Business Strategy for the Old and New Economy

Introduction

The old economy refers to the blue chip industries that experienced high growth at the beginning of the 20th century due to rapid industrialization. The old economy was characterized by companies that focused on mass production and heavy investments in physical assets such as factories. Advancements in information and communication technologies led to the emergence of the new economy, which is characterized by a large service industry, technology, and electronic commerce (Walters, 2004, pp. 346-357). This paper will discuss the differences between doing business in the old and the new economy.

Business Strategy for the Old and New Economy

In the old economy, business strategy focused on increasing production in order to serve new markets across the globe. Thus, companies focused on expansion through both organic growth and acquisitions. Vertical integration was also an integral business strategy in the old economy. Managers had to build end-to-end businesses in order to control their supply chains (Walters, 2004, pp. 346-357). Corporate strategy focused on improving cost efficiency by achieving economies of scale through mass production.

The business strategy for the new economy focuses on innovation and creation of new knowledge. This helps in developing new products and reducing operating costs. Investing in advanced information technologies such as the internet is one of the strategies used to achieve innovation and creation of new knowledge (Ansoff, 2007, p. 52). For instance, retailers are shifting from physical to online stores to increase their market shares, to improve customer service, and to reduce operating costs.

Motivation for Becoming an E-business

An e-business is a company that uses electronic commerce to conduct activities such as selling, marketing, and providing customer service. The motivations for becoming an e-business include the following. First, e-business enables companies to expand their operations by gaining instant worldwide exposure (Sadler, 2003, p. 147). For instance, a company can use its sales website to serve customers in any part of the world. Second, e-business promotes sales by enabling companies to operate 24 hours a day.

Third, e-business leads to significant cost reductions. It enables companies to streamline business processes such as billing, procurement, and supply chain management. This leads to reduction of costs associated with maintenance, repair, and labor. Fourth, e-business platforms facilitate provision of excellent customer service (Lapiedra, Smithson, & Chiva, 2004, pp. 219-228). For instance, online marketing systems enable customers to get instant feedback concerning their queries and to interact directly with the sales team. Finally, e-business facilitates effective control of various business processes by providing the information that managers need to make decisions.

Ways in which IT Makes the New Economy to be Different from the Old One

The new economy differs from the old one in terms of its six characteristics namely, knowledge, digitization, virtualization, innovation, dismidiation, and internetworking. IT has facilitated these differences in the following ways. First, IT has enabled companies to develop “knowledge management systems that facilitate creation, storage, and dissemination of information” (Ansoff, 2007, p. 139). In the new economy, companies use computer-based databases to store and access the knowledge needed to improve competitiveness. Second, advancements in IT have led to digitization of information and communication in the new economy. Digitization has improved the quality of information, thereby shifting business processes such as marketing, procurement, and sales from manual to online platforms.

Third, information technologies such as video conferencing have led to creation of a virtual business environment. This includes virtual shopping malls, offices, government agencies, and distribution systems. Fourth, IT facilitates dismediation by eliminating middlemen functions in the supply chain (Walters, 2004, pp. 346-357). For instance, online business-to-business sales platforms eliminate the role of wholesalers in the supply chain. Finally, the advent of peer-to-peer internet-based networks has enabled small companies to overcome the barriers to economies of scale that characterized the old economy.

Porter’s Models

Porter’s competitive model identifies five forces that businesses must overcome to improve their competitiveness. These include competitive rivalry, threat of substitutes, threat of new entrants, suppliers’ bargaining power, and buyers’ bargaining power (Sadler, 2003, p. 93). Porter’s generic model identifies three strategies for responding to the aforementioned forces. These include cost-leadership, differentiation, and the focus strategy. Cost-leadership involves improving profits by reducing operating costs. In the old economy, companies reduced costs by achieving economies of scale in production. In the new economy, companies employ e-business technologies to reduce the costs associated with inventory, labor, and sales. The cost leadership strategy helps in overcoming high competitive rivalry, as well as, the threat of new entrants and substitutes.

Differentiation involves developing unique products to overcome the threat of substitutes and new entrants, as well as, the bargaining power of buyers and suppliers. In the old economy, differentiation focused on improving product quality in order to attract and retain customers. In the new economy, differentiation mainly focuses on delivering innovative outputs in order to enhance customer loyalty (Ansoff, 2007, p. 165). The focus strategy involves serving a particular market through differentiation or cost-leadership. Given the high competition in the new economy, companies focus on serving specific market segments, which they best understand. The resulting improvement in customer value enables firms to increase their profit margins.

Agile and Adaptive Organizations

An agile organization is a company “that is flexible, robust, and capable of responding rapidly to unexpected challenges, events, and opportunities” (Ansoff, 2007, p. 213). Agile companies use an inverted management pyramid to promote innovation by including employees in decision-making processes. Agile firms believe in continuous learning, as well as, generation and sharing of knowledge. The organizational culture of an agile firm promotes liberty, cooperation, and high productivity among employees. In the new economy, agile firms use IT to enhance their flexibility, creation of knowledge, and decision-making processes. In the old economy, the use of command and control management systems and inadequate investments in IT reduced firms’ ability to become agile.

An adaptive organization is a company that “constantly matches and synchronizes the demand and supply of its goods and services in order to prevent wastes and losses” (Sadler, 2003, p. 245). In the new economy, firms become adaptive by optimizing the use of key resources. Adaptive firms in the new economy avoid holding large inventories in order to reduce their operating costs. They use advanced information technologies to plan their production to ensure that their supply is adequate to meet existing demand. However, firms in the old economy were less adaptive since they focused on holding large inventories. This tied up their capital in unproductive resources, thereby reducing their ability to respond to unexpected challenges and opportunities.

Real-time Business and Information Systems

A real-time information system is a computer-based technique that facilitates immediate processing and access to data. Businesses often use real-time information systems to process and to manage their transactions. A real-time business information system is an “approach to data analytics that enables managers to access up-to-the-minute data by directly accessing operational systems and data warehouses” (Lapiedra, Smithson, & Chiva, 2004, pp. 219-228). The techniques that are used to implement real-time business information systems include data virtualization and data federation. Real-time business and information systems enable managers to make instant decisions to respond to market needs in time.

