How to Change Organizational Structure Due to a Merger

7/29/2019 How to Change Organizational Structure Due to a Merger

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How to Change Organizational Structure Due to a Merger

By Tara Duggan, eHow Contributor

When two companies combine into one larger company, the hierarchy of people who work together

must often change dramatically in order to achieve new goals. Managing change involves recognizing

the organizational culture of each separate organization. Values and traditions held by one company

may not be shared by the other. Preparing your workforce for organizational change due to a merger

involves clearly establishing the purpose, creating a compelling vision statement, and overcoming

resistance to change by explaining why the status quo is insufficient.

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How to Make Staffing Changes Following a Merger The Effects of an Organizational Merging on

Employees

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Things You'll Need

Desktop publishing software

Instructions

1

With the sponsorship of senior leaders, establish a new organizational mission, objectives, and

strategies based on the merger. Sometimes, one company takes over another a company and the

second company assumes the branding of the first. In horizontal mergers, two competing companies

merge. In a vertical merger, a company merges with one of its customers. In some cases, companies that

sell the same or related products but in different markets merge. Depending on your situation, your

organizational structure should reflect an effective new entity. Changes such as removing redundancy in

the new company can be disruptive, so proceed with care.

2

Present the new strategic plan to employees and allow them to ask questions. Involve them in the

decision making process whenever possible.


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3

Assess each company's corporate culture. Combining a traditional top-down organizational structure

with a collaboratively run organization requires more planning to effectively blend the two cultures,

preserving the best features of both.

4

Empower employees to initiate changes. Change is most successful when the vision for the future is

perceived as addressing current problems and ultimately results in an improvement.

5

Align all programs and activities with the new strategic plan.

6

Establish metrics for each program to monitor progress towards achieving success in terms of quality,

finances and customer satisfaction.

7

Allow time for the transition to occur. Employees need to be able let go of old practices that have made

them successful in favor of new practices which may take time to learn. Working with new people in

new locations typically requires a period of adjustment.

8

Train people for new roles. Recognize that before people can behave in new ways in a new

organizational reporting structure, they need to develop the skills and competence to do so. Coach

employees to discover their own new paths. Establish orientation programs to ensure all functions

integrate effectively.

9


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Assess how the new organization is working, based on your operational metrics. For example, after six

months, evaluate customer satisfaction and make adjustments to business processes that impact

customers accordingly.

10

Communicate changes effectively through the use of email, newsletters and intranet sites. You can also

use social media technology such as wikis, blogs and forums to explain and promote organizational

changes due to mergers. Timely communication prevents rumors.

How to Make Staffing Changes Following a Merger

By an eHow Contributor

Mergers are difficult and worrying times for employees of the 2 merging companies. Fears about the

effect of the merger on job security, employment benefits and company structure can create a tense

corporate environment. However, by carefully reviewing your obligations and acting with care, you can

make staffing changes following a merger flow relatively seamlessly.


Post Merger HR Issues How Do Mergers Affect Employees?

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Things You'll Need

Your merger agreement

Final paychecks

Instructions

Consult the Merger Agreement


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1

Review the merger agreement carefully to see which employees are owed cash or stock benefits upon

termination. This will help you rank the cost of making staffing changes.

2

Read the merger agreement to see whether you contracted to keep certain employees on staff. After

the merger, certain representations made by you in the merger agreement become indemnifications

after closing. This means that you may be liable to the other company for your failure to honor the

agreement if you change staff that you said you wouldn't.

Negotiate Non-Competition Agreements

3

Offer an increased severance package to employees in exchange for them signing non-competition

agreements. Non-competition agreements will help ensure that the profit projections you made prior to

the merger remain valid.

4

Check your merger agreement for any non-competition clauses included therein that relate to specific

employees. Replacing employees who are bound by non-competition agreements protects your

investment.

Handle Staffing Changes With Professionalism

5

Create a document following the merger explaining the reasons for the staffing changes. Distribute

copies to those who will be laid off and to those who will remain with the company.

6


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Handle staffing changes following a merger with each employee in a private setting and have each

person's final paycheck ready.

7

Bring all employees you plan to keep on together for a meeting. Explain why you made the staffing

changes you did. Reassure the remaining employees that they are integral parts of the newly merged

company.

