Includes 30 certified micro-credentials

Introduction

Without a clear idea of who its customers are, and what they want and need, no business is likely to be successful.

In the 1920s, Henry Ford could famously say:

“Any customer can have a car painted any colour that he wants so long as it is black.”  

In the 21^st Century such an approach is no longer possible. Customers buying a new car are likely to be offered a number of paint colours, a range of model types, different seat covers, a range of engines, and so on.

The aim of modern marketing is to identify and then satisfy each customer’s needs and wants. This is often done by building relationships with customers and using these relationships to create a two-way communication between the two parties. The customer communicates his or her preferences, and the business communicates information about products that will satisfy the customer’s needs and wishes.

As examples, think of websites from which you have bought products recently. From the way in which you search the site, and from your purchasing choices, the retailer will have a clear picture of you and your preferences. When you next visit the site, you may well find that you are directed to particular areas that relate to your previous purchases.

Of course, marketing is not just about trying to make a sale. As the customer you will then use the product and make decisions about whether you are satisfied with your purchase.  Your level of satisfaction will often be based on a feeling for the ‘quality’ of the product. Does it do what the adverts claim, and, most importantly, does it do what you want it to do?  Your future purchases will often depend on your perception of that products quality: if it does what you want, you may buy another product from the same company. You may even upgrade and spend more money next time.

The final section of the module looks at ways in which the potential customers in a market can be grouped into segments and micro-segments. This is done so that marketing communications (such as advertisements) can be focused effectively onto the most likely targets. Rather than advertising new trainers to everyone in the country, the producer will want to advertise them to a micro-segment that is most likely to use that particular design.

As you can see, this module looks in turn at a number of topics relating to marketing. Don’t forget, however, that the key is to ensure that the focus is on the customer. 

We stared this introduction with a quote from Henry Ford. Another of his quotes is less well known, but perhaps more relevant today:

“It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.”

Introduction

Senior managers spend most of their time with other people.

That’s the main conclusion of a study by Kotter of the most senior managers in large American organisations.

Now think about a young manager who has just been appointed to manage a small supermarket in your local town. That manager will, of course, spend some time checking people’s wages, filling in reports and perhaps ordering new items of equipment. However, most of the time will be taken up with talking to customers, dealing with staff problems, passing on information, and so on. In other words, with tasks that need interpersonal skills.

Those interpersonal skills will typically involve listening carefully, explaining, telling, asking questions, trying to understand other people’s points of view, negotiating, and encouraging group work.

If the manager does the tasks well, it may be that the employees will feel motivated and will work hard to achieve the organisation’s goals. Some leaders have what is called ‘charisma’ and seem to be able to inspire their team. If you analyse that inspiration, you’ll probably find that much of it results from quite simple interpersonal skills.

Can the skills be learned?  This module shows you how you can follow a systematic process of comparing what skills you have with the skills that you need in your current and future work. You can then plan how you will fill any gaps in your skills.

This process may not make you a great, charismatic leader like Apple’s Steve Jobs or Body Shop’s founder Anita Roddick, but it will contribute greatly to your future success with your team, and your chances of promotion to more senior positions.

Introduction

The success of marketing efforts depends on a range of factors, as we must consider how customers can be reached and the fact that they make their purchasing decisions according to different criteria. The marketing efforts could be based on the traditional marketing mix which includes:

• Product – and how it satisfies the needs of its intended market.
• Place – and how each market requires the product to be available in a way that it does not affect current purchasing patterns.
• Promotion – and the ways used to ensure that customers are aware of the product and that demand increases.
• Price – and the way the value of the product in terms of specific benefits is aligned with a price that potential customers are prepared to pay for it.
• People – and the stakeholders of the product, including customers who are the most important ones.
• Physical appearance – and the way each product can be easily recognised by its shape and look, as well as the characteristics distinguishing the product from competitors’ alternative products.
• Process – and the steps that must be followed for the product to satisfy the relevant demand.

