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Posted on July 28th, 2012, by

One of the most important resource in a company that can significantly affect the increase of its competitiveness and attractiveness, is its corporate knowledge. Knowledge management nowadays is becoming the hottest topic of discussion by specialists from all levels of management.  Ability to effectively use and develop knowledge, to transform it into new products and services becomes a critical survival factor in the information society.

Knowledge exists in the form of understanding, insight and experience , that is necessary for making right decisions and providing innovations. That is why many management researchers  (Drucker 1993; 1995; Hamel 2002; Leonard-Barton 1998; Michalisin, Smith & Kline 1997; Pemberton & Stonehouse 2000) state that knowledge is the company’s main competitive advantage.

In modern society, due to the wide use of information and communication technologies that have united the whole world into a single network, knowledge is no longer the traditional advantage of leading companies.

The purpose of knowledge management is to bring together the knowledge accumulated by the enterprise with new knowledge obtained in the process of development, and its use in solving business problems. Quick access to the necessary knowledge
plays a paramount role because it allows significantly improve daily business processes. The purposeful use and improvement of knowledge liberates enormous potential savings and growth, which can not be achieved through traditional concepts of restructuring and modernization.

The paper justifies the need for enterprise to introduce the knowledge management strategy and the benefits received by an enterprise. It presents the plan of recommended interventions for the organization, aimed at improving the organizations performance through more effective knowledge management. It shows some approaches to developing new strategies and solutions to the mistakes, based on implementing the knowledge management approach.

Relevance of designed plan of interventions is due to the need to identify problems arising in the functioning of company in modern conditions, and provide practical recommendations for improving enterprise efficiency.

Any enterprise has a certain potential, which it uses in its activities, with it tends to minimize costs, maximize results (production volume, profit) in the shortest possible period of work. But because the firm is an open system and can be affected by the external environment, which is negative at the moment, it does not allow us to fully realize their potential and achieve the desired result.

To neutralize the negative influence of external conditions, or minimize it and help the company to get out of adversity, we can by applying the following areas:
Planning the marketing strategy of the enterprise;
Plan of implementation of marketing activities;
Provide opportunity to maximize the potential of the enterprise.

The purpose of the plan of interventions  is to identify the need for making optimal decisions on how to improve on the results, according to the state of the company. To achieve this goal it is necessary to accomplish the following tasks:
1. Theoretical analysis of enterprise KM strategies.
2. Analysis of the conditions of the company.
3. Development of recommendations to improve the efficiency of marketing strategy of the enterprise.

 

 

The concept of effective knowledge management

Corporate knowledge can be divided into external and internal. The first group includes, for example, knowledge of  customer (the most important knowledge for most rganizations), independent analytical information (marketing reports and ratings, prices on international stock markets, changes in U.S. stock indices – Dow Jones, NASDAQ), etc.
The second group often includes:
knowledge of key industry-specific processes – the accumulation of best practices (know-how) when performing basic tasks;
knowledge of the products (and services);
best solution that is most appropriate to the current needs of users;
knowledge of staff – identification, collection and use of intellectual capital (the most valuable asset of the organization);
memory of organization (past experience);
knowledge about relationships – the deep personal knowledge, which provide the successful co-operation;
intellectual assets (knowledge) – experience of projects best practices.

That is, knowledge of the company is an important resource for the efficient operation of the company, as well as make important decisions. For the knowledge is applied and used for the benefit of the firm, there is such a concept as knowledge management.

The most appropriate and comprehensive definition of this notion is: Knowledge management is a technology that includes a set of formalized practices, covering:
search and retrieval of knowledge of animate and inanimate objects (the carriers of knowledge);
structuring and systematization of knowledge (to ensure easy storage and retrieval);
Analysis of knowledge (identifying dependencies and
analogies);
update knowledge;
dissemination of knowledge;
generating new knowledge.

Each enterprise has strategy of work and development, in particular it must have knowledge management strategy.

In formulating the concept of strategy in his Theory of the firm based on knowledge, Carl-Erik Sveyby notes that the strategy is usually associated with the activities and decisions related to the interaction of the enterprise with its environment. In this case, in addition to a competitive and product strategy, market-oriented buyers and emphasizes the role of a specific resource strategy that is based on the organizational capabilities and core competencies of staff. All other assets of the company, both tangible and intangible (the relations of production, innovation, professional societies, etc.) are the result of human activities.

