Cluster analysis example
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This document outlines the six steps of a corporate self-analysis process for examining a company before developing alliance plans: 1) Analyzing the company's culture, including decision-making, communication styles, and ethics. 2) Assessing the company's financial picture. 3) Defining the business and conducting a SWOT analysis. 4) Considering the company's possible strategic direction. 5) Getting input from senior executives. 6) Selecting an alliance strategy. The purpose is to understand the company's strengths and weaknesses in order to form effective and compatible alliances.
Cluster analysis example
- 1. Group 7 VarisaraPhonphaisan 5080259 SrisongrukProhmvitak 5180170 TanaroekThanaaphiwong 4980205 SalouaKettani 5380422 Corporate Self-Analysis Corporate Self-Analysis is the task of examining your own company, its cultural characteristics and practices, its financial and managerial strengths and weaknesses, and its strategic direction, before developing plans for the possible use of alliances in pursuit of company goals. Many companies bypass this activity, which should be undertaken at the beginning of the alliance-planning process, and then find later that mistakes can be traced back to inadequate understanding of their own organizational motives and behaviors that are rewarded or sanctioned within their organization. I suggest use of a cross-functional team of people from various parts of the organization to develop the self-analysis. The Corporate Self-analysis process focuses on the elements of your company’s profile. I. II. III. IV. V. VI. The Culture Cluster The Financial Picture The Business Definition and SWOT Analysis The Possible Strategic Direction The Senior Executive Input Selection of Alliance Strategy I. The Culture Cluster A corporate or organizational culture is a set of coping mechanisms, or adaptation skills, that members of the culture use both within and outside their corporate environment. The Culture Cluster can be divided into ten separate areas that should be examined. At the very least you should use the Culture Cluster to understand your own organization. The Culture Cluster analysis is an acceptable exercise for most potential partners, especially if it is placed in the context of understanding the implementation milestones that will be acceptable within their culture and compatible with yours.
- 2. The ten factors that each company should look at as the first step of Corporate SelfAnalysis are the following: 1. Styles of decision making and problem solving 2. Authority, delegation and control; reporting methods 3. Work behavior 4. Compensation and incentives 5. Leadership and mentoring styles 6. Communication, oral; written; nonverbal 7. Levels of secrecy 8. Attitude toward time and milestones 9. Ethics and values 10. Personal versus corporate goals Let’s look at each factor more closely. 1. Decisions Making and Problem Solving This covers all the ways decisions are made in an organization, including those that reflect management and board receptivity to new ideas, especially the alliance concept. 2. Authority---Delegation and control ; Reporting Methods You must ask, “How is authority delegated and what management controls are in place, including reporting responsibilities ” 3. Work Behavior The topic of work behavior comprises dress, management of work space, arrival and departure norms, and whether a company is task or process-oriented. 4. Compensation and Incentives Most organizations have standard policies and procedures regarding compensation and incentives. The details of the reward, compensation, and incentive systems had the power to destroy a strategically important relationship. 5. Leadership and Mentoring Styles Leadership styles are often related to stages in the corporate life cycle, and so become a natural part of a cultural analysis. 6. Communication – Oral; Written; Nonverbal Miscommunication can occur in many levels when you combine country’s culture, beliefs, systems, values, protocol, and traditions. However, in the company, disagreement and open discussion are encouraged or discouraged depending on each culture. Also, leadership styles vary in close relationship depending on the degree of openness in discussions. Mature and consolidating company does not encourage frank
- 3. discussions,problems might dissolve but would not go away. When doing an alliance, both companies should understand each other’s communication style in order to work together well. 7. Levels of Secrecy Levels of secrecy is related to the life-cycle stages, with start-up companies generally being most open and family or private companies are very secretive, no matter in what cycle stage they are in. The law of secrecy applies to revealing corporation goals and knowing who the decision makers are. In a company, often employees create and in-group, who knows the answer, and an out-group, who does not know the answer. However, public companies cannot be secretive about information that must be disclosed by law. First step, it is important to understand the openness and secrecy issue in the company to develop a process to be able to work with an alliance. Second step, is to share knowledge to the partner. Third step, company should create a “fast-track” communication, mechanism, and environment that effects micro-cultural change. Now, alliances communication are open and both companies are able to work together easier. 