Download So far we have covered - Cambridge Marketing College

So far we have covered
• Marketing planning
o Purpose of marketing planning
o The marketing planning process
o SOSTAC / APIC
• Environmental analysis
o Having analysis skills
• Market sensing & learning organisations
o PESTEL – Macro
o Micro environment
o Problems with analysing the external environment
• Blue Ocean vs. Red Ocean
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So far we have covered
• Analysing the internal environment
o Resource based view (RBV)
• VRIN (Valuable, Rare, Inimitable, Non-substitutable)
• Capabilities & competencies
• Organisational culture
• Value chain analysis
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So far we have covered
• Information to recommend & inform strategic decision
making
o Research methods – primary/ secondary / qualitative /
quantitative
o Environmental scanning
o External analysis techniques incl. scenario planning
o Internal analysis techniques incl. marketing assets – brand
strength, McKinsey 7 s frameworks etc…
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So far we have covered
• Developing a strategic marketing plan aligned to meeting
organisational objectives
o Vision / mission statements
o Hierarchy of objectives
o Strategic choices – generic strategies
o STP
o SWOT & TOWS
o Marketing mix tactics to deliver the strategy
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Unit 3 Implementation and
Control
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CIM Strategic Marketing – 2014-2015
5. MANAGE RESOURCES TO DELIVER THE
STRATEGIC MARKETING PLAN (CORE TEXT CHAPTER 15)
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5.1 learning outcome
• Develop a realistic plan for the implementation of a
marketing strategy
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Strategic marketing implementation and control
• Managing resources to deliver the strategic marketing
plan:
o Develop a realistic plan for the implementation of a marketing
strategy
o Determine the key variables and resources required to
implement a successful marketing strategy
o Identify and assess the risks, implications and issues involved in
implementing a marketing strategy
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Detailed plan structure and content
Phase one – Goal setting
1. Mission
2. Corporate objectives
Phase two – Situation review
3. Marketing audit
4. Market overview
5. SWOT analysis
Phase three – Strategy formulation
6. Assumptions
7. Marketing objectives and strategies
8. Estimate expected results and identify alternative
plans and mixes
Phase four – Resource allocation and monitoring
9. Budget
10. First-year detailed implementation programme
McDonald and Wilson, 2011
The output of this process is the strategic marketing plan…
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Implementation process
• Good implementation process spells out the activities to
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be implemented
Which activities to be implemented – mostly driven by the
tactical mix elements of the plan
How the implementation will be done
The time and location of the implementation
Who will be responsible for the implementation
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Implementing the plan – questions to be asked?
• Is the structure of the organisation capable of
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implementing the strategy?
Are resources deployed effectively, and if not, can the
necessary changes be made?
Are managers suitably empowered to implement
changes?
Do organisational policies support the strategies?
Will staff members be affected by the strategy in such a
way that they might try to sabotage its implementation?
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The implementation process
Activities to be implemented
What?
Responsibility for
implementation
Who?
Implementation
process
How?
How implementation
Will be done
When?
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Time and location
of implementation
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Use of established frameworks and templates
• A range of formats and process for producing plans:
• PR Smith’s SOSTAC® model and APIC process
• Templates are generally chosen that best fits the
organisational context
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Marketing organisation, team management
• Advise for marketers developing an implementation plan:
o “Since some of these characteristics (of evaluating organisation
design) conflict with others, organisational design requires
looking at priorities and balancing conflicting consequences”
Cravens and Percy (2013)
o The overall organisational structure and dominant corporate
culture are important factors when designing the marketing
organisation and the implementation plan for the marketing
strategy
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Strategy and organisational structure
• Is the structure capable of implementing the ideas?
• Are resources deployed effectively within the
organisation?
• Are managers suitably empowered?
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Marketing Infrastructure
Systems and processes
Planning
QA
Marketing
infrastructure
Budgets
There are a number of different types
of organisational structures used
and choosing the right one is important.......
