Case Study

Executive summary

In this report, a case of Morgan-Moe’s drug stores will be studied. The company is suffering from a difficult economy situation, with stores being downsized and employees being dismissed. There is a huge problem concerning employee motivations. Therefore, the human resource team decided to change the management system, and they had conducted an experiment to test five newly designed programs. The outcome is analyzed based on sales revenues and employment turnover rate, and the most effective programs are selected accordingly.

At the same time, critical thinking is applied in this report. The process of the experiment is reviewed, and several factors are added into the consideration. Meanwhile, both practical and theoretical information is provided relating to the changing workforce, the importance of goal and directions, the construction of organizational culture, the employ involvement and empowerment, the changing resistance, as well as the justice and fairness of work place. Through these further analyses, a more comprehensive management system is suggested to Morgan-Moe’s drug company.

Background information

Morgan-Moe’s drug stores used to be the leading company in the retail industry with the firm owning hundreds of stores. However, there has been a dramatic declining in revenues recently based on a sharp decrease in the region’s manufacturing economy. The company used to consider high-margin items as their major product, but they have to switch their focus on low-margin commodities, and therefore the profit has been fallen rapidly. Out of frustration, the company has to cut down the number of stores, and dismiss the employees.

As the business going worse, there are some negative influences on the employees. Because of the insecurity of their jobs, employees had formed a pessimistic attitude against their daily work. Besides, the lack of advanced notice and communication, as well as the unsatisfied severance payments for departing employees, had caused the laid-off employees to have a radical emotion of angry. In this way, the working efficient of the daily operation was weakened, and the public image of the company has also been damaged.

To deal with the changes and to solve those problems, Jim Claussen, vice president of Human Relations, determined to set a new direction for the company, and the human resource management team decided to transform their performance management system. In order to come up the most effective management system, the HR team had come up with five options for the company, and each individual manager of the store is able to choose the most appropriate approach for their management purposes. An experiment had been conducted, and the results are analyzed in details in the following report.

Experiment approach

As mentioned above, there are five programs designed for this experiment (listed in the following table), and those programs can be considered as the variables. Program one is designed to be the same as the previous system, with sharing little or no information; program two and three provide employees with information that is controllable (sick leave) or uncontrollable (sales and inventory replacement); and program four and five engage employees into the decision making process with employees providing suggestions for a better performance.

Program No.
Content

Program 1

Continues to stay the course and providing employees with little to no information or opportunities for participation.

Program 2

Tracks employee absence and sick leave and shares that information with individual employees, giving them feedback.

Program 3

Tracks sales and inventory replacement rates across shifts

Program 4

Tracks the same information as Programs II and III. Managers communicate it in weekly bases, during which employees make suggestions for improving performance

Program 5

Keeps the idea of brainstorming, but doesn’t provide employees with information about their behavior or company profits To achieve a comprehensive analysis of this experiment, we need to identify what the independent and dependent variables are. According to Sechrest (1982), independent variables refer to factors of input which are able to be controlled, while dependent variable indicates the output or outcome which is determined by the dependent variable.

In this case, the independent variables rely on both the management and employee perspectives. Analyzing from the management perspective, the information sharing level, the empowerment level and management style will all have an influence on the outcomes. On the other hand, factors of employees should also be considered as independent variables. For example, the employment age, their positions in the company, the working condition or location will all affect the experiment results.

Our dependent variables focus on the outcome of those programs that we want to measure, and it can be classified as the average turnover rate, the sales profit, and the monthly staff cost time. Those dependent variables are determined by the independent variables, and the change of each independent variable will have an influence on the dependent variables and experiment outcomes.

Finding and discussion

The experiment was conducted within 299 retail stores, and the results are listed in the appendix. As can be observed, program four and five should be regarded as the most effective methods in generating revenues and reducing turnover.

First, we will focus on the revenue and cost aspects. As listed in the following chart, program one and two have a relatively low profit per month, which indicates that the sales revenue of stores using program one and two is lower than those applying program four and five. In other words, stores which engage employee into the decision making process are able to generate more sales revenues in general. It can be seen that employee’s suggestions could help the company to increase the profit and achieve a better performance.

Even though program four and five had generated the highest revenue during the experiment, they also caused the highest cost of staff time. On the other hand, since program one did not need to make any changes, there will be no staff cost. Staff cost means that the employees had to take some of their regular working hours into the information sharing and brainstorm meeting, so that the opportunity cost of those hours must be considered as well. Therefore, we need to deduct those costs from the revenue to get the net profit for each program. As can be seen from the following chart of net profit, program four and five still have a relatively higher profit of $9,580 and $11,250 than the other programs after remove the staff time cost from the revenues.

Another measurement is the employee turnover rate, which represents the percentage of employees who either quit or terminate their jobs. To maintain the experienced employees and to reduce the time cost of training newly recruited members, it is better for the company to keep a lower employee turnover rate. According to the experiment result listed in the following chart, program four and five have a relatively lower rate of employee turnover of 17% and 21%.

On the other side, program three has the highest turnover rate, following by program one. It can be figured out based on the results that a high level of employee engagement into the decision making process will have a positive influence to reduce the employee turnover rate. If the employee’s opinions and ideas are encouraged and respected in the company, they are more willing to dedicate themselves into their working process.

As analyzed above, it is obvious that methods four and five are superior to
the other methods, because they generated higher profits and lower employee turnover rates. On the contrary, program one is the least effective management system with regarding to a lower sales profit and a higher employee turnover rate. In this way, the company should be encouraged to modify their current management system, and systems like program four and five should be promoted to engage the employees into the decision making process.

However, there are some concerns regarding to the experimental approach. In this experiment, each manager was able to select the program which they think might be the most appropriate for the retail store. As can be seen in the following pie chart, almost one third of the managers choose program one which is to keep the status quo. Even though a relatively large number of managers choose not to change, it does not necessarily mean program one is a better solution. However, more than half of the managers are willing to bring changes into the organization and to offer empowerment to employees. Meanwhile, program four and five are approved to be the more effective methods based on the experiment results, so the majority of managers agreed with our conclusion.

Based on various management styles, managers would have different preferences, and therefore it is possible that the decisions were made with personal biases. In this way, the impartiality of the experiment would be negatively affected. To monitor the fairness of the experiment, a randomly assigned strategy could be recommended instead of the self-selection process. Critical analysis

Apart from the data and information that has been collected in this experiment, there are some other issues for the managers to consider. It is universally known that the world is continuously changing, and if a company wants to be the leading organization in the rapidly changing environment, it has to be adaptive and creative to fit into the new situation.

In this case, the manager had made his effort adapting to the current situation by designing the different programs. However, the requirement of diversified workforce (Langton, 2012) should also be seen as one of the new realities. In is undeniable that the employment of experienced workforce is more dependable than young workers, because they have accumulated more professional knowledge about the work.

However, in the current unpromising economic situation, the company might want to hire more diversified workforces. It will not only serve the different need of various customers, but also could generate more fresh ideas during the brainstorm meeting. Meanwhile, with diversified workforce, the employees will generally increase their skills and capabilities by sharing their knowledge.

