries obtain better trading
conditions and promote sustainability.
ff You wanted your lemonade business to build a reputation as an ethical
company.
ff You believe that having ethical credentials will give your business strategic
advantage against your competitors.
ff You currently do not have a fair trade policy and only deals with suppliers
who can trade with the cheapest price.
ff What changes are required in the business in order for you to achieve your
strategic objectives?
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Activity 2.4
In a group of 2-3 people, analyse and discuss the following scenario and be
prepared to present your ideas
Healthy Salad does not have a franchise management intranet which will
allow their franchisees to go online, make orders, and easily see and analyse
trends.
1. Is this a strategic issue for the business?
2. How will this affect their strategic objective of improving the supply chain
and create win-win situations with their suppliers?
3. What changes are required in order for the business to achieve their
strategic objective?
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Monitor trends in the external environment to identify events or
trends which impact on the achievement of the organisation’s
objectives
What is PEST Analysis?
PEST stands for political, economic, social and technological analysis. PEST
analysis is a scan of the macro environment in which the firm operates
(QuickMBA 2010). It looks at the internal and external factors that could affect
the strategic development of a business.
For example, political factors include government regulations and legal issues
and define both formal and informal rules under which the firm must operate.
Economic factors affect the purchasing power of potential customers and
the firm’s cost of capital. Social factors include the demographic and cultural
aspects of the external macro environment. And finally, technological factors
can lower barriers to entry, reduce minimum efficient production levels, and
influence outsourcing decisions (QuickMBA 2010).
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Activity 2.5
With the same group, perform the following task:
Your firm is trying to enter the Malaysian market. Conduct a PEST analysis
on Malaysia using the data below:
PEST Analysis – Malaysia
Source: Wiki commons
People and Society:
MALAYSIA
Nationality:
Noun: Malaysian(s) adjective: Malaysian
Ethnic groups:
Malay 50.1%, Chinese 22.6%, indigenous 11.8%, Indian 6.7%, other 0.7%, noncitizens 8.2% (2010 est.)
Languages:
Bahasa Malaysia (official), English, Chinese (Cantonese, Mandarin, Hokkien,
Hakka, Hainan, Foochow), Tamil, Telugu, Malayalam, Panjabi,Thai
Note: in East Malaysia there are several indigenous languages; most widely
spoken are lban and Kadazan
Religions:
Muslim (official) 61.3%, Buddhist 19.8%, Christian 9.2%, Hindu 6.3%,
Confucianism, Taoism, other traditional Chinese religions 1.3%, other 0.4%,
none 0.8%, unspecified 1% (2010 est.)
Population:
30,073,353 (July 2014 est.)
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Government Type: Constitutional Monarchy
Note: nominally headed by paramount ruler (commonly referred to as the king)
and a bicameral Parliament consisting of a nonelected upper house and an
elected lower house; all Peninsular Malaysian states have hereditary rulers
(commonly referred to as sultans) except Melaka (Malacca) and Pulau Pinang
(Penang); those two states along with Sabah and Sarawak in East Malaysia have
governors appointed by government; powers of state governments are limited
by federal constitution; under terms of federation, Sabah and Sarawak retain
certain constitutional prerogatives (e.g., right to maintain their own immigration
controls)
Capital:
Name: Kuala Lumpur; note – Putrajaya is referred to as an administrative center
not the capital; Parliament meets in Kuala Lumpur
Legal system:
Nixed legal system of English common law, Islamic law, and customary law;
judicial review of legislative acts in the Supreme Court at request of supreme
head of the federation
Suffrage:
21 years of age; universal
Economy – overview:
Malaysia, a middle-income country, has transformed itself since the 1970s
from a producer of raw materials into an emerging multi-sector economy.
Under current Prime Minister NAJ IB, Malaysia is attempting to achieve highincome status by 2020 and to move farther up the value-added production
chain by attracting investments in Islamic finance, high technology industries,
biotechnology, and services. NAJIB’s Economic Transformation Program (ETP)
is a series of projects and policy measures intended to accelerate the country’s
economic growth. The government has also taken steps to liberalize some
services subsectors. The NAJ IB administration also is continuing efforts to
boost domestic demand and reduce the economy’s dependence on exports.
Nevertheless, exports – particularly of electronics, oil and gas, palm oil and
rubber – remain a significant driver of the economy. As an oil and gas exporter,
Malaysia has profited from higher world energy prices, although the rising cost
of domestic gasoline and diesel fuel, combined with sustained budget deficits,
has forced Kuala Lumpur to begin to address fiscal shortfalls, through initial
reductions in energy and sugar subsidies and the announcement of the 2015
implementation of a 6% goods and services tax. The government is also trying
to lessen its dependence on state oil producer Petronas. The oil and gas sector
supplies about 32% of government revenue in 2013. Bank Negara Malaysia
(central bank) maintains healthy foreign exchange reserves, and a welldeveloped regulatory regime has limited Malaysia’s exposure to riskier financial
instruments and the global.
Financial crisis. Nevertheless, Malaysia could be vulnerable to a fall in
commodity prices or a general slowdown in global economic activity because
exports are a major component of GDP. In order to attract increased investment,
NAJ IB earlier raised possible revisions to the special economic and social
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preferences accorded to ethnic Malays under the New Economic Policy of 1970,
but retreated in 2013 after he encountered significant opposition from Malay
nationalists and other vested interests. In September.
2013 NAJ IB launched the new Bumiputra Economic Empowerment Program
(BEEP). policies that favor and advance the economic condition of ethnic Malays.
Agriculture – products:
Peninsular Malaysia – palm oil, rubber, cocoa, rice; Sabah – palm oil,
subsistence crops; rubber, timber; Sarawak – palm oil, rubber, timber; pepper
Industries:
Peninsular Malaysia – rubber and oil palm processing and manufacturing,
petroleum and natural gas, light manufacturing, pharmaceuticals, medical
technology, electronics and semi-conductors, timber processing; Sabah
– logging, petroleum and natural gas production; Sarawak – agriculture
processing, petroleum and natural gas production, logging
Labor force:
13.19 million (2013 est.)
country comparison to the world: il
Unemployment rate:
3.1% (2013 est.)
Literacy:
Definition: age 15 and over can read and write
Total population: 93.1%
Male: 95.4%
Female: 90.7% (2010 est.)
