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Free Business Plan: Restaurant

1. EXECUTIVE SUMMARY

The following document is a plan of my intended business: Enilson’s Cafe, a coffee shop situated in Ealing Broadway. The intended premise is a 65 square foot commercial property situated on the high street. The premise would be designed in a coffee shop format, with a counter serving various items, and a large section where customers could come in during opening hours and feel comfortable. The major products sold would be coffee, tea, cappuccino, a variety of cakes, snacks and sandwiches, and food sold during lunch hours 12pm – 4pm. Product ingredients would be sourced from wholesale suppliers such as Makro, equipments that are required would be sourced from Comet and Cafe suppliers, while food ingredients would be sourced from food suppliers and outsourced Chefs.

Ealing, the location within which this coffee shop is intended is a culturally and religiously diverse neighbourhood, with a majority (55%) being of ethnic minorities. Therefore the major target market would be the general population of commuters, workers and people living within the neighbourhood, who would like widely desirable, yet religiously conscious meals. The coffee market is growing, and everyone eats good food, thereby signifying a need for our services. However, our main competitors such as Starbucks and local cafes operate in close vicinity.

The pricing strategy utilised for this venture would be that of value based pricing. Competition, cost-plus and market oriented pricing would be adopted for the different products we have on offer. Several promotion strategies would also be adopted to promote the business. The business would be registered as a Sole Trader, with the owner, being the manager. Supervisors and Shop Assistants would also be hired. The start-up cost required for the business is ?79,869, and in the first year, the cafe expects to make annual sales of ?204,480, gross profit of ?123,739 and net profit of ?13,099. Breakeven period is in the 9th month of the first year.

The Cafe’s mission is to join the Ealing community, provide appropriate products that suite their tastes and deliver exceptional service. It is our objective to use this initial store as a stepping-stone towards higher sales and more store openings in neighbouring areas and throughout London. We intend to become a multinational organisation just like Starbucks in 5 – 10 years, and we hope that you can join us in that dream.

2.COMPANY SUMMARY

This following document is a business plan report for a coffee shop start-up called Enilson’s Cafe. It would be located on the corner of The Broadway, West Ealing, London. The business premises would be leased from the current owners, and a total of 130 square feet would be secured up front, however, with the permission of the Landlord, only half of that space (65 square feet) would be utilised in the first year, pending business growth.

The business premises is currently being refurbished by the previous owners, however once done, it would be situated in a strategic location within the neighbourhood, with easy access to public transportation and a short distance from the train station. The premises would be designed to suite the coffee shop format, a counter would be situated adjacent to the main entrance, wherein customers can easily place their orders, whilst chairs and tables arranged in various seating formats, would be situated over the rest of the shop. The facilities that would be present within the store for it to run smoothly are expressed in Table 3, which also contains a breakdown of the price and the total start-up costs.

No licenses whatsoever would be required from the local committee, as the cafe would not be selling alcohol or opening beyond 11pm at night. However, information pack and booklets would be sought form the Healthy and Safety Standards agency within Ealing. The business is required by law to register premises used for food businesses, and strictly follows food safety regulations (Ealing, 2010). A licensed premises insurance cover would be taken out from Anglo Pacific Consultants (London) Ltd, which offers “package policy for public houses, wine bars, restaurants and cafe’s,” the insurance package covers all business risks including terrorism cover, personal accidents, and theft (Yesquote, 2010).

The business would be registered as a Sole Trader business, with me, Enilson Helder, being the sole owner of the business. All income from the business would be recorded as personal income, and I would be liable for any debts incurred. All profits would be taxed as income.

3.PRODUCTS AND SERVICES

Enilson’s Cafe would adopt a Coffee Shop format, in which the major product being sold would be a variety of coffee types, while additional products would also be sold. Coffee, Tea, Coffee Latte, Tea Latte, Cappuccino, amongst others would constitute the majority of our offering. Carbonated and no-calorie soft drinks would also be sold. A variety of cake, muffins, sandwiches, crisps, and chocolates amongst others would be sold within the cafe. During lunch periods, particularly between 12pm – 4pm, food menus would exists, cooked particularly by an outsourced chef, who would sell Rice, Chips, Chicken, Mashed Potato, Gravy amongst other lunch time meals.

Suppliers:

The refrigerator, coffee machines, microwave, dishwasher, and all other smaller but vital electronic equipments would be sourced from Comet (www.comet.co.uk), where a business membership account would be created.

All other catering equipments such as plates, spoons, trays, would be sourced from Makro (www.makro.co.uk), that sell a variety of wholesale food items for small businesses.

Food ingredients such as coffee beans, flour and sugar for in house baking or feed preparation would also be sourced from the superstore, as they offer a reasonable discount for small and medium business owners.

Sandwiches would be sourced from Gourmet Sandwich Co (www.gourmetsandwich.co.uk); they provide wholesale sandwiches on a day-to-day basis for small businesses, while the cakes would be sourced from similar external suppliers.

The lunch menu would be sourced by hiring an external chefs who cook on their premises and bring in the food during lunch hour, companies such as Sundrica (www.sundrica.rtrk.co.uk), a local catering company can provide these services.

The services provided would be a hospitality service, wherein customers can come in, have a drink, eat lunch or a snack, and just relax. Sofas, in addition to wooden chairs, would be provided for customers that would like to have a seat with friends, and forget their time within the store. The music would be of several genres, but would mostly alternate between popular Pop/Alternative and Hip Hop music. Staff would be friendly and helpful.

There are a number of direct competitors within close vicinity to the intended location. Subway is directly opposite and a Roosters Chicken is close by (Google Maps, 2010), both of which could prove a threat for lunchtime meals. However, unlike these competitors, Enilson’s Cafe provides seating space and lunchtime food. They also sell Coffee and Tea, in addition to soft drinks.

4.MARKET ANALYSIS

The Ealing borough is currently home to over 300,000 individuals, with 12,800 residing in close vicinity of the store. The population of individuals aged 20 – 44, are higher than the UK average. The region has one of the highest levels of international migration within London, and is the 4th most ethnically diverse, and 6th most religiously diverse borough within the UK, which in itself is a major attractant. 55% of all Ealing borough residents are from ethical minorities, 41% of which were not white (Ealing, 2010). Therefore the different market segments that exist are based mainly on ethnicity, which is a major dividing factor within the population.

The major target market segment is for the general population of commuters working or living around the store. The location is currently on a road in which several buses pass, and houses are located. People living and working within this region, no matter their ethnicity or nationality would be sought as potential customers. We intend to sell a wide vary of ethnically acceptable food for all residents. Meat and Chicken would be halal, but sold in a contemporary and modern fashion. Meals such as Chips, Chicken, and Mashed Potato would be suitable for everyone, and the Muslim population would appreciate the religious considerations. According to Mintel (2009), coffee shops are always sought after, and due to the scarcity of one in immediate vicinity to the proposed location, then it could be said that there is a need for one. The food products being sold are fresh, which would appeal to people that want to eat good food.

The coffee market has grown consistently over the years, with large stores such as Starbucks, Costa, and Pret A Manger, breaking the ?1billion mark in 2007 (Mintel, 2009). There is room for growth within the UK, as the store density of coffee shops is lesser than that of developed countries such as the US, while the UK still has a low level of coffee consumption compared to other developed countries. Direct competition is low within the Cafe’s close vicinity, however the shopping mall opposite however contains a Starbucks and several other Cafes, which pose a considerable threat. Stores such as Starbucks, Costa, Cafe Nero, Pret A Manger, EAT, and several other established coffee and cafe chains pose a considerable threat, due to their long established status, and the financial resources at their disposal to displace competition.

5.STRATEGY

The pricing strategy being adopted by the cafe would be based on the overall strategy of the firm, which is to target low – mid income earners (population demographic), with easily affordable coffee and lunch. Therefore, our products would not be priced too high that it would deter customers; neither would be priced too low that it would be unprofitable. Due to the broad based generic product strategy we are adopting (Johnson et al, 2008), we would be adopting a value based pricing strategy, in which the price of each product being offered would be based on how much we believe the customers within this region are willing to pay.

Enilson’s Cafe intends to adopt the following pricing tactics for all/some of our product ranges.

Competition based pricing would be adopted for the price of Coffee and Tea products. They would be based mostly on the price being offered by competitors in the market. Though ours would be priced slightly cheaper, it would still be brewed and prepared to high quality, with a good taste.

Cost-Plus pricing would be adopted for those products such as Sandwich and Cakes that we have sourced from external vendors. If they have been bought at a wholesale price of ?1.50 each, then they may be priced at ?1.95 or ?2, depending on what competitors in the immediate vicinity charge.

Lastly, market oriented pricing would be utilised for the food products sold during lunch break. We expect to attract a large number of low earners, and pricing our products appropriately would assist our strategy (Monroe, 2003).

Sales Forecast

The following is a weekly sales forecast for Enilson’s Cafe. A minimum of 200 coffees, tea, cappuccinos and soft drinks would be sold each weekday for an average price of ?1.50, less on weekends. 100 cakes, sandwiches and crisps would be sold daily for an average price of ?1.50, more on weekends.

Table 1: Cafe Sales Forecast

MonTueWedThurFriSatSunWeekly
Drinks?300?300?300?300?300?200?200?1,900

Snacks?150?150?150?150?150?180?180?1,110

Food?150?150?150?150?150?250?250?1,250

Total

?4,260

Promotional Mix

The major forms of advertising for Enilson’s Cafe would be in the form of in store displays, brochures and catalogues available to new comers to the store, and external banners. Full-page adverts would also be placed in the Yellow Pages, online and offline, while print ads in newspapers particularly indigenous to Ealing would be utilised.

Personal selling would be utilised on all customers, especially new ones, in order to make them repeat customers. All staff would be taught how to provide the sort of service required for customers to come back frequently.

Sales promotions would be conducted within the first month of opening the store. Free coffees and snacks could be offered to customers as a form of tie in to ensure their continued patronage.

The major form of public relations to be conducted would be in local newspapers, an article that discusses our products, services and how we intend to please the local populace.

The business would be launched during a public holiday. Most probably a bank holiday weekend or Muslim holiday when most residents would be out shopping or celebrating.

6.MANAGEMENT STRUCTURE

As the business is being operated as a sole trade, it would be composed mainly of Enilson, as the store manager and owner.

Other members of the management team would include a Cafe supervisor/Assistant Manager, who would supervise procurement of supplies and running of the store.

The Staff Supervisor would supervise the rota and ensure that all staff are being friendly and offering the level of service expected.

Store assistants would also be present and would be the company’s main point of contact with customers. They would receive orders and attend to each customer’s needs.

Table 2: Sample Rota and Payroll

9am – 6pm

9am – 6pm

9am – 6pm

9am – 6pm

9am – 8pm

10am – 8pm

10am – 6pm

Store Hours

9

9

9

9

11

10

8

65

Wage

Mon

Tue

Wed

Thurs

Fri

Sat

Sun

Weekly

Wage

Manager

?10

7

7

7

7

7

5

0

40

?400

Asst Mngr

?8.50

0

7

8

9

0

8

8

40

?340

Staff Supervisor

?7.50

8

8

0

0

8

8

8

40

?300

Sales Assistant 1

?6.50

5

5

0

0

5

5

0

20

?130

Sales Assistant 2

?6.50

0

0

5

5

0

5

5

20

?130

Sales Assistant 3

?6.50

8

8

8

8

0

8

0

40

?260

Sales Assistant 4

?6.50

5

5

0

0

5

5

0

20

?130

Sales Assistant 5

?6.50

0

0

5

5

0

5

5

20

?130

Total Hours

240

?1,820

7.FINANCE

The start-up cost for Enilson’s cafe would be based on the price of the following facilities. The total startup cost for the venture would therefore be ?79,869, as illustrated in Table 3.