The elements of the marketing mix (also known as the 7Ps) can be classified according to their focus. More specifically, we can have two main categories of marketing mix components, based on whether these can be subjected to a shift change or whether they take more time to adapt to new needs and new products being introduced. Therefore, we have:

• Strategic marketing mix elements – which cannot be changed overnight and include:
  • Product
  • Place
  • People
• Tactical marketing mix elements – which can adapt to change in a more straightforward and prompt manner and include:
  • Promotion
  • Price
  • Process
  • Physical appearance

The way products are promoted depends on the nature of each product, the capacity of the organisation and the specific markets. However, the most common ways for promoting products include:

• Advertising – focusing on informing customers about a product’s existence but also about the features and characteristics that may suit specific needs.
• Public Relations – focusing on establishing brand names and perceived quality for organisations and their products.
• Selling – focusing on persuading the customers to buy the specific products.
• Sales promotions – focusing on convincing customers about the product’s value and transforming customer interest into a perceived need.

As mentioned earlier, the role of technology has affected organisations in the sense that they have to integrate technological solutions to their marketing strategies and operations. We must consider how organisations can use technology to boost the success of their marketing efforts. Some of the key issues that must be addressed include:

• Technology – organisations must identify suitable solutions that provide technological support in promoting their products.
• Marketing mix – the seven elements of the marketing mix must be reconsidered to ensure that they take advantage of technological solutions.
• Budget – the financial element of marketing strategy needs to consider how technology can increase costs but also how marketing efforts may become more cost effective.
• Resources – there are several additional resources needed to support technology enabled marketing strategies including software, hardware, staff, training, etc.
• Skills – marketing teams may include technical staff, could hire external help and expertise but also introduce training for new technologies and the use of the Internet in marketing practices.
• Support – the Internet-based marketing techniques are likely to require continuous support either from within the organisation or by experts who are experienced in the way marketing is affected by advanced technologies.
• Media used – there are several different types of media used for modern marketing approaches, ranging from email and informative websites to directed adverts through cookies and social media applications.
• Infrastructure – each organisation must have in place the necessary infrastructure for supporting Internet-based marketing practices, such as servers, databases, email lists, skilled personnel, relevant hardware and software including servers, cookies, and websites.

So far we have provided the foundation for understanding how the transition from traditional marketing approaches to modern, Internet-based practices may take place. The term e-marketing is used to describe how technology can be used to support the application of marketing principles and techniques. The term is also used to describe both direct response and indirect marketing elements supported by the use of Internet technologies.

One of the most important reasons for introducing e-marketing to an organisation is the fact that the Return on Investment (ROI) is far higher compared to traditional marketing techniques. This is expected as it is much more affordable to employ Internet-based techniques, and the fact that the vast majority of customers in modern markets have access to the Internet allows higher penetration.

The reason for so many organisations shifting to e-marketing is that this new approach provides numerous benefits and clear improvements for a range of marketing techniques. For example, e-marketing brings the following benefits:

• Market reach – traditionally businesses were limited to their local, regional or national boarders in terms of the market size and customer reach. However, the Internet allows organisations to reach global markets as there are no longer boundaries which restrict marketing attempts. This allows organisations to reach out to new markets and expand their operations.
• Marketing scope – as Internet technologies can be used in several ways, organisations can increase their marketing audience and attempt to support a wider range of products. This allows not only increasing marketing efforts but also opportunities to consider a broader business scope and support a bigger range of products and services.
• Interactivity – the available marketing tools in traditional markets would be based on one-way communication, attempting to increase awareness for certain products and services within a specific market. Internet technologies support two-way communication, allowing customers to interact with organisations and provide various types of feedback. This can help organisations to assess the success of their marketing campaigns but also to gain more information about how the existing products and services are perceived.
• Immediacy – most e-marketing techniques provide the means for customers to proceed with immediate purchase of goods and orders of services following marketing messages. This means that there is no longer an idle period between marketing messages and customer reaction. There is a seamless process that integrates marketing messages with links to products and services, and functionalities supporting orders and purchases.
• Targeting – Internet technologies provide the means to collect a wealth of customer data, which can be used to target marketing efforts more effectively, but also to react to customer feedback and changes in the market.
• Demographics – the Internet-based market seems to have formulated sub-groups of customers with certain user behaviour, purchasing patterns and customer needs. The use of technology to segment the market, identify market needs and better serve these needs is critical for the success of e-marketing.
• Closed loop marketing – finally, the plethora of data gathering tools can support organisations to perform closed loop marketing, which can be described as an approach based on continuous analysis of market reactions to existing offerings and the performance of certain adjustments based on feedback received as well as analysis findings.