8

Make up a termination agreement detailing the reasons for the layoff, the terms of the severance

package (if any) and the amount of the final paycheck. Ask the employee to sign the agreement. This will

help insulate you from potential wrongful termination lawsuits.

Tips & Warnings

Give employees you intend to let go 2 weeks advanced notice. You expect the same notice when

employees quit, and giving them the same courtesy will help diffuse negative feelings about the

company.

Resist the impulse to make staffing changes for personal or political reasons. Such choices can bring

increased negative publicity to the company.

How to Transition From Old Organizational Structure to New Organizational Structure

By Emily Sanderson, eHow Contributor

Businesses transitioning to a new organizational structure often consult a strategic managementspecialist.

Transitioning your business from an old organizational structure to a new one, perhaps because of

growth, downsizing, a merger or new corporate goals to improve efficiency, often involves the

redefinition of responsibilities for upper management and the implementation of new processes, which

can affect staff at multiple levels. Some departments within your business might be removed, while


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additional departments might be added. Inform staff of changes in company-wide and department

meetings. Make them aware of what will be expected of them.


Organizational Structure of Businesses The Best Organizational Structures

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Instructions

Develop a Strategic Plan

1

Hire a strategic management consultant to help you, as upper management, to develop a strategic plan.

Strategic managers often adopt a strategic process such as Six Sigma or Balanced Scorecard to provide

an overall guide to the transitions your company is experiencing. A strategic plan removes some of the

guesswork and guides you step by step.

2

Identify specific long-term and short-term goals for your company and steps to accomplish those goals.

For example, you might identify that you can save money by making certain operation processes more

efficient over time. Better efficiency could come by combining two steps or adding an additional step,

which might make the process more effective.

3

Develop a budget for your company's transition, and determine which changes would provide the most

benefit. Funds might be tight, but the budget is a one-time investment with a quantifiable risk and

return. Look at changes that would not only improve efficiency but provide a return on investment

within a realistic time frame.


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Implement Plan

4

Train upper management, as well as middle management, to address challenges that transitioning to the

new organizational structure might involve. For example, the transition might involve layoffs or changes

in the tasks of staff members. Help management to better facilitate the transition as easily and

effectively as possible. Focus on maintaining morale of staff, often your company's greatest asset.

Address the possibility of resistance from staff. Help management to identify whether resistance is

authentic (directly focused on the change and seeking to stop or block the change) or "pseudo-

resistance" (grounded in staff member's previous experience and attitudes). Tell management to focus

on authentic resistance, and equip them with methods to handle such resistance.

5

Inform staff of the changes in a company-wide meeting, and follow up with individual department

meetings. Inform staff of how the changes will affect them and what will be expected.

6

Provide training to staff who will be working with the new processes, and ask for input from staff where

appropriate.

7

Quantify progress toward company goals, and award staff who contribute toward that progress.

What is the Purpose of Organizational Structure?

By Joshua Wallace, eHow Contributor

The purpose of an organizational structure is to define the guidelines, parameters and the procedural

process necessary for a group to accomplish a main objective. For example, the anatomy of an


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organizational structure is further reduced to the distribution of authority, span-of-control, line vs. staff

structures, organizational height and departmentalization.

An organizational structure organizes priorities hierarchically by means of identifying tasks critical to a

group realizing an end goal.


Major Aspects of Organizational Structure Organizational Structure Benefits

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Distribution of Authority

Determining how an organizational structure distributes tasks to accomplish a main objective involves

identifying if the structure will adopt a decentralized strategy where significant potions of the decision-

making process involves sub-ordinates and the managerial staff across many levels of the structure or

both or if the structure will adopt a centralized strategy where the majority of decision-making is made

from the top-down.

Span-of-Control

Span-of-control portion of an organizational structure defines the amount of employees an authority

figure is responsible for. According to www.docstoc.com, the span-of-control is expressed one of two

ways: a wide span of control where managers supervise many employees; a narrow span of control

where managers supervise few employees.

Line vs. Staff Structures

An organizational structure may adopt a live structure or a staff structure or both to achieve their main

objectives. A line structure, sometimes called a product structure, identifies the activities directly

responsible for the organization's main goal, such as the labor involved in making an actually product. A

staff structure is the support staff or network assisting the line structures in their goals.


