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Sunday, June 30, 2013



Leadership means – to guide or to influence into an action. In today’s highly competitive world, it becomes important for organizations to have a good leader. The well-known book “In Search of Excellence” concludes that every company that has maintained its excellence over the years has done so because it had ‘a leader or two’ who gave it its structure. This conclusion has since been reinforced in a recent study by the Stanford Research Institute. It concluded that “12 per cent of effective management strategy is knowledge and 88 per cent is dealing appropriately with people”. Indeed, dealing appropriately with people is Leadership.

We know instinctively that in every human activity involving a group of people, there is a need for the guiding hand of a leader. The head of a family is the most ubiquitous leader since the dawn of human history. It is well accepted that on the quality and effectiveness of this leader, be it father or the mother, depends the progress and fortunes of the family.

In the modern complex society thousands of individuals are appointed or elected to shoulder roles and responsibilities of leadership in junior, middle and senior levels in factories and farms, schools and colleges, business and financial institutions, dispensaries and hospitals, in civil and military organs of the State’s scientific and research institutions and so on. On their quality and effectiveness depends the strength, prosperity and happiness of society. In history an effective leader has always been a ‘force multiplier’.

Leadership as the behavioural dimension helps in the successful implementation of the strategy. It is important to remember that leadership cannot be taught. However, a man does have the capability to perform himself/herself-to reprogramme his/her personality. And, it is here, that the most exciting part of human endeavour lies.


Sunday, June 23, 2013


Two perspectives on strategy and structure are described here: One by Michael E. Porter (Competitive Strategy, The Free Press, New York, 1980) and the other by Thomas J. Peters and Robert H. Waterman Jr. (In Search of Excellence, Warner Books, 1982).
Porter’s Perspective
Porter has enunciated three generic strategies: Overall Cost Leadership, Differentiation and Focus. According to him the successful implementation of the three generic strategies requires not only different resources and skills but also imply different organizational arrangements, control procedures and inventive systems. 
Overall cost leadership (common in 1970s in the USA) is achieved through a set of functional policies culminating into what is popularly known as the Experience Curve Effect. This strategy requires construction of efficient scale facilities, vigorous pursuits of cost reduction from experience, tight cost and overhead control and cost minimisation in areas like R&D, sales force, advertising and so on. A great deal of managerial attention to cost control is necessary to achieve the aims.
The differentiation strategy implies offering a product or service by the firm which is perceived in the industry as being unique. Differentiation can be approached in many ways (one or more at the same time); product design features, brand image, technology, customer services, dealer network and other dimensions.
The focus strategy means concentrating on a particular buyer group, segment of product lines, or geographic market.
As with differentiation, focus may take many forms. Whereas the ‘low cost’ and ‘differentiation’ strategies aim at achieving their objectives industry-wise, the focus strategy is built around serving a particular target very well. All functional policies are geared in that direction. This strategy rests on the premise that the firm is able to serve its narrow strategic target more effectively and efficiently than those competitors who are engaged in broader activities.
We now turn our attention to the organizational requirements for each strategy. Some common implications of the generic strategies in terms of skills and resources and organizational requirements are presented in Table -1 which are
Table -1 : Organizational Requirements for Different Generic Strategies


Friday, June 7, 2013


Explain the Stages Model of structure. Is it necessary for an organization to pass through all successive stages of growth?
The experiences of many firms indicate that organization structure evolves through different stages. What structure an enterprise will have would depend upon its growth stage, apart from size and the key success factors inherent in its business. For example, the type of organization structure that suits a small speciality steel tubes manufacturing firm relying upon ‘focus’ strategy in a regional market may not be suitable for a large, vertically integrated steel producing firm with businesses in diverse geographical areas. To extend our example further, the structural form suitable for a multi-product, multi-technology, multi-business enterprise pursuing unrelated diversification is likely to be still different. Recognition of this characteristic pattern has prompted several attempts to formulate a model linking changes in organizational structure to stages in an organization’s strategic development. 

The basic idea behind the stages concept is that enterprises can be arranged along a continuum running from simple to very complex organizational forms; and that there is a tendency for an organization to move along this continuum towards more complex forms as it grows in size, market coverage, product line scope and as the strategic aspects of its customer—technology—business portfolio become more intricate. The stages model proposes four distinct stages of strategy-related organization structure.
Stage I : Organizations in this stage are essentially small, single business and managed by one person. The owner entrepreneur has close daily contact with employees. He personally knows all phases of operations. Most employees report directly to him and he makes all pertinent strategic and operating decisions. As a consequence, the organization’s strengths, vulnerabilities and resources are closely linked with the entrepreneur’s personality, managerial ability, style and financial position. In a way, a Stage I enterprise is an extension of the interests, abilities and limitations of the personality of its owner. The activities of such a business typically are concentrated in just one line of business. 


Monday, June 3, 2013


When to adopt survival strategies? What are the routes of survival strategy? What is liquidation ?
When the company is on the verge of extinction, it can follow several routes for renewing the fortunes of the company. These are discussed in the following sections. 
An organization divests when it sells a business unit to another firm that will continue to operate it. Threatened with bankruptcy between 1979 and 1982, Chrysler sold its U.S. Army tank division to General Dynamics, its Air Temp air conditioning unit to Fedders, and its European distribution units to Peugeot/Citroen. The purpose was to focus only on the U.S. auto market- its main market. In our country, the TATA group has, in some form or the other, been realigning its portfolio since the early 1990s. But in the past few years it had done this in a more structured manner. The divestment of Tomco and Tata Steel’s cement plant was a conscious decision. It was Tata Steel’s decision to concentrate on steel and get out of the cement business. As for Tomco, the company had reached a point where it required immediate attention, not only in financial terms but in terms of management as well. The group felt that it did not have the requisite managerial skills in the specific area where Tomco operated and hence decided to hive it off. 
In a spin-off, a firm sets up a business unit as a separate business through a distribution of stock or a cash deal. This is one way to allow a new management team to try to do better with a business unit that is a poor or mediocre performer. For instance, Indian Rayon and Industries Ltd (IRIL), an Aditya Birla group enterprise, has decided to spin-off its insulators business under Jaya Shree Insulator Division, in favour of a new company - Vikram Insulators Private Ltd (VIPL). The net assets of Rs 92.98 crore of the insulators division were transferred in favour of VIPL and a 50:50 joint venture with the Japanese insulators giant - NGK Insulators Ltd - was forged. The joint venture with NGK Insulators Ltd was proposed in order to upgrade the quality of the existing insulators and to develop new and more technically advanced insulators. 

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