The following sections will cover a range of topics associated with e-marketing and the impact of technology in marketing communications. Initially, we will discover how e-marketing communications provide additional pathways for information exchange between organisations and their customers. Emphasis is placed on the way technology affects communications taking place as part of marketing practices and techniques.

Next, a number of e-marketing techniques are discussed in relation to the way they support an organisation’s marketing strategies. It is necessary to consider that since the mid-1990s e-marketing, also referred to as web marketing, has offered several techniques and tools to organisations. The discussion is focused on the use of well-established e-marketing techniques that have been used for the past decade.

Further discussion is focused on the role of emergent technologies, such as Web 2.0 and social networks, with emphasis on alternative communication approaches and innovative marketing practices. The role of emerging technologies and techniques is explained in relation to an organisation’s marketing strategies.

The module also discusses how certain measures can be used for assessing the effectiveness of e-marketing communication. Emphasis is placed on the criteria that can be used for examining the success of e-marketing practices.

Finally, the module discovers possible future development in e-marketing, and discusses how e-marketing communication will be affected by emerging technologies, and new markets.

Introduction

The way organisations conduct their business is affected by the sector within which they operate, as well as several other factors. Various models attempt to explain how a range of factors may affect the success of a business. Such models take under consideration aspects associated with politics, economical factors, social context, immediate environment, competitors, product specific issues, customer needs and infrastructure. It is quite difficult to agree on a definitive list of factors affecting business. 

However, most of the business models measuring impact on success and performance seem to have a common element that is strongly associated with the way technology is used and exploited. It is evident that over the past few decades, the role of technology has become very important in the way organisations perform their operations and support their processes. 

There are organisations that are dependent on technology to such an extent that any technological failures are likely to dramatically affect business. The role of technology is critical for organisations that may be involved in sectors such as e-commerce, service provision, online transactions, banking, learning, healthcare and customer care. 

Over the past few years we tend to focus on computer-related areas of technology enhancement and improvement. The use of Information and Communication Technologies (ICT) seems to be core for business. The support such technologies provide for processes, operations and transactions helps organisations to improve their performance and increase their revenues and profits. 

It is necessary to consider that technology is a concept that may cover software, hardware, networks, and other areas where technological improvement may take place. Organisations must consider how investment in technological evolution may help them to conduct their business in a more effective way. 

The investment in technology may take several forms, as organisations may seek ways to integrate technological support in their operations, while businesses may invest resources in the investigation of how business operations may be enhanced by the use of technology. Certain business sectors may require investment in research and development for the creation of new products, the deployment of enhanced services and the mapping of technology support to business offerings. 

The following sections discuss in more detail the impact of technology on business by covering a range of important topics and explaining how business concerns may relate to the use of technology. 

A very important topic relates to the need for organisations to define their product offerings and provide a detailed description of how the lifecycle of a product may be affected by the use of technology. 

The topic of obsolescence is also discussed as it is critical to be able to assess how the evolution of technology requires organisations to review frequently the need for further investment and possibly the replacement of any technology that no longer serves its originally identified purpose in an efficient way. 

Furthermore, organisations need to consider how their use of technology must be protected against industrial espionage and, in general, from competitors that wish to replicate successful business models based on technology use. An area of concern is the use of patents as a mechanism for the protection of innovative and creative solutions. Awareness of legal issues associated with the use of technology is also essential for organisations as it is increasingly difficult to forecast and control the impact of technology. 

It is also important for organisations to assess the impact of technology on various sectors. As technology is used for transforming business operations to e-business transactions, we must be aware of any issues relating to the way e-business solutions are deployed in different sectors. 

Organisations must perform a feasibility study in order to assess their capacity and resources with respect to their ability to invest in the use of the Internet as part of the business. It is critical to assess both the macro- and micro-environment of organisations and examine whether the Internet is likely to pose a threat or an opportunity for the business. 

Organisations must also consider the fact that they will not be the only ones capitalising on the use of the Internet, as well as the deployment of solutions that utilise information and communication technologies. It is necessary to identify how other organisations in the same business sector use technology and to investigate the ways organisations may gain a competitive advantage. 

