Unit IV: Strategy Implementation and Control

Unit IV
Strategy Implementation and Control: Organizational structures; establishing strategic

business units; Establishing profit centre’s by business, product or service, market segment or
customer; Leadership and behavioral challenges.
STRATEGY IMPLEMENTATION AND CONTROL
Introduction
Implementation of strategy is the process through which a chosen strategy is put into action.
It involves the design and management of systems to achieve the best integration of people,
structure, processes and resources in achieving organizational objectives.
Implementation of Strategy affects an organization from top to bottom, it affects all the
functional and divisional areas of business.
 Institutionalization of strategy.
 Setting Proper Organizational Climate.
 Developing Appropriate Operating Plans.
 Developing Appropriate Organization Structures.
 Review of Implemented Strategy.
Strategy Implementation, the 4th step of the strategy management process, is putting
formulated strategies into action.Without successive implementation, valuable strategies developed
by managers are virtually worthless.
The successful implementation of strategy required 4 basic skills:
1. INTERACTING SKILL
2. ALLOCATING SKILL
3. MONITORING SKILL
4. ORGANIZING SKILL
Interacting skill:
Interacting Skill is the ability to manager people during implementation. Managers who are
able to understand the fears and frustrations others feel during the implementation of a new strategy
tend to be the best implementers. These managers empathize with organization members and
bargain for the best way to put a strategy into action.
Allocating skill :
Allocating skill is the ability to provide the organizational resources necessary to

implementing a strategy. Successful implementers are talented at scheduling jobs, budgeting time
and money, allocating other resources that are critical for implementation.
Strategic Management – Unit IV & V 1

Monitoring skill:
Monitoring skill is the ability to use information to determine whether a problem has arisen
that is blocking implementation.
Good Strategy Implementers set up feedback systems that continually tell them about the
status of strategy implementation.
Organizing skill :
Organizing skill is the ability to create throughout the organization a network of people who
can help solve implementation problems as they occur.
Good implementers customize this network to include individuals who can handle the
special types of problems anticipated in the implementation of a particular strategy.
STRATEGIC CONTROL:
Strategic Control, the last step of the Strategy Management Process, consists of monitoring
and evaluating the strategy management process as a whole to ensure that it is operating properly.
Strategic Control focuses on the activities involved in environmental analysis,

organizational direction, strategy formulation, strategy implementation, and strategy control itself –
checking that all steps of the strategy management process are appropriate, compatible and
functioning properly.
ORGANIZATIONAL STRUCTURE
An organizational structure defines how activities such as task allocation, coordination

and supervision are directed towards the achievement of organizational aims. It can also be
considered as the viewing glass or perspective through which individuals see their organization and
its environment. Organizations are a variant of clustered entities.An organization can be structured
in many different ways, depending on their objectives. The structure of an organization will
determine the modes in which it operates and performs.

Organizational structure allows the expressed allocation of responsibilities for different
functions and processes to different entities such as the branch, department, workgroup and
individual.
Definition
The typically hierarchical arrangement of lines of authority, communications, rights and

duties of an organization. Organizational structure determines how the roles, power and
responsibilities are assigned, controlled, and coordinated, and how information flows between the
different levels of management.
A structure depends on the organization's objectives and strategy. In a centralized structure,

the top layer of management has most of the decision making power and has tight control over
departments and divisions. An organizational chart illustrates the organizational structure.
TYPES OF ORGANISATIONAL STRUCTURES
All managers must bear that there are two organizations they must deal with-one formal and
the other informal. The formal organization in usually delineated by an organizational chart and job
descriptions. The official reporting relationships are clearly known to every manager.
Alongside the formal organization exists are informal organization which is a set of
evolving relationships and patterns of human interaction within an organization that are not
officially prescribed.
Formal organizational structures are categorized as:
 Line organizational structure.
 Staff or functional authority organizational structure.
 Line and staff organizational structure.
 Committee organizational structure.
 Divisional organizational structure.
 Project organizational structure.
 Matrix organizational structure and
 Hybrid organizational structure.
These organizational structures are briefly described in the following paragraphs:

Line Organizational Structure:
A line organization has only direct, vertical relationships between different levels in the
firm. There are only line departments-departments directly involved in accomplishing the primary
goal of the organization. For example, in a typical firm, line departments include production and
marketing. In a line organization authority follows the chain of command.
Features:
 Has only direct vertical relationships between different levels in the firm.
Advantages:
 Tends to simplify and clarify authority, responsibility and accountability relationships
 Promotes fast decision making
 Simple to understand.
Disadvantages:
 Neglects specialists in planning
 Overloads key persons.

However, there are some disadvantages also. They are:
 As the firm grows larger, line organization becomes more ineffective.
 Improved speed and flexibility may not offset the lack of specialized knowledge.
 Managers may have to become experts in too many fields.
 There is a tendency to become overly dependent on the few key people who an perform
numerous jobs.
2. Staff or Functional Authority Organizational Structure
The jobs or positions in an organization can be categorized as:
(i) Line position:
a position in the direct chain of command that is responsible for the achievement of an
organization’s goals and
(ii) Staff position:
The line officers or managers have the direct authority (known as line authority) to be
exercised by them to achieve the organizational goals. The staff officers or managers have staff
authority (i.e., authority to advice the line) over the line. This is also known as functional authority.
An organization where staff departments have authority over line personnel in narrow areas of
specialization is known as functional authority organization. Exhibit 10.4 illustrates a staff or
functional authority organizational structure.
They are:
(i) The potential conflicts resulting from violation of principle of unity of command and
(ii) The tendency to keep authority centralized at higher levels in the organization.
Line and Staff Organizational Structure:
Most large organizations belong to this type of organizational structure. These organisations
have direct, vertical relationships between different levels and also specialists responsible for
advising and assisting line managers. Such organisations have both line and staff departments. Staff
departments provide line people with advice and assistance in specialized areas (for example,
quality control advising production department).

The line and staff organizational chart. The line functions are production and marketing
whereas the staff functions include personnel, quality control, research and development, finance,
accounting etc. The staff authority of functional authority organizational structure is replaced by
staff responsibility so that the principle of unity of command is not violated.
Three types of specialized staffs can be identified:
 Advising,
 Service and
 Control.
Some staffs perform only one of these functions but some may perform two or all the three
functions. The primary advantage is the use of expertise of staff specialists by the line personnel.
The span of control of line managers can be increased because they are relieved of many functions
which the staff people perform to assist the line.
Some advantages are:
 Even through a line and staff structure allows higher flexibility and specialization it may
create conflict between line and staff personnel.
 Line managers may not like staff personnel telling them what to do and how to do it even
though they recognize the specialists’ knowledge and expertise.
 Some staff people have difficulty adjusting to the role, especially when line managers are
reluctant to accept advice.
 Staff people may resent their lack of authority and this may cause line and staff conflict.
Features:
 Line and staff have direct vertical relationship between different levels.
 Staff specialists are responsible for advising and assisting line managers/officers in
specialized areas.
 These types of specialized staff are (a) Advisory, (b) Service, (c) Control e.g.,
 Relieves line authorities of routine and specialized decisions.
 No need for all round executives.
Disadvantages:
 Conflict between line and staff may still arise.
 Staff officers may resent their lack of authority.
 Co-ordination between line and staff may become difficult.
Committee Organizational Structure Features:
 Formed for managing certain problems/situations
 Are temporary decisions.
Advantages:
 Committee decisions are better than individual decisions
 Better interaction between committee members leads to better co-ordination of activities
 Committee members can be motivated to participate in group decision making.
 Group discussion may lead to creative thinking.
Disadvantages:
 Committees may delay decisions, consume more time and hence more expensive.
 Group action may lead to compromise and indecision.
 ‘Buck passing’ may result.

Divisional Organizational Structure:
In this type of structure, the organization can have different basis on which departments are
formed. They are:
 Function,
 Product,
 Geographic territory,
 Project and
 Combination approach.

Project Organizational Structure:
The line, line and staff and functional authority organizational structures facilitate
establishment and distribution of authority for vertical coordination and control rather than
horizontal relationships. In some projects (complex activity consisting of a number of
interdependent and independent activities) work process may flow horizontally, diagonally,
upwards and downwards. The direction of work flow depends on the distribution of talents and
abilities in the organization and the need to apply them to the problem that exists. The cope up with
such situations, project organizations and matrix organizations have emerged.
A project organization is a temporary organization designed to achieve specific results by

using teams of specialists from different functional areas in the organization. The project team
focuses all its energies, resources and results on the assigned project. Once the project has been
completed, the team members from various cross functional departments may go back to their
previous positions or may be assigned to a new project. Some of the examples of projects are:
research and development projects, product development, construction of a new plant, housing
complex, shopping complex, bridge etc.
Feature:
 Temporary organization designed to achieve specific results by using teams of specialists

from different functional areas in the organization.
Importance of Project Organizational Structure:

Project organizational structure is most valuable when:
 Work is defined by a specific goal and target date for completion.
 Work is unique and unfamiliar to the organization.
 Work is complex having independent activities and specialized skills are necessary for
accomplishment.
 Work is critical in terms of possible gains or losses.
 Work is not repetitive in nature.
Characteristics of project organization:
 Personnel are assigned to a project from the existing permanent organization and are under
the direction and control of the project manager.
 The project manager specifies what effort is needed and when work will be performed
whereas the concerned department manager executes the work using his resources.
 The project manager gets the needed support from production, quality control, engineering
etc. for completion of the project.
 The authority over the project team members is shared by project manager and the
respective functional managers in the permanent organization.
 The services of the specialists (project team members) are temporarily loaned to the project
manager till the completion of the project.
 There may be conflict between the project manager and the departmental manager on the
issue of exercising authority over team members.
 Since authority relationships are overlapping with possibilities of conflicts, informal

relationships between project manager and departmental managers (functional managers)
become more important than formal prescription of authority.
 Full and free communication is essential among those working on the project.
Matrix Organizational Structure:
It is a permanent organization designed to achieve specific results by using teams of

specialists from different functional areas in the organization.

Feature:
 Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical

functional structure
Advantages:
 Decentralized decision making.
 Strong product/project co-ordination.
 Improved environmental monitoring.
 Fast response to change.
 Flexible use of resources.
 Efficient use of support systems.
Disadvantages:
 High administration cost.
 Potential confusion over authority and responsibility.
 High prospects of conflict.
 Overemphasis on group decision making.
 Excessive focus on internal relations.

This type of organization is often used when the firm has to be highly responsive to a
rapidly changing external environment.
In matrix structures, there are functional managers and product (or project or business
group) managers.
Hybrid Organizational Structure:
Advantages:
 Alignment of corporate and divisional goals.
 Functional expertise and efficiency.
 Adaptability and flexibility in divisions.

Disadvantages:
 Conflicts between corporate departments and units.
 Excessive administration overhead.
 Slow response to exceptional situations.
The Informal Organization:
An informal organization is the set of evolving relationships and patterns of human

interaction within an organization which are not officially presented.
The informal organization has the following characteristics
 Its members are joined together to satisfy their personal needs (needs for affiliation,
friendship etc.)
 It is continuously changing:
 The informal organization is dynamic.
 It involves members from various organizational levels.
 It is affected by relationship outside the firm.
 It has a pecking order: certain people are assigned greater importance than others by the
informal group.
Benefits of Informal Organization:
 Assists in accomplishing the work faster.
 Helps to remove weakness in the formal structure.
 Lengthens the effective span of control.
 Compensation for violations of formal organizational principles.
 Provides an additional channel of communication.
 Provides emotional support for employees.
 Encourages better management.
Disadvantages of informal organization:
 May work against the purpose of formal organization.