Exports – commodities:
semiconductors and electronic equipment, palm oil, petroleum and liquefied
natural gas, wood and wood products, palm oil, rubber, textiles, chemicals, solar
panels
Exports – partners:
Singapore 13.6%, China 12.6%, Japan 11.8%, US 8.7%, Thailand 5.4%, Hong
Kong 4.3%, India 4.2%, Australia 4.1% (2012)
Imports:
$192.9 billion (2013 est.)
Country comparison to the world: 27
$186.9 billion (2012 est.)
Imports – commodities:
Electronics, machinery, petroleum products, plastics, vehicles, iron and steel
products, chemicals
Imports – partners:
China 15.1%, Singapore 13.3%, Japan 10.3%, US 8.1%, Thailand 6%, Indonesia
5.1%, South Korea 4. 1% (2012)
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Exchange rates:
Ringgits (MYR) per US dollar –
3.174 (2013 est.)
3.09 (2012 est.)
3.22 (2010 est.)
3.52 (2009)
3.33 (2008)
Electricity – from fossil fuels:
91.7% of total installed capacity (2010 est.) country comparison to the world: 73
Electricity – from nuclear fuels:
0% of total installed capacity (2010 est.) country comparison to the world: 145
Electricity – from hydroelectric plants:
8.3% of total installed capacity (2010 est.) country comparison to the world: ill
Electricity – from other renewable sources:
0% of total installed capacity (2010 est.) country comparison to the world: 205
Carbon dioxide emissions from consumption of energy:
191.4 million Mt (2011 est.)
Communications – main lines In use:
4.589 million (2012)
Country comparison to the world: 34
Telephones – mobile cellular:
41.325 million (2012)
Country comparison to the world: 30
Telephone system:
General assessment: modern system featuring good intercity service on
Peninsular Malaysia provided mainly by microwave radio relay and an adequate
intercity microwave radio relay network between Sabah and Sarawak via Brunei;
international service excellent
Domestic: domestic satellite system with 2 earth stations; combined fixed-line
and mobile-cellular tele density roughly 140 per 100 persons
international: country coda – 60; landing point for several major international
submarine cable networks that provide connectivity to Asia, Middle East, and
Europe; satellite earth stations – 2 Intelsat (1 Indian Ocean, 1 Pacific Ocean)
(2011)
Broadcast media:
state-owned TV broadcaster operates 2 TV networks with relays throughout the
country, and the leading private commercial media group operates 4 TV stations
with numerous relays throughout the country; satellite TV subscription service is
available; stateowned radio broadcaster operates multiple national networks as
well as regional and local stations; many private commercial radio broadcasters
and some subscription satellite radio services are available; about 55 radio
stations overall (2012)
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PEST Analysis
Malaysia
Political Factors
e.g., Parliament and hereditary rulers
Economic Factors
e.g., High government spending
Socio-cultural Factors
e.g., Variety of religions
Economic Factors
e.g., Variety of TV and radio stations
Conclusions:
(Source: MarketingTeacher. (2010). PEST Analysis-Exercise. Retrieved 21 May 2010,
from http://www.marketingteacher.com/exercise-pest-analysis/)
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Activity 2.6
Watch the YouTube video “Problem Solving Techniques #6: PEST Analysis”
http://www.youtube.com/watch?v=B7drEvHo7vA&feature=PlayList&p=D
EEFBED6E72AEA31&playnext_from=PL&playnext=1&index=20
Review Questions
1.
2.
3.
4.
What is strategic planning?
What is a strategic plan?
What are strategic change needs?
What is PEST analysis?
References
ff QuickMBA, (2010). PEST analysis. Retrieved 21 May 2010, from
http://www.quickmba.com/strategy/pest/
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Selected Reading 2a
Institute of Community Directors. (n.d). Strategic Planning
Overview. Retrieved 13 November 2016, from
https://www.communitydirectors.com.au/icda/
tools/?articleId=1368
Strategic Planning: An Introduction
Why Develop a Strategic Plan?
Every day there seem to be more people in need. There are groups who work to
help the poor, the disabled, those who suffer deprivation, the victims of violence
or disaster and then there are those who work to build and, in some cases,
change community.
All Appeal to the Public for Support
They all seem worthy, “good causes” but with so many choices and limited
resources, people are asking probing questions such as, “Is this organisation
making a difference, achieving results?” “In this competitive environment, is it
worth taking time out of my increasingly hectic schedule to personally invest in
this group? Is there a demonstrated social return?”
Community organisations requesting community support are being increasingly
pressured to clearly demonstrate their capacity to use resources responsibly
and strategically. Just as importantly, they need to give clear indications of their
results and how they have changed the lives of their target group.
Public Accountability
The strategic planning process is a way for organisations to ensure they are
accountable and that their processes transparent. It enables organisations
to think through and document what they are doing, for whom and why they
are doing it. In mature organisations, the process encourages examination of
established directions and strategies for contemporary relevance and results.
In the past, this used to be called “long-range planning”. The term “strategic
planning” is now used to express the analytic, comprehensive, thoughtful and
tactical elements of this type of planning.
During the process difficult questions are encouraged and discussed:
ff Do we need to change our mission?
ff Has our target community shifted its focus or needs?
ff Should we abandon much loved programs that have outlived their usefulness
and concentrate resources elsewhere?
ff Is there enough capacity and commitment within our present staff and
management team to achieve our goals?
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Put simply, a strategic plan is used for one purpose only – to help an
organisation do a better job.
A successful strategic planning process will be genuinely inclusive, involving not
just the Board but all of the organisation’s stakeholders – paid and volunteer
staff, clients, funders, and the community. It aims to focus an organisation’s
vision and priorities in response to a changing environment and to ensure that
members of the organisation are working toward the same goals.
The strategic plan documents for the organisation and its clients and
supporters:
1. where they are going;
2. what they need to do to get there;
3. how they are progressing along the way; and
4. that a full account of the results achieved will be delivered at the appropriate
time.
The Process
There is actually no perfect formula for planning but most organisations typically
work through the following common set of activities or steps in the process
Different organisations have different names for these major activities and might
even conduct them in a different order.
1. Environmental Scan
This activity reviews the organisation’s current relationship to the broader
political, social and economic environments. New “hot spots” are identified and
analysed. For example, a new competitor, a change of government policy or a
shift in demographics may all impact on the organisation.
At its conclusion, planners may then look at the way the organisation is placed to
meet the challenges described in the environmental scan.
Commonly this is through a SWOT analysis, an activity that identifies the
organisation’s current strengths, weaknesses, opportunities and threats.