Finally, organisations must be able to foresee any threats and opportunities associated with the use of technology in business. It is necessary to evaluate technologies before they become part of a business solution and investigate potential threats and opportunities for the organisation.

Introduction

Figure 1.1 What’s the next big step in the mobile phone market?

In the last week it’s very likely that you, or a colleague, has used a mobile phone, used the web to make a purchase or found a new route using their satellite navigation system. Within your organisation you may have looked for financial information on a spreadsheet or used the internal computer system to track the progress of a product or service. All of these innovations are relatively recent and have had a major impact on our social and work life. 

On a smaller scale, organisations increasingly adopt systems such as Total Quality Management and Quality Circles. These encourage employees to continually look for ways of improving quality, output and processes. The idea here is not to search for the next major innovation but instead to create continuous improvement through a series of minor innovations.

This first section of the module will introduce the idea of innovation. You’ll see that having new ideas can include inventing new products, creating changes to existing models, changing the services that a company provides, changing the processes by which they manufacture products, or indeed all of those. Innovation is clearly a very wide ranging idea, relating to a range of activities from the invention of a brand-new technological invention through to the smallest change in how a single department in a small company might change its processes or procedure.

Once you have seen what we mean by innovation, and seen that the term covers a very wide range of activities, Section 2 goes on to look at how innovation actually occurs.

Whatever your job role, or your organisation, as an innovator your key aims are to identify, pursue and capture value from business opportunities. Section 3 looks at possible sources of new ideas and some factors that may help you to spot suitable opportunities. You then need to assess which of those opportunities are most likely to create growth for the company. Finally, you need to be able to present a business plan that will persuade decision makers to provide you with the funds for your new development. 

Section 4 then stands back a little and looks at the place of innovation within an organisation. It helps you to think about questions such as how the company can encourage all employees to come up with innovative ideas, and how the company can be innovative in relation to its business model.

Introduction

Decision-making is a key task for every manager. Many senior managers are paid high salaries simply because they are able to analyse large quantities of information and reach a good decision. Middle managers will have to make decisions about how their team or department will carry out particular tasks, and will need to decide on a suitable work plan. Even the most junior manager will be expected to make a decision when a team member asks questions such as “What do you want me to do next?”

Many decisions at work need to be made in a systematic, logical way. This module focuses largely on that systematic approach.

The manager needs to start by deciding exactly what aspects of work they need to think about - what problem of opportunity are we considering?

The next stage is to identify the possible ways of overcoming the problem of benefiting from the opportunity - what options have we got?

He or she can then go on to collect information about the situation and each of the options. What do we know, and (often just as important) what don’t we know?

Finally, the manager (perhaps in consultation with other people) needs to make a decision. You’ll see that there are a number of techniques that can help here, but you’ll also see that this stage involves considering a range of factors and thinking about the options from many perspectives. One of the key points is to beware of unintended consequences: you don’t want to adopt what you think is a good policy and find that it causes you problems that you had not even thought about.

As you work though this module, you will also meet a range of decisions that may affect any manager.  Inevitably these will not relate to the specific situations that affect your particular company, industry and country. Try always to expand the ideas here to apply to your own work situation, perhaps discussing them with colleagues or friends.

We will encourage you to think about ways of making the best decision and selecting the best option. However, you should also remember the risks of making a poor decision. You would not want to be remembered for selecting the design for the 2001 PontiacAztek, the 1987 Yugo, or the 1958 Edsel Corsair: all on the lists of the worst ten cars. And you certainly would not want to be remembered as the manager who made health and safety decisions before Union Carbide’s disastrous explosion at their Bhopal factory, killing 2,500 people overnight. 

Introduction

In the 21st century, the marketing environment is one of complexity and organizations face many challenges in developing marketing strategy. The external environment of an organization is increasingly characterised by change and uncertainty. Customers, the critical assets of companies, have higher and higher expectations for quality, service and value. In certain business markets, customers view suppliers as strategic partners looking to them to provide thoughtful leadership, creativity and innovation. Developing distinct capabilities that are hard for competitors to imitate therefore becomes a priority for competitive advantage. For many organizations, in a recessionary climate, the search for increased market share and growth means expansion beyond home markets into international markets. These are just some of the challenges.

