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CIMA Paper E3
Enterprise Strategy
For exams in 2011/12

Notes

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CIMA E3 Enterprise Strategy

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Contents
About ExPress Notes 3
1. External factors affecting organizations strategy 7
2.
Strategy formulation and development
13
3. Strategy implementation 26
4.
Change management
34
5. Information technology 39
6. Project management 46







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Chapter 4
Change management









START
The Big Picture


Change management is an important aspect of management that tries to ensure that a
business responds to the environment in which it operates. There are four key features of
change management:
Change is the result of dissatisfaction with present strategies
It is essential to develop a vision for a better alternative
Management have to develop strategies to implement change
There will be resistance to change
Many factors drive change in a business. Despite the potential positive outcomes, change is
nearly always resisted. A degree of resistance is normal since change is:
Disruptive, and
Stressful
As a result of change resistance and poorly managed change projects, many of them
ultimately fail to achieve their objectives. Amongst the reasons commonly associated with
failed change programmes are:
Employees do not understand the purpose or even the need for change

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Lack of planning and preparation
Poor communication
Employees lack the necessary skills and/ or there is insufficient training and
development offered
Lack of necessary resources
Inadequate/inappropriate rewards



KEY KNOWLEDGE
Lewins change models

1. Unfreezing, Moving, Refreezing
Unfreezing Moving Refreezing
Shows the need for change
and gets people ready for
change.
The actual change occurs
here.
Stabilising the situation to
the new approach.

Change can only happen once people have been unfrozen and existing ideas and
misconceptions have melted.
2. Force field analysis










The length of the arrow represents the time duration of the force and the thickness of the
arrow represents the strength of the force.
Driving forces (pushing
for change)
Restraining forces
(resisting change)
Current state Desired state

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There are driving forces pushing for change and forces resisting change. To encourage
change, change agents should strengthen driving forces and reduce restraining forces.


KEY KNOWLEDGE
The Change Kaleidoscope (Balogun and Hope Hailey)

This helps management design approaches to change within a company. It contains 3 rings:
An outer ring which relates to the wider strategic change.
A middle ring which looks at the more specific change features.
An inner ring which provides a range of choices for management to use.

The kaleidoscope does not create prescriptive choices for management to use. Instead, just
like a real kaleidoscope changes the image so the change design mechanisms will change.


KEY KNOWLEDGE
Business Process Reengineering (BPR)

BPR is a method aimed at improving the efficiency and effectiveness of business processes
within an organisation.
Design Choice
- change path
- change start
- change target
- change roles
Time
Scope
Preservation
Diversity
Capability
Capacity
Readiness
Power
Organisational Change Context

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The process strategy matrix (Harmon) is based on:
The importance of the process
The complexity of the process


P
r
o
c
e
s
s

t
y
p
e

C
o
m
p
l
e
x

Complex process that are not part
of core competencies.

Outsource
Complex processes of high
strategic value.

Focus on people based process
improvements
S
i
m
p
l
e

Simple processes of low value.

Automate in ERP application
or outsource
Simple processes of high strategic
value.
Automate for efficiency
Low High
Strategic importance of process

Business processing Outsourcing (BPO) is a form of outsourcing that involves contracting 3
rd

parties to undertake specific functions. Typically, back office functions such as accounting
activities are outsourced.



KEY KNOWLEDGE
Methods of successful change implementation


The key stages in a successful change project are likely to be to:
Identify the changes required (a role here for SWOT and PEST analysis)
Determine the major issues
Identify and assess the key stakeholders
Win the support of key individuals
Identify the obstacles
Determine the degree of risk and the cost of change
Understand why change will be resisted and how it can be managed
People are the key factor in overcoming resistance to change. The successful
implementation of new working methods and practices or integrating new businesses into a
group is dependent upon the willing and effective co-operation of employees and

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management. Many change initiatives and programmes fail because they are derailed by the
people factor!
A key part of successful change is, therefore, building and communicating the reasons & the
vision for change.
Employee communication is critical for the success of the change. It will not ensure the
success will come but without it a failure is nearly certain. Employees need to be clear about
what a change involves and how they are involved in it:
What are the proposed changes?
What is the timescale?
Why should we do it?
What will the major effects be?
The way in which the change can be communicated / negotiated / discussed with employees
might be any or some of those:
Cross-functional teams
Stronger internal communication
Negotiation
Action planning
Appointing change agents or champions of change
And a certain amount of compulsion manipulation and coercion
The change must also be clearly supported by the top. Employees need to feel that the
changes has been accepted / invented by the top and thus it is unavoidable. Their voice will
be heard and their input is welcome but the previous state cannot be reinstated. Thus the
top managers should:
Act decisively demonstrate momentum
Consider how they will be affected
Involve them in the change
Consult and inform frequently
Be firm but flexible
Monitor the change