Failures of Real-time Business and Information Systems

First, real-time business and information systems can fail due to inadequate information security. For instance, unauthorized access to the systems can lead to lose of important information that companies need to improve their competitiveness. Second, real-time business and information systems can lead to information overload (Ansoff, 2007, p. 263). This can slow the process of making decisions. Third, the effectiveness of real-time business and information systems depend on the quality of the data fed into them. Thus, they can provide misleading information if the data fed into them is unreliable.

Conclusion

The old economy was characterized by companies that focused on mass production, whereas their counterparts in the new economy achieve competitive advantages by investing in information technologies and innovation. The main characteristics of the new economy include generation of new knowledge, dismediation, innovation, and virtualization. These characteristics have been achieved through heavy investments in information technologies. Moreover, these characteristics enable companies in the new economy to be more agile and adaptive than their counterparts in the old economy.

References

Ansoff, I. (2007). Strategic Management. New York, NY: McGraw-Hill. Web.

Lapiedra, R., Smithson, S., & Chiva, R. (2004). Role ofinformation systems on the business network formation process: An empirical analysis ofthe automotive sector. Journal of Enterprise Information Management, 17(3), 219-228. Web.

Sadler, P. (2003). Strategic Management. London, England: Kogan Page. Web.

Walters, D. (2004). A business model for the new economy. International Journal of Physical Distribution and Logistics Management, 34(3), 346-357. Web.

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Business Strategy and Human Resource Management

Professionals discuss the possibility of linking business strategy with human resource management (HRM) for a while already. They underline that the success of the organisation often depends on the support provided by HRM, but many companies have not realised this fact yet. Boxall and Purcell (2011) believe that professionals can utilise two types of linking HRM and business strategy. However, both of them are not ideal and have particular advantages and disadvantages. The first one is the best practice.

It is treated as a ‘universalist’ approach, which means that it is likely to bring advantage to all organisations that use it. It ensures much agreement considering particular practices. At the same time, bad practices are recognised by all staff members, which leads to a reduction of misunderstanding. Training and appraisal methods are also well-established, which is very beneficial. However, the best practices are rather diverse, which can cause confusions. Benefits for the company and employees may conflict so that the staff lose their voice. The second approach is the best fit. It states the opposite idea according to which all actions should be linked to context and environment. It means that the performer affects the success of the method used (Armstrong 2006). In this way, the connection between particular business strategy and employee behaviour is ensured. However, it can be aligned with an extreme emphasis on the expense of flexibility and agility and prevent HR strategy from being parochial.

With the help of these approaches, the creation of an HR strategy for a company can be enhanced greatly. For example, HR personnel can make better decisions when focusing on talent management. Sahoo, Das, and Sundaray (2011) emphasise that HRM can promote organisational values through its practices. Focusing on a lifelong commitment to learning, they can add regular training and development activities instead of utilising on episodic ones. Thinking about succession planning, HR leaders also need to focus on personnel and make sure that proper talent will be available when needed.

In this way, it can be stated that the main aim of HRM in the framework of its strategic role is to align with business strategy. However, it is critical to mention that is should also deal with recruitment. Potential employees should be prepared for their new duties. They are expected to generate knowledge that can be used by the company to reach its potential. In addition to that, HRM deals with rewards. HR leaders are expected to recognise those staff members who assist their organisation in reaching their objectives. As a result, they reveal their appreciation through rewards and encourage future development in this manner. Alvesson (2009) also emphasises the necessity to focus on the success of utilised practices so that the most advantageous can be selected. HRM should update their knowledge to base all decisions on valid information.

My personal experience considering the alignment of HRM and business strategy dealt with the value of lifelong learning. Not so long ago, HR leaders started emphasising it more than usual. They encouraged employees to participate in various meetings and conferences, which rarely happened previously. In addition to it, we have a reward system, which allows the best staff members to get some financial benefits or to have additional free time. These concepts are also discussed in the readings, which proves them to be effective and advantageous for both the organisation and personnel.

Reference List

Alvesson, M 2009 ‘Critical perspectives on strategic HRM’, in J Storey, P Wright & D Ulrich (eds), The Routledge companion to strategic human resource management. Routledge, London, pp.52-68.

Armstrong, M 2006, A handbook of human resource management practice. Kogan Page, London.

Boxall, P & Purcell, J 2011, Strategy and human resource management, 3rd edn, Palgrave, London.

Sahoo, C, Das, S & Sundaray, B 2011, ‘Strategic human resource management: exploring the key drivers’, Employment Relations Record, vol., 11 no. 2, pp. 18-32.

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Environmental Management in Hotel Companies

Today, various government agencies and the general public are growing more and more concerned with environmental issues, such as pollution, excessive energy use, and the waste of food and resources. An increasing body of structured environmental efforts from agencies, such as the UN, has put pressure on most businesses with regards to their sustainability and environmental impact. After the successful introduction of policies and practices aimed at decreasing the environmental impact of large manufacturing businesses, the policymakers shifted their attention to creating an all-rounded approach to environmental sustainability, which would involve all types of businesses in ensuring sustainability on a global level.

Naturally, the hospitality industry became involved in the process, with both large and small hotels aiming to adhere to the new industry standards for environmental impact management. This study aims to investigate the background and practices for environmental management in hotels, as well as to address the benefits and challenges of implementing a good environmental management strategy for businesses working in the hospitality area. The information for this study was gathered from ten separate scholarly articles on the subject of environmental sustainability management in hotel companies. The use of secondary data was a major limitation to this study; however, the impact of this limitation on the quality of research was kept to a minimum by ensuring the recency and reliability of the sources.

Background

The involvement of hospitality businesses in the global approach to decreasing the environmental impact was not widely discussed until the United Nations Conference on Environment and Development, also known as the Earth Summit, was held in 1992. Shanklin (1993) outlines the effect of the summit on the public’s perception of the environmental challenges ahead and the implications that the ‘age of ecology’ would have on hospitality businesses all over the world. For instance, the author states that one of the main ideas introduced at the conference was the need for a transnational approach to decreasing environmental damage: the representatives of different countries noted that there is a clear difference between the environmental damage inflicted by the Northern industrialized countries and the Southern areas of the world (Shanklin, 1993).

