Strategy and Corporate Planning Essay
The contemporary work place is subject to the influence of the environment in which it operates in. The intricate nature of the environment in which companies operate necessitates inclusion of actions by the management, actions geared towards achievement of the outlined objectives and goals. As a result, each organisation will have a formal document outlining the strategy and corporate plan through which it intents to achieve its objectives (Mason and Mitroff (1981). According to Chakravarthy and Lorange (1991), the similarity and difference between strategy and corporate planning is hinged on interpretation by the specific organisations.
Most organisations content on just having a strategic plan while some prefer to outline their strategy and corporate plan under different headings. Strategy denotes the outline of a company’s current position in the market, what it desires to achieve and how it plans to achieve its objectives (Helfat et al, 2007). Thus, when a company lays out its strategies, the contents outline the actions aimed at combating the sway of the external environment. A corporate plan on the other hand outlines the allocation of resources and capabilities in order to achieve a desired outcome.
As posited by De Wit and Meyer (2004), strategy is subject to the
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As a result, the management will have to outline how it plans to achieve its strategies and by so doing, a corporate plan has to be hatched in order to support the efforts of the workforce. Therefore, strategy and corporate plan must go hand in hand. By separating strategy and a corporate plan, an organisation clearly outlines the purpose of strategy in that the strategy will depict what is to be done while the corporate plan will depict how it will be done. As a result, strategy in its entirety is not sufficient to steer the organisation towards the objectives.
The management has to assign roles and outlay resources for use in achievement of the targets. Consequently, strategy is part of corporate plan and the corporate plan is part of strategy. For an organisation to succeed, it must recognise the internal and external characteristics and chart a way in which to take advantage of the situation and protect its interests. Its actions are subject to availability of resources, both human and capital, and thus the need for both a strategy and a corporate plan. Organisational Structure and Corporate Planning Process
Organisational structure denotes the reporting structure present in an organisation. The relationship between the different departments present in the organisation represents the organisational structure. As a result, the organisational structure has a major influence on the performance of an organisation since the interaction between the departments is based on the efficiency of the organisational structure. Powergen Limited emerged from the disintegration of the CEGB. As a result, the company had to develop an organisational structure aimed at revamping its generation capacity.
An efficient organisational structure was necessary for success of the company owing to the nature of the market. The industry was swamped with numerous private generators and Powergen Limited was mandated to provide a sustainable supply of electricity so as to capture a reliable market for its products. First and foremost, the company decentralised its planning units to business-unit levels in order to magnify their success. Clearly outlined objectives were appended to the mission statement of each unit. As a result, each unit was able to concentrate on the production of a specific product or for a specific geographical expanse.
This form of specialisation afforded each department enough time and capital resources to succeed in its business segment as contented by Christensen et al (2006). Since each unit was empowered to incur costs and generate revenue, Powergen Limited was able to stay in the market and retain excellence in service provision. The management of each unit was also able to motivate the employees owing to the increased role-specification as postulated by Senge (1990) and Stacey (1993). Secondly, the company was able to understand its market better and utilise the information to cater for the needs of the market better.
Since each business unit was assigned a smaller segment of the overall market and products, the company was able to access all its customers and provide personalised and customised services to the customers. As outlined by Hitt, et al (2008), strategy formulation and implementation became more efficient and less costly, and so were the operational activities. Deviation from budgeted levels became limited owing to the amplified information levels. Changes in the characteristics of an organisation are bound to have an impact of the normal process of achieving goals and objectives.
As a result, it is imperative that an organisation constantly reviews its procedures in order to remain efficient in achievement of plans. Question 2 Core Competencies and Dynamic Capabilities in Relations to Performance The difference in the characteristics of each firm emanates from nature and magnitude of influence by the environmental factors on each organisation. As a result, organisations seldom resemble one another in the industry and in the market place. This results in the phenomena of core competencies and dynamic capabilities. As a result, each organisation has a specific way of reacting to the external and internal environment.
Core competencies denote the factors that distinguish a company from the other competitors. The development of core competencies is market by emergence of processes depicting accumulation and deployment of resources and capabilities. Dynamic capabilities denote the ability of the organisation to “identify the need or opportunity for change, formulate a response to such a need or opportunity and implement a course of action” (Helfat et al, 2007 p 2). As a result, an organisation’s dynamic capabilities are marked by additions, deletions or modifications to its characteristics and resources with a specific aim.
PowerGen Limited entered the generation of power after disintegration of CEGB owing to the fact that it was best placed to supply electricity to the regional market. As a result, the company engaged its efforts in provision of energy to the ever-changing market and consumers. Since the nature of the industry necessitates division of roles, supply and billing was assigned to other companies whose investment matched the requirements of the venture. The ability of PowerGen Limited to enter into mergers and combinations with strategic partners assured its consumers of uninterrupted supply of power to their houses.
