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1.2:3.5. evaluate the strengths and weaknesses of stakeholder mapping techniques and the effectiveness of ongoing collaborative relationships.
Stakeholders are people or groups of people who can influence the success of an organisation and can in turn be affected by the organisation. A stakeholder map is a business tool that shows a visual representation of an organisation’s stakeholders, their level of interest in the company and their importance to the organisation. Stakeholder mapping is a four-step process of: identifying stakeholders, analysing stakeholders’ perspectives and interests, prioritising stakeholder needs and finally engaging your key stakeholders. The top five stakeholder mapping techniques are; power versus interest grid, influence versus impact grid, power versus influence grid, importance versus influence grid and salience model.
The strengths of stakeholder mapping include: It helps identify the stakeholder’s interests. Helps with identification of potential risks and misunderstandings. Shows the mechanisms that will positively influence other stakeholders. It also will help in the identification of the key people to be informed about the project during the execution phase. Points out negative stakeholders and the adverse effects on the project. Assists in discovering where the real power over a project is located thus enhancing better project decisions.
The weaknesses of stakeholder mapping techniques include: it is not as simple as identifying key stakeholders because if they are left out on consultation and communication loop they might develop resentment. There can be under estimation or over estimation of the influence of stakeholders. Little or no awareness of how stakeholders’ influence change during the course of a project. Lack of constructive cooperation and dialogue with stakeholders.
Collaboration between organizations is the process of pooling knowledge, resources and relationships for the sake of pursuing shared aims. It is also a process of building relationships between organisations for mutual benefit. Business alliances are living systems, evolving progressively in their possibilities (Rosabeth. M, 1994). Due to the rapid development of digital and online media, organisations increasingly use digital tools for communicating and sharing information. Openly sharing information requires trust and integrity and that’s why it is important to limit collaborative relationships to like-minded organisations and individuals. The effectiveness of ongoing collaborative relationships is measured in advantages and disadvantages.
These are the advantages of collaboration between organisations. An organisation that collaborates with another has the advantage of a wider pool of information available as the basis for business decisions and marketing opportunities. In terms of relationships, collaborative relationships are powerful marketing tools, offering the advantages of expanded networks and sources of mutual referrals. Collaboration enhances compartmentalisation which is an advantage as it allows the people involved to put time and energy into the areas where they excel. When using technology for business collaboration, there is an advantage of being able to exchange information fast, efficiently and securely. Working with an organisation that has been in a certain industry for long, can provide mentorship for a new organisation. In a collaborative environment, employees are motivated and more productive. Through collaboration, an organisation is better able to expand over diverse geographical areas. Unlike doing things alone, collaboration leads to access to constituents, funding, additional profits and sustaining competitive advantage. Collaborative relationships enhances increased community awareness as messages are better relayed to the community.
The disadvantages are as follows. Sometimes online business collaborations make it difficult to develop relationships and establish trust. This is because online tools can be an insufficient stand in for face to face interpersonal communication. Freely sharing information can create the risk of other organisations using proprietary and lead information in ways that pose a competitive risk. To prevent such risk, the agreements should spell out terms and limits on the use of the shared information. Building collaborative relationships takes time to be nurtured and built over time. To maintain these relationships, trust must be established with openness and integrity. Compartmentalization can be a disadvantage as it enables stakeholders to develop a very narrow focus and avoid learning additional skills and information.
Encore Care Homes works in collaboration with several organisations which include; West Hampshire Clinical Commissioning Group, Hampshire Social Services, CQC and various hospitals and medical practitioners. Encore Care Homes chose the stakeholders through stakeholder mapping which showed what each stakeholder has to offer. The level of power, influence, interest, impact and importance of each was considered. The collaborations have led to increased community awareness, improved products and services, increased profitability and has enabled the expansion of services to other geographical regions. The weaknesses of these collaborations are that the characteristics of these organisations are not constant and they keep changing.
Bourne, L 2012, Stakeholder relationship management: A maturity model for organisational implementation, Gower Publishing Ltd, p.PT6I.
Murray-Webster, R., Simon, P 2006, ‘Making Sense of Stakeholder Mapping’. PM World Today. vol. 8, no.11, pp. 1- 4.
Rosabeth, M. K 1994, ‘Collaborative Advantage: The Art of Alliances’, Harvard Business Review.
1.3: Research and explain the value of a range of analytical techniques and alliance modelling.
