Innovation is an important aspect of management not only in an engineering industry but in all other industries in an economy. It defines destinies and the directions of both small and large organizations. In a volatile situation such as a highly competitive environment, innovation becomes a threshold to success. In fact, the success of high performing business organizations in the contemporary world can only be attributed to their innovation. This paper introduces the reader into understanding the boundary between innovation management and success in an engineering organization by critically incorporating and analyzing strategic aspects of management. (Gibson, Ivancevich, & Konopaske 250)
Supported by different management theories drawn mainly from the literary works of renowned management scholars like Peter F Drucker, Michael Porter, Hertzberg, Henry Minzteberg and many others, this paper provides the reader with an opportunity to advance his or her knowledge particularly in innovative management. (Hertzberg 114) The modern engineering works is characterized by use of sophisticated technology requiring multi-skilled professionals, dynamic leadership strategy and appropriate allocation of resources.
With the current economic climate, entrepreneurs are devising new strategies day by day to either reduce costs or maximize profit margins. (Hertzberg 115) These can only be achieved when an organization has relevant employees who are not only technically qualified but are also creative and innovative enough to drive the organization into achieving the end results. Innovative employees will produce unique and quality products that may match the changing consumer tastes and preferences especially in a new market niche.
Different business organizations operate in different external business environments; these include political, economical, social, legal and technological environments. This paper evaluates each factor on its own under the PEST model as follows:
|Political Factors: |
Factors here include the extent of government’s intervention in an economy through taxation, labor laws, trade restrictive practices, specific and national environmental laws etc. The company specializes in lift manufacturing for businesses. (Hertzberg 118) This is a very sensitive area and therefore due care and diligence should be demonstrated at all costs.
Since the company wants to open a new site in North London, labor laws would be very important. In respect to our employees, the company will operate the following:
Remunerations of employees will be paid in accordance with the law as contained in the UK act.
Variations in remunerations shall only be made according to experience, academic and professional qualifications in line with UK labor laws
Employees would be entitled to additional benefits as per the laws.
Since engineering is a heavy industrial work, the company is proposing an insurance package that includes; WIBA (Work Injury Benefit Assurance), Professional Indemnity, medical scheme, group personal Accident and etc. (Ferrell 213)
|Social Factors |
Since organizations depend on people and vice versa, social factors become very important. As the human resources manager, a department in which managing people falls in its docket, the following analysis has been done.
The company has carried out an analytical study of North London on population distribution and pattern, age distribution, career attitudes and their safety preferences. (Hertzberg 118)
Population distribution. The company liaises with Sans Burry Stores that supplies periodicals on population distribution and government statistics bureau to provide the population trend and age distribution.
Based on the findings of a research carried out by an independent body on behalf of Action aid UK, the research found out that there is a steady population growth in North London. (Ferrell 213)
An independent source from national bureau of statistics also reveals that real estate investment has become a booming business in North London with at least ten construction companies being registered every week. This confirms that there is a good business opportunity in this region.
The source also reveals that the population mainly comprises of young and energetic persons aged between 20 to 35 years. In line with this, the human resources department has designed a plan that will take advantage of the existing aging structure. The company’s line of business requires an energetic workforce with enthusiasm and morale. It’s these young people who are capable of achieving the results. (Gibson, Ivancevich, & Konopaske 251)
Engineering industry consists of heavy works and therefore has some of the worst business risks including death. The human resources department has designed a model of health and safety requirement to its employees as well as the public.
|Economical Factors |
Economic factors that are likely to affect the operations of our core business activities include change in interest rates, general economic growth, exchange rates, and inflation. (Ferrell 214) This is discussed as follows:
General economic growth rate; as the economy begins to experience a booming session, the demand will rise, and hence a general growth in all industries. The company has already identified a growing prospect of business in North London occasioned by the current development in real estate investment.
Exchange rates. Due to the current economic and financial recession, major currencies of the world have been so volatile. The GBP has been appreciating and depreciating now and again. The company has decided to concentrate most of its operations in the domestic environment. However plans are underway to hedge foreign currency risk in case the company deals with an international client.
Interest rates.Interest rates will affect a company’s borrowings and lending from and to the public sector. (Ferrell 216)
|Technological Factors |
The human resource department has designed a system of recruiting its staff. The recruitment process ensures that only candidates who are qualified join the existing staff.
Employees are trained on new skills and current technology. Since engineering relies so much on technology, the company has adopted a learning culture.