Considering the situation where the development of the KM strategy can help business another well-known expert David Skyrme names such as:
when the company’s specialists have a high level of knowledge and skills, but performance is still insufficient (for example, the largest Ukrainian machine-building enterprise as a result of the formalization and reuse of knowledge efficiency of designers and engineers increased by 30-40 times by reducing the production cycle);
the initial stages of evaluation of knowledge management as a key component of business strategy (in the famous Ukrainian IT-company initial KM initiative was the creation of communities of practice – through a special portal experts share knowledge, ideas, innovations, find the necessary information or expertise, etc.);
during the annual process of developing or adjusting the development strategy of the enterprise;
in the assessment of knowledge of the enterprise or the preparation of the inventory of knowledge;
immediately after the pilot project on knowledge management;
for an annual independent review of the status of program implementation of KM initiatives;
when competitors are adopting a knowledge management strategy to improve its performance. (Skyrme 1999)

KM strategy is a detailed plan describing how the organization intends to manage its knowledge for the benefit of customers, staff and other stakeholders.

There are many approaches to the development of KM strategies in line with key business objectives. Such a plan is preceded by several stages:
1. Elaboration of the company’s goals. Here the main issue is the following: how the knowledge management can help the company achieve its main objectives (for example to reduce costs, increase production volumes, improve customer service, etc.)?

It is necessary to discuss it with management of the company, re-examine what do divisions and units do. The most important is to develop an action plan and describe the possible factors affecting the achievement of goals and see what you can be done to improve, refine, etc. As a result, it will become more clear the objectives of the enterprise and the main pressure points, the needs and problems of people, the risks and possible new opportunities.

2. Audit of knowledge. This stage is a serious study of the state of KM in the organization. Typical questions that should answer knowledge audit are as follows:
What are the needs of the organization in knowledge?
What resources or knowledge assets have the enterprise?
What are the gaps in this knowledge?
What is the flow of knowledge in the enterprise?
What are the barriers to the movement of knowledge?
The extent to which people, processes and technologies support the current state of knowledge?

The audit of the knowledge helps: to clarify the needs of businesses in knowledge, to identify strengths and weaknesses of the enterprise in the organization of knowledge flows, to show threats and risks of loss of knowledge as well as new ways to improve knowledge management. The main result of this work is a description of the state of organization in terms of efficient use of intellectual assets and the definition of the focus for the nearest future.

So it is evident that knowledge management is an important aspect of work of management, especially when improving the organizations performance. We must use KM strategy when developing the plan of recommended interventions for improving the organizations performance. It is also necessary to highlight some key principles on which it is possible to implement the changes immediately, and gradually realize the long-term goals of the company.

 

Plan of recommended interventions for improving the organizations performance

Description of the company: tourism company Haylayts. It is a small travel agency that provides travel and tour services to its customers in America. Tourists spend their vacation at upscale hotels, and experienced guides give them tours of major historical and architectural monuments and museums. Haylayts offers individual tours and ensures high-quality transport service and catering. The company Haylayts provides services that can satisfy interest of people to get acquainted with the lifestyle, mentality and culture of other countries, particularly America.  Services provided focus mainly on individual or very small groups, consisting of three or four people, and depending on customer choice program can be made up of personalized tours according to the customer’s order, with regard to its interest in the history, culture, politics or certain professional fields.

The strongest part of the company is work of experienced professional guides who are ready to meet all customer requirements. Demand for such services is great, but competition is also very high, so it is rather difficult to achieve good results. Now about the company knows only part of the population, which limits the number of customer orders on the tours.

In this regard, it is necessary to develop a plan of actions, aimed at improving the organizations performance. In particular the recommended interventions will relate to advertising and marketing strategy of the company. Of course, this plan of actions will be based on the strategy of effective knowledge management.

In tourism business very important are activities to promote the product to the consumer. Promotion of tourist product are  measures aimed at implementing the tourism product: advertising, participation in specialized exhibitions, actions, organization of tourist information centers for the sale of tourist products, publishing of catalogs, brochures, etc.  In other words, the promotion of tourist products involves conducting various activities to bring
information about the merits of the product to potential customers and promoting of their desire to buy it.

Promotion of a product can be carried out in the following areas:
– Advertising campaign;
– Sales Promotion (sales);
– Personal selling;
– Public relations.

Functional capabilities of advertisements can be classified into the following types:
– Informative – Informative advertising informs consumers about new tours to create the initial demand.
– Incentive – Incentive advertising is calling people to make the purchase ;
– Recall – this advertising reminds consumers about the existence of already well-known tour.

The main means of advertising that can be proposed to the company are the following:

1. Travel directories – they contain descriptions of tourist goods and services, images, prices. Directories are used by tour operators and travel agents to present the program of tours. The catalog includes illustrated descriptions of different routes, hotels, excursions, transport services, the departure date.