Table 3: Start Up Cost. Source: Startups, 2010; Buycatering.com)

FacilitiesForecast Price
Facility Rent?30,000
Industrial Refrigerators?1,295
Dishwasher?1,275
Six Burner Range?1,899
Heated and Refrigerated Merchandisers?3,475
Microwave?300
Coffee/Cappuccino Machine?2,175
Domestic Food Appliances?3,450
Kitchen?9,500
Restroom?2,500
Furniture?9,000
Cafe Outfitting?15,000
Total?79,869

Table 4: Projected Profit and Loss 1 Year

Revenue

?204,480

Cost of Sales

?80,741

Coffee

?18,240

Snacks

?32,501

Food

?30,000

Gross Profit

?123,739

Expenses

Staff Salary

-?68,640

Rent

-?30,000

Maintenance

-?6,000

Misc

-?6,000

Net Profit

?13,099

The sales forecast depicted in Table 1 has been utilised for the projected profit and loss statement. All weekly forecast has been multiplied by 4 weeks in order to get the average forecast for one month (for the cash flow), then multiplied by 12 months. The cost of sales has been calculated based on projected cost of goods obtained from Startups (2010). The profit margin for coffee used was 80% that for Snacks was 40%, while the profit margin for good was 50%. The net profit for the first year is ?13,099.

Table 5 is a representation of the forecast cash flow and breakeven analysis for the first year of business. The information presented above illustrates that Enilson’s cafe would make a profit of ?13,099 in the first year of business. The breakeven would be in the 9th month of the first year. Particularly, money back analysis illustrates that the company may not get its total investment of ?79,869 back within the first year. Most probably in the second year depending on how well the cafe is able to improve sales and profit.

Table 5: Cash Flow Forecast (1 Year)

Month

0

1

2

3

4

5

6

7

8

9

10

11

12

Revenue

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

?17,040

Cost of Sales

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

?6,728

Coffee

?1,520.0

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

?1,520

Snacks

?2,708.4

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

?2,708

Food

?2,500.0

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

?2,500

Gross Profit

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

?10,311

Start-Up Cost

-?49,869

Staff Salary

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

-?5,720

Rent

-?30,000

Maintenance

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

Misc

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

-?500

Monthly Profit

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

?3,591

Profit Cumulative

-?30,000

-?26,408

-?22,816

-?19,225

-?15,633

-?12,042

-?8,450

-?4,858

-?1,267

?2,324

?5,916

?9,507

?13,099

Total Cumulative

-?79,869

-?76,277

-?72,685

-?69,094

-?65,502

-?61,911

-?58,319

-?54,727

-?51,136

-?47,544

-?43,953

-?40,361

-?36,769

Start-up capital required: ?79,869.

Operating capital required till breakeven: First month Expense = ?6,728

Total Capital Requirement = ?86,597, half of which is sought from bank.

8.REFLECTIVE ESSAY

During the business plan writing session, we were all meant to work in teams of 2, wherein each team member would contribute equally towards the achievement of the eventual business plan. We were all meant to research a particular business idea, and come up with a plan through which we could secure funding from the bank. However, for unforeseen reasons, I was unable to join a team and had to do mine myself. The first business plan I wrote was on a Barbershop, and resulted in a fail.

I was told I failed because I did not write a plan on a company within the hospitality sector. Most of us were meant to write on restaurants and hotels, and I wrote on a barbershop. Now that I think back towards that decision, I believe that I wrote it that way because I was unsure of the true requirements of the essay. I had difficulties coming up with a true hospitality company to start up a business with, thus deciding to go ahead with something I was pretty familiar with, the barbershop. Now that I had failed and had to choose another, I eventually chose a coffee shop cafe, after much deliberation. My decision regarding the coffee shop cafe and its location were of utmost significance to me, because if I truly did have the funds, that is what I would have invested in. The location did not have any immediate coffee shop and I thought that was something that neighbourhood needed.

The decision to write a business plan left me initially confused because I had no idea on how to write one. We were provided with notes and guides on how to write it but I was still confused, and judging by the fact that I was meant to write mine myself when most of my classmates did theirs in groups, I felt left out and thought I was not going to make it. However I sought advice, and did all that was required of me, and eventually I have found that it is educating creating such a plan. My newfound skill in research on businesses makes me proud, as this is not something I could easily have boasted about previously. Also, it has taught me how to undertake financial analysis, especially using cash flow forecast in ascertaining how much a business is realistically going to make given its condition, location and potential. Which is satisfying. During future research, I wound endeavour to seek advice prior to commencing any project I am not sure about, that way I would not fail.

9.APPENDICES

Appendix requirements such as start-up cost, list of suppliers, sales calculation, duty rotas, staffing and planning applications are already included in the main body of the business plan.

a. Market Research Analysis

The following market research analysis is based on Mintel’s (2009) report on Coffee Shops in UK.

The rapid expansion amongst coffee shops has eroded their USP and significantly increased competition within the industry.

Operators within the UK market are generally optimistic about the future growth of the coffee shop format.

As a result of the economic recession, an increasing number of customers are resorting to eat indoors or take lunch to work to increase savings.

Branding is increasingly becoming a prerequisite and a key factor for success within the industry.

Ethical responsibility is increasingly becoming an issue amongst coffee shops that mainly source their produce internationally.

There is huge competitive rivalry amongst competitors within the industry, with companies such as Starbucks, Pret A Manger, EAT, and Cafe Nero, leading other coffee brands.

Barriers to entry within the industry are very low, anyone can open a coffee shop with little cost.

Buyers have a high bargaining power due to the availability of a wide number of coffee shops within every neighbourhood, therefore coffee shops that have a premium price, without high quality products or effective branding may lose out.

Within the UK, more than half of all adults visit coffee shops, although on a relatively infrequent basis, while per capital coffee consumption within the UK is much lower than in other countries, thereby giving room for growth.

Cost issues such as overhead cost, coffee prices, staff costs and utility prices have all increased substantially in recent years.

Growth within the population of 20 – 34 year olds, and that of ABC1 customers, should increase the demand and patronage in coffee shops.

Coffee shop industry is relatively fragmented with a variety of shops operating in different geographical markets, citing high competition and potential for consolidation.

The lack of differentiation, increased competition, premium perception and failure to engage customers are all seen as weaknesses within the Coffee Shop industry.

However, there exists substantial growth potential, economy of scale to be achieved, wide product range to be utilised and brand equity to be built, all of which could substantially increase competitive advantage.


b. FLOOR PLANS


c. SAMPLE MENU AND DRINKS LIST

Drinks

Coffee

?1.80

Cappuccino

?2.50

Latte

?2.20

Carbonated Drinks

?1.00

Non Carbonated Drinks

?1.20

Water (75cl)

?0.75

Snacks

Cake

?1.95

Muffin

?1.70

Sandwich

?2.50

Crisps

?0.50

Chocolate

?0.50

Food

Mashed Potato and Chicken

?4.95

Rice and Chicken

?4.55

Fries and Chicken

?3.99

d. SAMPLE COSTINGS

Average cost for products sold

Drinks

80% Profit

Coffee

?0.36

Cappuccino

?0.50

Latte

?0.44

Carbonated Drinks

?0.50

Non Carbonated Drinks

?0.60

Water (75cl)

?0.38

Snacks

40% Profit

Cake

?1.17

Muffin

?1.02

Sandwich

?1.50

Crisps

?0.36

Chocolate

?0.30

Food

50% Profit

Mashed Potato and Chicken

?2.48

Rice and Chicken

?2.28

Fries and Chicken

?2.00

Profit figures are obtained from Startups (2010), as described in the main text.

e. OPENING TIMES

Monday 09.00 – 18.00pm

Tuesday 09.00 – 18.00pm

Wednesday09.00 – 18.00pm

Thursday09.00 – 18.00pm

Friday 09.00 – 20.00pm

Saturday10.00 – 20.00pm

Sunday 10.00 – 18.00.pm

BUSINESS LAUNCH POSTER


10. BIBLIOGRAPHY

Business Link (2010) Price your product or service, www.businesslink.gov.uk, accessed: 21/05/10

Ealing (2010) Starting a food business; Ealing Demographics, www.ealing.gov.uk, accessed: 21/05/10

Google Maps (2010) Ealing Broadway, www.maps.google.co.uk, accessed: 21/05/10

Johnson, G., Scholes, K., and Whittington, R. (2008) Exploring Corporate Strategy, 8th edition. Prentice Hall

Mintel (2009) Coffee Shops – UK – February 2009, www.mintel.com, accessed: 21/05/10

Monroe, K. B (2003) The Pricing Strategy Audit, Cambridge Strategy Publications, p4

Startups (2010) Starting a Coffee Shop, www.startups.co.uk, accessed: 21/05/10

Yesquote (2010) Restaurant Insurance and Cafe Insurance, www.yesquote.co.uk, accessed: 21/05/10

Categories
Free Essays

International Business Environment Essay

EXECUTIVE SUMMARY

Careful consideration must be given to key factors before a company makes the decision to expand into foreign markets. PharmaMed, a U.S. based multinational manufacturer and distributor of medicines and consumer healthcare company, has identified Mexico as an extremely promising country for expansion. It is true that U.S. commercial expansion in Mexico has grown considerably over the past years, especially since the 1994 North American Free Trade Agreement (NAFTA) began promoting industrial development. Nonetheless, PharmaMed is aware that Mexico is not a straightforward country to operate in and economic, cultural and political forces can dent commercial objectives. This paper seeks to examine the suitability of the target country for further pharmaceutical expansion. We will conduct an analysis of cultural, political, economic, legal and protectionist issues in order to devise an international expansion strategy. The findings will determine recommendations on whether PharmaMed should adopt a trade only policy or venture into Foreign Direct Investment (FDI).

1 Introduction

Globalisation progressed significantly in the past decade facilitated by modern communication, transportation and improved infrastructure as well as political choice to consciously open markets to international trade and finance (WTO, GATT, as well as regional trade blocs: EU, NAFTA, ASEAN, etc). Besides the possibility of increased sales and revenues, there are several reasons why companies should consider targeting the global marketplace. Toftoy (1999) identifies the drive to offset sales decline in the domestic market. Even if the sales are not declining in the domestic market, being present in other markets can act as a safeguard for the future. A further international trade theory is put forward by Vernon (1966, 1971) and Wells (1968, 1969) arguing that a country will begin by exporting its product and later undertaking foreign direct investment as the product moves through its life cycle. Levitt’s 1965 Product Life cycle model illustrates this pattern (see figure 1)

Essentially, macroeconomics risks and operational risks are diversified by engaging in business in more than one country. If operations are underperforming in one country, hopefully, the performance will be offset by profitable performance in another country. Another argument for overseas trade is the idea of improving competitive position. This, ties in with the opportunity to lower manufacturing and labour costs. Additionally, possible funding benefits from the trade block to which the host country belongs may also influence a company to expand overseas.

