Nestle is a publically traded multinational corporation that mainly specializes in various food and beverage products. The company has over 29 brands that are sold in more than 447 factories that are located in 194 nations (Girard, 2005). The company has more than 333,000 employees and it generates an average of $ 1.1 billion annual sales. Based in Switzerland, Nestle manages its products through specific business locations that are situated in the various continents of the world. The different segments under which the food and beverage business is managed include Nestle baby food, Nestle Water and Nestle cereal and nutrition products among others. The company was founded in 1905 after the Anglo-Swiss Company merged with the Farine Cactee Nestle. The company strengthened its foundation during the entire First World War era, which enabled it to expand its specialization beyond the initially compressed infant milk formula goods. The company is ranked as the world’s leading food and beverage company as well as the best provider of the “out of home” food products (Nestle, 2010). This paper aims at establishing how various company attributes that include vision, mission, primary stakeholders, SWOT and business strategy have impacted the company’s level of success.
The Impact of the company’s vision, mission and primary stakeholders on Nestlé’s overall level of success
Although Nestle has faced severe competition from rival companies that include Kraft food and Pepsi Co, it has increasingly emerged as the most successful global company with the highest revenues and profits. Among the major company attributes that have significantly contributed to a high level of success include its vision, which includes becoming the most successful food and beverage corporation that is capable of providing its clients with high quality products at the fairest prices while on the other hand promoting a high degree of viability and profitability for the company. This commitment has ensured a significant level of success for the company as it has ensured that innovativeness is integrated at the heart of every production activity (Girard, 2005). This ensures that food products are made tastier and healthier at limited cost to meet customer needs and demands while promoting the overall performance for the company at large. The vision attributes to a significant level of success by ensure that reliable and innovative skills are employed to develop high quality products that meet customer needs while on the other hand reducing the overall production expenses incurred by the company.
The company’s mission, which includes becoming the friendliest and caring company that is capable of providing its customers with safe, nutritious and healthy products, has equally contributed to its significant level of success. While the company is committed to offer its customers with high quality products that are central to health and wellness, it has continually adopted unmatched research and development to ensure that it can develop safe and nutritious products that can significantly improve customers’ quality of life. This has significantly increased customers’ loyalty to the company’s wide range of products thereby promoting a high degree of sales. Nestlé’s primary stakeholders have as well played an important role in contributing to its overall success (Nestle, 2012). The company’s suppliers and employees are committed to a series of basic corporate principles that guide the way in which these stakeholders operate. The suppliers are thus committed towards ensuring that the supplied raw materials are of high quality to protect safety of the end consumers. Employees are equally committed towards ensuring that quality and safe production procedures are followed to ensure that end products remain healthier and tastier to meet consumer demands. Conversely, the consumers have partnered with the company to ensure that it is well updated of their demands and expectations so as to ensure that the company’s products remain competitive in the market.
How the five forces of competition impact the company
A significant analysis of the five forces of competition can help us to understand where Nestlé’s power that pertains to its business position lies. Threat of new entrants is a major force that might impact Nestle’s level of competition in the industry. As explained by Girard (2005), it is often easy for new entrants to invade the food and beverage industry especially because the capital requirements needed to start off businesses in this industry is relatively low. There is equally no specific legislation regulating the degree of entry into the industry, which means that as many companies as possible can enter the industry. This might expose Nestle to a high degree of competition as new entrants might invade the industry. Nestle is however operating at a global scale where it has already developed a global marketing strategy, which limits new entrants that mainly include local companies from competing with it (Nestle, 2013).
Threat of product substitute is another important force that might affect the company’s ability to compete in the food and beverage industry. There is sufficient evidence that threat of product substitute is intense in the food and beverage industry as most companies can develop substitute products to win a huge market share. Nestle however has a wide range of products that can always serve as substitute products (Nestle Professional, 2012). This means the company’s products may not be easily substituted as it always has an equivalent product to suit different customers’ preferences.
Suppliers’ bargaining power may not negatively impact Nestle, as it is always able to obtain its raw materials from a wide range of suppliers. This is especially because the company purchases the raw materials in non-processed form, which allows it to source agricultural materials direct from the farm. This limits the suppliers’ bargaining power as the company can always seek for alternative but cheap sources of the materials.
The company experiences a moderate degree of consumer bargaining power in that the dire need to generate a strong customer base demands that the company would sell its products at a relatively low cost. The company however offers high quality as well as highly differentiated products that are always on consumers’ minds. This limits their bargaining power, as they are always concerned about quality, safety and wellness and not about the prices (Nestle, 2010).
Nestle experiences a high degree of industry rivalry, which is characterized by stiff competition among different companies operating in the industry. As explained by Nestle (2013), the food and beverage industry has a unique level of attractiveness that encourages new comers to enter into the industry. Nestle however stands at an advantage in that it operates at a global scale thereby enjoying a huge share in the global market.
Nestle has major strengths that might enhance its level of success. The company has a huge brand portfolio that can meet different customer demands and expectations. It employs unique research and development strategies that allow for the creation tasty and health products. The company derives raw materials directly from the farm, which reduces production cost thereby increasing its overall profitability. The company has major weaknesses that might impact its overall success. The company has for a long time experienced transportation and storage problems, and this might interfere with the product quality (Nestle Annual Report, 2013). The company has not been able to ensure consistency in the quality of its wide range of product brands. Nestle has witnessed various opportunities that might perpetuate its future success. There is a growing demand for healthier food products, which creates a huge opportunity for the company to succeed particularly because it is committed towards promoting consumers’ health and wellness. The company has a huge opportunity to establish new ventures, which might create a favorable platform upon which the company can succeed. The company has however been facing severe threats that might affect its ability to succeed. There is a high probability of food contamination that might result from the transportation and storage problems that the company has continued to face. The growing trends intended to promote healthy eating might see most Nestle customers drifting their loyalty from the company’s sugary brands. The rapidly growing raw food prices might see the company increasing the overall product prices, thereby threatening its ability to maintain a strong customer base (Girard, 2005).
A strategy that the company can use to capitalize its strengths and opportunities and minimize its weaknesses and threats
In order to ensure that Nestle is capable of capitalizing on its strengths and opportunities while minimizing its weaknesses and threats, it should adopt a renovation and innovation strategy that can allow it to develop quality new products while ensuring quality of the existing ones. Despite the fact that Nestle has for a long time been able to develop healthy and tasty products that ensures a high degree of customer loyalty, it has not always been able to ensure consistency in product quality especially because it retains a huge portfolio of brands that may have been developed using old-fashioned technology (Nestle Professional, 2012). The strategy would however ensure that the company is able to constantly upgrade old products to match the new ones thereby increasing consistency in quality. The strategy would as well help to upgrade production and storage activities, which would help to maximize the product quality while minimizing the likelihood of product contamination. Renovation and innovation further reduces the possibility of product duplication by rival companies while on the other hand ensuring that the company products are able to meet the demands posed by the growing trends towards healthy eating.
The various levels and types of strategies that Nestle can use to maximize its profitability and competitiveness
Nestle should adopt different levels and types of strategies to promote its overall profitability and competiveness. The company should adopt a product differentiation strategy, which is a marketing level strategy that can enable it to distinguish its products from a wide range of products offered by the rival companies. This could ensure that the company is capable of attracting a huge number of customers thereby promoting its overall competiveness and subsequent profitability in the industry. Market leadership, which is a business level strategy, is equally important in promoting Nestlé’s competitiveness and profitability (Nestle, 2013). Nestle should always seek to be a first entrant in any given market, which would ensure that it has developed a strong customer base before other companies copy the trend. This would create a suitable opportunity for the company to earn customers’ loyalty, which might limit the ability of other companies to do so. Low-cost, which is a marketing level strategy, can help Nestle to remain profitable and competitive. Selling quality products at a relatively low cost compared to the rival companies can help Nestle to attract a huge number of customers that might be seeking for high quality products at an affordable price (Nestle Annual Report, 2013). This would enable the company to sell a significant amount of products within a short duration of time hence generating huge profits within a short while. This would as well ensure that the company is able to remain competitive, as most people seeking for quality products at affordable costs would increase their loyalty to the company products.
A communication plan the company would use to make the strategy known to all stakeholders
In order to make the proposed strategy known to all stakeholders, Nestle should adopt a communication plan that would ensure that the right information is passed on to the right people. The plan should begin by establishing the specific goals governing the intended communication. The key information that the company would be intending to convey to various stakeholders should be identified. The company should then determine the specific stakeholders that would need to receive the intended messages. Specific messages intended for each individual should also be identified. The company should then identify the specific strategy that would be used to convey information to each stakeholder (Nestle, 2010). The company should then identify individuals that would undertake the role of conveying messages to different stakeholders. A communication calendar that would be repeated after a given duration of time should then be developed. An evaluation strategy that would help to assess communication outcomes should then be developed.
Corporate governance mechanisms employed at Nestle
Nestle employs unique corporate governance mechanisms that allows it to effectively control its managerial actions. Employing a board of directors is a key mechanism that Nestle has adopted to help govern the various management activities within the company (Girard, 2005). The board’s effectiveness in controlling the company’s managerial functions is exhibited in its ability to oversee the supervision of different company activities while offering the necessary leadership directions. Shareholder participation is another important mechanism employed at Nestle to help control various managerial functions. Various stakeholders related to the company are usually entered in a stakeholder register after which they are allowed to exercise voting rights pertaining to various managerial functions taking place within the company. This helps to effectively control these functions as different stakeholders can vote for or against such functions depending on their perceived suitability (Nestle Professional, 2012).
Effectiveness of leadership within Nestle
Nestle has an effective leadership strategy that is inclined towards long-term commitment for organizational and people development. The company mainly relies on innovative ways through which employees can be effectively aligned to ensure that their aspirations and circumstances are effectively transformed. The company particularly relies on short-term projects, weekly assignment and global job rotation to ensure that quality skills that can help individuals to improve their experience to help address their personal circumstances are developed (Nestle, 2013). The company’s leadership strategy is however inclined towards improving experiences that can help address organizational and personal needs. The strategy should however extend its objectives towards promoting leadership skills that can help to develop common employees into effective organizational leaders. The strategy should equally seek to enhance employees’ career development to ensure that their career and not just personal needs are met.
Nestlé’s efforts to become a corporate citizen
Nestle has shown a major commitment towards promoting the wellbeing of the wider society. The company is committed towards Created Shared Value by ensuring that the wider society is able to reap significant benefits from its various production activities (Nestle, 2012). Nestle has for example established a project that is commonly known as the Cocoa Plan. The plan is mainly aimed at ensuring that cocoa farmers are able to generate high profits from the rising market prices so as to increase their overall productivity. Nestle has equally established its membership in various Cocoa Plan initiatives that mainly address various social problems that include child labor and poor access to quality health (Nestle Annual Report, 2013). Such commitments have attributes to the overall success of the company at large since it has managed to develop a strong supplier base thereby ensuring that it can access quality raw materials at an affordable cost.
Nestle has established various business strategies and approaches that significantly contribute to its overall success. The company’s vision, mission and primary stakeholders have contributed to its current level of success by ensuring that production activities are integrated with the positive intentions defined by these concepts. The company equally has major strengths and opportunities that tend to overshadow its weaknesses and threats thereby ensuring that it stands a suitable opportunity to succeed. The company equally has recommendable leadership strategies as well as corporate governance that ensure proper coordination of activities. Specific strategies can thus be incorporated to ensure that the company has attained a competitive edge while generating a huge amount of profits.