The existing environment is characterized by massive utilization of technology. H Young a construction company with multiple branches across the world is already in North London and therefore our company must use all that is possible to penetrate the region. (Ferrell 215)
Most customers in the modern economy have been sensitized by the prevailing economic climate such that any unpopular behaviour is likely to cost an organization heavily. In periods of change, flexible organizational structures become more significant. An organization with a flexible structure will adapt more easily and rapidly than an autocratic organization. The company is already planning to move to a new business environment i.e. North London. The company may take time to adapt culturally if the existing structure is turgid and rigid. (Porter)
One of the difficulties that organizations face whenever there is a change of environment is cultural incompatibility. Matters become worse when the existing leadership becomes characterized by bureaucracy. It will be very challenging to meet the market requirements. In this scenario, customers might find it equally hard to respond to an organization. A flat structured organization will allow its employees to be responsible for their own work and managers freed from slavery leadership to a culture of relaxed environment where they make decisions based on their job contents and not on organizational structure. (Gibson, Ivancevich, & Konopaske 259)
On the other hand, a learning organization provides managers with opportunities to update their knowledge base with new skills and creativity. In learning organizations, employees are always identified with shared value fit adopting a pattern of behaviour. In this case, the company will adapt to the new environment, understand the culture of the population and study their specific needs and requirement. Consequently there will be a positive customer response and hence a business niche. (Porter)
Generic strategy for competitive advantage
Michael porter identified three generic strategies in 1980 that a firm can use to enter or achieve a competitive advantage in a business environment. These include differentiation, cost leadership, and market focus.
- Cost leadership: this refers to a strategy where a firm decides to produce quality products or services that are the same as its competitors but at the lowest cost. In this respect, cost minimization is the driving focus. This is an engineering industry and the company has decided to manufacture lifts. The UK’s engineering industry is flooded with many firms that are manufacturing lifts; in fact the North London is even worse. In order to penetrate the London’s competitive market the company could manufacture the quality lifts but at the lowest cost possible. (Porter)
- Differentiation: this refers to making a firm’s products and services completely different in terms of quality, price, presentation and design. In order to achieve a competitive advantage especially in a volatile situation characterized by similarity of products, price and market saturation, a firm can use differentiation as a strategy. This will pay particular attention to the organizational structure in that a bureaucratic organization might complicate things for managers and therefore unexpected change of market penetration strategy could be difficult to realize. (Porter) Maximum benefit from this strategy is achieved especially when manufactures decide to segment a market e.g. Moving to North London could offer the company an opportunity to manufacture different types of lifts and charge them at a price and focus on value that could generate exorbitant price for greater margins. (Porter)
- Market focus: this generally represents a situation where a company decides to put its energies in one part of the market to increase productivity. (Porter). The aim of the strategy is to create a competitive advantage through differentiation within a segment where it’s possible or being the lowest cost producer. In this respect, the segment could be North London. Focus strategy is in most cases used by small enterprises. However, this strategy could also be determined by the organizations structure. (Porter).
Sustaining Competitive Advantage
|Design||Knowledge transfer across locations |
Design management is the effectual operation by line managers of the plan resources available to an organization in the pursuit of its shared objectives. (Melcher 118) It is therefore straightforwardly apprehensive with the organizational place of design, and recognition with specific design disciplines which are applicable to the decree of core management issues and with the schooling of managers to bring into play design. Design in business can be described in two ways; management design and product design. In many organizations, a design is a prerequisite for a competitive advantage.
Management design refers to how an organization aligns all its aspects of management including leadership styles and structures. In order to facilitate better and speedy transfer of knowledge across, an organization should adopt a suitable and compatible leadership structure. (Melcher 119)
Design can be a source of competitive advantage only if it allows flexibility in the management so as to facilitate rapid and upward as well as downward communication.
|Marketing||Brand awareness in the new markets |
The rationale of any marketing activity is to inform consumers about the existence of a firms’ product. If this is not achieved then there will be no basis for marketing.
Marketing can be used to achieve a competitive advantage when consumers become aware of the company’s brands in a new market. (Melcher 120)
For instance; if the company moves its engineering activities to North London where it has some customers who are actually aware of certain types of lifts manufactured by the company, then this could offer some competitive advantage.
|Production||Economies of scale for a diversified product range |
High performance organizations rely on effective and efficient production to achieve organizational objectives. However, in highly competitive market economies of scale become drivers of quality management if a business is to achieve a competitive edge. Cost leadership as a generic competitive strategy asserted by
Porter becomes a big factor in sustaining competitive advantage. (Porter) If a firm can utilize the resources available in producing better quality products than its competitor at the lowest cost, then it will have made a big milestone in an industry and hence a strong competitive advantage.
|Logistics||Collaborative forecasting |
Logistics in an organization is achieved through value chain. A value chain is a management model that embraces quality in each level in the entire organization.