However, cultural and language barriers, political issues and variations in religious beliefs, societal norms and business negotiation styles impact how business should be conducted with international counterparts.

The aim of this report is to provide guidance to PharmaMed’s proposals to expand overseas into Mexico. Key analysis on the host country will help the company decide whether to engage upon an export only policy or to undertake investment in the country.

1.1 The Pharmaceutical industry: PharmaMed

Consistent with most industries “the economic, social, cultural and political changes that come with globalization create both opportunities and challenges for pharmaceutical industry” (Mansell, 2010). The Wall Street Journal (July 2009, cited in Medical News) pinpoints and an important development in the U.S. pharmaceutical industry in its observation that for the first time in half a century, sales of prescription drugs declined in 2009, historically the industry’s biggest and most profitable market. Consequently, the industry reaction is a more favourable perception of expansion into developing countries. Indeed, Pfizer has set up operations in China, India, Brazil, Russia and Turkey. With sales totalling $1.4 billon from emerging markets in the first quarter of 2009, the company is “benefiting from the belief… in the developing world that branded medicines are worth paying a premium for because they are safer and more effective than generics”(Wall Street Journal, July 2010). A look at such positive success stories both encourages and forces PharmaMed to follow suit in order to maximize revenue growth. Like its competitors PharmaMed has witnessed declining sales in its primary medication distribution offering. As a result senior management has set in place investigative plans to expand into the developing country markets. As such, the focus is on the E7 Countries (China, India, Brazil, Russia, Indonesia, Mexico, and Turkey) in particular Mexico. This interest is based on the literature that ‘the E7 countries represent increasing opportunities for pharmaceutical companies constrained by maturing markets in the West’ (Espicom Business Intelligence, 2010).

1.2 Mexico

Emerging Pharmaceuticals Markets Globally (2008) reports that the E7 pharmaceutical markets are expected to grow at a CAGR 11% between 2007 and 2012, reaching revenues worth nearly $116 billion. In contrast the G7 pharmaceutical markets are projected to grow at CAGR 4.95% between the same periods. The question is what makes Mexico a favourable environment for expansionSignificantly, Espicom Business Intelligence (2010) in its pharmaceutical market analysis report observes that 2010 saw the announcement of regulatory measures to simplify regulatory procedures. Which include the transmission of drug registration or increasing OTC (over the counter) medicines already registered in the USA and Canada. These measures should prove to be attractive to a manufacturer and distribution of Medication Company, such as PharmaMed.

2The business system and the national culture

The concept of National Business System as launched by Whitley (1999) centres around the belief that companies do not operate in a vacuum, but are economic actors affected by numerous influences from the environment. Companies operate in markets, business sectors and have to comply with law and regulations. The majority of these influences are linked to the nation in which the company is operating. The U.S. and Mexico share many common interests related to trade, investment, and regulatory cooperation are closely tied in other areas as well. Indeed, the economic relationship with Mexico has strengthened considerably under the 1994 NAFTA alliance in the form of the 1993 and 1998 Foreign Investment Law (FIL). Which, provided a broad scope for foreign investment and simplified the process of registering foreign companies. Figure 2 shows that as a result trade between the two countries have more than tripled since the agreement was implemented (Villarreal, 2010).

Figure 2: Trade effectives of NAFTA implementation. Total U.S. Mexico trade in goods in billions of US dollars

Importantly, lower NAFTA tariffs on pharmaceuticals have fostered greater choice for imports needed (US Department of Commerce, 1994). A world class patent regime in Mexico, bolstered by NAFTA’ patent provision, gives innovators a favourable environment to launch new components. Indeed, the Mexican pharmaceutical market is the leading and most developed in Latin America and the ninth largest worldwide, with sales valued at US$13.5 billion in 2006 (Massachusetts Office of International Trade and Investment (MOITI, 1996). It is important to take the state as the basic geopolitical unit for studying the operation of companies. States remain the primary unit of political competition and mobilization. Thus, individuals and collective actors usually organize themselves at the national level to compete for state resources and legitimacy. As such an organization wishing to enter trading activities within a given country will be subject to regulations, and the pharmaceutical industry is no exception. Thus, MOITI (1996) cites that according to current regulations, in order to export pharmaceutical products to Mexico, the exporting country must register and import those pharmaceutical products through a host pharmaceutical manufacturer, a local manufacturer holding a sanitary licence for such products. This firm acts a “guarantor” with local authorities vis a vis the foreign company, in particular with regards to manufacturing practices, registration and quality control.

Connected with the national business system are cultural issues that will inevitably come into play in the international trading process. How is this reflective in the pharmaceutical industryAnalytical insight into Mexican culture reveals the importance of the family; the deeply held rooted Roman Catholic religion, the nationalist pride, the high degree of personal sensitivity of Mexicans and the importance given to time. All of which have implications in communication styles, decision-making, negotiating, contracting and planning and business etiquette. Cultural sensitivity must be the foundation of business activities. The literature defines cultural sensitivity in rather general terms, such as “understanding the cultural context of each market and the degree which (markets) are culturally similar” (Toyne and Walters, 1993). There is, however, agreement that cultural sensitivity requires cultural awareness, avoidance of culture-bound thinking and reduction of cultural biases (Douglas and Craig, 1983, Toyne and Walters, 1993). There is also consensus that culture is multidimensional. For example, Hofstede (1991) identifies five dimensions along which culture differs: power distance, individualism, uncertainty avoidance, masculinity and long term orientation. Figure 3 illustrates the results of these dimensions when applied to Mexico.

In carrying out our analysis on Hofstede’s cultural dimensional scores we will draw on information from the itim International website. As can be seen Mexico’s highest Hofstede dimension is Uncertainty Avoidance (82), indicating that society’s low level of tolerance for uncertainty, does not readily accept change and is risk adverse. Mexico’s low Individualism (30) ranking indicates that an inclination to collectivism rather than to individualism. This is manifest in close long term commitment to the ‘member group’, be it family, extended family, or extended relationships. A high Masculinity ranking (69) indicates a high degree of gender differentiation roles. The male dominates a significant portion of society and power structures. Finally, the high ranking Power Distance Index (81) is indicative of a high level of inequality of power and wealth within Mexican society. To achieve an appreciation of Mexico’s and the USA’s cultural makeup it is vital to provide a comparative study of Hofstede’s analysis of cultural dimensions applied to the USA (see figure 4).

Figure 4: Geert Holstede Cultural Dimensional scores for USA

Importantly, the USA’s Individualism score is the highest in the world, demonstrating the high extent to which people look after themselves and their immediate family only. The Power Distance score of 40 indicates that U.S. society is decentralized with a flatter organizational structure, a smaller portion of supervisors and employees empowered to make their own decisions. A high masculine score places greater value on success, money and material possessions. Americans score 62 on the masculinity, 24% higher than the world average. The USA’s UAI score of 46 is 38% lower than the world average. This suggests that Americans tolerate much more risk and are more comfortable with ambiguities and rapid change. Finally, the USA’s low LTO score of 29 indicates that the importance of the beliefs of meeting obligations and also reflect a tendency for an appreciation for cultural traditions.

In order to achieve successful international trading results in Mexico PharmaMed must respect Mexican cultural strong uncertainty avoidance, low individualism, centralized power structures and higher masculinity scores. The purpose of employing Hofstede’s dimensions is to show that U.S. culture and Mexican cultural differences do not doom overseas expansion to failure. Instead, they suggest that cultural sensitivity and cultural adaptation on the part of both countries is especially important to the success of the venture. This chapter focused on how understanding of the local culture and business environment can give managers an advantage in the pharmaceutical industry. Such differences in culture and the way of life in Mexico necessitate that managers develop international expertise to manage on a contingency basis according to the host-country environment. International managers can benefit greatly from understanding the nature, dimensions, and variables of a specific culture and how these affect work and organisational processes. This cultural awareness enables them to develop appropriate policies and determine how to plan, organize, lead, and control in a specific international setting. Such a process of adaptation to the environment is necessary to implement strategy successfully. It also leads to effective interaction in a workforce of increasing cultural diversity, both in the United States and Mexico

3US-Mexico trading patterns in the Pharmaceutical INDUSTRY

Importantly, lower NAFTA tariffs on pharmaceuticals have fostered greater choice for imports needed (US Department of Commerce, 1994). A world class patent regime inMexico, bolstered by NAFTA’ patent provision, gives innovators a favourable environment to launch new components. Indeed, the Mexican pharmaceutical market is the leading and most developed in Latin America and the ninth largest worldwide. According to Business Monitor International‘s (BMI) Mexico Pharmaceuticals & Healthcare Report (2010) the total drug market in Mexico will increase from US$9.79bn in 2009 to US$18.96bn by 2014 at a compound annual growth rate (CAGR) of 14.1%. Thereafter the CAGR will slow to 7.6% to 2019, giving a final market value of US$27.48bn. Per-capita spending on medicines will be US$170 in 2014; up from US$91 in 2009, while the proportion of GDP dedicated to drug spending was 1.13% in 2009 and will reach 1.25% by 2014.

The presence of the US Food and Drug Administration FDA) in Mexico should strengthen existing regulatory ties between the two countries.
BMI (2010) expects the FDA to be in close contact with Mexican authorities regarding food and medicine production in order to boost the safety of all products destined for the US, while also encouraging regulatory harmonisation and knowledge transfer.

How can PharmaMed compete in this marketClearly to survive in such a competitive market PharmaMed will have to be relevant and current in the Mexican pharmaceutical industry, whilst being legally protected. This means being fully up-to-date on all regulations regarding exporting and importing, licence requirements, approval of brand names, labelling requirements, certificates of quality and marketing practices.

We suggest that entry into the Mexican market should initially be aimed at Seguro Popular, the Mexican state-run health insurance scheme for those on low incomes or without other healthcare options. This is because according to BMI (2010) Seguro Popular intends to enrol an additional 12mn people in 2010. In 2011, another 6mn people will be added to the scheme, giving a total of 18mn new additions and comprising the last remaining segment of the Mexican population eligible to be included in the programme. This coincides with changing health patterns in the Mexican population – pointing at an increase in diabetes, cardiovascular diseases, stroke and cancer (Roberts and Stott, 2010). Since we specialise in medications for these diseases, taking advantage of such changes should give us a competitive edge.

4The Exchange Rate Regime

The literature agrees that the Mexican currency crisis of 1994 induced important changes in view of policy makers and economists concerning choice of exchange rate regimes (Villerreal, 2010). A number of authors began to argue that a world of high capital mobility, intermediate regimes are highly prone to currency crisis. The notion gradually started to emerge suggesting that developing countries should either have a pure floating exchange or a hard ‘peg’ regime. As a result after the crisis Mexico let the peso float while using a monetary policy of monetary aggregates to control inflation. In 1999 the country switched to an inflation targeting monetary regime, with monetary instruments to determine interest rates. Forex Realm (2011) report that one US Dollar equates to 13.2085 Mexican pesos. The observation is also made that like the U.S. the Mexican peso is considered to be one of the important national currencies, which is used in millions of currency trading and conversion. However, Pharmaletter (Jan. 2011) states that the current Mexican peso against the U.S. dollar is causing uncertainty, with increasing pharmaceutical costs. This is expected to affect previously registered import levels. The overall pharmacy sector is facing stagnation, into negative growth. On a positive note, the downturn and evolving regulatory environment are fuelling generics consumption. This market doubled in 2010.