2. Plotting Direction
After carefully investigating the territory in the environmental scan, the
organisation must decide what it needs to do to respond to the major issues and
opportunities it faces. It needs to make and commit to a set of strategic choices
to go forward.
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The Mission Statement
The organisation must identify or review the reasons why it exists. This is
documented in the organisation’s mission statement, which typically contains
the basic, guiding principles that provide guidance and inspiration to the Board
and staff.
The mission statement is a succinct description of the organisation’s basic
purpose, along with the activities or business it undertakes to achieve its
purpose, and the basic values that the organisation holds in common and
endeavours to put into practice.
A mission statement for a children’s sporting association might be;
The Bluehill’s Tennis Camp seeks to enhance the lives of all children in our
municipality [purpose] by providing access to free or low cost training and facilities
[business] supervised by staff and volunteers who are committed to the pursuit of
excellence and equality of opportunity [values].
Undertaking a strategic planning process might also present the opportunity
for a long-standing, well-respected organisation to question the rationale for its
very purpose. For example an organisation that solely exists to support newly
arrived refugees in a particular location might decide to close or significantly
review its mission when the community’s migrant reception centre moves to
another suburb.
Setting the Goals (sometimes called “objectives” or “outcome
statements”)
This is the activity that assists the organisation to choose specific priorities – to
be strategic about the ends that need to be accomplished for the organisation to
achieve its mission.
Goals or objectives should be designed and worded as much as possible to be
specific and measurable, acceptable to those working to achieve the goals,
realistic, timely, extending the capabilities and rewarding for those working to
achieve the goals (an acronym for these criteria is “SMARTER”).
They can be seen as milestones to achieving the organisation’s overall purpose.
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3. Action Planning
Activities
These are the strategies or activities that have been prioritised and selected to
help the organisation achieve its goals. They clearly reflect and respond to the
findings of the research documented in the environmental scan, with a number
of broad activities matched to each strategic goal.
Action planning also includes specifying responsibilities and timelines for each
objective, or who needs to do what and by when.
It is also common for organisations to develop separate operational plans that
include staff work plans for the coming year. Larger organisations will develop
plans for each major function, division, department, etc. and call these work
plans.
Evaluation
Your planning process should also include methods to honestly monitor and
evaluate the plan and its results, including documenting how the organisation
will know who has done what, to whom and by when.
Budgets
Usually budgets are included in the strategic and annual plan, and with work
plans. Budgets specify the money needed to implement the annual plan.
Budgets also describe the main items of expenditure, for example, for human
resources, equipment, materials.
Strategic Planning – a Process not a Monument
The important thing to remember is that an organisation’s strategic plan is not a
monument, or an end in itself, but rather a means of achieving its purpose. Many
management experts have emphasised the need for the people implementing
a strategic plan to have enough flexibility and authority to be creative and
responsive to new developments. In reality this will normally mean changing
the activities that have previously been selected to achieve the organisation’s
mission in the light of new opportunities or challenges.
The process is helpful only if it assists organisations to honestly test old
assumptions in the light of new information about the present, and anticipate the
environment in which the organisation will be working in the future.
Finally, the process is about building commitment and embracing public
accountability through engaging key stakeholders in the regular process of
identifying priorities and evaluating strategies in the pursuit of changing people’s
lives for the better.
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3. IDENTIFY CHANGE REQUIREMENTS/
OPPORTUNITIES (Continued)
At the end of this training session, you should be able to:
ff Identify major operational change requirements due to performance gaps,
business opportunities or threats, or management decisions
ff Review and prioritise change requirements/opportunities with relevant
managers
ff Consult specialists and experts to assist in the identification of major change
requirements/opportunities
Important terms to remember
ff Gap analysis
ff SWOT analysis
Identify Major Operational Change Requirements Due to
Performance Gaps, Business Opportunities or Threats, or
Management Decisions
Major operational change requirements mean changes which need to be made
to the organisation to maintain or improve performance and/or competitive
position.
Major operational change requirements are due to business opportunities and
threats, management decisions and/or performance gaps identified as a result
of gap analysis.
Gap Analysis
Also known as needs assessment, gap analysis is a technique for determining
the steps to be taken in moving from a current state to a desired futurestate (BusinessDictionary.com). Gap analysis utilises comparative analysis
techniques to identify the differences that exist between the current state and
those required of the desired state. This will then help focus improvements on
the worst performing areas in order to raise the overall competitiveness of the
company.
For example, a company might realise that the gap from achieving a desired
future sales target is the lack of innovation in product development due to
insufficient R&D funding. As a consequence, the company might decide to
increase their R&D budget to come up with innovative products which will
help achieve their strategic goals. Strengths, Weaknesses, Opportunities, and
Threats (SWOT) analysis is a form of gap analysis used by management to gauge
company operations.
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SWOT Analysis
An important part of strategic planning is the understanding of the firm’s
internal and external environment. This can be done through an activity called
environmental scanning. Environmental scanning looks at the internal and
external forces that the firm needs to contend with during its existence
Using tools such as SWOT analysis (Strengths, Weaknesses, Opportunities and
Threats), we can identify the internal and external factors that may have an
immediate and/or long-term effect on the company.
Review and prioritise change requirements/opportunities with relevant
managers
After performing gap analysis and SWOT, change requirements and
opportunities are reviewed and prioritised with relevant managers.
Relevant managers are managers who:
ff are affected by the change,
ff are participating in the change project, and
hold a leadership position in the organisation.
Consult Specialists and Experts to Assist in the Identification of Major Change
Requirements/Opportunities
The help of specialists and experts may also be sought to assist in the
identification of major change requirements/opportunities. For example,
strategic change consultants may provide assistance in improving organisational
performance, implementing the right change strategies for the organisation and
recommending strategies for cultural change.
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Activity 3.1
Read the following scenario and discuss with your partner
Your lemonade stand is the oldest running business of its kind and has created an iconic
image in the mind of the target market. It is a third generation family business and has
built a loyal following of customers throughout the years.
The business is strong financially from a positive cash flow, profitability and strong
funding from investors. There is a huge demand for lemonade especially during the
summer months. The negotiated joint venture with Soup Kitchen, a soup company is a
good opportunity for both companies to bring in more sales during the winter season.
However, bringing in two cultures and joining operations could be a real challenge
for both companies once the joint venture materialises. A new branch that opened
in front of the sports ground is also seen to provide extra revenue during weekends.
Your products’ organic and fair trade labels are getting a favourable response from the
consumers. You are recently featured and recommended by an influential food guide
magazine due to your commitment to sustainability and ethical marketing.