Thus, the contemporary popularity of tourism all over the world and the consequential increase in hotels and hotel chains located in different areas of the world created the need for the businesses operating in the hospitality sector to address various kinds of environmental issues. Shanklin (1993) also addresses the types of environmental concerns that are involved in hospitality management. For instance, increased energy use has a strong effect both on the environment and on the hotels’ profitability due to the increasing energy costs (Shanklin, 1993, p. 222). The issues of water quality and availability are also among those that need to be solved, for instance, by introducing water conservation efforts in all areas of hotels’ operations, particularly through changing the structure of water supply for public restrooms and bathrooms (Shanklin, 1993, p. 223). Finally, the solid waste remains a substantial issue, even though many hospitality businesses had composting and recycling programs in place even before 1992 (Shanklin, 1993, p. 223). Shankling (1993) notes that, in the future, “a total solid waste and environmental plan” is required to provide long-term solutions (p. 222).

Despite the overall progress in environmental impact management made over the past two decades, most of the issues described in Shanklin’s (1993) analysis are still present. Jones, Hiller, and Comfort (2014) describe the current state of environmental management structures in the hotel industry and state that one of the main reasons for the management’s weak approach to environmental solutions is that “the global hotel industry’s commitments to sustainability have been developed within existing capitalist business models which are focused on continuing economic growth” (p. 14). According to Jones et al. (2014), in the capitalist business model, there is a certain conflict between environmental management and cost-saving, which leads the businesses to pursue only the strategies that are economically beneficial or seek compromises instead of addressing environmental concerns on a full scale.

Current Efforts

There is a great variety of recent studies that provide an overview of current practices emptied by hotels for environmental management. For example, Chan (2009) provides an overview of existing measures for hotels’ environmental management systems, aimed at adhering to the requirements of ISO 14001 certification. The majority of 113 measures were found to relate to electricity conservation and the efficient use of energy (Chan, 2009). Fewer efforts were undertaken for solid waste management and the reduction in the use of oil and gas (Chan, 2009). Bohdanowicz, Zientara, and Novotnac (2011) performed a more specific analysis of the Hilton hotel chain and they’re We Care! the program, which targeted the environmental performance of 70 Hilton hotels all over the world. The researchers found that the enterprise managed to achieve a 15% reduction in energy use, as well as to decrease its water consumption and CO2 emission levels by 8% each over the three years of the program (Bohdanowicz et al., 2011). The program also targeted the employees to raise their concern for the environmental issues and the influence of hotels’ performance on pollution and resource usage, achieving increased environmental awareness and improvement of environmental behaviors in 95% and 97% of employees respectively (Bohdanowicz et al., 2011, p. 808).

However, other strategies could be implemented in the hospitality sector. For instance, Elliot (2011) discusses the use of information technology to empower sustainability-focused business transformation. He stresses that the optimization of IT technology use could help businesses to cut down their electricity usage (Elliot, 2011). The author also discusses the involvement of governments all around the world in various environmental efforts (Elliot, 2011). As no reports on hospitality businesses’ environmental management strategies mentioned the use of government resources in their environmental strategies, it is possible to suggest that cooperation with the countries’ governments could provide hotel managers with more opportunities for addressing environmental concerns relating to their businesses, especially in the areas where tourism is supported by the government.

Economic and Performance Benefits of Environmental Management

Contrary to the widespread view that environmental management strategies are not cost-effective and may increase both immediate and long-term business expenses, a large body of work suggests that environmental management can improve hotels’ profitability and overall performance. For instance, a study by Segarra-Oña, Peiró-Signes, Verma, and Miret-Pastor (2012) examines the data from over two thousand Spanish hotels to determine the variation in profitability between the hotels that obtained official environmental certification and those that did not. The study showed that there is indeed a positive correlation between the adoption of environmental operation standards and improved economic performance, particularly in urban and beach hotels (Segarra-Oña et al., 2012). Another study by De Giovanni (2012) investigated the influence of internal and external environmental management on the firm’s performance by three factors: social, environmental, and economical. The study found that the implementation of environmental management strategies had a strong positive influence on the social and ecological performance of the companies studied (De Giovanni, 2012).

Even though the effect on the financial performance was not direct, the author still argues that “The indirect improvement of an organization’s EC may be attained through EM initiatives, while improvements in environmental and SP per se do not lead to greater economic results” (De Giovanni, 2012, p. 282). Finally, a study by Sirakaya-Turk, Baloglu, and Mercado (2013) showed the impact of the customers’ perceived image of a hotel as ‘environmentally-friendly’ may positively affect their tourism choices. Thus, the study proves that introducing well-rounded environmental management strategies and making them known to the public can help the hotel to attract new clients, thus increasing the revenues. A useful resource to assess the effect of environmental management on the hotel’s performance is proposed by Moreo, DeMicco, and Xiong (2009). The researchers developed a tool called the Environmental Scorecard (ESC), as well as its version applicable to the contemporary hospitality businesses. The Scorecard can help managers to measure the efficiency of the hotel’s environmental practices, as well as the company’s global environmental impact (Moreo, 2009), thus providing a framework that can be used to determine cost-effective environmental practices and projects.

Real and Perceived Challenges of Environmental Management

Eric Ricaurte (2012) argues that one of the main reasons why environmental management is not yet popularised in hospitality institutions all over the world is that many managers working in the sector lack awareness of the processes involved. In particular, the author argues, several perceived challenges stop managers from implementing a full-scale environmental approach in their companies. For instance, one of the largest myths that act as obstacles to achieving sustainability is that green technologies and strategies are expensive, when in fact, “numerous initiatives that have been proven time and again to save money, including those that involve changing to more efficient lighting or reducing the waste stream by recycling” (Ricaurte, 2012, p. 7). Another assumption is that the customers do not care about the environmental sustainability of hotels; Ricaurte (2012) argues that nowadays, the customers are aware of sustainability notions and issues, which affects their hotel choices.

Methodology

The proposed study is a systematic review of 10 articles related to the topic of environmental management in the hospitality industry. The articles for the literature review were found using Google Scholar, as well as Emerald Insight and Taylor & Francis databases of environmental studies journals. The articles for the study were chosen using purposeful sampling. One of the main criteria for the choice was the recency of publications – except one core source, dated 1993, the publication date of the articles had to be no earlier than 2008, with preference given to the more recent studies. The reliability of the sources was also an important factor: all of the sources obtained were either from peer-reviewed journals or official conference proceedings. Finally, the applicability of findings to the current study was evaluated to narrow down the list of chosen articles to 10. The articles are to be analyzed by their coverage of the topics explored in the current proposal, such as existing environmental management practices, as well as benefits and obstacles to effective environmental management for hotels and hotel companies.