In this chapter we also need to concentrate on the falling value of U.S dollar against major currencies (see figure 5).

Figure 5: Deliotte Research Study (2006)

As identified in a Deloitte Research Study (2006) Steep and long term shifts in the foreign exchange rates create discrepancies in cost and revenue models resulting in operational and strategic risk. To formulate effective risk management strategies, PharmaMed needs to assess the risk exposures rising from sensitivities in cost and revenues under various exchange rate scenarios.

Exchange rate shifts can create shifts across the supply chain. If the dollar slides, pharmaceutical companies with offshore sourcing and operations may face soaring input material and shipping costs and supplier risks. PharmaMed would see a hike in labour costs in dollar terms. On the demand side if the company decides to pass on the increased costs to customers it may result in reduced demands or loss of sales. Moreover, the exchange rate risks faced by customers can impact PharmaMed directly, significantly rising strategic and operation risks.

4.1 Political Risks

Risk in international trade is unavoidable, especially when it involves countries in the developing world (Busse, 2005). Among many of the risks involved in it, the political ones are the most difficult to measure, while having the potential of greatest damage as well. The political risks themselves can be classified according to their different origins and etiologies. That is, change of government, violent conflicts, sanctions and political trade risks

4.1.1 Change of Government

The political risks that can confront an international trader can arise in several ways. The most common of these is the ‘change of government’ (Fitzpatrick, 1931).

4.1.2 Violent conflicts

Developing countries face a higher risk of violent conflicts (Oetzel et al. 2007). Violent conflicts, whether internal or external are invariably damaging to trade

4.1.3 Sanctions

Another political risk to international trade exists in the form of conflicts without violence. International sanctions are the main form of these, which may be precipitated by an action of the host country.

4.1.4 Political trade risks

A peculiar form of political risks is changes in trading pattern imposed by politics. An example is a sudden ban on all imports or exports of a particular commodity, due to the sudden popular mood against those trades (Orden, 2004).

How do the above apply to MexicoBremer (2010) argues that raging drug gang violence, a tepid economic recovery, flagging momentum on economic reforms and declining oil output are risks to watch for in Mexico. All of these ties in with the above citations. In relation to the pharmaceutical industry the publication, Pharmaceutical Technology (Jan 2009) identifies that a significant hurdle still to contend with is protection of intellectual property, while the large-scale prevalence of counterfeit drugs remains a major challenge.

How can PharmaMed manage the political riskUnfortunately, there isn’t a perfect solution. Investing always has risks — and political risk is one of them. Yet without risk there would be no reward. To plan for managing a risk, the first step is to compute the probability of its occurrence. Once that is done, a decision needs to be taken as to whether in the light of that risk and the probable loss arising from it; it makes any sense to continue with the business. A difficult and tricky question is to quantify this risk in monetary terms, which alone is a sensible indicator for the need to spend on planning for it. Once it is decided to continue with business in spite of these risks, then necessary provisions need to be made for the losses likely to arise from them, while also attempting to hedge against each of those risks to the best extent possible.

5FDI or Export

In light of our research should PharmaMed choose an exporting strategy or a FDI (Foreign Direct Investments) in expanding into MexicoWhen an organisation has made a decision to enter an overseas market, there are a variety of options open to it. These options vary with cost, risk and the degree of control that can be exercised over them. The simplest form of entry strategy is exporting using either a direct or indirect method such as an agent, in the case of the former, or countertrade, in the case of the latter. More complex forms include truly global operations, which may involve joint ventures, or export processing zones (all of which are forms of Foreign Direct investment). Having decided on the form of export strategy, decisions have to be made on the specific channels. On the other hand, FDI offers more far reaching influences for the investing country because it involves ownership, whole or partial control of a company in a foreign country. Drawing on the research presented in this paper, especially those that relate to uncertain pharmaceutical future growth in Mexico, we propose a mixed foreign market entry strategy.

That is, combining FDI with exporting rather than choosing one single foreign market entry. The research by Johanson and Vahlne (1977) shows that many firms minimize the uncertainty risks in internationalization by adopting an incremental approach. Specifically, they expand their foreign operations gradually, beginning with entry into foreign markets with similar cultures before moving on to the dissimilar ones. And, for each foreign market entry, the process starts with exporting, followed by setting up local sales subsidiaries, and then the establishment of production facilities. We believe that this incremental process will allow us to learn from the experience we acquire in the initial operations, and use this knowledge to reduce the uncertainty we face in subsequent expansion efforts. Additionally, we believe that this will protects PharmaMed from the downside risks of failure by increasing overseas resource commitment over a certain time period, contingent on the performance of prior foreign operations.

6CONCLUSION

This report has assessed PharmaMed’s intended expansion into Mexico, in light of cultural, industrial and macroeconomic factors. The results garnered from this analysis highlight that for PharmaMed to achieve successful operations in Mexico, it must understand its culture and develop the necessary expertise required to manage the host environment business.

Exchange and Political risks are also factors that have been identified as critical to the success of PharmaMed’s expansion into Mexico, and this must be addressed appropriately. The incremental process of foreign expansion has also been found to be an ideal option for expansion into Mexico, which could start with exporting, then setting up local sales subsidiaries, and finally the establishment of production facilities. Therefore, based on these analyses, it is recommended that PharmaMed does expand into Mexico, with particular emphasis on managing political, exchange rate and cultural issues that may arise.

7Recommendations

Before acting we have to plan our approach. Here are helpful recommendations for PharmaMed:

1. Research local product requirements

Find out about customer preferences, local standards and product regulations. We may need to change the product’s appearance, or to fundamentally redesign it.

We may need to translate labelling and instructions redesign packaging to suit the local market. We may even need to change your product’s name or logo if they have unfortunate connotations locally.

2. Find out how local commercial practice differs from the U.S.

Find out about local business behaviour.

Investigate how products are marketed and sold, including any legal restrictions.

3. Identify the key contacts we need to build relationships with.

Key contacts may include customers or suppliers, agents, trade organisations and government departments.

4. Decide what use we will make of agents

.

The way the market operates may mean that it is easier to sell through a local agent (or distributor), rather than directly. In the Mexican Pharmaceutical industry this is a legal requirement.

A local agent can be a valuable source of market information, and can help us find customers and build relationships with them.

Take legal advice before entering into a contractual relationship with an agent or distributor. It can be difficult and expensive to terminate the relationship later on.

The above recommendations are essential for determining success in PharmaMed’s overseas efforts. Researching products and commercial requirements, while aligning with overseas contacts will give PharmaMed a competitive Edge. To the achieve this, the company will have to embark a series of managerial and staff training programmes. Projects should then be delegated to relevant departments to see the operation through.

8REFERENCES
Boone, L., and Kurtz, D.L. (2009) Contemporary Business, Wiley and Sons Inc, 800pp

Bremer, C. (2010) FACTBOX: Key Political Risks to Watch in Mexico [online], available: www.reuters.com [22 January 2011]

Busse, M. (2005) Measuring Political Risks to Foreign Investment, Ashgate Publishing, London, 200pp

Business Monitor International (2010) Mexico Pharmaceutical and Healthcare Report Q2, www.businessmonitor.com [22 January 2011]

Calenti, L. (2010) The Drug Industry and the NAFTA Experience [online], available: http://www.thepharmaletter.com/ [22 January 2011]

Deloitte (2006) Global Economic Outlook 2006: Global Risks, Regional Opportunities, www.deloitte.com [22 January 2011]

Douglas, S. P. and Craig, C. S. (1983) International Marketing Research. Prentice Hall, New York, 456pp

Episcom Business International (2010) The Outlook for Pharmaceuticals

Forex Realm (2010) Exchange rates between Mexican Peso and US Dollar [online], Available: http://www.forexrealm.com/forex-rates/ [22 January 2011]

Hofstede, G. (1991) Cultures and organizations — software of the mind, McGraw Hill, New York, 191pp

Itim International (2009) Geert Hofstede Cultural Dimensions [online], Available:

http://www.geert-hofstede.com/hofstede_mexico.shtml [22 January 2011]

Johanson, J. and Vahlne, J. E. (1977) The Internationalization of the Firm: A model of knowledge development and increasing foreign market commitments, Journal of International Business Studies, Vol. 8, p23

Levitt, T. (1965) Exploit the Product Life Cycle. Harvard Business Review, November/December, pp.81-84

Massachusetts Office of International Trade and Investment (2006) Life Science Companies Doing Business in Massachusetts: An Introduction U.S. and Massachusetts Laws for Foreign Life Science Companies

The Pharmaletter (2011) Outlook For Pharmaceutical Markets In Latin America, Now Worth a Total of $50 Billion [online], available: http://www.thepharmaletter.com/ [22 January 2011]

Roberts, I. and Stott, R. (2010) Doctors and Climate Change, The Lancet, Vol. 376 (9755), pp1801 – 1802

RNCOS (2009) Emerging Pharmaceutical Markets Globally [online], available: http://www.rncos.com/Report/IM081.htm [22 January 2011]

Toftoy, C. (1999) Management Training to Gain For Small And Medium Sized Enterprises: Focus On Latin. Center For Advancement Of Small Business. George Washington University.

Toyne, B. and Walters, P.G. (1993) Global Marketing Management: A Strategic Prespective, Allyn and Bacon, Boston, 394pp

US Department of Commerce (1994) International Trade Administration [online], available: www.commerce.gov [21 January 2011]

Vernon, R. (1966) International Investment and international Trade in the product cycle, Quarterly Journal of Economics 80, p190-207

Villarreal, M.A. (2010) U.S.- Mexico Economic Relations: Trends, Issues And Implications. Congressional Research Service.

Wells, L. T. (1968) A product life cycle for international tradeJournal of Marketing, Vol. 33, July pp. 1-6.

Wells, L.T. (1969) Test of a product cycle model of international trade Quarterly Journal of Economics, February, pp. 152-62.

Whitley, R. (2007) Business Systems and Organisational Capablities: The Institutional Structuring of Competitive Competences.OxfordUniversityPress. 487pp

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1.0. Introduction

Business & Dissertation Topics ~ Hundreds of Topics absolutely FREE

The aim of this guide is to assist in selecting business & management dissertation topics and to provide practical advice on how to go about writing a dissertation.

Business dissertations incorporate numerous topics covering various aspects of business studies. 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 and subsequent list of dissertation titles

2.1. Business, Government and society

2.1.1. Measuring and evaluating whether or not there is a causal relationship between corporate social responsibility and corporate financial performance

2.1.2. Is reputation-building the paramount reason why business leaders integrate CSR into their overall business strategiesThe case of Nike

2.1.3. Assessing the effects of evolving consumer expectations of corporate philanthropy on the shareholder and stakeholder primacy models of CSR

2.1.4. An assessment of the implications of societal perceptions of corporate influence in determining governmental decision-making processes. The case of Shell in the Niger Delta

2.1.5. Can Governments effectively prevent the formulation of monopolies and curb unfair practices of large corporations. The case of Microsoft

2.1.6. An assessment of Obama’s health care reforms: Are intentions to drive down healthcare costs for corporations and government, whilst protecting the profits of insurance companies a viable strategy?