However, the lack of R&D initiative for the company was seen as a strategic opportunity
by your competitors. Recently, a new entrant, Cool Drinks, began marketing flavoured
lemonades with different colours and flavours in attractive packaging and containers.
Cool Drinks also offers free toys for every drink purchased at an affordable price. Cool
Drinks is becoming very popular among the younger demographics and is slowly
becoming a strong competitor in the market.
Identify the strengths, weaknesses, opportunities and threats of Lemonade King.
1. What are the worst performing areas in your business?
2. You are increasing funding on research and development (R&D) activities
in order to come up with new and innovative products. Who are the relevant
managers which may be involved in the change project?
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3. When might you need the services of a strategic consultant? Explain.
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Activity 3.2
In a group of 2-3 or people with a partner perform a SWOT analysis on the
following case and be prepared to present your ideas. (You might like to use
the template provided on the next page)
SWOT Analysis
Highly Brill Leisure Centre
Highly Brill Leisure Centre has hired you to help them with their marketing
decision making.
Perform a SWOT analysis on Highly Brill Leisure Centre, based upon the
following issues:
ff The Centre is located within a two-minute walk of the main bus station, and is
a fifteen-minute ride away from the local railway station.
ff There is a competition standard swimming pool; although it has no wave
machines or whirlpool equipment as do competing local facilities.
ff It is located next to one of the largest shopping centres in Britain.
ff It is one of the oldest centres in the area and needs some cosmetic attention.
ff Due to an increase in disposable income over the last six years, local
residents have more money to spend on leisure activities.
ff There has been a substantial decrease in the birth rate over the last ten years.
ff In general people are living longer and there are more local residents aged
over fifty-five now than ever before.
ff After a heated argument with the manager of a competing leisure centre, the
leader of a respected local scuba club is looking for a new venue.
ff The local authority is considering privatising all local leisure centres by the
year 2000.
ff Press releases have just been issued to confirm that Highly Brill Leisure
Centre is the first centre in the area to be awarded quality assurance standard
BS EN ISO 9002.
ff A private joke between staff states that if you want a day-off from work then
you should order a curry from the Centre’s canteen, which has never made a
profit.
ff The Centre has been offered the latest sporting craze.
ff Highly Brill Leisure Centre has received a grant to fit special ramps and
changing rooms to accommodate the local disabled.
ff It is widely acknowledged that Highly Brill has the best-trained and most
respected staff of all of the centres in the locality3
After performing the SWOT, create a list of priorities for all change requirements
and opportunities identified.
3. Source: Marketing Teacher. (2010). SWOT Analysis-Exercise. Retrieved 14 June 2010, from http://www.
marketingteacher.com/exercise-swot-analysis/
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SWOT Analysis
Highly Brill Leisure Centre
Strengths
Weaknesses
Opportunities
Threats
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Selected Reading 3a
Read the following article to learn more about SWOT Analysis:
Marketingteacher.com. SWOT Analysis. Retrieved 11 January
2017, from http://www.marketingteacher.com/swot-analysis/
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3.3
You Activity
Watch the YouTube video “SWOT Analysis: How to perform one for
Sydney Ferries
Tube
your organisation”
http://www.youtube.com/watch?v=GNXYI10Po6A&feature=related
Review Questions
1. What is gap analysis?
2. What is SWOT analysis?
3. How can outside expertise help in identifying change requirements and
opportunities? Give an example.
References
ff Volery & Schaper. (2007). Entrepreneurship and Small Business. 2nd Edn.
Brisbane: John Wiley & Sons
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Selected Reading 3b
Read the following article to learn more about SWOT Analysis:
Thompson, AA, Strickland, AJ, & Gamble, J 2008, Crafting and
executing strategy : the quest for competitive advantage : concepts
and cases / Arthur A. Thompson, Jr., A.J. Strickland III, John E.
Gamble, Boston : McGraw-Hill/Irwin, c2008. P.107-110
What to Look for in Identifying a Company’s Strengths,
Weaknesses, Opportunities, and Threats
Potential Resource Strength and
Competitive Capabilities
Potential Resource Weaknesses and
Competitive Deficiencies
ff
ff
ff
ff
ff No clear strategic direction
ff Resources that are not well matched to
industry key success factors
ff No well-developed or proven core
competencies
ff A weak balance sheet; burdened with too
much debt
ff Higher overall unit costs relative to key
competitors
ff Weak or unproven product innovation
capabilities
ff A product/service with ho-hum attributes
or features inferior to those of rivals
ff Too narrow a product line relative to
rivals
ff Weak brand image or reputation
ff Weaker dealer network than key
rivals and/or lack of adequate global
distribution capability
ff Behind on product quality, R&D, and/or
technological know-how
ff In the wrong strategic group
ff Losing market share because ...
ff Lack _of management depth
ff Inferior intellectual capital relative to
leading rivals
ff Subpar profitability because ...
ff Plagued with internal operating problems
or obsolete facilities
ff Behind rivals in e-commerce capabilities
ff Short on financial resources to grow the
business and pursue promising initiatives
ff Too much underutilized plant capacity
ff
ff
ff
ff
ff
ff
ff
ff
ff
ff
ff
ff
ff
ff
ff
ff
ff
A powerful strategy
Core competencies in __
A distinctive competence in __
A product that is strongly differentiated
from those of rivals
Competencies and capabilities that are
well matched to industry key success
factors
A strong financial condition; ample
financial resources to grow the business
Strong brand-name image/company
reputation
An attractive customer base
Economy of scale and/or learning/
experience curve advantages over rivals
Proprietary technology/superior
technological skills/important patents
Superior intellectual capital relative to
key rivals
Cost advantages over rivals
Strong advertising and promotion
Product innovation capabilities
Proven capabilities in improving
production processes
Good supply chain management
capabilities
Good customer service capabilities
Better product quality relative to rivals
Wide geographic coverage and/or strong
global distribution capability
Alliances/joint ventures with other
firms that provide access to valuable
technology,
competencies, and/or attractive
geographic markets
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Potential Market Opportunities
Potential External Threats to a Potential
Market Opportunities Company’s Future
Prospects
ff Openings to win market share from rivals
ff Sharply rising buyer demand for the
industry’s product
ff Serving additional customer groups or
market segments
ff Expanding into new geographic markets
ff Expanding the company’s product line to
meet a broader range of customer needs
ff Using existing company skills or
technological know-how to enter new
product lines or new businesses
ff Online sales
ff Integrating forward or backward
ff Falling trade barriers in attractive foreign
markets
ff Acquiring rival firms or companies with
attractive technological expertise or
capabilities
ff Entering into alliances or joint ventures
to expand the firm’s market coverage or
boost its competitive capability
ff Openings to exploit emerging new
technologies
ff Increasing intensity of competition
among industry rivals-may squeeze profit
margins
ff Slowdowns in market growth
ff Likely entry of potent new competitors
ff Loss of sales to substitute products
ff Growing bargaining power of customers
or suppliers
ff A shift in buyer needs and tastes away
from the industry’s product
ff Adverse demographic changes that
threaten to curtail demand for the
industry’s product
ff Vulnerability to unfavorable industry
driving forces
ff Restrictive trade policies on the part of
foreign governments
ff Costly new regulatory requirements
What Do the SWOT Listings Reveal?