Apart from adapting to the changing situations, the organizational goal and direction are also essential when making organizational decisions and motivating employees. Specific and achievable goals could improve employee’s performance and help the management process. According to Langton (2012), a well-designed company goal is able to provide a direction for employee’s actions, regulate their behavior and efforts, as well as increase their persistence during their working process. Meanwhile, goals and directions are also able to stimulate the development of administrative strategies, and it will dramatically increase the motivation of employees. Accordingly, the Morgan-Moe’s drug stores should primarily design a specific goal to direct the employment behaviors.

As Lencioni (2012) represented in his book, once a company has accomplished setting their mission and goals, which he refers to as the “clarity”, those directions must be emphasized and reinforced during the daily basis of the operation process. In other words, the tasks and jobs assigned to employees must be designed based on the major objective and goal of the company. Meanwhile, award and appreciation systems should be provided to employees to promote their motivations. Fairness and equity must be considered when offering employees rewards, and the rewards should be in alliance with organizational goals and personal performance.

In addition to organizational goals and objectives, organizational culture and value should also be created as a core factor within the organization. A satisfying culture could get employees to be engaged into the organization, and it will also have a positive influence in the employee’s job satisfactory level, which might lead to a higher level of motivation. As showed in the following chart (Round the Clock Resources, 2012), a sustainable organization should build up a solid system around an appropriate working culture, with other aspects constitute a framework guiding the business process.

At the same time, employment involvement and empowerment strategies must be implemented within the organization. Those strategies suggest a company to move some of the power from managing level into the general employee level, which indicates that employees should be inspired and encouraged into the decision making process. Based on Herzberg’s motivation-hygiene theory (Langton, 2012), employees should be given greater responsibilities and more power to plan and control their work, and their motivation would be increased.

As in this experiment, program four and five are designed with empowerment activities, they engage employees into the brainstorm meeting to communicate the current situation and to generate ideas and suggestions of what they can do to for a better development of the company. Judging by the results, it is testified that giving employees more responsibility is able to improve the sales profit, reduce employment turnover rate and increase the overall performance level of the organization.

When bring changes into an organization, not all employees are willing to embrace the transforming. There will be a resistance power caused by the fear of the unknown and uncertain future. As Torben Rick (2011) illustrates with his “change cycle”, employees will experience several stages before they finally accept the conditions.

During the changing process, it is significant for managers to have a clear communication with the employees, and the directions must be clear and precise, so that the employees understand the current situation and their expectations. Meanwhile, managers must be fair and impartial to maintain the organizational justice, in which way a satisfied working environment could be established, and the employees are trusted and they will be more committed to the organization. Conclusion and recommendation

According to the experiment results, program four and five are considered to be most effective because they are able to generate relatively higher net profits and lower employment turnover rates. It means a regular brain storm meeting is beneficial for the improvement of organizational performance and employment engagement. Therefore, managers should actively encourage employees to be involved into the decision making process.

However, considering the current business situation, the managers should also embrace more diversified workforce, and different kinds of employees should be hired. Besides, a clear goal and direction should also be created by the management level to guide the behavior of employees. Apart from that, a favorable organizational culture should also be established to form an instructional working environment. At the same time, actions of employ involvement and empowerment should also be taken to increase motivation and employment responsibilities. During the management process, organizational justice and fairness should also be paid attention to, so that employee will be committed to the organization.

1. Sickle cell disease is a group of disorders that affects hemoglobin, the molecule in red blood cells that delivers oxygen to cells throughout the body. People with this disorder have atypical hemoglobin molecules called hemoglobin S, which can distort red blood cells into a sickle, or crescent, shape. SCD affects millions of people worldwide, particularly those with African, Spanish, Mediterranean, and Indian ancestry.

Some 120,000 infants are born with SCD every year worldwide. In the United States, approximately 1 in 500 African-Americans and 1 in 1,200 Hipic Americans are born with SCD. Some 2 million Americans including about 10 percent of the African-American population carry one gene for SCD, the “sickle cell trait.” 2. People without a spleen or those who have a spleen that is nonfunctioning are at an increased risk for developing infections, these infections can be fatal if not treated immediately.

3. Anemia resulting from a failure in blood cell

Anemia associated with an excessive destruction of red cells

4. SCD can be very painful and to help control the pain the physican would need to know how much pain the client is in and if he is in pain did he want something to help control the pain.

5. Yes V.M. is be adequately oxygenated.

6. V.M. low Hgb could be causing the S.O.B. usually shortness of breath with anemia is caused upon exertion so I think there are some other underlying conditions causing his SOB.

7. Increased pulse, crackles in the lungs, increased B/P, increased respirations/respiration pattern.

8. I would expect the MD to do a chest xray, place client on strict I&O, give him lasix, admit for observation, order teds, place on low sodium diet.

9. Normal
NA 137
K 4.9
WBC 4.3
Platelets 208

High
Bun 27

Creatinine 2.7- problem with the kidneys or kidney function
Phospate 4.7- controlled by kidneys, evidence of a kidney problem Cl 110- can be caused by certain kidney disease

Low

CO2 16 Changes in your CO2 level may suggest that you are losing or retaining fluid, which causes an imbalance in your body’s electrolytes.CO2 levels in the blood are influenced by kidney and lung function. The kidneys are mainly responsible for maintaining the normal bicarbonate levels. Ca 8.2- kidney decease can cause a decrease in Ca

HBG 7.8 can be caused by Kidney problems, SCA, bleeding etc
Hct 20.9 can be cause by anemia, destruction of red blood cells and over hydration

10. Furosemide – Furosemide is a loop diuretic (water pill) that prevents your body from absorbing too much salt, allowing the salt to instead be passed in your urine. Furosemide treats fluid retention (edema) in people with congestive heart failure, liver disease, or a kidney disorder such as nephrotic syndrome. This medication is also used to treat high blood pressure (hypertension). Methylprednisolone – is used to treat conditions such as arthritis, blood disorders, severe allergic reactions, certain cancers, eye conditions, skin/kidney/intestinal/lung diseases, and immune system disorders. It decreases your immune system’s response to various diseases to reduce symptoms such as swelling, pain, and allergic-type reactions. This medication is a corticosteroid hormone.

Ceftriaxone is an antibiotic used to treat a wide variety of bacterial infections. This medication is known as a cephalosporin antibiotic. It works by stopping the growth of bacteria. 11. Sickle Cell Disease clients often receive blood transfusions on an ongoing basis, making it more important for the them to receive the best match for their bodies. When they receive blood that is not the best match, their bodies may begin to slowly reject the blood.

If they cannot receive blood safely, they may die. It is important that the labs knows it is a sickle cell patient, follow all facility protocols ( monitoring Bp, temp, pulse, as recommended), monitor the patient closely for signs and symptoms of rejection. 12. Often SCD patients are looked at as drug seekers and are not provided with the pain relief that they need. It’s important to remember not to stereotype patients and believe what they tell you their pain level is.