Timeline of the Project

  • Proposal Submission – 24 February
  • First Draft – 10 March
  • Second Draft – 17 March
  • Final Draft – 24 March

References

Bohdanowicz , P., Zientara, P., & Novotna, E. (2011) International hotel chains and environmental protection: An analysis of Hilton’s We Care! programme (Europe, 2006–2008). Journal of Sustainable Tourism, 19(7), 797-816. Web.

Chan, W. W. (2009). Environmental measures for hotels’ environmental management systems. International Journal of Contemporary Hospitality Management, 21(5), 542-560.

De Giovanni, P. (2012). Do internal and external environmental management contribute to the triple bottom line? International Journal of Operations & Production Management, 32(3), 265-290.

Elliot, S. (2011). Transdisciplinary perspectives on environmental sustainability: a resource base and framework for IT-enabled business transformation. MIS Quarterly, 35(1), 197-236.

Jones, P., Hillier, D., & Comfort, D. (2014). Sustainability in the global hotel industry. International Journal of Contemporary Hospitality Management, 26(1), 5-17.

Moreo, A., DeMicco, F. J., & Xiong, L. (2009). Towards a model to measure the quality of environmental sustainability: The hospitality Environmental Scorecard. Journal of Quality Assurance in Hospitality & Tourism, 10(1), 44-58. Web.

Ricaurte, E. (2012). The hospitality industry confronts the global challenge of sustainability. Cornell Hospitality Roundtable Proceedings, 4(1), 6-15.

Segarra-Oña, M., Peiró-Signes, A., Verma, R., & Miret-Pastor, L. (2012). Does environmental certification help the economic performance of hotels? Evidence from the Spanish hotel industry. Cornell Hospitality Quarterly, 53(3), 242-256.

Shanklin, C. W. (1993). Ecology age: implications for the hospitality and tourism industry. Journal of Hospitality & Tourism Research, 17(1), 219-229.

Sirakaya-Turk, E., Baloglu, S., & Mercado, H. U. (2013). The efficacy of sustainability values in predicting travelers’ choices for sustainable hospitality businesses. Cornell Hospitality Quarterly, 55(1) 1-12.

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Principles of Changes in the Workplace

Introduction

Change management refers to the process of ensuring that everything is put in order in the organization in order to achieve change effectively. The government must put in place mechanisms for achieving change before the commencement of the organizational change. There are several principles that play a major role in determining the achievement of effective change management. The paper will discuss a change that took place in my workplace and relevant principles that impact change (Creasey & Hiatt, 2003).

Description of Experience

Personally, I have been involved in a change initiative in my workplace. The change entailed the computerization of the finance department in the company. Initially, the department used manual procedures in receiving, sending, maintaining, and keeping records. The process involved adjusting in the setting of the department. IT specialists assisted in the installation of computers in the department as well as the required accounting software and other programs. The change manager led the change in assistance by the finance officer. Employees in the finance department received communication about the change.

The finance officer had previously discussed the issue with all the affected employees. The main events that occurred before the implementation of the change involved analyzing the effectiveness of the change to the finance department as well as to the entire organization. Employees received adequate training on the use of accounting software and other programs applicable in the new system. The change manager passed the new system through a test program to ensure that it functioned according to expectation (Meyer & Stensaker, 2006).

Change Management Principles

There are several principles that affect the change management activities in the organization. The principles offer key insights upon which effective change management may be applied. Below is a description of these principles.

Senders and Receivers

This principle of change management sees change as the process that involves a sender and a receiver. In most cases, employees act as the receivers while the senders comprise of the management representatives such as the immediate supervisors and even the CEO. The sender and receiver concept is very important to the actions undertaken by change management teams (Creasey & Hiatt, 2003). The sender uses the best way possible in order to share the information related to change.

In most cases, the receivers have just received a fraction of the communication about a change, or even in worse situations, they may make up answers for questions not understood. Communication of change management is effective when employees are able to internalize the change messages as well as being able to begin the transition process (Creasey & Hiatt, 2003).

Based on the above principle, all the employees in the company received relevant information from the initiators of the change. The finance officer, together with the change manager, explained the importance of the change to the employees clearly.

Resistance and Comfort

The principle holds that individuals naturally resist change. Employees usually perceive change differently, and several factors may influence the amount of change they are able to sustain. Change can be blocked by fear of the unknown from employees. The resistance that arises in the organization when it is not well controlled or managed may negatively affect the business. The management must design programs for managing resistance during the change process. Therefore, change management must address the issues of employee resistance. The management must deal with the root cause of the resistance (Creasey & Hiatt, 2003).

Based on this principle, there was resistance amongst most of the employees in the department. Some employees had a fear of the unknown regarding their security in their jobs. The management had a well-structured program that encouraged employees to accept the changes. This helped in reducing the resistance.

Authority for Change

This is an important factor in the success of the change implementation process. Employees are less resistant in instances where there is a big change in authority. In this case, certain individuals assume the task of legitimizing change in the business. A strong authority determines the success of change (Van Dijk & Van Dick, 2009). Leaders of change must be active and vigilant throughout the change process. The top-level authority must communicate information relating to changes to the mid-level managers and supervisors as well as managing their resistance to change. The authority to change also communicates business reasons for the change to the employees (Van Dijk & Van Dick, 2009).

Based on the principle, the top-level management communicated the reasons for the changes to the finance department employees and to the entire organization. The change manager, together with the finance officer, communicated the business reasons behind the adoption of the change.

Value Systems

The firm’s value system influences the ease of implementing change. Employees receive information on how to be responsive to customers and accountable to the business results. Each firm’s value affects the ease with which the top-down change process is applied. Project managers and business managers must consider the shift in the value system on their ability to manage change. The issues of the employee, together with those of the entire business, must be well addressed. Change agents must develop individual change management models (Meyer & Stensaker, 2006).

Using this principle, it is evident that little was covered during the change process in our organization. Change management models targeting each individual employee were not developed.

