MOST Analysis

Mission Statement

Course Objectives:

Business Transitions is a forward-looking program designed to build value for the next evolution of the business. Business Transitions begins with establishment of a baseline for where the business is today. Business Transitions are affected by the value of the business viewed by industry standards and balanced against the perceptions, desires and needs of the owners and stakeholders of the Company itself. To accomplish this, a suite of tools will be utilized. In this session, we will be introduced to, and learn each tool for use and application throughout the Business Transitions program. These tools are; Porter’s Five Forces, SWOT, 5 Whys: Root Cause Analysis, VMOST Analysis and Pareto Principle. Each of these tools will facilitate analysis into each area and identify areas and create a roadmap for improvement and change to build value.

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Objectives

01. The changing business environment today: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
02. Understanding the impact of external economic activity on business growth and success; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
03. How to set objectives for your business; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
04. Metrics for measuring business success; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
05. Evaluating business performance in the modern economy; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
06. Porter’s five forces; departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
07. SWOT analysis: departmental SWOT analysis; strategy research & development. 1 Month
08. Root cause analysis: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
09. VMOST analysis: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
10. Pareto principle: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
11. Appraising future investments: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
12. Implementing improvements and growth measures: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

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Strategies

01. The changing business environment today: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
02. Understanding the impact of external economic activity on business growth and success: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
03. How to set objectives for your business: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
04. Metrics for measuring business success; Each individual department head to undertake departmental SWOT analysis; strategy research & development.
05. Evaluating business performance in the modern economy: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
06. Porter’s five forces: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
07. SWOT analysis: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
08. Root cause analysis: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
09. VMOST analysis: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
10. Pareto principle: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
11. Appraising future investments: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
12. Implementing improvements and growth measures: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

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Tasks

01. Create a task on your calendar, to be completed within the next month, to analyze The changing business environment today.
02. Create a task on your calendar, to be completed within the next month, to analyze Understanding the impact of external economic activity on business growth and success.
03. Create a task on your calendar, to be completed within the next month, to analyze How to set objectives for your business.
04. Create a task on your calendar, to be completed within the next month, to analyze Metrics for measuring business success.
05. Create a task on your calendar, to be completed within the next month, to analyze Evaluating business performance in the modern economy.
06. Create a task on your calendar, to be completed within the next month, to analyze Porter’s five forces.
07. Create a task on your calendar, to be completed within the next month, to analyze SWOT analysis.
08. Create a task on your calendar, to be completed within the next month, to analyze Root cause analysis.
09. Create a task on your calendar, to be completed within the next month, to analyze VMOST analysis.
10. Create a task on your calendar, to be completed within the next month, to analyze Pareto principle.
11. Create a task on your calendar, to be completed within the next month, to analyze Appraising future investments.
12. Create a task on your calendar, to be completed within the next month, to analyze Implementing improvements and growth measures.

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Introduction

Introduction to Business Evaluation Course

Success in the changing business environment of today is only available by identifying the importance of updates and innovative measures. Before we discuss the important subject of business evaluation, it is necessary to shed some light on the changing business environment that has resulted in the need for businesses to constantly evaluate their strategy and growth curve.

Changing with time is a key business skill and as an introduction to our business evaluation course we will look at some necessary techniques for adjusting in the rapidly changing business environment of today.

Steps for Change Management

The changing business environment has only made senior executives realize the needs of their employees. When change was scarce, organizations wouldn’t worry about ingraining it within their culture and employees, but now that change lies at the very core of business culture, there is greater focus on how it can be managed and the results that can be derived through it.

Some steps organizations and managers can follow today to remain competitive in the changing business environment include:

Addressing the Human Side

Almost any significant transformation in the workplace can create people-issues and complications. New skills and capabilities have to be developed, new leaders will be asked to step up and fill in for responsibilities. Employees will remain skeptical of change in the meanwhile and will have their reservations as always.