An analytical technique is a procedure or method used to determine a problem, status or facts in order to accurately forecast potential outcomes while factoring in variables. These techniques are usually time limited and task limited. The purpose of analytical techniques is to get the best outcome as a business solution. The following are the most popular techniques used in the various industries.
SWOT Analysis. The analysis determines the strengths, weaknesses, opportunities and threats of a business. It is one of the most popular business analysis techniques. It is used to help focus on areas of strength and where the most opportunities lie. It also assists in identifying the dangers in form of weaknesses and both internal and external environment. It is done on the internal and external environments of a business. It is easy and is an enterprise level technique and is not limited to business analysis. It can be used at any stage of a project.
MOST Analysis. The term stands for mission, objectives, strategy and tactics. A mission defines an organisation’s purpose and goals it wants to achieve in future. Objectives are key goals that assists an organisation to achieve its mission. Objectives must be SMART (specific, measurable, achievable, realistic, and timely). Strategy is the actions that an organisation take to achieve the objectives and eventually accomplish the mission. Tactics are methods that an organisation uses to carry out the strategies or how strategies will be materialised by action. The analysis is structured and is followed by all working levels in an organisation. It ensures that an organisation retains focus on the mission.
PESTLE Analysis. These are environmental factors which influence an organisation. PESTLE stands for; political, economic, social, technological, legal and environmental. Political factors include, government and its policies, financial support, government initiatives. Economic factors include; inflation and interest rates, labour and energy costs. Social factors include; population, lifestyle, culture, education and media. Technological factors include; new technology, information and communication systems. Legal factors include; regulations and employment, government law and standards. Its advantage is that it’s a simple and easy framework for business analysis. An effective PESTLE analysis can help reduce the potential threats of an organisation. It also opens up the scopes to exploit the opportunities for new global markets.
CATWOE Analysis. It is a generic way of thinking of business analysis to understand what a business is trying to achieve. It identifies where the problem is and how the solution will affect the business and the people involved. CATWOE is an acronym for; clients, actors, transformation, world view, owner and environmental constraints. It brings up the perceptions of different stakeholders on a common platform. It helps a business analyst to prioritise different perspectives depending on its merits.
Brainstorming. It is a group activity and is also very popular. It is a creative technique in which a group activity is performed to generate ideas, root cause analysis and proposing solutions for the problems.
Other analytical techniques include; business processing model(BPM), Use case modelling, non-functional requirement, requirement, user stories, mind mapping, heptalysis, STEER, de Bono’s six thinking hats, five whys, MoSCoW, VPEC-T, SCRS and business analysis canvas. All these techniques are useful a business analyst should know them all.
Alliance modelling is the process of coming up with strategic alliances. A strategic alliance is an understanding or agreement between parties to follow a set of objectives they have agreed upon. Collaborative agreements between businesses are becoming very common as businesses aim to get the upper hand over their competitors. The main types of strategic alliances include;
Joint ventures. These are agreements between two or more parties to form a single entity to undertake a given project. Each involved party has an equity stake in the business and share revenues, expenses and profits.
Outsourcing. This is the transference of management or day to day business functions to a third party service provider. Outsourcing allows companies to reduce costs, benefits consumers with lower cost goods and services, causes economic expansion that reduces unemployment and increases productivity and job creation.
Technology licensing. This is a contractual agreement whereby trademarks, intellectual property and trade secrets are licensed to another firm. It is a low cost way to enter foreign markets.
Product licensing. Provides license to an external firm to manufacture and sell a certain product. Usually the licenser gives the licensee an exclusive geographic area to supply to. It is a lower risk way of expanding product’s geographical reach compared to building your own manufacturing base and distribution reach.
Distribution relationships. This is the most common form of alliance and are formed because the businesses involved want more customers. This results to the establishment of cross-promotion agreements.
Other strategic alliances include; franchising, R&D, affiliate marketing, equity strategic alliance and non-equity strategic alliance. Strategic alliances create value by improving current operations, changing the competitive environment and ease of entry and exit.
Encore Care Homes as an organisation uses almost all of the analytical techniques in order to leave no room for failure. Encore Care has formed profitable strategic alliances in order to get an upper hand over its competitors.
Exploring Corporate Strategy Using M.O.S.T Analysis, 2009, Strategy Consulting Ltd
1.4: 1.5: Evaluate the implications of collaborative relationships for a) risk b) knowledge management c) supply chain and the sustainability for future working arrangements.