Girard, R. (2005). Nestle, Retrieved on 11 June 2014 from http://www.polarisinstitute.org/files/Nestle%20October%20update.pdf
Nestle. (2010). Vision, Action, Value Creation, Retrieved on 11th June, 2014 from http://www.nestle.com/asset-library/documents/r_and_d/nestle-rd-brochure-2010.pdf
Nestle. (2012). The World of Nestle, Retrieved on 11th June, 2014 from http://www.nestle.it/asset-library/Documents/pdf_nostri_report/12_TheworldofNestle.pdf
Nestle Professional. (2012). Good Food, Good Life, Retrieved on 11th June, 2014 from https://www.nestleprofessional.com/united-states/en/Documents/Mix_Magazine/GFGL_Mix_NP.pdf
Nestle. (2013). Corporate Governance Report 2013, Retrieved on 11th June, 2014 from http://www.nestle.com/asset-library/documents/library/documents/corporate_governance/corp_governance_report_2013_en.pdf
Nestle Annual Report. (2013). The Nestle Roadmap to Good Food, Good Life, Retrieved on 11th June, 2014 from http://www.nestle.com/asset-library/documents/about_us/nestle-roadmap.pdf
Globalization of Business in China
Many business firms exist in every country and each of them usually starts out as a small firm within its familiar home environment. They operate within their country surrounding, which is usually well known to them. Within the home environment, they have proper knowledge of the strategies to use for attracting and retaining customers. They are a well aware of their customers’ likes and dislikes and know how to improve their production scales in order to meet the customers demand and supply. With all these knowledge, the firms easily maintain a large following of customers who are loyal to the company due to their unrivaled customer satisfaction.
Once such firms realize success at home, the next move is to make their operation international. They start pondering how to globalize their business operations. Globalization of business refers to the process in which a company makes its products and services present in the global market. This means that the company expands its selling territories to other countries around the world (Passaris, 2006). Business globalization occurs in a broader perspective and has different impacts on the firm. It refers to the act of making sure that goods and services produced in one region are available to the rest of the world. For example, McDonald pizza was originally produced in America but the stores are now all over the globe.
Globalization also refers to the mobility as well as availability of technology and capital throughout the globe. Globalization has been the important factor in connecting many countries around the world. As a result, different issues concerning relating technology, culture, politics, economics, ethics, human resource management and the environment are investigated from a wider global perspective instead of the narrower regional or national perspectives to which we have become accustomed to. (Passaris, 2006).
This is a research paper on china study tour. It seeks to find out how developments in technology, communication, and transportation have tremendously increased the level of business globalization. The paper also seeks to exhaust different learning activities concerning the experiential study tour in china by answering various questions.
The Study of Globalization of Business
This research work seeks to find out how business operations are carried out in China. The research will also show the level to which China has embraced globalization of their businesses. The influence of western countries, such as Australia in the internationalization of businesses in China also takes a center stage (Passaris, 2006). China, just like many other nations based her business operation within her territories, as time went by and many changes, such as new knowledge in business practices and technological advancement evolved, the country had to change business operation tactics. One of those strategies included ways in which goods and services produced in the country could be made available in other countries. This meant that China had to start trading with other countries. It had to be involved in international trade. Taking part in international trade meant signing trade agreements with countries in the European Union, such as Australia.
Chinese businesspersons and women knew that for them to succeed in globalizing their business operations, they had to be smart and get the right information. During the study, the student visited many Chinese firms that engage in international operations. They found out from the operations manager and other management teams that before they could become international, they had to do a lot of market analysis. The market evaluation was important because it allowed the companies to determine their target customers (Liu, Pfoertsch, Xin & Yeung, 2011). Thus, they would know what type of people liked their products and would be willing to consume them.
This evaluation was of importance since it also enabled the firms in China to explore the technological, political, cultural, ethical, environmental, human resource, and economical factors and how they influence trade in the intended countries. Customer satisfaction became another important factor in the analysis of global business environment by the Chinese companies. The achievement of customer satisfaction results from the way a company meets the demands of the customers. The firms viewed environmental analysis as an important factor as it would aid them in making decisions concerning employees and production of goods in the destined country (Liu et l, 2011). Companies are usually advised to make use of as much local labor force as possible. Some countries do not allow foreign companies to outsource their labor from their home nation.
The students found out that apart from exporting goods to other countries and importing products from other nations, trade internationalization in China involved the availability and improvement of communication and means of transport. During the tour, students visited several companies and had talks with the chief executive officers as well as stakeholders. They discovered that most companies in China decided to explore international market, such as Australia to make more profit. According to Nolan (2004), China suddenly realized that they were producing more superior products and services as compared to other countries in Asia.
They had a feeling that most people in other markets outside their nation would like to use the products as well. Therefore, most businesses decided to get out of their comfort zones and pursue more challenging international business opportunities. Until 2001, the study revealed that the Chinese firms have been bursting in the glory of their local success. They were not keen nor focused in venturing into other territories. The sudden change into global participation came due to the need to diversify and reach a large audience (Nolan, 2004). China is also known for other beneficial products that most people in different would benefit from.
The study discovered that there are many Chinese companies operating abroad. They found out that many of these firms are located in the Asian region. China also trade with Australia through exchanges of goods and services by importing from and exporting to the nation. The study indicated that China was initially adamant in participating in international trade just like other nations that are successful in this area (Liu et al, 2011). The fear for involvement in globalization of businesses had its roots in the requirement and lack of knowledge. For example, China business firms still thought localizing their business operation would improve production and reduce competition. They were as well weary of the strict demand for cross border trade. They also thought that allowing foreign companies to operate in their countries would jeopardize their levels of operations.
The trade ties between China and Australia began back in 1972 when the Australians recognized the economic and business opportunities they would reap through forming trade unions with China. The two countries started trading in small scale since then research shows that the business relations between China and Australia have become very solid. This success did not happen easily. China was then considered a developing country with myriads of business opportunities (Vigfusdottir, 2008). However, they had to enter a trade agreement with Australia in order to start proper business deals. There were challenges, such as cross border restrictions, tariffs, political, social, and cultural influences between the two countries that needed urgent consideration before any business operations could start.
The business legends in China revealed that they had many-failed negotiation with the Australian business fraternity before they could finally come to an agreement. This is because some rules had to be removed and other altered from both sides in order for operation to take place smoothly. None of the countries was ready to relinquish total power involving business negotiations to the other (Vigfusdottir, 2008). China wanted to take total control of its operations in Australia and Australia wanted the same in china. Finally, an agreement was reached in 2005 through the formation of a trade agreement.
In the agreement, each country agreed to ease their stance on foreign businesses operating within their environment. The tariffs that caused barriers to free trade between the two nations were elevated and were no longer a hindrance to business. The issue of cross border restrictions that touched on entry and exit of goods and services into these countries was also discussed. It was agreed that there would be ease of access of the border entrance to companies from both sides (Harcourt, 2013). However, this had to be done under stringent measure to avoid entry of other illegal goods from shrewd citizens from either country.
The two nations also accepted to reduce or totally get rid of regulatory barriers, which hindered services to support improved trade operations across goods and services that were beneficial to the economies of the two nations. They as well agreed to implement strategies that encourage more foreign investment between Australia and China. This move would provide a strong foundation for their future economic relationship (Passaris, 2006). The two countries knew that there was an issue of taxes to be discussed during the negotiations. For example, by the end of the agreement, it should be clear to both sides how their imports and exports would be taxed. It was agreed that tax rates would definitely favor registered companies from both nations. This would increase their foreign earning and reduce expenses. Reduced taxes also meant that firms could export and import more. The agreement also considered the possibility of reducing customs in order to increase the amount of export and imports into both countries.
Thomas (2004) argues that bilateral trade between two countries is affected by many other factors. The students realized that even after signing the trade agreement between China and Australia, both countries had factors, such as society, culture, environment, and politics to contend with. Asked of how they overcame these unseen but important barriers to trade, most company managers said that they took one-step at a time. Both countries and especially China was aware that Australia had a strong western culture and way of conducting business. Australians were as well aware of the rich Chinese cultural background. As such, they decided to analyze and take time to find out how each country carried out their operations.
The two countries easily adopted each other’s cultural ways of doing business. Eventually, culturally differences became a major reason for the two countries to do business together (Liu et al, 2011). The society determines how foreign goods and services as well as foreign firms will fair on in the business environment abroad. The management of Chinese companies with affiliations in Australia stated that initially it was a challenge dealing with Australians and vice versa. This is because firms from both sides thought that their products and services would trade well in new environments due to different cultural requirements. This was solved by the fact that there were immigrants from one country to the other (Schneider, 2009). This created a good customer base and away of influencing other members of the society to buy products from foreign companies.
China and Australia also ensured that this type of trade involved the import and export of goods and services whose demands were high and would be beneficial to people of other cultures. Such goods would include electronics, fabrics, and car body parts for assembling. The countries had no volatile political situation at the time of signing the agreement. In fact, the government warmly welcomes any business negotiation with many countries. They were ready to support international business ties, as they knew it would improve their economy. The government from both countries took part in signing the trade agreement. The reports showed that politics did not play any negative role in its achievements (Liu et al, 2011).
Another factor that firms from both nations considered was whether the Chinese and Australian environment was favorable for business. A thorough market research from both countries revealed that the intended market had enough clients and the business would easily flourish. The analysis revealed that most Australians were used to using products from the Chinese market and the same was true in the country of China. The Chinese researcher also found out that there were many Chinese migrants in Australia and Australian migrants in China. Therefore, this would help in eradicating language barriers and ease communication in both countries for global business developments (Schneider, 2009). Secondly as said earlier, both countries took pride in producing high quality good that the whole society would utilize irrespective of one’s nationality.
Concerning the matter of productions, the students learnt during the study that the countries agreed to take care of their own productions in the foreign countries under certain conditions. These include the agreement that productions done by the Chinese firms in Australian would be foreseen by an Australian nationality working with the companies. China would also appoint a Chinese to monitor production operations in the Australian companies. It was also agreed that each foreign firm would provide local but not foreign labour (Schneider, 2009). This was aimed at creating job opportunities for benefiting people in either country. Out sourcing labour was not allowed at any circumstance and doing this would ruin the relationship between the two nations. Each country was however allowed to send a given number of expatriates into the other country to evaluate business operations. The expatriates also had the rights to carry out investigations in their firms without interfering with operations in local firms. The free trade agreement signed between China and Australia also allowed a Foreign Direct investment (FDI) into each other’s territories. This meant that any authorized company from both countries could directly invest into each country without going through rigorous procedures that could delay investment opportunities.
Benefits of Business Relations between China and Australia
Whenever two or more countries decide to enter into trade relations, they do so with an aim of meeting various expectations. First, Australia realized that entering into business relations with China would be of important economic benefits (Harcourt, 2013). China also saw this as an economic development opportunity. Research into secondary materials indicated to the students that both countries and especially China was thrilled with the foreign earning that international trade between her and Australia would bring into her nation. This is true because the Australian currency is much stronger that the Chinese Yuan, meaning more money for other uses. Australia was also happy about the economic development from the Chinese currency, which would add to their local earnings (Harcourt, 2013). Thus, each country had the opportunity to earn foreign currency and increase their economic standing.
A study into the trade negotiations and business operations show that the business relations between China and Australia have brought about important technological advances in both countries. Australia is still a developed country with many opportunities for technological development. China on the other hand was a developing country with massive abilities to develop such technologies. This business merger leads to technological advances by making both countries producers and beneficiaries of technology (Vigfusdottir, 2008). Australia had the resources while China had the knowledge. It is clear that currently, both countries are enjoying massive improvement in technology with China producing many electronics.
The development in technology has also brought about creation of jobs to citizens of both countries. People in both China and Australia had the opportunity to be working in foreign firms. They got jobs as managers, productions analyst, procurement, clearing and forwarding, and human resources management among many titles. They also worked in companies that produce different technology products (Drysdale, 2012). The job opportunities increased government revenues in each country through income taxes from the citizens. This also improved people’s standards of living. The life of the citizens were made better by purchasing and using technological products, such as mobile phones, and other appliances that provided a wider amount of information for them.
The business relation increased the exportation of other products like jewelry from China to Australia. China is also rich in classic fabrics that are not found in Australia. This export of fabrics and jewelry has increased development in the fashion industry. This has also improved the living standards of the people who are fashion forward and can afford high fashion garments and expensive jewelry (Drysdale, 2012). China is also known to be good at assembling motorcycles and motor vehicles. Therefore, it can easily export these commodities to Australia.
Australia on the other hand has some of the best academic institution in the world. The trade relations between her and China also opened an academic door for Chinese nationals who would want to achieve higher and quality learning. Through such interactions, Australians learn Chinese culture as the country earns foreign exchange through fee paid by the students. Apart from better academic institutions, Australia has the most untamed wildlife and beautiful natural sceneries (Thomas, 2004). As such, the globalization of business allows Chinese and other people to visit this country as a tourist destination. Therefore, the trade agreement between these two nations also improved tourism activities in Australia. This has also lead to increased government earning through the tourism sectors. It has as well ensured proper market and development within this famous country.