2.1.7. In practice does the public good transcend the rights of individuals and firms to seek profit without regard to societal consequences?

2.1.8. Is CSR is too vague and indeterminate for the corporation to truly fulfil the criteria it demands and make an effectual contribution to the community of its operations?

2.1.9. Creating shared value: How can corporate policies and practices enhance company competitiveness and simultaneously advance community social and economic conditions?

2.1.10. Does government maintenance of a high level of integrity and transparency correlate with creating an auspicious environment for private sector growth and investmentThe case of Tanzania

2.2. Organisational leadership

2.2.1. Do organisations need to concentrate on distinguishing leadership from management in order to achieve effective overall corporate strategies?

2.2.2. An evaluation of the Latern model as an integrated, systematic approach to organisational and successful leadership development

2.2.3. Does organisational leadership provide the functions of leadership to an organisationally beneficial degree than that of individual charismatic leadership on its own?

2.2.4. How does the micro and macro perspective of leadership provide insight into effective leadership characteristics required to sustain competitiveness on a continuous basis?

2.2.5. Is the development of a common language for team leadership and leadership amongst directors and managers the answer for enhanced teamwork on an organisational-wide basis?

2.2.6. An examination of the impact of organisational culture on leadership decision for organisational reinvention: The case of Nokia

2.2.7. An examination of a leadership paradigm proposing the coexistence of multiple leaders: Abandoning the traditional leader/follow concept for organisational leadership distribution to form communities of leaders along the chain of command

2.2.8. In difficult economic times how can leadership redefine organisational processes and leverage institutional and outside knowledge more effectively?

2.2.9. Can the success of 3M be attributed to a leadership philosophy to create an organisation equipped with the capabilities to continuously innovate, learn and renew?

2.2.10. The changing nature of leadership: Why humility and courage are two frequently cited words in relation to leadership in the 21st century?

2.3. Organisational behaviour

2.3.1. Goal setting: Are people more likely to perform relative to a goal if it is consistent with personal values and standards or will bring recognition or improved reputation?

2.3.2. An investigation into managerial measurement indicators for employee job satisfaction and the ability of the organisation to meet employee needs

2.3.3. What are the advantages and disadvantages of management tendency to attract and recruit people based on characteristics similar to established organisational patterns of behaviour or culture?

2.3.4. The correlation between organisational culture and firm performance: Does firm focus on building strong organisational culture outperform comparative firms lacking these characteristics?

2.3.5. An examination of ethical behaviour, the counter-norms and accepted practices developed by organisations: The reasons why individuals knowingly commit unethical actions

2.3.6. What is the relationship between the national culture and the commitment to organisational cultureThe case of Brazil

2.3.7. Examining the correlation between organisational culture, innovation, creativity and the likelihood of the successful implementation of ideas?

2.3.8. Is managerial behaviour imperative in the development of trust and belongingness for the facilitation of information sharing in the organisation?

2.3.9. An examination of employee perception of women’s adoption of stereotypically male leadership styles in traditionally male dominated organisational positions in the 21st century

2.3.10. Organisational agility: Is technological innovation the solution for survival in turbulent timesA study of mobile telecommunications

2.4. Global business environment

2.4.1. How do ethnic dimensions of employee behaviour impact on the profitability of the corporation in the international environment?

2.4.2. Examining the challenges of protecting electronic personally identifiable information in the global business environment. Achieving data protection harmony

2.4.3. Is Starbuck’s planned entry into India an example of organisational exhaustion of developed markets?

2.4.4. An assessment of approaches adopted by the tourist industry to screen the business environment for climate change and the actions taken to mitigate climate impact

2.4.5. Should corporations place greater emphasis on corporate diplomacy and increase negotiation skills investment for executives operating in the current volatile business environment?

2.4.6. An examination of the significance of corporate value chain structure and core business activity on management decision to adopt an International framework Agreement?

2.4.7. An assessment of FDI flows in difficult economic times: Why have FDI flows to developing and transitional economies remained more resilient than to developed economies?

2.4.8. Does geographical proximity of the host to the domestic country of investors reduce informational and managerial uncertainty?

2.4.9. An examination of the methods employed by countries to enhance international competitiveness for FDI: A case study of Sub-Saharan Africa

2.4.10. How does the characteristic of the organisation’s host country providing FDI impact the probability of the recipient country benefiting or losing from FDI opportunities?

2.5. Strategic management

2.5.1. An assessment of regional strategic management in the fast food restaurant industry: The global operations of McDonalds in the US, Europe, Asia-Pacific, Middle East and Africa

2.5.2. An examination of the origin and nature of the management strategy influencing people to regularly communicate through networking sites. A case study of Facebook

2.5.3. Does the strategic difference between Amazon.com and eBay amount to the handling of physical goods with accepted ownership and “virtual” products without accepted ownership?

2.5.4. Is adaptive thinking the starting point of effective management strategy formulation for harmonious co-alignment between the corporation and the operating environment?

2.5.5. Are “resource-based” strategies dependent on the governance structure within which a firm can leverage its resources?

2.5.6. Is the ability to take a holistic perspective of the organisation and its environment the primary ingredient of strategic thinking and formulation?

2.5.7. Analysing hyper-competitiveness in contemporary business environments: Does hyper-competitiveness render determining systematic strategic direction for enterprises impossible?

2.5.8. Assessing considerations of stakeholder objectives in the strategic business process and how this varies between different cultures

2.5.9. Can planned, opportunistic or forced decisions really be considered as strategyA case study of the Chrysler and Daimler Benz merger

2.5.10. Can firm strategy be adapted to contextual external environment while simultaneously remaining internally consistentThe case of Sony

2.6. International Business strategy

2.6.1. An investigation into how push and pull factors combined to motivate Tesco to adapt an internationalisation strategy

2.6.2. Globalisation, e-strategies and performance: How can organisations develop a successful social media strategy in the international business environment?

2.6.3. Examining entry strategies of foreign companies in the Indian Android smartphone market. The case of Samsung Android phones

2.6.4. Determinants of multinational corporations’ choice of entry modes and formation of alliances: The Sri Lankan experience

2.6.5. How can banks enhance international connectivity with business customers: A study of HSBC?

2.6.6. An investigation of multinational corporations’ determinants of FDI in transitional economies. A case study of the Czech Republic

2.6.7. An exploration of the relationship between internationalisation and SME performance: The export behaviour and performance of SMEs in the German context

2.6.8. Implementing a cross-border management strategy: A study of foreign companies in the Malaysian telecommunication industry

2.6.9. How does offshore outsourcing of customer services affect customer satisfactionThe case of AOL customer services outsource to India

2.6.10. Identifying the drivers of Chinese business leader’s strategy for expansion into Africa. The resource-seeking and market-seeking perspective

2.7. Project management

2.7.1. An examination of project management effectiveness in project-oriented business organisations. The significance of leadership organisational structure and technical capacity

2.7.2. Is planning, organising, networking and informing the most significant managerial practices in the leadership behaviour of project managers?

2.7.3. An analysis of critical success factors in project management: Are client presentation methods of needs and expectations determinant of project success/failure?

2.7.4. A study of the capabilities required by project managers to effectively manage stakeholder relationships?

2.7.5. Project management in a multicultural environment: Establishing guides for culturally specific consulting

2.7.6. A project management perspective on capabilities to deliver M&A projects on budget, to timescale and on expected synergies

2.7.7. Change management, project management and intervention: A study of Banco Santander internationalisation banking ventures

2.7.8. An assessment of the lifecycle management framework adopted by BAE Systems as a core business process approach for project management

2.7.9. Does outsourcing project management office functions improve organisationalA case study of the financial retail industry in India

2.7.10. An examination of the critical capabilities for outsourcing and offshoring information systems projects

2.8. Innovation and Entrepreneurship

2.8.1. An exploration of the synergies between entrepreneurship and innovation on organisational development in the E-commerce industry: A case study of Amazon.com

2.8.2. A study of firm resources, capabilities and internal firm conditions in strategic decisions to organise entrepreneurship for enhanced performance

2.8.3. An examination of social entrepreneurship and CSR as contributors to solving community problems. A case study of social enterprise development in South Africa

2.8.4. An explanation of organisational drivers of innovation and entrepreneurship: Exploring entrepreneurial innovation in the Chinese private sector

2.8.5. How does organisational approach to innovation and corporate entrepreneurship training interventions impact employee performance?

2.8.6. The impact of entrepreneurial characteristics on firm performance: Uncovering the characteristics of strategic entrepreneurship on the performance of Nigerian SMEs

2.8.7. The exploration and exploitation of knowledge management and intrapreneurship and the linkage with competitive dynamics. A case study of Sony PlayStation

2.8.8. An assessment of leadership role in fostering organisational cultural components for enhancing innovation in the Malaysian public sector

2.8.9. The innovation relationship between organisation operational capabilities and market outcome. A case study of Proctor and Gamble

2.8.10. An exploration of innovation and entrepreneurship in family and non-family SMEs in the UK

2.9. Enterprise risk management

2.9.1. Is the relationship between Enterprise risk management and firm performance contingent on adequacies of internal controlInternal control mechanisms and firm financial performance in Ghana

2.9.2. An analysis of deficiencies in internal controls and risk management systems in financial institutions. A study of Lehman Brother’s bankruptcy

2.9.3. Assessing the effects of culture on the enterprise risk management of business managers in the Mexican oil and gas industry

2.9.4. Addressing corporate governance and organisational risk management challenges in the Caribbean. A study of risk management structures in Jamaica

2.9.5. A comparative study of risk management and information security in non-financial SMEs operating in the US and UK

2.9.6. A consideration of risk management, configuration management and change management as an integrated framework for delivery of IT security in organisational operations

2.9.7. Examining enterprise-wide risk management practices and the implications of communicating the strategy across the organisation’s business or between departments

2.9.8. An investigation into stakeholder pressure on organisations to implement or refine enterprise risk management strategy. A study of Zurich Financial Services

2.9.9. Is protection against loss and damage to reputation the most important potential benefit of an ERM strategyA case study of the UK insurance industry

2.9.10. An analysis of risk management in senior management decisions. A case study of French banks

2.10. International human resource management

2.10.1. Multinational subsidiaries and the configuration of human resources management. The case of Spanish banks in Latin America

2.10.2. An assessment of the trends towards the coordination of management practices in multinational corporations: The contribution of multinational firms to the development of standardised international best practices in HRM

2.10.3. Evaluating the multinational corporation balancing act of developing standardised policies with the pressures to be responsive to the peculiarities of the local context. A case study of international banking

2.10.4. Examining the cultural effects of knowledge transfer in multinational subsidiaries. Is inter-subsidiary knowledge transfers likely to be most effective in subsidiaries located in similar cultural contexts?

