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 Mapping4. 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 shareholderso 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.

HISTORYThe 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.

PROCESSTen questions by which you can measure the quality of a mission statement are:

Purpose1. 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?

Strategy3. 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 Standards7. 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?

Character9. 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.