SWOT analysis involves more than making four lists. The two most important
parts of SWOT analysis are drawing conclusions from the SWOT listings about
the company’s overall situation, and translating these conclusions into strategic
actions to better match the company’s strategy to its resource strengths and
market opportunities, to correct the important weaknesses, and to defend
against external threats. Figure 4.2 shows the three steps of SWOT analysis.
Simply making lists of a company’s strengths, weaknesses, opportunities,
and threats is not enough; the payoff from SWOT analysis comes from the
conclusions about a company’s situation and the implications for strategy
improvement that flow from the four lists.
Just what story the SWOT listings tell about the company’s overall situation is
often revealed in the answers to the following sets of questions:
ff Does the company have an attractive set of resource strengths? Does it
have any strong core competencies or a distinctive competence? Are the
company’s strengths and capabilities well matched to the industry key
success factors? Do they add adequate power to the company’s strategy,
or are more or different strengths needed? Will the company’s current
strengths and capabilities matter in the future?
ff How serious are the company’s weaknesses and competitive deficiencies?
Are they mostly inconsequential and readily correctable, or could one
or more prove fatal if not remedied soon? Are some of the company’s
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weaknesses in areas that relate to the industry’s key success factors?
Are there any weaknesses that if uncorrected, would keep the company
from pursuing an otherwise attractive opportunity? Does the company
have important resource gaps that need to be filled for it to move up in the
industry rankings and/or boost its profitability?
ff Do the company’s resource strengths and competitive capabilities (its
competitive assets) outweigh its resource weaknesses and competitive
deficiencies (its competitive liabilities) by an attractive margin?
ff Does the company have attractive mar~et opportunities that are well suited
to its resource strengths and competitive capabilities? Does the company
lack the resources and capabilities to pursue any of the most attractive
opportunities?
ff Are the threats alarming, or are they something the company appears able to
deal with and defend against?
Figure 4.2: The Three Steps of SWOT Analysis: Identify, Draw Conclusions,
Translate into Strategic Action
What Can Be Gleaned
from the SWOT Listings
Identify company
resource strengths and
competitive capabilities
Identify company
resource weaknesses and
competitive deficiencies
Identify the company’s
market opportunity
Identify the company’s
market opportunity
Conclusions concerning the company’s
overall business situation:
ff Where on the scale from “alarmingly
weak” to”exceptionally strong” does
the attractiveness of the company’s
situation rank?
ff What are the attractive and
unattractive aspects of the
company’s situation?
Actions for improving company strategy:
ff Use company strengths and
capabilities as cornerstones for
strategy.
ff Pursue those market opportunities
best suited to company strengths
and capabilities.
ff Correct weaknesses and deficiencies
that impair pursuit of important
market opportunities or heighten
vulnerability to external threats.
ff Use company strengths to lessen the
impact of important external threats.
ff All things considered, how strong is the company’s overall situation? Where
on a scale of 1 to 10 (1 being alarmingly weak and 10 exceptionally strong)
should the firm’s position and overall situation be ranked? What aspects of
the company’ situation are particularly attractive? What aspects are of the
most concern?
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The final piece of SWOT analysis is to translate the diagnosis of the company’s
situation into actions for improving the company’s strategy and business
prospects. The following questions point to implications the SWOT listings have
for strategic action:
ff Which competitive capabilities need to be strengthened immediately, so
as to add greater power to the company’ s strategy and boost sales and
profitability? Do new types of competitive capabilities need to be put in place
to help the company better respond to emerging industry and competitive
condition? Which resources and capabilities need to be given greater
emphasis, and which merit less emphasis? Should the company emphasize
leveraging its existing resource strengths and capabilities, or does it need to
create new resource strengths and capabilities?
ff What actions should be taken to reduce the company’s competitive
liabilities? Which weaknesses or competitive deficiencies are in urgent need
of correction?
ff Which market opportunities should be top priority in future strategic
initiatives (because they are good fits with the company’s resource strengths
and competitive capabilities, present attractive growth and profit prospects
, and/or offer the best potential for securing competitive advantage)? Which
opportunities should be ignored, at least for the time being (because they
offer less growth potential or are not suited to the company’s resources and
capabilities)?
ff What should the company be doing to guard against the threats to its wellbeing?
A company’s resource strengths should generally form the cornerstones of
strategy because they represent the company’s best chance for market success.
As a rule, strategies that place heavy demands on areas where the company is
weakest or has unproven ability are suspect and should be avoided. If a company
doesn’t have the resources and competitive capabilities around which to craft
an attractive strategy, managers need to take decisive remedial action either
to upgrade existing organisational resources and capabilities and add others
as needed or to acquire them through partnerships or strategic alliances with
firms possessing the needed expertise. Plainly, managers have to look toward
correcting competitive weaknesses that make the company vulnerable, hold
down profitability, or disqualify it from pursuing an attractive opportunity.
At the same time, sound strategy making requires sifting through the
available market opportunities and aiming strategy at capturing those that
are most attractive and suited to the company’s circumstances. Rarely does a
company have the resource depth to pursue all available market opportunities
simultaneously without spreading itself too thin. How much attention to devote
to defending against external threats to the company’s market position and
future performance hinges on how vulnerable the company is, whether there
are attractive defensive moves that can be taken to lessen their impact, and
whether the costs of undertaking such moves represent the best use of company
resources.