 Reduces the degree of predictability and control.
 Reduces the number of practical alternatives.
 Increases the time required to complete activities.
Benefits of a Good Organizational Structure

1. A good organizational structure facilitates attainment of objectives through proper
coordination of all activities:
It has a built-in system of “checks and balances” so that the progress towards the attainment
of objectives is evaluated along the way so that any required adjustments can be made and any new
decisions required can be taken.
2. In a good organizational structure, the conflicts between individuals over jurisdiction are
kept to a minimum:
Since each person is assigned a particular job to perform, the responsibility of performing
that job rests solely with him. It results in traceability of outcomes and the work interdependency of
that particular task is reduced to a minimum.
3. It eliminates overlapping and duplication of work:
Duplication exists when work distribution is not clearly identified and the work is
performed in a haphazard and disorganized way. Since a good organizational structure requires that
the duties be clearly defined and assigned, such duplication of work is eliminated.
4. It decreases likelihood of “runarounds:”
The runarounds occur when we do not know who is responsible for what and we are not
sent to the right people in the first instance for getting some work done. However, in a well
organized company where the responsibilities are clearly established, this does not occur.
5. It facilitates promotions of personnel:
Since the organizational chart clearly pinpoints the positions of individuals relative to one
another, it is easier to know as to which level a person has reached at any given time in the
organizational hierarchy. Furthermore since each job is well described in terms of qualifications and
duties, the promotional stages can be more clearly established.
6. It aids in wage and salary administration:
A fair and equitable wage and salary schedule is based upon the premise that the jobs with
similar requirements should have similar benefits. If these requirements are clearly established and
the yearly increments or the cost of living increments for each type of job are properly and clearly
understood, then compensation administration policies are easier to implement.
7. Communication is easier at all levels of organizational hierarchy:
Since the lines of communication and flow of authority are clearly identified on the
organizational chart, the intercommunication is both clearer and easier and it eliminates ambiguity.
8. A well-structured organization provides a sound basis for effective planning:
Since the goals are clearly established and resources clearly identified, both short term as
well as strategic planning becomes more focused and realistic and such planning contains the
provision to permit changes to be made in the right direction including expansion and contraction of
facilities, operations and activities when it becomes necessary.
9. It results in increased cooperation and a sense of pride among members of the

organization:
An employee is given sufficient freedom within the domain of his responsibility and his
authority. Since the authority and the extent of exercise of such authority is known, it develops a
sense of independence among employees which in turn is highly morale boosting.
10. It encourages creativity:
Because of a sense of belonging and high morale that a well-structured organization

develops among employees and also because of clear-cut accountability, recognition of skill and
appreciation for their contribution towards organizational growth, the employees develop their own
initiative and a spirit of innovation and creativity.
The Importance of Organizational Structure
Small companies usually use one of two types of organizational structure: Functional and
product. Functional areas such as marketing and engineering report to the president or CEO in a
functional organizational structure. Product structures are used when a company sells numerous
products or brands. It is important for companies to find the organizational structure that best fits
their needs
There are six key elements that managers need to address while they design their
organization structure They are:
 Work specialization
 Departmentalization
 Chain of command
 Span of control
 Centralization and
 Decentralization
1.Work specialization: The degree to which tasks in the organization are subdivided into separate
jobs.

2.Departmentalization: The basis by which jobs are grouped together.
3.Chain of command: The unbroken line of authority that extends from the top of the organization
to the lowest echelon and clarifies who reports to whom.
Authority: The rights inherent in a managerial position to give orders and to expect the orders to be
obeyed.
4.Unity of command: The idea that a subordinate should have only one superior to whom he or she
is directly responsible.Span of control: The number of subordinated a manage can efficiently and
effectively direct.
5.Centralization: The degree to which decision making is concentrated at a single point in the
organization.
6.Decentralization: The degree to which any task is passed on to the subordinates in the
organization.
7. Formalization: The degree to which jobs within the organization are standardized.
Fact ors affecting organizational structure

 Organization size
 Organization life cycle
 Strategy
 Environment
 Technology

Although many things can affect the choice of an appropriate structure for an organization,
the following five factors are the most common: size, life cycle, strategy, environment, and
technology.
Organizational size
The larger an organization becomes, the more complicated its structure. When an
organization is small
— Such as a single retail store, a two‐person consulting firm, or a restaurant
— Its structure can be simple.
In reality, if the organization is very small, it may not even have a formal structure. Instead
of following an organizational chart or specified job functions, individuals simply perform tasks
based on their likes, dislikes, ability, and/or need.
As an organization grows, however, it becomes increasingly difficult to manage without

more formal work assignments and some delegation of authority. Therefore, large organizations
develop formal structures. Tasks are highly specialized and detailed rules and guidelines dictate
work procedures.
Organization life cycle
Organizations, like humans, tend to progress through stages known as a life cycle. Like humans,
most organizations go through the following four stages: birth, youth, midlife, and maturity. Each
stage has characteristics that have implications for the structure of the firm.
 Birth: In the birth state, a firm is just beginning. An organization in the birth stage does not
yet have a formal structure. In a young organization, there is not much delegation of
authority. The founder usually “calls the shots.”
 Youth: In this phase, the organization is trying to grow. The emphasis in this stage is on
becoming larger. The company shifts its attention from the wishes of the founder to the
wishes of the customer. The organization becomes more organic in structure during this
phase. It is during this phase that the formal structure is designed, and some delegation of
authority occurs.
 Midlife: This phase occurs when the organization has achieved a high level of success. An
organization in midlife is larger, with a more complex and increasingly formal structure.
More levels appear in the chain of command, and the founder may have difficulty remaining
in control. As the organization becomes older, it may also become more mechanistic in
structure.
 Maturity: Once a firm has reached the maturity phase, it tends to become less innovative,
less interested in expanding, and more interested in maintaining itself in a stable, secure
environment. The emphasis is on improving efficiency and profitability. However, in an
attempt to improve efficiency and profitability, the firm often tends to become less
innovative. Stale products result in sales declines and reduced profitability. Organizations in
this stage are slowly dying. However, maturity is not an inevitable stage. Firms experiencing
the decline of maturity may institute the changes necessary to revitalize.
FACTORS INFLUENCING ORGANIZATIONAL STRUCTURES
Within the context of this document, the term organization refers to all forms of co-
operation and union based on a central disposition of resources1. As members of an organization,
individuals hand over to it certain decision-making powers. In return, they receive benefits in the
form of support or services. Resources received from members are, in turn, used to fulfill the tasks
of the organization.
Organizations vary according to the relative influence of a number of factors related to both
the objective of the organization and the instruments and strategies chosen to achieve them.
These factors, which determine the structure, aims and activities of the organization, can be
grouped into:
1. External factors - those from the enabling environment which are not under the control of the
organization but which affect its structure and development. They include:
 Economic factors
 Socio-economic factors
 Political-administrative factors
2. Internal factors - organizational characteristics, including:
 Purpose of the organization

 Organizational instruments
3. Individual choice factors - members joint or individual decisions regarding expected costs and
benefits.
Older studies, especially in the 1970's, focused on the influence of internal factors 2, while
more recent work has emphasised the importance of all three sets of factors.

External factors/enabling environment
(i) Economic factors
These define the economic situation in which production and processing take place. For forest
owners these mainly concern the market for wood.
Table 1: Economic factors
Factor Description / Example

Structure of the wood market / Number, size and distribution of local institutions,
industry enterprises or groupings and their share of
production and processing.
Wood use Uses of harvested timber (firewood, industrial wood,

stem wood etc.). A high percentage of firewood use
by the forest owner lowers the pressure for marketing
and consequently the need for co-operation.
Wood demand Relationship between wood production and wood

use, including import and export of raw timber.
Wood supply Number and distribution of timber sellers by size.

Forest / land market Ownership size changes where purchase/sale of forest
land is possible.
Role of certification Wood marketing may be restricted by certification

rules. A certificate may be granted only for larger
units.

Level of wages High levels of wages add pressure on forest owners to
improve management of the forest either by
themselves or through organizations.
(ii)Socio-economic factors
These define the socio-economic context in which the organization operates.
Table 2: Socio-economic factors

Forest ownership structure The relative proportion and distribution of ownership
classes (state, communal, private) affect the potential for
co-operation between forest owners.
Size of forest holding With an increase in size of holding the importance of the
forest for the owner also increases. Need for and
advantages of co-operative activities are also affected by
the size of holding.
Occupation of owner(s) Whether the forest owner is tied full time to the rural
production system, part time or not at all (non-farmer
will also affect the need for and activities of the
organization (e.g. farmers often get basic training in
forestry and are in general familiar with co-operative
organizations). The amount of time available for forest
management will also vary.
Residency of owner Residency refers to whether a landowner lives on or

near the land or not. Absentee landowners often lack
information and contacts about local landowner
organizations.
Involvement of groups / Interest representation is one of the basic tasks of many

organizations in political organizations. The involvement in political processes
processes and decision making (formal or informal) can increase the attractiveness of

belonging to an organization.
(iii)Political-administrative factors
This group of factors refers to the political and administrative arrangements, which define
the legal boundaries and organizational options
Table 3: Political-administrative factors

Role and influence of forest Forest administrations play a crucial role in determining
authority / forest service forest owner organization. They can act either as
support bodies (provision of subsidies, extension
services) or supervisory bodies or both.
Legal framework Land tenure legislation builds the basis for the
organization of landowners. Unclear landowner rights
and responsibilities hinder co-operation efforts.
The legal framework also determines the two major

approaches to the organization of private forest owners:
1. Self organization, where the proprietors have the

right to form organizations voluntarily by themselves.
The type and activities of any organization will also be
their choice though options may be reduced by
regulations.
2. External authority organization, where the

organizational option(s) and structures are prescribed
by the government and membership is obligatory.
Support programs Governments often implement programmes to

encourage formation or improve the functioning of
forest owner organizations. The programmes may
include financial incentives, either directly (subsidy) or
indirectly (tax reduction for organization activities),
information and training.

Internal Factors
Internal factors include the purpose of the organization, organizational structures,
instruments and bodies
(i)Purpose of the organization
Table 4: Description of internal factors - Purpose of organization

1 Interest representation The individual landowners interests are brought
together and introduced as a group interest through
the political decision making process.
2 Information / Education This purpose is directed towards the individual
members of the organization. Information, which is
not available, or is difficult to find, is collected,
adapted and distributed by the organization.
3. Economics Group activities to take advantage of economies of
scale are a major purpose of forest owner
organizations. Economies of scale can be found in
input management, supply, production, marketing and
cost management.
a. Supply Bulk purchase by an organization on behalf of
members can mean lower prices for equipment and
materials.
b. Production/management Another economic purpose for organizations is co-
operation in wood production and forest management.
c. Marketing Due to small amount of timber produced per property,

joint marketing of wood products is often the only
possibility to access larger wood markets. Joint
marketing, in general, gives a stronger market
position, with consequent higher revenues.
4. Combinations of 1 - 3 Organization purposes may also consist of
combinations of interest representation, information
tasks or economic objectives. In larger organizations,

functions may then be carried out through specialized
units.
(ii)Organizational structure and instruments
The more appropriate an organizational structure to the local situation and services it wishes
to offer, the more efficient and effective it will be.
Table 5: Description of internal factors - Organizational instruments

1.Constitution The constitution of the organization describes the
formal/informal structure of the committees, the roles and the rules
governing decision making. These can be informal or
formal:
Informal organization Informal organizations tend not to have any formal
structure and work through informal agreements between
individual partners. Specific duties may be written into
contracts or guidelines
Formal organization Resources in a formal organization may be controlled by
individuals and/or corporate bodies with recognized rights
and duties. Personal partnerships and corporations,
associations and limited companies are some examples of
such formal organizations.
Legal form The legal form of an organization and its rights and
obligations depend on the legislative constitution of the
individual state. In general though, the two forms of a
public body and a private body can be differentiated.
Public body The legal form of a public body is suitable in cases where
organizations also have to fulfil specific state tasks, e.g.
regulatory functions or administration, distribution and
control of subsidies. The organization is often strictly
regulated and membership is often compulsory. Public
bodies may be formed as: Public corporation, Community
forests organization or Chamber (of agriculture or
forestry)
Private body The most suitable legal form of organization for private
forest owners is usually a private body. The conditions for
forming such organizations, their tasks and implications
for state supervision are usually simpler than for public
bodies, and tend to be voluntary. Private bodies may be
formed as Association, Society, Corporation, Co-
operative or Community forests.
Membership type Membership type refers to the level of free choice by
forest owners for membership in an organization.
Membership may be voluntary, compulsory (defined as
regulated through legislation), conditional (prescribed
limits, exclusions or minimum conditions for
membership) or unconditional (no limits on who can be a
member)
Member group The range of potential members gives an indication of the
general purpose of the organization. Membership in an
organization may be limited to specific member groups,
which can be classified into: individual forest owners,
private organizations (firms, forest owner organizations),
public bodies / authorities (communal forest owners, state
forest services)
2.Centralization / The tasks of an organization depend on the organization’s

Decentralization purposes. The level of centralization affects the allocation
of tasks and responsibilities of individual positions
including the decision making process. A decentralized
structure may have sub-units according to functions or
geographical area.
3. Structure type The responsibilities of the organization towards its
members as well as the level of member influence
indicate the potential effect of the organization on
individual forest management decisions. Three levels of
member influence may be defined:
Corporate Forest / Community forest, where the

individual ownership of a specific area is lost and
members only own shares. A joint management covers the
entire membership area.
Production associations, where the individual ownership

of an area remains, but forest management is conducted
across the borders of individual properties (though larger
areas may still be managed individually).
Interest associations, where the joint activities are limited

to marketing and/or supply purchase and member areas
are still managed individually.