Transportation
Staff
Organisations require systems and
processes for all of their operations
(gathering marketing intelligence,
developing the product mix,
communicating value propositions
etc..)
Administration
MKIS
Systems and processes
Refers to all the resources and structures
that are needed in order for marketing
to take place (staff, MIS, QA, budgets etc..)
Communication
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Definitions
“the pattern of relationships among
positions in the organisation and
among members of the organisation.
Structure makes possible the
application of the process of
management and creates a framework
of order and command through which
the activities of the organisation can
be planned, organised, directed and
controlled.” (Mullins, 1999)
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(Mintzberg, 1983) defines an
organisation as “the sum total of the
ways in which it divides its labour into
distinct tasks and then achieves coordination among them.”
“Organisations are as different and
varied as nations and societies of the
world. They have differing cultures sets of values, norms and beliefs reflected in different structures and
systems. And the cultures are affected
by events of the past and the climate
of the present, by the technology of
the type of work, by their aims and
the type of people who work in
them.” (Charles Handy, 1993)
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Functional structure
Cons
Pros
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Maximise efficiency
High levels of specialisation
Division of labour and little overlap
Accountability and highly ordered
Opportunities to progress for
individuals
Top
Manager
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Difficult to achieve horizontal integration
Silo mentality
Inefficiencies and conflicts
Communication up and down could be slow
Unresponsive to changing external
environment
Divisional
Manager
Department
Operations
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•
Department
Marketing
Department
R&D
Department
Sales
Arranged around the roles undertaken by individuals and teams - these may be subdivided
Ideally suited to organisations with a single product or service or portfolio of similar things
Minimal overlap & duplication of roles
Communication lines follow the chain of command up & down the levels of authority
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Product/Market/Brand structure
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Matrix structure
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Flexible and adaptive organisation
Burns & Stalker (1961)
o Mechanistic & organic forms of organisation
• Stable, efficient and suitable for slow-changing operating environments
•
(mechanistic or “machine-like” organisations; also called
“bureaucracies”
Flexible, adaptive and suitable for fast-changing or dynamic operating
environments (organic or “organism-like” organisations)
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Flexible and adaptive organisation
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Functional flexibility (multidisciplinary, Multi-skilling)
Numerical flexibility - (Handy, 1989), The Shamrock Organisation
Informal organisation – loosely structured & spontaneous
Flat structures – the flattening of hierarchies
Horizontal structures – functional versatility
“Jobless” structures – employability a range of skills
Boundary less structures – horizontal barriers are removed or
softened by de-layering
Ad hocracy (not bureaucratic) – temporary, adaptive, creative
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Critical path analysis
• Project management tools and techniques to deliver the
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strategy
CPA is one of these known as network analysis
Divides the various components into smaller tasks hold
them in a logical sequence and estimate how long each
will take
Gantt charts
Resource Histograms
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GANTT Chart
• The start and finish dates with milestone elements of a
project
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Project critical path analysis flow diagram
1. A list of all activities required to
complete the project
2. The time (duration_ that each activity
will take to complete
3. The dependencies between the
activities
4. Logical end points such as milestones or
deliverables
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http://www.businessballs.com/project.htm#critical-path-analysis
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Agile project management
• Is one of the revolutionary methods introduced for the practice of
project management.
• Emphasis is on the fact that entire team (scrum) should be a tightly
integrated unit. This includes the product owner – who sets goals
and priorities, Scrum master – who works with the team to prioritise
the individual task and acts as trouble maker
• Frequent communication is one of the key factors that make this
integration possible. Agile project teams follow open communication
techniques and tools including self-managing.
• Deliveries are short-term. Usually a delivery cycle ranges from one
week to four weeks. These are commonly known as sprints.
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Action priority matrix
• Is a simple technique that helps you choose which
activities to prioritise (and which ones you should drop)
• By choosing activities intelligently, you can make the very
most of your time and opportunities.
• By choosing badly, you can quickly bog yourself down in
low-yield, time-consuming projects that close down
opportunities and stop you moving forwards.