2.10.5. Moderating the influence of cultural on relationships between strategic human resources management practices, motivation and organisational performance. A study of multinational corporations in Kenya

2.10.6. Is there a distinctive Chinese approach to human resources managementA study of international resources management in Chinese multinational enterprises

2.10.7. An investigation of the dynamics of trust on international human resources management practices in shaping organisational performance

2.10.8. Developing measurements of firm strategy to assist in the importance of international HRM alignment for the achievement of maximum firm performance

2.10.9. The impact of international human resources practices and organisational culture on managerial effectiveness in multinational corporations in India

2.10.10. Is centralisation, coordination and decentralisation the solution for achieving a successful interplay of IHRM strategy for centralised control and responsiveness to local circumstancesA case study of Siemens

3.0. How to structure a business dissertation

Title Page

Dedication

Acknowledgements

Abstract: A summary of the dissertation

Table of Contents

Introduction: Introduces the study and summaries the state of area prior to the research. This section outlines the problem(s) to be investigated, the aims and objectives of the research and describes the methodologies used. Additionally, an outline of the overall dissertation structure may be included.

Literature Review: This accounts the previously written, published and unpublished literature on the selected research topic. The purpose of conducting a review on the existing knowledge and ideas on the topic is to highlight the strengths and weaknesses of the research area whilst defining a guiding concept for the dissertation. To achieve this, four important steps must be followed: concentrate on the relevant theories; break down the topic and define key terms; examine recent research in the area; and conclude with the research questions that will be resolved in the study.

Methodology: This section is designed to give the reader a coherent, clear and precise account of how the study was conducted. The section is composed of number of sub-sections which should include: research philosophy, research approach, research strategy, data collection and any problems encountered in the data gathering process, data reliability, validity and generalizability, and finally, ethical issues and possible limitations with the research.

Results: An essential tip for this section is to only report the findings of the study in the most appropriate manner, resisting in the process the temptation to interpret or draw conclusions.

Discussion: The interpretation of the results is undertaken in this section. The first task is to state what the results of the study are by outlining the findings. Account for the findings by indicating whether or not the research hypothesis has been supported. The second task involves linking the results with the evidence discussed in the literature review. Finally, explore the implications of the findings with regards to the research questions together with consideration of the direction and form that future research should take.

Conclusion: This section provides a summary to the overall study and final comments and judgements. The final comment should entail making suggestions for improvement and speculations for future research.

References: Approval should be sought from University for appropriate layout

Appendices: This section contains graphs and diagrams used when writing the dissertation. The purpose of appendices is essentially to enable the expansion of information only included in abbreviated format in the body of the dissertation. Make sure that vital information is not mentioned here for the first time.

Also, make sure you review Free Dissertation Topics and let us know how our site can help you.

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Understanding consumer behaviour in business

INTRODUCTION

The question of how understanding consumer behaviour informs business success is a vital issue. According to Parkinson (1982) with the analysis of 16 British and German machine tool manufacturer and 129 of their customer, the consumer behaviour in Germany determine the business success of the German machine tool industry. This suggests that the study of consumer helps a firm or organisation improve their strategies in order to provide the best services for them.The customers are the major determining factor of a business. They need to be satisfied in order to keep patronising which brings about the growth and development of a business. After all, it is a consumer who decides what a business is. When you understand the behaviour of consumers, you can create products and services that provide the consumers with more value. And then you can market those products and services in ways that the consumers’ understand. The entire idea of reviewing consumer behaviour is to persuade customers’ to purchase.

The purpose of this essay is to discuss the connection between consumer behaviour and business success. To achieve this certain factors needs to be considered and they are; the consumer buying process which are problem recognition, information research, evaluation of alternative, final purchase decision and post purchase behaviour. Also, personality, lifestyle, culture,

emotions and satisfaction to mention a few needs to be put into consideration because the customers are from different geographical locations with different perspectives. Having considered all this, a business can then build a connection with the consumer which will bring about sales and development which is the aim of all business. This composition will concentrate on how the satisfaction and emotion of the consumers improves the success of a business.

The essay argues that the understanding consumer behaviour through satisfaction and emotion informs business success. To understand your consumer; research are made which is the emotional and satisfaction research. The emotional brings about hidden attitudes, motivation and feelings while satisfaction tells us about the future needs and ideas for a new product. Firstly, a definition of terms will be presented; next, examples will be analysed .Then, the arguments against how understanding consumer behaviour informs business success.

Understanding of consumer behaviour involves gathering of information from Economics, Marketing, Psychology and sociology.

CONSUMERS

According to Loudon D.L and Della Bitta A.J, A consumer is anyone who involves in physical activities of evaluating, acquiring, using or disposing of goods and services. A consumer is one who purchases a product or services from a particular organisation or firm. A customer is always defined in terms of a specific product or company. Customers may explain their satisfaction with a product or service in terms of specific aspects such as the product qualities, price, customer service, or a combination of these features. In order words, the consumer needs to be motivated and satisfied with the product or a service for them to patronize which brings about sales and growth between specific aspects of satisfaction and overall satisfaction.

CONSUMER BEHAVIOUR

Consumer behaviour is useful to distinguish the outcome of a business. Consumer behaviour teaches companies of all sizes about the consumption patterns of their consumers as well as the internal and external influences that can affect the customers.

Consumer behaviour reflects the totality of consumer’s decision with respect to the purchase, consumption and disposition of goods, services, time and ideas over time.

Recognise consumer behaviour, you create products and services that provide the consumers with more value. Studying consumer behaviour is to motivate customers to purchase goods and services and to meet consumer emotions.

Recognize consumer behaviour and explain the usefulness to better the marketability of an organisation or firm, explain your values, and increase your sales.

BUSINESS SUCCESS

The business is advised to identify and build a relationship with the customers. Understanding the consumers brings about growth and development. The business success requires the ability to know the weakness and strength. An organisation is advised to work on the strength instead of fixing the weakness. They should be able to adapt to all condition in order words tackle all problems as they come. In Conclusion, the organisations to meet the demand of their customers, they are advised to be productive which can be achieved through technology, automation, outsourcing and improving business sources. Having done all the above-mentioned, there will be an increase in purchase which helps in the success of the business.

CONSUMER SATISFACTION

Customer satisfaction has received considerable attention in the marketing literature and practice in recent years (Oliver, Westbrook and Oliver, Price et al).The cooperating with customers serves as a strategy in order to gain access to getting information on their needs and wants.

Customer satisfaction can be described as a thinking process where customers consider whether their products, services and process needs are considered.

Consumer satisfaction is defined as a post-consumption evaluation that a chosen alternative at least meets or exceed the expectations.

According to Anderson, Satisfaction is a generally evaluation of performance based on all prior experiences with a firm. Customer satisfaction surveys can generate valuable information that enables an organisation to compare performance in different time period.Satisfaction measurement can make customers more satisfied as they receive position attention that they feel they are listened to. In order words, attention is given to customer satisfaction as a corporate goal.Szymanski,Spiro and Weitz suggests that The business plays a vital role in diagnosing and addressing customers’ needs and in sharpening the overall evaluation of the way in which the discrete exchange level.

Hegebarth similarly argued that if contact centre capture and analyse customer interactions and share them throughout the organisation, as enormous opportunity exists in understanding customer needs and expectation, identifying opportunities and proactively addressing improvement areas.

Aderson and Sullivan suggest that customers’ satisfaction is the overall or global judgement regarding the extent to which products and services performance match expectations.

When a business has a close contact with the consumers, this influences the customers experience and creates a relationship satisfaction because consumer related information can only be obtained from consumers themselves. According to Beatty et al Customer-oriented business with customer understanding, proper customer care with trustworthy behaviour and reliable personal service are liable to building long term relationship with the customers. Winsted,Price et al recommend the important dimension of business that helps consumers perspective. They are mutual understanding, authenticity, extra attention, competence and meeting minimum standards of the consumers. With this, positive association between social regard and customer satisfaction are expected. Furthermore, several actions which are closely related to social regard increases customer satisfaction. According to Gremler and Gwinner (2000) an enjoyable interaction and personal connection on satisfaction with the company yield an encouraging outcome. The former variables included aspects such as “this employee relates well to me” or “this person has taken a personal interest in me”. Similarly, Van Dolen et al. (2002) found a positive effect of the “social competence” perceived by the customer on the customer’s encounter satisfaction, where social competence included aspects such as “the employee pays special attention to me”. On the other hand, recent results from Butcher et al. (2003) suggest a positive relationship between social regard and service satisfaction. Based on previous findings and taking into account that in a service context employees’ actions are an important driver of customer satisfaction (e.g., Price et al., 1995; Winsted, 1997; Van Dolen et al., 2002;Maxham and Netemeywer, 2003).The interaction with consumers as regards satisfaction has an impact on the business because working on the information increases organizational effectiveness and also performance.

With reference to Cisco,they used three types of data for customer satisfaction practice which were

The Annual customers Satisfaction Survey
Interviews with the targeted customer segments coupled with the internal brainstorming sessions.
Records of individual transaction data.

The survey indicated a broad problem, the detailed interviews showed the problem in detail and the transactional data indicates whether actions have achieved desired outcome. The brainstorming session help to identify the new opportunities. This has not only lead to customer loyalty but also profitability.

CONSUMER EMOTION

Customers attitude reveal the softer code of the business. Much of customers attitude about a brand are based on emotional connection they have formed with the company. Winkielman and Berridge (2004) argues that emotions, even if genuinely unconscious, may drive behaviour and reactions.Consumer use emotion in making good decision and to take effective action.Emotions play a highly motivating role in consumer behaviour. Emotions give us deeper understanding of the experimental aspects of consumption and are associated with the degree of consumer satisfaction by a strongly influential relationship.Consumers are typically and highly emotional about some brands and products while others are incompletely attached and indifferent about others.Consumers emotional connections have a specific and fairly simple structure regardless of the nature of the particular emotions involved.

Bagozzi et al (1999) define emotions as mental states of readiness that arises from cognitive appraisals of events or one’s own thought.Furthermore Oliver (1997) suggests that emotion coexist with various thinking judgement which produces satisfaction and is important in understanding consumers consumption experiences. Emotion tends to have an influence on quality perception and customer behaviour (Liljander and Strandvik,1997).Positive emotions leads to positive word-of-mouth behaviour,while negative emotions may result to complaining behaviour.Customers respond to an event in certain ways in order to maintain positive emotion and to avoid negative emotions(Stauss and Neuhaus).An emotional reaction is part of the favourable experience (Cronin 2003,Sherry 1998).Oliver (1997) claims that the role of emotions is gaining attention as a central element in service quality management. Consumer emotion such as pleasure and sorrow are simple, primitive motivations in the consumer situation, and they are also critical factors in our choice of products and services. Consumer emotion shows that customer’s feelings of enjoyment serves as the best predictor of customers’ loyalty, while feelings of happiness serve as the best predictor of relationship quality. The business plays an important role in the delivery of service quality as well as the formation of the satisfaction. People remember emotional experience better than most other element of a brand experience. However, satisfaction influences the customers behavioural responses in form of customer loyalty, word -of­-mouth, or switching behaviour.

Oliver suggests that the role of emotion is to gain attention as a central element in service quality management.Consumer begin to form a strong emotional bond with an organisation after they experience multiple episode of helpful and enjoyable service.As customers become more confident in their relationship with companies,additional helpful experiences stimulate even stronger and more enduring emotional attachment toward the company.Furthermore,emotional connections are not only the province of certain ‘emotional’ categories or brands.Consumers are emotional about checking accounts and discount merchandise,not just about soft drinks and expensive fountain pens.Bank of America and Wal-Mart create emotional connections just as surely as Jeblue and Ipod.They do it in different ways depending on the people than the product but the result is the same.