4. Technological approach Services and information offered (newsletters, leaflets,
brochures, meetings etc.) will depend on the overall
purpose of the organization. Higher levels of services and
information may increase the attractiveness of
membership.
Member capacity building activities like information,

training or further education are an important service
function of an organization.
5. Participation and delegation The involvement of members in planning, decision

making, implementation of decisions and control of
activities is a measure of the level of member influence on
the organization performance
(iii)Individual choice factors
The following list of criteria makes the assumption that institutional choice is based on a
comparison of expected benefits against expected costs of membership.
Table 6: Factors affecting institutional choice by forest owners
Factors Description / Example

Factors affecting evaluation of The number of members/users, the area covered by the
expected benefits organization, number, size and location of resource units,
availability of information, existing and proposed rules of
membership, economic pressure
Factors affecting evaluation of Number of decision makers, heterogeneity of interests,

expected costs of membership skills and assets of leaders, current and proposed
regulations, options for altering rules.
- issues regarding becoming a
member - size and structure of resources available, technology used,
marketing arrangements, current and proposed regulations
- issues regarding continuing
costs of membership - distance to resources, involvement in other co-operative
activities, availability of information on opportunities
elsewhere

STRATEGIC BUSINESS UNIT
In business, a strategic business unit (SBU) is a profit center which focuses on product
offering and market segment. SBUs typically have a discrete marketing plan, analysis of
competition, and marketing campaign, even though they may be part of a larger business entity.
An SBU may be a business unit within a larger corporation, or it may be a business unto
itself or a branch. Corporations may be composed of multiple SBUs, each of which is responsible
for its own profitability. General Electric is an example of a company with this sort of business
organization. SBUs are able to affect most factors which influence their performance. Managed as
separate businesses, they are responsible to a parent corporation. General Electric has 49 SBUs.
Companies today often use the word segmentation or division when referring to SBUs or an
aggregation of SBUs that share such commonalities.
Definition
An autonomous division or organizational unit, small enough to be flexible and large

enough to exercise control over most of the factors affecting its long-term performance.
Because strategic business units are more agile (and usually have independent missions and
objectives), they allow the owning conglomerate to respond quickly to changing economic or
market situations
PROFIT CENTER
A profit center is a section of a company treated as a separate business. Thus profits or

losses for a profit center are calculated separately
Peter Drucker originally coined the term profit center around 1945. He later recanted,
calling it "One of the biggest mistakes I have made." He later asserted that there are only cost
centers within a business, and “The only profit center is a customer whose cheque hasn’t bounced.
MARKET SEGMENTATION
Market segmentation is a marketing strategy that involves dividing a broad target market
into subsets of consumers who have common needs and priorities, and then designing and
implementing strategies to target them. Market segmentation strategies may be used to identify the
target customers, and provide supporting data for positioning to achieve a marketing plan objective.
Businesses may develop product differentiation strategies, or an undifferentiated approach,
involving specific products or product lines depending on the specific demand and attributes of the
target segment.

Definitions of Market Segmentation (MS)
 According to Philip Kotler, market segmentation means "the act of dividing a market into
distinct groups of buyers who might require separate products and/or marketing mixes."
 According to William J. Stanton, "Market segmentation in the process of dividing the total
heterogeneous market for a good or service into several segments. Each of which tends to be
homogeneous in all significant aspects
Criteria for segmenting
In ideal market segment meets all of the following criteria:
 It is possible to measure.
 It must be large enough to earn profit.
 It must be stable enough that it does not vanish after some time.
 It is possible to reach potential customers via the organization's promotion and distribution
channel.
 It is internally homogeneous (potential customers in the same segment prefer the same
product qualities).
 It is externally heterogeneous,( potential customers from different segments have different
quality preferences).
 It responds consistently to a given market stimulus.
 It can be reached by market intervention in a cost-effective manner.
 It is useful in deciding on the marketing mix.
 It identifies the target customer(s) (surrogate(s))
 It provides supporting data for a market positioning or sales approach.
Understanding Meaning of Market Segmentation
Market segmentation means dividing the total market for a product into different parts i.e
segments on certain bases and using each segment fully for the purpose of marketing and sales
promotion. Due to segmentation, each segment will have uniform features and suitable marketing
mix can be introduced for promoting sales in each segment.
One marketing mix for all segments will not be effective and for introducing different
marketing mixes, segmentation is a basic requirement.
Philip Kotler has rightly pointed out that "Markets consist of buyers and buyers differ in one or
more respects. They may differ in their wants, resources, geographical locations, buying attitudes
and buying practices. Any of these variables can be used to segment a market." This can be made
clear with the help of following figures. Let us assume that there are six buyers the market with
different characteristics as shown below:

FIVE ESSENTIAL OF MARKET SEGMENT
Market segmentation criteria must be chosen carefully, it is a must for products and services
need to be targeted to a specific market. Segments need to be made which helps in marketing the
right product to the right target market. Market segments need to be generally attractive, the size,
growth and profitability needs to be good. Market segments need to satisfy the following five
market segmentation criteria:
1.Measurable
The size of the segment must be in numbers, the purchasing power of the segment and the
characteristics of the segment must be measurable in numerically. Market research would be able to
explain, if the segment is accurate, the number of individuals within the segment must be defined
clearly.
2.Substantial
The segment must be a homogeneous group, with similar characteristics. Factors such as
age group, brand perception and other factors. The segment must be large enough to tailor
marketing effort. The consumer market must be defined clearly, products are made for certain
characteristics, it could be for height or weight or other preferences. The segment chosen must be
substantial.
3.Accessible
The targeted segments need to be accessible, take example a form of advertising, certain
areas may not have access to the internet so they need to be targeted using different methods of
communication. The targeted segment must be served well, locations need to be chosen based on
seasons.
4.Differentiable
Different segments must be differentiated, they must react differently to different campaigns
or products, and different marketing tools would be used to target these audiences. Their
characteristics must be differentiated and their understanding of the marketing efforts and the
product or service must be different.
5.Actionable
The segment must be devised in such a way that it results in an action, this could be a
buying behaviour. The segment must have practical value; the marketing effort must result in an
action.

Advantages and Benefits of Market Segmentation
Following are some of the benefits as cited in leading marketing books.
1. Customer needs
It is easier to understand the exact needs of the customer and target the marketing strategy at
a particular group. It is much easier and more successful to create and promote specific and
customized products and services.
2. Profit Potential
Mass marketing is a strategy of the past. Target marketing and positioning creates new
potential customers and new ideas for new products and services. Companies can create better
products and hence maximise their potential profit.
3. Growth
Segmenting the markets creates further opportunities for business growth. Specific groups
require specific products.
4. Retaining Customer
It is a great way to retain customers. Firms can establish a life-long relationship with their
consumers via formulating an effective market segmenting strategy.
5. Right Target Market
The company's resources are utilized for producing the right product for the right customer.
6. Market Share
Segmenting business and consumer markets is important to maintain existing market share
and expand it. A successful company needs to gain competitive advantage by looking closely at the
specific needs of customers and devising strategies to provide maximum benefit and value.
Limitations (Disadvantages) of MS
Market segmentation has its own limitations and marketers have pointed certain disadvantages.
 No highly customized product. Only group served not individuals.
 No link to competitive advantage
 Lack of suitable process
Others have identified limitations such as:

Infrastructure Barrier:
The firm may not have suitable infrastructure to make the right product. This may result in
loss of profits, market share, failures etc.
Process Barrier
The process of creating segments may not be followed correctly or the segments may not be
created at all.
Implementation Barriers
The Company fails to implement the market segmentation strategy.
The following diagram summaries Market Segmentation.
The Importance of Market Segmentation
 The market segmentation and corresponding product differentiation strategy can give a firm
a temporary commercial advantage. Most market segmentations are the techniques used to
attract the right customer.
 Objectives of segmentation are: 1) To reduce risk in deciding where, when, how, and to
whom a product, service, or brand will be marketed; 2) To increase marketing efficiency by
directing effort specifically toward the designated segment in a manner consistent with that
segment's characteristics.
 While the market is initially reduced to its smallest homogeneous components (perhaps an
individual), business in practice requires the marketer to find common dimensions that will
allow him to view these individuals as larger, profitable segments.

Market Segmentation In Present Marketing System
In the present marketing system, market segmentation is a normal rule and not an exception.
It enables companies to exploit marketing opportunities fully by using the available resources and
also enables them to face market competition with confidence. It enhances marketing efficiency of
the firm in each segment selected. No segmentation means absence of market penetration. In short,
market segmentation is an important aspect of modem marketing management. It is a must for
survival and growth in the present competitive marketing. It facilitates the preparation of separate
marketing programmes for meeting the needs of different groups of buyers. Right markets for the
right products can be provided through market segmentation.
In brief, market segmentation is important not only for creating consumers but also for
satisfying them. Market segmentation helps matching of market opportunities to the resources of
the corporations and enables them to face market competition effectively. It raises marketing
efficiency through proper adjustment of marketing mix for each market segment. Market
segmentation is one important element of modem marketing management. Segmentation gives
precise answer to the question, "To whom should we sell out products and what should we sell to
them?"
CONSUMER
A consumer is a person or group of people, such as a household, who are the final users of
products or services. The consumer's use is final in the sense that the product is usually not
improved by the use.
Definition
An individual who buys products or services for personal use and not for manufacture or
resale. A consumer is someone who can make the decision whether or not to purchase an item at the
store, and someone who can be influenced by marketing and advertisements. Any time someone
goes to a store and purchases a toy, shirt, beverage, or anything else, they are making that decision as a
consumer.
Different Types of Consumers
 Demographics
 Geographic’s
 Psychographics

 Behavioristics
 Linguistics
1. Demographics
These are basic identifiable characteristics of individual final consumers and organizational
consumers, groups of final consumers and organizational consumers. Demographics are often used
as segmentation bases because groups of people, or organizations, with similar demographics often
have similar needs & desires that are distinct from those with different backgrounds. They include:
age, race, religion, gender, family size, occupation, income level, education level, marital status and
others.
2. Geographic’s
These describe basic identifiable characteristics of town, cities, states, regions, and
countries. One, or a combination of factors, such as: size, location, density, climate, transportation
network, media, competition, growth pattern, legislation, cost of living, and operations may
comprise an identifiable locale.
3. Psychographics
These are any attributes relating to personality, values, attitudes, interests, or lifestyles They
are characteristics like social class, family life cycle, usage rate & experience brand loyalty,
personality & motives, perceived risk, innovativeness, opinion and lifestyle that determine how a
customer thinks of themselves relative to others.
4. Behavioristics
These are variables such as occasion, benefit sought, user status, user rate, loyalty rate,
readiness stage, and consumers attitude. They include loyalty, cost, frequency of purchase, amount
of purchase, time of year, time involved in purchasing decision, where customer purchases the
product.
5. Linguistics
The way language varies in communities of customers. Looks in particular at the interaction
of social factors (such as a speaker’s gender, ethnicity, age, degree of integration into their
community, etc) and linguistic structures (such as sounds, grammatical forms, intonation features,
words, etc). They also include keywords, key phrases, misspellings, regional differences in spelling
and pronunciation.