The students learnt that business relations between these two countries have also improved the means of communication in either of them. As said earlier, China is an expert in developing communication gadgets, such as mobile phone and other tools that can be used for online communication. This has improved modes of communication in the two countries and with the rest of the world. During the research, the student discovered that the means of transport in both countries have also improved. This came due to the increased revenues that either country earns from the business transactions. Liu at al (2011) states that infrastructure in both countries improved significantly since they started doing business together.
During the study, the students learnt that there is a very important relationship between global and national business. Normally, most businesses that globalize their operation start from local to national level. Globalization of business comes from the knowledge gathered by the local managers, stakeholders, human resources, and other employees within the local business firms. The student also learnt that culture should not be a hindrance to doing business in any country as long as each country and people are open to diversity. The study in China revealed that a country’s economy could greatly improve based on international business relations. They also thought that such trade agreement should serves as a good example to other Asian countries that have solely localized their operations. It should give them a reason to think of globalizing their businesses.
Drysdale, P. (2012). APEC and liberalization of the Chinese economy. ANU Press
Harcourt, T. (2013). China economic ties put Australia in the right place. Retrieved from http://www.abc.net.au/unleashed/4617438.html
Liu, C., Pfoertsch, L., Xin, M. & Yeung, D. (2011). The globalization of Chinese companies: Strategies for conquering international markets. New York, NY: John Willey & Sons
Nolan, P. (. (2004). Transforming China: globalization, transition and development. Anthem Press
Passaris, E. (2006).The business of globalization and the globalization of business. Journal of comparative international management. University of New Brunswick, Canada. Retrieved from http://journals.hil.unb.ca/index.php/jcim/article/view/5666/10661
Schneider, S. (2009). Working papers: 1. The rise of China – 2. Is protectionism still alive in a globalized world? – 3. US under Bush II – empire Or hegemony? China: Books on Demand
Thomas, N. (2004). Re-orienting Australia-China relations: 1972 to the Present. Aldershot, UK: Ashgate publishers.
Vigfusdottir, H. (2008). A free trade agreement between Australia and China. Retrieved from http://skemman.is/stream/get/1946/3327/10434/1/Heidur_Vigfusdottir_fixed.pdf
Business Plan for Eco-Garden
Having enough procedures and ecoGarden products to educate people on the purposes of preserving our environment, we will be able keep and attract more farmers and gardeners willing to learn from our venture. These education will reduce the chances of plants being destroyed, perhaps due to lack of proper keeping of the environment. Apart from providing and enhancing the use of our product, we will be able to educate our customers a little about the right process to maintain different plants, also as a way of preserving them. Plants are important to our environment, and by preserving them in the right way, we will be able to reduce the chances of destroying them, and they will be able to provide a beautiful atmosphere and also other foods.
The different gardeners and farmers will be able to be invited in agricultural awareness in different communities, such as the entrepreneur week (dragons den), where they will be able advance their knowledge and understanding of their farm activities. However, as we introduce our products to people, we will have to come up with an experimental activity, that will enable our customers believe our products are efficient enough. By drawing the confidence of our customers, it will be easier working with them.
Efficiency through cutting down cost and creating effectiveness, is the major element of our business operations. Customers in the market prefer using a product that takes care of their wants, at a cheaper price and long lasting. Our products create all these requirements, and all need to be done is undertaking enough experimental that will be able to interest our target, by showing how cheap and easy and eco-friendly our products are. As we win the confidence of our customer in the dragons den, that will mean that the demand for our products will increase and we will need some extra manpower for the education process, as well as the creation of our products to meet the required demand.
Corporate Responsibility and Marketing Strategies
The need to ensure effective corporate responsibility in the operation of a business enterprise is vital owing to the need to constantly improve the public image of the organization. Corporate responsibility entails involvement in activities of societal interest. Among these vital activities may include conservation of the environment besides sensitizing the community on the need to undertake measures that are environmentally friendly. Tax responsibility is also a corporate responsibility that organizations often struggle to achieve. Adherence to these tax regulations will ensure that the firm is in good operating ties with the existing authorities. Failure to adhere to these regulations may cause the firm as the authorities may consider terminating the operations (Werther & Chandler, 2011). On the other hand, the level of success of an income generating organizations highly depends on the marketing strategies adopted. Promotional activities assist the organization in increasing their sales volume as a result of awareness creation. In addition, the public image of the entity will also be improved through marketing techniques that presents the firm as the best in the industry. The competition within the industry will also be heightened by the types of marketing methods adopted. As a result of this, companies often strive to adopt more superior marketing options in comparison to their competitors. This will ensure a competitive advantage for the firm hence efficiency. The paper will majorly focus on the operating aspects of Apple Company with regard to corporate responsibility and marketing activities.
Ethical considerations have been a pertinent issue in the procedures of most enterprises as it affects a number of stakeholders. In light of this, organizations have set ethical standards that should be achieved by every action within the premises of the business (O’Grady, 2009). Apple Company, an American multinational company located in California has constantly made attempt to assume the required ethical considerations in its operations (O’Grady, 2009). Ethical aspects in regard to the consumers have shaped a number of operations of the firm. Reports released in 2013 shows the company’s position in the strive to improve the working conditions of its employees. Being an electronic producing firm, the production process entails emission of dangerous effluents that are harmful to the lives of employees. In bid to curb this challenge, the management of the organization has considered management of gas absorbers within its premises. In addition to this addition to this adoption, the firm has often considered training programs to employees with an aim of reducing operational risks (Lüsted, 2012). These trainings are employees safety centered that have in the past helped in preventing a number of risks in the course of employees’ performance. It is general requirement for companies to ensure its employees against any risks possible in the course of their task execution. Apple Company has fully taken this aspect into consideration by bringing on board various covers for the employees. In an event that an employee is hurt in the course of his organizational duties, the insurance policies fully cover the expenses. Apple Company contributes to these insurance policies by remitting the required premiums. However, in 2012, the company faced a major blow by witnessing the demise of few of its employees in their lines of operation; the firm reacted to this by compensating the bereaved families.
Apple Company has also considered employees’ remuneration pertinent in their ethical standards. Favorable employment terms to employees have aided the effective performance among employees besides respecting individual rights of the company’s workers. The process of ensuring desired terms for the employees begins at the selection process where individuals, qualifications are the basis of the selection process. All the applications are equally considered and the best are absorbed. The management of the organization strives to eliminate cases of favoritism in the selection process. This is then followed by the presentation of remuneration plans that majorly targets to achieve motivation of employees. In comparison to other multinational electronic companies, the numeration plans of Apple Company are considered more favorable. The facet has significantly improved the quality of the services through keeping the employees motivated.
Environmental ethical standards are another aspect that has been central in the procedures of the company. In regard to pollution, the firm has established treatment plans in number sites in various countries where various parts of its products are disposed without causing harm to the environment. Assembling plants that utilizes the disposed parts of the company’s products has also been established to further curb any aspect of disposed parts being spilled to the environment (Karake, 1999).
Ethics Violation by Supplier
The revelation in August 2014 that one of the suppliers to Apple Company, Pegatron, has consistently violated the Chinese and international labor laws greatly compromised the image of Apple Company. Since Pegatron is one of the major suppliers to Apple Corporation, the allegations that the supplier had held salaries of a group of employees risked jeopardizing the purchase procedures of the Apple Corporation. Owing to fear of distortion of the firm’s image, the management of Apple attempted to intervene through compelling the supplier to respond promptly to the allegations (Lashinsky, 2013).
In order to prevent future malpractices by key suppliers, the management of Apple Company can adopt measures that will ensure that the suppliers adhere to the existing wage and benefits standards. Initially, the company can adopt operational ethical standards that all suppliers must adhere to before being confirmed to deliver services to the company. Among these standards should be prompt settlement of all obligations. Thorough tender vetting process will help in ascertaining that all the considered suppliers of the firm have adhered to this vital ethical aspect. Secondly, another strategy that the corporation can consider to ensure adherence to the existing wage and benefits standards by suppliers is through ensuring control of these suppliers. Among the measures of control include purchase securities of these suppliers. Through ownership of shares of these suppliers, Apple Company will be part of the decision organs of the company (Lüsted, 2012).
The pricing techniques adopted by the corporation are central in influencing the sales volume of its products. Among the pricing methods that the firm constantly adopt include price penetration and price skimming. The organization mostly applies the use of price penetration in the event of new markets access. This is in order to entice customers with the low prices of the products. However, in case of improved quality of the offered products, the company often adopts the use of price skimming in order to reflect the improved quality levels. Increase in the prices of the commodities at times can affect the volume of the realized sales (Werther & Chandler, 2011). However, in the event of improved qualities, increase in product prices will not negatively affect the sales level. In addition, owing to the nature of the products offered by company, goods of ostentation, an increase in price will generally be interpreted to be as a result of new integrated aspects hence encouraging more purchase.
Technological integration has been pronounced in the marketing strategies of the organization. Specifically, the use of computing devices has been central in strive to maximize effectiveness and market reach. Before adoption of any marketing option, the company often considers extensive market analysis to identify the best method that will conform to the existing market aspects. Market analysis includes industry analysis where the operations of competing are critically examined. Through these facets, marketing methods assumed by the corporation are normally superior in comparison to those used by competing firms (Karake, 1999). Online marketing is highly valued by the company as a promotional measure. The strategies entail the use of various social platforms to create awareness about the existence of the products. In the past, the use of facebook has intensely been adopted by the corporation. Through these created platforms, Apple Company has achieved constant communication with its potential customers. Constant communications has made it possible for the organization to be aware of the changing market aspects thereby tailoring their productions to meet these demands. In addition to the constant communication, the media allows for customers to request for delivery of goods and even make online payments. Online marketing aspects are also achieved through the website of the organization. The platform highlights all the products offered by the organization and allows potential customers to show their interest in making purchases (Karake, 1999). The sites are supported b y a user interface that collects relevant information from customers. The use of online marketing strategy is adopted in close reference with the targeted market segment. For effectiveness of the plan, division of the market into indivisible groups of customers is highly vital (O’Grady, 2009). The use of social sites is basically regarded in attempt to reach the young generation. On the other hand, the use of electronic media for advertisement activities is often designed to reach out for the aged individuals.
Secondly, due to global operation, Apple Company has considered certain forms of international practices in bid to promote the product of the company. Through sponsoring a number of international activities, the company has promoted most of its products. In the 2010, World cup, held in South Africa, Apple Company was one of the major sponsoring partners. Through the activities, the company realized a significant increase in the volume of sales. Publicity has been a core aspect in the marketing options of the organization. Other international activities such as Olympics witnessed the organization rally its support. Embracement of foreign direct investment in various nations can also be attributed to the ever growing volumes of sales. Apple Company has in the past adopted the use of mergers and acquisition as a marketing strategy. Partnership programs with various distributing companies have effectively aided the publicity agenda of the corporation in various markets.
Due to the stiff competition in the global electronic industry, there is need for management of Apple Company to adopt actions that will allow them a competitive advantage within the industry. Embracement of advanced and current technologies in the company’s production has greatly allowed the enterprise to enjoy market power over a long period of time. The production of high series of ipad, iphone amongst other electronic gadgets was a major boost to the company (American Bar Association & Center for Professional Responsibility (American Bar Association). 2007). Competitive analysis is highly regarded in the choice of the technology to be adopted. Activities of competing firms such as Nokia, Samsung and Tecno are initially analyzed before coming up with the company’s technological adoption. In addition to this analysis, the existing trends in the market are extensively researched on so as to integrate technologies that are in the interest of customers .Through the various forms of analysis before technological adoptions; the institution has often been rated highly in terms of technological embracement.