Dealing with these issues in a reactive manner can put all morale, efficiency and speed at risk. The first and perhaps the most important attribute of change management should be to focus on the employees directly involved in the process. The change management process can only succeed if the focus remains on employees and what that change means to them. The change management approach should be integrated into the decision making process and should focus on employees as the first point of change.

Starting from the Top

Since change can be inherently unnerving and unsettling for people at all levels of an organization, the attention would definitely turn to the leadership team and CEO for support, strength and direction. Leaders themselves have to be onboard with the new approaches first and should be ready to take drastic measures for the growth of the organization. These drastic measures should be focused on challenging and motivating the organization. Executive teams should be the first to be introduced to the change and should be kept on board throughout the change.

Involving Every Layer in the Firm

As transformation programs progress forward, you should look to involve every layer within the organization. Change efforts should include plans to identify leaders across the organization and give them dedicated instructions on how to manage a change initiative. Since water trickles down, the implementation of the change initiative should start from the top and then trickle down to the bottom. The change eventually cascades through the organization and achieves the objectives required from it.

Creating Ownership within Workers

Leaders of real change management programs strive to create ownership among the workforce in favor of the change and what it can achieve for the organization. This can be created through a leadership team willing to accept responsibility for the change in all areas they can influence or control. Ownership can be created and reinforced through the use of rewards or incentives. The incentives can either be tangible, in the form of financial compensation, or intangible, in the form of psychological camaraderie and a shared sense of destiny.

Assessing Culture

Almost all successful change management programs pick up intensity and speed as they come down to other lower levels of the hierarchy. This is only possible if the management has done their homework and assessed all attributes of the organization’s culture. Companies often assess culture too late and do not recognize the importance it carries. Through cultural diagnostics, organizations can prepare themselves for change, bring a number of major problems to the surface, define all factors that influence leadership sources and identify conflicts. These diagnostics help in the identification of core values, behaviors and perceptions across all levels of the organization.

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Adapting to Change in a Changing Business Environment

As managers and employees in this changing era, the primary measures you can take to adapt to and be ready for change include:

• Becoming aware of your situation
• Understanding the true meaning of change and how it inspires you
• Building your skill- and knowledge set for the future

We explore these points in greater detail within this section.

Becoming Aware of Your Current Situation

A big part of change management for supervisors and managers is to become aware of their current situation. What is currently going on in your organization? If you don’t know, it is about time that you find out about it and take the steps necessary to inculcate change within the workplace.

Relevant ideas and questions to help you take the research process and pace forward include:

• What is the mission of your specific department, organization or unit? Supervisors and managers need to begin their analysis of the current situation by answering this question first. The very first thing to clarify is your department’s or unit’s mission. Concrete steps toward change can only be undertaken once the mission is clear.

• What is the purpose of your job? As supervisors and managers, we contribute to the organization in one way or another. The job has a specific purpose, which should be identified and understood here.

• What are your key assignments and responsibilities? Again, supervisors should take their understanding of the job’s purpose forward by studying the key responsibilities and assignments that come under their supervision. An understanding of these responsibilities can significantly enhance results.

• What does your supervisor expect from you? As employees, and even as managers, we mostly have supervisors and higher-ups keeping an eye on us. These supervisors expect a certain deal from all members.

• What obstacles stand in the way of change? Organizations and the employees within them should identify all obstacles in the way and come up with a clear strategy to remove these hurdles and build a clear path to success.

• What resources are present at your disposal? The basic economic problem of limited resources and unlimited wants still stands true today and should be mitigated before proper change management. Understand the resources you have and take the query of wants forward from there.

• What changes are coming? Finally, you should ask yourself the all-important question of what changes are coming your way? This answer helps you determine the management endeavor and adapt to change along with your team.

The inability to answer questions like these should be a warning for most department managers to do their homework. As managers and supervisors, you are in a very strategic position in the change management process. The inability to do your homework can significantly reduce the efficiency of change.