How then do organizations develop strategies in a complex marketing environment? How do they assess opportunities and threats? Which markets and segments do they target and why? Which market positions play to an organization's strengths? What product portfolio should be maintained for long-term value? These are some of the questions we shall address.

We commence by examining what is meant by markets, products and market segments, and then go on to examine how the marketing environment can be assessed. The marketing environment consists of an organization's external environment as we well as its internal environment. The external environment can be sub-divided into macro and micro environment. By macro environment we mean the broader national and global influences that have the potential to impact a business - political changes, socio-cultural changes, technological innovations, economic cycles, taxation changes and demographic changes. The micro environment, on the other hand, is the environment of the industry or business sphere within which the organization operates - customers, suppliers, competitors, possible new entrants to the industry and strategic partners. The internal environment of an organization consists of all factors that are within it - factors such as organizational structure, leadership and management style, organizational culture, the skills of its people and organizational capabilities. An assessment of the marketing environment gives a view on the opportunities as well as the threats to the organization.

Following an assessment of the marketing environment, an organization can begin to develop its optimal market strategy for competitive advantage. Questions for an organization to address in developing strategy include:

• Which markets, and specifically market segments, is it profitable to enter or continue in?
• What market positioning is it advantageous for the organization to adopt in each segment - leader, follower and so on?
• How can the organization best leverage its internal capabilities?
• How can a corporate portfolio be maintained for long-term value?
• What market entry strategies can be adopted, especially when entering foreign markets?
• How can the organization support market strategy by exploiting every available lever in the marketing mix, the 5Ps - product, price, place, promotion and people?

Strategies must then be turned into actions to achieve market objectives. We examine how to create a marketing plan and manage the marketing strategy on an on-going basis. 

Introduction

What is it that leads some people at work to do certain tasks really well?

This module tries to answer that question. If you think about, it really involves two questions:

• What motivates people to behave in certain ways?
• How can organizations and managers motivate individuals and groups to work towards the organization’s goals?

Think about two teams carrying out the same activity. Their manager may ask how a series of tasks will be completed to create a product or service. The manager can plan how the work will be done, make sure that the teams have all the right materials, explain everyone’s tasks and deadlines, and measure progress once they get started. However, the two teams will almost certainly not work at the same speed, not create output of the same quality, nor show the same attitude to their work.

What’s different about the two teams?

One of the key factors is motivation. What makes one team (or one individual) work much better than another? Are they motivated by getting a bonus if they do good work? Do they simply enjoy working well? Do they want their company to do well? Is there some team spirit that encourages good teamwork? 

Another key factor is influence. It may be that one team works well because they have been influenced by their manager or someone from inside the team. The influence may occur because someone explains how important this team’s work is. It may involve getting praise every time someone works well. It may be as simple as always smiling and being cheerful.

The first two sections of this module look at motivation. We’ll look first at the things that might motivate us: do we simply want the money, are we looking for praise or promotion, or do we have some need to achieve success in some way? We’ll then look at the processes that people and teams go through: I certainly will not be motivated by the promise of a bonus for extra work if I was not actually given that bonus last time I worked hard. I might not work hard if I think that my company has not behaved fairly towards me in the past.

The third section looks in a similar way at influencing people. First, what factors might affect how much influence a manager has; does influence depend on their job title, something about their personality, the knowledge, or some combination of all of those factors? Second, how should the manager try to influence people; how important is listening, communicating well, or leading by example?

The last section then focuses on you and your performance. How can you assess you own performance as a motivator and influencer? If you find gaps in your skills and knowledge, what can you do to fill those gaps?

Finally, before you start your study of this fascinating subject, a word of warning. We all know what motivates and influences us in our own work, but everyone is different. Do not make the mistake of assuming that all the members of your team are motivated and influenced by the same things. One of the key aims of this module is to show that each of us will be motivated and influenced by very different forces.

Introduction

An organisation consists of people. If you think of any organisation, whether it is in retail, service, manufacturing or any other sector, there are people involved. It is certainly true that there may be fewer people in some organisations than there were some years ago, due to technology replacing jobs, but I cannot think of any organisation that has no people.