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4. DEVELOP CHANGE MANAGEMENT
STRATEGY
At the end of this training session, you should be able to:
ff Undertake cost benefit analysis for high priority change requirements/
opportunities
ff Undertake risk analysis, identify barriers to change, and agree and document
mitigation strategies
Important terms to remember
ff Feasibility study
ff Cost benefit analysis
ff Return on Investment (ROI)
ff Payback period
ff Risk analysis
ff Mitigation strategies
Undertake Cost Benefit Analysis for High Priority Change
Requirements/Opportunities
After making a priority list for all change opportunities identified, the first
step in the development of a change strategy is to decide on the viability of
the investment through feasibility study. Feasibility study is an analysis and
evaluation of a proposed project to determine if it (1) is technically feasible,
(2) is feasible within the estimated cost, and (3) will be profitable. Feasibility
studies are almost always conducted where large sums are at stake
(BusinessDictionary.com). An effective way to decide whether an investment is
financially viable is through cost-benefit analyses.
Cost benefit analysis is a technique designed to determine the feasibility of a
project or plan by quantifying its costs and benefits.
Consider this example of a cost-benefit analysis:
Analysis for the co-operative venture reveals that it will cost $95,000 to
implement over a one-year period and will produce no savings during that year.
After that, the company will save $40,000 during the first year of implementation.
For the next four years, the savings will be $20,000 per year (see Table 1).
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Payback period is approximately 3 years and nine months.
Years
Benefits
Costs
0
$–
$95,000.00
1
$ 40,000.00
$95,000.00
2
$ 60,000.00
$95,000.00
3
$ 80,000.00
$95,000.00
4
$ 100,000.00
$95,000.00
5
$ 120,000.00
$95,000.00 TOTAL BENEFITS
TOTAL COSTS
$120,000.00
$95,000.00
Table 1. Cost-benefit totals for the co-operative venture project
Formula to calculate the Return on Investment (ROI)
ROI = Total Benefits–Total Costs
Total Costs
ROI = 120,000-95,000
95,000
ROI = 26.32%
Table 2. Payback period for the co-operative venture approx 3 years and 9 months
Conclusion
Stakeholders may decide that this project is not a good investment due to a
very low return on investment (ROI) and long payback period. ROI is expressed
usually as a percentage, it is a measure of the profitability which (while not
taking the time value of money into account) indicates whether or not a firm is
using its resources in an efficient manner. Payback period is the length of time
required to recover the cost of an investment.
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Activity 4.1
ff In a group of 2-3 people or with a partner consider the following situation
and discuss.
ff Analysis for a co-operative venture that is being considered reveals that it
will cost $75000 to establish (in year 0), and that the recurring costs for the
next 3 years will be $35000 (in years 1, 2 & 3).
ff There will be no benefits in year 0, but there will be $85000 worth of
benefits each year in years 1 through to 3. Using the formula above,
calculate the payback period and the ROI. What is your recommendation?
Years
Benefits
Costs
0
1
2
3
TOTAL BENEFITS
TOTAL COSTS
The payback period is ______________________ years.
The Return on Investment (ROI) is ________________%.
Would you recommend it as a good investment? Justify your answer.
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Undertake Risk Analysis, Identify Barriers to Change, and Agree
and Document Mitigation Strategies
Risk Analysis
A risk is a combination of the probability that a particular outcome will occur and
the severity of the harm involved.
Specifically, some types of risks include:
ff commercial and legal relationships (including but not limited to contractual
risk, product liability, professional liability and public liability)
ff economic circumstances and scenarios (can include such sources as
currency fluctuations, interest rate changes, taxation and changes in fiscal
policy)
ff human behaviour (such as riots, strikes, sabotage)
ff individual activities (including, misappropriation of funds, fraud, vandalism,
illegal entry, information misappropriation and human error)
ff management activities and controls
ff natural events (can include fire, water damage, earthquakes, vermin, disease
and contamination)
ff political circumstances (legislative changes or changes in government policy)
ff technology – technological issues (include innovation, obsolescence and
reliability)
The process of identifying risk can be made simpler through the use of tools.
Risk management tools may include:
ff documentation to assist in process of identifying risk, and assessing impact
and likelihood of occurrence
ff standard instruments developed for the organisation and contextualised
for sections of the workplace’s operations, such as checklists and testing
procedures
ff tools to prioritise risks, including where relevant, numerical scoring systems
for risks
Risk assessment is a component of risk analysis, it involves identification,
evaluation, and estimation of the levels of risks involved in a situation, their
comparison against benchmarks or standards, and determination of an
acceptable level of risk.
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Risk analysis is a component of risk management, it consists of (1) Identification
of possible negative external and internal conditions, events, or situations, (2)
Determination of cause-and-effect (causal) relationships between probable
happenings, their magnitude, and likely outcomes, (3) Evaluation of various
outcomes under different assumptions, and under different probabilities that
each outcome will take place, (4) Application of qualitative and quantitative
techniques to reduce uncertainty of the outcomes and associated costs,
liabilities, or losses.
Risk management are the policies, procedures, and practices involved in
identification, analysis, assessment, control, and avoidance, minimisation,
or elimination of unacceptable risks. To manage risk, a firm may use (or
combination of) strategies such as risk retention, risk avoidance and/or risk
transfer (BusinessDictionary 2010).
Risk Management Context
The context for risk management is the strategic and operational context against
which the risk management process in the company will take place. Criteria
against which risk will be evaluated and measured should be established and
the structure of the risk analysis process defined.
The strategic part of risk management includes identifying the direction the
business is heading and the risks of not achieving business goals. For example,
risk management may be applied on a particular project/s of the organisation.
It could be applied to a certain investment, or marketing/growth strategy the
business is planning.
The operational aspect of risk management includes the daily operations of the
business including human resources, product/service delivery, stakeholder and
financial management (Small Business NSW n.d). For example, it could include
assessing the risk of not providing training to staff.
Managing risks both at the strategic and operational level gives the organisation
a holistic view of the organisation’s risks. Thus risk management should be
integral part of the ongoing management of the business and applied at all
levels of the business.
Identifying Barriers to Change
Barriers to change may include:
ff challenges to group norms/established roles
ff existing organisational culture
ff existing reward systems
ff fear of loss of status, security, power, friends
ff interdepartmental rivalry/conflict
ff lack of involvement in the change
ff low morale
ff vested interests
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Mitigation Strategies
Strategies put in place or action taken to reduce or eliminate risk identified.
Risk Documentation
To manage risk, appropriate documentation is required.
Who are accountable in documenting all identified risks? It is the responsibility
primarily by the staff(s) conducting risk assessment. Risk assessment
documentation is usually accepted, checked and reviewed by the manager and/
or supervisor. It can also be countersigned by some other relevant levels of the
organisation such as when technical expertise is required.