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Organizational Height

Organizational height defines how many levels or layers from the decision makers and down there are.

Organizational height is expressed as tall organizations with many levels or flat organizations with few

levels.

Departmentalization

It's critical for an organizational structure to determine, categorize, and organize the variety of tasks to

be accomplished when achieving a main goal and decide how to separate specific tasks from others. This

involves departmentalizing tasks, resulting in the formation of departments and divisions within an

organizational structure.

How Changing a Firm's Structure Can Affect Its Culture

By Aaron Marquis, eHow Contributor

Changing the company structure could affect the culture of team members.

Structure and culture are two critical elements in a company that affect its bottom line. The role of a

firm's management is to implement a structure that fits the company culture. Changing the structure of

a company without consideration of the culture could lower output and motivation among employees.


How Employees Impact Organizational Structure How to Improve Organizational Structure & Culture

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Ethics

Changing the structure of a firm can affect the ethics of its employees negatively or positively. For

example, if a company changes from a bureaucratic, managerial style to a structure that gives the

employees more freedom and independence, ethical problems could arise. An employee with no


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oversight could skew numbers or manipulate accounts to achieve personal monetary goals.

Alternatively, a company that changes from an independent structure to a bureaucratic structure could

encounter employees that hide mistakes for fear of punishment from managers.

Flexibility

Company flexibility relies heavily on the structure and culture of the firm. Companies with flexible

cultures respond quicker to changes in the market and new goals from decision makers. If the firm

changes the structure, this flexibility could be lost. For example, if a company readily shares information

between departments as a part of its culture and structure, but then decides to create a hierarchical

managerial system that must relay decisions for each department, flexibility is lost.

Performance

The performance of a company, and its ability to finish projects on time, hinges on a structure

compatible with the company culture. If the company completes projects effectively by using teams that

make group decisions, appointing a managerial structure could slow down performance. For example, if

a team had to report its findings to a manger to gain approval for the next phase of the project, any

delay on the managerial side impedes progress.

Motivation

If a company switches from a bureaucratic structure to a more independent structure, or vice versa, the

motivation element of the company culture can change. For example, a company culture that tackled

projects voraciously and enthusiastically could lose that motivation to the red tape of a bureaucracy.

Similarly, an unmotivated culture lacking direction could gain motivation from the goals set forth by a

managerial system.

Organizational Structure Problems

By Renee O'Farrell, eHow Contributor

Organizational structure is a consideration of every company. The breadth of products/services offered,

the range of markets targeted and the methods by which those markets are targeted are important

considerations. A narrow focus can turn out to be a make-or-break venture, while too broad of a focus

can erode competencies and brand image. Either extreme can lead to problems for the company.



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Signs of Poor Organizational Structure Organizational Structure Issues

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Functions

The organizational structure of a company has many functions. The organizational structure determines

the breadth of focus, the range of product/service offerings, the number of niches targeted and the

variety of ways in which the market is targeted. Problems can arise at various points concerning

organizational structure; these problems range from the appropriateness of markets targeted towhether certain products or services should actually be offered. Younger companies especially have a

tendency to shift focus narrowly, which is a big issue if they miss the mark.

Market

Problems arise regarding the organizational structure and the market. It is common for a company--

younger companies especially--to pursue the market too broadly, trying to be all things to all people.

Companies that have adopted an overly broad approach tend to lose continuity in brand image and

product advertisement, which can erode customer confidence and, thus, loyalty. Take, for example,Pepsi and Coca-Cola. Coke targeted adults (for example, jack-and-coke, images of Santa handing Cokes

to adults) whereas Pepsi targeted youth (such as Mountain Dew and Pepsi points); neither company

went after the same market and both profited.

Product or Service Offerings

It is important to consider the breadth of product or service offerings as well. Imagine walking into two

restaurants and looking at their respective menus. In the first restaurant, the menu is seven pages long,

offering everything from pizza and burgers to steak and lobster. In the second restaurant, the menu istwo pages long and includes a third of specials; it is centered on wood-fired pizza, salads and appetizers.