Radical vs. Incremental Change

In the radical environment, change takes place within a short duration. The change results from a significant opportunity facing the business. The change entails the entire replacement of the existing programs. In contrast, incremental changes take place within a long period, and the changes are just improvements to existing business processes. While in incremental change, employees have sufficient time to adjust, in radical change, change management is often necessary (Creasey & Hiatt, 2003).

Using this principle, the change in the finance department was incremental, and employees were given sufficient time to prepare for change. Change management was also employed to ensure that the entire process was a success.

Change is a Process

The principle views change as a continuous process rather than a single and one-time concept. Change must be broken down into phases, thereby making it easy for change managers to adapt to their strategies and techniques. The change management managers must always remain active and vigilant in the change processes. Managers must customize their change management activities based on where they are in the change process (Van Dijk & Van Dick, 2009).

Based on this principle, the change managers effectively broke down the phases of computerizing the finance department. There was the installation of computers and relevant software and programs, the testing of programs, the training of employees, testing of the software’s on real data, correction of anomalies, and the actual implementation (Meyer & Stensaker, 2006).

Conclusion

In summary, change management is an essential process while undertaking changes in the organization. All the relevant parties to the changes must be well involved in order to aid in the success of the change. There are important principles that influence the success of the change management process. They include; change as a process, value systems, senders and receivers, resistance, and comfort.

References

Creasey, T. J., & Hiatt, J. M. (2003). Change management: The people side of change. Madison, Wis: Prosci Learning Center Publications.

Meyer, C., & Stensaker, I. (2006). Developing capacity for change. Journal of Change Management, 6 (2), 217-231.

Van Dijk, R., & Van, Dick, R. (2009). Navigating organizational change: Change leaders, employee resistance, and work-based identities. Journal of Change Management, 9 (2), 143-163.

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International Trade Theories – Global Business Management

Introduction

The following essay discusses the theories of international trade. The essay first identifies two international organizations that help countries trade, which include the World Bank and the World Trade Organization. The essay looks into the application of the theory of absolute advantage between Japan and Saudi Arabia.

Two regional international institutions

The first institution is the World Bank that aims at poverty reduction in developing countries by promoting international trade between nations and funding infrastructural developments (Woods, 2006). The aim of the World Bank is to provide capital to nations in form of repayable loan so that the recipient nation can improve its infrastructure, educational levels as well as health. This helps the country to have competitive advantage in certain areas enabling trade with other nations (Woods, 2006).

The second international organization is the World Trade Organization. This is an organization, which aims at liberalizing markets such that trade tariffs usually imposed on imported goods are removed and countries within the organization trade freely without discrimination and restrictions on the exports (Fergusson, 2007). This allows countries to negotiate for better trading terms, which promotes trade between nations. It also allows export, which has absolute advantage as well as import with no absolute advantage (Fergusson, 2007).

To explore this discussion it is important to discuss the theory that will apply in this essay when comparing the competiveness of nation’s products and how countries can make use of the international institutions to finance trade and develop their own industries (Schumpeter, 1981). The theory of absolute advantage in international trade states that there are countries with absolute advantage in the production or manufacture of certain goods and services, which enable them produce products for domestic consumption and export the surplus (Smith, 1776).

The absolute advantage in international trade applies when a country manages to produce different kinds of goods at a relatively low cost compared to other countries. The absoluteness results when the cost of the product imported is usually lower than the locally made products of similar nature (Smith, 1776). This is because a country cannot sell imported products at a higher price than the locally produced goods.

The absolute advantage implies that each country can invest in skills and infrastructure that will lead to economic growth (Irwin, 1996). This theory presumes that all countries have absolute advantage in the manufacture and production of a given commodity. However, this is not always true as some countries have absolute advantage in many industries thereby disadvantaging such countries in free market, as their goods are usually cheaper than locally made products (Schumpeter, 1981).

The application of this theory made economic disparity and regulation of imports to discourage importation of products. The World Bank and the World Trade Organization have sought to liberalize the markets by ensuring that each country has its own absolute advantages in international trade (Schumpeter, 1981).

Two countries that can apply the theory of absolute advantage

The two countries selected are Japan and Saudi Arabia. Japan is a manufacturing country that is the leading car exporter in the world. The country has absolute advantage in the manufacture of vehicles mainly because it has many technical laborers that maintain the cost of production low. The country has many qualified engineers, power plants and infrastructure to support the manufacture of vehicles at a relatively low cost. Saudi Arabia on the other hand would find it expensive and costly to manufacture cars.

The first reason is that they do not have engineers as well as technical team to manufacture vehicles. Outsourcing of such jobs in Saudi Arabia will make the cost of production very high in the global market (Irwin, 1996). Saudi Arabia however has an absolute advantage in the production of oil. The country has expansive oil reserves and invested heavily in oil production facilities thereby enabling the country to produce oil at a relatively low cost.

This gives the country an absolute advantage in oil production. Japan on the other hand has few or no oil reserves. Due to its investments in industrial manufacture and production, the country need to import energy especially fuel (Irwin 1996). Although the nuclear energy is an option, the costs of setting up nuclear plants as well as the dangers posed by their existence make production of nuclear energy expensive. The country has to import oil from Saudi Arabia for energy generation (Irwin, 1996).

Since having absolute advantage is what enables a country to trade with other nations, the following are suggestions on how Japan can increase its absolute advantage in the manufacture of vehicles in order to remain competitive in the Saudi Arabia market. The first one is to look for ways of minimizing the costs of production such that the vehicles are manufactured at the lowest cost possible, which will make them competitive (Schumpeter, 1981).

The country must take note of the economies of scale because of having incurred the cost of setting up assembly lines as well as manufacture plants (Smith, 1776). Therefore, the country has a higher absolute advantage over the countries that have not met the initial costs of setting up power plants. The country should therefore produce more units of vehicles than previously. The country should have an absolute advantage in Saudi Arabia especially considering that other countries such as the United States also have vehicle manufacturing industry.

This can be achieved by having an assembly line in Saudi Arabia from where they hire the labor. This will lead to decreased labor and importation costs of fully assembled vehicles thereby giving the country an absolute advantage. The other way of gaining the absolute advantage is by enhancing bilateral agreements with Saudi Arabia such that their goods receive preferential treatment hence restricting other exporters who might compete with Japan’s export.

