What is the importance of effective communication within an organization?

What is the importance of effective communication within an organization?

The strategic-management process does not end with deciding what strategy or strategies to pursue. There must be a translation of strategic thought into action. This translation is much easier if managers and employees of the firm understand the business, feel a part of the company, and through involvement in strategy-formulation activities have become committed to helping the organization succeed. Without understanding and commitment, strategy-implementation efforts face major problems. Vince Lombardi commented, “The best game plan in the world never blocked or tackled anybody.”

Implementing strategy affects an organization from top to bottom, including all the functional and divisional areas of a business. This chapter focuses on management, operations, and human resource issues most critical for successful strategy implementation, whereas Chapter 8 focuses on marketing, finance/accounting, R&D, and management information systems (MIS) strategic issues. As showcased next, Papa Johns is a company with exemplary strategic management, especially by motivating its franchisees to own and operate excellent restaurants.

Even the most technically perfect strategic plan will serve little purpose if it is not implemented. Many organizations tend to spend an inordinate amount of time, money, and effort on developing the strategic plan, treating the means and circumstances under which it will be implemented as afterthoughts! Change comes through implementation and evaluation, not through the plan. A technically imperfect plan that is implemented well will achieve more than the perfect plan that never gets off the paper on which it is typed.1

Exemplary Company Showcased

Papa John’s International, Inc. (PZZA)

The world’s third-largest pizza delivery company and headquartered in Louisville, Kentucky, Papa John’s is a pizza delivery and dine-in chain of restaurants. For 13 of the past 15 years, consumers have rated Papa John’s No. 1 in customer satisfaction among all national pizza chains in the American Customer Satisfaction Index (ACSI). That distinction reveals highly motivated franchisees, managers, and employees at the company—a tribute to excellent management policies, incentives, and compensation. Papa John’s is one of the most financially accessible for franchise owners; the total investment is between $129,910 and $644,210, depending on where the franchise is located and the size. Franchisees pay royalties of 5 percent, agree to a 10-year term, and must also have a net worth of at least $150,000, with at least $50,000 available in cash.

Papa John’s operates 4,500 restaurants, 750 company-owned and 3,750 franchised, in 50 states in the United States and in 35 countries. In 2015, Papa John’s added hickory-smoked bacon to its Cheeseburger Pizza, and began offering a new Double Chocolate Chip Brownie; the company trails Pizza Hut and Domino’s in sales in the United States. Two of Papa John’s seven members of the Board of Director are female, Olivia Kirtley and Laurette Koellner.

Along with Avan Projects and Global Franchise Architects (GFA), Papa John’s recently acquired Pizza Corner stores in southern India. Papa John’s is converting the existing Pizza Corner stores to Papa John’s branded restaurants, as part of Papa John’s commitment to expand its presence in India, specifically in Bangalore, Chennai, and Hyderabad. Pizza Corner, part of the GFA brands, is the third largest pizza chain in southern India, with special focus on the city of Chennai. Prior to the acquisition, Papa John’s operated 15 restaurants across India through its Master Franchisee for the region, Om Pizza and Eats. Through this merger, Papa John’s added 40 restaurants in India with conversions continuing monthly.

Papa John’s is spending $100 million annually to eliminate 14 artificial ingredients, preservatives, and additives from its menu, including all artificial colors and corn syrup. All 14 will be totally banished by the end of 2016 from Papa John’s. Monosodium glutamate (MSG) and trans fats were removed from the company’s menu in 2015.

Source: Based on a variety of sources.

 

 

 

  1. Watchthe “Implementing a Performance Management System” video.

Supporting Activity:
After watching the video, write a 200- to 300-word short-answer response to the following:

In the video, Edward Lawler described a number of process-related issues which he found to be the biggest predictors of success or failure of any Performance Management System.

Which of these process issues have been most instrumental in helping your performance management efforts succeed where you work? Which of them have caused some difficulties or outright failure of the system? Why? What was done about it?