In conclusion, customers use emotion to make good decision and act effectively.

THE LINK BETWEEN CONSUMER SATISFACTION AND CONSUMER EMOTION

Emotions may be classified as a core component of satisfaction, since there is a positive relationship between customer satisfaction and brand loyalty,and customer satisfaction incorporates cognitive and emotional component because emotion influence behaviour,therefore positive emotions would increase the emotional satisfaction of clients with any service industry.Decision making process of customers is also affected by emotions, as positive would result in a positive attitude or behaviour towards a brand.The emotional satisfaction of the consumers can be increased by providing unique services to the consumers. Jacoby and Chestnut (1987) suggests that Services or products provided by an organisation must be unique in order to meet the satisfaction of the consumers. Bagozzi (1999)found that when customers are provided with unique products or services to meet their needs they show greater willingness to pay more in the future due to the positive emotions they have with the brand. When a high quality of service is rendered to customers, they are comfortable and therefore customers who are emotionally satisfied are likely to recommend the services to others Hui (2007).Satisfying the psychological needs of the customers,their promotes positive attitude towards the organisation while the emotional satisfaction leads to an increase in customers appreciation towards the firm.Consumer satisfaction and emotion encourages the consumers to be loyal to the firms with respect to goods or services provided.The business needs to be responsive to the consumers needs and wants which makes them happy.Understanding the consumer is vital in order to provide better,faster and more services.The determinant of getting customers involved so as to enhance their awareness, exception and assurance through active participation has been a common policy to obtain reasonable level of quality of and satisfaction with the organisation. With reference to global competition advance in technology has improved what create a standard level of service.

Volvo started with a companywide education programme to boost customer satisfaction awareness. The company combined qualitative research on customer motivation with customer satisfaction research. It also organises direct customer contact by production and design teams meeting with the customers and the senior managers visiting dealers and the consumers regularly. Besides, Volvo does additional qualitative customer research to track consumers shifting perceptions about key product attributes.

ARGUMENT AGAINST

Consumer behaviour measurement has both benefits and limitations. This part of the essay will describe the limitations of consumer satisfaction and consumer behaviour which simply means the negative emotions and dissatisfaction. This is linked the opposite decision of the consumers to leave or discontinue with a particular firm or organisation. This may result to complaining behaviour from the consumers. According to Andreasen(1999) suggest that negative consumer behaviour caused by the business results in consumer exit which creates a state of tension that affects the success of the business.

It affects several desirable outcomes like customer loyalty,word of mouth promotion and purchases(Fornell,Oliver and Swan)

Mihelis et al argues that customers satisfaction is a dynamic parameter of business organisation and is affected by the changes in customer’s preference and expectations.Poor treatment towards the customers leads to lack of satisfaction will leads the customer to other organisation where they will be satisfied.This could lead to image tarnish when the customers complain to friends and partners.Concentration of business on solving financial issues makes them neglect their customers. This causes negative impact on a brand which makes the customers seek for better services from other organisations.If firms fail to develop strategies for managing consumer reaction,they face alienating and losing customer.Customers often only contact customer service or help line when something has gone wrong or they need problem solved, when such happens they are already in negative mood. This negative mood tends to fuel the negative perception of dealing with organisation’s customer service personnel and reduce the customer’s zone of tolerance. It is therefore important for organisations to be willing to listen to the consumers and show understanding with empathy to customers’ predicament rather than leaving them unattended to. However, analysis seems to imply that emotions are brands that either inspire or does not, sports cars and perfumes are emotional while office supplies and households are not. The company faces major problem when it seeks to understand how the customers connect with the brands emotionally because emotions are treated as what can be sensed but not measured scientifically. When measures emotions are proposed, they are complex and difficult to administer. They organisations rely on strategies that are not always easy to replicate, like nonverbal photo sorts or deep psychological projective probing. In addition, while these measures may correlate with consumers stated intention, they may fail to provide sort of evidence that is demanded in the boardroom.The problem of lengthy and complex questionnaire which are time consuming and difficult to develop consist of complex data which may be useful in improving quality shortfall but rarely shed light on customers expectation and delights.The consumers have problem understanding the questionnaire and therefore hard to interpret.

RECOMMENDATION

To ensure that all customers are satisfied,the service provider should avoid biasness,prejudice or discrimination against some customers.Developing a genuine desire and passion to serve others with skills and knowledge to serve their customers excellently.The business should engage in collection of customers opinion on services they render.The personnel dealing directly with the customers improves their satisfaction ,training and seminar should be conducted so that the best quality of service is delivered.High quality of services leads to customer satisfaction.The immediate response to customers complain increases emotional satisfaction as assurance that problems are solved on time which helps them retain their customers which increases loyalty(Hofstede 1994).According to Patterson (1999) customers express brand association through behaviour.Brand associations are represented as emotional impression in the memory such that customers are emotionally satisfied by services received which gives no room considering an alternative. Supphellen suggests emotional brand association increases brand loyalty by becoming the dominating determinant of choices.Retaining customers is cheaper compared to attracting new ones.A business usually puts emphasis on the relationship between the consumers perceptions about the quality of the service they receive.Information of data from consumers promotes the improvement of services which inturn increase brand loyalty.Customer loyalty to a certain brand varies in industries and markets(Quelch and Harding,1996).The relationship between a customer and the brand determines the loyalty of the customer to brand(Bluestein 2003). Personalization, friendliness ,flexibility ,efforts and respect helps organisation increase their brand loyalty so as to have long-term relationship with them.

CONCLUSION

It is a challenge for the organisations to ensure that clients are provided with the best quality services. This promotes the psychological, physical and emotional satisfaction of the clients. All customers’ aim at getting value for their money when they purchase a product or on service rendered. Research established the relationship between consumer emotion and consumer satisfaction in organisation show that high levels of satisfaction increases brand loyalty. Consumers are faced with an array of product selection and competition is fierce among companies. This is why your understanding of consumer behaviour is vital to the success of your business. When you understand your consumer better than the competition you have a greater chance of winning their business. Understanding of life satisfaction including the emotional aspects and their relationship to consumption should enable a business to target consumer in a more meaningful way.Companies that have created successful emotional connection with their customers benefit in cash flow, make profit and improve market share. Emotional connection can be measured, enhanced and managed. The investigation into how customer survey should take account of emotional satisfaction of customers in order to have a better understanding of how to monitor and improve upon the psychological and emotional aspects providing a quality service in any organisation.

REFERENCE

Consumer Behavior: The Basics

Customer satisfaction: review of literature and application to the product-service systems;Final report to the Society for Non-Traditional Technology,

Japan (Oksana Mont,Andrius Plepys)

imperative

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Understanding the importance of Green IT in business

Introduction:

As the Information Technology has become the considerable part in social infrastructure, it plays an important role in human’s life. Computing is a rapid growing technology or area which depletes energy a lot. A computer which is a machine performs well depletes lots of energy. Generally a computer consumes lot of energy for functioning. By the rapid development of the technologies people usually tend to use and depends on this technologies more and more. As the energy is a non renewable resource this rapid usage will lead us to many issues. If we go on use this computer rapidly in future it will soon cost more to power a computer than purchasing a new one. So to overcome this wastage of energy mainly in the data centers considerably and to minimize the cost effectiveness and also to reduce the effects on the environment an initiative was designed, declared and commenced by the U.S environmental protection agency in 1992 as an energy star program which was designed to promote and recognize the energy efficiency. This program was basically designed to encourage and recognize the energy efficiency in the monitors, climate control equipments and other technologies. Therefore to minimize this wastage of energy and to recognize the efficiency the term Green Computing was emerged shortly after the energy star program and this method of initiative was introduced to maximize the energy efficiency and increase the recyclability of products and the factory waste, mainly to preserve the environment from the bad effects of the technological enhancement.

Green computing is also generally referred as Green IT. The main idea is to have the least human impact on the environment and it mainly aims to achieve the environmental sustainability. Green computing or Green IT refers to the study and the efficient use of eco friendly computing technology.

According to Sam Murugesan (Article: Harnessing Green IT) Green Computing is “the study and practice of designing, manufacturing, using and disposing of computers, servers and associated sub systems- such as monitors, printers, storage devices, networking and communication systems- efficiently and effectively with minimal or no impact on the environment” (Murugesan 2008).

Information Technology has brought several changes and also found many solutions for the environmental sustainability but at the same time it also caused a lot of issues particularly in the data centers where the energy is consumed excessively (Murugesan 2010).

Information Technology affects the environment in several dissimilar ways in the every stage of the computers life that is from the production and to the end of the disposal stage that is last stage. Therefore increase in the consumption of the energy may leads to green house affect due to carbon dioxide gas emissions because the source of energy is from oil, coal and burning of gas.(Murugesan 2008).

Hopper, the professor of computer technology at the university of Cambridge declared that “ the system we now employ is hugely wasteful” and he has proposed a system that is much efficient and helps in minimizing the consumption of energy resource, because he believed that moving the data is always cheaper than energy resource.(Kurp 2008).

Approaches to Green IT:

Murugesan has explained a holistic approach and he told to follow this approach for completely addressing the environmental impacts of Information Technology this approach consists of four steps to gain the environmental sustainability:

1. Green Use which aims in minimizing the energy consumption of the computer systems and also the products using them in an efficient manner.

2. Green disposal where reusing of systems and refurbishing takes place and also the proper disposing, unwanted recycling of computers and other equipment takes place.

3. Green design where designing the energy efficient and environmentally sound computers and accessories such as servers and cooling devices.

4. Green manufacturing which targets to manufacture the computer systems and its components with minimal effect on the environment.

Murugesan illustrated some of the area and activities where the above four steps focuses on:

1. Designing for the environmental sustainability.

2. Energy-efficient computing.

3. Power management.

4. Design of the data center and its layout and location

5. Server virtualization to split the server.

6. Responsible disposal, reusing and recycling.

7. Regulatory compliance.

8. Green metrics, assessment tools and methodology.

9. Environment-related risk reducing.

10 .Use of renewable energy sources and

11. Eco-labeling of IT products

Solutions:

Dell and Hewlett Packard are the two computer manufacturing companies who had decided to solve the problem by retooling their products. On the other hand the efficient environmental solution from the David Wang the data center architect for Teradata says that have a look at the entire lifecycle of the computer the complete picture from manufacturing as every step depletes energy he says that make a reliable method to remove the heat from the data centers than buying a new one. (Kurp 2008)

The solutions produced by the Hasbrouck and Woodruff, they have suggested two strategies for Green IT:

1. Minimize the computing technology’s contribution to the issue by producing the energy efficient computers by taking reusability into consideration during computers’ designing and make use of less materials and work toward computers’ and related systems’ recycling. Moreover they have shown that truing off the inactive computers; by utilizing energy efficient computer devices and reduction of emissions that are emitted from computers’ manufacturing are the significant parts of this strategy.

2. Hand over computing a role in changing the problem by creating green appliances which enable design green processes and objects such as design green buildings, invent source of renewable energy and designing fuel efficient aircraft.

