An Assignment

on
Ashridge portfolio Matrix
(Constraints/Limitations)

Submitted To: Prepared By:

Mr.K.S.Prasad Ronak R Patel
(11F76) (B)
B.P.S.M.-ll
INTRODUCTION:

Some businesses acts as 'parental developer' acquires other

businesses with a view to add value to it by using their resources and
capabilities. Ashridge portfolio matrix is used to evaluate the attractiveness of
potential acquisition target or existing business to the parent. This matrix has
two variable according to which the attractiveness of businesses is to be
judged. One is Benefit and the other is feel. In practice, other variables, like
previous experience, management attitudes and culture, stakeholders
expectations, may also influence the decision regarding potential acquisitions
to be included in the portfolio of the business. All the relevant factors needs to
be considered taking the decision. Let discuss each of the above variables.

Benefits.

It is the value business can add to potential business by utilizing their resources
and competencies.

Business may have many resources and capabilities, but only those resources
and capabilities are counted towards benefits which the potential business
needs to grow. In other words, benefits are the opportunities to help. More
the business can help, more it can add value. Ex. If parent has strong finance
department than it can help business needs financial services to add value.

Feel.

Feel is the similarity between Parent and the potential business. Similarities
can be determined by industry, organization structure, culture and law. There
can be many other elements need to be considered. Feel is about critical
success factors (CSF) related to the elements stated above. If the business
understands how to makes potential business successful as it know its CSF, it
can use its resources and capabilities more effectively. Ex(continued), business
needs to know how financial services are provided in context of particular
industry.
The combination of Benefits and Feels gives the following types of business
acquisition targets which varies in attractiveness according to situation.

Alien Businesses.
These are the business outside the industry of the business considering
takeover or merger proposal, so business has no knowledge of internal and
external factors affecting the business operating in that industry, needed to
make it successful. It can be said that it has low feel. There are no
opportunities for the parent to add value by helping it because potential
business has the skills necessary for its success. It can be said that it has low
benefits.

Value Trap Businesses.

These are the business outside the industry of the business considering
takeover or merger proposal. It can be said that it has low feel. There are
opportunities for the parent to add value by helping it because the business
possess resources and capability to help the potential acquisition target lacks
the skills necessary for its success. It can be said that it has high benefits.

Ballast Businesses.
These are the business inside the industry of the business considering takeover
or merger proposal. It can be said that it has high feel. There are no
opportunities for the parent to add value by helping it because potential
acquisition target has the skills necessary for its success. It can be said that it
has low benefits.

Heartland Businesses.
These are the business inside the industry of the business considering takeover
or merger proposal. It can be said that it has high feel. There are opportunities
for the parent to add value by helping it because potential business lacks the
skills necessary for its success. It can be said that it has high benefits.
ASHRIDGE MISSION MODEL

DESCRIPTION

Managers and employees are occasionally searching for a purpose and a sense
of identity. They want more than just pay, safety and an opportunity to
develop their skills. They want a "Sense of Mission". In fact there are a number
of functions that a Mission can have in any organization. These can be internal
and external and include:

1. To inspire and motivate managers and employees to higher levels

of performance. (Sense of Mission)
2. To guide resource allocation in a consistent manner.
3. To help to balance the competing and often conflicting interests of
various organizational stakeholders. Compare also: Stakeholder
Analysis, Stakeholder Mapping
4. To provide a sense of direction.
5. To promote shared values amongst employees.
6. To refocus an organization during crises.
7. To improve corporate performance.

A Mission Statement is an articulation of a company's mission. An often-

used definition of a mission statement is: "a broadly defined but enduring
statement of purpose that distinguishes the organization from others of its
type and identifies the scope of its operations in product (service) and market
terms” (Pearce, J.: The company mission as a strategic tool. Sloan Management
Review, 1982, 23-3, pp. 15-24). According to Campbell, mission statements
frequently do more harm than good because they imply a sense of direction,
clarity of thinking, and unity that rarely exists. Instead of uplifting employees
with elevating ideals, they encourage cynicism. The Ashridge Mission
Model from Andrew Campbell is a method that can be used to create or
analyze a Mission, Sense of Mission and Mission Statement. The Ashridge
model integrates two historic schools to determine a Mission:

 The Strategic School. A Mission is primarily seen as the first step

in the strategy process. It defines the business's commercial rationale
and target market.
 The Cultural/Philosophy/Ethics School. A Mission is primarily
seen as an expression or statement that should ensure good
cooperation between employees. It is a cultural glue which enables an
organization to function as a collective unity.