Secondly, Apple Company achieves competitive advantage through its personnel aspects. Competitive selection processes adopted by the firm assists in resulting with the best and more qualified personnel. The extensive recruitment process of the company subjects the applicants of various positions to an array of test programs thereby eliminating the less qualified. Both internal and external sources of personnel are both combined to guarantee a wide range of selection. External sources involve outsourcing best performing individuals from other competing organizations. The company in most circumstances has experienced performance rivalry with Nokia due to outsourcing of employees form Nokia. Outsourcing of employees is further made possible through the favorable remuneration plans offered. Apart from the extensive selection procedures, training programs to new recruits is an option that always ensures that all the employees of the organization have good mastery of their defined roles. Training programs helps in limiting the performance mistakes that could arise in the course of execution of roles. After every accounting period, the organization always considers conducting performance appraisal that points out to the challenges manifested during employees’ performances. Training programs are then tailored to meet the existing needs pronounced. Constant customer- company interaction is also another important source of competitive advantage (Lashinsky, 2013). Customers’ loyalty to the company is gained through various offers allowed that include; credit facilities, advisory services and after sale services contributes to the strong ties with the company that greatly influences the overall sales. The past success of the organization that has been achieved over the years is attributed to competitive advantages gained through the various peculiar strategies.
In summary, it becomes evident that global operation of any enterprise entails a number of factors that organizations should be keen to identify and integrate in their operations. In order to gain efficiency and effectiveness in the operations, there is need for a company y to consider corporate responsibility. Indulgence into activities that are in direct assistance to the society will be key in achieving corporate responsibility. Proper identification of these facets of corporate responsibility will therefore aid in achieving this aim. Pollution is pronounced to be key factor in achieving corporate responsibility. Organizations should therefore highly consider healthy operations that help in maintaining a healthy environment. In addition, the discussion makes it manifest that marketing options are vital in determination of the level of success. The marketing section of the firm should properly identify the best promotional methods that are more superior to those assumed by competing organizations. Promotional methods should also be designed in order to position the firm as the best in the market. Through this the company will realize increase in sales volume besides improving the public image of the institution.
American Bar Association & Center for Professional Responsibility (American Bar Association). (2007). Model rules of professional conduct. Chicago, Ill: American Bar Association, Center for Professional Responsibility.
Karake, Z. A. (1999). Organizational downsizing, discrimination and corporate social responsibility. Westport [etc.: Quorum
Lashinsky, A. (2013). Inside Apple: How America’s most admired–and secretive–company really works. New York: Business Plus.
O’Grady, J. D. (2009). Apple Inc. Westport, Conn: Greenwood Press.
Werther, W. B., & Chandler, D. (2011). Strategic corporate social responsibility: Stakeholders in a global environment. Los Angeles: SAGE.
Lüsted, M. A. (2012). Apple: The company and its visionary founder, Steve Jobs. Minneapolis, MN: ABDO Pu
Global Ethical Issues
Ethics denotes the fundamental and core principles governing decent human behavior. The study of values such as equality and difference between good and bad is also considered. Business ethics refers to the set down rules and regulations that govern processes such as customer relations, governance, or corporate social responsibility. Business ethics are derived from a country’s law like a constitution or may also be derived from a consensus among members involved in a particular business (Sullivan, Smith, & Esposito, 2012). Those members lay down the framework that will govern them.
Global ethical issues in business include acts like corruption, copyright and intellectual rights infringement, tax evasion, environmental concerns, discriminatory policies, and corporate social responsibility (CSR) issues. In corruption, bribery is imminent; it includes taking tokens from someone in order to influence a decision (Sullivan et al., 2012). An official who adopts an idea that he or she would not act competently in the absence of a bribe may do this. Copyright infringement encompasses acts of reproducing audiovisual or written material and design of an object without the prior permission of the owner or publisher. This automatically leads to a tussle legal issues, for example, Samsung and Apple, which are telecommunication giants, were involved in an ensuing battle over patent infringements. CSR is a new strategy on how science of risk managing and taking can converge into profit maximization. This includes wooing individuals by giving back to the society without taking advantage of them.
Environmental concerns are also considered in business ethics. Mining or manufacturing companies must adhere to rules set to make sure ecological life is not endangered. These companies should have an elaborate way of disposing of waste and adequate safety practices for their employees. Instances like those that happened in Ukraine in 1986 due to a nuclear leak should be avoided. Every kind of discrimination should be avoided (Lahey, 2012).
Various measures have been taken by countries and organizations like the UN to ensure business ethics are followed. Some include the Helsinki Final Act, which strengthens the United Nations Declaration that multinationals should enhance a standard of living to support the health of workers and their families. The International Labor Office Tripartite Declaration of Principles Concerning Multinational Enterprise and Social Policy is concerned primarily with labor issues; it states that multinational firms provide workers with equal pay for equal work, advance, compensation, and health care benefits for the poor. Those are among the many regulations laid down to enhance business ethics (Lahey, 2012).
Several changes need to occur for global businesses to be treated fairly. Human rights such as the right to nondiscrimination should be enshrined in the international fundamental right chapters. Fair treatment of employees should be a theme in every business; this includes timely pay and room to air out their ideas. The employees should also respect their employers and prove their worth by meeting the business employee requirements (Lahey, 2012). Empowering employees to make decisions is a way of recognition that they are obliged to self and the company.
From a biblical point of view, it is important to adhere to work ethics. Leviticus 19:11 states that, “Ye shall not steal, neither deal falsely, neither lie one to another” (The Holy Bible, 2014). Additionally, the book of Proverbs 19:17 encourage the helping of the poor since there is a reward from God. Colossians 3:23 states that “And whatsoever ye do, do it heartily, as to the Lord, and not unto men” (The Holy Bible, 2014). This persuades business and organizational leaders to function ethically while remaining profitable in the present international economy.
Lahey, T. (2012). Perspective: a proposed medical school curriculum to help students recognize and resolve ethical issues of global health outreach work. Academic Medicine, 87(2), 210-215.
Sullivan, O., Smith, M., & Esposito, M. (2012). Business & Economics: A Critical Approach Integrating Ethics across the Business World (1st ed.). London: Routledge Publisher
The Holy Bible. (2014). Retrieved from https://www.lds.org/scriptures/bible
Evolution of Employment Law
The history of labor law entails the story of the conquest of citizenship by the employee, to pass “silence to speech”, in the words of Jacques Le Goff. Throughout the history, evolution of employment law has been subject to the ups and downs of history, autonomous text of such legal practices however, only really appear at the late nineteenth century.Understanding how the employment laws have evolved over time is critical to shaping the future formulation and implementation of such laws.
The limitation of child labor and the recognition of freedom of association are among the major laws initiated.The law of 10 May 1884 prohibits the work of children under 12 and creates a body of inspectors to put the employer on notice (Clayton, 2018). One of the first major labor laws, adopted on June 12, 1893, for the first time, obliged the employer to respect a number of rules of hygiene and safety in professional premises far too much often unhealthy.
Recognition of work accidents is also one of the great achievements in implementation of employment laws.The principle of the supremacy of the contract, dear to the liberals, carried the correlative acceptance of the employee of the risks of work in line with the main principles of the Civil Code. However, the Court of Cassation, in a first judgment dated June 21, 1841, operates a reversal of jurisprudence to admit the action of the worker against his/her boss on the basis of the tort of section 1382 of the Civil Code (Clayton, 2018). This law adds an additional obligation for the employer, previously only required to pay a salary, an obligation that truly establishes the right to work by the establishment of what will become at the end of the nineteenth century, the contract of employment and no longer a civil contract of hire of work.
These fundamental rights are today integrated into the fundamental principles recognized by the laws. However, as early as 1975, the climate changed, industrial jobs gradually disappeared, and unionism weakened.The trend is towards the gradual weakening of the collective rights of employees (Bower, 2016). As a result, over the years, there has been a gradual erosion of the labor law base, state law, to rely on a necessarily unequal balance of power in a period of scarcity of employment, or even on direct negotiation between the employee and the employer. The idea behind the whole construction of the labor law, according to which the employee was to be protected against his/her individual will, was renounced, his/her protection being conceived as the counterpart of his/her subordination. The collective rights of employees are gradually weakened.
In general, over time, employment laws have undergone significant changes. With regard to laws governing child labor, laws have transformed from a time when children were employed and allowed to work to presently where child labor is prohibited and punishable by law. Further, laws relating to work safety have largely changed across time with increased safety and environmental standards being required of organizations. Indeed, more changes are expected in future as policy makers seek to fill loopholes and encourage worldwide good practice with regard to child labor and work place safety.
Bower, J. (2016). Blackstone’s Employment Law Practice. London: Oxford University Press, Oxford.
Clayton, D. (2018). Legal Update: Employment Law. Law Society Gazette, 10 (2), pp. 112-116.
Business Success or Failure in Technology
Most people are in consent that improved business productivity or performances can be facilitated by an organization’s ability in successfully executing their overall strategy. Technology application in organizations helps in maximizing business productivity and builds a platform for an organization to realize their real business success. Technology enables business organizations to have tools essential for countering possible challenges in the execution of business strategies while also prospering the business especially in today’s volatile economic environment (Mohan-Neill, 2009). Technology usage in organizations, therefore, enhances their productivity levels leading to successful businesses. Technology use in business organizations helps in boosting their competitiveness. Nevertheless, successful technology applications in organizations are based on a variety of factors, without which a company may not attain business excellence as intended (Jasra et al, 2011). Understanding the organizational strategy is a must in the development of an effective technology strategy, which aligns with the overall firm’s business vision. Successful technology usage in organizations can generate a variety of benefits through improving the company’s strengths and efficiencies. However, technology implementation in an organization can present extraordinary challenges to organizational management and the technology experts. Lacking the ability of curbing such limitations can result to technological failures that can extremely drain the company’s funds, people and vitality. This paper, thus, will examine how companies can gain business success or suffer failure especially in technology. The paper will focus on two specific cases of sport businesses comprising of Nike and Under Armour. The analysis will determine how firms can use technology effectively to succeed in their businesses.
Successful Technology Application in Organizations
Organizations that have managed to incorporate technology into their business strategy successfully have generated substantial business returns. Moreover, technology has become a significant business strategies enabler in diverse areas including competitive differentiation, quality improvements, process improvement/automation and mass customization. Organizational managers that have aligned technology with their business strategies claim that such integration was vital in ensuring business survival and success. Technology has enabled many organizations to gain effectiveness and efficiency in their businesses. Weiss and Anderson (2004) noted that trends have shown positive relationships among technologies, competitive strategy and organizational performance.
Therefore, developing a strategic technology plan starts with acquiring full support from the senior management or organizational executives. A team should be appointed to create the technology plan hand-in-hand with appropriation of resources required to facilitate the development of the plan. Such a plan assures the company that all factors have been keenly considered within the planning process. Further, the plan strengthens the technology professionals’ ability in gaining cooperation from all the organizational members and the different organizational departments during this early stage. Considering that technology use, awareness and expectations are found in different degrees across the organization, such a team should incorporate representatives from all the functional departments of a company. Their engagement and participation within the planning process will ensures the technology plan aligns with the company’s goals and mission while also capitalizing on all resources available in the whole organization (Vaughan, 2007).
In this case, attaining successful businesses in organizations is not merely a matter of technology. Other factors are critical in order to make the technology strategy successful in a company.
Interaction between technology and the organization/Company: Technology influences how organizational members interact with each other in the accomplishment of routine tasks. For this reason, technology implementers must be mindful of the cultural connotations of the technology efforts to the company. Cultural and institutional separation between designers and users can easily lead to a huge gap between the two (designers and users). Nonetheless, companies can manage this through seeking functional representatives that have a wider understanding of the possible technology applications in the business. Moreover, imposing a technological solution can exacerbate, instead of resolving a problem. Therefore, it is important for technologist to know that imposing technological solutions could worsen instead of resolving the problem (Waheed et al, 2010). Organizations should examine, understand and document the contextual interactions of processes prior to concluding that a new technology can resolve any problem within the processes. A company can attain an effective technological solution, which complements a company’s culture through having an open mind towards the situation they are facing. Nurturing a cross cultural understanding of business practices and technology across all organizational levels will position the company and the technology department strategically for the execution of the technology-based initiatives.
The involvement and participation of the users: Employee participation is the most dominant management practice that correlates with success in an organization. Companies, therefore, should structure employee engagement or participation in a manner that ensures successful results on the part of employees, organization and the technology project. Organizations should communicate to users effectively while also linking the communication to the users’ experiences. The technology implementation activities should be supportive to users through enabling them to cope with the changes, surprises and contrasts to facilitate a successful technology initiative. Companies can engage users through allowing discussions among coworkers as well as between the technology users and implementers. According to Waheed et al (2010), whenever employees are provided with opportunities to contribute towards a specific technology under implementation, they are more likely to adapt easily to the subsequent changes and readily accept the technology. Organizational members, thus, should be involved in making important decisions when considering and implementing new technologies. The individuals should be allowed to assume measures of responsibility to a certain level when designing and executing the technology to facilitate a shared ownership and acceptance of a technology project. User participation involves engaging employees in the activities, behaviors and assignments throughout the technological implementation process. The participation is critical for successful results because it allows users to consider the considered technology essential and individually relevant. Consequently, this creates a positive attitude towards the new technology.