LEADERSHIP
Introduction
Imagine that you were living in the year 1915 when the whole country was distressed by the
tortures inflicted by the British. Everybody wanted freedom but there was no unity and which made
the British successful in ruling our country. At that time Mahatma Gandhi arrived from South
Africa. He felt the need to unite the country towards its freedom struggle. Under his leadership the
movement gathered momentum and ultimately India achieved freedom. The leadership of Mahatma
Gandhi proved to be one of the major causes in achieving political freedom of the country.
Leadership is a necessary part of the social process. Any group, association, organization or
community functions the way its leader leads it. It is more true in the collectivistic cultures like
India where people follow the path shown by the great
In this lesson you will read about leadership, its characteristics, various approaches
and types of leadership.
Leader" redirects here. For other uses, see Leader (disambiguation).
Leadership has been described as "a process of social influence in which one person can
enlist the aid and support of others in the accomplishment of a common task". For example, some
understand a leader simply as somebody whom people follow or as somebody who guides or
directs others while others define leadership as "organizing a group of people to achieve a common
goal”.
What is Leadership?
Leadership is an integral part of work and social life. In fact in any given situation where a
group of people want to accomplish a common goal, a leader may be required. Leadership
behaviour occurs in almost all formal and informal social situations.
Some characteristic of Leaders are
 Adaptable of situations
 Alert towards social situation
 Cooperative
 Decisive
 Dependable
 Assertive
 Confident and persistent
 Knowledge
We can identify the key elements in any leadership situation as follows:
 Leadership is an activity or a process

 The leadership process involves such things as influence, exemplary behaviour or

 persuasion
 It involves actors who are both leaders and followers
 The leadership process has various outcomes – most obviously the achievement of
 Goals, but also commitment of individuals to such goals.
“The leader must put the group or organization into a position where the highest level of
performance is necessary in order to succeed. There is no escape from commitment.”
-Sun Tzu.
THEORIES OF LEADERSHIP
Over time, a number of theories of leadership have been proposed, including:

 Great Man Theory
 Trait Theory
 Behavioral Theories
 The Managerial Grid
 Theory X and Theory Y
 Participative Leadership
 Lewin’s leadership styles
 Situational Leadership
 Contingency Theory
 Transactional Leadership
 Transformational Leadership
(i) The Great Man Approach
The earlier view to understand leadership emphasized on the great man approach. The
attention was focused on great men and women leaders in history and on their personalities. It was
based on the assumption that the route to become an effective leader was to study their lives and
emulate them. But the world’s most effective leaders display widely different personal qualities.
Also, emulating these great men would altogether be a difficult process. This approach is still being
pursued in the industrial and commercial world where great business leaders such as Bill Gates or
JRD Tata take prominent position.
(ii)Trait Approach
This approach to leadership attempts to link leadership qualities not with particular
Individuals. Instead, it involves listing a number of traits, which are believed in general to relate
with effective leadership. It can be defined as a set of theories that seek personal, social or
intellectual traits that differentiate leaders from non-leaders. The five key leadership attributes that
have been identified in many studies are as follows:
 The ability to build effective teams
 The ability to listen

 The capability to make decisions on his or her own
 The ability to retain good people
 The ability to surround himself or herself with good people
 Trait Theory/Great Man (Woman) – assumes the leader is different from the average person
in
 terms of personality traits such as intelligence, perseverance, and ambition
Assumptions
 People are born with inherited traits.

 Some traits are particularly suited to leadership.
 People who make good leaders have the right (or sufficient) combination of traits.
There have been innumerable studies under the trait approach. However, leadership is a
dynamic process, varying from situation to situation with changes in leader, the followers and the
situation. Because of this there may be helping or hindering traits in a given situation.
(A) Behavioral Theories
Assumptions
 Leaders can be made, rather than are born
 Successful leadership is based in definable, learnable behavior
Description
 Behavioral theories do not seek inborn traits – they look at what leaders actually do
 Success can be defined in terms of describable actions
Implication:
 Leadership capability can be learned
Two general types of behavior exhibited by leaders:

 Concern for People
 Concern for Production
(B) The Managerial Grid
Theory X Leaders Assume

 Employees inherently dislike work and, whenever attempt to avoid it.
 Because employees dislike work, they must be coerced, controlled, or threatened with
 punishment desired goals
 Employees will shirk responsibilities and seek formal direction whenever possible
 Most workers place security above all other factors associated with work and will display
little ambition
Theory Y Leaders Assume
 Employees can view work as being as natural as possible, will rest or play
 Men and women will exercise self‐direction and self‐control if they are committed to the to
achieve objectives
 The average person can learn to accept, even seek, responsibility
 The ability to make good decisions is widely dispersed throughout the population and is not
necessarily the sole province of managers
(iii) Participative Leadership
Assumptions
 Involvement in decision‐making improves the understanding of the issues involved by those
who must carry out the decisions.
 People are more committed to actions where they have involved in the relevant decision‐
making.
 People are less competitive and more collaborative when they are working on joint goals.
 When people make decisions together, the social commitment to one another is greater and
thus increases their commitment to the decision.
 Several people deciding together make better decisions than one person alone.
Participative Leadership
 A Participative Leader, rather than taking autocratic decisions, seeks to involve other people
in the process, possibly including subordinates, peers, superiors and other stakeholders.
 Most participative activity is within the immediate team
Lewin's Three Participatory Leadership Styles (1939)
Autocratic
 In the autocratic style, the leader makes decisions without consulting with others. In Lewin's
experiments, he found that this caused the greatest discontent.
 An autocratic style works best when:
 There is no need for input on the decision
 Where the decision would not change as a result of input
 Where the motivation of people to carry out subsequent actions would not be
affected whether they were or were not involved in the decision‐making.
Democratic
 In the democratic style, the leader involves the people in the decision‐making, although the
process for the final decision may vary from the leader having the final say to them
facilitating consensus in the group.
 Democratic decision‐making is usually appreciated by the people, especially if they have
been used to autocratic decisions with which they disagreed.
 Democratic style can be problematic when there are a wide range of opinions and there is no
clear way of reaching an equitable final decision

Laissez‐Faire
 The laissez‐faire style minimizes the leader's involvement in decision‐making.
 Laissez‐faire works best when:
 people are capable and motivated in making their own decisions, and
 where there is no requirement for a central coordination
Lewin's Conclusions
These experiments were actually done with groups of children, but were early in the modern era
and were consequently highly influential.
 Lewin discovered that :
 The most effective style was Democratic
 Excessive autocratic styles led to revolution
 Laissez‐faire resulted in less coherent work
 patterns and exertion of less energy than when
(iv)Situational Leadership
Assumptions
 The best action of the leader depends on arrange of situational factors.
 When a decision is needed, an effective leader does not just fall into a single preferred style
Factors Influence Situational Leadership
Tannenbaum and Schmidt (1958) identified three forces that led to the leader's action:
 The forces in the situation
 The forces in the follower
 The forces in the leader
This recognizes that the leader's style is highly variable, and even such distant events as a
family argument can influence decisions made in the work place.
It has been argued that leaders exhibit a degree of versatility and flexibility that enables
them to adapt their behaviour to the changing demands made on them. The focus in situational
approaches is on the observed behaviour, not on any acquired ability or potential for leadership.
The emphasis is on the behaviour of leaders and their group members (followers) and various
situations.
 Leader-member Relations: the degree of confidence, trust and respect subordinates
have in their leader.
 Task-Structure : the degree to which task assignments are procedurized.
 Position Power : the degree of influence a leader has over power variables such as
hiring, firing, discipline, promotions and salary increases.
Leaders-hold more control when the role is highly structures. It has been found that the
task-oriented leaders tended to perform better in situations that were very favorable as well as when
they were unfavourable. For instance taking the same example of army drill instructor where the
situation is highly favourable a task oriented leader is likely to be most effective. On the other hand,
relationship oriented leaders would function more effectively in moderate situations. The
implication is that either you can change the leader according the situation or vice versa.
(v)Contingency theory
Contingency theory takes a broader view that includes contingent factors about leader capability
and other variables within the situation. (Leaders who are very effective at one place and time may
become unsuccessful either
(vi)Transactional Leadership
Assumptions
 People are motivated by reward and punishment.
 Social systems work best with a clear chain of command.
 When people have agreed to do a job, a part of the deal is that they cede all authority
to their manager.
 The prime purpose of a subordinate is to do what their manager tells them to do.
Transactional Leadership Style
Transactional leader works through creating clear structures

 Work requirements are clear
 Reward structure is clear
 Punishments are not always mentioned, but they are also well‐understood and formal
systems of discipline are usually in place
 Negotiate the contract whereby the subordinate is given a salary and other benefits,
and the company (and by implication the subordinate's manager) gets authority over
the subordinate.
 When work is allocated to subordinates, they are
(vii)Transformational Leadership
Assumptions
 People will follow a person who inspires them.
 A person with vision and passion can achieve great things.
 The way to get things done is by injecting enthusiasm and energy
Components of Transformational Leadership
Develop the vision

Starts with the development of a vision, a view of the future that will excite and convert
potential followers. (This vision may be developed by the leader, by the senior team or may emerge
from a broad series of discussions. The leader must buy in completely.)
Sell the vision

 Sell the vision immediately and continually.
 Create trust
 Rely on personal integrity
 Transformational leaders are selling themselves as well as
(iii)Attitudinal Approach
By attitudinal approaches we mean approaches that emphasize attitudes or predispositions
towards leader behaviour. Early research led to the postulation of two major dimensions of leader
behaviour-consideration and initiation structure.
Identification of four leadership styles.
1. Impoverished: This style emphasizes exertion of minimum effort to get the required work done.
It is appropriate to sustain organizational membership.
2. Country Club: It involves thoughtful attention to needs of people for satisfying relationships. It
leads to a comfortable friendly atmosphere and work tempo.
3. Task : This type of leadership emphasizes on efficiency in operations based on arranging the
conditions of work in such a way that human elements interfere to the
minimum degree.
4. Middle-of the Road : This type of leadership assumes that adequate organizational performance
is possible through balancing the necessity to get out the work while
5.Team : It holds that work accomplishment is from committed people. It involves interdependence
through a “common stake” in organization. The relationships of trust and respect are found very
important.
In summary leadership deals with the following:

 Providing meaning and support
 Focusing on right things to do
 Structuring environment to achieve the organization’s goals
 Getting others to do what you want
 Motivating people to get things done willingly
 Enabling others to take responsibility
 Empowering others to do what they think is right
 Helping people feel less fearful, more confident
Types of Leadership
There are many ways in which leadership can be categorized. Accordingly there are many types of
leaders as given below.

1. Visionary Leader
Visionary leader is the one who has a long-term perspective, who is externally oriented and
has a broad interest in industry, economy, regulations, and politics. His tasks include forming a
mission statement, vision and values. He is supposed to transform and structure the organization to
ensure survival and growth. Example of visionary leader can be a director, senior executive, chair
and head of school, senior partner etc.
2.Integration Leader
Integration leader is the one who has medium-term perspective. He has an inside out
orientation where his main focus is on his own organization. His main function is to develop
organization’s systems and processes. He reconciles conflicting interests. He develops and
champions a strong culture. He ensures effective running of whole organization by using and
innovating corporate knowledge and recruiting and retaining talent.
3.Fulfillment Leader
Fulfillment leader is the one who has a short-term perspective. He is a knowledge expert
who is result oriented and who has customer service thinking. He pleases the customer by
delivering results on time. He makes continuous improvement by unlocking individual potential
and optimum usage of resources.
4.Transactional Leader
Transactional leaders are the ones who take the initiative in offering some form of need
satisfaction in return for something valued by the employees, such as pay promotion, improved job
satisfaction or recognition. The leader sets clear goals, and is adept at understanding the needs of
employees and selects appropriate, motivating rewards.
5.Transformational Leaders
Transformational leadership is the process of engaging the commitment of the employees
in the context of the shared values and the shared vision. It is particularly relevant in the context of
managing change. It involves relationship of mutual trust between the leaders and the followers.
Transformational leadership has following components.
 Idealized Influence : It involves having a clear vision and a sense of purpose. Such
leaders are able to win the trust and respect of the followers. They build a base for
future mission, which enables them to obtain extra efforts from the followers.
 Individual Consideration : It involves paying attention to the needs and potential
for development of individual followers. It also involves delegating, coaching and
giving constructive feedback.
 Intellectual Stimulation : It involves soliciting new ideas and new ways of doing
things.
 Inspiration : It involves motivating people, generating enthusiasm, setting an
example, being seen to share the load.
An ideal example of transformational leadership would be what Mrs. Kiran Bedi

achievedwith Tihar Jail inmates. She brought about a complete transformation in the followers as
well as the institutional processes.
6.Charismatic Leader
Till now we have read about different types of leaders but some times it happens that we are
awed by a leader and follow him/her blindly. The personal charm of the person influences us. These
types of leaders are known as charismatic leaders. Mahatma Gandhi was also an example of
charismatic leader. The charismatic leaders have the ability to carry the masses the them. They have
a great deal of emotional appeal. Swami Vivekananda was another charismatic leader. Some
characteristic of charismatic leaders are –
 Followers accept the leader unquestioningly.
 Followers obey the leader willingly.
 Followers belief are similar to the leader’s beliefs.
 Followers trust the correctness of the leader’s belief.
The Benefits of Leadership
 Being a leader enables you to be effective and efficient in determining your

company’s destination and creating a team that focuses on getting it there.
 Being a leader means defining and exhibiting moral and ethical courage and setting
an example for everyone in the company. • Being a leader helps you teach leadership
skills to your employees, who will then help do the “heavy lifting” of moving the
company from where it is today to where it needs to be in the future.
 Being a leader enables you to recruit, hire, and promote employees who demonstrate
leadership abilities.
 Being a leader forces you to analyze your own strengths and weaknesses, as well as
those of the company, and enables you to develop a good sense of reality.
 Being a leader helps you dictate appropriate employee conduct while, at the same
time, preventing employees from being too tough, ruthless, or mean to other
members of the staff.
 Being a leader helps you emphasize the value of the company’s customers, how they
are treated, and the importance of their returning.
Leadership Characteristics
1.Proactive vs. Reactive
The exceptional leader is always thinking three steps ahead. Working to master his/her own
environment with the goal of avoiding problems before they arise.
2.Flexible/Adaptable