Saudi Arabia can also promote its oils exports to Japan and other countries by ensuring that they have absolute advantage in oil production. The absolute advantage in oil production can come in because of the country investing its resources in the development of the country’s pipeline and refinery industries. Rather than selling crude oil, the country can sell refined and processed oil, which has greater benefits as its selling price is higher (Schumpeter, 1981).

This can give the country an absolute advantage not only as an oil producer but also as a producer of refined oil products. To make the country have absolute advantage as most of the countries have their own refineries, the country can have its oil products selling at a low cost. This is mainly because they have oil reserves and can produce products at a lower cost than other countries. The country must also invest in having a well-trained and efficient labor in order to lower the costs of production (Smith, 1776).

In some instances, the country has to outsource labor from poor countries as the work force is cheaper and with appropriate training, it can have the efficiency to produce the amount of oil needed to give the country absolute advantage.

To ensure that the country has absolute advantage in exporting oil to other countries, it can embark in having bilateral and unilateral trade agreements with various countries that are not oil producers but they have absolute advantage in other sectors such as agriculture and manufacturing. The role of these bilateral agreements is to give the country an advantage in the creation of markets for the produced goods in a certain country.

World Bank facilitation of the trading process

The way in which World Bank can facilitate trade between Japan and Saudi Arabia is by funding industrial development in both countries. The funding must take into account the industries that each country has absolute advantage (Woods, 2006). In the case of Japan, the absolute advantage is in the development of more vehicle manufacturing plants or vehicle assembly and parts manufacture plants in order to produce more vehicles at reduced cost than the competing nations.

The bank must also consider funding the country to establish industry lines in Saudi Arabia especially if it is going to give the country an edge in lowering labor and shipping costs. The other financial help that World Bank can assist the industries in the country with is the infrastructure development (Woods, 2006).

Although the country is well developed, improvement of the rail transport, which is cost effective in the transportation of the manufactured vehicles to the seaport, can be a major infrastructural development that will help the country to have absolute advantage in manufacture of vehicles (Woods, 2006).

The bank can fund a railway system between the two countries such that Japan can export its vehicles to Saudi Arabia using the railway line. In addition, the bank can assist Saudi Arabia by funding a pipeline system to export the oil directly to Japan. Such developments create mutual benefits and trading patterns between the two countries as they have different absolute advantages. The World Bank can help Saudi Arabia build modern oil refineries such that the country can start refining its crude oil for export.

World Trade Organization facilitation of the trading process

The World Trade Organization promotes the relationship between countries in terms of having unilateral trade agreements between the member nations. The unilateral trade agreement calls for unrestricted flow of goods from one country to another. It advocates for the removal of trade barriers between member nations (Fergusson, 2007). The World Trade Organization offers each particular member nation an opportunity to have a market for the products.

With each particular country identifying its absolute advantages, the member country allow unrestricted importation of goods from other countries in which they do not have an absolute advantage. By being members of World Trade Organization, both Japan and Saudi Arabia can expand their international markets by reaching out to the nations where they can sell their products at lower prices. The other advantage for being members of World Trade Organization is having preferential treatment compared with non-member nations.

The preferential treatment implies that the goods are not subject to discriminatory standards of quality and tariffs imposed by other nations (Fergusson, 2007).

As both Japan and Saudi Arabia are members of the World Trade Organization, they can utilize bilateral agreements to trade by providing preferential treatment to each other’s absolute advantage imports. The absolute advantage imports are imports that have no local substitutes in the country as the country does not have the capacity to manufacture or produce such goods (Fergusson, 2007).

By belonging to the World Trade Organization, Saudi Arabia would have an advantage if it opts to develop its own refined petroleum industry as it can produce large volume of such products at a relatively lower cost than its competitors can. When looking for the market of the products, the country’s goods will not face restrictions as they can be sold to the members of the World Trade Organization.

Conclusion

There is need to recognize the role of international bodies and their contribution to the international trade. Without these bodies, international trade would be unimpressive and some countries would end up having many absolute advantages. The role played by the World Bank is to ensure that each country develops its own industries and production lines that give it a particular advantage in the international market, thereby contributing to a balanced international trade (Woods, 2006).

The situation where one country has absolute advantage, which makes it exporter and other countries importers deprive them foreign currency (Smith, 1776).The World Trade Organization role is to create markets for goods or exports, which the country has absolute advantages. The markets come in the form of free entry of goods to the member countries. The role-played by the two institutions link them to the theory of absolute advantage in international trade.

References

Fergusson, F. (2007). The World Trade Organization: Background and issues. Congressional Research Service, 4, 5-10.

Irwin, D. (1996). Against the tide: An intellectual history of free trade. Princeton: Princeton University Press.

Schumpeter, J. (1981). History of economic analysis. London: George Allen & Unwin.

Smith, A. (1776). An inquiry into the nature and causes of the wealth of nations: The Glasgow edition. London: Liberty Press.

Woods, N. (2006).The globalizers: The IMF, the World Bank, and their borrowers. Ithica and London: Cornell University Press.

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Excellence Model of Management

Introduction

In the present business environment, organizations are under pressure to do better than competitors and retain customers (Kelly, 2004). It is advisable for firms to carefully examine their operating environments in order to devise success strategies.

Having a reliable excellence model is meant to provide a benchmark against which performance can be measured. The excellence model is devised so as to provide a strong motivation for organizations to work smartly to realize their goals.

Apparently, many organizations consider an excellence model to be a critical tool for sustainability and general success in business operations (Kelly, 2004). The excellence model discussed in this paper includes five key elements explained in the following subsections.

Leadership

For any organization to grow and realize the purpose of its existence, effective leadership is critical. To a large extent, a leader is guided by a vision, a mission, and values. A good leader encourages team spirit and develops a culture that promotes openness and honesty. These are all explained as follows.

  • First, a vision ensures that an organization moves towards the right direction. It ensures that the organization is able to successfully realize its goals and objectives. Lack of a vision thus leads to failed operations.
  • In addition to having a vision, a mission provides a basis of understanding why an organization exists and ensures that every single individual works towards the realization of the vision.
  • Values on the other hand help to determine what an organization considers important. They are responsible for motivating employees to work towards protecting the dignity of the organization.
  • The best performance in any organization comes when the input of everyone is respected. Unfortunately, this may not be realized without team work. Among other benefits, teams create an environment for individuals to contribute freely and also learn from others.
  • As noted earlier, good leadership also establishes a culture that urges individuals to be their best. In the present world, most employees prefer working in a flexible environment and without feeling pressured.