13. Have him follow up with a cardiologist about his heart murmur, incourge hime to work on his B/P control with diet and exercises. Education on what can trigger Sickle cell crisis temp, smoking etc. Encourage a low sodium diet, weigh daily if more than a 2 lbs gain in a day notify his physician, Teach causes of fluid volume excess and/or excess intake to patient or caregiver. Provide information as needed regarding the individual’s medical diagnosis (e.g., congestive heart failure [CHF], renal failure). Explain or reinforce rationale and intended effect of treatment program. Identify signs and symptoms of fluid volume excess. Explain importance of maintaining proper nutrition and hydration, and diet modifications. Identify symptoms to be reported.

The case study is about the challenge in the classroom in my working experience. It is about two twin boys who were in my class, whereby I was the class teacher. The boys were really bullies, rude, lazy and very abusive. They used to abuse me, their teacher, other teachers and the other pupils. These boys really stressed me to a point that I was not even concentrating in what I was supposed to do. The father of the twins was a member of the school board and taking complaints to him all the time about the bad behaviors of the boys could cost me my job.

The twins could interrupt many learning sessions by making noise, abusing and beating other children, and even saying that if I report them to their father, nothing could be done as he was a member of the board. The behaviors of the twins affected the other children who went home and told their parents about it. The parents responded by calling me and coming personally to school to complain on how the twins are affecting their children from learning and how the class teacher and the school management had been unable to contain twins.

The case was challenging to my career and was degrading the name and status of the school in general. A quick and faster action had to be taken to contain the situation. Decisions had to be made whether for better or for worse since a lasting solution was needed. The boys had to be counseled and their behaviors modeled and at the same time the pupils in my class had to be counseled. The best solution for this was to apply the behavioral modeling to the twins whereby model looks closely at the behaviors of the victims, by going back by collecting data on their behavioral history.

The behavioral modeling is meant to assess at the behavioral patterns of an individual from the past and relate to them to the present, know why individual is behaving in that strange manners, whether the causes for the behavior change could be the family, environment, the friends, the workplace or the community and then look for strategies that can assist in correcting the behavior and was done in the following ways; a) Initiating a session-the counselor should first initiate a session for discussion. He/she should introduce him/herself to the twins so that they could be aware of who they are going to discuss with.

The initial rapport will determine on how the discussion will flow. The counselor should tell the twins what he/she expects from them and the boys should be given time to decide if they will be willing to talk but should be given options. b) Isolation- the twins should be isolated from other children. The counselors should in isolation with the twins study their behaviors and know what is really happening. He/she should dig deep into the past history of the twins, the behaviors of the family and the circumstances that have made them to behave like so.

This information can only be gotten from the twins when they alone with the counselor whereby they have the freedom of expressing themselves freely. When victims of the same circumstance are mixed with people of the same problem it becomes very difficult to get information from them because those who are with them may influence their answering to the questions asked. Isolation does not mean that the twins should be completely isolated from other children or the family but put in isolation when talking to the counselor.

The counselor must also make sure that the isolation process does not affect the twins but improves their concentration during the discussion exercise. c) Find out about the historical background of the family/ information gathering- the consultant should critically look at the behavioral patterns of the twins’ family before making conclusions. Are there other members of the same family who are still in school and have the same behavior? The counselor should find out whether if the had been counseled previously and if there was any impact.

It will be necessary to know the behavioral patterns of their parents and then relate them to those of their children. d) Show the paternal and maternal love-the counselor should at his/her level best the paternal and maternal love to the twins. The twins may be missing the love and attention of the one or both parents, and this has made the twins to become uncontrollable as there is no one to control them and show them love and affection. Every person needs the love of both parents to grow and develop normally and if the twins are missing the love and absence of their father or mother or both of them, their mind set and behavior will change.

e) Become closer to the boy- the counselor should develop a very close relationship with the twins. He/she should make sure that the twins are comfortable with him/her all the time they will be spending together. The counselor should not be sympathetic to the twins as this will worsen the situation but should make sure that they understand that what they are doing is wrong and they should be ready to change their behaviors so that they will be able to interact and mix freely with the rest of the other children.

They should be told that their behaviors are affecting the whole class and that parents of the other children are complaining of their behaviors. The counselor should also involve the friends of the twins to find out more about the twins behavior when they are together. The friends should be encouraged to talk to them on changing their behavior pattern and they should at the same time tell them the consequences of their bad behavior in a friendlier manner.

If the twins feel that they are insecure when they are being counseled, they should be taken to a place of their choice, but should be given options or else they will dictate the situation. This will give them more freedom to express themselves and will build confidence and trust between them and the counselor. The consultant must also involve the family members who should be urged to become closer to the twins. The parents should be told Without any fear of the bad behaviors of their children and how this has had a negative impact to the other children and to the school.

The family members and friends should play a bigger role in modeling the behavior of the boys through being closer and talking positively to them on how good behaviors and manners come with good rewards. Having gone through all these steps, the twins in their minds will be in a position to condemn their bad behaviors and see the need to reform for the better. Behavioral change is a long term process which needs a lot of patience and perseverance. The above actions will help solve this crisis and also create a good learning environment for the other children and at the same time ease my work as the class teacher.

The level of competitive intensity according to Wheelen is determined by the threat of new entrants, the rivalry among existing firms, threat of substitute products or services, bargaining power of buyers, bargaining power of suppliers, relative power of other stakeholders. 4 “The collective strength of these factors”, he contents, “determines the ultimate profit potential in the industry, where profit potential is measured in terms of long-run return on invested capital. “5 The threat of new entrants to an industry brings new capacity, a wish to achieve market share, and considerable resources.

That is the reason why it is a threat to existing companies in a certain industry. To defend this threat there is only one thing, the existence of entry barriers. Entry barriers make it difficult for potential entrants to enter an industry like for instance economies of scale, product differentiations, required capital, switching costs, the access to distribution channels or the loyalty of consumers to a certain brand or company. The Rivalry among existing groups is associated to the existence of several factors.

These are for example the number of competitors, the rate of industry growth, product or service characteristics, the amount of fixed costs, the capacity, the height of exiting barriers and the diversity of rivals. The threat of substitute products is the possibility that a competitor invents or offers a product that appears to be different but actually satisfies the same need as a certain existing product. Buyers may have an effect to the industry through their aptitude that they are able to force down the prices.

That means that they may have a bargaining power for higher quality or more services in order to play competitors against each other. The power of the buyers is determined by factors such as little changing costs to other suppliers, the purchase of a large amount of selleris products, the potential to integrate backwards or the plenty of alternative suppliers and so on. The bargaining power of the suppliers means that this group may have the ability to raise prices or reduce the quality of needed goods or services.

This bargaining power is high in case that the suppliers industry is dominated by few suppliers, that a needed product is unique with high switching costs, that substitute products are not readily available or that suppliers are able to integrate forwards. Amazon. com Inc. , was founded 1994 in Seattle, Washington by Jeff Bezos. Operating as an online book retailer, Amazon. com has grown rapidly since first opening its Web site in July 1995. At the beginning there were few online book sellers already in the business.