The diner is likely to choose the second restaurant, as it is indicating that it specializes (via the focused

menu) and that it uses fresh ingredients (via the specials insert). Another example is an accounting firm.

Imagine Bob is looking for a firm to handle his payroll; is he likely to choose the firm that specializes in

payroll or one that includes payroll services in a page-long list of service offerings?


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Keeping a relatively narrow focus on product or service offerings increases brand power by increasing

perceived expertise. It also frequently lowers certain costs because of the commonality of parts

required, it has a lower learning curve, and familiarity with the product or service builds efficiency.

Niches

Niches, although related to the market at large, represent those subsets of the population that are

targeted through marketing; a niche is generally based on a demographic. The most common problem

regarding organizational structure and niches is price points. When targeting a niche, a full demographic

is imagined: double-earner household, corporate, yearly income > $100k, no children, owns home. The

problem arises when a company tries to fit a wide range of these niches.

An example of this is a retail clothing store where they sell $500 suits and $30 jeans. This combination

does not go over well. Shoppers want to feel special. Higher price points eliminate certain customers, as

does selective purchasing. While the general customer base may go down, the remaining customers will

likely continue to shop at the same pricing level. This is why Gap offers Banana Republic, Gap and Old

Navy or Ann Taylor offers Ann Taylor, Ann Taylor LOFT and Ann Taylor Outlet.

Keep offerings within consistent price ranges. If a person in the targeted niche walks in, what is that

person willing to spend (the range) and what standards qualify that price range?

Misconceptions

Although diversification can help increase company longevity, diversification for the sake of

diversification is a recipe for disaster; projects should only be undertaken if they are seen as having a

higher return. Also, it is unwise for a company to develop too broad of an organizational structure.

Doing so risks a loss of focus necessary to perform each service or create each product to the best

possible standard. It is also possible that a broad organizational structure may affect the company's

target market; there are some benefits to having a more narrow focus. This is particularly evident in the

effects of specialization on brand image and product innovation.

How to Change your Organizational Structure

By braniac


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From time to time as the needs of your organization change so will the structure. You may have to down

size, out source, add departments or divisions. In order to change the structure you must do the

following.


Organizational Structure, Design and Change How to Design an Organization Structure

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Things You'll Need

Organizational Chart

Business Plan

Mission

Instructions

1

Determine what changes need to be changed in your organization by reviewing the business plan

mission, goals and objectives.

2

Review the organizational chart and look to see if your organization is top heavy (meaning that there is

too many managerial positions and not enough lay persons) or the opposite may be true. There may be

too many workers and not enough management.

3

Make the changes on the organizational chart which acts as your organization's skeleton. Remember

just as our body bones connect to make our bodies function properly, so must your positions in your

organization skeleton connect. Boxes that are not appropriately attached to a department or reporting

to someone or something, is a position that may not be needed.


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4

Once you have a clear picture of how your organization should function and look with the new changes

of positions and classifications, or positions that have been removed, consult with the HR department to

start implementing the changes.

5

Be sure to have clear proper reasons behind the decisions to change the structure so that you can

articulate this information to HR and legal counsel. They will in turn be able to discuss with you the

feasibility of making changes relative to a timeline and legal authorization.

Tips & Warnings

Be prepared to talk with your staff about the organizational structure changes and how it will affect

their positions

Make sure that you are not the only one making the decisions. Have a team of executives to help

facilitate and discuss changes.

How to Implement Change Effectively

By Kristen Hamlin, eHow Contributor

An enthusiastic leadership team is integral to implementing change.

Few people enjoy change, whether at work or in their personal lives. Whether they resist out of fear of

how the change will affect them or simply because making lasting change takes a lot of work, many

organizational change efforts fail because of resistance. Large-scale change efforts can be effective,

though, with a well thought-out plan. Following steps to clarify the goals of the change and getting

employee buy-in will ensure that the change goes smoothly and moves the organization forward.



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How to Make Positive Changes in the Workplace How to Develop a Personal Vision and Mission

Statement

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Instructions

1

Demonstrate the importance of the change. Many people will resist change unless they see that the

change is urgently needed. Demonstrating the importance might mean breaking down the cost of office

supplies to show that too much money is being spent or showing a video or letter from a customer

expressing disappointment with your product or service.