Secondary to power-generation was the ability to discern the energy needs if the consumers and thus PowerGen Limited wasted no time in diversifying to production of natural gas and nuclear energy. As a result, the company was able to power the nation at affordable costs and with unswerving efficiency. In the wake of globalisation, PowerGen Limited ventures into the region and global market by acquiring and developing production units in overseas locations with the aim of tapping into the global market (Hitt, et al, 2008). As a result, the company enjoyed the challenges and benefits of producing for a diverse market.
The increased resource disposition and availability translated to heightened efficiency in production of electricity. PowerGen Limited changed in both market size and product categories with the aim of augmenting profitability at the backdrop of increased market share. During the years between 1991 and 1998, the company experienced a significant change in both measures of performance. With the company having established an intricate network of energy-generation infrastructure across Europe and other parts of the world, the company was able to retain and increase its market share.
The entry into renewable and clean energy fostered the success of the company owing to the discovery of the destructive nature of fossil fuels. As a result, the company diversified into provision of clean energy. The ability to provide a reliable supply of energy to its consumers accorded it a place in the energy industry. This emanated from the long-term relationship developed between the industry players and regulators. As a result, the company was able to hedge the price levels in order to limit the adversities of price fluctuations.
As a result, the consumers were also protected from the high prices associated with reduced supply. Among its customers, PowerGen Limited was the reliable supplier and partner owing to the excellence of services provided. PowerGen Limited was able to maintain a steady supply of electricity in spite of the occasional price fluctuations. The nature of energy provision calls for predictability of the pricing and the efforts of the company were not always met with success. As a result, the company reserved the right to vary its prices and motivate the consumers to shoulder the burden emanating from the shortage of energy.
PowerGen Limited was also able to enter into contracts with partners so as to hedge production gaps. Lowered demand was met with disposal of production of units while increases in demands were catered for by acquisition of appropriate facilities. The ability to vary supply and products in order to satisfy customers’ needs came in handy to sustain its profitability and market-share alike. The company was also able to vary its organisational structure in order to assign specific emphasis on business units.
Such changes were based on intensive and extensive analysis of the situation and capabilities of the company. By so doing, the company was able to manoeuvre through the changing scenario in the energy sector. As a result, the company successfully diversified into coal-powered energy generation stations as well as provision of natural gas to its consumers. Electricite de France (EDF) and E-ON The energy sector ranks as one of the most dynamic with the changes occurring as a result of the necessity to cut costs and provision of reliable supply of power.
The long-term nature of the investment as well as the huge capital input required for setting off the projects calls for adequate planning in order to reduce the burden to be shouldered by the consumers. EDF and E-ON power companies have each laid out strategies to supply power to their consumers with an aim of improving the livelihood of the society. As a result, both companies have excellent customer care services to cater for current and potential customers. As a result, customers are able to access information relating to the geographical coverage, billing and costs details.
Customers are also able to report any anomalies and inquire about services through an on-line facility provided by the company. Both companies are also involved in extensive campaigns against environmental degradation emanating from use of the generation and use of the energy products they offer. As a result, the companies have institute models through which they utilise renewable sources of energy and supplement it with generated electricity. In addition to curtailing the environmental degradation, use of traditional and renewable electricity generation methods reduces the costs associated with provision of energy to homesteads.
Both companies supply energy from wind and biomass. Both energy companies provide energy through strategic partnerships and networks across their geographical expanse. Consequently, EON and EDF have invested heavily in generation, distribution and retailing of power and gas as a way of solving the energy needs of their consumers. In addition to provision of power, the companies have also engaged in personalised services geared towards streamlining the livelihood of their consumers including provision of indoor heating services. According to www. edfenergy.
com, EDF has moved into generation of nuclear energy unlike EON. The advantage of using nuclear energy is the reduction in production costs as well as reliability of the supply. As observed, EDF has concentrated its efforts in the UK unlike EON which has spread its wings across the globe. Thus, EDF has managed to consolidate its efforts to set up production units powered by nuclear energy while EON has only managed to set up wind-farms in the wake of renewable energy productions. Unlike EDF, EON has established a huge network across the globe with an aim of providing energy to the global citizen.
Over 75% of its workforce is spread across the globe with the remaining portion serving the needs of the residents of the UK (www. eonenergy. com). As a result, EON has left a mark on the global scene through excellent product and service delivery. EDF has concentrated on production for the domestic market since inception in 2003. EON has managed a place on the global scene owing to its huge investment in production and supply of power in numerous countries. The large customer-base has contributed to amplified revenues which have enabled the company to expand its production outwards.
Effect of Privatisation and Deregulation Privatisation of state corporations is geared towards according the entity autonomy independence from political interference. As a result, privatised state corporations achieve greater efficiency under the management of the private sector owing to the change in mission statement and objectives. Deregulation on the other denotes the act of reduction of the control exerted by a government on a specific industry of organisation. The removal of such control is aimed at easing the conduct of business with the aim of stimulating economic success.
Privatisation of PowerGen Limited accorded the entity the freedom to widen the scope of its target market as well as product catalogue. As a result, the company was able to compete with the emerging private generators. The success achieved by the company under the management of the private sector imposes the fact that privatisation of the company revamped the ability of the company to supply energy to its consumers. The first step undertaken after the privatisation was to change the characteristics of the organisational structure with an aim of augmenting responsibility and performance standards.