Because of the reason that many people at this time were not familiar with the world wide web and just focused on using e-mail the business model was that people could order books via e-mail. At this time Bezos wanted to gain an advantage by differentiating from competitors. The mission at this point, was to use the Internet to transform book buying into the fastest, easiest and most enjoyable shopping experience possible. Through that Amazon enjoyed a tremendous first-mover advantage, which continued until today.

Amazon.com, today offers the Earth’s Biggest Selection. The company aspires to be the Earth’s most customer-focused company, where customers can find and discover anything they might want to buy, and makes an effort to offer its customers the lowest possible prices. Amazon. com offers thousands of products in categories such as books, music, DVD’s, electronics, tools, kitchen, home and garden equipment, toys, apparel, accessories, health and personal care, etc. and operates on over two million square feet of warehouse space.

Industry Analysis of Amazon. com The main competitive factors in the e-business segment in which Amazon. com is operating include selection, price, availability, convenience, information, brand recognition, personalized services, accessibility, customer service, reliability, speed of fulfillment, ease of use etc. 3. 2. 1 The societal environment of Amazon. com Amazon. com as well as many respectively all other traditional companies are sensitive to the general environment like in the following aspects shown:

Economic environment: For instance since the United States has recovered from the impacts of the 9th September 2001 the ongoing economic growth stimulates the populationsi?? consumption. Another economic force is that the unemployment rate increases and the customer confidence levels decreases. Technological environment: Nowadays Internet software technologies on the one hand go further than theory and experiments and on the other hand focus on developing robust applications for large-scale.

As well, the costs for storage devices drop significantly and gigantic interactive dynamic databases are possible on both software and hardware level. Furthermore the technologies like for instance computer technology changes fast. Sociocultural environment: Personality and individuality are more emphasized and consumers are willing to spend more money on products that are individual or make them feel extraordinary. Political-legal environment: There are different taxation laws in the countries Amazon operates for example. 3. 2. 2 The task environment of Amazon. com

The rivalry among existing firms in the business Amazon operates is high. Competitors of Amazon. com are physical book stores, wholesalers, publisher, mail order retailers and online book sellers. Book sellers such as Barnes ; Noble or Bol. com, online retailers for games respectively pc games, pc hardware, clothes and all the goods which are momentary offered at amazon. com like BestBuy, Wal-Mart, Costco or Homedepot and online auctions like eBay or mail order houses like Bertelsmann. In the industry in which Amazon is operating the threat of new entrants is also high.

The reason for that is that the infrastructure is not as expensive as for a physical book store and already existing book stores which look forward to expand to the internet already have an established customer base, as well as brand and market recognition. The bargaining power of the buyers is high as well because the there is a high number of options to purchase any given book. Another reason is that this industry is based on the fact that the customer is king. High is also the bargaining power of the suppliers because publishers usually serve several other physical stores and have an established customer base.

A further reason is that warehouse owners and wholesalers may service end-customers directly. The threat of potential substitutes is large because physical book stores already have an establishes brand name as well as clientele and some customers may not be as comfortable buying a book over the internet as visiting a physical book store. In addition, new technologies and the expansion of existing technologies may increase the competitive pressures on online retailers. 3. 3 Organizational Analysis of Amazon. com.

The Business Model of Amazon. com Cf. Wheelen (2005), p. 10-4 The products Amazon.com offers include books, music, DVD’s, electronics, tools, kitchen, home and garden equipment, toys, apparel, accessories, health and personal care, etc. Amazon wanted to get the most complete retailer possible like Bezos says in one of his statements: “We want to build up a place where people can come to find and discover anything they might want to buy online. You realize very quickly that you canit sell everything people want directly. So instead you need to do that in partnership with thousands and indeed millions of third party sellers in different ways. To try to do that alone, in strictly a traditional retail model, isnit practical. “

Amazon has beside the partnerships with other retailers and investments in some online retailer’s, offers like auction services and a store-hosting program for small- and medium sized businesses which is named zShop. In these shops businesses have a website to sell their products. Amazon gives the guarantee that the ordered product will really reach the customer. Both, the merchants as well as Amazon have a benefit. The merchants have a already established platform where they can offer their products to loyal customers and Amazon gets a wider product range.

A further Service Amazon provides are the Web Services where they allow merchants to use Amazoni?? s patented technology on their own website. irst of all Amazoni?? s structure is a network structure and the company acts like a coordinator of this value chain. The Company was one of the first companies going online, started selling books and after some time went into related product fields like music and movies. Amazon always had the philosophy to differentiate from their competitors through the product line they continuously expanded and still expand as well as through superior customer service.

Additionally the company was constantly focused to offer the best price. To be able to expand the company was registered at the stock exchange and used 1999 the high stock price to fund purchases of other online retailers like Drugstore. com, Homergrocer. com and Pets. com. That was a great mistake because it took just one year till these online retailers went bankrupt. After that Amazon changed respectively restructured its strategy and started expanding through partnerships which gave them the possibility to enlarge their product lines without further costs.

Furthermore the invented selling technologies like the 1-Click ordering method was used by their partners and brought extra profits. Additionally the partnerships made it possible for Amazon to offer a greater product variety and as well Amazoni?? s products were offered on the partner website. Another strategic change took place in 2002 when Amazon decided to cut advertising cost by concentrating on print and internet advertisement and not anymore on television advertising. There through Amazon could offer permanently the best price because the company on the one hand didni??

t need to run shop and pay the necessary employees and on the other hand they focused on less expensive advertisement. 16 4 Conclusion I think it is possible to use a Value-Chain analysis to find out the core ; distinctive competencies of a business which is operating in the e-business. The structure is particularly not comparable to the one of a traditional business. Marketing is in the same way value creating. A difference is that technology in the e-business has a much higher impact. E-business is based on technology. Also the Supply-Chain has changed.

The procurement is much easier because of for instance paperless processes or electronic bill payments and there through more efficient. So summarizing the internet is changing the value chain of companies which operate in an e-business. Companies are more focused on support activities because the great opportunities through technology for instance. According to the strategy, I think it is necessary to stay flexible because like the example of Amazon shows it is not possible to keep a competitive advantage without adapting changes.

Actually Amazon changed its strategy very often. The company followed trends like forming partnerships, more and more customization and technology as well as customers service developments and there through stayed competitive. The only point what Amazon never changed is the vision, to become a great marketplace for everything. A further reason why it is necessary to stay flexible is that the competition in this business is getting bigger and bigger because many traditional companies see their opportunities in the internet and tend to sell their products as well online.

Introduction

There are a number of theories that explain motives and prospects of FDI. OLI framework is the one that is most widely used by economists. According to OLI, there have to be advantages that can offset costs of making direct investment abroad.

In this paper we apply the OLI framework to understand the motives behind German FDI in China. A case study of Volkswagen China is conducted to show the application of OLI in practice, and to demonstrate why FDI abroad can be a success story despite all the difficulties a company faces in a foreign environment.