All identified risks go to the risk register. On the minimum, the risk register,
treatment schedule and action plan will be maintained by the company for later
review and auditing.
A business needs to comply with a smorgasbord of statutory and regulatory
obligations such as WHS, fair trading, anti-discrimination, environmental
protection, industrial relations, taxation and any trading and license practices,
legal contracts, such as those with a client, sub-contractor, insurer or supplier,
insurance and financial reporting requirements (Small Business NSW n.d),
including relevant policies, procedures and standards.
One such relevant standard is the Standards Australia Risk Management
Standard, AS/NSS 4360:1999 – Risk Management. In compliance to the standard,
businesses are required to:
ff establish a risk management context
ff identify risks
ff analyse risks
ff evaluate risks
ff treat risks
ff monitor and review
ff communication and consultation.
Selected Reading 4a
Read the following article to learn more about the risks of doing
business in China: Austrade. (2008). Doing Business. Retrieved 14
June 2010, from
http://www.austrade.gov.au/Australian/Export/Export-markets/
Countries/China/Doing-business
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Activity 4.2
1. Form a group of 2-3 people. Read Selected Reading 4b. Perform a risk
analysis on doing business in China.
2. Use the forms provided on the next page:
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Assets
Revenue
Cost
People
Community
Performance
Timing
Environment Intangibles
Organisational
behaviour
(Source: Murdoch University 2001, Risk Management Policy, viewed 19 April 2010, http://www.murdoch.edu.au/admin/policies/risk.html link not working)
Individual activity
Management
activity & control
Technology
Political
Natural events
Human behaviour
Economic
Commercial and
legal
Source of risks
Areas of Impact
Activity: _______________________________________
RISK IDENTIFICATION FORM
46
Date of risk review: _______/_______/_____
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Risk
Consequences
Likelihood
Adequacy
of existing
controls
Consequence
rating
Likelihood
rating
Level of risk
Risk priority
(Source: Murdoch University 2001, Risk Management Policy, viewed 19 April 2010, http://www.murdoch.edu.au/admin/policies/risk.html link not working)
Ref
Consequences
Reviewed by: ____________________ Date __/__/_____
Compiled by: ____________________ Date __/__/_____
Activity: _______________________________________
RISK REGISTER
47
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Possible treatment options
Preferred options Risk rating after treatment
Result of cost/
benefit analysis
A: Accept
B: Reject
Person responsi- Timetable for imble for implemen- plementation
tation of option
How will this risk
and the treatment
options be monitored
Reviewed by: ____________________ Date _____/____/_____
Compiled by: ____________________ Date _____/____/_____
Date of risk review: _______/_______/________
(Source: Murdoch University 2001, Risk Management Policy, viewed 19 April 2010, http://www.murdoch.edu.au/admin/policies/risk.html link not working)
Risk priority
order from the
Risk Register
Activity: _______________________________________
RISK TREATMENT SCHEDULE AND PLAN
48
49
RISK ACTION PLAN
Item :
Ref:
Risk:
Summary – Recommended Response and Impact
Action Plan
1. Proposed Actions
2. Resource Requirements
3. Responsibilities
4. Timing
5. Reporting and Monitoring Required
Compiler:
Date:
Reviewer:
Date:
(Source: Murdoch University 2001, Risk Management Policy, viewed 19 April 2010,
http://www.murdoch.edu.au/admin/policies/risk.html link not working)
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Activity 4.3
1. Watch the YouTube video to see an example of implementing change in
the workplace: http://www.youtube.com/watch?v=bG5na7JD7rE
2. Watch the YouTube video regarding implementing a risk assessment
framework http://www.youtube.com/watch?v=T5aPT-TSxCE
Review Questions
1. What is a cost-benefit analysis?
2. What is ROI and payback period and explain why they are useful when
performing cost-benefit analysis?
3. What is risk analysis?
4. Give some examples of change barriers.
5. Give examples of mitigation strategies.
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Selected Reading 4c
Small Business NSW n.d, Risk management, viewed 14 June
2010, http://www.smallbis.nsw.gov.au/start/legalcompliance/
riskmanagement/Pages/default.aspx
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Types of risk
Why manage risk?
Categories of risk
Risk management
NEWS
Risk is a part of everyday life. In business, Risk can be defined as the chance of something happening
that will impact upon objectives.
There are many types of risk that will be encountered in business, and business owners choose to take
risks every day. Some risks will have a minimal impact and are easily managed. Other risks can
threaten the longevity of a business.
Good governance
practice
Many business owners rely on experience and intuition to manage risk. However, the more complex
the business, the more important it is to identify risks that may prevent a business from realising its
potential.
Human resources
management
Understanding the principles and processes of effective risk management will help a business owner
make the decisions necessary to ensure the best possible outcomes for the business.
Statutory and
regulatory
compliance
What is risk management?
Legal considerations
ATO compliance
ACCC compliance
ASIC compliance
Insurance
HR & employee
management
Marketing & sales
Glossary of business
terms
Risk management is the way that adverse effects are managed and potential opportunities realised.
EVENTS
Important
Risk management
should be integral to the
ongoing management of
a business and applied
at all levels of a
business.
How do you do
business online?
Take our survey.
Risk management involves:
understanding what the risks are and the potential impacts
minimising negative impacts
identifying and harnessing activity that achieves the goals and objectives of the business.
While it is impossible to predict all negative outcomes for a business, risk management can help an
owner to prepare for adverse events. The limitations of risk management should be clearly recognized
by the business owner and/or management team.
Who should use risk management?
Risk management is the responsibility of anyone operating a small business.
Accountability for management of risk cannot be outsourced or delegated.
Ultimately, the business owner will remain accountable for their risk decisions. So there should be a
clear definition of the level of risk the business will accept and who makes that decision.
The business owner should oversee the management of all risks, particularly those that are significant.
Risk management should be integral to the ongoing management of a business and applied at all levels
of a business.
There are two levels in the management of a small business:
strategic – including identifying business requirements and the direction the business is taking
operational – daily running of the business including human resources, product/service delivery,
stakeholder and financial management.
Risk management should be applied at both levels.