People are key to the success of the organisation. Have you ever been to a shop, a restaurant or a hotel and been frustrated by the poor level of customer service? Maybe you have even decided that you will not return due to the poor level of customer service received. By making such a decision you are actually deciding that you are not going to give your business to that organisation because of the people that you have dealt with. One poor performing employee could impact on the decision about your future custom with that organisation. People, therefore, are very important to an organisation and we need to be certain that we recruit the very best people to work in it. We could decide that the organisation cannot be blamed for the one poor employee who has made us decide that we never want to go to a particular hotel, restaurant or shop ever again. However, someone decided to recruit that individual.

The organisation is responsible for the people working in it and for ensuring that only the very best people are there. In this module we are going to look at the process of identifying the very best people to work in an organisation. We are going to start by thinking about how we decide which jobs need to be recruited. We are then going to move on to think about the external and internal factors that can impact on our recruitment decisions and how we might be able to address them. We will then think about how we specify the jobs that we want, and in doing this we will consider the processes of writing job descriptions and person specifications. We will then look at selection techniques and what should be included in a contract that we eventually offer to a successful applicant. Finally, we will look briefly at the process of continuing professional development. To summarise, the process that we are going to study looks like this:

Introduction

When managing people it is essential that we treat them well and treat them fairly. As we study different aspects of management it becomes clear that it is important to motivate people, to invest in their development and learning, and to support them as they develop in their careers. These are all important matters that should take up a considerable amount of management time.

However, there is also the need to operate within the law. Doing something that breaches the law is likely to de-motivate employees because they will perceive that they are not been treated correctly. It is also likely to take up a lot of management time whilst related grievances are addressed and even, perhaps, attending court to respond to a claim.

In the UK the law relating to employment has been one of the fastest growing areas of law. This has led to the current coalition government becoming concerned that employment law is too onerous for employers and so there are certain changes being made that will reduce some of the burdens on employers.

Despite the changes that are planned (which we will address as we work through this module) there are still a lot of legal issues relating to the employment of people. Managers need to know about this law. Even if an organisation has a company solicitor, managers still need to be aware of the parameters within which they can operate.
As employment law is such a vast topic it is not possible to cover every aspect in one module. In this module we are going to focus on the issues that managers need to consider most often. We are going to start by thinking about employment status. We are going to consider the different types of status and what managers might want to recruit into an organisation. We will then think about the specific issue of working time.

We are then going to look at the process followed in the Employment Tribunal. This is the place that legal claims relating to employment are heard, and hence it is very important that managers understand how the process works.

After that we will look in depth at the two areas which result in the most claims being brought before the Employment Tribunal, and hence the areas that managers really do need to understand – dismissal and discrimination.

Finally, we will take a brief overview of other areas covered by employment law.

Introduction

Strategy concerns the decisions made by an organization on how it will achieve its vision and corporate objectives. The strategic plan defines the route to be followed to get to the future state the organization has aspired to in its vision. Strategic planning decisions define the product lines and services offered by the company, the markets and market segments targeted, market positioning and avenues for growth. They also define decisions on developing internal capabilities to build sustainable competitive advantage.

In a complex marketing environment which is both dynamic and volatile, how are these strategic decisions made? How are opportunities and threats assessed? Which markets and segments are targeted, and why? How can internal capabilities be leveraged to match market opportunities? What new competencies should be developed to achieve a distinctive capability that positions the organization for long-term competitive advantage? These are complex questions and there are no simple answers. However, there are a number of strategic planning tools which, together with management experience and judgement, can help organizations assess alternative strategies and make a strategic choice.

To develop strategy, an organization must first know where it currently is in its competitive environment. It must also know its internal capabilities and limitations. It must then decide where it wants to be in the future. The organization must address the strategy questions:

• Where are we now?
• Where do we want to be?
• How do we get there?