Literature Review

One of the earliest theories explained FDI in terms of market imperfections. Kindleberger (1969) argued that for companies to gain advantage by investing abroad market has to be imperfect . If we assume that markets are perfect there is nothing foreign companies can exploit to make enough profits that will offset costs and risks associated with investing abroad (Kindleberger 1969).. The concept of firm-specific advantages was introduced to explain how market imperfections lead to foreign investment. Among these advantages are superior technology and marketing (Caves 1971), cheap labour (Grubel 1968), management skills (Wolf 1977), and exclusive access to natural resources (Lall and Streeten 1977). . Only when a foreign company possesses these firm-specific advantages can it successfully invest and become a major player in a foreign market and compensate for the disadvantages of being foreign in the country of its operation (Hymer 1976).

Vernon’s product life cycle is another major FDI theory that tries to explain motives and the rationale behind FDI. Vernon (1966) dissected product life cycle into three distinct phases – innovation, maturity and standardisation Established companies in developed economies invest in new projects to design innovative products that will sell in future and guarantee a new profit channel for them. When a new product is designed, it is sold in the domestic market. Consumers gradually get used to it and demand new products. This leaves the company with two not mutually exclusive choices – get back to the innovation phase and design something new, or go abroad and produce the same products there. Going abroad is sometimes a better choice because foreign producers (such as China) start to imitate the existing product and become so good at it that the differences with the original become marginal (Vernon 1966).

A later theory developed by Dunning (1977) has become widely used in attempts to understand the motives behind FDI. The theory became known as OLI: Ownership, Location and Internalisation. All three elements should be present in order for FDI to occur. This theory will be explained in greater detail in a separate chapter of this paper.

Theoretical Framework

Definition of FDI

According to the Organisation for Economic Co-operation and Development (OECD) (2008) 4th Edition of Benchmark Definition of FDI, FDI is “a category of cross-border investment made by a resident entity in one economy (the direct investor) with the objective of establishing a lasting interest in an enterprise (the direct investment enterprise) that is resident in an economy other than that of the direct investor” . Companies carry out FDI because they want to have direct control over their enterprise. This is what makes FDI different from portfolio investments which usually result in an ownership of less than 10 per cent of a foreign company’s capital. Hence the investor does not have real control over the foreign company (OECD 2008).

Mergers and Acquisitions (M&A) and Greenfield investments are the two different types of FDI. The choice between them has different implications for the parties concerned. M&A happen when an existing company is bought out by a foreign firm. In contrast Greenfield investments are investments into new assets. For developing economies, including China, M&A are more common, for developed economies like Germany Greenfield investments are a popular choice (Shatz and Venables 2000).

FDI are divided into horizontal and vertical; only in a few cases do the two occur simultaneously. Horizontal FDI occurs when a company invests in a firm built to serve the foreign market (Shatz and Venables 2000). . This foreign firm then performs the same activities as the host firm does in its own domestic market. With vertical FDI, the production cycle is fragmented so that each phase can be completed in a country where it can be done cheapest of all (Shatz and Venables 2000).

OLI Framework

The OLI framework is a theory that explains motives and the rationale behind multinational corporations’ (MNCs) decision to choose FDI instead of licensing use of their name or product to foreign producers or sellers (Lynn 2008). . FDI is a foreign investment so, for it to occur, the investing firm has to acquire assets in a foreign country. FDI is called direct investment because it results in a direct and real control over the acquired capital. MNC acquires a right to produce what it wants in a foreign country and decide where it wants to sell the product. As explained above, the whole product (horizontal FDI), or parts of it (vertical FDI), can be produced in a foreign country based on the considerations of cost-effectiveness (Shatz and Venables 2000)..

FDI occurs because there are advantages to it. The first one is ownership advantage which stands for “O” in the OLI abbreviation. There has to be some advantage to owning the foreign asset. These can be lower costs, greater reputation, or swifter transition to a foreign market. Take for example Apple. The company has a reputation for high quality products so by owning a production facility in a foreign developing country it can still make profits that will offset costs of FDI (Lynn 2000). .

Ownership advantage alone is not enough for FDI to occur. Here is when the “L” comes into play. “L” denotes the location advantage. A less costly labour force, access to the natural resources needed in manufacturing and a better geographic position (which leads to more efficient logistics), are some of the location advantages that can make companies seriously consider investing abroad (Lynn 2000). . Again this is not enough for FDI because everything described above can be achieved by brand licensing or through establishing joint ventures. FDI needs a third element – internalization, or control, advantage. This is the “I” in OLI. When it is believed that MNC can lose market share in case another company gets access to the same asset, FDI becomes the only choice available (Lynn 2000). . It is known that at some stage, foreign producers start copying products produced in the developed world and when they do it they are able to offer cheaper prices thus outperforming foreign producers in sales. To prevent this scenario many companies prefer to go with FDI and gain exclusive control over their assets.

Methods and Data

In this research, we conduct a critical review of the main theories of FDI, paying special attention to the OLI framework. While we acknowledge the importance of OLI in understanding international business and FDI in particular, we provide a short overview of criticisms of the paradigm so that readers have an understanding of the potential limitations of this research.

A case study of German car manufacturer Volkswagen is used as a method of understanding FDI under the OLI framework as applied to the German investor interest in China and the two country’s bilateral economic relations.

Additionally, we use statistical information to put some numbers into perspective and cite a research by Deutsche Bank which includes some forecasts as to the future of German FDI in China.

Volkswagen (VW) Case Study

Volkswagen was founded in 1937 (Datamonitor 2011). The name of the brand translates as “the car of the people” (Datamonitor 2011).. Volkswagen is represented in China through two ventures – with Shanghai Automotive International Company founded in 1985 and with First Automotive Works started in 1990 in Changchun (VW Annual Report 2010).

VW has always regarded China as an important market. Today, there are 9 production facilities in China and 2 more are planned. VW’s target is to sell 3 million cars per year. Through 2015 VW is set to invest a total of 10.6 million euro to expand its production in China. VW is actively involved in producing electric vehicles in China. Both E-Golf and E-Lavida were presented in China and the first electric test was made here in 2011. VW is also set to produce a new brand specifically for the Chinese fast-paced economy (VW Annual Report 2010).

Volkswagen Analysis Based on the OLI Paradigm

Ownership advantage

VW is one of the world’s most successful car manufacturing companies and, as such, it has a lot of advantages. VW is known in Europe for its technological advances and efficient production system. VW brand is strong all over the world. Many consumers associate vehicle design innovation, cost-effectiveness, and high safety standards with VW and consider it as their first choice when making decisions on buying a vehicle (VW official website 2011). Not surprisingly, VW had a competitive advantage over all Chinese manufacturers at the time of the entry into the market (VW official website 2011). In fact, VW is still superior to any of the Chinese car producers. VW exploited its technological dominance and increased its brand recognition. Chinese consumers were happy with the product offered and enjoyed VW’s presence in their country. Currently, VW strives to adjust its technology to meet changing customer needs and develop sustainable models for future (Yu 2010). .