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Action priority matrix
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Action priority matrix
High
High
Effort
High impact/Low effort (quick wins)
High impact/High effort (major projects)
Low
Impact
Low
Low impact/Low effort (fill in tasks)
Low impact/High effort (time bandits)
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Resource histogram
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Legislative, regulatory and code of conduct
• Implementation plans need to take into account a range of
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internal and external factors which marketers may have little or
no influence
Multinationals need to consider local and regional
legislation/regulation affecting promotional and packaging
techniques
Bribery and corruption
Standards of behaviour and actions set by the organisation
The promotion of high standards and professional skill
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Project management……..
http://www.youtube.com/watch?v=OEQWSjWSx4Q
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5.2 Learning outcomes
• Determine key variables and resources required for the
successful implementation of a marketing strategy
o Critical success factors
o Culture attitudinal shifts
o Communication – internal marketing
o Resource/capability allocation
o Budgeting
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Critical success factors
• Essential factors that are essential for success in a particular market or
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industry Could be product attributes, marketing resources and core
competencies?/capabilities
The establishment of standards/CSF’s:
What elements of the VP are essential in meeting customer needs?
The assets and abilities or the organisation need to be successful in a
chosen market or sector these can be determined by looking at the
winners and losers in the sector
Understand the weaknesses that may put an organisation at a
competitive advantage
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Critical Success factors - (the marketing mix)
Activity
CSF
New product development
Trial rate
Repurchase rate
Sales programme
Contribution by region, salesperson
Controllable margin as percentage of sales
Number of new accounts
Travel costs
Advertising programmes
Awareness levels
Attitude ratings
Cost levels
Pricing programmes
Price relative to industry average
Price elasticity of demand
Distribution programmes
Number of distributors carrying the product
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Cultural attitudinal shifts
• Instilling a culture that supports the implementation of
the strategy – resulting in a flexible and responsive
organisation.
• Therefore internal marketing needs to be included in
strategic marketing plans
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Internal marketing
• Is the use of a marketing approach in the internal
environment of the organisation, whose employees are
seen as customers who have to “buy in to” management
ideas.
• It also embodies a variety of approaches and techniques
to acquire and motivate customer-conscious employees
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Internal marketing - Aims
• Aligning internal & external programmes
• Employee motivation and satisfaction
• Customer orientation and satisfaction
• Inter-functional co-ordination
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Internal marketing
Strategy
Plan
Targeted at key
groups in the
company,
alliance partner
companies, and
other influencers
Internal
marketing
programme
External
marketing
programme
Targeted at key
customers, segments
and niches, and
other external
influencers
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Internal communications
http://www.youtube.com/watch?v=PujlvJhEEE0
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Resource/capability allocation and attainment
• Final phase of developing the marketing strategy clearly
state what resources the plan needs to be successfully
implemented
• Financial resources : budget
• Human resources – expertise in social media?