Organizations take different approaches to strategy development and planning. Deliberate, emergent or incremental are all alternative approaches. Deliberate strategy is the result of a classical planning approach where strategic analysis leads strategic choice, which then defines the implementation of the strategy. In the complex, global and ever changing environment of contemporary business, fewer and fewer organizations are adopting a deliberate approach. Emergent and incremental approaches are more common today. In emergent strategies, patterns of strategic choice evolve over time, influenced by insights gained from implementation and day-to-day market interactions - these patterns are unintended (in contrast to deliberate strategy). Thus, in emergent strategies implementation actually leads to strategic analysis and choice. The emergent approach is more suited to uncertainty where there are risks involved and the competitive landscape is continually changing, and flexibility is required. A deliberate strategy would be flawed in these circumstances.

In some cases, strategic analysis, strategic choice and implementation proceed together in small incremental steps - this is known as incremental strategy and is often adopted by innovative companies. One or two simple improvements can deliver game changers and keep the company ahead of the competition.

Whatever the approach to strategy, strategic planning tools are invaluable in assessing the external and internal environments, integrating the insights gained and guiding organizations in decision making. We shall examine a wide range of strategic planning tools that are at the disposal of management.

Introduction

Figure 1.1 “If I have seen a little further it is by standing on the shoulders of Giants."

In your study of management and organisations, you will have met many theories and models suggested by some of the key researchers and theorists working over the last century. Like the great physicist Isaac Newton, the various researchers have built on the ideas suggested by Giants in the past. This module is designed to encourage you to look at what some of the ‘Giants’ actually said.

This module has two main aims. The first involves looking more closely at particular theories and models, and assessing whether they really apply to your own work. The second involves standing back to see how the various theories and models may relate to each other.

In the first two sections of the module, we look from the viewpoint of the researcher. What are the key factors that the researcher must consider? How is the researcher’s original perspective on organisations likely to influence their conclusions? How does the method of collecting data affect the conclusions? It’s only by considering questions like this that the manager can accurately assess the value and relevance of a theory or model for their own work.

In the third section of the module, we’ve gathered some of the most important of the theories and models into groups. This will enable you to stand back and consider how all of them together may affect your work and your organisation.

For example, you may in the past have studied one module on motivation and another on human resources. This module encourages you to reflect on how you can get a clearer picture of the theories and models in those two modules, and see how they relate to each other. You may find some unexpected links; for example, clarifying how your recruitment plans should be affected by your organisation’s structure, culture, human resource policies, leadership styles, and so on.  

Throughout this module, you will see references to managers and researchers. You will find the module most useful if you can use the various Involve me activities to plan the best ways of investigating a problem in your own work. As the manager, you will be carrying out your own research, hopefully collecting ideas from other researchers who have already looked at the topic. Carrying out your own research, even if this is a very small-scale investigation, is a particularly useful way of finding out more about the challenges and problems that researchers have to deal with.

In summary, the first two sections of this module give you tools that you can use to assess and compare management theories. The final section groups management theories and models, and encourages you to make your own investigation into their relevance for your own work.

Introduction

‘Plans are nothing; planning is everything’. (Dwight D Eisenhower)

‘When defeat comes, accept it as a signal that your plans are not sound, rebuild those plans, and set sail once more toward your coveted goal.’ (Napoleon Hill)

‘You can always amend a big plan, but you can never expand a little one. I don't believe in little plans. I believe in plans big enough to meet a situation which we can't possibly foresee now.’ (Harry S Truman)

These three quotes give differing views on the approach to making plans. Eisenhower emphasises the importance of the actual planning approach. Hill suggests that good plans will mean that goals are achieved. Truman suggests that we should always aim high.

In a business, as in many other areas of life, we need to have plans. A business without a plan has no clear direction. A business without a clear direction is likely to drift, and lose competitive edge as other businesses steam ahead towards a clear goal.

In this unit we are going to look at the business plan. We are going to start by thinking about what should be in that plan, and the purpose of the plan. We are then going to move on to look at some specific elements of the plan – the vision, mission, values and objectives. We will then consider the environment within which the business is operating – it is crucial to understand that environment before making any firm plans.

Having understood the content and context of the plan we are then going to move on to think about the process of creating the actual plan. We are going to look at a number of different tools that can be used in the analysis. We are going to look at ways of comparing one business with another, and we are going to think about how these analyses can be used to put in place measures that can be evaluated and monitored. Finally, we are going to think about some management attributes that are required to ensure successful achievement of the business plan.