Global supply chains have become more and more vulnerable as time passes over the years (Brandon-Jones et al., 2014). Risks occur because collaborating organisations need to set future objectives against a background of uncertainty. A risk management framework involves four key steps; risk identification, risk assessment, risk mitigation, risk management plan review. Collaboration between organisations is not a low cost or risk free option. Partnering costs can be high due to the time needed to explore, establish and manage the relationships. There are many implications of risk:
Negative reputation from failed partnerships. Difficulties in implementation of collaborative objectives. Conflicts of interest where interests of the partnership might be at odds with individual organisation’s interests. Challenges of shared decision making processes. There is loss of autonomy. Hidden costs. Activities outside the scope of original agreement. Information leakage. Loss of operational control.
b) Knowledge management
Knowledge management is considered as an important part of modern organisations (Nonaka 2007).Knowledge is the know-how of making effective decisions and taking effective action. Knowledge management is the way you manage your organisation after understanding the value of your knowledge. It is systematically making use of the knowledge in the organisation and applying it to your problems to help you deliver business results.
The implications can be negative or positive. Better and faster decision making through learning from the experience of other organisations and taking necessary action. Reduced costs and resources to meet growth targets. New products and services as knowledge fuels innovations. It also increases motivation and productivity per head.
Access to knowledge mitigates risks and reduces future mistakes due to greater understanding of the operational context. It promotes efficiency and effectiveness in human resource development resulting to long term stability and impact. Enhances positive reputation and credibility of the involved organisation.
c) The supply chain
A supply chain is a system of organisations, people, activities, information and resources involved in moving a variable from manufacturing to the customer. Supply chain collaboration is a long-term relationship where participants generally cooperate, share information and work together to plan and even modify their business practices to improve joint performance (Whipple et al., 2010).
Supply collaboration has negative and positive impacts;
Cost reduction. The longer the collaboration the lower the costs of supply. The longer the relationship, the more indirect costs such as operational costs are reduced. Operational process enhancements which will result to new innovations.
The negative impacts; overreliance on technology in supplying products and services. Same treatment of every partner or customer without considering their various needs. Lack of trust amongst partners which can result to negative effect on customers.
The collaborative nature of Encore Care Homes with various organisations has mostly positively impacted it. In risk management, it has developed a risk mature culture that is aware that risks exists at all levels and they should be handled proactively. In knowledge management, Encore Care has made use of the knowledge from its collaborating organisations and applied it to its problems to deliver positive results. This will help prevent future mistakes and promote efficiency in its services. Supply chain collaborations has helped reduce supply costs in Encore Care and has increased community awareness of its existence and services offered.
Brandon-Jones et al. 2014, ‘A contingent resource based-perspective of supply chain resilience and robustness’, Journal of Supply Chain Management, Vol.12, no.2, pp.123-147.
Nonaka, I. 2007, ‘The knowledge-creating company’, Harvard Business Review, vol.7, no. 8, pp.162-171.
Whipple, J.M., Lynch, D.F., and Nyaga, G. N 2010, ‘A Buyers Perspective on Collaborative Versus Transactional Relationships’, Industrial Marketing Management, vol.39 no.3, pp 507-518.
1.6: Evaluate the components, use and likely effects of invoking an exit strategy.
In business, an exit strategy is an owner’s strategic plan to sell his or her ownership in an organisation to investors or another organisation. It gives an owner a way to reduce or liquidate his or her stake in a business. If the business is successful, make a substantial profit and if unsuccessful, limit losses. For an effective exit strategy, business owners need to think through their personal and corporate goals and create a plan that includes the following essential components:
Define the desired outcome or goals. Knowing your goals will assist in devising the best strategy. A clear description of what a business owner wants to achieve when they exit from their companies. Once there is clearly defined goals, the owner and supporting players can work together to develop a strategy that will reach the desired goals.
Decisions on the transition type. There are various types of transitions in business and each is intended to serve the goals and needs of different owners and company types. For example; mergers and acquisitions, liquidating the business and closing down or selling out. The selected transition type will determine the future of the company.
Focus on optimising company value. An exit strategy needs to include steps that optimises a company value if you want to obtain the best terms and price for your business. In order to secure the best price or deal terms for a company, tactics optimising company value should be included. They include working with brokers or business advisors who are familiar with the metrics of the industry.
An exit date target. With a target date in mind, it’s much easier to develop an exit strategy and coordinate the strategy with key supporting players. Most owners have a time frame in mind as to when they are planning to exit their companies.
Proper timing/sufficient time to execute the plan. They that plan ahead fare better than those who don’t. Insufficient time to plan may not be optimised to attract those buyers who are willing to offer the highest valuation or most desirable deal terms.