• Organisational systems such as CRM software
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The balanced scorecard
Kaplan and Norton (1992, 1993)
http://www.mindtools.com/pages/article/newLDR_85.htm
“..gives managers a fast but comprehensive view of the business”
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Encourages implementation
of a common strategy, which
is communicated and
coordinated across all major
areas of the organisation
The budgeting process
Define organisational objectives
(vision mission etc…
Analyse the external environment (using
forecasts, sensitivity analysis, e.g. PESTEL
Analyse the internal environment
(resources, capabilities, e.g. SWOT)
Develop sales forecasts and budgets
Devise
marketing
plan
Develop production forecasts and budgets
Revise
Develop operational forecasts and budgets
Devise
marketing
budget
Develop budgets for capital expenditure
Produce cash low forecasts and accounts
(master budget)
Seek approval for proposed budgets
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The purpose of budgeting
Objectives of budgetary planning – PRIME
• Planning – most important feature as managers can see potential
threats or opportunities
• Responsibility - objectives are set and managers of budget centres
are made responsible
• Integration and coordination – Activities need to be coordinated to
ensure maximum integration of effort
• Motivation – Commitment of employees can be encouraged through
communication and feedback
• Evaluation and control – Evaluating the performance of the budget
holder
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Approaches to budget setting
A statement of desired performance expressed in financial
terms and never unlimited
• Top down budgets – set on high and passed down the
organisation
• Bottom-up budgets – set further down the organisation
and passed up for approval
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The financial approach…
• Tends to be a top down model
• Total marketing spend is often determined at the outset
and then broken down into discrete activities
• It is important that the marketing manager is able to
express their intended outcomes in terms that indicate a
direct contribution: Increase to sales, positive cash
inflows, return on investment, growth in customer value
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Approaches to setting marketing budgets
KPIs:
• Total market share
• Levels of customer
satisfaction
• # of direct response to
advertisements
• Volume of sales
• Competitor
performance
• Distributor support
Marketing
Objectives
Key performance
indicators (KPI)
Develop detailed
action plan
Create budget
bottom up
Close monitoring or actual
performance against KPI’s
Adjust actions accordingly
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Factors critical for success of change programmes
Structure
Systems
Soft aspects
Style
Shared
• The 7-S model McKinsey & Co.
• A number of factors that will
contribute to the successful
implementation of plans and
change programmes
values
Strategy
Skills
Staff
Hard factors
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5.3 Learning outcomes
• Identify and assess the risks, implications and issues from
the implementation of a marketing strategy
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Risk assessment
• Political – within an organisation or outside of it e.g. the
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defection of a key supplier
Social – Media or pressure groups can pose risks to strategy
Physical – issues such as distribution resources or plant and
equipment affected by disaster such as fire
Technical – Systems failures
Labour – loss of key staff
Legal – Actions by customers or other connected stakeholders
to seek redress through the courts
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Action evaluation
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How likely is it that the risk will show itself?
Can we control it in any way?
What will happen if this risk occurs?
How can we control it in the least damaging way?
Strategies:
o Avoidance – eliminate or not be involved
o Reduction – optimise, limit , mitigate
o Sharing – transfer or outsource to third party
o Retention – accept, plan on dealing with any incidence and budget
accordingly
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Contingency planning
• A series of milestones and activities to bring the strategy
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plan back on track
Key personnel who need to be involved with clear details
of roles and responsibilities
Details of the plan will be tested
Coverage of any additional training staff
Details of how the plan will be updated as the risk it is
designed to mitigate changes
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Stakeholder analysis
• One of the biggest risks to execute a strategy is politics inside and
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outside the organisation.
Powerful stakeholders can derail strategies
Therefore important to categorise stakeholders e.g. the seven
markets model also consider classifications:
Economic stakeholders
Social/political stakeholders
Technological stakeholders
Community stakeholders
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Stakeholder influence - Mendelow matrix
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Positional power
Resource power
System power
Expert power
Personal power
Used to plot the potential
influence of stakeholder groups
and possible threats to execute a strategy
Mendelow’s power-interest matrix
Level of interest
Low
High
Low
A
Minimal
effort
B
Keep
informed
C
Keep
satisfied
D
Key players
Power/
influence
High
The Mendelow matrix (1991)
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Risk impact probability charts
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Directly changeable aspects of implementation
Aspect
Explanation and examples
Organisation
structure
The hierarchy of the organisation can be redrawn with new posts created or old ones removed.
The informal structure will remain intact, insofar as the individual staff remain employed under
the new structure
Management
systems
Information systems, feedback systems and control mechanisms (e.g. rewards and sanctions
offered to staff) will need to be changed carefully, and with consultation
Policies and
procedures
Procedures are often the easiest aspects to change and therefore are often the first aspects
which the less competent manager will address
Action plans and
short-term
budgets
Action plans outline the tactics to be used to achieve the strategy. Tactics are easy to change.
Short-term budgets can also be altered with relatively little difficulty
Management
information
systems
The methods by which management is fed information affect the type of information that is
supplied. Changes in the information system will inevitably impact on future strategic decision
making.