Resistance and skeptics: Resistance to a specific technology in an organization can face resistance in an organization for various reasons. Resistance may result due to individual or group reasons. An organization that aspires to develop and implement a successful technology strategy must eliminate this form of resistant through training or education of organizational members, changing the personnel involved in the technology execution, persuading the resisting people, coercing the resisting employees via company policies or promoting user participation to secure their commitment towards the technology project. Nevertheless, the most effective strategies in this case are training/education and user participation. Similarly, resistance may result from internal factors related with the technology under consideration. For example, people tend to resist technically insufficient technologies/systems, technologies with poor designs, and technologies that are not user-friendly. Nonetheless, organizations can minimize such form of resistance through rectifying the problems linked to the technology. Companies can also reduce technology-based resistance through employing skilled designers, modifying the technology to align with the company’s procedures/policies, being keen on the ergonomic features and engaging users in the designing stage (Waheed et al, 2010).
Commitment: Successful technology development depends on the commitment the organizations and their members have towards the project. Commitment engages the human psyche, time element and the external forces. This concept incorporates psychological forces binding a person to certain actions plus the structural conditions, which make behaviors difficult to change or irrevocable. Similarly, commitment influences behavior persistence. In this case, commitment towards a technology project in an organization involves doing the crucial things throughout the process of technology development, technology installation and utilization to provide a solution to an organizational problem. Commitment also incorporates change such that a company must show a willingness to institute changes to procedures, behaviors, structures plus any other factor, essential for the technology to work. Commitment must be present across the organization including the senior management, which is arguably the most critical factor in the planning and implementation of a new technology. According to Waheed et al (2010), lack of commitment can be detrimental to the success of a technology and its successful application in an organization because it paves way for resistance and indifference. Organizational leadership and management should ensure the success of a technology project through building an organizational culture that promotes commitment of all their members towards technological projects. They should stress on the efforts of the project, respond to the projected-based crises in a way that reflects the project’s importance as a vital component of the company, ensure sufficient availability of resources, training organizational members in preparation for the technology execution and reward all efforts directed towards the project. Indeed, commitment must generate from all organizational levels and persist throughout the life cycle of the technology project for success to be achieved.
Planning: Every organizational project should always start with a clearly defined vision. Strong leadership that has well written vision acceptable across the organization acts as a great source of intrinsic motivation, allowing organizational members to support the efforts of one another to achieve a common goal, which consequently leads to a successful technology implementation. The plan of the project needs to be focused on relevant detail, clear and concrete. Further, the plan should incorporate keen specifications on the roles of team members plus an assessment of the company’s needs, a communication plan, critical project’s success factors, project schedule and risk analysis, among several others. Such a comprehensive plan will establish accurate expectations while also defining user participation and minimizing individual anxiety on unknown issues (Waheed et al, 2010).
Risks: Lack or poor management of technology-based risks can lead to huge cost overruns during implementation. Imperative to note, every technology project comprises of some risks due to the organizational effects of the technology. Project managers, however, can contain such risks through knowing and understanding the correlation between the dimensions of a technology success and risk factors involved. Some of the risks may comprise of project size, organizational changes, users unwillingness, lack of expertise among the team members, lack of support from organizational executives, conflicts between technology developers and users, unrealistic budgets and unrealistic schedules, among others (Waheed et al, 2010). Nevertheless, factors that can ensure the success of a technology project include senior management support, clearly defined goals, adequate resources, sufficient communication, effective decision making, user information satisfaction, cost/benefit productivity and clear project scope, amidst others.
Nike’s Technology Success
Nike operates within the athletic footwear industry, an exceedingly competitive environment. Although this industry has few entry barriers, the success of small sports-wear firms is always shaky. Nike, therefore, has demonstrated great success in this industry, having taken the market lead followed by Adidas and Reebok. Nike’s business involves designing, making and marketing athletic apparel, footwear, accessories and equipment (Igbal, 2011). Nike Corporation has been running under a very effective management within an attractive industry, with a very strong brand image. The business success or excellence that this business has been enjoying is primarily based on technology, in efforts to remain ahead of competition through producing sports products while also producing the machines that make shoes. For this reason, one of the factors that have facilitated the success of Nike’s business relates to their manufacturing efficiency. As a shoe manufacturer, Nike must balance costs of raw materials, labor, import tariffs, technological developments and shipping. Footwear firms must keenly choose their channels of distribution in order to ensure availability of their products efficiently while also retaining their business goals and brand image (Igbal, 2011).
In today’s business environment, technological development is becoming increasingly dominant within the footwear industry where Nike operates. Technologies such as computer aided design (CAD) have enabled such companies to shorten design-distribution cycle in a short period successfully. Further, new technologies like the electronic data interchange (EDI) have allowed accessibility to new quick response programs, linking retailers to manufacturers to allow for proper inventory to retailers when need arises (Vaughan, 2007). Under such technologies, the electronic point-of-sale scanners are able to read data associated with the sale including the size, price and product immediately following a sale. Similarly, the technology allows the manufacturers to accurately adjust product to suit consumer demand. Among the dominant strategies that have made Nike’s business successful relates to their working hand-in-hand with the suppliers that enable the company to manufacture their products at extremely low costs, and of superior quality facilitated by the application of the newest technologies. Such factors have made the company a market leader while their competitors continue striving for market survival.
Nike has further been very aggressive in incorporating technology in their marketing strategies, which have increasingly boosted their success in this industry. The most sustainable competitive advantage Nike has relates to their innovative product quality. The company engages in massive scientific and technological research like air sole to make footwear. Research and development (R&D) has been a constant activity in producing better products for Nike consumers. According to Igbal (2011), the competitive advantage has been valuable to both the consumers as well as the company. In spite of Nike’s competitors, Nike has retained their great competitiveness in relation to product technology, which has been impossible for other firms in the industry to imitate or substitute. Various factors have led to the successful development and implementation of such technologies at the company.
User participation is one key approach employed by Nike Corporation. The company engages employees in their technology-based decisions to provide insights on the same. Nike, therefore, is constantly involved in challenging their staffs on daily basis. Indeed, Nike’s human resources global strategy involves unleashing the potential of their human capital across all their business areas including technology to enable the individuals make valuable decisions that consequently result in Nike’s business growth. Nike’s employees have actively participated in shaping the innovation and sustainability journey of the company. In 2005, for example, all Nike’s employees participated in efforts of devising what the future held for the company in terms of sustainability. The company, thus, challenged their employees through brainstorming sessions and group exercises to define the company’s future plus the possible technology they could employ to get there. Employees’ contributions or insights during the exercise enabled the company to shape their business approach towards technologies that would promote business sustainability. Nike’s employees also are well equipped in managing change. Moreover, the customers’ needs keep changing such the staffs must also align their new decisions based on such needs. Therefore, Nike offers learning opportunities for their employees, which enables the individuals to constantly rethink the business needs (Nike Incorporation, 2010/2011).
The organization’s culture also support’s employee participation through openness and allowing creativity. The culture ignites and inspires innovation, which facilitates ideas for new technologies that increasingly boost the company’s business. Nike’s inclusion and diversity strategy facilitates this through three foundational priorities. One of them includes offering a resource center that has various exercises and tools to enable teams discover how inclusion and diversity can promote innovation and creativity. Nike also seeks empowering inclusive cultures such as ‘cultures as offense’ comprising of young employees. Thirdly, Nike inspires ideas with a purpose to ignite innovation (Nike Incorporation, 2010/2011). Through designing/developing new and creative engagement models, the company equips teams and leaders with tools that build a culture of innovation and openness where new ideas and perspectives are welcomes, heard and considered.
Under Armour Technology Disaster
Technology failures in business organizations result in negative impacts on time, resources and internal costs (Compuware, 2013). Similarly, such failures are related to lost productivity, decreased revenues and sales. Organizations that have faced such disasters also have been found to fail in meeting the service level agreements. External costs are incurred as such companies try to establish manual processes or temporary systems for correcting the failure. The direct impacts are normally absorbed by the products, operations, sales and marketing. The biggest cost to businesses after a technology disaster is usually experienced at the operational level of an organization. At the operations department, sales suffer the greatest heat as executives report lost sales or errors in order fulfillment. Similarly, company managers report that such failures affect products through causing substantial downtime. Nonetheless, the most expensive effect of a technology disaster relates to products recall. Besides the shorter effects on costs within a business organization due to technology performance failures, there are considerable long-term effects on a company’s financial health or position. Such an organization can suffer a loss or drop in market share plus a loss of brand equity due to such technology failures.
An organization should place the factors discussed above when introducing and implementing a new technology to ensure successful results. Moreover, a successful technology strategy plays a key role in a business productivity and performance. This is primarily because a new technology can help in increasing the speed within which manufacturing of products occur and ensures quick delivery of services or products to the end users. Other technologies also ensure production of high quality products, which are actually the primary issue driving investments into technology in modern firms. Occasional technology issues such as those that occur few times within a week or daily represent the greats risk or threat facing investments in technology (Compuware, 2013). In spite of proactive measures to address issues of technology failures, most executives state that failure frequencies have remained constant or at an increasing trend.
Companies that have suffered technology disasters in the past have, the majority of organizational managers confirm that technology failures demands for additional investments in efforts to resolve technology matters. Among the most frequent and immediate actions companies take in resolving the issue include buying or upgrading the new hardware or software, hiring an external consultation firm or increasing the IT staffing. In spite of such efforts in resolving technology matters when technology failure occurs, most companies consider it essential to inform or communicate the matter to their clients. Some companies that have suffered technology failure are forced to start the production process all over again while also revalidating the manufactured products especially because of regulatory requirements. According to Compuware (2013), this is an extremely expensive venture for companies that really shake their financial ability.
Under Armour’s technology failure has for long been blamed for the US speed skating team inability to deliver, in spite of the high expectations. Under Armour teamed up with Lockheed Martin to develop the ‘Mach 39’. The company promoted this new developed product as the fastest suit for speed skating in the whole history. Nevertheless, the technology used in developing this new suit has been associated with a US-based athletic team failure. ‘Mach 39’ has been considered a total failure by the end users, which has placed the company’s technological capabilities in question in relation to whether it can help improve the professional athletes’ performance (Moskowitz, 2014). Due to this failure, Under Armour has suffered greatly impacting negatively on their stock price, especially because the failures occurred on their playing field. End-users complained on the effectiveness of the newly developed product. Speedskaters complain that the newly developed skating suit was of poor quality because it was extremely tight making it difficult for the skaters to breathe. According to them, the vents placed at the back of this suit, which was designed for the purpose of releasing heat has been creating drag thereby preventing skaters from preserving the correct form (Moskowitz, 2014). Similarly, it was noted that the speed skating team did not test the new skating suit before using them in the Olympics. Further, the team had trained in Italy in a high elevation, on an ice different what was found where the Olympics took place, Sochi. The team coach also expressed some concerns relating to a similar suit developed three years previously, which was found ineffective since it slowed down skaters by creating drag.
According to Moskowitz (2014), Under Armour’s performance and stock has suffered greatly since the occurrence of this technology failure. Although this has been found to be a temporary occurrence that immensely hurt the firm’s stock price, it has provided an opportunity for the sideline investors to invest within a high-growth firm at a slightly discounted rate. Under Armour’s smaller size has made it susceptible to diverse economic setbacks while also incapacitating the company to provide dividends. For this reason, most investors have always preferred investing with Nike rather than Under Armour.
Sochi Games created a very negative/bad image concerning Under Armour’s technological ability, which has had bad implications on their business in terms of consumers trust and confidence on their products. This sports apparel company had spent countless hours developing the high-technology aerodynamic suits for racing for the purpose of improving the performance of the US-based speedskating team. Although the company intended the technology intended to enable the team-members become victorious in the skating game, none of the skaters has succeeded (Peters, 2014). The failure was blamed on the new skating suits developed by Under Armour because it interfered with the speed of skaters such that the players felt like they were struggling with the suit(fighting the suit) in order to maintain the right form. Under Armour had hoped to focus their attention on setting a record in the athletic field, but the failure came as extremely bad news since it nearly destroyed the company’s reputation as the worst athletic-product producer in history (Peters, 2014). Indeed, this was not what the company envisioned when signing to work with the skating team.