Location advantage

VW’s joint venture in Shanghai was the most successful car enterprise in China at the time it was established in 1985 and it retains the top position today (Li 2000). . Locating in China, and Shanghai in particular, was the best possible decision for VW in terms of location because the region is rapidly developing and the people’s life standards are improving. Shanghai is the most densely populated and prosperous city in China and it has close ties with the central part of the country (Li 2000). Products from Shanghai are considered to have high quality across China and do not face any obstacles due to local protectionism. It should be also noted that at the time VW entered China it received many incentives and support from the government. The government still stimulates the automobile industry to increase domestic sales and contributes to the development of the sector. Thanks to these location advantages, VW China became a success and continues to be a source of decent income for the parent company (Li 2000)..

Internalization advantage

VW had the first mover’s advantage which helped it to become a major player in the new market. The company managed to take control over the major share of the Chinese market and realise all its ownership advantages. This first mover advantage till today helps VW to be very competitive with regards to Japanese and American rivals. To retain its market share, VW continues to innovate according to the changing tastes of the Chinese consumers and requirements to reduce the strain on the environment resulting from manufacturing and exploitation of automotive vehicles (VW official website 2011).

Future of German Interest in China

China has attracted German interest more than any other emerging country since 1997 (Deutsche Bank Research 2004). German companies explain their excessive interest in China by citing the country’s huge market potential. In 2001 there were about 76 million prosperous consumers in China – a population that is worth FDI in any country despite possible barriers and foreign culture-related challenges (Deutsche Bank Research 2004). This number of prosperous consumers in China is greater than the total population of Germany and it is set to increase tenfold by 2015. The second most important argument for German FDI in China is the “extended low-cost assembly line” (Deutsche Bank Research 2004). Cost has always been one of the most important considerations in business decision-making.. Heated global competition for competitive advantage and market shares across virtually all industries means that companies need to find cheaper options for manufacture. China is often the best solution because of the low-cost labour force it offers. Not surprisingly, Germany, alongside other strong economic powerhouses, chooses China as a low-cost manufacturing site and actively invests there (Deutsche Bank Research 2004).

Another reason for German FDI is the growing economy of China and its potential to become a dominant power. Germany has to defend its interest in a country which is set to become a global leader with an over 1 billion of potential buyers of products and services.

Of course, China is a completely whole new world for German businesses that has to be explored until there is sufficient understanding required for making informed decisions. Usually, most foreign companies entering China lack information vital for their success and have to be quick to adapt or risk becoming a failure. China cannot be considered “one country – one market”. It is bigger than both Eastern and Western Europe put together (Deutsche Bank Research 2004) and it is naive to think that one product design or pricing strategy will work across the whole country (Deutsche Bank Research 2004). Hence a lot of prior planning is required (Deutsche Bank Research 2004). Among other obstacles that can potentially deter German interest in China are high input prices. There are a lot of protectionism locally, and also many logistic and bureaucratic inefficiencies that are not easy or cheap to overcome. Moreover, the global prices for raw materials and energy resources are growing which adds to the cost of production even in China (Deutsche Bank Research, 2004). The final commonly-cited obstacle to German interest in China is the heated competition amongst different foreign companies coming from such developed nations as USA, Canada, and Australia. Everyone knows about advantages of investing in China and hence there is a lot of competition for assets and control over the market.

Criticism of OLI framework

The OLI framework offers a very useful insight into the motives and the rationale behind FDI. The paradigm has evolved over the time to adapt to changes in the way international business is conducted (Narula 2010). Critics of the theory argue that because of expansion of OLI’s application to all MNE-related phenomena, it now risksbecoming tautologous (Narula, R. 2010). Narula proposes a return to the classic OLI framework and using alternative theories to understand the more complex new developments rather than internalising everything so that it fits OLI. Narula acknowledges the importance of OLI in early research on the international business and FDI, but argues that it is not suited for explaining everything that happens in business (Eden 2003). In fact, it is becoming cumbersome to apply OLI to understanding international business, as the latter has became complex (Eden 2003).There is a need for new frameworks. OLI can still be a valuable tool in understanding some aspects of international business and FDI, but should lose its dominance in the academic community (Narula, R. 2010).

Conclusion

German interest has been present in China for almost half a century. Because Chinese market is huge and has a big growth potential, German companies are likely to look for more opportunities there. Before a decision to invest is made, companies always asses its prospects. OLI framework is often used to see whether FDI is justified. OLI’s critics now say that there should be some additional analysis involved in decision-making, because, as good as the paradigm is, it still cannot explain every complex aspect of international business.

References

Caves, R. (1971). International Corporations: The Industrial Economics of Foreign Investment.

Economica, Vol. 38, pp. 1-27

Datamonitor (2011). Automotive Manufacturing in China

http://360.datamonitor.com.www.baser.dk/Product?pid=10C672D5-7559-4A0A-90B3-5EFBDF97D73C [accessed 31 March 2014]

Dunning, J. (1977). Trade, location of economic activity and the multinational enterprise: A search for an eclectic approach. University of Reading diuscussion papers in international investments and business studies, no. 37

Eden, L. (2003). A Critical Reflection and Some Conclusions on OLI. Vox Professori. http://www.voxprof.com/eden/Publications/Eden-Reflections-on-OLI-2003.pdf [accessed 1 April 2014]

Foreign Direct Investment in China – Good Prospects for German CompaniesChina Special (2004). Deutsche Bank Research. http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000196028.PDF [accessed 30 March 2014]Grubel, H. (1968). Internationally Diversified Portfolios: Welfare Gains and Capital Flows. American Economic Review, Vol. 58, pp. 1299-1314.

Hymer, S. (1976). The International Operations of National Firms: A Study of Direct Investment. PhD Thesis. Massachusetts Institute of Technology

Kindleberger, C. (1969). American Business Abroad: Six Lectures on Foreign Direct Investment. Yale University Press

Lall, P. and Streeten, S. (1977). Foreign Investment, Transnationals and Developing Countries. London: Macmillan

Li X. (2000). Foreign Direct Investment in China: The Importance of Market Entry Timing. The Haworth Press, Inc

Lynn, W. (2008). The OLI Framework Temple University. Lecture Notes. http://astro.temple.edu/~pippin/oli.htm [accessed 30 March 2014]

Narula, R. (2010). Keeping the eclectic paradigm simple: a brief commentary and

implications for ownership advantages. United Nations University. Working Paper Series. https://www.google.com/#q=Narula%2C+R.+(2010).++Keeping+the+eclectic+paradigm+simple%3A+a+brief+commentary+and++implications+for+ownership+advantages [accessed 30 March 2014]

OECD (2008). OECD Benchmark Definition of Foreign Direct Investment, 4th Edition, pp. 1-241

Shatz, H. and Venables, A. (2000). The Geography of International Investment. Policy Research Working Paper, Vol. 2338, The World Bank, Washington, D.C.