 

  1. What is the relationship between personal ethics and business ethics?

Although the three sections of this chapter [(1) business ethics, (2) social responsibility, and (3) environmental sustainability] are distinct, the topics are quite related. For example, many people consider it unethical for a firm to be socially irresponsible or to treat animals inhumanely. Business ethics can be defined as principles of conduct within organizations that guide decision making and behavior. Good business ethics is a prerequisite for good strategic management; good ethics is just good business! Social responsibility refers to actions an organization takes beyond what is legally required to protect or enhance the well-being of living things. Sustainability refers to the extent that an organization’s operations and actions protect, mend, and preserve rather than harm or destroy the natural environment. Polluting the environment, for example, is unethical, irresponsible, and in many cases illegal, as is treating pigs, cows, chickens, and turkeys inhumanely. Business ethics, social responsibility, and environmental sustainability issues therefore are interrelated and impact all areas of the strategic-management process, as illustrated in Figure 10-1 with white shading.

An example of a high-performing, highly ethical, privately held company is Chick-fil-A, the popular restaurant that is closed on Sundays out of respect for the Sabbath. Another high-performing, highly ethical, publicly held company is Chipotle Mexican Grill, which recently stopped selling a pork product at one third of its U.S. restaurants because one of its suppliers failed an animal welfare audit. That particular supplier could not ensure that pigs have outdoor access or “deeply bedded barns” instead of being raised in tight cages. In response, Chipotle stopped offering carnitas, or pork meat, in its burritos or bowls. An increasing number of firms like Chipotle are raising their standards for animal welfare in terms of its beef, pork, and poultry suppliers raising animals with respect and also avoid using various antibiotics and growth hormones. A Chipotle spokesman remarked, “This is fundamentally an animal welfare decision and is rooted in our unwillingness to compromise our standards where animal welfare is concerned; we hope the vendor will solve its problems and return as a regular supplier for Chipotle.”

Exemplary Company Showcased

Chick-Fil-A

 

Headquartered in Atlanta, Georgia, Chick-fil-A prides itself on demonstrating high business ethics. Although all Chick-fil-A restaurants are closed on Sundays out of respect for the Sabbath, the company recently surpassed Kentucky Fried Chicken (KFC) as the largest chicken quick-service restaurant (QSR) in the United States. This is shocking because there are only about 2,000 Chick-fil-A outlets in the nation, compared to KFC’s 4,500. Total annual revenues for Chick-fil-A exceed $5 billion, whereas all of KFC’s U.S. restaurants have revenues under $5 billion. Each Chick-fil-A restaurant averages $3.2 million in annual sales, more than three times the average KFC at $938,000.

Over the last 10 years, the average Chick-fil-A restaurant sales increased steadily, compared to the average KFC’s sales being unchanged, or down. Chick-fil-A added 100 restaurants in the United States in 2014, whereas the number of KFCs is declined. Most Chick-fil-A restaurants are located in the southern United States, but the company is expanding north rapidly. For example, there are 270, 200, and 161 Chick-fil-A outlets in Texas, Georgia, and Florida, respectively, but only 1 in the state of New York, and none in Montana, North Dakota, South Dakota, Vermont, Maine, or Connecticut—but that is to change soon.

The old saying that “good ethics is good business” seems to be especially true for Chick-fil-A.

Source: Based on http://www.dailyfinance.com/2014/03/28/chick-fil-a-stole-kfcs-chicken-crown-with-a-fraction-of-the-sto/?icid=maing-grid7%7Clegacy%7Cdl1%7Csec1_lnk3%26pLid%3D458929

 

Watch the “Effective Communication in Business” video.

Consider the following as you watch:

  1. Who are some of the parties that will receive the communications of changes to a strategic plan?

Discuss your perceptions in class/online forum.