How do you handle yourself in unexpected or uncomfortable situations? An effective leader
will adapt to new surroundings and situations, doing his/her best to adjust.
3.A Good Communicator
As a leader, one must listen...a lot! You must be willing to work to understand the needs
and desires of others. A good leader asks many questions, considers all options, and leads in the
right direction.
4.Respectful
Treating others with respect will ultimately earn respect.
5.Quiet Confidence
Be sure of yourself with humble intentions.
6.Enthusiastic
Excitement is contagious. When a leader is motivated and excited about the cause people
will be more inclined to follow.
7.Open-Minded
Work to consider all options when making decisions. A strong leader will evaluate the input
from all interested parties and work for the betterment of the whole.
8.Resourceful
Utilize the resources available to you. If you don't know the answer to something find out by
asking questions. A leader must create access to information.
9.Rewarding
An exceptional leader will recognize the efforts of others and reinforce those actions. We all
enjoy being recognized for our actions!
10.Well Educated
Knowledge is power. Work to be well educated on community policies, procedures,

organizational norms, etc. Further, your knowledge of issues and information will only increase
your success in leading others.
11.Open to Change
A leader will take into account all points of view and will be willing to change a policy,
program, cultural tradition that is out-dated, or no longer beneficial to the group as a whole.

12.Interested in Feedback
How do people feel about your leadership skill set? How can you improve? These are
important questions that a leader needs to constantly ask the chapter. View feedback as a gift to
improve.
13.Evaluative
Evaluation of events and programs is essential for an organization/group to improve and

progress. An exceptional leader will constantly evaluate and change programs and policies that are
not working.
14.Organized
Are you prepared for meetings, presentations, events and confident that people around you
are prepared and organized as well?
15.Consistent
Confidence and respect cannot be attained without your leadership being consistent. People
must have confidence that their opinions and thoughts will be heard and taken into consideration.
16.Delegator
An exceptional leader realizes that he/she cannot accomplish everything on his own. A
leader will know the talents and interests of people around him/her, thus delegating tasks
accordingly.
17.Initiative
A leader should work to be the motivator, an initiator. He/she must be a key element in the
planning and implementing of new ideas, programs, policies, events, etc.
Time Management
Have you ever asked yourself how some people are able to work so many different activities
into their schedules while others barely seem to have the time to attend classes? Are they smarter?
Doubtful.
The Big Five
The five steps to effective time management are:

 Plan
 Assess
 Organize
 Prioritize
 Schedule
Plan
Research and personal experiences have shown that individuals who set personal goals have a
greater chance of success. These individuals have determined and set on paper what they would like
to achieve and how they would like to get there. The goals are realistic, believable and achievable.
People who set goals also evaluate their progress and make any necessary changes on a regular
basis. So, if you want to better manage your time, your first step is to set the goals you would like to
achieve, either for the semester, year or throughout your college career. See our Personal Goal
Setting Handout.
Assess
Your next step is to assess how you are currently using your time. You cannot make productive
changes unless you know what areas need to be changed. Keep a time log for three days from the
time you get up until the time that you go to bed. Describe your specific activities in 15 minute
blocks.
Organize
Ideally, you should make a list each morning of everything that you want or need to do for
that day. Don't plan out every minute and don't even think about which task is most important, just
write them all down.
Prioritize
After you have recorded these "things to do", go over the list and rewrite in priority order
which things you need to do at the top and less important/pressing tasks at the bottom. Keep in
mind due dates, commitments you have made and whether or not these tasks involve other people.
If the items are for class, it is important to consider how much of the final grade they are worth.
How you choose to prioritize is a very personal matter. What is important is that you are
responsible with your priorities. Review your personal goals and how these priorities fit with your
goals?
Schedule
The last thing to do is to take this list and begin to work these "things to do" into your
schedule. You can't plan every minute of your day. Remember to leave room for breaks, socializing
and those unexpected things that pop up. There's no use making a schedule that is impossible to
follow.

Learn to say no. You will reach a point when there is only so much that you can do instead
of burning yourself out or not doing quality work. Learn to balance how much you can do with
what you need to do.
According to Daniel Goleman managers work within a mix of six styles. Every style consists of
specific methods and is ideally applicable only in certain situations:
1. Commanding - demands immediate compliance ("Do what I tell you"). To use: in a crisis,
to kick start a turnaround, or with problem employees.
2. Visionary - mobilizes people toward a vision ("Come with me"). To use: when changes
require a new vision, or when a clear direction is needed.

3. Affiliative - creates harmony and builds emotional bonds ("People come first"). To use: to
heal rifts in a team or to motivate people during stressful circumstances.
4. Democratic - forges consensus through participation ("What do you think?"). To use: to
build buy-in or consensus, or to get input from valuable employees.
5. Pacesetting - sets high standards for performance ("Do as I do, now"). To use: To get quick
results form a highly motivated and competent team.
6. Coaching - develops people for the future ("Try this"). To use: to help an employee
improve performance or develop long-term strengths
Nature of Leadership
The ability to influence people toward the attainment of organizational goals. Leadership is
reciprocal, occurring among people. Leadership is a “people” activity, distinct from administrative paper
shuffling or problem-solving activities. Leadership is dynamic and involves the use of power. travel the
globe solving problems
BEHAVIOURAL CHALLENGES
Challenging behaviour is defined as "culturally abnormal behaviour(s) of such intensity,

frequency or duration that the physical safety of the person or others is placed in serious jeopardy,
or behaviour which is likely to seriously limit or deny access to the use of ordinary community
facilities".
Challenging behaviour is most often exhibited by people with developmental disabilities,

dementia, psychosis and by children, although such behaviours can be displayed by any person.
Types
Common types of challenging behaviour include self-injurious behaviour (such as hitting,

headbutting, biting, scratching), aggressive behaviour (such as hitting others, headbutting,
screaming, scratching others, spitting, biting, punching, kicking), inappropriate sexualised
behaviour (such as public masturbation or groping), behaviour directed at property (such as
throwing objects and stealing) and stereotyped behaviours (such as repetitive rocking or echolalia).
Causes
Challenging behaviour may be caused by many kinds of factors, including:
 biological (pain, medication, the need for sensory stimulation)

 social (boredom, seeking social interaction, the need for an element of control, lack of
knowledge of community norms, insensitivity of staff and services to the person's wishes
and needs)
 environmental (physical aspects such as noise and lighting, or gaining access to preferred
objects or activities)
 psychological (feeling excluded, lonely, devalued, labelled, disempowered, living up to
people's negative expectations)

Challenging behaviour can often be viewed as a ‘behavioural equivalent’ of a mental health
problem. However, research evidence indicates that challenging behaviors and mental health
problems are relatively independent conditions.
A common principle in behaviour management is looking for the message an individual is

communicating through their challenging behaviour: "All behaviour has meaning". This is a core in
the functional analysis process.
Children communicate through their behaviour, especially those who have not acquired
language and vocabulary skills to tell the adult what the problem is.
In adults with developmental disabilities certain types of challenging behaviour can predict
contact with police and hospital admission.
Behaviour response cycle
Challenging behaviours may be viewed as occurring in a cycle:
 Trigger
 Escalation
 Crisis
 Recovery
Analysis of this cycle provides a foundation for using a variety of strategies to minimise the
triggers of challenging behaviour, teach more appropriate behaviours in response to these triggers,
or provide consequences to the challenging behaviour that will encourage a more appropriate
response. Behavioural strategies such as Applied Behaviour Analysis, operant conditioning and
positive behaviour support use similar approaches to analysing and responding to challenging
behaviours.
SECTION-A
1. _______is the process through which a chosen strategy is put into action
2. ____________ is the ability to manager people during implementation.
3. Strategic Control, consists of__________& _____________
4. ____________has only direct, vertical relationships between different levels in the firm.
5. SBU ____________
6. A profit center is a section of a company treated as a separate business
7. Demographic segmentation is dividing markets into different groups according to their age,
gender, the amount of income, the ethnicity or religion of the market and the family life cycle
8. Behavioral segmentation divides consumers into groups according to their
9. The segment must be devised in such a way that it results in an action, this could be a buying
behavior

10. _________is a person or group of people, such as a household, who are the final users of
products or services
SECTION-B
1. What are the successful implementations of strategy required?

2. Write short notes about organizational structure.
3. Explain matrix organizational structure and hybrid organizational structure.
4. What are the factors affecting organizational structure?
5. State the importance of organizational structure.
6. Explain strategic business unit.
7. What you understanding meaning of market segmentation?
8. What is Leadership? Explain types of leadership.
9. Mention limitations (disadvantages) of market segmentation.
10. State the importance of market segmentation.
SECTION- C
1. State the strategy implementation and control
2. What are the Different types of organizational structures?
3. Explain line organizational structure. Staff or functional authority organizational structure,
line and staff organizational structure.
4. What are the benefits of a good organizational structure?
5. What are the factors influencing organizational structures.
6. Explain various methods for segmenting consumer markets
7. Mention advantages and benefits of market segmentation.
8. Describe significance of market segmentation.
9. Who is consumer? Explain different types of consumers.
10. Explain leadership theories.