Vernon, R. (1966). International investment and international trade in the product cycle. Quarterly Journal of Economics, Vol. 80, pp. 190-207

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Volkswagen official website (2011). With a new sales record Volkswagen Group China, http://www.volkswagenag.com/vwag/vwcorp/info_center/en/news/2011/01/With_a_new_sales_record_Volkswagen_Group_China.html[accessed 31 March 2014]

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Additional Resources

Chunlai, C. (1997). The Location Determinants of Foreign Direct Investment in Developing Countries. The University of Adelaide. http://www.rrojasdatabank.info/97_12.pdf [accessed 30 March 2014]

China (2013). German Federal Foreign Office. http://www.auswaertiges-amt.de/EN/Aussenpolitik/Laender/Laenderinfos/01-Nodes/China_node.html [accessed 30 March 2014]

Franco, C., Rentocchini, F., Marzetti, G. (2008). Why Do Firms Invest AbroadAn Analysis of the Motives Underlying Foreign Direct Investments. University of Bologna and University of Trento. http://www.etsg.org/ETSG2008/Papers/Franco.pdf [accessed 30 March 2014]

World Economy FDI: The OLI Framework. University of Oxford. http://users.ox.ac.uk/~econ0211/papers/pdf/fdiprinceton.pdf [accessed 30 March 2014]

1.0. Introduction

The aim of this guide is to assist in selecting an MBA dissertation topic and to provide practical advice on how to go about writing a dissertation. MBA dissertations incorporate numerous topics covering various aspects of business. Typically, writing a business dissertation involves questions such as how to report the features of the design and how to adequately report research results. Consequently, the latter part of the guide serves as a handy reference source to navigate the writer through the process.

2.0. Categories

2.1. Management and E-business

2.1.1. An investigation into e-business security management in internet banking: A case study of Lloyds TSB

2.1.2. An assessment of the critical success factors for implementing e-business strategic risk management. A case study of Royal Mail

2.1.3. Measuring organisational change management capabilities in making the transformation to e-business customer relationship platforms

2.1.4. An assessment of the opportunity gains from creating awareness and education for e-business knowledge management in UK SMEs

2.1.5. An examination of external forces impacting organisational e-business strategies. A case study of British Airways

2.2. Managerial economics

2.2.1. Establishing a measurement for game theory suitable for analysing the different players’ behaviour and interaction between them

2.2.2. An assessment of how managerial pursuit of value maximization through acquisitions intensifies the manager-shareholder conflict in the banking sector

2.2.3. An analysis of price discrimination and competition between major UK supermarkets: The case of Tesco and ASDA

2.2.4. An analysis of the laws of diminishing returns and profitable microfinance in Indonesia

2.2.5. An assessment of demand segmentation models in the tourist industry. A case study of TUI Travel

2.3. International negotiations

2.3.1. An analysis of factors influencing cross-cultural negotiation processes in head-office subsidiary relationships. A case study of Ikea in Russia

2.3.2. An investigation into the impact of negotiation context on negotiation outcome between governments and multinational corporations. A case study of the Nigerian oil and gas industry

2.3.3. An examination of international negotiation tactics in crossborder mergers and acquisitions projects. A case study of BMW and Rover

2.3.4. A comparative study of Chinese and Japanese patterns of behaviour in buyer-seller negotiations. A review of the literature

2.3.5. Analysing international negotiation in high risk business ventures: Towards a model for dealing with conflicts in international business relationships

2.4. International business law

2.4.1. What are the problems associated with enforcement of intellectual property rights in developing countriesA case study of Bangladesh

2.4.2. Do the benefits of achieving global patent policy harmonization outweigh the disadvantagesA case study of the pharmaceutical industry

2.4.3. An examination of the interactive complexities of competition law and consumer protection law: A study of the European Commission integrated framework for competition policy and consumer protection policy

2.4.4. An assessment of resolutions for international conflicting Cyberspace laws: A case study of US and European personal information protection laws

2.4.5. An analysis of multinational corporation accountability for human rights violations: A case study of sweatshop violations of women’s rights in Vietnam

2.5. Financial Management

2.5.1. An evaluation of budgeting and forecasting methods and application in UK manufacturing. A case study of the automotive industry

2.5.2. An assessment of financial management and performance of SMEs in Singapore. Managing cash flows for overseas financial expansion

2.5.3. Do Islamic financial management banking risks differ from conventional banking risksA case study of Pakistan and the UK

2.5.4. An analysis of the financial management of majority state-owned banks and justifications for corporate bonus pay-outs. The case of Royal bank of Scotland

2.5.5. An analysis of the impact of corporate financial management structures on decision-making processes. A case study of investment banking in Japan

3. How to Structure an MBA Dissertation, Tips

For details on how to structure your MBA dissertation, kindly check out the following post:

How to Structure a dissertation (chapters)
How to structure a dissertation (chapters and subchapters)
How to structure a dissertation research proposal

Abstract

Innovation and performance are important elements of organisational culture as they help with business growth and development. As a result, it is vital that all businesses adopt and create an innovative culture in order to be successful. How this can be attained is unclear, yet many organisations attempt to instil innovation into their companies through the creation of various programs. Whether this works or not is a matter for debate, yet it is apparent that those organisations which lack innovation are unlikely to be as successful as those who have innovation. Apple Inc provides a good example as to how building an innovative culture and enabling internal systems to drive innovative behaviours leads to success.

The Proposed Plan of Work

Introduction

The creation of new products is at the forefront of economic growth, which is why the focus on innovation and performance within small and large organisations has greatly increased over the years (Hall and Mairesse, 1995, pp. 263-293); (Klette and Kortum, 2002). It has been said, nonetheless, that innovation creates productivity (Loof and Heshmati, 2002, p. 21) because of the fact that the growth rate of productivity only grows when new innovations are introduced. In accordance with this, it seems as though innovation and productivity are simultaneous and that organisational culture has a lot to do with the degree of novelty the innovations possess. Organisational culture thus has a significant impact upon innovation and performance and helps to determine how new methods, ideas and products are to be created. If an organisation fails to create a corporate culture of innovation, it is unlikely that the business will grow and the performance of individuals will effectively be stifled. Establishing a corporate culture of innovation requires the creation of teams sharing the same horizontal positions of power so that each person within that team can play a theoretically equal role. This is in comparison to the more traditional hierarchical organisation, which does not place individuals on an equal footing and leads to a lack of incentive to innovate (Barone, 2010, p. 1). Apple Inc is one the biggest organisations that have developed an organisational culture of innovation and performance and has recognised that “creativity and innovation skills are critical to future success in life and work” (ACOT, 2012, p. 1).

Research Objective

The objective of this study is to determine the effects organisational culture has on innovation and performance. A will thus be provided in order to establish whether the creation of an innovative culture within any organisation is one of the most important parts of a business’s organisational structure.

Research Questions

• Is innovation an important part of any businesses organisational structure?
• Can innovation be created?
• What impact does organisational culture have on innovation and performance?
• Is innovation what drives a business’s success?
• Do innovation programs work?
• How important is it to build an innovative culture within an organisation?
• Is the success of Apple Inc the result of the innovative culture that has been established?
• What advantages does innovation bring to an organisation?
• What does the innovation process consist of?
• Is there a difference between innovation and invention?
• Does innovation affect performance?