2. Brochures and pamphlets are less bulky than the publication of directories, and they contain a list of tourist vacation spots, more detailed information about placements, prices, transportation schedules and other tourist enterprises are used to inform potential customers about available travel services and as an aid in the sale. Brochures are usually printed on one illustrated page, their production is easier and cheaper and they are the most common mean of advertising.
3. Letters of sale, which are sent to potential clients, target groups, whose interests are known. They can be used to implement last-minute travel packages, or to convey information quickly. Letters of sale are used alone or in combination with pamphlets and brochures.

4. Advertising in the media – is advertising in print, on television, radio and outdoor advertising. Its main feature is the ability to convey promotional information to a large number of people. But the cost of advertising varies in different media, and the choice of media depends on the particular advertising information and allocated funds for its implementation.

5. Outdoor advertising has a definite location, the small amount of data, contains mostly symbols and pictures. Also it is important that attention paid to this advertising has  a short period of time. Usually it is used in addition to advertising in the media.

6. Advertisement in places of sales – these are posters, banners, advertising panels in the windows and walls of the room where the sale of tours is carried out. This advertisement is intended to remind consumers about the advertising information that they have already seen in other media.

Also, it can be recommended to use such marketing tool as personal selling, which is an oral presentation of goods. PR (Public Relations) suggest the formation of a favorable image of the tourist company by creating a good relationships with various governmental and social structures.

The means of promoting tourist products with the help of Public relations are:
1.  Information provided to Press in newspapers, magazines and other publications. It is printed without changes and comments, with the name of the organization that sends information. Working with the media is one of the most effective and successful means of communication to the public.
The means of public relations that can be used by Haylayts company also include radio and television advertising not only in travel services, but its achievements in the social sphere, environmental protection, etc.
2. Press conferences that are carried out according to previously developed scenario.
Typically, the script includes the following:
– Presentation of new tourist products to the guests of the company;
– Answers to questions of company representatives present with a story about the history of travel companies, its activities, etc.;
– Communication gathered in an atmosphere of a cocktail and dinner.
3. Illustrated stories – a way to provide the most complete information in a printed publication on the activities of travel agencies.
4. Fairs and other organizational activities. This kind of impact on society is defined concentration of a large number of potential customers in one place. It may be national and international trade fairs, conferences and congresses,  the representation of tourist products in department stores.

Here, all methods of advertising are particularly important. For example, the exposure of slides, showing fragments of films, demonstrating handicrafts, etc. Successful choice of ways of advertising plays a decisive role in the success of these activities.
5. Sponsorship and charity – the planned investment of money in a nonprofit activity, which is expected to improve company image and increase sales of travel services.
The main criteria for selection of activities and facilities for the sponsorship and charity is their social importance and prominence. It is recommended to provide support to such as spheres as culture, sports, health, etc.

 

The possible results from the introduction of interventions and importance of Knowledge Management in this process

When we formulate a plan of changes and strategy of development for the company aimed to improve its results, it is necessary about the use of material resources of the company, as well as human resources and knowledge. Proper application of knowledge can help a company as much as the use of material resources. For example, formulating the concept of strategy in his Theory of the Firm, the knowledge-based Karl-Eric Sveiby notes that the company’s development strategy is usually associated with the activities and decisions related to the interaction of the enterprise with its environment. In this case, in addition to a competitive and product strategy, market-oriented and buyers-oriented strategy, Sveiby emphasizes the role of a specific resource strategy that is based on the organizational capabilities and core competencies of company’s staff. All other assets of the company, both tangible and intangible (the relations of production, innovation, professional societies, etc.) can serve the result of human activities. (Sveiby 2001)

Considering the transformation of knowledge as a tool to improve company’s performance, Sveybi emphasizes the difference in the transfer of wealth and knowledge. When the use of property and cost is limited, the use of knowledge – on the contrary, is not limited and always can help to increase value and performance results.

Forming a KM strategy, the company appears not as an isolated unit, but forms a kind of network – with partners, customers and all those involved in the process of creating and using knowledge. In the organization of knowledge creation requires large investments in education, training, in addition, considerable time is necessary for the formation of professional managerial skills. (Sveiby 2001)

In addition to the interest of the company’s management, in particular, in finding new ways to commercialize knowledge, improving business efficiency,  developing and implementing KM strategies can include:
minimize duplication of effort and loss of knowledge in the restructuring of the enterprise;
clarify the question as to what skills are not enough specialists or what change is needed in governance;
More careful planning of priorities when introducing new KM initiatives;
Improving communication between business strategy and technological infrastructure for sharing knowledge, their creation and reuse;
Staff training on the experience of the enterprise, motivating people, attract new manpower and provision of specialist conditions for self-actualization.