People in organizations often employ selective perception, specialization or certain habits to keep them from being exposed to ideas of change. While this can be considered basic human nature, it isn’t a good strategy to handle change. Instead, this is the time for supervisors and managers to look into their fears and broaden the information they have to explore a number of new ideas. By increasing their awareness of change, managers can practice a distinct advantage over others who have isolated themselves.

Understanding Change

Compare your reaction toward change to that of a small child’s reaction to thunder. You might ignore change as it comes your way, but a small child may feel anxious and can seek assurance from the adult sitting them. It is a basic human trait to fear the unknown, as confidence only comes from understanding the phenomenon and the intricacies behind it. From your learning and experiences as an adult, you now realize that thunder is a natural event that does not harm you. The small child has no idea what thunder is and can only hear a loud, roaring sound that immediately scares them. Based on this analogy, an important step toward change is to realize and understand what is happening around you and why you’re a part of it.

Is your department in the process of being reorganized? Are you a bit worried about how that might impact you? These reactions are totally natural. But do not fall victim to speculations, inclinations or rumors that make you assume the worst. Wait for someone to explain the motive behind the reorganization, and the specific changes that will result from it.

Flexibility toward change can make organizations stand out in the industry today. Organizations that fail to deal with change are unable to compete with other strong members in the industry. Organizations can have internal debates on this matter, but as a rule of thumb, organizations should appreciate technology and competition, and also recognize that these two factors play an important role in business evaluation and re-evaluation.

Building Skills

Adapting to change frequently requires an effective command over skills that matter in the industry today. In some cases, adapting to change will require you to learn a number of new skills that you do not yet have command over. As employees and managers, we cannot stop learning and updating our skills.

Employees should take the responsibility to educate themselves and also to remain current and up to date with changing trends. This information will help update their skill sets and will also demonstrate an achievement and strive toward self-improvement.

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Considerations to Stay Relevant in the Changing Business Environment

The faster you learn, the sooner you can adapt to changes and the more relevant you will remain in the industry. One of the biggest challenges that leaders face today is facilitating organizational adaptability. The business environment, as we have discussed above, is dynamically changing around us. There are a number of new advancements and challenges that weren’t around until recently and have popped up of late.

Historically, western culture has focused on the concept of a heroic leader. The idea that a charismatic leader will swoop in as the knight in shining armor and save the business in distress has for long been the ideal characteristic that businesses and entrepreneurs have had to live up to. For instance, take a look at the cover of any business magazine and you will see pictures of the successful CEO and the achievements they have had, without a single word on the team that helped them achieve what they did.

As per recent business predictions, businesses that live by the same age-old methodology and don’t broaden their leadership practices will suffer at the hands of the changing business environment of today. Change will upgrade you onto a phase of relevance, be it from customers, competitors or even suppliers.

In this section we shed light on some of the considerations and practices businesses can follow to remain relevant in this changing business environment:

Updating Change Theory

Just like the business environment around us is constantly evolving, so too are the leadership and change theories enabling work. Unfortunately, many theories of change are focused on antiquated efforts that don’t hold true anymore. For instance, the trickledown effect does hold value, but the fact that one person at the top can impact almost every aspect of an organization’s style and environment is insane. Every hierarchy in the organization comes with different approaches, environments, cultures and behaviors. Due to the difference in these core processes, the behavior toward change and the acceptance of new technologies will be different across the board. Hence, leaders cannot just impact every level within the organization by cascading goals, directions and values.

Organizations need to take into consideration the emergence of sub-cultures across hierarchies and the different dynamics across different levels. Based on this information, viewing the entire organization as a stable entity with similar characteristics and viewing the leader as the messiah in a white robe is plain farfetched.

Shift from Drastic Change to a Culture of Adaptability

The primary assumption with the change process is that it is something that begins and then ends, once it has lived its finite life. A change effort, for instance, connotes a finite effort that is temporary and will not last long. Hence, organizations and employees really aren’t at fault to consider change a temporary effort which will pass when people start suffering change fatigue.

However, change isn’t something that ends, especially in the rapidly changing business environment of today. There is no single change per se, just varying levels of organizational adaptability toward different advancements.