The Ashridge Mission Model contains the following four elements which
should be linked tightly together, resonating and reinforcing each other to
create a strong Mission:
  Purpose. Three categories:
o For the benefit of the shareholders
o For the benefit of all its stakeholders
o For the benefit of a higher ideal, going beyond merely
satisfying the needs of its stakeholders.
o
 Strategy. The commercial logic for the company. Strategy links
purpose to behaviour in a commercial, rational, left-brain way.

 Values. The beliefs and moral principles that lie behind a

company's culture. A Sense of Mission occurs when employees find
their personal values aligned with the organizational values. Values give
meaning to the norms and behavioral standards in the company. Values
are strong motivators to act in the best interests of the purpose of the
company. They can provide a rational for behavior that is just as strong
as strategy. But in another, emotional, moral, ethical and right-brain
way. It is for this reason that the Ashridge framework has a diamond
shape.

 Policies and Behavioral Standards. Guidelines to help people to

decide what to do on a day-to-day basis.

ORIGIN OF THE ASHRIDGE MISSION MODEL.

HISTORY
The model is based on research conducted in 53 large companies by the
Ashridge Strategic Management Center. Its founding director, Andrew
Campbell, has spent much of his professional career studying mission
statements. Campbell’s framework of four important mission statement
dimensions has come to be known as the Ashridge Mission Model.

USAGE OF THE ASHRIDGE MISSION MODEL.

APPLICATIONS
 Helps to think clearly about mission.
 Helps to discuss mission with colleagues.
 Both for developing a new Mission and analyzing
an existing Mission.
 A corporate mission must not be confused with a
 corporate vision. A vision is a mental image of a possible and desirable
future state of the organization.

STEPS IN THE ASHRIDGE MISSION MODEL.

PROCESS
Ten questions by which you can measure the quality of a mission statement
are:
 Purpose
1. Does the statement describe an inspiring purpose that
avoids playing to the selfish interests of the stakeholders -
shareholders, customers, employees, suppliers?
2. Does the statement describe the company's responsibility
to its stakeholders?
 Strategy
3. Does the statement define a business domain and explain
why it is attractive?
4. Does the statement describe the strategic positioning that
the company prefers in a way that helps to identify the sort
of competitive advantage it will look for?
 Values
5. Does the statement identify values that link with the
organization's purpose and act as beliefs that employees can feel
proud of?
6. Do the values 'resonate' with and reinforce the
organization's strategy?
 Behavioral Standards
7. Does the statement describe important behavioral
standards that serve as beacons of the strategy and the values?
8. Are the behavioral standards described in such a way that
individual employees can judge whether they have behaved
correctly or not?
 Character
9. Does the statement give a portrait of the company and does
it capture the culture of the organization?
10. Is the statement easy to read?

STRENGTHS OF THE ASHRIDGE MISSION MODEL.

BENEFITS
 Combines strategic and cultural motivators to guide an
organization.
 The model is particularly useful to ensure that a company has a
clear Mission AND it has employees with a strong Sense of Mission.
 The Ashridge Mission Model emphasizes the need for a fit
between strategy and values. Additionally the Ashridge model
recognizes the importance of the link between the organizational
shared values and the private values of employees and managers.
 Improves decision-making. Raises energy levels. Reduces the need
for supervision. Promotes constructive behavior. Increases satisfaction
and loyalty.
 Puts corporate purpose as the corner stone and starting point of
mission.

LIMITATIONS OF THE ASHRIDGE MISSION MODEL.

DISADVANTAGES
 Having inappropriate values or an inappropriate sense of mission
is a powerful negative influence on employee behavior.
 Shared values and sense of mission often are extremely difficult to
change and can become an obstacle for change.
 Strongly shared values or a strong sense of mission can lead to an
insularity that becomes xenophobic.
 Creating a mission statement is often a time- and resources-
consuming process.
 A mission paper may not be a 'paper tiger'.

ASSUMPTIONS OF THE ASHRIDGE MISSION MODEL.

CONDITIONS
 Committed employees and teams perform more efficiently and
more effectively than apathetic employees and teams do.
 People connect themselves more easily to values than to abstract
strategic concepts.