Unit V
Reaching Strategic Edge: Business Process Reengineering, Benchmarking, Total Quality

Management, Six Sigma Contemporary Strategic Issues.
BUSINESS PROCESS REENGINEERING (BPR)
Business:
It means conducting some activities with an objective (Survival, Profitability, Growth, etc.)
Process:
Process means methods adopted to conduct business activities, a series of activity. A
process is a collection of activities which creates an output of value to the customer and often goes
beyond departmental or functional boundaries.
Re-engineering
Means redesigning of methods to conduct business activities. The combined effect of these
three terms means what is Business Process Re-Engineering.
BPR:
BPR refers to the analysis and redesign of workflows and processes both within and
between the organizations to achieve dramatic changes in terms of costs, time, performance,
quality, customer responses, etc.
 Identify business processes

 Review, update & analyze as-is business processes
 Design to-be business processes
 Test & implement to-be business processes

Business Processes:
Business Processes are simply set of activities that transform a set of inputs into desired
output (goods or services).
A business process comprises a combination of number of independent or interdependent

processes as:
 Developing new product
 Customer order processing
 Bill payment system
The BPR concept can be better stated as restart of a business from scratch (zero) and doesn’t
refer to make-up, reconstruction, manipulation and new addition. It is quiet equivalent to term in
Budgeting called Zero-Base Budgeting.
It refers to complete new Vision, Mission and Process. It starts with definition, scope, and
objective, focus on learning, R&D, knowing customers attitude, understanding employees, adopting
new technology, redesigning the businesses, new plan of action.
In today's competitive market place, the business processes needs to be improved to stay in the
market because of the multiple affect of competition and globalization. Now, customers have

command over the market, and they want better quality products and services and companies are
forced to improve their products or services in order to satisfy the customer need.
BPR is fundamental rethinking and radical redesign (reinventing) of business process to achieve
dramatic improvement in business process in terms of cost, quality, service and speed.
Principles of BPR
Following are major principles of BPR:
 In many organizations the business process is split into many activities and same is
assigned to different people. So, single person cannot be held responsible of any
business outcome. In such cases it is difficult to determine the status of work and
even more difficult to identify the process problem, if it occurs.
 When different people perform work in parallel then it is essential to design a
process that demands continuous communication and coordination between these
people. Otherwise, integration problems are sure to emerge. BPR second principle
says if work is to be performed in parallel then there should be perfect co-ordinations
among persons / resources performing work in parallel.
 Data should be stored in on-line common database form, so that once collected it
need never be reentered. BPR third principle says that there should be a common
database through which everyone can share the common data to avoid duplicity.
Using these principles of BPR the processes in the organization are redesigned to improve
the processes in terms of cost, accuracy, quality and speed etc.
Role of Information Technology in BPR:
The merger of two concepts, BPR and Information Technology, has resulted in a new
technology term known as Business Engineering. Business Engineering combines the innovations
of Information Technology with BPR and focus on better business processes. The main thrust of
using information technology in BPR lie in far-reaching (best procedure based) processes oriented
solutions.
Impact of IT-systems
 Compression of time
 Overcoming restrictions of geography and/or distance
 Restructuring of relationships.
Summarizing: BPR+ Information Technology = Business Engineering
Business values provided by IT in three distinct areas as Efficiency – by way of increased

productivity, Effectiveness – by way of better management, and Innovation – by way of improved
products and services

Rationale (Reasons of accepting) of BPR
New technologies (like Information Technology) are rapidly bringing new capabilities to
businesses, thereby raising the strategically options and the need to improve business processes
dramatically. Opening up of a local economy into a global economy has increased competition in
terms product/service quality, pricing, etc. and even Customers are also demanding better products
and services and greater value for their money and time.
Implementation of BPR:
BPR implementation is a few steps process:
 Determining objectives and Framework:

Objectives provide required focus, direction, and motivation for the redesign process and helps
in building a comprehensive foundation for the reengineering process.
 Identify Customers and Determine their Needs:

 Designers should understand customers - their profile, their logics in accepting and
discarding a product or services.
 The redesigned business process should clearly provide added value to the customer.
 Study the Existing Process:
Existing processes provide an important base for the redesign. It is studied with a Purpose to
gain an understanding of the ‘what’, and ‘why’ of the targeted process, problems with current
product, services or process(s).
 Formulate a redesign process plan:

 Information gained through the earlier steps is translated into an ideal redesign
process. It is the real crux of the reengineering efforts.
 Customer focused redesign concepts are identified and formulated after careful study
and evaluation of every Alternative processes the best is selected.
 Implement the redesign:

It is always easier to formulate than to implement new process. But Implementation is the only
Key to achieve dramatic improvements in terms of Implementation of the redesigned process and
Application of other knowledge gained from the previous steps.
Implementation of the new process is the responsibility and only by the joint effort of the designers
and management both.
Central Thrust of BPR:

The reduction of the total cycle time of a business process by eliminating the unwanted and
unnecessary steps, by simplifying the systems and procedures, by eliminating the transit and
waiting time and by maintaining a continuous effort for more and more improvement.

Business process re-engineering is also known as business process redesign, business
transformation, or business process change management.
Three-Phased Approach to a BPR
 Planning Phase
 Redesign Phase
 Implementation
Phase 1: Planning, establishes the required oversight and reference materials for successful
Redesign and Implementation phases as well as lays the administrative groundwork. Work in the
Planning phase spans approximately one month (part time).
Planning involves:
 Mission and vision identification / verification
 Case for Action and End Results creation
 Executive Steering Committee (ESC) selection
 Team selection and related tasks
 Administrative planning and execution
 Communication planning and implementation
Phase 2, Redesign, is the period during which the BPR team is trained, then follows the
methodology to transform the selected process and deliver recommended solutions. The major steps
of Redesign are:
 ESC training and End Results approval
 Team leader and process owner training (see Appendix A for details)
 Team member training
 Process redesign (see Appendix A for details)
 Report writing and presentation creation
 Team prep for ESC presentation
 ESC presentation
 Implementation planning
Phase 3, Implementation, is about bringing to life the team’s recommendations to realize the goals
of the redesign. It involves prioritizing, planning for, and executing projects to achieve the redesign.
Given that the team is transforming a process during the Redesign phase, implementation
details will not be known until the team has completed its work. However, the nature of a radical
and dramatic redesign implies that significant resources will be required to implement
recommended solutions. The implementation timeframe will also depend on the team’s
recommendations.
This phase begins with the creation of an Implementation Framework that forms the bridge
between the team’s recommendations and the projects required to enable the recommendations.
Next, projects in the Implementation Framework are prioritized using criteria to determine an order
that will best achieve the redesign goals. Projects are then resourced, scheduled and executed. An

Implementation Framework Team Leader (different from the Team Leader of the Redesign Phase)
completes this work.
Project execution is usually staggered, with some policy recommendations and “quick
wins” implemented immediately, and other major process changes implemented over time (months
and / or years) as decisions are made and resources are available. The timeline for technology
upgrades to support the new processes also varies depending on the availability and nature of
technologies and the timeframe for implementing new processes.
Benefits of Business Process Re-engineering.
1. Increased customer satisfaction:Customer satisfaction should improve when an organization

employs the use of BPR. As mentioned in previous programmes when an organization utilizes
this process it is geared towards the customer. As processes are re-engineered and employees
deliver a high quality service the customer seeks to benefit. This is due to a reduction in the
time and cost associated with BPR as those processes that added no value would have been
eliminated.
2. Increased employee satisfaction:Due to the way business process re-engineering is
fashioned it allows the employees of an organization to have a greater sense of responsibility
and accountability. Employees are driven to deliver a higher quality service to its customers
and at the same time important tasks are performed at the highest standards. Employees get
motivated as BPR reduces the length of time at a task; thus allowing fewer tasks to be
performed in delivering service of a high standard.
3. Increased flexibility of the organization: Traditionally, organisations can be rigid in
structure but through the application of BPR it is forced to change as a different environment
is created. Organisations therefore have to be flexible and adapt to the changes that will come
as a result of this.
Problems in BPR
 Only few company have the courage of having BPR because it disturbs established hierarchies
and functional structures since it creates serious affect and involves resistance from the work-
force.
 As it takes time and expenditure, many companies are unwilling to adopt BPR and even chances
of losses in the transition period.
 Target setting is tricky and difficult. It may turn-out as a failure if targets are not properly set or
the whole transformation is not carried out properly
Characteristics of Business Process Re-engineering”. Business process re-engineering challenges an

organization to examine what and how activities are being carried out and why it is that these activities are
performed in a particular way. BPR then pushes the envelope further, critiquing the current system to re-
invent or re-engineer a new system that will speak to efficient and effective service delivery.
BPR, when employed, asks an organization, and by extension its employees, to break old assumptions and to
create processes or activities that lead to efficiency. In BPR, each process must be owned by an individual
who takes ownership of and responsibility for the process. The organization’s processes must be evaluated in
order to eliminate those which do not add value.

BENCHMARKING
Introduction
Benchmarking is an approach of setting goals and measuring productivity based on best

industry practices. Benchmarking provide standards against which performances can be measured.
Benchmarking helps in improving performance by learning from best practices and the
processes by which they are achieved. It involves regularly comparing different aspects of
performance with the best practices, identifying gaps and finding out methods to reduce the gaps
and also to improve the situations so that the gaps are positive for the organization.
Therefore, for the benefit of corporate executives, students and the interested general
populace, the key steps in the benchmarking process are highlighted below.
A Step-by-Step Approach to Benchmarking

Following are the steps involved in benchmarking process:
(1) Planning:
Prior to engaging in benchmarking, it is imperative that corporate stakeholders identify the
activities that need to be benchmarked.
For instance, the processes that merit such consideration would generally be core activities
that have the potential to give the business in question a competitive edge.
Such processes would generally command a high cost, volume or value. For the optimal results of
benchmarking to be reaped, the inputs and outputs need to be redefined; the activities chosen should
be measurable and thereby easily comparable, and thus the benchmarking metrics needs to be
arrived at.
Prior to engaging in the benchmarking process, the total process flow needs to be given due
consideration. For instance, improving one core competency at the detriment to another proves to
be of little use.

Therefore, many choose to document such processes in detail (a process flow chart is
deemed to be ideal for this purpose), so that omissions and errors are minimized; thus enabling the
company to obtain a clearer idea of its strategic goals, its primary business processes, customer
expectations and critical success factors.
An honest appraisal of the company's strengths, weaknesses and problem areas would prove
to be of immense use when fine-tuning such a process.
The next step in the planning process would be for the company to choose an appropriate
benchmark against which their performance can be measured.
The benchmark can be a single entity or a collective group of companies, which operate at optimal
efficiency.
(2) Collection of Information:

Information can be broadly classified under the sub texts of primary data and secondary
data.To clarify further, here, primary data refers to collection of data directly from the benchmarked
company/companies itself, while secondary data refers to information garnered from the press,
publications or websites.
Exploratory research, market research, quantitative research, informal conversations,
interviews and questionnaires, are still, some of the most popular methods of collecting
information.
When engaging in primary research, the company that is due to undertake the benchmarking
process needs to redefine its data collection methodology.
(3) Analysis of Data:

Once sufficient data is collected, the proper analysis of such information is of foremost
importance.
Data analysis, data presentation (preferably in graphical format, for easy reference), results
projection, classifying the performance gaps in processes, and identifying the root cause that leads
to the creation of such gaps (commonly referred to as enablers), need to be then carried out.
(4) Implementation:
This is the stage in the benchmarking process where it becomes mandatory to walk the talk.
This generally means that far-reaching changes need to be made, so that the performance gap
between the ideal and the actual is narrowed and eliminated wherever possible.
A formal action plan that promotes change should ideally be formulated keeping the
organization's culture in mind, so that the resistance that usually accompanies change is minimized.
Ensuring that the management and staff are fully committed to the process and that
sufficient resources are in place to meet facilitate the necessary improvements would be critical in
making the benchmarking process, a success.
(5) Monitoring:
As with most projects, in order to reap the maximum benefits of the benchmarking process,
a systematic evaluation should be carried out on a regular basis.
Assimilating the required information, evaluating the progress made, re-iterating the impact
of the changes and making any necessary adjustments, are all part of the monitoring process.

TYPES OF BENCHMARKING
Benchmarking can be internal (comparing performance between different groups or teams

within an organization) or external (comparing performance with companies in a specific industry
or across industries). Within these broader categories, there are three specific types of
benchmarking: 1) Process benchmarking, 2) Performance benchmarking and 3) strategic
benchmarking. These can be further detailed as follows:
 Process benchmarking - the initiating firm focuses its observation and investigation of
business processes with a goal of identifying and observing the best practices from one or
more benchmark firms. Activity analysis will be required where the objective is to
benchmark cost and efficiency; increasingly applied to back-office processes where
outsourcing may be a consideration.
 Financial benchmarking - performing a financial analysis and comparing the results in an
effort to assess your overall competitiveness and productivity.
 Benchmarking from an investor perspective- extending the benchmarking universe to
also compare to peer companies that can be considered alternative investment opportunities
from the perspective of an investor.
 Benchmarking in the public sector - functions as a tool for improvement and innovation in
public administration, where state organizations invest efforts and resources to achieve
quality, efficiency and effectiveness of the services they provide.
 Performance benchmarking - allows the initiator firm to assess their competitive position
by comparing products and services with those of target firms.
 Product benchmarking - the process of designing new products or upgrades to current
ones. This process can sometimes involve reverse engineering which is taking apart
competitors products to find strengths and weaknesses.
 Strategic benchmarking - involves observing how others compete. This type is usually not
industry specific, meaning it is best to look at other industries.
 Functional benchmarking - a company will focus its benchmarking on a single function to
improve the operation of that particular function. Complex functions such as Human
Resources, Finance and Accounting and Information and Communication Technology are
unlikely to be directly comparable in cost and efficiency terms and may need to be
disaggregated into processes to make valid comparison.
 Best-in-class benchmarking - involves studying the leading competitor or the company
that best carries out a specific function.
 Operational benchmarking - embraces everything from staffing and productivity to office
flow and analysis of procedures performed.
 Energy benchmarking - process of collecting, analysing and relating energy performance
data of comparable activities with the purpose of evaluating and comparing performance
between or within entities. Entities can include processes, buildings or companies.
Benchmarking may be internal between entities within a single organization, or - subject to
confidentiality restrictions - external between competing entities.