Organizational adaptability can be defined as an organization’s ability to do something in a sustainable manner without interruptions. However, organizational adaptability requires a shift in perspective from top management, who should focus more on short-term management than on long-term management.

Distinguish Between Managers and Leadership

Many leadership training and development programs in the contemporary world focus a lot on individual skill sets such as delegation, building a strategic vision and coaching. While these leadership skills can be helpful for managers, they aren’t a true representation of leadership.

While leader development focuses primarily on the individual and their skills, leadership development focuses more on creating value through interaction in the workforce. Organizations looking to promote true leadership development should give opportunities to all leaders to apply their skill sets within their work. This includes producing real results through collaborative inquiry, action learning and appreciative feedback. The faster leaders learn, the faster they can adapt to different situations.

Clarify the Purpose of Leadership in Your Organization

With the growing surge in cross functional teams, the role of the leader in organizations is a lot more prominent. As the business environment changes at a rapid pace, leaders have to act as liaisons and integrators that enable the coordination of disparate functions across the organization. Based on leadership theories from prominent psychologists, we can list down three major types of leadership styles:

• Administrative Leadership: This leadership style is focused on coordinating and structuring organizational activities in a bureaucratic manner.

• Adaptive Leadership: Adaptive leadership is what is seen when a meeting that starts with opposing viewpoints and different arguments ends on a positive note of consensus.

• Enabling Leadership: Enabling leadership refers to the conditions leaders set to enable new behaviors, learning and innovation.

The purpose and type of leadership should shift based on the situation organizations find themselves in, and the steps that should be taken to counter that situation.

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The Effect of Economic Change on Businesses

Sometimes organizations feel like the only guarantee about economic conditions is that they will change sooner or later. Businesses with sufficient experience behind their back went through the same phenomenon yet again as COVID-19 killed all economic activity and led to a recession of sorts. These economic ups and downs are part and parcel of running a business, and business owners can’t help but be aware of them and the complications they bring for them. Due to the constant presence and threat of economic downturns, businesses have to ensure that they are always working toward plans for better economic strength and ability.

In this section we study the impact economic conditions can have on business activity:

Focus on Profitability

Regardless of how the economy is doing, the primary focus of every organization today should be on making their business as profitable as they possibly can. As a general rule of thumb, seasons of high economic growth and stability are relatively easy for businesses to manage. This is because economic growth is the call of the hour, consumer confidence is high, unemployment rates are down and people have greater disposable incomes to spend on goods they like and believe they should have. All of this eventually leads to more people choosing to buy from different businesses. The more people have to spend, the more willing they will be to try different businesses in the market and benefit from the expertise they have to offer.

This situation can present a gloomy contrast when economic activities die down and the economy experiences a downturn. People are more inclined toward saving money during an economic downturn than they are toward spending it. Additionally, businesses also have to market hard to build a relative perception of their product in the eyes of customer. Businesses can feel the pressure during economic downturns, especially if they aren’t prepared to face the rising pressure.

Business entities that are focused on being profitable get to benefit the most during dry times of economic downturns. The objective of profitability does not only provide businesses with the peace of mind they require across seasons, but it also gives them the freedom and leverage to make hasty cuts in prices during recessions, make rash decisions based in the moment and innovate their product for different markets. Without the freedom to experiment with decisions, businesses will never be able to decide what’s best for them. This will eventually lead to a sphere of decreased sales, where businesses rely on past glory and profits to pull them through the phase.

Be Prepared for Opportunity

This does sound like the kind of content you might see on the marketing material for a business school, but the fact of the matter is that every single economic period brings with it an opportunity for businesses to diversify their opportunities and open new avenues.

During a period of growth, businesses are more at ease to take decisions they feel can be beneficial for them and are also willing to hire additional personnel, because there is no better time than now. Organizations that want to move into larger spaces also do so during periods of economic downturn, because the market is ideal for purchasing during such periods, and businesses have enough cash available to them to buy new plants and step into new markets.