 

Implementation of the Knowledge management strategy

Very often, the workers and managers, supporting the proposed changes, are not well informed about the main questions What is it made for? Implementation of the new development plan for the company, as well as the KM strategy involves holding conferences, meetings in departments to explain the professionals, the whole team, and the whole enterprise on the objectives and results of future changes. Research shows that awareness of company strategy among staff directly influences the results of its efficiency. The purpose of developing a plan is to carefully assess the problem facing the company, and then its explanation and delivery to the performers. If workers are not aware of the pressures of business environment that is the company experiencing, any good strategy can fail if people do not understand why the company is changing and what results will it bring. (Davenport et all. 2002)

The main stages of the knowledge management strategy are:

1. Knowledge Introduction – explanation to the staff why this strategy is needed and how the company would benefit from it;

2. Knowledge Audit – an evaluation phase, assessing of information resources and knowledge and their conformity with the real needs of employees;

3. Develop Strategy – development of strategy and policy of knowledge management (Knowledge Policy);

4. Launch Program – a program introduction and implementation.

Any knowledge management project is always worth starting with an explanation. This first, introductory phase (Knowledge Introduction) is very important. At the same it gives possibility to determine the key employees who are really interested in supporting the project, and they will form a community that will further promote the ideas of knowledge management in the company. Sometimes in the first phase a pilot project is developed and introduced, usually in those departments where the maximum effect can be get with minimum costs. Often the first stage of the project include news publication (KM Newsletter), which covers the management of knowledge within the company.

Ignoring the introductory stage may lead to failure of the project. Employees do not always realize why they need to manage knowledge, they see no benefit and, accordingly, are not motivated.

The next stage is assessment of information resources and knowledge and their conformity with the real needs of employees (Knowledge Audit – audit of knowledge). This assessment is often conducted through questionnaires, specifically developed under the project goal. For example, listening can be done to determine if external sources of information are really needed, how effective is the use of knowledge of employees, how the knowledge about customers is managed. To get the real picture it is necessary to use the questionnaires with several groups of questions. During the project implementation and at its end it is necessary to make  re-interviews to understand what has changed.

In the third stage (Develop Strategy) managers must analyze the responses and develop strategies and tactics of knowledge management in the company – a scenario and technological solutions, policy management knowledge (Knowledge Policy), which should include the basic mechanisms of the program:
– What kind of knowledge is particularly important for the company,
– How to estimate the effectiveness of knowledge sharing;
– What are the new duties and responsibilities of employees with regard to knowledge management, etc.

And finally, the fourth phase (Launch Program – a program introducing knowledge management systems), the plans are carried out: implementation of technology solutions that put into effect policies of knowledge management, changing the contents of incoming information flows, compiled a directory (directories) of all resources, conduct training programs prepared manuals for new sources of information and knowledge, etc.  On average, the introduction of software for knowledge management takes several months.

It is important to evaluate the success of the plan implementation at each stage of the project.

The last phase is presentation of results. Like many ways to develop the KM strategy, there are many versions of the documents representing the CM-business strategy. As a general rule, any strategy requires answers to three key issues: the current status, plans and prospects for business development, achieving their goals.

Detailing the plan of changes, in particular, implies:
a list of projects to be undertaken to implement the strategy;
assessing the cultural aspects and human factors;
characteristics of professional and personal qualities of a man who could lead the strategy into practice;
A description of the technological component of the KM strategy;
an indication of the skills that are necessary to get personnel to carry out the KM projects;
ways of measuring results (effectiveness) of this strategy.

Plan of interventions include such document: a plan of actions, time, resources, budget; conclusions and recommendations for the implementation of the interventions  in practice.

 

Possible threats of implementing the plan of interventions

Some of the possible threat of failure of the plan of company development and application of KM initiatives must be justified. Also it is necessary to generalize most common mistakes in implementing the development plan of the company and KM initiatives:

1. Lack of support of top management of the company.  Effective implementation of the new development plan as well as KM initiatives requires much more than mere information technology. The first thing to change is the corporate culture, starting with the leaders of the enterprise. It is they who should be the first to begin to implement KM in their practice.

2. Underestimation of the potential benefits and costs. How much will it cost and what is the return from investments? These questions should be asked at the outset of the plan. Unreasonable expectations, as well as the lack of methods for estimating the cost of the project may cause frustration. Despite the fact that this requirement is a well-known fact, many companies neglect this assessment.

3. Inadequate technology support. Companies need to protect their investment in a development and KM projects through careful selection of supporting information technologies based on proven standards and software.

4. Poor work planning and the lack of clear criteria for the project evaluation. It is recommended to devote sufficient time to determine points of the plan and all necessary requirements for its security, including identification of business objectives, return on investment, technological requirements, development of the pilot project evaluation.

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