Blythe and Megicks, 2010
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Change management models
• Balogun et al, 1998
– “change Kaleidoscope”
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The planned change model - (Lewin, 1951)
Breakdown the existing
restraining and driving
forces
Unfreeze
Existing behaviour
Announce change
Transition
Movement
Attitude/behaviour
change
Introduces imbalances
which allows restraining
forces
Refreezing the
driving/restraining
forces
Refreeze
new behaviour
New order
This model was designed for stable environmental conditions. Re-freezing may be
seen as counter-productive in fast-changing/turbulent business environments
http://www.mindtools.com/pages/article/newPPM_94.htm
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Kotter 8 step model
1. Establish a sense of urgency 5. Empower broad-based action
2. Form a guiding coalition
6. Create short-term wins
3. Create a compelling vision for 7. Consolidate gains and
4.
change
Communicate the change
vision
8.
produce more change
Anchor new approaches in
the culture
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Managing change in teams Internal marketing
....can be used to facilitate the change process and overcome
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resistance to change; & implementation of plans
Attitude management and communications management
(Grönroos, 1990)
Company
Internal marketing
External marketing
Internal market
staff
3 types of marketing, Kotler 1999
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External market
customers
Internal marketing
Adapted from Kotler,
1999
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Lewin (1951) Force Field Analysis
Current State
Driving forces
(for change)
A requirement of
new legislation.
Professional Commitment
to controlling the organisation.
Requirement to report
to external agencies
A concern for quality
Ideal Position
Restraining forces
(resistance)
Cynicism about change
‘another fad’
Existing systems
are sufficient
Trade Union concern
over effects on job
working conditions
Complexity of producing
such reviews
Cost of carrying
out such reviews
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Factors for successful implementation for change
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Leadership
Culture
Structure
Resources
Control
Skills
Strategy
Systems
The 7-S model
developed by
McKinsey & Co, helps
to illustrate the
elements that can
contribute to
implementing
change.....
(Drummond and Ensor, (2001)
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Activity
• Please review the CMI “Developing the skills for
managing change” and present key findings/comments
• Please review the case study about Corus “Overcoming
barriers to change” and present key findings/comments
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CIM Strategic Marketing – 2014-2015
6. MONITOR, MEASURE & ADAPT THE MARKETING
PLAN FOR CONTINUOUS IMPROVEMENT (CORE TEXT
CHAPTER 15)
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6.1 Learning outcomes
• Recommend appropriate control mechanisms to measure
and monitor the progress of the implemented marketing
strategy
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Marketing performance measurement
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The use of marketing metrics is vital for any healthy
business & the prime reasons:
To evaluate success (or failure) of marketing plans
To rectify and implement corrective actions
To assist future decision making and planning
To provide a convincing and strong rationale for a
marketing plan for the board
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Finance measure/control ratios
• Measure value added in four ways (McDonald & and
Wilson, 2011:
o Value-chain analysis – looking at cost sand outputs in
comparison wit competitors
o Shareholder value added (SVA)
o Customer value – looking at customer satisfaction and loyalty
measures
o Accounting value – the results and ratios from the annual
accounts and quarterly updates
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Accounting
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Accounting measures of marketing performance reflect the
financial impact that its activities have:
Profit and loss – the impact of incomes earned and costs
incurred
Balance sheets – the impact on assets and liabilities
Cash flows – the impact on money moving into and out of the
organisation
Budgetary controls – the impact on the monitoring and
management of income and expenditure
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Accounting measures
• The interpretation of financial data
o Published accounts - Financial health
o Management accounting
o Prudence concept - assets and income are not overstated and liabilities
and expenses are not understated.
