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MBA Final Thesis – Presented to AIU’s Academic Department CY 06/07 Mohamed Fahmy UM3848BlB8942 Strategic Business Diagnosis Approach For Small & Medium Enterprises “SMEs” Specialized Study in How Business Improves By Assessing & Diagnosing Factors, Obstacles & Lacks A Final MBA Thesis Presented to The Academic Department ATLANTIC INTERNATIONAL UNIVERSITY Aug. 2007 M. Fahmy-Research& Development Document A. Investigative Theories ??” 6 B. Business Case Study A. Discussions & Main Results 25 B. Final Conclusions Page 1 TABLE OF CONTENTS Chapter l: A.

Introduction 5 Chapter II: 11 Chapter Ill: 28 Chapter IV: B. General description . 37 Page 2 Chapter I For a company to be successful in the market place it needs to build its business & its organizational capacity. Building the business has different essence and approach than building organizational capacity. Yet both sides should be integrated, compatible and are also developed in a coherence manner. The main two elements driving any business are about; understanding of how to improve its competitive edge and how to maintain its success factors in the most economic method.

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The case in large scale enterprises is simpler than SMEs as the large scale nterprises has discovered the solution and overcame the obstacles toward growth. This study is the tool to build a comprehensive understanding of the business and its internal organization. It consists of several aspects of assessment, each of which looks at the business from a different perspective. Each aspect has its own deliverables and applications and combining all together gives the management team in-depth understanding of the business.

It resembles a puzzle where each piece provides information on its own and the combination of all the parts together shows the bigger picture. The study will answer the following questions: 1- What are Business Development Stages? 2- How can Business Evolve “The Business Dynamics”? 3- What are The Forces that drive the business? In order to understand and revile the current situation of most types of enterprises we should investigate thoroughly what we call it “Cross Functional Operation” methodology, which means that we have to investigate the outcome of all functional relation between the organization’s functions and the business results.

M. Fahmy- Research& Development Document Page 3 keep monituring the business performance. Accordingly we have to develop non traditional approach to achieve the right objective which is the causes of enterprises’ lacking and weaknesses toward growth. In this study I’ll demonstrate and examine three types of assessment and diagnosis methodologies which provide us with better understanding of assessing any type of enterprises: 1 . Business Development Stages Model 2. Business Assembling Model 3. Corporate Stand Forces Model It consists of several aspects of assessment, each of which looks at the business from a different perspective.

Each aspect has its own deliverables and applications and ombining all together gives the management team in-depth understanding of the business performance and also in which area we should focus and invest. The main essence of this assessments/ diagnosis composition is to give the management team the clear view of WHAT do they lack? WHY does it happen? Also help them finding the right way of HOW to fix it? Page 4 B. General Description In fact small and medium enterprises are still struggling to have its growth strategy toward being large scale business.

To enable them to move in that direction they have to understand the factors and elements that prevent them from growth. Two ides should be assessed and diagnosed, Business and Organizational Capacity, in a comprehensive and integrated manner also being holistic and coherent. As we described earlier that the study is based on three main assessment models which we will elaborate on in a more comprehensive and integrated manner: 4- Business Development Stages Module (BDS) ??? Identifies the development stage of the business. ?? Identifies business functions that lag, exceed, or match the business development stage. ??? Measures the degree of matching between the development of a certain business function and the overall business development. ?? Assesses the organization’s performance in each business function ??? defected areas in the business ??? Measures the overall performance of the organization 6- Corporate Stand Forces Module (CSF) Identifies ??? Identifies company competences, competent individuals, strategic result and relevant success factors. ??? Measures the relative strength of each of the specified competency areas. ?? Assesses the coherency level between all the different integrated forces. Page 5 Chapter II A. Investigative Theories For the time being only some of Int’l consulting firms have issued a wide number of iagnostic and assessment tools which are either high level or not integrated. Most of world wide consultants are using main source for assessment/ diagnosis tools which is called Consultant Tool Kit. This source/ reference includes 10s of tools and methodologies for business and organization assessment, most of them in questionnaire format.

By examining them in deferent events we found that we can nearly know what are the business’s problems but almost we can’t answer why! In fact through a comprehensive reading and using most of those tools I found that here are Just two holistic and interesting tools/ models which are SWOT analysis and Mckinsey 7 S’s. Here I’ll try to highlight the main positives and negatives of each one and how they help us understanding both business and organizational situation. Also we will emphasize on the strength of each one and the limitations that we may face when we use any or both of them. . SWOT Analysts Model: The SWOT analysis process includes both an internal analysis of strengths and weaknesses and an external analysis of threats and opportunities in the environment. SWOT stands for strengths, Weaknesses, Opportunities and Threats. The technique is credited to Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s using data from the Fortune 500 companies. Following are definitions for the elements of SWOT analysis: Strengths: that eventually lead to achieving the vision.

Examples: Dedicated employees, up-to-date technologies, high quality products. Page 6 Weaknesses: Controllable internal disadvantages that hinders achieving the vision. Examples: Inexperienced employees, tight budget, unclear organizational structure. Opportunities: External possibilities for success that help in achieving the company’s vision. Examples: New market trends favorable for the business, new technologies. Threats: Uncontrollable external negatives that hinders achieving the vision. Examples: Competition, economic recession, new laws restraining the business, war.

SWOT Analysis Format What do you do well? What could you improve? What unique resources can you draw on? Where do you have fewer resources than others? What do others see as your strengths? What are others likely to see as weaknesses? Threats What good opportunities are open to you? External Weaknesses Opportunities Strengths What trends could harm you? What trends could you take advantage of? What is your competition doing? Looking at your strengths, how can you Looking at your weaknesses, what threats do these turn these into opportunities? expose to you? page 7 2.