Introduction

An organization's strategy must take into account both its internal and external environment. An analysis of both is necessary to understand the competitive environment and respond to it in a way that exploits the strengths and capabilities of the organization for competitive advantage.

So how does the external environment differ from the internal environment?

The internal environment of an organization consists of all factors that are within it - factors such as organizational structure, leadership and management style, organizational culture and business philosophy (e.g. market orientation, product orientation, services orientation). The external environment, on the other hand, is the environment outside of the business over which the organization has little or no control. The external environment surrounding the business can be subdivided into the macro environment and micro environment.  The macro environment consists of the broader national and global influences that have the potential to impact the business. These factors include such things as political changes, technological innovations, economic cycles, taxation changes, socio-cultural changes and demographic changes. The micro environment, on the other hand, are factors closer to the organization - factors within the industry or business sphere in which the organization operates. An analysis of the micro environment would encompass a study of customers, suppliers, competitors, possible new entrants to the industry and strategic partners.

Figure 1.1 The External Environment Surrounding the Business

Why scan the external environment?

The simple answer is that an organization needs to understand the big picture to detect changes and identify opportunities as well as to detect risks or threats to the business. The 21st century external environment is one characterised by continual change and uncertainty. The success of an organization in meeting challenges caused by change will depend on its skills in monitoring the environment and anticipating changes ahead, and then responding to it.

Reflect on some of the key changes in the external environment impacting your own organization. You will probably agree that the external environment is a rapidly evolving landscape, often with fundamental changes in the macro as well as micro environment. Shifting market conditions, innovations in technology, new economic and political realities, globalization and increased environmental consciousness for sustainability are just a few of the factors that add to the complexity of understanding the external environment. Then there are other important effects from strategic alliances and de-regulation that must be recognised in the micro environment for an organization to be successful.

Regular auditing of the external environment enables an organization to address questions such as:

• What changes are there in regulatory frameworks that impact our operations?
• How do changes in income levels and inflation impact the buying power of consumers in the markets in which we operate?
• What changes are occurring in consumption patterns and tastes?
• What is the impact of political instability in certain countries on our operations and sale of market offerings?
• What opportunities can be exploited in emerging markets and from the rising middle classes in China and India?
• What technological innovations can be exploited in the market?
• What is the market strength of our competitors? What is their value proposition to the customer?
• What is the threat of new rivals in the marketplace?

“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”

Charles Darwin

As with the survival of species, understanding the external environment and adapting to change is essential for the mere survival of organizations. However, to outperform competitors and achieve sustainable competitive advantage, an organization not only requires an understanding of the current environment, it must also build a picture (or even alternative pictures) of what the future environment might look like and have a plan to compete in the new world. It requires proactive and innovative responses to the challenges and changes ahead - gaining insights to engage customers in creative ways, adopting global perspectives in entering emerging markets, leveraging new technologies and developing competencies and organizational capabilities for the future world.

After evaluating opportunities and threats in the external environment, some organizations may well decide that they should continue to operate and develop opportunities in existing markets; markets that play to their current strengths. Others may decide to enter completely new markets and acquire new resources and capabilities. Others may even decide to reinvent themselves. The greatest risk is to do nothing or lose the window of opportunity whilst competitors commit and leap ahead with the times.

The focus of this unit is the external environment and we shall explore the frameworks that enable organizations to assess the external environment and make sense of it. Noting that the 21st century environment is characterised by rapid change and uncertainty, scenario planning by asking "what if" questions and envisaging different possible futures is also examined.

Any analysis of the external environment, however rigorous, is pointless unless the organization responds to changes to gain competitive advantage. How then can an organization respond to its external environment? How can it pursue opportunities and avoid threats in the external environment? The answer to this, in large part, depends on its internal environment. An analysis of the internal environment must ultimately lead to an assessment of an organization's assets (tangible and intangible). Core competencies are a focus in many sectors today. Core competencies are the unique combination of skills, knowledge and systems that combine to provide the organization with unique and distinctive capability; capability that offers unique value to the customer, capability that is difficult for rivals to imitate. Sustainable competitive advantage is often gained by leveraging and matching these core competencies and capabilities to opportunities in the external environment. In the final part of this unit, we consider internal strategies for responding to changes in the external environment.