 

  1. Why should a strategic plan be continuously monitored and updated?

The best formulated and best implemented strategies become obsolete as a firm’s external and internal environments change. It is essential, therefore, that strategists systematically review, evaluate, and control the execution of strategies. This chapter presents a framework that can guide managers’ efforts to evaluate strategic-management activities, to make sure they are working, and to make timely changes. Guidelines are presented for formulating, implementing, and evaluating strategies. Nike is the exemplary company showcased because the firm continually evaluates its strategies and takes prompt corrective actions as needed, posting higher and higher revenues and profits every year.

Exemplary Company Showcased

Nike, Inc. (NKE)

The sportswear clothing giant, Nike, is running away from rival firms with both sales and earnings increases. Headquartered in Beaverton, Oregon, Nike’s first-quarter (Q1) 2015 revenues rose 25 percent in western Europe, 12 percent in North America, and 20 percent in greater China. Analyst Laurent Vasilescu recently announced. “Nike is eating Adidas’ lunch, especially in western Europe.” Nike is doing an excellent job implementing its strategy to focus more on higher-margin products, higher average prices, and direct-to-consumer sales (includes Nike stores and Nike website). The company is capitalizing on the trend for people to wear gym clothes (called activewear) outside the gym. Nike recently secured the endorsement of NBA superstar Kevin Durant, beating out rival Under Armour’s bid for that athlete.

 

Nike’s strategy evaluation activities have resulted in the company offering premium stores called NIKETOWNs, the largest Nike stores in the fleet. Each NIKETOWN store features six or seven NIKE brand categories, providing the very best innovative product and services. For example, the NIKE Running Store in New York City caters to the complete needs of the runner, and Nike’s House of Hoops for Basketball with Foot Locker is available, as well as the NIKE Track Club for runners with Finish Line and the Field House with Dick’s Sporting Goods Store. Nike store variation strategies allow for premium pricing. In addition, Nike has factory stores that provide a premium product to consumers shopping for value. These stores attract higher customer shopper volumes.

Revenues for Nike’s 2015 Q2 rose 15 percent to $7.4 billion, while the company’s earnings per share increased 25 percent to $0.74. For that quarter, revenues for the Nike brand rose 17 percent to $7.0 billion, while the company’s Converse revenues rose 24 percent to $434 million. The company’s net income for the quarter increased 23 percent to $655 million.

Source: Based on Elaine Low, “Nike Sales Surge on Europe, Internet,” Investor’s Business Daily, September 26, 2014, A2.

 

Watch the “Business Plan” video.

Consider the following as you watch:

  1. What role should the employee play in the monitoring or development of a strategic plan?

Discuss your perceptions in class/online forum.

 

  1. Watch the “Keeping Control of Cash” video.

 

Supporting Activity: 

After watching the video, write a 200- to 300-word short-answer response to the following:

 

In the video, Sir Peter Middleton related a story about how the British government in the 1970s had “fooled itself” into economic difficulty by not looking at the right measures, and then he made the following startling statement:

 

“… fundamentally, life is about money, and if you get that wrong, you get everything wrong.”

 

Do you agree or disagree with this statement, in the context of a business? Furthermore, which of Sir Middleton’s prescribed steps would be most helpful to a business that finds itself in difficulty? What examples of this can you share?

 

  1. Watchthe “Monitor Your Business Environment and Anticipate Change” video.

 

Supporting Activity: 

After watching the video, write a 200- to 300-word short-answer response to the following:

 

In the video, Paul Skinner described how Shell Oil New Zealand was able to move very quickly in implementing what had been their well-developed contingency plan once the new NZ government implemented their promised deregulation programs into the national economy. Mr. Skinner mentioned that they made progress much faster than their competitors because they had prepared detailed plans in advance, though surely their competitors were also aware of the possibility of a newly elected government that intended to deregulate certain industries.

 

This underscores, I think, those external force/trend areas we dealt with in Week 3, including Legal and Regulatory, Global, Economic.

 

As part of the Monitoring and Control phase of a company’s strategic planning efforts, how would you recommend they remain aware of what’s happening in their external environment? How should they choose which strategic contingencies to plan for?

 

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