Key Words

• Innovation
• Performance
• Organisational Culture
• Apple Inc.
• Innovative Programmes
• Innovative Process
• Innovation and Invention

Methodology

Secondary research will be used for this study so that existing data can be gathered and thereby analysed. This is the most appropriate form of research that is required for this study as the collection of primary data would be too costly and lengthy. In addition, it would be very difficult to collect data from large organisations such as Apple Inc and given the projects aims; it would be unwise to embark upon this type of study. Quantitative and qualitative research methods will be used so that the literature can provide a wider analysis of the subject matter. Quantitative research gathers information that is in numerical form, whilst qualitative research gathers information that is not in numerical form but which contains descriptive data. Whilst this type of data is a lot more difficult to analyse than quantitative data, a better evaluation of the topic in question can be made. The resources that will be used include text books, journal articles, online databases, government reports and applicable websites.

Main Body

Innovation and Performance Overview

Innovation is defined as “the introduction of new methods, ideas or products” (Oxford Dictionaries, 2012, p. 390). In accordance with this it is thereby evident that innovation takes place when something new is introduced into the market which subsequently leads to economic growth. Because of how important economic growth is, it is vital that innovation is part of any organisations culture. This is because, a lack of innovation will significantly affect the success of the business and the businesses’ overall performance will be impaired. How an organisation can improve innovation and performance is difficult to determine because whilst businesses want to be successful, they do not necessarily want to be innovative. Nevertheless, as put by Ryan (2012, p. 1): “A successful organisation achieves the goals and objectives that it sets itself. Innovation is simply a lever that delivers success rather than an end in itself.” However, it was further made clear by Ryan that whilst levers that can be used as a means of delivering success, it is important that innovation is placed in context with the objectives and aims of the organisation in question. Arguably, this suggests that innovation is the most important lever of an organisation that helps to deliver its success. Innovation should therefore be at the forefront of any organisation’s structure and should be promoted throughout its life cycle.

Organisational Culture and Innovation

Whilst it is vital for innovation to become part of an organisations culture, there has been much debate as to who drives innovation. It was traditionally argued by Schumpeter (1934, p. 65) that small businesses drive innovation, whilst large businesses simply dominate innovation by investing in its research and development. Not all agree with this, however, and instead it has been argued by Szirmai et al; (2011: p. 8) that innovation exists within the individual and that it does not matter whether the business is small or large. Regardless of this, small businesses are likely to be more innovative than large businesses simply because of the fact that small businesses have a greater desire and need to be successful. Essentially, small businesses are therefore more likely to embed innovation into their organisational structure by creating an innovative culture. However, as noted by MIT Sloan (2011, p. 8); “there are no quick fixes, panaceas or one size fits all solutions.” Not all businesses can successfully create innovation, but it is imperative that they make some attempt to create an innovation culture as innovative businesses generally yield high returns (Douhan and Henrekson, 2007: p. 2).

Apple Inc and Innovation

An innovative culture has certainly been created within Apple Inc., which is why this organisation has had so much success. Steve Jobs, the co-founder and CEO of Apple Inc, thus made it clear early on that innovation is what created his success: “innovation is what distinguishes between a leader and a follower” (Raup, 2012: 1). Although Jobs did not believe that innovation could be taught through innovative programs he did believe that it could be established by following his seven general principles (Gallo, 2010, pp. 15-209). He believed that the seven principles provided sufficient guidance to undertake innovative practices within any organisation and thus generate new ideas. This is because, it was felt by Jobs that innovation existed within all human beings. Conversely, innovation within an organisation could not be ascertained without the establishment of an organisational innovative culture. This is because; the whole of the organisation would need to possess an innovative mind, which would require a greater awareness and understanding of the innovative process: “Becoming innovative requires an organisational culture which nurtures innovation and is conducive to creativity” (Ahmed, 1998, p. 1).

Innovative process

The innovative process will depend entirely upon the organisational culture and climate that has been created. This is because, whilst innovation is present within all human beings it will depend upon the particular organisation as to whether the innovative attribute is to be triggered or not. The importance of “simultaneously introducing product and process innovations” was highlighted by Walker (2004, p. 1) when he made it clear that innovation plays a mediating role in the management-performance relationship of an organization. Nevertheless, whilst it became apparent just how important the creation of an innovative culture is, it could not be established how a strategy of organisational innovativeness should be pursued (Walker (2004, p. 1). Provided that businesses’ understand the innovative process; innovation will undoubtedly be created. In addition, as put by Brown and Frame (2003, p. 11); “in managing innovation, it is important for all groups to understand the subjectivity of each group’s value judgements.” If the subjectivity of each group’s value judgements is not fully understood, difficulties will ensue when trying to interact and integrate with each other and the growth of the business will be constrained.

Innovation and Performance Lessons from Apple Inc

Much can be learnt from the way Apple strives on innovation and performance within its company, which is clear from the fact that Apple has one of the most valuable empires of all time. Because innovation is the main driver of Apples organisational structure, it is apparent that innovation is the main attribute all businesses need if they want to be as successful. Nevertheless, “while experts remain optimistic about Apple’s future, they predict the strength of the Apple empire could be undermined by politically unrealistic growth expectations” (Bosker, 2012, p. 1). Whether this means that Apple’s future remains uncertain is questionable, but given the innovative nature of Apple’s business structure, it is unlikely that Apple’s success will fade as new products will continue to be introduced into the market. Thus, it does not matter that Steve Jobs is no longer with Apple since his innovative legacy will live on because of the innovative organisational culture that has been created. If innovation was not part of Apple’s business structure, it is likely that Apple would have been doomed from the start, which illustrates the importance of innovation. Consequently, as pointed out by Muller (1); “innovation and creativity have long been regarded as the lifeblood of organisational success.” In addition, it was also added that; “in the 21st century innovation practices and initiatives have become more important than ever due to a fast and unpredictably changing global business environment.” Essentially, innovation has never been more important and because of the continuous advances in society, it is vital that the principles of innovation management are being embraced by all. This is because, “organisations that do not innovate will not survive” (Swaim, 2010, p. 78).

Conclusion

Overall, it is evident from the above findings that innovation and performance are integral attributes of a business’s structure. This is because; businesses that do not create an innovative organisational culture will not be successful since innovation is the lifeblood of any organisation within today’s society. Because advances in technology are continuously being made, new products need to be introduced into the market on a continual basis in order to satisfy consumers. Therefore, organisations that fail to introduce new things will ultimately fail since they will not be deemed relevant in the 21st century. Whilst innovation cannot be created, however, it can in fact be instigated by following the seven general principles of innovation as laid down by Jobs. Provided that these principles are followed, all businesses will most likely be successful which is evident from the success of Apple Inc. Innovation was the main attribute of Apple and because of this, the Apple empire will continue to live on. How innovation can be effectively managed is open to debate but given that the general principles are followed, an innovation culture will be created.

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