Customer Satisfaction

By and large, organizations exist to serve the needs of customers whether in the private or public sector. It is thus imperative for the leadership of any organization to clearly understand and work hard to surpass the expectations of customers.

  • Delighting customers enables organizations to expand their market reach and improve profits. To please customers, it is necessary to effectively address two critical issues. The quality of the design must meet the requirements of the customer and the products must perform as expected.
  • Having a strong customer focus and ensuring that customers are fully satisfied also leads to greater customer loyalty and repeat business which in turn translates to improved profits (Sukhija, 2009).
  • Focusing on customer satisfaction also creates an opportunity for the organization to understand and provide what the customers need. This helps to builds customer confidence and convinces them that the organization cares about their needs.
  • It is also vital for organizations to get feedback from customers in order to understand their level of satisfaction and make improvements where necessary.
  • Finally, a great focus on customer satisfaction makes it possible for organizations to effectively manage and improve relationships with customers. Healthy relations with customers ultimately lead to improved customer loyalty, repeat business, and improved profits.

Process Management

Greater results may be realized through effective management of processes.

  • Among other benefits, process management leads to a drastic reduction in costs, faster processing, and better use of scarce resources (Sukhija, 2009).
  • Effective management of processes also makes it possible to determine those activities that are necessary for achieving desired results.
  • Well managed processes also make employees responsible and to be fully accountable for their actions.
  • Research also indicates that effective process management leads to the achievement of results that are consistent and often predictable.
  • Finally, it is possible for management to determine the effect of important process activities and make changes where necessary.

Continual Improvement

Given that today’s business operations are carried out in a very competitive environment, continual improvement is mandatory (Sukhija, 2009). Organizations that do not pursue continual improvement are thus doomed to fail miserably. It is, however, important to note that continual improvement does not happen automatically. It must be facilitated by focused leadership and strong management. The following five issues must be addressed if continual improvement is to be realized:

  • First, it is necessary to train employees in the methods and tools of continual improvement. Performance advantage can only be realized through improved organizational capabilities.
  • Secondly, it is necessary for organizations to establish goals and measures for guiding and tracking continual improvement (Sukhija, 2009). This provides a mechanism for ensuring that employees work as expected in order to realize the desired quality.
  • Thirdly, top management in the organization must ensure that every single employee appreciates the importance of continual improvement to products, processes, and systems.
  • Another important consideration is the acknowledgement and recognition of improved performance. Where possible, the efforts of employees should be rewarded. This has the effect of motivating every individual to increase their efforts to the benefit of the organization (Sukhija, 2009).
  • Finally, it is helpful to ensure that all improvements are well aligned the organization’s strategy.

Strategy and Planning

For an organization to operate effectively, it is necessary to have a well thought out operational plan commonly referred to as a strategic plan. A strategy provides an organization with operational guidelines for a specified period of time and ensures that the organization is able to reach its goals and objectives (Kelly, 2004).

  • Strategic planning facilitates the process of making decisions that are backed with credible information. These decisions later provide a strong foundation for growth to be realized.
  • A well crafted strategic plan also helps to establish why an organization exists and ensures that leaders come up with realistic goals and objectives that do not strain the implementers in the long run (Kelly, 2004).
  • A strategic plan is also an effective tool for communicating the goals and objectives of an organization to all its employees and encourages everyone to move in the same direction.
  • The entire strategic planning process further creates an opportunity for different levels of staff in an organization to interact and freely share ideas and learn from one another.
  • Apparently, a well designed strategic plan also helps to improve the level of productivity besides increasing efficiency and effectiveness across the organization.

Conclusion

An excellence model provides a common approach for organizations to improve their performance while working to delight their customers. It is employed by both private and public organizations as an important tool for improvement. Although the approach and application may vary from one organization to another, the end goal is same for all.

References

Kelly, J. M. (2004). IMS: The Excellence Model. London, UK: British Standards Institution.

Sukhija, R. (2009). Quality Management: An Excellence Model. New Delhi, India: Global India Publications.

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Coca-Cola Company Career Development and Planning

Globalization has made employment a fundamental aspect of people’s lives today. As people engage in various activities for the purposes of generating an income, they build what is referred to as a career. Noe (2012) provides a working definition of the concept ‘career’. Noe (2012) views this concept as a collection of work related activities that an individual is engaged in. The said activities are usually sequential and distinct.

However, the work related tasks are related to each other. The current paper examines the element of career planning and development. Coca-Cola Company is used as the case study in this paper. Interviews were conducted with personnel from this company to come up with this report.

Career development is regarded as a series of activities that are in line with an individual’s skills and career objectives (Greenhaus, Callanan & Godshalk, 2009). It takes into consideration future opportunities in an individual’s work life. On its part, career planning is the identification of an individual’s skills and knowledge and aligning them with career goals (Greenhaus et al., 2009).

Importance of Career Development and Planning

According to Noe (2012), the growth of an organization relies on its abilities to formulate policies touching on career development and planning. The benefits of career development accrue both to the employer and to the employee.

The Perspective of Employees

Greenhaus et al. (2009) suggest that career planning and development is beneficial to the growth of individual employees. Growth is realized in the manner through which individual skills are developed and promoted. The importance of this concept is seen in terms of performance. Greenhaus et al. (2009) argue that career development and planning policy is essential in improving performance of the employees. In addition, this concept enhances satisfaction among employees.

The Perspective of the Employer

Career development leads to improved skills among employees. Noe (2012) points out that improved skills imply enhanced organizational performance. The concept allows the employer to increase the number of staff. The reason is that motivated employees tend to remain in the organization.

Career Development and Planning: A Case Study of Coca-Cola Company

A Profile of Coca-Cola Company

Mission

The mission of this company addresses its core objectives against which all activities are measured. Following are the goals of this company:

  1. Creating value and making a difference.
  2. Refreshing the world.
  3. Inspiring moments of optimism and happiness.

The mission helps to gauge the company’s performance in terms of career development and planning. According to Noe (2012), organizations are expected to develop career development and planning policies based on their mission statements.