The Importance of Benchmarking
By making data-driven business decisions based on information rather than intuition,
through shedding fixed cost spending, and by partnering with business process experts so that
medical staff focus exclusively on patient care, your practice can succeed.
Critically important to becoming a pacesetting medical practice is adopting a continuous

improvement mindset and integrate regular benchmarking. Benchmarking is the process of
comparing your practice’s key performance indicators and business processes, to industry norms.
Common areas measured during a benchmark include:
 Staff productivity
 Payment processing
 Claims processing
 Accounts receivable
 Operational costs
Understanding where you stand in the industry, and how you compare to your peers, is an
empowering exercise. It provides you with critical information so you can make informed business
decisions based on data, rather than intuition.
Benefits of Benchmarking
Benchmarking is a common practice and sensible exercise to establish baselines, define best
practices, identify improvement opportunities and create a competitive environment within the
organization. Benchmarking helps companies:
 It helps to improve organizational performance.

 Increased customer satisfaction.
 Reduced waste and costs of poor quality.
 Reduced overhead through business simplification.
 Transmission of best practice between divisions.
 It can assist in overcoming complacency and drive organizational change.
 It provides a way to monitor the conduct of competitive position.
 It provides advance warning of deteriorating competitive position.
 It improves management understanding of the value-adding processes of the business
 Gain an independent perspective about how well they perform compared to other companies
 Clearly identify specific areas of opportunity
 Validate assumptions
 Prioritize improvement opportunities
 Set performance expectations
 Monitor company performance and manage change
Procedure for Benchmarking
The 12 stage methodology consists of:
1. Select subject
2. Define the process
3. Identify potential partners
4. Identify data sources
5. Collect data and select partners
6. Determine the gap
7. Establish process differences
8. Target future performance
9. Communicate
10. Adjust goal
11. Implement
12. Review and recalibrate
TOTAL QUALITY MANAGEMENT (TQM):
Introduction:
There are many approaches in the business domain in order to achieve and exceed the
quality expectations of the clients.
For this, most companies integrate all quality-related processes and functions together and
control it from a central point.
As the name suggests, Total Quality Management takes everything related to quality into
consideration, including the company processes, process outcomes (usually products or services)
and employees.
The Origin:
 The origin of the TQM goes back to the time of the First World War. During the World War I,
there have been a number of quality assurance initiatives taken place due to the large-scale
manufacturing required for war efforts.
 The military fronts could not afford poor quality products and suffered heavy losses due to the
poor quality. Therefore, different stakeholders of the war initiated efforts to enhance the
manufacturing quality.
 First of all, quality inspectors were introduced to the assembly lines in order to inspect the
quality. Products below certain quality standard were sent back for fixing.
 Even after World War I ended, the practice of using quality inspectors continued in
manufacturing plants. By this time, quality inspectors had more time in their hands to perform
their job.
 Therefore, they came up with different ideas of assuring the quality. These efforts led to the
origin of Statistical Quality Control (SQC). Sampling was used in this method for quality
control.
 As a result, quality assurance and quality control cost reduced, as inspection of every
production item was need in this approach.
 During the post World War II era, Japanese manufacturers produced poor quality products. As
a result of this, Japanese government invited Dr. Deming to train Japanese engineers in
quality assurance processes.
 By 1950, quality control and quality assurance were core components of Japanese
manufacturing processes and employees of all levels within the company adopted these
quality processes.
 By 1970s, the idea of total quality started surfacing. In this approach, all the employees (from
CEO to the lowest level) were supposed to take responsibility of implementing quality
processes for their respective work areas. In addition, it was their responsibility to quality
control, their own work.
The definitions of these three terms used for TQM cumulatively stands and means TQM.
Total: Involving the entire organization, supply chain, and/or product life cycle.
Quality: Providing output (goods or services) as per specifications or without fault.
Management: Management is a process including steps like Planning, Organizing, Staffing,

Directing and Controlling.
Combined result of all these term forms the TQM definition and that definition is:
"TQM is a management approach for an organization, centered on quality, based on the

participation of all its members and aiming at long-term success through customer satisfaction, and
benefits to all members of the organization and to society." TQM ensures things are done at right
time and that defects and waste are eliminated from operations.
TQM is a management concept to encourage all associated with the organisational processes
to realize the importance of quality. It is a concept that state adoption of quality in every step of
your work and process.
The TQM philosophy greatly emerged under Deming's guidance (regarded as the father of
TQM). Deming believed quality management should be pervasive, and should not focus on merely
sorting good products from bad. Deming believed the responsibility for quality should be shared by
everyone in an organization. Deming recognized that most quality problems were system-induced
and were therefore not related to workmanship.

Basic Principles of TQM:
In TQM, the processes and initiatives that produce products or services are thoroughly
managed. By this way of managing, process variations are minimized, so the end product or the
service will have a predictable quality level.
Following are the key principles used in TQM:
 Top management: The upper management is the driving force behind TQM. The upper
management bears the responsibility of creating an environment to rollout TQM concepts
and practices.
 Training needs: When a TQM rollout is due, all the employees of the company need to go
through a proper cycle of training. Once the TQM implementation starts, the employees
should go through regular trainings and certification process.
 Customer orientation: The quality improvements should ultimately target improving the
customer satisfaction. For this, the company can conduct surveys and feedback forums for
gathering customer satisfaction and feedback information.
 Involvement of employees: Pro-activeness of employees is the main contribution from the
staff. The TQM environment should make sure that the employees who are proactive are
rewarded appropriately.
 Techniques and tools: Use of techniques and tools suitable for the company is one of the
main factors of TQM.
 Corporate culture: The corporate culture should be such that it facilitates the employees
with the tools and techniques where the employees can work towards achieving higher
quality.
 Continues improvements: TQM implementation is not a one time exercise. As long as the
company practices TQM, the TQM process should be improved continuously.
TQM focuses on 6C:
 Commitment
 Culture
 Continuous Improvement
 Customer
 Co-ordination
 Control

FIVE IMPORTANT FACTORS IN TOTAL QUALITY MANAGEMENT
Total Quality Management (TQM) is a participative, systematic approach to planning and

implementing a constant organizational improvement process.
 Commitment and Understanding from Employees
It is key to ensure that all employees within your organization know about the Total Quality
Management (TQM) policies and make them an fundamental part of their work. Your
employees should know your corporate goals and recognize the importance of these goals to
the overall success of your organization.
 Quality Improvement Culture
The organizational culture needs to be modernized on a continuous basis to encourage

employee feedback. Your employees are full of valuable knowledge- embrace it! Listen to
those executing the processes that keep your business moving daily. If employees have an
idea on how to improve operations, they need to know management respects their ideas or
they will not share.
 Continuous Improvement in Process
There is no standing still. If you are not moving forward, you are moving backwards. Total
Quality Management (TQM) is a continuous process and not a program. This requires
constant improvement in all the related policies, procedures and controls established by
management.
 Focus on Customer Requirements
In today’s market, customers require and expect perfect goods and services with zero
defects. Focusing on customer requirements is significant to long term survival and
essential in order to build relationships with customers. People do business based on
emotion. Competitors will always be a risk. Keep your customers close and happy. Make
sure precise requirements of all customers are documented and understood by everyone that
touches the account.
 Effective Control
It is essential to monitor and measure the performance of the business. It’s easy to forget
how many times in a year an employee does not conform to a controlled procedure or how
many times a piece of equipment was down due to unplanned maintenance. If strict
documentation is maintained, you will be able to objectively quantify areas for improvement
and focus your efforts where they will provide the greatest return of both your time and
financial resources

Total Quality Management Benefits
 Strengthened competitive position

 Adaptability to changing or emerging market conditions and to environmental and other
government regulations
 Higher productivity
 Enhanced market image
 Elimination of defects and waste
 Reduced costs and better cost management
 Higher profitability
 Improved customer focus and satisfaction
 Increased customer loyalty and retention
 Increased job security
 Improved employee morale
 Enhanced shareholder and stakeholder value
 Improved and innovative processes
The Eight Elements of TQM
Total Quality Management (TQM) is a management approach that originated in the 1950s
and has steadily become more popular since the early 1980s. Total quality is a description of the
culture, attitude and organization of a company that strives to provide customers with products and
services that satisfy their needs. The culture requires quality in all aspects of the company’s
operations, with processes being done right the first time and defects and waste eradicated from
operations.
To be successful implementing TQM, an organization must concentrate on the eight key

elements:
1. Ethics
2. Integrity
3. Trust
4. Training
5. Teamwork
6. Leadership
7. Recognition
8. Communication
This paper is meant to describe the eight elements comprising TQM.

TQM and Traditional Management Practices
1) Strategic Planning and Management:
 Quality planning and strategic business planning is same and not separable in TQM.
 Customer satisfaction, Defect rates, and Process Cycle Times are equally important like
financial and marketing objectives.
2) Changing Relationships with Customers and Suppliers:

Traditional management places customers outside the enterprise whereas TQM views
everyone inside the enterprise including customer, supplier, etc.
3) Organizational Structure:
TQM views the enterprise as a system of interdependent processes, linked through a
network of suppliers and customers. Each process is connected to the enterprise's mission and
purpose and every process contains sub-processes.
4) Organizational Change:
In TQM the environment in which the enterprise interacts is considered to be changing
constantly. Management's job, therefore, is to provide the leadership continual improvement and
innovation.
5) Teamwork:
In TQM individuals cooperate in team structures such as quality circles, steering
committees, and self-directed work teams. Departments work together toward system optimization
through cross-functional teamwork.
6) Motivation and Job Design:

TQM managers provide leadership. Subordinates are viewed as process managers rather
than functional specialists. People are motivated to make meaningful contributions to what they
believe is an important and noble cause, of value to the enterprise and society.
The Advantages of TQM
TQM offers both short term benefits and long term benefits. The long term pros of TQM,
however, outweigh the near-sighted advantages. Because this process can take years to perfect and
implement, most organizations are concerned with the long term gains.
Some of the pros of TQM in the long run include higher moral, decreased costs, increased
customer loyalty and trust, better market penetration and increased productivity. Practicing TQM
decreases the chance of committing mistakes and producing inferior products that can damage the
name and fame of a company. It also increases the popularity and status of an organization in

society while saving it money and time in the long run. Resources are saved that can be utilized for
better projects.
Overall, TQM enhances employee satisfaction and creates an air of enthusiasm and
welcomes professional attitude to jobs. Probably the most beneficial of all short term gains is its
potential to increase team work and spread camaraderie in a production unit.
The disadvantages of TQM
Total Quality Management does suffer from some drawbacks. First of all, its complexity
exposes the organization to potential decision bottlenecks and overall bureaucracy. Ideas that are
worthy may get dumped in favor of greater incentives and better market penetration.
Improvement in a company's TQM can be at the cost of jobs and employment as technology
plays an important role. This can have a devastating impact on various communities and also reduce
the amount of goodwill the company name carries within these communities. The fact TQM has the
capacity to replace jobs with technology is both an exciting and scary possibility, and the
ramifications of it must be considered.
Focusing too much on the end result and customer satisfaction may sometimes cause a
project to run into excess costs without any possible sign of returns. Moreover, it can result in the
lack of confidence of the management in the floor workers and think tank. Finally, the cost of
analyzing and implementing a TQM plan is exponential limiting it to only financially sound
companies.
It is clear that any TQM plan will inherently have benefits or flaws depending on your
outlook and world view. However, this article served to analyze how TQM works and why it has its
pros and cons. Obviously, subscribing to any management philosophy without tailoring it to your
specific business needs is problematic, so exercise caution before beginning to use systems such as
this one.
SIX SIGMA
Six Sigma is a set of techniques and tools for process improvement. It was developed by
Motorola in 1986, coinciding with the Japanese asset price bubble which is reflected in its
terminology. Jack Welch made it central to his business strategy at General Electric in 1995. Today,
it is used in many industrial sectors.
The term Six Sigma originated from terminology associated with manufacturing,
specifically terms associated with statistical modeling of manufacturing processes. The maturity of
a manufacturing process can be described by a sigma rating indicating its yield or the percentage of
defect-free products it creates. A six sigma process is one in which 99.99966% of the products
manufactured are statistically expected to be free of defects (3.4 defective parts/million), although,
as discussed below, this defect level corresponds to only a 4.5 sigma level. Motorola set a goal of
"six sigma" for all of its manufacturing operations, and this goal became a by-word for the
management and engineering practices used to achieve it.
Six Sigma is a thorough and disciplined methodology that uses data and statistical analysis
to measure and improve a company's operational performance by identifying and eliminating
"defects" in manufacturing and service-related processes. Six Sigma standard is 3.4 defects per
million parts or 99.99966% of products manufactured are defect free.
Six Sigma is driven by understanding customer needs, disciplined use of facts, data and
statistical (probability and normal distribution) analysis, and diligent attention to managing,
improving and reinventing business processes.
Six Sigma efforts target three main areas:
 Improving customer satisfaction