NSW Government
Industry & Investment NSW
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Selected Reading 4d
Austrade. (2008). Doing Business. Retrieved 14 June 2010, from
http://www.austrade.gov.au/Doing-business-in-China/default.
aspx
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Export
Export Markets
Countries
China
Doing business
Doing Business Doing business
China
(Last updated: 4 Feb 2008)
Austrade Market
Monitors
Current business situation
Beyond the Financial Crisis:
China, November 2009
Country overview
business
(LastDoing
updated:
4 Feb 2008)
Tariff and non-tariff barriers
Current Business Situation
Product certification, labelling
and packaging
Methods of quoting and
payment
The Department of Foreign Affairs and Trade (DFAT) provides advice for business
travellers and tourists going to China. This is regularly updated, and should be
Austrade’s global network has the
expertise to monitor international
business conditions and provide
advice to business. This brief is one
tool to help businesses manage risks
and leverage opportunities.
checked before planning travel.
The Department of Foreign
Affairs and Trade (DFAT) provides advice for
Documentary requirements
Current environment for foreign products imported into
business
travellers
andmainland
tourists
going to China. This is regularly updated, and
In-market
representation
China
shouldTaxation
be checked before
planning
travel.
Recent incidents involving tainted food products in China has brought attention to
Intellectual property
both domestically produced and imported food products and food ingredients. As a
result Chinese authorities are increasing the monitoring of safety and quality of both
imports and exports, and rigidly enforcing requirements and regulations.
Shanghai World Expo
2010
Current Environment for Foreign Products Imported
into Mainland
China
Setting up in China
Visiting China
Multimedia
News
Exporters should expect increased inspection and testing by Chinese authorities of
products imported into China, and a more inflexible approach to regulatory issues by
the local authorities.
Australia will have a significant
national presence at the Shanghai
World Expo 2010 from May to
October 2010.
Events
Recent
incidents involving tainted food products in China has brought
attention
The Australian pavilion will provide
This applies to all imported product categories and is expected to continue well into
Success stories
a unique platform to help
2009.
to both
domestically produced and imported food products and
foodbusiness,
ingredients.
strengthen
cultural and
Austrade contacts
people to people links with China.
Exporters of products are
intended increasing
for human consumption (adult
and infant,
final
It
host a 'business
program' of
As a result
authorities
the
monitoring
ofwill safety
and
Shanghai WorldChinese
Expo 2010
over 200 events including targeted
processed product as well as ingredients) are particularly encouraged to pay extra
seminars,
high-level
official
regulations on
products/
product categories
applicable to
quality of both importsattention
andto Chinese
exports,
and
rigidly
enforcing
requirements
andvisits,
business networking events and
products allowed for import into China and ensure that all documentary
Profiled industries in
trade and investment promotion
requirements are met.
regulations.
activities. Read more.
this market
In the event of a market entry issue incident occurring, exporters are advised to seek
Automotive to China
assistance
from their appointedinspection
local importers to try resolve
the issue
with local
Exporters
should expect
increased
and
testing
by Chinese authorities
authorities (i.e. CIQ) at the point (city/port) where the incident has occurred.
Biotechnology to China
Scams
of products
imported into China, and a more inflexible approach
to regulatory
Building materials to China
Exporters are strongly advised to ensure that their local importer/representative has
Australian companies need to be
applied
for
and
been
granted
all
relevant
approvals
and
import
permits
from
the
issues
by
the
local
authorities.
Education to China
aware of scams operating in some
Environmental technologies to
China
relevant Chinese authorities prior to making any plans for product dispatch or order
fulfilment for the China market.
parts of China. Read more .
This applies to all imported
product categories and is expected to continue well
Once all relevant approvals and import permits have been granted by the Chinese
Food and beverage to China
authorities,
Australia
exporters can work with their official shipping and logistics
into 2009.
Green building to China
contractor on ensuring all documentation is prepared and accurate. Exporters can
ICT to China
seek advice from the relevant Australian government representatives on specific
product requirements for specific export markets.
Exporters
of products intended
for human consumption (adult and infant,
Infrastructure and construction
to China
Advance
manifesting
to be enforced 1 January
final processed product
as well
asrule
ingredients)
are2009
particularly encouraged
Marine to China
Exporters
are
advised
to
check
with
their
logistics
carriers
regarding
China
Customs product categories
to payMining
extra
attention to Chinese regulations on products/
to China
upcoming introduction of a new rule on advance manifest reporting (Decree No.
effective as of 1st
January
2009.
applicable
allowed
for
import
into China and ensure that all
Music to Chinato products 172),
Visual arts to China
Decree No 172
has been
published by China Customs on its official website
documentary requirements
are
met.
(Chinese language only) since March 2008. International shipping and logistics
companies should have information available and be able to advise their customers
on how
to meet requirements
new rule.
In the event of a market
entry
issueof this
incident
occurring, exporters are advised
The new
measureappointed
will require shippers and local
carriers to fileimporters
shipping manifests up toto try resolve the issue
to seek assistance from
their
24 hours prior to lading onto carriers departing and destined for China. This may
entail
significant
changes
to
shipment
process
for
all
cargo
that are loadedwhere
on
with local authorities (i.e.
CIQ) at the point (city/port)
the incident has
vessels at foreign ports destined for ports in China, as well as cargo that are loaded
at ports in China for exports.
occurred.
The rule requires that shippers and carriers, freight forwarding agencies and
organisers to be responsible for manifest reporting process at both foreign
Exporters are stronglylogistics
advised
to ensure that their local importer/representative
has applied for and been granted all relevant approvals and import permits from
the relevant Chinese authorities prior to making any plans for product dispatch
or order fulfilment for the China market.
WORKBOOK | © 2018 YOUNG RABBIT PTY LTD, AUSTRALIAN PACIFIC COLLEGE
BSB61015 ADVANCED DIPLOMA OF LEADERSHIP AND MANAGEMENT | ORGANISATION MANAGEMENT_V1.7
53
Once all relevant approvals and import permits have been granted by the
Chinese authorities, Australia exporters can work with their official shipping
and logistics contractor on ensuring all documentation is prepared and
accurate. Exporters can seek advice from the relevant Australian government
representatives on specific product requirements for specific export markets.
Advance Manifesting Rule to be Enforced 1 January 2009
Exporters are advised to check with their logistics carriers regarding China
Customs upcoming introduction of a new rule on advance manifest reporting
(Decree No. 172), effective as of 1st January 2009.
Decree No 172 has been published by China Customs on its official website
(Chinese language only) since March 2008. International shipping and logistics
companies should have information available and be able to advise their
customers on how to meet requirements of this new rule.
The new measure will require shippers and carriers to file shipping manifests up
to 24 hours prior to loading onto carriers departing and destined for China. This
may entail significant changes to shipment process for all cargo that are loaded
on vessels at foreign ports destined for ports in China, as well as cargo that are
loaded at ports...
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