Sports serve as a big marketing tool for firms such as Under Armour. Such companies can generate substantial rewards from prominent associations with popular or successful athlete. When an organization has some strong affiliations with a successful athlete, consumers tend to associate the company’s product with the athlete’s success. For this reason, businesses can use Olympics as a strategy to demonstrate their great innovative capabilities to the world. In fact, companies do that with the aim of showing their technology cutting-edge (Peters, 2014). This was what Under Armour hoped to achieve through their ‘aerodynamic racing suit (Mach 39). The product had been tested within wind tunnels and its design was based on great contributions from Lockheed-Martin Engineers. The results, unfortunately, were on the contrary with the product becoming an object of derision and mockery, which made Under Armour appear inept rather than innovative. The company, therefore, is trying the best way possible to fix the problem of the substandard suits. According to Peters (2014), the company has tried without success to win back their public relations war.
Based on the above case, it is important to assess what led to the technology disaster experienced by Under Armour. To begin with, the new technology did not seem to interact well with the company’s culture (Waheed et al, 2010). Under Armour’s culture has always been based on excellence and quality of their products, but this was not the case with the skating suit. The product never met the standards that aligned with the company’s culture. Similarly, this failure could have been caused by the lack of involvement of the users, both employees and customers. Engaging the users would have prevented the great resistance to the new product since the users would also identify with the product and appreciate its capability. Moreover, probably they would have contributed ideas to improve the product or develop a better quality product. Users’ participation is extremely critical for any technology development and execution to be successful. Besides, embracing contributions from the users also helps in preventing resistance to the new product as it is in the case of the skating suit, Mach 39.
Commitment is similarly an essential element in ensuring successful technological projects (Waheed et al, 2010). Commitment must generate from all organizational members including the executive. Under Armour does not seem like it engaged total commitment in the development of the new technology. This is because commitment requires doing all the essential things in the entire process of developing, installing and using the technology to offer the required solution to an organizational problem. Under Armour anticipated to market their company’s offerings through developing a technology that would enable speedskaters have the best skating experience while also becoming successful. Such efforts would boost the company’s reputation as well as improve their public relations. Nonetheless, this was not achieved because the technology became a disaster to the company’s business making the company loose greatly in relation to PR and image. If all company members were fully committed to this project, they would have discovered any aspect that interfered with the quality of the product to rectify accordingly prior to releasing it to the market.
Under Armour needs to re-assess their planning processes for technology projects and make the necessary amendments to ensure every important bit of a strategy is addressed effectively for successful results (Vaughan, 2007). Planning must be within a vision, objective and goal that a company intends to achieve upon the execution of any strategy including technology. Based on the Under Armour’s case, it seems the technology disaster got them by surprise. The company had not anticipated such a failure would occur, but they were confident the newly developed technology would increasingly market their business even to other consumers. However, in every organizational project, it is critical to consider and reflect on the possible risks a certain undertaking may face. A risk analysis prior to starting a technological process enables an organization to plan ahead and incorporate some mitigation measures. Under Armour failed terribly in this respect and that is the reason their stock, stock price, image and PR were greatly hit. From the look of things, most consumers appear like they do not have trust or confidence with the company’s products anymore. In fact, the company has been very aggressive in trying to win back their company image but the results have not been very fruitful. For this reason, it is recommendable for any business organization intending to introduce or develop a new technology to take into consideration all the critical factors to prevent such technological disasters that can immensely threaten the survival of a business.
The above work has provided a detailed analysis of two different scenarios, involving cases for successful technology (Nike) and technological disaster (Under Armour). The discussion has demonstrated that successful technology initiatives must incorporate a number of factors for successful results including proper interactions between the technology and the company culture, commitment of all people in an organization (especially the senior management), developing measures of preventing resistance to technology, risk analysis, user participation and proper planning. Lack of such elements when introducing a new technology can lead to technological failures like in the case of Under Armour.
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Moskowitz, D. (2014). What do US Speedskating Failures say about Under Armour? Retrieved from http://www.fool.com/investing/general/2014/02/19/what-do-us-speedskating-failures-say-about-under-a.aspx
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Peters, J. (2014). Is the Under Armour Speedskating Suit the Worst Product Placement in Ports History? Retrieved from http://www.slate.com/blogs/five_ring_circus/2014/02/14/under_armour_mach_39_speedskating_suit_the_worst_product_placemen
Vaughan, P. (2007). System Implementation Success Factors: Its not Just the Technology. IT Management Journal, 1(1):1-19.
Waheed, S., Khalid, M., & Hussain, T. (2010). Factors that Lead Organizations to Achieve Business Excellence. Journal of Quality and Technology Management, 6(1):39-55.
Weiss, J., & Anderson, D. (2004). Aligning Technology and Business Strategy: Issues & Frameworks, A Field Study of 15Companies. Proceedings of Hawaii International Conference on System Sciences, 1(4):1-10.
Should all UK companies pay a living wage?
‘A living wage’ is a phrase that has become common in the recent past and quite a good number of people confuse what it means and the role that it plays in the society. This research paper begins by shedding some light in regard to this state of quandary, by giving a clear definition of what a living wage is, their purpose when implemented in life, in addition to locating the phrase alongside other techniques that can be used to solve issues such as low pay, or rather minute earnings or wages. First and foremost, the paper discusses the difference and relationship between a minimum wage and a living wage, and then further explores the link between a living wage and in-job benefits. Deeper into the paper, discussions in regard to major economic principles associated with the subject, the difference between minimum and living wages, in addition to the relationship between demand and supply of jobs or labour and market wage rates in the United Kingdom (UK) are discussed. On the second part, the research paper discusses some ethical values that relate to living wages that includes the responsibility of business, including the understanding of the difference between social verses private costs and mentioning Milton Friedmann’s arguments on the responsibility of business. Additionally, the paper discusses the relationship between pay and performance, plus motivation and productivity, and then highlights some major findings associated with the research. The paper then concludes that all companies in the UK should pay living wages to employees based on an agreement or contract signed between them and their employees.
2.Economics: The Difference Between a Living Wage and a Minimum Wage
A living wage is clearly different from a constitutional minimum wage. While the process of working out the minimum wage may encompass giving a consideration of the pressures that low-paid workers experience linked with the cost of living, this is less important when compared to the degree of attention given to the current conditions of the labour market (Pollin & Stephanie, pp.12-76). A minimum wage refers to the maximum wage level that is thought to be reliable with evading major career losses in the least paying companies or divisions, regardless of whether most companies in those segments are able to have enough money to compensate employees with much higher pays. This implies that a minimum wage is constitutional, and it is compulsory that companies pay workers an amount that is not less than this set figure in the constitution. These particular considerations have been major to the process that is used by the Low Pay Commission (LPC) of the UK in determining the rates of National Minimum Wage since 1999 (Harford, n.p).
A living wage is mainly different because it is a phrase that is used to make reference to the rate of wage that is essential to provide employees and their dependents (families) with a fundamental but satisfactory, acceptable, adequate and tolerable living standard (Harford, 23; Pollin & Stephanie, pp.12-76). This implies a voluntary wage rate or rate of pay, usually calculated hourly, to help employees that are paid little or low amounts to afford a necessary or basic living standard. This least standard of living is defined socially, and thus varies from one place to another and with time. It is usually explicitly associated with other social objectives such as the realization of caring obligations. A living wage generally focuses on the responsibilities of employees beyond the working environment, for instance, as members of a particular community and as parents to families, and demands for a wage rate that will guarantee that employees are not forced to work overtime with an intention of having a satisfactory income. The possible effect on employment or the impact on employers is given minute, if any, thoughtfulness while calculating it (Levitt & Stephen, 47).
These ideological differences help to give a clear explanation of the various ways through which a minimum wage and a living wage are sophisticated. In the United Kingdom, paying a living is usually voluntary and is more than often adopted by companies (employers) after a negotiation process or a local or domestic campaign. This gives employers, who have a feeling that they cannot meet the cost of introducing living wages without losing employees, an opportunity to refuse the commitment of paying such (Levitt & Stephen, 76; Sloman & Dean, 101). It is therefore the nature of living wages to be fragmented and partial. Conversely, minimum wages are compulsory across the world, even though most companies have exclusion, through law or legislation at the local or national levels.
- The relationship between Demand of jobs and Wage Levels
- Demand for Labour: Labour as a Derived Demand
On top of making decisions associated with pricing and output, a company must similarly determine the extent (how much) of each input it is supposed to demand. Labour and capital are the most common inputs that any company can demand amongst others (Nordlund, 85). The supply and demand for labour are determined in the labour market by its participants, who are basically employers and employees. As companies demand for labour from employees in exchange for wages, workers supply the same in exchange for wages. What a firm finally decides to pay an employee or the additional cost that a company is ready to forge as a result of hiring an extra employee is referred to as the market wage rate (Sloman & Dean, pp. 32-46).
Employees are often required for the output, which they are expected to give or produce. It is said that labour, when considered as a factor of input, becomes a derived demand. When companies experience or see an increasing demand for their services and products, they will be forced to employ additional labourers or workers, thereby increasing the demand for labour (Pollin & Stephanie, 67). Since demand would determine the degree of supply of any product, or service, labour can be categorized as a service and thus the more the demand for labour, the larger the supply base since most workers would report to a company that is in demand of more employees. A direct and linear relationship, therefore exists between the degree of supply for labour and the demand for the same (Nordlund, 34).
- Demand for Labour and The Market Wage Rate
An inverse relationship usually exists between the demand for human labour and the market wage rates (Sloman & Dean, 113). This essentially because a living wage is a payment that is done to the employee, and since every employer will have to pay a salary, including both living and minimum wages to every additional labourer, they tend to shy away from additional costs (Levitt & Stephen, 50). If the market wage rates are high, it would imply that it would be more expensive or costly to hire (than fire) any extra labourer or employee. In the event that wages become lower, sources of labour or labourers would become cheaper than making use of or committing capital (assets) equipment. Consequently, it would become affordable and more attractive for companies to hire additional employees, thus increasing the demand for employees (Mazumdar, 191). It is imperative to note that most companies are interested in maximizing their profits, as such, they will make use of whatever factor of production (whether capital or labour) to realize this provided that the factor chosen realizes this objective with close to maximum efficiency and for the lowest or least possible expenditure or cost.
- Marginal Revenue Product
Marginal Revenue Product, similarly abbreviated as MRP, is a hypothesis that is linked with wages and it is used to describe a scenario where employees are compensated in regard to their MRP (Marginal Revenue Product) to the company under consideration (Mazumdar, pp. 190-193). The theory of Marginal Revenue Products postulates that the degree of wage differences originates from disparity in regard to the productivity of labour and the value attached to the output that a particular labour input gives or produces. The theory of Marginal Revenue Product is founded on an economical, competitive, and aggressive labour market and the hypothesis depends on various assumptions that are ideal (Mazumdar, 199). In actual sense, most supplies or sources of labour display imperfect features, which could as well be considered as a factor in determining the possible reasons for disparity in terms of payments or wages in occupations (Mazumdar, pp. 190-197).
Some of the assumptions that the MRP theory depends on include, but are not limited to:
- The generalization that all workers are the same or homogenous,
- Companies have no purchasing power when in demand of employees,
- Trade unions are non-existent,
- The degree of productivity that each employee gives can be measured clearly, and that
- The labour supply is purely (perfectly) elastic. In this given regard, the theory suggests that employees are geographically and occupationally mobile, and face the possibility of being hired at the same or constant market wage rates.
MRP particularly measures the disparity or difference in the total revenue that a firm realizes when it sells the product or output that is given by a specific additional employee. As such, it can be measured using the formula:
The Demand and Supply Curves of Labour
LD is an abbreviation for Labour Demand
Making reference to the diagram on the left, it is illustrated that there exists a fall in the market wage rate from point W1 to point W2. As a result of this drop in the market wage rate, the company is likely to increase its employment capacity from point E1 to point E2. The company undertakes such an action because the cost of hiring additional labour has become relatively cheaper for a particular degree of productivity, as compared to other input costs. A possible rise in the market wage rate from point W1 to point W3 is likely to cause a reduction in the demand for labour, or a contraction in the demand for labour.