McKinsey 7 S’s Model: The Seven-Ss is a framework for analyzing organizations and their effectiveness. It looks at the seven key elements that make the organizations successful, or not: strategy; structure; systems; style; skills; staff; and shared values. Consultants at McKinsey & Company developed the 7S model in the late 1970s to help managers address the difficulties of organizational change. The model shows that organizational immune systems and the many interconnected variables involved make change complex, and that an effective change effort must address many of these issues simultaneously.

The 7-S model is a tool for managerial analysis and action that provides a structure with which to consider a company as a whole, so that the organization’s problems may be diagnosed and a strategy may be developed and implemented. The 7-S diagram illustrates the multiplicity interconnectedness of elements that define an organization’s ability to change. The theory helped to change manager’s thinking bout how companies could be improved. It says that it is not Just a matter of devising a new strategy and following it through.

Nor is it a matter of setting up new systems and letting them generate improvements To be effective, your organization must have a high degree of fit, or internal other Ss. All Ss are interrelated, so a change in one has a ripple effect on all the others. It is impossible to make progress on one without making progress on all. Page 8 Thus, to improve your organization, you have to master systems thinking and pay attention to all of the seven elements at the same time. There is no starting point or mplied hierarchy – different factors may drive the business in any organization.

McKinsey 7 Ss Model The 3Ss across the top of the model are described as ‘Hard Ss’: o Strategy: The direction and scope of the company over the long term. o Structure: The basic organization of the company, its departments, reporting lines, areas of expertise, and responsibility (and how they inter-relate). o Systems: Formal and informal procedures that govern everyday activity, covering everything from management information systems, through to the systems at the point of contact with the customer (retail systems, call centre systems, online ystems, etc).

Page 9 The 4Ss across the bottom of the model are less tangible, more cultural in nature, and were termed ‘Soft Ss’ by McKinsey: o Skills: The capabilities and competencies that exist within the company. What it does best. o Shared values: The values and beliefs of the company. Ultimately they guide employees towards ‘valued’ behavior. o Staff: The company’s people resources and how they are developed, trained, and motivated. Style: The leadership approach of top management and the In fact, after reviewing and examining the most famous assessment models/ tools SWOT & 7 Ss), we can discover easily that both models (used as a representation of all the different models) are not enough to have a clear vision and then give effective means that help the management team in solving totally their companies problem. Here we will explain and examine the three new models which have been developed to give the management team or consultants better way of assessing and diagnosing both business and organization.

This new type of assessment called the three dimensional diagnosis techniques which include three types of assessment models that work together to give us ntegrated diagnosis results and help defining ultimate solutions. page 10 B. Business Case Study The three dimensional Diagnosis framework is the tool to build a comprehensive understanding of the business. It consists of three modules, each of which looks at the business from a different perspective. Each module has its own deliverables and applications and combining the three together gives the consulting team in-depth understanding of the business.

It resembles a puzzle where each piece provides information on its own and the combination of all the parts together shows the bigger picture. 1 . Business Development Stages Model: The purpose of this Module is to identify the business development stages which contribute to understanding the strengths, opportunities, and challenges that can potentially face the business. that view business growth as a series of development stages through which the business should normally pass.

Although these theories disagree on the exact number of stages from a minimum of three to a maximum of seven, they agree that a certain business confronts different challenges based on its degree of Page 1 1 development. The business’s ability to overcome these challenges is what qualifies it to pass from its current stage to the other. The Module has many applications that help organizations to efficiently use their capabilities to overcome the challenges of their current stage and to evolve smoothly from stage to another. Business development stages are identified using pre-set criteria that cover many business functions.

In order to accurately depict the minimum degree of changes in different stages, the Module adopts a six-stage-model that includes the following stages in order of their occurrence: Pre-start up, Existence, Survival, Success, Takeoff, Maturity and Decline. The time spent in each stage varies according to industry verage, market development/ growth and business capability to pass to another Business Development Stages LMC Business Development Stages “BDS” ModelO page 12 BDS’s Key terms Following are brief definitions for the areas examined to determine the business development stage.

While other criteria might indicate the stage, it was found that the below criteria are the most significant indicators for business development stages across various industries and organizations’ sizes. LMC Business Development Stages Component “BDS” ModelO page 13 Management It refers to the group of individuals who make decisions about how the business is un. This module focuses on the management style which moves toward more decentralization, authority delegation, and empowerment as the organization grows.

Human Resources It refers to the organization’s workforce including: number of employees, age range, qualifications, recruitment, and retention efforts. This module uses the capacity and utilization of the organization’s HR as indicators of its business development stage. As the organization develops, the number of employees increases, and the HR function develops to contribute significantly to leveraging the employees’ caliber and ncreasing their efficiency.

Organizational Structure It refers to the way in which different groups, teams, departments of an organization are constructed to enable the organization to perform its functions. It includes span of management, mechanisms of control, and centralization of power. In early development stages, the structure is likely to be simple and informal. The development of a clear, formal and comprehensive organizational structure goes hand in hand with the organization development. Planning It refers to the process of setting goals, developing strategies, and outlining tasks and chedules to accomplish goals.

Business plan is used in this context as an indicator of the level of development of this function. Organizations tend to have comprehensive and clear business plans with well defined directions as they approach more developed stages. Employees’ participation in the planning process is another indicator of the business development. During early stages, planning is usually the responsibility of the CEO who is likely to be the founder. Many employees from various levels of the organization are included in the process as the organization evolves. Page 14

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