Vision

To realize sustainable and qualitative growth, Coca-Cola uses its vision in order to develop the necessary policies. The vision guides all the company’s activities (Coca-Cola Company, 2013). The following make up the company’s vision statement (according to Coca-Cola Company, 2013):

  1. To be a great place to work wherein the employees are inspired to be the best they can be.
  2. To provide the world with a variety of quality brands of beverages, which respond to the demands of their customers and satisfy them in equal measure.
  3. To maintain a network of winning clients.
  4. To exercise responsibility in providing support to the community as a way of making the planet a better place.
  5. To strike a balance between profit maximization and meeting responsibilities.
  6. To improve productivity and maintain the company’s competitive advantage.

Organizational structure

The company has a three tier organizational structure as shown below:

Organizational structure
Source: Coca-Cola Company (2013)

Workforce

Statistic Brain (2012) illustrates that Coca-Cola is one of the most recognized brands in the world. The company has a huge workforce. The organization is a significant point of reference when it comes to global expansion. Studies on the company’s market capitalization are taken very seriously in the financial market. As at 2012, Statistic Brain (2012) estimates that Coca-Cola had a cumulative workforce of 146,200 people.

Sector

Since 1886, Coca-Cola has consistently produced and supplied beverages (Coca-Cola Company, 2013). The organization operates in the manufacturing sector. Statistic Brain (2012) estimates that the Coke brand of soft drinks is familiar with 96% of the global population. The same affirms the company’s dominance in the manufacturing sector.

Activities

Coca-Cola is engaged in several activities that are in tandem with the company’s mission and vision statements. Besides being a market leader in soft drink production, the company is engaged in other activities meant to give back to the community. Some of these undertakings include environment conservation and nurturing of talent through sports (Coca-Cola Company, 2013).

Workforce Planning and Staffing at Coca-Cola

How the Program Supports the Mission and Vision Statements

According to Greenhaus et al. (2009), a company’s career development and planning programs are meant to mirror the organization’s mission and vision. Coca-Cola has a three-point program when it comes to career development and planning. The programs are as follows:

  1. Identifying the career objectives of employees alongside their general aspirations.
  2. Identifying the capabilities of staff alongside their delegated duties.
  3. Continuous analysis of career opportunities.

Noe (2012) points out that career development relies on the individual’s skill development. The process of identifying career objectives, as outlined above, helps to nurture the skills of employees. The same is in line with the company’s vision of providing an environment conducive for employees’ functioning. On its part, continued analysis of opportunities brings in an element of freshness. The same is in line with Coca-Cola’s mission to refresh the world.

Policies Related to Career Stages

According to Noe (2012), careers can be classified into different stages. They include early, middle, and late stages. A proper career development and planning policy is expected to respect these stages. During the early stages of a career, Coca-Cola is aware of the scarcity of skills. Consequently, the company has formulated a mentorship policy. The policy is crafted in such a way that new employees are paired with others who possess similar skills but who have more experience.

Many employees are undecided on whether they want to advance in their field or not (Noe, 2012). To address this, Coca-Cola has formulated a policy to ensure that employees are matched with the tasks they are best suited for. As for the later career stage, the company has put in place a policy framework that makes sure staff members are guaranteed of a retirement package when they decide to leave employment.

Role of Employees, Managers, and Organizations in Career Planning

At Coca-Cola, the entire organization works as one unit in carrying out all the activities. Greenhaus et al. (2009) point out that an efficient career plan must bring together the employee, the management, and the organization at large. Employees at Coca-Cola fill out forms to participate in the career development programs. The management assumes the task of evaluating each application.

The Role of Learning and Development at Coca-Cola

Role of Employee, Manager, and Organization in Employee’s Training

An employee should be willing to enter into a training program to improve their skills (Noe, 2012). Coca-Cola has designed application forms for this purpose. The role of the management is to provide the necessary training. The organization acts as a facilitator for the process by availing funds.

Identification of Competencies

In the training program, the organization relies on the management to evaluate those participating (Noe, 2012). Through a series of tests and tasks, the management can determine the competencies of each member of staff

Tools for Identification of Competencies

According to Greenhaus et al. (2009), the best way to identify the competencies of employees in an organization is through a series of tests. Coca-Cola uses these tools to gauge the expertise of the personnel on its payroll.

Exploration Opportunities

At Coca-Cola Company, employees are given the opportunity to select the internal departments in which they would prefer to work (Coca-Cola Company, 2013). The same is in line with the organization’s objective of matching personnel with their skill levels.

Role of Employee Relations

Coaching and Counseling

Noe (2012) suggests that employees seeking to improve their skills and grow their career must engage with their trainers. In this regard, Coca-Cola ensures that there is a mutual co-existence between the staff and the trainers. The trainers in reference are the coaches and counselors.

Working-Life Programs

Greenhaus et al. (2009) illustrate the importance of having a healthy lifestyle that is not interrupted by work. To this end, Coca-Cola advices employees to take breaks from work to socialize.

Creating and Maintaining Employees’ Morale

To boost staff morale, the human resource department at Coca-Cola has put in place a number of incentives. The incentives include increased salary for employees who perform well in the training tests (Coca-Cola Company, 2013). Such incentives encourage employees to perform better.

Individual Career Plans: Conclusion

Strengths of Coca-Cola’s Policy

The company’s career development and training policy has significantly improved the morale of employees (Coca-Cola Company, 2013). In addition, the policy has enhanced service delivery in the organization.

Weaknesses of Coca-Cola’s Policy

The policy has one major weakness. An increasing number of trained employees leave the company. As a result, the company loses a significant chunk of its human resource. Similar sentiments are echoed by Noe (2012).

Recommendations

The current report recommends that companies should embrace this concept of career development and planning. According to Noe (2012), companies that have embraced this policy record a tremendous growth.

Lessons Learnt

The information gathered in this report is beneficial in improving the morale of employees. As Noe (2012) puts it, motivated employees perform better. The author of this report intends to put this lesson into good use in improving their career.

References

Coca-Cola Company. (2013). Coca-Cola journey. Web.

Greenhaus, H., Callanan, A., & Godshalk, M. (2009). Career management. London: Sage.

Noe, R. (2012). Employee training and development. New York: McGraw Hill.

Statistic Brain. (2012). Coca-Cola Company statistics. Web.

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