- Shifts in the Marginal Revenue Product of Labour
The MRP of labour will rise when there is a rise in the productivity of labour, and similarly when there is a rise in demand for the company’s output, which results in hire prices thus raising the value associated with products given by this [articular employee (s) (Mazumdar, pp. 190-197). The diagram illustrated on the right hand side helps in illustrating how this market feature is likely to cause a noticeable shift in the demand curve for labour. For a specific market wage rate, ‘W1’, a company that maximizes its profits will hire additional employees, as such, the sum total of employment levels in the labour market will increase.
- Ethics: The Responsibility of Business
Ethics implies a division of knowledge that is associated with moral values (DesJardins et al, 23). In other words, it is a term that is used to represent the moral principles that govern an organization, a group of people, or a company in this given context. Morality would mean doing what is right, and knowing what is wrong. In the context of businesses, companies have responsibilities that they owe to all stakeholders, shareholders, its clients, employees, and the society at large (Bowie, 124). For purposes of coexistence in an environment or a given locality, a company must undertake certain activities that benefit all parties that interacts with it in one way or the other, and this is referred to as a Corporate Social Responsibility (DesJardins et al, 23; Schneider, 191). For instance, a company that manufactures agricultural chemicals has to do everything within its reach to avoid polluting the environment, employ people from its locality, while at the same time make sustained profits (Crane &Dirk, pp. 10-51). Similarly, a company cannot just increase prices to whatever amount that its shareholders desire with an intention of maximizing its profits without considering the affordability of the product, or taking into consideration inflation rates (Boatright, 270). This is where the subject of doing the right or wrong comes in, and a company has to be identified with a specific value or principle that will encourage sustained production. In light of this discussion, it is clear that a company is charged with the obligation of ensuring that all parties that interact with it, either directly or indirectly benefit from its activities (Corporate Social Responsibility). Imperative to note, however, is that there are costs that the company will have to incur when meeting this obligation such as social costs (Bowie, 31).
A social cost, under economic definitions, is the expenditure that a company incurs as a result of its activities, or a change in policy towards the society (Turvey, pp. 309-313). It includes both private and other external costs, third party impacts and effects. Private costs that companies incur are not always equal to the total cost to a society of a particular activity, product, or service. Thus, the difference in amount between a social cost and a private cost is the external cost. For a company, a private cost includes the costs that the company pays for purchasing capital equipment, hiring labour, and buying raw materials or any other inputs (Turvey, pp. 309-313). For as much as this cost can be looked at from the company’s side, it is significant that the same be viewed from an end consumer’s point of view. Contrarily, external costs are not included in the income statements of a company or in the decisions made by clients, however, they remain part of the costs to the society, not considering who incurs the loss (pays for them) (Turvey, pp. 309-313). Social costs include both external and private costs to a specific society, which normally arises from the manufacture or consumption of a service or good (Turvey, pp. 309-313).
Applying these principles to the subject matter, a company may decide to avoid paying for the cost of buying an air pollution control machine or equipment, which would mean the cost incurred is passed to the society in terms of harm or health hazard. Morally, this is wrong because the company causes the pollution and should control it instead of maximizing its profits. Considering the private costs, a company has the responsibility of paying its employees a wage that is fair or acceptable to enable them to live a standard lifestyle (Turvey, pp. 309-313). Failure to do this would mean the company is evading its responsibilities. Milton Friedman argued that the social responsibility that a business is charged with is to make profits. According to his statements, “The difficulty of exercising ‘social responsibility’ illustrates, of course, the great virtue of private competitive enterprise — it forces people to be responsible for their own actions and makes it difficult for them to ‘exploit’ other people for either selfish or unselfish purposes. They can do good — but only at their own expense (Laidler, n.p).” This implies that companies should only take into consideration the interest of its shareholders to make profits and ignore the welfare of its service and product consumers, plus employees (Schneider, 11). This acts in contrary to the demands of Corporate Social Responsibility (CSR), and discourages sustained productivity and profitability which are essential to the survival of a business in any environment (Crane &Dirk, pp. 10-51).
The curve illustrates that companies that incur social costs experience high expenditures and low outputs. However, the marginal private cost curve illustrates a better use of resources.
- The Relationship Between Pay and Performance
The aggregate supply curve for labor illustrated above represents the wealth effects of raising wages. During the low income levels and increased (higher) wages, employees are induced to work better since leisure is made more expensive in regard to the income that must be surrendered to get it. As such, employees, substitute their work for leisure. With high income levels and increased wages, however, possible income increments that can be achieved by more work in reaction to a higher pay is not as much of value as the foregone leisure. Nonetheless, a market wage level would be reached beyond which employees will work less for better pays since they can uphold the same degree of contentment as before, or rather still amplify it, by means of minus labour effort. Typically, as employees become wealthier, they work less and take additional leisure (Heywood & Daniel, pp. 249-490). Thus, pay increments beyond some level, by additional improvement of wealth, will increase an employee’s desire for leisure with an amount that is way above what an opportunity cost for leisure can reduce (Heywood & Daniel, pp. 249-490). Laborers therefore work less as payments improve beyond some level, and the supply curve, ‘SS’, portrays a backward bend pattern as illustrated above. In this regard, the effect of wealth originating from higher wages on leisure activities offsets the switch, substitution or swap effect.
- The Relationship Between Motivation and Productivity
Motivation of employees is a necessity in improving productivity, as such the more they are motivated the better the production because they work with zeal (Mahy, François, & Mélanie, pp. 455-489). Increasing a worker’s wage is one amongst many factors that can be used to motivate employees (Heywood & Daniel, pp. 249-490). Since productivity is directly related to performance, the arguments illustrated above are applicable (Mahy, François, & Mélanie, pp. 455-489). As wages, improve the performance, productivity similarly improves up to a certain level. Beyond a certain point, the effect works to the disadvantage of the company as workers would engage more in leisure activities at the expense of working (Mahy, François, & Mélanie, pp. 455-489).
This research came up with findings on the subject of wages in that:
- A living wage is constitutional, while a minimum wage is voluntary.
- The provisions of living wages do not necessarily lead to displacement of workers.
- There is some degree of evidence that productivity improves with improved motivation of workers, commitment, and minimal employee turnover.
- Increased cost pressure makes companies look for efficiency and the need to save costs from other segments of the industry like evading social costs.
- There is some proof of ‘spill-over or ripple effects’ with an intention of maintaining pay disparities.
- Companies are not committed to meeting their Social Responsibilities.
- Decisions made in companies should take into considerations the consumer and producer perspectives.
- The companies pay different living wages.
- Conclusion and Recommendations
Based on the above findings, it is clear that social responsibilities are becoming significant to the management of a business. Companies incur costs, both primary and social, when providing a given service or product to a society to enable sustainable growth and development of the business. A business cannot survive without making profits, but at the same time meet the welfare requirements of its employees and product or service consumers. Since it has become an absolute necessity to incorporate the interests of all parties affected by the activities of a company, it is necessary that all companies in the UK pay their living rates because it is moral or fair to do so. The productivity of a company depends on its employees’ performance and demoralized or poorly paid employees would not work, consequently leading to losses and high employee turnover rates in the company. This way, the business shareholders would not meet their fundamental goal of making profits. In the same perspective, it is clear that disparities exist in regard to the acceptable living wages that are payable to employees. It would therefore be prudent that an agreement or contract be established between employees and employers that would state an agreeable living wage that would enable a mutual survival of both parties based on each parties survival. The contract would then be enforced by law to ensure that companies meet their responsibility.
With these recommendations, it is possible that some companies may retrench employees with an intention of limiting or minimizing the expenditure that would be incurred as a result of implementing a statutory living wage. Additionally, employees are likely to file several lawsuits with an intention of compelling their employers to commit with the new regulation. In order to minimize the possibility transnational migrations and disparity that exist in regard to the amount of living wage paid to employees, there should be an established national and international body that determines the amount, though based on the market conditions in the country under consideration. The United Kingdom should therefore have a national body that oversees, implements, and enforces all aspects of economics that are associated with a living wage.
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Background and Setting
Niuswise Media is a social media provider and a PR firm that offers communication and Public Relations services to its customers. The media was established on the backdrop of technological advancement in communication and aimed to tap the growing need for communication.
It seeks to establish a niche in communication market by providing public relations and communication service solutions to its clients at affordable rate.
Among the services the organization offers includes: Development and Business communication, Public Relations, Media and Corporate communication, Marketing and Branding.
It has a dedicated team of experts that provide tailor made business and communication solutions to its customers. Established in 2005, Niuswise Media continue to live an imprint in the media as it strives to redefine communication and the media
The conflict that I will discuss involves a feud leading to termination of an employee contract due to lack of cooperation by the employee.
The employee was contracted on 3 months renewal contact as a video producer, after a short while the employer saw that he was not fit to work as video producer noting that he required more exposure.
The bone of contention began when the employee was relegated to article writer with a role to generate post for the firm’s online media. This attracted a go slow on employee side and after a week’s time protest the employer cracked the whip and dismissed the employee on summary dismissal instead writing or giving the employee due notice or wages in lieu of notice as specified in contract. Thus the parties in this conflict are the employer and the employee with the employer’s lawyer.
- I choose the employee’s side.
- In this feud the Principled negotiation, (PN) was not used by the employee who was overwhelmed by emotions after he was summary dismissed instead he opted for Best Alternative To a Negotiated Agreement (BATNA).
How PN would have benefited the two sides
The Principled Negotiation could have been implemented by the two parties. Furthermore there are a number of benefits that the employee and the employer should have gained from the process.
- A glance look at the Principled Negotiation does rest on four principles as illustrated by Fisher & Ury (1999). This includes separating people from the problem, focusing on interest not people, inventing options for mutual gain, and finding best objective criteria.
- According to Harvard scholars by separating people from the problem, one is able to separate and identify the issues to be solved rather of the people in feud, also it will help one avoid emotion and get to root cause of problem not individual focus. This could have helped the party to avid mixing the issues and emotion like dislike, hatred, and hunger in the disagreement.
- Focusing on interest at hand rather not position, this could have enabled them to understand their interest and reach to a mutual agreement like ironing out the root cause of the problem for their benefit instead of just looking at the physically result or what is at stake. (Fisher & Ury, 2011)
- Through inventing options for mutual gain, this would have enabled the employee and employer to brainstorm in available options and solutions and come up with a conclusive or possible solution instead of wavering or taking hard stances that could have stalled the negotiations.
- Finally arriving at the best criteria always depends on the solutions reached. Hence this could have enabled them to ensure that the criteria they reach is principled with the set standards and that all parties get satisfied and ward off any disparities like feelings of being treated or deal struck with unfairness (Raiffa,2002).
Principled Negotiation here was not used in above feud though it could have been of benefit to both employee and employer as illustrated above.
Spangler (2003) notes that Best Alternative to a Negotiated Agreement (BATNA) is what one or a negotiator gets without negotiating or negotiations fail. Since my side opted to compromise after the summary dismissal so as to reach a consensus with the employer after it happen that he had remain with 2 months on his contract. Consequently, there was no possibility of reaching at Best Alternative to a Negotiated Agreement with the employer.
What I could have done
Being the principal representation of the employee I should have first called for Principled Negotiation with the employer of my client to solve the conflict amicably.
I n this case my client was dismissed abstract without writing in advance or in lieu notice and further there was late in payment of my client and this warrants explanation. Also my client felt shortchanged from video producer to article writer, this was the reason for his ‘protest’ leading to dismissal.
The decisions that I could have taken:
- First include understanding the problem by identifying key areas to address.
- Secondly after analyzing the problems, concerns are likely to emerge and this are what will be the objectives to make addressed in decision making.
- Third after identifying objectives, I would identify alternatives solutions available to my objectives that I tend to achieve and enable me exploit other avenues like if they fail or possibility of succeeding in getting enough information about the conflict (McCarthy, 1991).
- Also every decision has a consequence thus it is advisable to know the outcome if they will be good or damaging , whether there will be alternative to safe landing or will the choice be harmful to my client.