Clearer reporting structures enabled the employees to set and meet realisable performance targets. By so doing, the company was able to enter into an era of accountability and responsibility since performance was based on merit and political inclinations. Absence of political and government control increased the attractiveness of the company to talented and ambitious employees whose aim was to function it an objective environment. As a result, the years following the privatisations and deregulation were marked with improvement in performance of the organisations.
The laid down strategies protected the future of the organisation without jeopardising the present and thus laid down a foundation for s stable energy sector in the UK. The efforts of the workforce were rewarded by an increased turnover and revenues at the backdrop of sustainable sustainability in production facilities. The dynamic nature of PowerGen Limited took roots after the deregulation of the energy sector. The privatisations also empowered the management and owners to make appropriate decisions and lay out strategies to cater for the needs and demands of the environment (Johnson et al, 2005).
Thus, the management were able to vary strategy in order to react to changes in environmental factors. Privatisation also enabled the company to enter into partnerships and contracts with other private generators for the supply and provision of services to the consumers. Such partnerships were aimed at establishing a reliable supply of electricity to the consumers regardless of the productions levels of the organisations. In some occasions, the management shut-down power plants, sold off production units and entered into contracts and partnerships with ease.
However, for a government-owned firm, such decisions would have taken ages to receive approval and budgetary allocations, thereby compromising the viability of the ventures. The reduced government control denoted that the company could run strategies aimed at generating profits and not necessarily rely on budgetary allocations by the government. As a result, the company’s budgets were aimed at reducing costs and increasing revenue generation with the customer at the centre stage of performance standards. On the same note, the company was able to eliminate the political influence and focus on building a strong foundation for the future.
Since the company was no longer under the control of political elite, changes in their political fortunes were not adverse to the performance of the company. The deregulated energy sector motivated investment by the private sector and the global citizenry owing to the fact that their finance would be channelled to the desired destination. PowerGen Limited was also able to steer its efforts towards profitable ventures in order to remain afloat. In spite of the increased competition, the huge market share assured the company of ample returns to investment as well as revenues to finance novel ventures.
Centralised Approach to Planning According to Alexander (1992), planning is one of the most important aspects of the functions of management. The success of any activity is hinged on the ability of the people involved to plan the timing and kind of actions. The absence of planning convicts the resulting scenario to total chaos at the very best. Adequate planning on the hand assures the concerned individuals of inclusion of all constants and variable and reduces the uncertainty associated with the future. The approach to planning can also be a factor to consider when it comes to success of the activities to be carried out.
Centralised and decentralised approaches to planning have their own influences on the outcome of the result. The changing market for electricity as well as consumer characteristics necessitated a change of the entity. A change in the organisational structure and management functions was necessary in order to accommodate the significant change in the target market and product catalogue. CEGB employed the centralised approach to planning owing to the fact that most of the control emanated from the political offices.
A centralised approach to planning ensures unity of action and direction owing to the singularity of source of decision making (Sycara-Cyranski, et al 1990). As a result, the company maintains a steady and sustainable development strategy towards the laid out objectives without possibility of derailment. Similarly, centralised planning reduced ambiguity in plans resource allocations. Since resource allocation is done from a single office, it is seldom that any unit will be overlooked since the planner is fully aware of the requirement of each unit.
Monitoring and appraisal is also possible since all units will receive evaluation based on the same scales and measures of performance. However, a centralised approach to planning is bound to overlook the intrinsic characteristics of each unit as asserted by Alexander (1992). Owing to the differences in the difference business units and the dynamic nature of the business environment, it becomes impossible for a central planner to fully appreciate the scenario facing each business unit. This contributed to the reduction in the power generators in the UK.
Centralised planning is not able to cater for the needs of each unit at all times. The evaluation and appraisal methods used under centralised planning approach endow emphasis on departmental performance and recognition of the efforts of a few (top management). In the corridors of employee welfare and motivation, recognition and sufficient appraisal is necessary in order to reduce employee turnover. As a result, decentralised planning is necessary to outline the efforts of each employee (Senge, 1990).
With the changing market from domestic to global, the company required a larger and more knowledgeable planning unit equipped with information to cater fro the needs and requirement of the global citizen. The cultural and socio-economic characteristics of the potential target-market dictated that the management finds a more knowledgeable planning group. In the UK, most of the consumers fit into two categories, that is high and low consumption. However, the global scene was marked with a different category of consumers.
Diversification in product category also necessitated change from centralised approach to planning. The difference in nature of products and consumers is not catered for in the centralised planning approach. References list Alexander, E. R. 1992. Approaches to Planning: Introducing Current Planning Theories, Concepts, and Issues. Taylor & Francis Chakravarthy, B. and Lorange, P. (1991) Managing the Strategy Process: A Framework for a Multibusiness Firm, Pearson Education, Inc. , NJ. Christensen, C. M. , Baumann, H. , Ruggles, R. , and Sadtler, T. M. (2006).
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