Key Success Factors

Introduction

Key success factors are resources, skills and attributes of an organisation that are essential to deliver success in the market place. They are related to the industry and are unlikely to provide differentiation between organisations in the industry. Key success factors can be used to identify elements of the environment that are particularly worth exploring.

Key success factors are common to all the major organisations in the industry and do not differentiate one company from another. For example, factors such as low labour cost, a range of specialised steel products are common to many steel companies. Such factors will vary from one industry to another. For example, by contrast, in the perfume and cosmetics industry the factors will include branding, product distribution and product performance, but they are unlikely to include low labour costs.

Identifying Key factors of success in the industry

Key factors concern not only the resources of organisations in the industry but also the competitive environment in which the organisation operates. There are 3 principal areas that need to be analysed which are customers, competition and corporation

 

Customers

It refers to who is your present and potential customers, segmentations and who they purchase from are examined.

1)    Price – market segmented by high, medium and economy pricing.

      2)    Service – customer value the service more than the purchase of a product.

3)    Product or service reliability – customer views product performance and reliability more important than other factors.

 

4)    Quality – customers willingly to pay higher prices for actual or perceived quality differences.

    5)    Technical specifications – technical details providing major attractions to some customers.

 

6)    Branding – Customer is more into branding.

Competition

It refers to the main competitors, main factors in the market that influence competition, the intensity of competition, achieving market superiority and resources required.

 

1)    Cost comparison – which companies have the lowest cost.

2)    Price comparison – which companies have high prices.

3)    Quality issues – Which, why and how companies have the highest quality?

4)    Market dominance – Which companies dominate in the market.

5)    Service – Companies offering superior service levels.

6)    Distributors – Companies having the best distribution networks, lowest costs and fastest delivery.

Corporation

It refers to examining concentration of industry costs, the organisation and competitors’ resources.

 

            1)    Low cost operations

2)    Economies of scale

3)    Labour costs

4)    Production output levels

5)    Quality operations

6)    Innovative ability

7)    Labour/management relations

8)    Technologies and copyright

9)    Skills

 

Limitations

There are 4 issues

 

1)    Identification

Difficult to pick out the important factors

2)    Causality of relationships

The causality of relationship has been identified, it may not be clear how they operate or interact.

3)    Dangers of generalising

The competitive advantage of a single organisation by definition cannot be obtained by seeking what is commonly accepted as bringing success to all organisations in an industry.

4)    Disregard of emergent perspectives

Success may come from change in an industry rather than the identification of the current key factors for success.

Conclusion

In a strategic analysis of the environment, there is an immense range of issues that can potentially be explored, creating a problem for most organisations, which have neither the time nor resources to cope with such an open-ended task. The analysis can be narrowed down by identifying the key factors of success in the industry and then using these to focus the analysis on particularly important environmental matters.

The key factors of success are consistent with Porter’s view that there are factors that determine the relative competitive positions of companies within an industry. Thus, it is important to identify the KFS for a particular industry as there are many elements relate not only to the environment but also to the resources of organisations in the industry. The limitations suggest that key factors for success should be explored with caution as it is a starting point in strategy analysis. In order to make KFS effective, it requires a thorough exploration of the resources and skills of an industry before they can be applied to the environment.

 

 

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REDS ACID TEST

Introduction

 

REDS² ACID test provides a means by which the framework may be operationalised and the development of the test is the result of its application in situations that highlighted by the model and provided direction for subsequent refinement.

Case Study: ABC Pte Ltd

 

ABC Pte Ltd (ABC) is a local company and the core business is carpark systems.

REDS ACID Test Model involves:

A) Revealing the Identities

B) Examining the Interfaces

C) Diagnosing the Problem

D) Select a suitable Strategy and their implications

A) Revealing the Identities

 

Identities	Definitions and case study examples
Actual Identity	What the organisation is.   ABC owns 80% of cark park system in private sectors ABC owns 10% of cark park system in public sectors
Communicated Identity	How the organisation communicates its identity internally and externally.   Uncontrollable: Word of mouth and referrals   Controllable: Personal Selling and Direct Marketing
Conceived Identity	How the organisation is perceived externally and internally As a result of both its actions and communications.   Market leader in private sector Well known in private sector but not in the public sector
Ideal Identity:	The optimum positioning of the organisation in its market or markets taking cognisance of its strengths and abilities in addition to environmental considerations   ABC’s ideal identity is to be a market leader in public sectors as well.
Desired Identity	The identity which the chief executive and management board wishes to acquire.   ABC’s desired identity is to be market leader in all sectors.

 B) Examining the Interfaces

It provides clear guidance on how to analyse the interfaces, directing the researcher towards constructing a multidimensional comprehension of the corporate identity while promoting an understanding of the inter-relatedness of the four constructs. There are ten interfaces and each interface may or may not revealed significant gaps between the 5 identities.

