Rayner and Adam-Smith (eds): Managing and Leading People – Tutor notes
The aim of the exercise is to encourage students to analyse current business life using
the press and other media as a source of case study material, and to enable them to
understand ‘live’ questions of strategic management. The focus on the public sector
reflects its significance as a UK employer, and the availability of material that is more
likely to be in the public domain. It might be anticipated that some of the chosen
disputes will demonstrate attempts to make public services more ‘businesslike’ in
nature, and thus reflect changes of strategy and consequent problems of culture change.
It is also likely that the views of the many stakeholders who have direct but often
conflicting interests will be aired differently in different parts of the media. It will
therefore help readers to understand different perspectives and the way in which
reporters shape the discussion.
The aim of the exercise is to help students become clear about the use of these ideas.
Marketing communications messages, for example, should give a good view of how the
organisation is trying to reach its target customers. The product range may be broad or
focused, while the company may be specialised towards a few target segments or seek a
broader appeal.
This exercise will help to reveal the complexity of the strategic environment of a
typical public sector organisation (as compared to a shareholder-owned company). A
local government organisation, for example, has multiple ‘publics’, each of whom may
have very different needs and expectations. Its revenue derives from a range of sources
– central government, Council Tax payers, etc, and it is only partly in control of the
specification of the services it offers, many of which are nationally defined.
Organisational websites may well contain details of democratic and governance
procedures operated by the organisation, together with summary statements (or
sometimes more detailed accounts) of strategic priorities, together with public
statements of how the organisation’s money is spent. Characteristically, public sector
organisations also publish information about the quality of services provided, with
much more detailed measurement than would have been true a couple of decades
before.
The company’s choice of how to compete is likely to affect the amount and type of
contribution that employees are required to make to the offering provided for
customers. A high-service offering, for example, will require a larger number of people
to deliver it, many of whom will need higher-level skills. By contrast, a low-cost
service is often achieved partly by making maximum use of automation (airline checkin, for example), with lower levels of discretionary support. If the low-cost provider has
communicated an accurate expectation to its users, the service can be provided
smoothly with fewer people, since customers will know that some parts of the job must
be done by themselves, without assistance.
Yes, the ideas of business strategy can be adapted satisfactorily to public service
organisations because public service organisations have clients, who expect a service to
be provided, whether or not it is done on a commercial basis. A public sector
organisation also has to apply its available resources effectively, in order to maximise
the use of those resources in the public interest.
However, in public services the mechanisms of competition and pricing work less well
– if at all – in providing signals of what the ‘market’ wants (and therefore what the
provider should be investing in producing). Guidance on what to produce, at what
volume and to what standard is therefore a more complex process, with many sources
of information, some of which conflict with each other.
‘Missions’, ‘goals’ and ‘strategies’ are defined in the chapter, although the precise
meaning of these terms does vary from one text to another.
It should, however, be possible to use public domain data to infer what the organisation
believes its purpose to be, what it hopes the result of pursuing that purpose will be, and
in general how it intends to achieve its goals.
This question may help to make the point that the value of organisational resources
depends upon the use to which they are put by a company’s strategy, implying that a
change of strategy may change the value of some resources to the organisation (in
either direction).
A decision by a high-street retailer to open up online channels that will gradually
substitute for many of the existing outlets will have implications from the outset on the
value (to the organisation) of its current high-street stores. If the new channels find
favour with target customers and grow strongly, the organisation may find that the
resources tied up in high-street property can be more usefully switched to the new
strategy, in which additional storage and handling capacity, or IT resources, may be the
priority.
The five forces that determine the attractiveness of an industry are: within-industry
rivalry, customer pressure, supplier pressure, the threat of new entrants, and the threat
of substitutes.
The interaction of these forces is said to affect the ‘attractiveness’ of a particular
industry – the ease with which the average player can make a reasonable margin. Thus
some environments are inherently more attractive than others (the video games
industry, for example, has more profit opportunities for competent players than, say,
the ready-mixed concrete industry). Also, industry attractiveness may change over time
because the forces – like technology and competition – develop and interact.
The resource-based view of organisational strategy emphasises the uniqueness of a
firm’s history and set of resources (both assets and capabilities). The way in which
these resources are put to work in meeting the needs of target customers is the key to
understanding and analysing strategy.
Human resources can certainly be analysed in this way – they are one of the main types
of resource available to the firm, and the fit between this set of resources (numbers,
skills, geographical disposition, etc) and the actions implied by the firm’s chosen
strategy will often be critical in determining its success.
In comparing the Porter and the Mathur models, the Porter model is longer-established
and much more widely known. It has been criticised in respect of some of its
definitions (the ‘focus’ strategy, for example, is usually a small-scale version of the
‘differentiation’ strategy, and so not really a third strategic choice). Most would also
now accept that there was no need to insist that the ‘differentiation’ and ‘cost
leadership’ options are mutually exclusive – Tesco, for example, is one of many very
successful companies that would reasonably claim to score high in both dimensions.
The Mathur model claims to model competition as the customer sees it; by contrast, the
Porter category of ‘cost leadership’ relates to the parts of the value chain that the
customer does not see. It envisages four main types of competitor, each of whom could
exist profitably alongside each other by offering different types of value to different
customers.