2

Develop a leadership team to shepherd the change process. The team should include representatives

from all departments affected by the change, from both management and lower-level employees. The

team members should be enthusiastic and committed to making the change.

3

Create a clear vision of what change needs to occur and your desired results. Unless you know exactly

why you are changing and what needs to happen, the change effort is likely to stall due to lack of

direction.

4

Communicate about the change early and often, maintaining a consistent message. Employees often

resist change when they feel blindsided by it or they do not understand what it means for them. In fact,

a study published in 2011 in the journal "Organizational Development" indicated that "redundant

communication" helps projects move more quickly and smoothly.


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5

Empower employees to act to move the change forward. This doesn't mean letting everyone do

whatever they want, but instead, allowing them to make decisions that will move the organization

toward its goals. For example, a business changing its customer service approach can empower

customer service representatives to issue refunds to unhappy customers without manager approval.

6

Celebrate the progress you make toward the change. When the change effort is long-term, employees

can lose enthusiasm if they feel as if nothing is happening. Acknowledge short-term wins to maintain

momentum.

7

Monitor the change effort over time and make adjustments as necessary. Anticipate problems and

proactively address them. Assessing your efforts on a regular basis can help prevent wasting time on

activities that are not effective.

Tips & Warnings

Large-scale change takes time to implement and take hold; major change does not happen overnight.

How to Implement Change Effectively

By Kristen Hamlin, eHow Contributor

An enthusiastic leadership team is integral to implementing change.

Few people enjoy change, whether at work or in their personal lives. Whether they resist out of fear of

how the change will affect them or simply because making lasting change takes a lot of work, manyorganizational change efforts fail because of resistance. Large-scale change efforts can be effective,

though, with a well thought-out plan. Following steps to clarify the goals of the change and getting

employee buy-in will ensure that the change goes smoothly and moves the organization forward.



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How to Make Positive Changes in the Workplace How to Develop a Personal Vision and Mission

Statement

Print this article

Instructions

1

Demonstrate the importance of the change. Many people will resist change unless they see that the

change is urgently needed. Demonstrating the importance might mean breaking down the cost of office

supplies to show that too much money is being spent or showing a video or letter from a customer

expressing disappointment with your product or service.

2

Develop a leadership team to shepherd the change process. The team should include representatives

from all departments affected by the change, from both management and lower-level employees. The

team members should be enthusiastic and committed to making the change.

3

Create a clear vision of what change needs to occur and your desired results. Unless you know exactly

why you are changing and what needs to happen, the change effort is likely to stall due to lack of

direction.

4

Communicate about the change early and often, maintaining a consistent message. Employees often

resist change when they feel blindsided by it or they do not understand what it means for them. In fact,

a study published in 2011 in the journal "Organizational Development" indicated that "redundant

communication" helps projects move more quickly and smoothly.


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5

Empower employees to act to move the change forward. This doesn't mean letting everyone do

whatever they want, but instead, allowing them to make decisions that will move the organization

toward its goals. For example, a business changing its customer service approach can empower

customer service representatives to issue refunds to unhappy customers without manager approval.

6

Celebrate the progress you make toward the change. When the change effort is long-term, employees

can lose enthusiasm if they feel as if nothing is happening. Acknowledge short-term wins to maintain

momentum.

7

Monitor the change effort over time and make adjustments as necessary. Anticipate problems and

proactively address them. Assessing your efforts on a regular basis can help prevent wasting time on

activities that are not effective.

Tips & Warnings

Large-scale change takes time to implement and take hold; major change does not happen overnight.

HR Issues in a Merger

By Marcia Moore, M.S.S.W., eHow Contributor

Mergers can cause future uncertainty.

Mergers may require a dramatic cultural change. When one organization purchases or absorbs another,

it can affect the core of the acquired organization. Financial, human capital (employees) and materialassets may be scrutinized. Employees at all levels may become insecure about continued employment,

demotions or decreased salaries. Human Resources (the department that handles employee and

personnel issues) may play a major role in mergers, and careful planning for a successful transition is

necessary for success.