This is the process where a company creates specific roles and puts in place an official reporting mechanism within an organization. (Gibson, Ivancevich, & Konopaske 265) At the site the most appropriate design could be:
|Strategic leadership/top level of management.|| This position consists of high ranking managers in the organization and may include chief executive officer, senior engineers, company president and etc. (Melcher 358) The main responsibility of this level of management is to make long term strategic decisions on behalf of the organization e.g. strategy formulation, market penetration, key objectives, change management and etc.|
|Tactical/ Middle level management.|| At the site, this level of management includes branch managers, divisional engineers, and marketing managers that are responsible to the top management for the functions of their department. (Beitler 179)|
|Operational/lower level management|| This will consist of low level managers in the site. The main responsibility of these managers is to define the more detailed roles and processes. It is mainly routine in nature and consists of all activities that are instrumental in daily operations of the company. Managers in this level may include supervisors. (Carter, & Goldsmith 270)|
The responsibility of the human resource manager is to ensure that the site is effectively staffed with competent and qualified employees and that necessary morale is provided. In each level of management, appropriate authority is transferred and every manager becomes responsible for his own department. (Peteraf 180)Together with a team of eminent personalities within the human resource department, we are planning to recruit 20 new employees. Five of these will be joining senior management team comprising of branch manager, regional engineer, marketing manager and two other managers who have been in the company for the last five years. This is to allow quick induction of new staff.
Creativity and innovation
The human resource department has developed the following model in order to ensure that employees not only remain creative and innovative in the site but also motivated.
- Recruitment: the department plans to put into use thorough and vigorous recruitment procedures for new candidates joining the company as employees. This is to ensure that site is staffed with only professionally and technically qualified staffs with adequate motivation. Competent employees are always creative and innovative. (Melcher 125)
- Training: As described by (Tuck Man Team Building) training is the only way an organization can acquire new skills for its existing staff. The department plans to organize training sessions including on job training at the site, off-job training, computer based training, and exposure visits to other professional organizations. This is to enable the new and existing staffs to acquire new and latest production methods. (White 214)
- Appraisal: the department will conduct regular staff appraisals in order to identify whether there are any training needs. Where the findings of the appraisals become positive, the particular employee is considered for an upward mobility. On the other hand, where an employee’s performance is below the standard, then that employee is taken for training. Staff appraisals are important in identifying training needs as well as determining morale in organization (Hertzberg 126). The expectancy theory of motivation by Vroom asserts that employees are purposeful and that people will always work harder in expectation that something will happen.
Force Field Analysis
This is a technique that is used by most managers and organizations to evaluate the forces for and against change. (Clampitt & Williams 8) The following are some of the decisions that the organization could be forced to make and factors restraining the change.
Plan: Establishing a lift manufacturing plant in North London
|Forces for change||Forces against change|
|Customers’ preferencefor new lift design with the growing consumer taste and preferences, the company could be forced to change its production design in order to meet the market requirements. (Gibson, Ivancevich, & Konopaske 460) |
Automating production. The rationale here is to increase the speed of production to maximize on economies of scale so that the company achieves a competitive advantage.
Raising output volumes-raising output volume would make the company to have a steady supply of lifts in the North London market. This would eliminate cases of prices fluctuating now and then.
Controlling costs: minimizing cost would make the company to be efficient and hence achieve a competitive advantage. (Gibson, Ivancevich, & Konopaske 461)
|Loss of staff overtime: when staffs begin to lose overtime, morale would automatically reduce. Where this is the case, the company will lose some of its professionals to other rivals. |
Environmental pollution:when a firm makes a decision to use a highly sophisticated technology, the impact is felt much more on the environment. This could cause degradation and hence prosecution.
Cost:Any decision made comes with a corresponding cost. Venturing into many organizational decisions would mean a heavy overlay on overheads. (Gibson, Ivancevich, & Konopaske 461)
Disruptions:implementing a decision in a department would cause a disruption to other departments.
This is a type of leadership that is characterized by identification of vision, direction, and purpose for growth and the success for the entire organization. (Kotelnikov) For an organization to succeed in any field it must have a clear vision, mission and commensurate structure supported by necessary and adequate resources.
Strategic leadership is normally associated with long-term strategy formulation and directions that must be broken down into small manageable tasks to be performed by every manager in an organization, low-level divisional managers, plant supervisor in the site and unskilled laborers. In order to achieve a strategic leadership, an organization must identify itself with a particular form of leadership style. (Collis, Montgomery, & Cynthia 119) The current economic climate has forced many organizations to reduce numerous layers in their structures. That means that most organizations are now flexible enough to meet the changing economic circumstances.
Bureaucracy cannot work in the site; a new environment requires a flexible structure accommodating every kind of change. As has been discussed, the strategy formulated will depend upon the circumstances on the environment. (Webber 258)
In the current global economy, managers need to make sound mind decisions if success is to be realized. This is why high performance organizations insist on hiring talented professionals who are technically experienced and qualified to be trusted with strategic leadership positions especially in a volatile economy. In the scenario, the company has already identified its market as being North London. Generic competitive strategy could be appropriate in penetrating this market. However, the decision remains with the managers.
Since the nature of business remains to be engineering, staff welfare should be a priority. Many manufacturing firms tend to lose employees for failure to pay adequate compensation. Engineering is one field that requires technicality and professionalism and therefore the employees should be adequately rewarded in order to motivate them. If such plans are underway, then there is no doubt that the organization will succeed.
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