Lean sessions of economic downturn can present a different kind of opportunity altogether. These opportunities are difficult to jump on, as most of the businesses in your industry might decrease their operations and reduce the money they spend on marketing.

As your competitors reduce the focus they put on the market, you can focus intently on pivoting your efforts to focus more on new avenues such as digital marketing, entering a new market or crafting a new marketing strategy. These seasons also give you the time and freedom to experiment with new packages, pricing tiers and services that they haven’t embarked on previously.

The exciting part about opportunities unearthed during periods of economic downturn is that they pave the way for future growth in this regard.

External Factors Affecting Business Environment

There are a number of external factors today that impact business environment and the success/growth curve of organizations around us. While we have discussed the economy in general and the impact it has on businesses, we will discuss some of the other external factors that affect business performance and can positively or negatively influence growth.

1. Social and Cultural Environment

The social and cultural environment of a region includes the attitudes, values, opinions, lifestyles and beliefs of individuals residing in a nation or region. These characteristics determine customer behavior and are developed from cultural, demographical, religious, ethnic and educational conditioning. The characteristics are often the result of years of conditioning.

Like other forces impacting the external business environment, social factors keep changing continuously. A change in the social attitudes, values and beliefs in a region can affect the demand for different types of leisure activities, books and attire etc.

The factors that influence this impact include:

Demographic Factors

Demographic characteristics such as age distribution, population, literacy levels, religious composition, inter-state migration, income distribution and rural-urban mobility can significantly influence the strategic plans of an organization. This eventually affects the compensation and hiring policy followed by employers within different organizations.

The age demographics in particular countries define the selling and buying environment of that region. Organizations have an eye on the characteristics and the age demographics of the people in the region and make their plans accordingly. Countries with a growing young population have a shift toward more youth-oriented goods, which are meant for younger audiences. These products include fitness equipment, beauty products, magazines, hair and skin care preparations, etc.

On the contrary, countries with a growing population of senior citizens have businesses that focus more on products to this market. Additionally, governments in such countries pay more importance to social security benefits and tax exemptions for senior citizens.

Cultural Factors

Social values, customs, attitudes, rituals, practices and beliefs are formed through years of conditioning and influence businesses and their practices in a number of ways. Christmas offers a great opportunity for tree growers, toy retailers, card companies and mail order catalogue firms to grow their business further and to benefit from the sudden spike in demand.

Social values can best be defined as an abstract sense of what is good, desirable and bad. Beliefs on the contrary can be defined as an understanding of the characteristics that define social and physical phenomena around us. Beliefs are important, since they define the way most individuals think and the rules they have for themselves.

McDonald’s is the ideal example of a foreign brand endorsing local culture and beliefs to sell in different markets. Being a global brand, McDonald’s is present in a number of countries across the globe. The fast food brand does not serve beef burgers in India, because practicing Hindus within the country consider cows to be sacred and prohibit the consumption of beef. Values and beliefs vary from country to country, and organizations should always consider them before stepping into different global markets.

This concept can better be defined through the consumption of soup in both, the United States and Japan. When marketing soup in the United States, restaurant managers and marketers realize that soup works best as an appetizer and builds the appetite for what’s to come, which is why it is best marketed in that role. However, the marketing and positioning of soup would be completely different in the Japanese market. Soup is considered a breakfast drink in Japan, which is why brands market it in that way.

Religious and Ethical Actors

Religious beliefs often dictate the consumption patterns of most users across the globe. Since Muslims, the followers of Islam, are prohibited from eating pork, they don’t have bacon for breakfast or any other meal made out of pork for that matter.

Similarly, religious beliefs set the foundation for ethics as well. The culture of different countries is dictated by the primary religion within the region.

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2. Political Environment

Many political factors in the environment businesses operate in can influence how managers implement strategic decisions and how they formulate ideas for the business. The political environment of a nation determines a number of factors including high tariffs, barriers to entry in a nation, anti-nationalist slogans directed toward foreign brands, bad publicity and a lot more.