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HR Issues in Mergers & Acquisitions How to Manage a Merger

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Layoffs and Downsizing

One of the main HR issues in mergers is how many employees will be affected and what time lines will

be involved. In some situations, the downsizing (the decision to let personnel go to improve efficiency) is

dramatic and the number of layoffs (the termination of employees or elimination of positions) can be

high. Employees are tense, as losing their jobs affects their ability to provide food and shelter for theirfamilies. Planning a fair method of implementing a layoff process can be challenging as the dominant

company (the new company that bought or absorbed the present one) may be in charge of the

decisions. This requires HR employees to remain businesslike and professional in their dealings with

both companies. This issue calls for good communication and discouragement of rumors to alleviate the

concerns of remaining employees.

Assimilation of New Employees

Another HR issue in a merger is the assimilation of new employees. Employees coming into the acquiredcompany may be a source of tension and stress for the present employees. Careful planning is required

to introduce the employees and facilitate teamwork. HR-planned activities (picnics, off-site meetings,

ball games, bowling evenings) involving all employees may be helpful to allow for introductions and

socializing.

Preparing for Change

Preparing for change can be a major HR issue in a merger. Some people may not like change and will

resist any change actions. HR professionals can be helpful by preparing written communications, holdingdepartment meetings, and placing suggestion boxes (for employee ideas) in various areas. Preparing all

employees for the planned changes within the company and discussing how the changes will affect

them can enhance a successful transition.

How Are Short-Term & Long-Term Effects Incorporated Into Planning & Policy-Making in a Company?

By Paul Merchant, eHow Contributor


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Policies are the principles and guidelines formulated by the company's management team to streamline

the pursuit and achievement of performance objectives. These objectives fall into two main categories:

long-term goals the company intends to achieve in a period exceeding three years and short-term goals

for a period not exceeding three years. Planning and policy-making involves identifying, analyzing and

establishing the priorities of activities and procedures required to achieve objectives. Indeed, it is

through plans and policies that the company is able to align and allocate resources.


Short-Term, Medium-Term & Long-Term Planning in Business Describe Long-Term, Medium-Term and

Short-Term Goals

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Identify Long-Term and Short-Term Effects

Long-term effects are the potential outcomes of the long-term goals of the company. The long-term

effects are determined by the forecast of future performance targets such as expanding through

acquisitions and mergers; implementing new technologies such as automation of services; or

introducing new products. The long-term effects give the general direction the company will move in the

pursuit of these objectives. Short-term effects are more immediate and involve the day-to-day running

of the business. Such tactical aspects may involve adjusting raw materials supplies; adjusting the

number of working shifts; and handling repairs and maintenance.

Develop Plan and Policy-Making Process

Policy-making involves engaging in brainstorming sessions to generate guidelines for the company's

activities. Plans and policies are based on long-term and short-term expectations. Consider risks,

opportunities, time allocation, required skills and available and expected finances. The structure of

management is also developed at this stage. Structure of management is the order that the organization

uses to execute decisions and allocate responsibilities. The top management is charged with the

planning and policy-making process because managers represent the interests of owners of the

company.

Incorporate the Long-Term Effects


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The long-term effects are incorporated into the planning and policy-making process of a company to

actualize the gradual realization of the long-term objectives. Time plays a key role when considering the

long-term effects because future performance objectives are based on past records and are subject to

uncertainty of the business environment. When preparing plans and policies consider factors that may

dictate the business environment during your target time frame. As such, you need to provide an overall

direction, approaches and target market that the company will focus on.

Incorporate the Short-Term Effects

Tactical and operational plans are the main items to focus on when considering short-term effects in the

planning and policy-making process. Tactical plans are creative actions that give the business a

competitive edge in selected activities whereas operational plans are the routine activities the company.

Outline the operational plans during the policy-making process to establish the modes, sequences,

priorities and trends of the routine activities. Daily finance requirements, the number of personnel,

work procedures and raw materials needed to keep the company running are some of the short-term

effects to consider in the plan and policy-making process.

Align Long-Term and Short-Term Effects

Always endeavor to align the long-term and short-term effects to avoid contradictions in the core

objectives of your company. The harmonization of the short-term and long-term effects requires a

continuous review of the market trends and the performance of the company. Long-term effects should

not be neglected even when short-term effects are prioritized because the long-term goals will

ultimately provide the direction for the short-term activities.

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How to Change Organizational Structure Due to a Merger