• Understand the impact of marketing decisions on the finances of
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the business
Be able to work effectively with the finance professionals in the
business
Be competent in the day-to-day financial techniques
http://www.businessballs.com/finance.htm
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Operational measures
• Provide and indication of the impact the tactics in the
marketing mix are having and if they are achieving the
desired level of competitive advantage
• A wide range of metrics to consider
• Choice of metrics influenced by the objectives set in the
strategic marketing plan…
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Operational measures
Category
Examples
Category
Examples
Competitive and customer
metrics
Market share, consumer
purchase intentions,
customer loyalty,
willingness to recommend
Profitability metrics
Break-even sales level,
contribution margins
Product and portfolio
metrics
Market penetration, sales
Customer profitability
volumes for new products metrics
vs existing products, repeat
purchases
Customer lifetime value,
acquisition and retention
costs
Sales and channel metrics
Percentage of outlets
stocking the product,
inventory turnover
Pricing metrics
Proportion of customers
considering product good
value, competitors’
response to price changes
Promotion metrics
Coupon redemption rates,
baseline vs incremental
sales
Advertising media and web Opportunities to view,
metrics
cost-per-thousand
impressions, share of
voice, cost per click
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KPIs
• Key performance indicators help an organisation to define
and measure progress toward organisational goals
• Are quantifiable measurements agreed beforehand that
reflect critical success of an organisation
• E.g. KPI for a business might be the % of its income
coming from returning customers
• A customer service department might have a KPI that
says a % of customer calls must be answered within a
minute
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Marketing Dashboard
• A good dashboard consists of three layers
o Strategic level - Monitors and measures performance against
business outcomes and marketing objectives
o Operational level - Tracks performance of core marketing
strategies and processes
o Tactical level - Analyzes performance at project or activity
level as they relate to the first two
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Marketing dashboard
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Examples of basic marketing measures
• Market share – is the % of a market accounted for by a
specified product or organisation.
• Profitability – for marketing the difference between
gross and net profit and making comparisons between
products, brands, segments and customers
• Loyalty – customer retention is important and need to
be able to monitor
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Marketing metrics
• Competitor & customer
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metrics
Profitability metrics
Product and portfolio metrics
Customer profitability metrics
Sales and channel metrics
• Pricing metrics
• Advertising, media and web
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metrics
Financial metrics
Brand equity metrics
Innovation metrics
Internal market metrics
Internal process metrics
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Customer metrics
Monitoring customers
1. Key customer identity
2. Customer history
3. Relationship of customer to product
4. Relationship of customer to potential market
5. Customer attitudes and behaviour
6. The financial performance of the customer
7. The profitability of selling to the customer
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Advertising effectiveness
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Must
Must
Must
Must
Must
be
be
be
be
be
seen
read
believed
remembered
acted upon
(David Starch 1920s)
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Advertising metrics - Reach, frequency, impact
• Reach – measure of percentage of people in target
market exposed to the ad campaign during a given period
of time
• Frequency – how many times the average person in the
target market is exposed to the message
• Impact – qualitative value of a message through a given
medium
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Media metrics
Planning Concept
Explanation
Reach
% of target audience exposed to message at least once during
relevant time period.
