Explain the Role of Proximity and Globality in Effectiveness

Question: Explain the role of Proximity and Globality in effectiveness

1. Executive summary

The aim of this assignment was to explain the effect that proximity and globality has on an organizations' ability to be effective and competitive in its operating environment.

Effectiveness is defined a "to have an effect on" (Concise Oxford dictionary)

According to the Oxford dictionary "Proximity" is defined as "the closeness, near neighborhood or approach' to a subject. In business proximity is defined as the environment in which the organization is operating in.

The environment consists of the macro environment and the Competitive environment. The macro-environment consists of the following factors: legal, political, economical, technical, demographic, social and natural factors. The competitive environment is composed of the following: the firm, its competitors, suppliers, customers, new entrances and substitutes.

A organization, according to Chester I. Barnard (Kretner and Kinickki), is "a system of consciously coordinated activities or forces of two or more persons" Embodied in the term "consciously coordinated" are four factors common to all organizations; coordination of effort, a common goal, division of labor and a hierarchy of authority.

The figure below shows the external environment of an organization/firm. (Bateman and Snell)

According to the Oxford dictionary "Globality" is defined as the worldwide embracing, the totality of a group of items and categories.

The liberalization of international trade coupled with the phenomenal speed and volume of international information transfer through the Internet and other communication systems has created an environment where the more effective companies will not only survive but also harness the vast opportunities presented by such an open, less protected global economy.

In order to be effective organizations have to adopt a global approach in terms of their structures, strategies, information management and all other aspects of normal daily operations management.

2. Introduction

In today's markets, organizations need to embark on a continues change mode. Managers of today need to be aware that organizations should be geared internally to adapt to the changes in the external environment in order to stay competitive. They should also be able to influence the nature of their competition and not merely react to the environment. Unpredictable exchange rates and unstable share prices; the drive towards employment equity coupled with discriminatory education policies of the past; HIV/AIDS; the events of 11 September in the USA; and the impact of globalization, are just a few of the indicators of this turbulent, competitive and complex environment with which South African managers have to cope.

Firms must ask themselves "How can we be the best in the world?" (Bateman & Snell 5th edition 2002:8)

3. Strategic Process

In order to improve the effectiveness of the organization the organization needs to do Strategic planning. The following diagram serves as a guideline for organizations embarking on a strategic planning process. (Ref: Total Strategy by R. Sondhi)

3.1 Strategic planning

Strategic planning is "the continuous long-term planning process of especially top and middle management to continuously achieve the enterprise's goals by developing and implementing a suitable plan amidst environmental change" (Kroon et al. 1994: 169).

Strategic planning is an ongoing process. It is never completed, but should always be brought in line with changing demands facing the organization.

Although the responsibility for strategic planning lies with top and middle management, it is a good strategy to periodically involve the entire establishment in this task. This fosters a democratic spirit and focuses all those involved on the goals of the establishment.

Strategic planning in general, may be done in accordance with the following framework:

3.1.1 Mission/ vision statement

3.1.2 Strategic focus areas or performance areas

3.1.3 A historical overview

3.1.4 Situational description

* The internal environment

* The external environment

3.1.5 Environmental analysis

* Restrictive factors (weak points) in the internal environment

* Supportive factors (strong points) in the internal environment

3.1.6 Environmental tendencies

* Restrictive factors (threats) in the external environment

* Supportive factors (opportunities) in the external environment

3.1.7 Scenarios

3.1.8 Assumptions regarding the future strategic position of the unit

3.1.9 Goals

* Long-term goals

* Medium-term goals

* Short-term goals or strategic objectives

3.1.10 Plan of action

3.1.1 Mission and vision statement

An important question for a business enterprise is: What is your business? The mission should answer this question. The mission of an organization guides it towards the identification of its focus areas. It is with respect to these focus areas that an organization should perform if it wishes to carry out its mission. The mission should also indicate the functions to be carried out by the organization. In the mission of the organization the endeavors of those involved and the task of the organization are embodied. The direction in which the organization wishes to go also needs to be clear from the mission.

3.1.2 Strategic focus areas or performance areas

Two important questions that should always be asked