 Reducing process cycle time
 Reducing defects
Six Sigma at many organizations simply means a measure of quality that strives for near
perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating
defects (driving toward six standard deviations between the mean and the nearest specification
limit) in any process – from manufacturing to transactional and from product to service.
Methodologies
Six Sigma projects follow two project methodologies inspired by Deming's Plan-Do-Check-Act
Cycle. These methodologies, composed of five phases each, bear the acronyms DMAIC and
DMADV.
 DMAIC is used for projects aimed at improving an existing business process. DMAIC is
pronounced as "duh-may-ick" DMADV is used for projects aimed at creating new product
or process designs. DMADV is pronounced as "duh-mad-vee"
DMAIC
The DMAIC project methodology has five phases:
 Define the system, the voice of the customer and their requirements, and the project goals,
specifically.
 Measure key aspects of the current process and collect relevant data.
 Analyze the data to investigate and verify cause-and-effect relationships. Determine what
the relationships are, and attempt to ensure that all factors have been considered. Seek out
root cause of the defect under investigation.
 Improve or optimize the current process based upon data analysis using techniques such as
design of experiments, poka yoke or mistake proofing, and standard work to create a new,
future state process. Set up pilot runs to establish process capability.
 Control the future state process to ensure that any deviations from the target are corrected
before they result in defects. Implement control systems such as statistical process control,
production boards, visual workplaces, and continuously monitor the process.

Some organizations add a Recognize step at the beginning, which is to recognize the right
problem to work on, thus yielding an RDMAIC methodology.
DMADV
The DMADV project methodology, known as DFSS ("Design For Six Sigma"), features five
phases:
 Define design goals that are consistent with customer demands and the enterprise strategy.
 Measure and identify CTQs (characteristics that are Critical To Quality), product
capabilities, production process capability, and risks.
 Analyze to develop and design alternatives
 Design an improved alternative, best suited per analysis in the previous step
 Verify the design, set up pilot runs, implement the production process and hand it over to the
process owner(s).
Implementation roles
One key innovation of Six Sigma involves the absolute "professionalizing" of quality
management functions. Prior to Six Sigma, quality management in practice was largely relegated to
the production floor and to statisticians in a separate quality department. Formal Six Sigma
programs adopt a kind of elite ranking terminology (similar to some martial arts systems, like
Kung-Fu and Judo) to define a hierarchy (and special career path) that kicks across all business
functions and levels.
Six Sigma identifies several key roles for its successful implementation.
 Executive Leadership includes the CEO and other members of top management. They are
responsible for setting up a vision for Six Sigma implementation. They also empower the
other role holders with the freedom and resources to explore new ideas for breakthrough
improvements.
 Champions take responsibility for Six Sigma implementation across the organization in an
integrated manner. The Executive Leadership draws them from upper management.
Champions also act as mentors to Black Belts.
 Master Black Belts, identified by champions, act as in-house coaches on Six Sigma. They
devote 100% of their time to Six Sigma. They assist champions and guide Black Belts and
Green Belts. Apart from statistical tasks, they spend their time on ensuring consistent
application of Six Sigma across various functions and departments.
 Black Belts operate under Master Black Belts to apply Six Sigma methodology to specific
projects. They devote 100% of their valued time to Six Sigma. They primarily focus on Six
Sigma project execution and special leadership with special tasks, whereas Champions and
Master Black Belts focus on identifying projects/functions for Six Sigma.
 Green Belts are the employees who take up Six Sigma implementation along with their
other job responsibilities, operating under the guidance of Black Belts.

Criticism
Lack of originality
Noted quality expert Joseph M. Juran has described Six Sigma as "a basic version of quality
improvement", stating that "there is nothing new there. It includes what we used to call facilitators.
They've adopted more flamboyant terms, like belts with different colors. I think that concept has
merit to set apart, to create specialists who can be very helpful. Again, that's not a new idea. The
American Society for Quality long ago established certificates, such as for reliability engineers."
Role of consultants
The use of "Black Belts" as itinerant change agents has (controversially) fostered an
industry of training and certification. Critics argue there is overselling of Six Sigma by too great a
number of consulting firms, many of which claim expertise in Six Sigma when they have only a
rudimentary understanding of the tools and techniques involved, or the markets or industries in
which they are acting.
Potential negative effects
A Fortune article stated that "of 58 large companies that have announced Six Sigma
programs, 91 percent have trailed the S&P 500 since". The statement was attributed to "an analysis
by Charles Holland of consulting firm Qualpro (which espouses a competing quality-improvement
process)". The summary of the article is that Six Sigma is effective at what it is intended to do, but
that it is "narrowly designed to fix an existing process" and does not help in "coming up with new
products or disruptive technologies." Advocates of Six Sigma have argued that many of these
claims are in error or ill-informed.
Over-reliance on statistical tools
A more direct criticism is the "rigid" nature of Six Sigma with its over-reliance on methods
and tools. In most cases, more attention is paid to reducing variation and searching for any
significant factors and less attention is paid to developing robustness in the first place (which can
altogether eliminate the need for reducing variation). The extensive reliance on significance testing
and use of multiple regression techniques increases the risk of making commonly-unknown types of
statistical errors or mistakes.
Stifling creativity in research environments
A BusinessWeek article says that James McNerney's introduction of Six Sigma at 3M had
the effect of stifling creativity and reports its removal from the research function. It cites two
Wharton School professors who say that Six Sigma leads to incremental innovation at the expense
of blue skies research. This phenomenon is further explored in the book Going Lean, which
describes a related approach known as lean dynamics and provides data to show that Ford's "6
Sigma" program did little to change its fortunes.
Lack of systematic documentation
One criticism voiced by Yasar Jarrar and Andy Neely from the Cranfield School of
Management's Centre for Business Performance is that while Six Sigma is a powerful approach, it
can also unduly dominate an organization's culture; and they add that much of the Six Sigma
literature lacks academic rigor:
Probably more to the Six Sigma literature than concepts, relates to the evidence for Six
Sigma’s success. So far, documented case studies using the Six Sigma methods are presented as the
strongest evidence for its success. However, looking at these documented cases, and apart from a
few that are detailed from the experience of leading organizations like GE and Motorola, most cases
are not documented in a systemic or academic manner.
Six Sigma Advantages
The main advantage of Six Sigma compared to other approaches to quality control is that
Six Sigma is customer driven. Six Sigma is defined as a limit of 3.4 defects per one million
products or service processes, where anything not acceptable to the end customer is considered a
defect. Six Sigma addresses the entire process behind the production of an item or completion of a
service, rather than just the final outcome. It is proactive rather than reactive, as it sets out to
determine how improvements can be made even before defects or shortcomings are found.
Six Sigma Disadvantages
Because Six Sigma is applied to all aspects of the production and planning process, it may
create rigidity and bureaucracy that can create delays and stifle creativity. In addition, its customer
focus may be taken to extremes, where internal quality-control measures that make sense for a
company are not taken because of the overlying goal of achieving the Six Sigma-stipulated level of
consumer satisfaction. For example, an inexpensive measure that carries a risk of a slightly higher
defect rate may be rejected in favor of a more expensive measure that helps to achieve Six Sigma,
but adversely affects profitability.

SECTION-A
1. BPR refers to __________

2. BPR + information technology =__________
3. _______is an approach of setting goals and measuring productivity based on best industry
practices.
4. _______________is a process of continuous improvement in search for competitive
advantage.
5. Any two type of benchmarking __________&_________.
6. Six Sigma means ________.
7. ____________is the discipline concerned with good and bad in any situation.
8. DMAIC________.
9. DMADV _______.
10. Black Belts operate under_________.
SECTION-B
1. State principles of BPR.

2. Explain role of information technology in BPR.
3. What are the three-phased approaches to a BPR?
4. Mention benefits of business process re-engineering.
5. Write short notes on benchmarking.
6. State the importance of benchmarking.
7. List out benefits of benchmarking.
8. State important factors in total quality management.
9. Criticize of six sigma.
10. Mention advantages and disadvantages of TQM.
SECTION-C
1. Explain business process reengineering.

2. Describe implementation of BPR.
3. Explain characteristics of business process re-engineering.
4. What are the various types of benchmarking?
5. Explain step-by-step approach to benchmarking.
6. What are the procedures for benchmarking?
7. Explain basic principles of TQM.
8. What are the Methodologies in six sigma?
9. State contemporary strategic issues.
10. Explain.

i. BPR.
ii. BENCHMARKING.
iii. TQM.
iv. SIX SIGMA.

Unit IV: Strategy Implementation and Control

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Unit IV

Strategy Implementation and Control: Organizational structures; establishing strategic

STRATEGY IMPLEMENTATION AND CONTROL

The successful implementation of strategy required 4 basic skills:

Allocating skill is the ability to provide the organizational resources necessary to

Strategic Management – Unit IV & V 1

Strategic Control focuses on the activities involved in environmental analysis,

An organizational structure defines how activities such as task allocation, coordination

Strategic Management – Unit IV & V 2

The typically hierarchical arrangement of lines of authority, communications, rights and

A structure depends on the organization's objectives and strategy. In a centralized structure,

TYPES OF ORGANISATIONAL STRUCTURES

Formal organizational structures are categorized as:

 Line organizational structure.

 Staff or functional authority organizational structure.

 Line and staff organizational structure.

 Committee organizational structure.

 Divisional organizational structure.

 Project organizational structure.

 Matrix organizational structure and

 Hybrid organizational structure.

These organizational structures are briefly described in the following paragraphs:

Strategic Management – Unit IV & V 3

 Tends to simplify and clarify authority, responsibility and accountability relationships

 Promotes fast decision making

 Neglects specialists in planning

 Overloads key persons.

Strategic Management – Unit IV & V 4

 As the firm grows larger, line organization becomes more ineffective.

 Managers may have to become experts in too many fields.

2. Staff or Functional Authority Organizational Structure

The jobs or positions in an organization can be categorized as:

(i) Line position:

(ii) Staff position:

Line and Staff Organizational Structure:

Strategic Management – Unit IV & V 5

Three types of specialized staffs can be identified:

Some advantages are:

 Relieves line authorities of routine and specialized decisions.

 No need for all round executives.

 Conflict between line and staff may still arise.

 Staff officers may resent their lack of authority.

 Co-ordination between line and staff may become difficult.

Committee Organizational Structure Features:

 Formed for managing certain problems/situations

 Are temporary decisions.

 Committee decisions are better than individual decisions

 Better interaction between committee members leads to better co-ordination of activities

 Committee members can be motivated to participate in group decision making.

 Group discussion may lead to creative thinking.

 Group action may lead to compromise and indecision.

 ‘Buck passing’ may result.

Strategic Management – Unit IV & V 7

Strategic Management – Unit IV & V 8

A project organization is a temporary organization designed to achieve specific results by

 Temporary organization designed to achieve specific results by using teams of specialists

Importance of Project Organizational Structure:

Strategic Management – Unit IV & V 9

 Work is defined by a specific goal and target date for completion.