8. Attitude Toward Time and Milestones Time is a cultural norm. Individuals, companies, and countries have different conception of time. Someone’s “on time” may mean “half an hour late”. Also, “now”, “soon”, and “on time” have its own corporate cultural meaning. Start-up companies have a sense of urgency, so “now” means “today” or “this minute.” Milestones have to do with the time-related expectations in an alliance project. Some culture believes in the natural progression of activities like “We cannot externally control them.” Members of an alliance can experience frustrations from time-related cultural differences. Both alliances should understand each other’s corporate norms. 9. Ethics and Values In a corporate environment, ethical codes are mostly unwritten. Ethical attitudes shapes up the entire culture like people with similar belief or interest are attracted to each other. When doing an alliance, both companies should understand each other’s code. Ethics are highly influenced by the culture the company operates. 10. Personal Versus Corporate Goals In a family owned company, family goals may be well understood by family members, because of historical issue and relationship matters. But to general business community, they could appear illogical. Personal goal of a family are the corporate ones and they may be unclear in the organization except the family members. Cultural analysis can be done on a “need to know basis”, one-on-one discussions with key family members can clarify corporate actions and direction.
- 4. II. The Financial Picture In a corporate self-analysis, companies should have a clear financial picture of the organization. The company should look at financial history and past plans, examine areas which financial projections were not attained and performance fell short of goals. Financial picture depends on corporate personality and the desire for detail, but many look at past two years. Financial result of a particular division of the company is needed in planned alliance. The purpose of clarifying the business definition is to define the existing business in the light of today’s reality, and the second is to access your future potential in the same light. The logical consequence of this Strength and Weakness analysis will be the understanding of possible opportunities and threats. The approach is to list the major characteristics of a company in a corporate profile on one page. For example, a description of the company, its products and services, market, competition, human and financial resources. The purpose of this process is to place the decision to develop an alliance in context- to know what kind of organization you are, what you hope to be, and what the strengths are that will help you get there and to uncover weaknesses that need either to be eliminated or compensated for. Organization responsibility – your SWOT analysis should include a process of pinpointing sources of strength for membership on the alliance team. When developing an alliance plan, a team approach is best. Human resources issues should also be addressed in the planning stage when the issue is addressed of who in the organization has responsibility for the alliance. A final point must be made concerning the human side of the capital investment associated with these relationships. When it comes to the possible strategic direction, participants in this process will need to discuss the preferred strategic direction into which the company will direct its alliance activity. There are 5 levels in corporate life cycle, which are Start-up, Hockeystick, Professional, Mature and Consolidating, Declining or sustaining. The company needs to check themselves that which stage they are at and try to define the strength and weakness in order to achieve the best interest. As for the senior executive’s input, CEO input can sometimes manifest itself in a phenomenon that I like to call the Golf Course alliance. Just like two executives meet on the golf course and agree that they “really should do something together.” It all comes down to how the alliance is formed. If there’s no clear analysis upon the problem each has, but it’s rather a way of agreeing due to relationship at the very first agreement. A lot of problem is going to be in store for such alliance. Selection of Alliance Strategy is a very important step in corporate self-analysis. Firstly, developing a mission statement helps your company to evaluate the success in the alliance. Secondly, success is a moving target, because as the industry changes and the partner’s goal, personality characteristics, and life-cycle stages change, the goals and success criteria for the partnership will be affected. Thirdly, if you do not clearly state your success criteria in the planning stages, it will be difficult to make strategically correct decisions during the criteria development and partner-selection stages.
- 5. In summary, there are six steps of corporate self analysis, which are the culture cluster, the financial picture, the business definition and SWOT, the possible strategic direction, the senior executive input, selection of alliance strategy. If you decide to go forward and seek an alliance, you will need a timetable. Few alliances that are well thought through come together in less than six months, and most take a year; international alliances take even longer to develop, sometimes as long as two years.