Flexibility. The best and most effective exit strategies change over time as the industry or market evolves. Every strategy should be monitored at regular intervals and updated.
The uses of an exit strategy include:
To transition the ownership of a company to another company or to investors.
Used to ensure that businesses are prepared for the termination of significant contracts and other business relationships.
Providing a blue print for success. An exit strategy plan assists in defining success and gives a timeline for charting your progress.
Helps in making informed strategic decisions. With an end game in view, an exit strategy can make daily decisions more strategic in nature.
Enhances the value of the business. An owner with a strategic exit plan, will guide his company towards their own predetermined preferred conclusion.
Provides a flexible template by giving guidance and benchmarks if an unexpected event occurs.
Effects of invoking an exit strategy include:
A well laid exit strategy will attract potential investors thus giving a company financial prospects.
Minimised tax burden. A good and effective strategy helps reduce any tax implications that may be passed on to the new owner.
Preservation of a company’s cultural identity and founder’s legacy.
Enduring financial success and business growth.
Reduced time to exit. A good exit plan has a time limit and a set target which an owner sticks to in order to meet his set goals.
The ability to act quickly in unforeseen circumstances. A well laid exit strategy enhances flexibility.
Proper valuation estimates and smooth transitions.
Encore Care Homes as an organisation has not initiated any exit strategy and is still in business.
CIPS Australasia 2016, CIPS Procurement Topics: Exit Strategies.
Hoover Institute 2012. An Exit Strategy from the Euro.
John Hawkey 2014, Exit strategy planning: Grooming your business for sale or succession, Google Books.
2.2: Analyse the potential synergies and scope for collaboration likely to benefit the organisations involved.
Collaborative relationships rely on participation by two or more parties who agree to share resources such as finances, knowledge, people and labour (Parker, 1994). They are made by consenting organisations to share resources to accomplish a mutual goal. Organisations in such relationships share common goals. Through collaboration, companies aim to share resources, exchange and share information, reduce risk, reduce cost, reduce marketing time, reduce delivery time, increase market share, increase asset utilisation, improved skills and knowledge, increase customer services, increase productivity and innovations and so on(Lewis,1990, Kanter 1994)
There are a number of factors that can cause collaborative relationships to either fail or succeed. There are four synergy perspectives; strategic synergy, operational synergy, cultural synergy and commercial synergy. They are derived from the synergy model Bititci et al 2007).
Strategic synergy. This is to ensure that the participating organisations have a common ground and that their individual objectives and expectations are understood. The objectives have to be consistent with competencies and contribution of each organisation as well as the additional value and competitive advantage to be delivered through the collaboration. There are two elements in this synergy. The first element requires an organisation to be self-aware by understanding its strategic and operational environment. The second element requires the organisation to be collectively aware by understanding its collaborative partners’ objectives and expectations and what they will contribute to the collaborative enterprise.
Operational synergy. This ensures that each partner’s internal management process and hardships are understood and resolved. It also ensures that customer focused operational systems extend across organisational boundaries. It also comprises two parts. The first one focuses on operational processes and internal controls of an organisation to ensure that its internal functions are in order. The second part explores the maturity of cross-enterprise processes and assess the ability of the partner organisations to coordinate their operational business processes beyond their individual boundaries.
Cultural synergy. Ensures that the mind-set, organisational structure and management styles are compatible between partners and that the level of trust and commitment is really sufficient. It focuses on organisational and people related issues. It is designed to evaluate cultural and organisational compatibility of the involved organisations.
Commercial synergy. Ensures that the short term and long term expectations, risks and benefits are understood. Also ensures that appropriate agreements have been put in place. It focuses on evaluating the clarity and size of commercial arrangements for all the collaborating organisations. Ensures that partners are well aware of each other’s commercial works and any agreements with risk.
Encore Care together with its collaborative organisations considers the synergy model strategic, operational, cultural and commercial synergies. This is because they can lead to either their success or failure. So far success has been realised in form of; shared resources resulting to cost reduction, reduced marketing time, increased market share and asset utilisation and lastly increased customer awareness.
Bititci, U. et al 2007. ‘Managing synergy in collaborative enterprises’, Production Planning and Control, vol.18, no.6, pp. 454-465
Lewis, W.J 1990 Partnerships for Profit: Structuring and Managing Strategic Alliances. The Free Press, New York, NY.
Parker. N 1994, Managing the Search for Partners in Collaboration Management: New Project and Partnering Techniques, John Wiley and Sons, New York, NY.
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