While businesses do not want to be involved in modern politics, they do realize that successful growth across countries in the world requires a basic understanding of the laws of the land and how things work in the region. From tax laws to tariffs, business treaties and commerce in general, a number of factors can be influenced by the politics of the region.

These factors are:

• Political climate
• Severity of employee welfare legislation
• Influence of political pressure groups
• Political influence on trade unions
• Protection of special interest groups like consumers, women, minorities
• Simplicity and understandability of government legislation
• Consumer protection laws
• Environmental pollution control legislation
• Government’s view on globalization and trade liberalization
• Political stability
• Political ideology and philosophy of political party in ruling
• Environmental protection laws
• Anti-monopoly laws
• Export restrictions
• Copyright and patent protection

Some of the ways politics can influence businesses include:

Politics and Business Taxes

Businesses with a higher yearly yield are typically taxed at a higher percentage than businesses that earn within a lower bracket. Businesses in the modern economy need to understand the importance of paying taxes and should recognize that there is no way out of the conundrum. Taxation is an important part of business today.

Business owners also keep an eye on the exchange of rhetoric between the ruling party and opposition parties. Opposition parties are often in favor of reducing taxes on bigger organizations. The pressure put on them by the opposition can eventually determine the response of governments toward progressive taxation measures. A major increase in taxation for foreign brands can also scare a number of brands away from the local market.

Employee Protection and Coverage

Businesses expanding operations across the globe have to keep an eye on the individual employee protection and coverage requirements that are in place by ruling parties in different countries. Different countries have different regulations on minimum wage, health benefits and other instances of employee protection and coverage. A detailed look at these legal factors should clear complications away.

International Business Impact

No business can succeed within a bubble. Sure, an organization can operate on a local level and have customers from within the local region or community, but almost all company owners and investors dream for their organization to go big and have a global impact on proceedings around us. Political tensions on a global level can impact local businesses as well, since countries’ economies today are all connected in a certain way.

For instance, the departure of the United Kingdom from the European Union negatively impacted a number of local businesses, which although operated on a local scale, had to look at new ways to do business.

Business and politics have an incredible connection, which is something that we will take a look at in greater detail through the length of this manual. The business world can collide with the world of politics in a number of scenarios to create economic openings for the society at large.

3. Legal Environment

The regulatory environment or the legal framework in most countries is decided by the political party in power within the upper house. The government, hence, has the power to legislate on and discuss matters like managerial remuneration, wage fixation, location of plants, safety and health at work, price control, location of plants, licensing policy, entry of multinationals and export policy.

Most mixed economies with a certain level of control exercised by the government follow the same characteristics – the government puts down the rules of the game, while businesses in the industry are required to follow them to the letter.

Companies that want to operate on a global level should study the law of the land in detail and adapt to the requirements it puts on them. The legal framework of all international countries should be respected for the right results.

4. Technological Factors

New technology can be utilized in a number of ways to counter both, recession and inflation. New machines come with capabilities to reduce production costs and can help businesses succeed in what they do. Current advances in information technology have made it possible for global supply chain players to plan for the future and have also enabled them to distribute their products economically in better quantities than before.

Technology is the means by which a business converts all input, including raw materials, into output in the form of finished goods. By this definition, technology can refer to anything that helps in the production process including machinery, tools, work procedures, equipment and employee skills and knowledge.

In the competitive world of today, breakthroughs in the field of technology can significantly influence the efficiency of an organization itself and the stakeholders that it is associated with. Technology can impact the efficiency of the service market a business is trading in, the suppliers, distributers, customers, competitors, manufacturing processes and marketing processes.

During the last few decades, we have seen a greater focus on technology that promotes communication within and outside of organizations. Optic fibers have facilitated technology in communication, robots have completely changed the face of manufacturing processes, digitalization has enhanced the delivery of sound and image output, lasers have come up as the perfect alternative for scalpels in a number of surgical procedures and computers have helped in the processing and structuring of enormous amounts of data.

Technological advances help open up a number of new markets as well. Since technology is an ever involving c