Frequency
No of times a member of target audience is exposed to a media
vehicle (not the advertisement) during relevant time period
Opportunity to See (OTS)
Even if a person has been exposed to a vehicle, doesn’t mean
they have seen an ad. OTS measures they have had the
opportunity to see it
Duplication
Targets exposed to 2 or more adverts carrying the same
message
Gross Rating Points (GRP)
Measure of the total no of OTS generated in a set period of
time. Simply reach x frequency = GRP
Effective frequency
No of times an individual needs to be exposed to an ad before
comms is effective
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3 parts to brand equity
Feldwick, 1996
• Brand value - based on a financial and accounting base
• Brand strength - measuring the strength of a
consumer’s attachment to a brand
• Brand description - represented by the specific
attitudes customers have towards a brand
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General brand equity metrics and measures
Consumer metric
Measure by
Familiarity
Familiarity relative to other brands in the set being
considered
Penetration
Number of customers or number of active customers as
a percentage of the intended market
What they think about the brand
Brand preference as a percentage of preference of other
brands within the set being considered or those with
intention to buy or those with brand knowledge
What they feel
Customer satisfaction compared to the average for other
brands
Loyalty
Either behavioural (repeat buying, retention) or
intermediate (commitment, engagement)
Availability
Distribution, for example, weighted percentage of retail
outlets carrying the brand
Ambler, 2003
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Brand values
• http://www.interbrand.com/en/best-global-
brands/2013/Best-Global-Brands-2013.aspx
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Innovation and learning measures
• Comparative analysis
o Making comparisons over time or against standards is essential
to encourage a culture of continuous improvement
• Benchmarking
o An external target of performance against which a firm
measures its activities
• Process benchmarking
• Competitor benchmarking
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Innovation metrics
Strategy
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•
Culture
• Appetite for learning
• Freedom to fail
Outcomes
• Number of initiatives in process
• Number of innovations launched
• % revenue due to launches in the last 3 years
Awareness of goals
Commitment to goals
Active innovation support
Perceived resource adequacy
Ibid
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Internal market metrics
• Metrics available to assess employee-based equity
o Awareness of corporate goals
o Perceived calibre of employer
o Relative employee satisfaction
o Commitment to corporate goals
o Employee retention
o Perceived resource adequacy
o Appetite for learning
o Freedom to fail
o Customer-brand empathy
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Customer lifetime value (CLV)
Measures the worth of a customer to the firm either as an
individual or as part of a segment. (Kumar, 2008)
Customer life time value is an important concept because
it indicates long term health of the customer relationship
along with an upper limit on spending to acquire new
customers (Farris et al, 2006)
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Triple bottom line
• Measuring and reporting financial, social and
environmental performance – offering a solution to
balance various stakeholder demands, and is increasingly
being adopted by organisations.
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Activity
• Measurement of marketing effectiveness for one of your
organisations, please
• Discuss the types of measures currently in use e.g.
•
•
•
– Financial
– Productivity
– Relationship marketing / CRM
– HR
– Innovation and performance
Do you think they are appropriate?
Are there any decisions made as a result?
How could measurement be improved?
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6.2 Learning outcomes
• Understand the importance of continuous improvement in
relation to marketing strategy and planning
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Strategic drift
• External changes over time and an organisation's strategy will
•
•
•
change in an incremental way to keep pace
Often driven by routine and processes built up over time
However if there is disruptive change in the external
environment, the organisation's strategy does not keep pace
with the changes leading to strategic drift
This can affect the organisation financially and sustainability if
the organisation does not change fast enough – this
demonstrates the importance of continuous improvement
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Total Quality Management (TQM)
•
•
•
Is an orientation to quality in which quality values and aspirations
are applied to the management of all resources and relationships
with the firm (incl. The value chain) to seek continuous
improvement and excellence:
Quality in all processes
Requires buy in
Anything less results in higher levels of waste, rejected items
failures and customer dissatisfaction
http://www.businessballs.com/dtiresources/total_quality_
management_TQM.pdf
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Total quality management (TQM)
•
•
•
•
•
•
•
Get it right first time - zero defects
Quality chains – relationship between customers-suppliers
Quality culture and total involvement - everyone
Quality through people – “empowerment”
Quality management
Process alignment
Continuous improvement – always looking for ways to improve
processes
http://www.youtube.com/watch?feature=player_detailpage&v=OSA1q107IYg
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Cost management – general principles
Any activity intended to ensure expenditure is monitored
and achieves value can be considered a cost management
activity
• Set standards and targets
o Standard costs are used as a basis for comparison with actual
costs
• Measure and evaluate actual performance
• Take corrective action
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Cost behaviour and budgeting considerations
An understanding of how different costs behave is
important. Cost behaviour is the way in which cost
changes as the activity level changes.