- I will also need to minimize the number of objectives by making tradeoffs so as to stand with a feasible objectives instead of pursuing divergent agendas, there is need to focus on one goal looking at it impact. Moreso with key goals in hand I will identify possible uncertainty I am likely to encounter during the negotiations and its impact. With uncertainty in place I will need to be a risk taker if any negotiation is to be achievable by my client. (Hammond et.al, 1999)
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Hammond, S.J, Keeney, L.R., & Raiffa, H. (1999): Smart Choices: A Practical Guide to Making Better Live Decisions. Broadway Books, New York.
Kaner., S. (1996).Facilitator’s Guide to Participatory Decision-Making, New Society Press, Philadelphia.
Raiffa, H. (2002) Negotiation Analysis: The Science and Art of Collaborative Decision Making Belknap Press. Cambridge, MA.
Spangler, B. (2003)”Best Alternative to a Negotiated Agreement (BATNA).” Beyond Intractability. Retrieved from http://www.beyondintractability.org/essay/batna
McCarthy,W. (1991). The Role of Power and Principle in Getting to Yes in Negotiation Theory and Practice.
In dynamic business environment, enterprises have to maintain a continuous pace for change to deal with the emerging competitors aggressively. Change is inevitable in the business world because without change, organizations would lose the competitive edge and fail to meet the increasing customer needs and requirements. I have chosen Wal-Mart for diagnosis of change needs for this assignment. Wal-Mart is the largest departmental store in the US. This paper will apply Kotter’s 8-step approach to changing Wal-Mart enterprise towards a successful perspective. John Kotter designed the eight-stage process to introduce a sense of change to the corporate leadership. Change is considered paramount for solving problems of the day. Conventional methods of change results into a return of approximately 20% per dollar whereas modern approaches to change results into returns of approximately 80% per dollar that is more appealing to the investors and shareholders (Cohen, 2005). Since Wal-Mart has not optimized the modern transformation methods, a model for introducing change to its corporate culture is crucial to prepare the organization for change.
Wal-Mart store Inc is a multinational corporation with operating retail stores across the world. It was incorporated in 1969. It operates in 3 segments; the Wal-Mart international, Sam’s club and Wal-Mart U.S (Brunn, 2006). The company has established its operations in all the 50 states in America and 26 countries globally. It has fully owned subsidiaries in Brazil, Japan, Argentina, United Kingdom, China and Canada. Further, it has majority owned subsidiaries in Central America, Mexico, China, Chile and some parts of Africa. The company rose from a regional store to a global giant transforming the lives of numerous communities and customers live better lives. Wal-Mart concentrates on providing seamless shopping experiences to its customers whether online, on mobile devices or through their stores. Today, Wal-Mart is the largest retailing supermarket in the world whose model is emulated by many emerging retailers both in the US and other areas across the world. Wal-Mart deals with six merchandise units including grocery merchandise, entertainment, hard lines, health and wellness, apparels and home furnishing merchandise. The Wal-Mart US also provides financial services such as wire transfers, check cashing, bills payment and money orders (Fishman, 2006). Wal-Mart shares trade in the New York stock exchange and other regional and international financial markets. Today the share is trading at USD 84.62 at the New York Securities Exchange. Wal-Mart is recognized globally because it is the 3rd largest public company. It has over 8500 stores operating under 55 different names across the world. It is the largest retail stores in the world with over 2 million employees’.
The perception about change being the only thing that is constant in the world is relevant even today. Change is a common denominator particularly in the world of business. New ways such as project-based working, staying competent, technological improvements meant to drive ongoing changes in the most effective manner are necessary. Whether it is necessary to take into account a small change in processes or transforming the whole system of the organization, it is common to feel inconvenient and intimidated by the degree of the problem. To succeed in reacting to innovation, growth prospects, technology, culture, leadership and cost structure in the organization, change is inevitable (Cohen, 2005). Numerous theories and models are available to manage change in organizations that demonstrate clearly how to implement change, but for the purposes of this assignment, we will focus on Kotters 8-step model for change.
Kotter developed the model to introduce change and innovation sense to the corporate leaders. The model comprises of the following identifiable stages; developing sense of urgency, establishing a guiding coalition, creating a strategy and a vision, communicating your change vision, empowering the employees’ for broad-based action, generating the short-term wins, consolidating the gains and driving more change and last but not the least anchoring new strategies in the organization culture.
Utilizing the Kotter’s 8-stages approach to bring change in Wal-Mart
Step 1- building a sense of urgency for change
Due to the intensive competition at global level resulting from reduced merger activities and rising economies, the need for change has skyrocketed. The biggest challenge involves understanding why companies are not pursuing the change with some sense of urgency in order to accomplish organizational goals. A different perspective for business is crucial so that the purpose of the company should not be limited to making money but providing value to the society and customers. If the organization serves its customers well, it will generate revenue and profit. The leadership of Wal-Mart enterprise should focus on serving more customers to enable the company grow progressively. To develop some sense of urgency necessary for change, Wal-Mart should be committed to allocate resources optimally for growth and execute strategies to develop a portfolio of change for both long-term and short-term growth. Absence of these approaches indicates depending too much on the existing products and ineffective performance. During hard economic times, Wal-Mart management should turn to the basic idea that business and the community needs each other (Kotter & Rathgeber, 2006). To succeed, the company requires support from the community for infrastructure and employment and the community needs the company support for new solutions and employment opportunities. Sustainable growth creates a better company and community relationship that sours if the firm focuses purely on profit without focusing on the growth of revenue. The leadership of Wal-Mart should articulate the fundamental strategies for sustainable profits growth and the importance of change in accomplishing business objectives. This way, it will create some sense of urgency for change.
Stage 2-Developing a guiding coalition for change
A guiding coalition is a recipe for initiating change in the behavior of employees’. The change team organized to drill down change at Wal-Mart should represent the company not just the management. It should consist of powerful people without ego, people from all levels of management from both genders who embrace culture and diversity. A more diverse coalition is likely to be innovative in its strategies to introduce the anticipated change (Gupta, 2011). The guiding coalition should demonstrate enthusiasm, care for the people, company’s success, tools and methods applied. During this internet era, Wal-Mart guiding coalition should consider including outside members including consultants, associates, professors and professional bodies in diverse or related industry. The coalition should also utilize the social media platforms for spreading change message to supply chain, stakeholders and employees (Gupta, 2011). The guiding coalition should realize that employees make change happen in an organization with their support. Care and empathy for employees is necessary for building trust. Coalition members should acknowledge that employees have to be inspired to become innovative. When an organization is run for short-term gains, the environment is destructive and competitive because employees fear being laid off. Consequently, employees show up to pass the time, become nub because of stress since nobody is mindful of their ideas. However, if the company is run for long-term growth, failures are acceptable, employees’ develop a risk-taking culture and the environment becomes friendlier (Gupta, 2011). Company’s drive to change should persuade the employees’ that change is crucial for the success of the company as well as their personal growth. Drive to change should be an interesting experience that is worth sharing with families and friends.
Stage 3-designing a strategy and a vision for change
For Wal-Mart to develop a vision, it should think like a newly formed company all over again. The company should adjust its strategies and vision to meet the evolving customer needs and existing market conditions. The company management should review the existing business models including internal competencies, processes, product mix, resources and services. The review will allow the management to learn the trends in technology and growing customer and consumer demands. For Wal-Mart, the fundamental strategies should be profitability, growth and sustainability. This will require a combination of change and acquisitions to ensure that growth is attained profitably by utilizing resources optimally. Sustainability requires developing a portfolio including long-term and short-term changes (Gupta, 2011). Such a portfolio will allow Wal-Mart management to allocate financial and intellectual resources for change. The management should realize that change can be achieved internally by improving the current products and processes. The corporate managers should design a futuristic portfolio of changes and vision prior to formally launching the change initiatives.
Stage 4- Communicating change vision
Clearly communicated visions lead to organizational success. For Wal-Mart, frequent and clear communication of the corporate vision is crucial. There are numerous ways a company can communicate its vision succinctly such as through pocket cards, emails, story boards signs and posters or bulletin boards. Any Wal-Mart vision for change should be straightforward without apple pie jargons in order to vividly benefit all the stakeholders without inconsistencies. The best method of communicating a vision is to lead by example. The vision should be in a manner that challenges intelligence of the employees as well as demanding for collaboration from all stakeholders. Accomplishing corporate vision requires making decision quickly and accepting experimental failures. Communication of change vision should clearly allay employees’ doubts and instill confidence to all (Gupta, 2011).
Stage 5-Empowering the employees for broad-based change
Empowering employees involves making them responsible for company’s accomplishments, educating them and listening to their ideas. For employees to become intellectually engaged, Wal-Mart should give them more authority to the make decision related to change in the company. To deploy change in the most pervasive, profitable and predictable manner, the management should consider giving employees incentives. Incentives in this sense mean eliminating bureaucratic procedures and policies, communicating openly. Incentives also include encouraging reflective and thing minds through activities such as games. Wal-Mart Company should invest in its employees by training them on innovation and creativity concepts, tools, methodologies and techniques (Cohen, 2005). Further, employees should be exposed to launching of innovative products process. The management in different stores should develop in-house change competencies by setting up innovation laboratories. Checks must be established in order to develop a change routine. Employees’ empowerment should also involve supervisors who are supportive of the change practices in the Company.
Stage 6-Generating small and short-term wins for the change
Small and short-term wins will occur at Wal-Mart if the company’s management launches innovative products, embraces new cultures and ensures traceable financial impacts. The company must set up a system and process of dealing with surprise and expected elements of change (Gupta, 2011). Change comes with some chaos and the organization needs a high level of reproductively. Wal-Mart has to change from its existing rigid structure and shift to a more flexible structure that offers innovative and customized solutions as demanded by customers. It is possible that while working on short-term wins for the change, some of them are unsuccessful. Initial failures are necessary since they provide lessons of what needs to be avoided. Short-term wins are a source of visible evidence that change is worthwhile because they justify the desired changes in the company. Experiences from small and short-term wins for the change will strengthen Wal-Mart management to drive change throughout the company. Enthusiastic and well-informed company executives will provide more transforming and charismatic leadership for pursuing change (Gupta, 2011).
Stage 7-Consolidating the gains and driving more change
Publicizing the company’s success will influence employees to join the change bandwagon. Success is a good way of inspiring employees. A major challenge during selection of change projects involves collaboration by the various departments. The management of Wal-Mart should accelerate the drive for change after the short-term wins by fostering teamwork. To ensure that changes introduced are sustained for years, the Company should redefine its culture accordingly. Corporate procedures and policies, vision, informal rules, work environment, behaviors, organizational structure and rules should be amended to perpetuate change. Innovation certification and training should be utilized in acquiring change expertise (Gupta, 2011) .Periodic reviews, measures of change and action plan for nurturing change at departmental levels should be deployed and developed. This is the stage where change becomes a standardized procedure throughout the company.
Stage 8-Anchoring new strategies in the organization culture
The changing technology and customer demands create expectations for a dynamic and enjoyable experience. Wal-Mart has the responsibility developing portfolios of change for both long-term and short-term benefits. Anchoring change is crucial for perpetuating a culture of change (Gupta, 2011). The company should reinforce change in every step through environment, expectations, activities, decisions and measures. If Wal-Mart establishes fundamental strategies of sustaining profitable growth through change, infrastructure will grow significantly nurturing the culture of change continuously. From orientation of new employees to the exit interviews, the company should emphasize change to maintain the change awareness inside and outside the organization (Gupta, 2011). Once this is achieved, the society and company’s stakeholders will expect change. Without anchoring change in the corporate culture, this will be difficult to deliver.
In conclusion, the management of Wal-Mart is not quite sure how to pursue change. The reasons behind their change averse nature includes little confidence in change processes, long product development period, measures, little accountability for change among other reasons. As a result, the company provides limited incentives, questions investments channeled to driving change and has no plans to handle failures. There is a need to address the management’s inability to manage change and the little involvement of employees across the board to speed up change process. The ultimate goal is to sustain profitability, progressive growth instead of aiming at profits alone. The drive for change provides the company’s executive with a proven framework for executing their strategies successfully. The paper has explored in details the need for change at Wal-Mart Company and suggested the ways of addressing the change needs by utilizing Kotter’s 8-steps strategies to change.
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