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Strategic Management. Macmillan and Tampoe OUP. Case Examples. Nolan, Norton & Company, Inc. 1985-87. The reasons for choosing Nolan, Norton. Nolan, Norton was a small privately owned company providing professional services. This is a fast growing category of enterprise.

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strategic management

Strategic Management

Macmillan and Tampoe

OUP

(c) Macmillan & Tampoe 2001

case examples

Case Examples

Nolan, Norton & Company, Inc. 1985-87

(c) Macmillan & Tampoe 2001

slide3

The reasons for choosing Nolan, Norton

  • Nolan, Norton was a small privately owned company providing professional services. This is a fast growing category of enterprise.
  • Nolan, Norton had a clear vision and values and had been extremely successful for a number of years.
  • Changes in the external environment forced Nolan, Norton to change
  • The strategy process was openly conducted and the interests of different stakeholder groups became apparent
  • A clear strategic choice was made leading to the sale of Nolan, Norton to Peat Marwick.

(c) Macmillan & Tampoe 2001

nolan norton s origins
Nolan, Norton’s Origins
  • Founded in 1975 by Dick Nolan and Dave Norton
  • Subchapter S corporation (i.e. privately owned)
  • Management consultants specialising in deriving business benefit from information technology
  • Clients mostly large multi-national, multi-divisional companies.
  • Rapid growth between 1975 and 1982.

(c) Macmillan & Tampoe 2001

nolan norton s business purpose
Nolan, Norton’s Business Purpose
  • Intellectual leadership in the management of information technology ‘Write the Book’.
  • Practical methods for applying these ideas in practice
  • Bridge the gap between managers and information technology and IT people.

(c) Macmillan & Tampoe 2001

nolan norton s internal structure
Nolan, Norton’s Internal Structure
  • ‘One firm’ with coherent and extendible framework of ideas
  • Three organisational dimensions
    • Geography
    • Client
    • Practice
  • Three levels of staff
    • Consultants
    • Managers
    • Principals
  • 2 owners with high proportion of profit distributed to staff

(c) Macmillan & Tampoe 2001

nolan norton s management processes
Nolan, Norton’s Management Processes
  • Professional ideas shared and transmitted using common pictures and diagrams.
  • Marketing focused on creating and sustaining relationships with key individuals
  • Assignments executed by joint client/consultant teams
  • Consultants assigned to projects to optimise client service, consultant development and profitability.

(c) Macmillan & Tampoe 2001

slide8

People and Culture in Nolan, Norton

  • Complementary skills of founders
    • Dick Nolan - Inspirational leader
    • Dave Norton - Top-flight management consultant and organised manager
  • Staff - IT professionals taking a career risk
  • Values
    • Hard work
    • Client commitment
    • Leading edge ideas from research and university contacts
    • Heavy investment in staff development

(c) Macmillan & Tampoe 2001

external strategic issues in 1985
External Strategic Issues in 1985
  • Arrival of mini-computers
    • Loss of control of central IT departments
    • Fragmentation of IT spend in clients
  • Increasing business impact of IT on company strategy caused leading strategy consultants to become competitors of Nolan, Norton.
  • Nolan, Norton’s assignments addressing wider issues and becoming much larger.

(c) Macmillan & Tampoe 2001

internal strategic issues in 1985
Internal Strategic Issues in 1985
  • Limits to growth of founder-managed structure
  • Founders’ aspirations important - equity realisation.
  • Mismatch between resources and opportunities

(c) Macmillan & Tampoe 2001

question 1 what were the alternative options to selling out
Question 1 – What were the alternative options to selling out?

Option A Building strategic alliances with major partners in each separate major market.

Advantages

NNC can focus on its strengths in developing ideas and methods

Rapid deployment in separate markets

Provides ample resources

Combines global and local identities

Disadvantages

Handling multiple relationships difficult and time-consuming

Hard to control overall quality and identity

(c) Macmillan & Tampoe 2001

question 1 what were the alternative options to selling out1
Question 1 – What were the alternative options to selling out?

Option B Continue independently and develop a new range of services related to IT-enabled business change.

Advantages

NNC builds on its strengths in developing ideas and methods

Appeals to staff who are interested in doing new things

Disadvantages

NNC lacks some of the necessary skills

Moving into direct competition with much larger and capable competitors

(c) Macmillan & Tampoe 2001

question 1 what were the alternative options to selling out2
Question 1 – What were the alternative options to selling out?

Option C Extend specialisation in the management of IT

Advantages

NNC builds on its strengths in developing ideas and methods

Competing in a relatively small market in which NNC is a respected player

Exploits NNC staff’s technical skills

Disadvantages

Does not appeal to many staff wishing to extend themselves away from their technical roots.

(c) Macmillan & Tampoe 2001

question 2 views of stakeholder groups
Question 2 – Views of Stakeholder Groups?

Founders Unwilling to weather another recession

Looking to realise equity

Keen to carry Principals with them

Principals Sale offer chance of payouts/earnouts (a quasi-capital gain)

Staff Peat Marwick offers stability and security but less ‘fun’.

Danger of loss of identity in larger firm

(c) Macmillan & Tampoe 2001

question 3 saatchi and saatchi instead of peat marwick
Question 3 – Saatchi and Saatchi instead of Peat Marwick?
  • Peat Marwick and S&S had dramatically different cultures - NNC opinions divided on which was preferable.
  • S&S offered NNC more independence but did not resolve the resource issue
  • S&S in fact hit difficult times soon afterwards from which Nolan, Norton would inevitably have suffered.

(c) Macmillan & Tampoe 2001

question 4 how could peat marwick have made their acquisition more successful
Question 4 – How could Peat Marwick have made their acquisition more successful?
  • Peat Marwick could have left Nolan, Norton to continue as an independent unit retaining its historical centralised organisation and independent marketing.
  • Peat Marwick would have received:
    • Nolan, Norton profits
    • Entry into large non-audit clients
    • Staff development by transferring/seconding IT consultants into Nolan, Norton
  • The simultaneous much larger merger of Peat Marwick with Thomson McLintock was unfortunate to the success of the Nolan, Norton acquisition.

(c) Macmillan & Tampoe 2001