C) Diagnosing the Problem

A gap analysis revealed companies’ flaws demonstrated in a degree of mis-alignment between the identities or non-alignment of between identities, which may result in serious implications for managing the corporate image and reputation. The nature of these gaps tended to fall into three areas of focus, which are corporate culture, management processes and communications.

 

1)    Actual – Communicated

Gap: Although strong private sectors, public remains weak. There is no effort in the shown in the public sectors.

2)    Actual – Ideal

Gap: ABC placed more weightage in the private sectors due to better ROI. Thus, ABC’s profitable orientation strategy did not work well in public sectors tenders.

3)    Actual – Desired

 

Gap: ABC’s vision to be the market leader in all sectors is far as all efforts are directed to the private sectors and neglected the market opportunities in public sectors.

4)    Actual – Conceived

Gap: Personal selling and word of mouth are 2 essential locomotives for ABC’’s success in the private sectors. But for the public sectors, these 2 strategies did not work well as “WSN” and “SCP” are the 2 companies have already entrenched them in the public sector markets.

5)    Communicated – Conceived

Gap: Communication efforts in the public sectors are paltry and ABC suffers “identity alienation” as it is not known to the public.

6)    Communication – Desired

Gap: In the controllable communication, the budget set for private sector is more than public sector and private sectors commands better returns

7)    Communication – Ideal

Gap:  Little effort from sales forces and direct marketing initiatives to penetrate into public sectors

8)    Ideal – Conceived

Gap: Only well known in the private sectors but not in the public sectors.

9)    Ideal – Desired

Gap: Owns 80% in the private sectors and 10% in the public sectors. ABC is far from company’s vision.

10)  Desired – Conceived

Gap: Gap: Only well known in the private sectors but not in the public sectors.

D) Select a suitable Strategy and their implications

Select Strategies to align and to close the gaps
 

1)    Actual – Communicated

Gap: Although strong private sectors, public remains weak. There is no effort in the shown in the public sectors.

Strategies to align: Increase effort in personal selling and direct marketing in public sectors

2)    Actual – Ideal

Gap: ABC placed more weightage in the private sectors due to better ROI. Thus, ABC’s profitable orientation strategy did not work well in public sectors tenders.

Strategies to align: Joint venture

3)    Actual – Desired

Gap: ABC’s vision to be the market leader in all sectors is far as all efforts are directed to the private sectors and neglected the market opportunities in public sectors.

Strategies to align: Revisit IMC tools such as marketing research for public sectors

4)    Actual – Conceived

Gap: Personal selling and word of mouth are 2 essential locomotives for ABC’’s success in the private sectors. But for the public sectors, these 2 strategies did not work well as “WSN” and “SCP” are the 2 companies have already entrenched them in the public sector markets.

Strategies to align: Deploy an additional set of IMC tools for public sector such as PR

5)    Communicated – Conceived

Gap: Communication efforts in the public sectors are paltry and ABC suffers “identity alienation” as it is not known to the public.

Strategies to align: increase efforts in personal selling and direct marketing in the public sectors

6)    Communication – Desired

Gap: In the controllable communication, the budget set for private sector is more than public sector and private sectors commands better returns

Strategies to align: Deploy an additional set of IMC tools for public sector such as PR

7)    Communication – Ideal

Gap:  Little effort from sales forces and direct marketing initiatives to penetrate into public sectors.

Strategies to align: Using PR tools such as lobbying and get into public sectors’ good books

8)    Ideal – Conceived

Gap: Only well known in the private sectors but not in the public sectors.

Strategies to align: re-position ABC’s proposition in the public sectors

9)    Ideal – Desired

Gap: Owns 80% in the private sectors and 10% in the public sectors. ABC is far from company’s vision.

Strategies to align: Increase all possible efforts in public sectors and continue to uphold robust reputation in the private sectors.

10)  Desired – Conceived

Gap: Gap: Only well known in the private sectors but not in the public sectors.

Strategies to align: re-position ABC’s proposition in the public sectors

Usefulness of REDS ACID Test Model to managers

From a communication perspective, the concepts surrounding the revelation of identities and their inter-relation with each other were easily grasped by managers and personnel involved in the study. This suggests that the format is both simple and memorable in terms of justifying the methodology employed and communicating the concepts of corporate identity management to research subjects.

The REDS ACID Test model focused managers’ attention on the gaps between the identities, a style that has come to be consistent with many other strategic management analysis techniques, and emphasized the requirement for identity management and the need for corrective action in situations of non-alignment.

 

These experiences are consistent with other positive reactions to the model in most commercial contexts highlighted, which reveals that the REDS ACID Test approach has been well received by the major organisations in which it has been used.

Conclusion

The development of the REDS ACID Test of Corporate identity Management and its evolution through the use of case study examples of applying the test in a research situation is an iterative one and requires many more applications in order to refine and develop the process into one that is universally applicable. Future research in the area of the REDS AC2ID Test needs to address the development of specific tools that can be utilised within the framework to reveal aspects of identity. In addition, repeated application of the test in research situations will help to build and refine the model through the use of empirical evidence of the impact of the five constructs and the ten interfaces.