Work Sample 3 - Rise of New Tech Companies Management Report

1101IBA Management Concepts

Rise of the New Tech Companies – Planning

Semester 2, 2016

Introduction and Problem Identification

The purpose of the following report is to analyse and explain a management problem in relation to ‘Rise of the new tech companies’. The report will further detail the importance of the issue and examine two strategies in which new technological companies can solve the problem. The two strategies will be supported by research and from that, processes and techniques will be recommended and justified. The case study which the report refers to is ‘Rise of the new tech companies’ and subtracted from that is a management problem.

Companies such as Airbnb, Uber, Alibaba and Facebook are purely based off the content and resources society creates. These internet based businesses allow for a limitless system that creates different and innovative experiences for normal services. The rate at which technological based companies are rising is extremely rapid. Technology and the internet is proving to drive new successful businesses while overriding traditional systematized businesses. Although the current business approach seems to be effective, it is evident that there is a lack of planning structure for future technological changes. The lack of planning structure for future changes has the potential to effect all aspects of management; controlling, organizing, planning and leading. Organisations such as Uber, rely solely on the technological trend in which society are involved with. They hold no actual assets in which customers can utilize nor can they strongly monitor employees. The organisation is based on whether the societal trend is relevant to needing a car service.

Planning is the process of setting objectives and determining how to accomplish them. It involves deciding exactly what the organisation wants to accomplish and the best way to go about it (Schermerhorn, Davidson, Poole, Woods, Simon & McBarron, 2014). It is the most fundamental function of management and is needed for the businesses success. Planning provides the following; direction, reduces risks of uncertainty, reduce overlapping and wasteful activities, promote innovative ideas, facilitate decision making and establishes standards for controlling (Samiksha, 2015). It is essential for businesses, especially new technological businesses, to have a strong and comprehensive plan to prepare for technological changes.

2.0 Discussion

2.1 Scenario Planning

Scenarios are an “important tool for exploring future uncertainties in a coherent, consistent and plausible way, and as such, they have been widely used for strategic planning and policy making” (Dong, Schoups & Van De Giesen, 2013). With the rapid change in the technology environment it is crucial that businesses plan for future potential scenarios for the assurance of success. It is evident that technology has created a large amount of business and with that comes a larger competitive range. For businesses all competing in the same category, the ones that scenario plan for the future will have the upper hand in. Currently companies such as Facebook, Airbnb, Uber and Alibaba have all successfully comprehended the importance of utilizing their technological ambiances. Resulting in these businesses having the upper hand in the competition. They all rely on customers creating content, products and services therefore owning no assets. In addition to the new rise in technology based companies, there is also a rise in the need for scenario planning. Scenario planning “Has been adopted as a management technology to articulate mental models about the future and to help managers make better decisions” (Dong, Schoups & Van De Giesen, 2013). It allows businesses to prepare for future changes in technology, client relationships, global economy and new innovative ideas (Buttell, 2009). This type of planning also “allows you to draw a broader envelope around the uncertainties and look at them in combination and recognize that sometimes these uncertainties are correlated” (Shoemaker, 2009). Scenario based planning is also imperative for businesses as it establishes a clear cut decision focus, identify key drivers of change, determine implications for each scenario and overall both analyse and summarize different strategies (Olsen, 2011). In a world of uncertainties preparation is fundamental for best adapting to new changes.

2.2 Tactical Planning

Most or close to all businesses have long term goals that they desire to achieve. Within those goals it is important that having intermediate goals to assist as stepping stones for the end goal. Strategic planning “includes a broad picture of what must be achieved…[and] often is done pre-event, based on previous experience and expertise” (Scand J Public Health, 2014). It essentially “defines long term needs and set action directions the organisation” (Schermerhorn, Davidson, Poole, Woods, Simon & McBarron, 2014). However, tactical planning falls underneath strategic planning and is “developed and used to implement strategic plans. They tend to be intermediate-term plans that specify how the organisation’s resources can be used to put strategies into action” (Schermerhorn, Davidson, Poole, Woods, Simon & McBarron, 2014). Although having a broad long term goal is important, tactical plans are also important for achieving success. Tactical plans usually consist of three to five goals that lead to achieving the end long term goal. These plans allow for some flexibility for unexpected occurrences and are individualized accordingly. In the case study ‘Rise of new tech companies’, existing companies such as Facebook, Airbnb, Uber and Alibaba all lack the significance of planning for unexpected changes. Therefore, tactical plans would only benefit the current planning structure. For upcoming technology based companies a rise in tactical planning is necessary. With unexpected environmental changes, having flexibility in changing plans is very beneficial. Not only does it allow flexibility, they can “promote teamwork because they promote clarity as to how certain goals will be achieved” (Financial Assistance, 2014). Now, more than ever, companies need to be planning in a way that apprehends new technological changes.

3.0 Recommendations

3.1 Forecasting

As discussed, businesses need to prepare and plan for unexpected technology changes and it is recommended that forecasting be used. As Jeong, Park & Yoon said “As emerging technology is being introduced more frequently, the importance of forecasting emerging technology has been increasingly emphasized. The failing to prepare for forecasting along with an excessive focus on incumbent technology may lead to failure in coping with emerging technology” (Jeong, Park & Yoon, 2016). Forecasting is “A planning tool that helps management in its attempts to cope with the uncertainty of the future, relying mainly on data from the past and present and analysis of trends” (Business Dictionary, 2016). Within forecasting lies two different approaches that assist in predicting environmental changes. Firstly, qualitative, which is expert-driven opinions to predict short term success. Models used include market research which is usually polling a large number of people on a specific product to predict future sales when launched. Another model is Delphi method, which is asking field experts for general opinions and compiling them (Beattie, 2016). Secondly, quantitative forecasting, which is “using mathematical and statistical analysis of data banks to predict future events” (Schermerhorn, Davidson, Poole, Woods, Simon & McBarron, 2014). Models for quantitative forecasting include the indicator approach; depends of the relationship between certain indicators, time series; collection of different methodologies using past data to predict future events and econometric; which is a more mathematically rigorous version of the indicator approach (Beattie, 2016). Using forecasting will allow companies to use different methods that will help develop an idea of future changes. This will result in better preparation and factor in unexpected events.

3.2 SMART Model

As planning is the first and most fundamental management process, it is recommended that a SMART model be used to ensure a detailed plan. SMART models are structured and are trackable for the goals and objectives. Instead of having vague, undetailed goals, the SMART model creates comprehensive objectives and allows the goals to be evaluated (Your Coach, 2016). The SMART acronym stands for specific – clearly defined objectives, measureable – the exact measure must be stated, attainable – managers have the resources and authority to take action, reasonable – realistic and attainable goals and timetabled – objectives can meet deadlines (Schermerhorn, Davidson, Poole, Woods, Simon & McBarron, 2014).

4.0 Conclusion

In conclusion, it has been examined that in the case study ‘Rise of the new tech companies’ there is a lack of planning in relation to future environment changes. As researched, planning is the most fundamental management function and with the lack of planning it can be harmful to the other management functions. It is clear in the case study that companies such as Airbnb, Facebook, Uber and Alibaba are all successful in resourcing their surrounding technology however lack to plan for change. It has also been explained the uprising need for scenario planning and the importance of tactical planning. It is also recommended that the use of forecasting and SMART models are inferred into businesses. With the world filling up with uncertainties it is crucial that planning be highly regarded as a vital function for business succession.