The basic principle of cost behaviour is that as the
levels of activity rises, costs will usually rise
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Cost-benefit analysis
Is a techniques used to determine the feasibility of an
activity, project, decision, or plan by quantifying its cost
and benefits
The cost-benefit analysis adds up the value of the
benefits of a course of action, an activity or a project, and
subtracts the cost associated with it
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Cost-benefit analysis - Pay back
The amount of time taken to break even on a project or
investment, or the time taken for the benefits received to
equal costs
It assumes equally divided cash flow
To calculate payback you need to know
o The cost of the project
o The forecast profit
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Breakeven analysis
Is a tool used to calculate the breakeven point. The
breakeven point is the sales volume at which the variable
and fixed costs of producing the product or service will be
recovered – so there is neither a profit or loss
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Breakeven analysis
Total revenue
Breakeven point where
revenue = total costs
Total cost
£cost
Variable cost
Fixed cost
0
B.E.P. =
Fixed Costs
Contribution
Volume of output
Contribution is
the difference between
revenue
and variable cost
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Productivity measures
It looks at the effectiveness of the allocation and usage of
the organisation and usage of the organisations resources
Productivity is the ratio of
Outputs or Outputs units
Inputs
Input units
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Quality concepts
Critical success factors:
• Product & service quality for marketing-orientated
businesses, because:
o They determine customer satisfaction - the ultimate source of
competitive survival and advantage
o The ability of the company to differentiate its products and
services rests upon the quality of its total offering
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Quality concepts – a view from some of the “gurus”
• Juran (1988) – quality should not just be about meeting
•
•
specification (but on internal & external customers) – “user based
approach” and that 85% of quality problems were the result of
“ineffective systems”
Ishikawa (1991) – “Quality Circles” – the process of people
solving quality problems
Taguchi (1986) – Quality cost model – costs of quality
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Kaizen theory
• A process of making continual incremental improvements
to business processes
• Originating in Japan as a response to Deming’s work on
Plan, Do, Check, Act
• The reasoning of Kaizen is that it is always possible to
enhance the operations of the company and the
employees should be encouraged to find ways to solve
even minor operational problems and deliver
improvements
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Six sigma process improvement
DMAIC model (Bruce,
2005)
• Define an opportunity or
•
•
•
•
need for improvement
Measure current
performance
Analyse the opportunity for
improvement
http://hueftlestudios.com/SixSigma/DMAIC_Model.gif
Improve performance
Control performance
http://www.youtube.com/watch?v=Yyk8G0zrfpU
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6.3 Learning outcomes
• Create an effective continuous improvement plan
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Action learning
• User reflect on their own knowledge of a subject and use
questioning to generate insights into a particular topic.
• Action learning sets, teams of eight or ten individuals to
tackle difficult problems though questioning.
• The insights are then used to create action plans
• Professor Reg Revans…
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Data collection plans
• Important part of continuous improvement is deciding
what data to collect and how to collect it.
• Much of the information is collected via research methods
and gathered through market intelligence channels.
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The PDCA (Deming) cycle) - An improvement methodology
Adapt,
implement
& monitor
ACT
PLAN
CHECK
DO
What and
who
Analyse
findings &
assign cause
Direct
contact &
secondary
data
Source: Drummond & Ensor
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Deming 14 points for improving quality
1.
2.
3.
4.
5.
6.
7.
Create a constancy of purpose
Adopt a new quality-conscious philosophy
Cease dependence on inspection
Stop awarding business on price
Continuous improvement in the system of
production and service
Institute learning on the job
Institute leadership
8. Drive out fear
9. Break down barriers between
departments
10. Eliminate slogans and exhortations
11. Eliminate quotas or work standards
12. Give employees pride in their job
13. Institute education and a selfimprovement programme
14. Put everyone to work to accomplish it
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Assessment – March 2015
• Task 1 – 40 marks produce a 3 year marketing plan to
increase the organisation’s level of market orientation.
(see assessment for more requirements but need to use
recognized planning framework)
o Maximum page count 8
• Task 2 – 60 marks examination (based on the marketing
plan)
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Home work / activity
• Please complete an outline of task 1 of the December
assessment and submit for review. Please indicate the
models and approaches you might take…….
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Q & A session
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