In Green computing or Green IT the most efforts have been directed towards the first strategy to solve the environmental issues which have increased along with the usage of the computers.

As a result of several problems caused by the computers, several associations are turning to green computing to save the money and reduce the waste. To do so Dick Sullivan listed five trends majorly:

1. Server Virtualization in all the forms particularly for servers, storage and network environments. In other words changing the entire machines into a software based entities for example a room with five servers is transformed and replaced with a single efficient server with having high performance.

2. Make use of the cloud computing where it doesn’t require the own data centers, servers or storage systems. Although most of the organizations require only small amount of equipment and functionality in that casting they can usually buy what they require from someone else who will be the one responsible to the security, power and maintenance.

3. Sullivan proposed that “a huge amount of data is basically an exact duplicate of other data”, so changing it into intelligent compression or into single instance storage which can eliminate this waste and cut the total data storage required.

4. Solid state disk is not comprised of moving parts and is not magnetic that is reason it is a stronger, secure and the faster way to access the data.

5. Every person can be part or effect of green computing project suppose when s/he has more awareness of her/his direct and indirect daily computing habits. Suppose for Employees considering an example, who can support green computing if they use to turn off computers not in use, banning screen savers and shorten the turn-off times when computers are inactive. On the other hand, printing waste a lot of papers, so managing this daily process by printing only as needed and adopting double sided printing will make a significant impact (Clarke 2009).

Industry initiatives:

Many efforts have been made to encourage and support the concept of green computing. The climate savers computing initiative is mainly to aims at encouraging and enhancing, deployment and adaptation of smaller technologies in order to maximize the efficiency of power delivery and to minimize the waste of energy, as this is an initiative with nonprofit group of businesses, consumers and organizations started by Google and Intel in 2007and by 2010 their main aim is to reduce the total co2 emission of computer systems by 54 million tons (Wikipedia)

1. Climate savers computing initiative.

2. Green electronics council.

3. Green computing impact organization.

4. Green Grid.

Motivations:

It is better to raise the awareness in the people about the danger or the impact that threatens the earth if they continue to use the same traditional methods and computers and also to teach the benefits of green IT.

By implementing the Green IT issues in all the impact areas which offer individual and financial benefits where information technology will achieve the better and most efficiency approach through green initiatives. In one of the survey made my sun micro system Australia 1500 responses have been gathered from 758 dissimilar sized organizations. Almost all these responses revealed that the main reasons for following green IT practices are due to reducing in consumption of energy and get lower costs.

However most companies have started to prioritize the environmental problems and most of the institutions and corporate ask their suppliers then consider into account how to “green up” their products and manufacturing processesnot only the companies but also several people began to adhere to eco friendly environmental issues of Information Technology.(Murugesan 2008)

Conclusion:

Green computing or Green IT is popular in note and it is not only considered as an organizational responsibility that must be undertaken by all the computer users. Home computer owners must also follow the Green IT practices to make the environment sustainable.

References:

1. Murugesan. S., 2008, “Harnessing Green IT: Principles and Practices,” IEEE IT Professional, January–February 2008, pp 24-33.

2. Murugesan, S., 2010. Making IT Green. IEEE Computer Society, Vol. 12, No. 2.

3. Hasbrouck, J. & Woodruff, A., 2008. Green Homeowners as Lead Adopters: Sustainable Living and Green Computing. Intel Technology Journal, 12(1), 39-48.

4. Kurp, P., 2008. Green Computing. Communications of the ACM, Vol 51(10), 11-13.

5. Clarke, K., 2009. Green computing trends you should know. Associations Now, Vol 5(8), 19

6. http://www.brighthub.com/environment/green-computing/articles/62742.aspx

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Information management systems ‘’Purpose and need for information systems in small and medium business enterprises’’

1. Introduction

This project intends to investigate the impact of information system on the success of Small and medium enterprises. Almost all the successful big enterprises have embraced information system in their various businesses. It is generally believed, that information technology enables a firm to access information needed to make decisions, to make an efficient use of resources by reducing labour and manufacturing costs, to seize opportunities in its markets and to position itself effectively in relation to its contenders (Dirks, 1994).Unfortunately, it is the same environment both big and SME’s operate and there is a need for the small enterprises to survive in this environment.

We live in a very competitive world with the competition becoming fiercer. It has become so volatile that it takes more than success to stay alive. The threat posed to SME by the big enterprises is such that they can be swallowed at anytime. One of the ways by which SME’s can achieve a competitive advantage in the era of globalization is through the implementation of IS in their organizations.

Implementation and practice of IS comes at a cost and its increasing high cost is a concern to management, especially in SMEs sector. With lack of sufficient funds to acquire such skills smaller organizations often implement IS in a less than optimal way, thereby attaining fewer benefits than larger organizations (Delone, 1988). The decision to invest the few available funds on information technology need to be worth it as SME’s don’t have the luxury of fund big enterprises have.

Traditionally, the success of Information Systems (IS) has been studied in the context of large organisations, most businesses, however, are small and medium

Enterprises (SMEs) and they have increasingly adopted packaged application software to meet their information processing requirements. Small- and medium-sized enterprises exert a strong influence on the economies of all countries, particularly in the fast-changing and increasingly competitive global market (Anaroni 1994; Drilhon and Estime 1993). They have been a major engine of economic growth and technological progress (Mulhern, 1995; Thornburg 1993). Carrier (1994) said that SMEs are often more fertile than larger firms in terms of innovation. Most IS research focuses on large firms, yet the majority of firms in most economies are SMEs.

It is amazing how SME’s form the bedrock of every country’s economy yet they always find it hard to survive not to talk of competing in an environment where the big enterprises have enormous edge. Though these SME’s can’t match the financial investment of the big enterprises, they need to find a way of balancing their investment to keep abreast of what is happening in their environment. Some SME’s have decided to overlook the cost of investing in IS as they

2. Literature Review

Given the dominance of worldwide competition and high rate of technological change, there will be some challenges, which most SMEs are likely to have in common (Marri et al., 2000). Blili and Raymonds (1997) identified the need and usefulness of information systems strategies (ISS) in small and medium sized enterprises (SMEs). In the transformational role, IS helps to

Fundamentally redefine and alter the business processes and business relationships. These benefits could range from simple cost reduction to creation of new businesses or enhanced organizational capabilities (King and Teo, 1996; Feeny and Willcocks, 1998). Palvia and Palvia (1999) stressed on key areas of IT dissatisfactions that are: training and education, software maintenance, documentation and vendor support. According to them software

Vendors and consultants can appropriately address these deficiencies. These issues can be addressed well by having a proper IS management in place in an organization. Poon and Swatman (1999) reported on internet use in small business sector as a part of IS management and found that although use of e-mail was very popular for business communication and documents transfer, there was almost no integration between the Internet and internal applications.

2.1WHY DO WE NEED INFORMATION SYSTEMS

Information has become very important to the modern business organization that it is seen as its lifeblood. Information systems help an organization manage and make efficient use of its data to achieve utmost success. There has been more information produced in the last 30 years than during the previous 5,000. … The information supply available to us doubles every five years. Information system enables companies to react, respond, cater, store, retrieve, disseminate, and control their new valuable asset that is information. In the years to come, a good information system within a company will be no longer an option; it will become a compulsory in determining success.

The term IT is defined in broad sense as ‘‘technologies dedicated to information storage, processing and communication’’ (Ang and Koh, 1997). This notion of IT focuses on a combination of hardware, software, telecommunications and office equipments that transform raw data into useful information for speedy retrieval (Seyal et al., 2000). Blili and Raymonds (1997) identified the need and

Usefulness of information systems strategies (ISS) in small and medium sized enterprises

(SME’s).

2.2 INFORMATION SYSTEMS IN SMALL AND MEDIUM ENTERPRISES

Many smaller firms now utilize computer-based information systems (IS). Top managers in these small firms have a crucial role to play in the development of IS, but the nature of this role differs sharply from that usually undertaken by the senior manager of the larger firm (Martin,J 1989) There is little doubt that advanced information and communication technologies (IT) are changing the way businesses operate and conduct commerce. As the advent of a more secure Internet and new transmission standards makes it easier and cheaper for businesses to conduct inter-organizational commerce.( Khazanchi,D 2005)

2.3 OUTCOME OF INFORMATION SYSTEMS IN BUSINESS ENTERPRISES

IT investments had a positive relation with the IS management practices.

Increasing investments in IT and strategic role played by information systems (IS) make IT

Implementation as an important research issue within the MIS discipline (Bostrom and

Heinen, 1977). Schein (1992) and Zuboff (1988) outlined three major roles that IS could play in an organization:

(1) Automate;

(2) Informate; and

(3) Transformate.

The automate role refers to mere replacement of labour processes by technology. In the

Informaterole, IS provides data and information that empowers different levels of

Management andorganizational employees. In the transformational role, IS helps to

Fundamentally redefine and alter the business processes and business relationships. These

Benefits could range from simple cost reduction to creation of new businesses or enhanced

Organizational capabilities (King and Teo, 1996; Feeny and Willcocks, 1998). Palvia and

Palvia (1999) stressed on key areas of IT dissatisfactions that are: training and education,

Software maintenance, documentation and vendor support. According to them software

Vendors and consultants can appropriately address these deficiencies. These issues can be

Addressed well by having a proper IS management in place in an organization.

3. Research Objectives and Research Questions

The general objective of the study is to ascertain the need for information systems in modern day small and medium business enterprise. How much are they loosing out as a result of their unwillingness to invest in information system or is the price being paid for the competitive edge provided by information system too expensive?

It looks at the benefit accrued to the small and medium enterprises that have embraced information systems.I wish to create a relationship between the cost of investment in information systems and the gains accrue to small and medium organizations that have embraced it. I also intend to look at how small and medium entrepreneurs feel about the need for information systems in their business. It will also be interesting to know how much they are willing to invest in information systems even if they feel it is needed.

4. Research Design

Research methodology involves qualitative method due to the nature of the work. It will be ideal to get detailed information about the operations of the small and medium enterprises because they have different challenges; these challenges affect the running of the organizations in different ways. I intend to carry out a series of one on one interview with a number of small and medium entrepreneurs. There are two categories of entrepreneurs that I wish to interview, those that have embrace information systems and those that are yet to.

5. Data collection and analysis

Both primary and secondary data will be collected for this project. Primary data will be collected from SME’s especially through interview and It is intended to retrieve the required secondary data from available financial sources to measure the performance of enterprises that use IS and those that don’t use it, only data from regulated bodies will be processed

6. Time Scale

Working to meet the project submission deadline, there will be critical reading of relevant materials, regular meeting with the supervisor and also to conduct interviews with some SME business owners.

References

Ang, J. and Koh, S. (1997), ‘‘Exploring the relationships between user information satisfaction’’, International Journal of Information Management, Vol. 17 No. 3, pp. 169-77.

Blili, S. and Raymonds, L. (1997), ‘‘Adopting EDI in a network enterprise: the case of subcontracting SMEs’’, European Journal of Purchasing & Supply Management, Vol. 3 No. 3, pp. 165-75.

Bostrom, R. and Heinen, J. (1977), ‘‘MIS problems and failures: a sociotechnical perspective-part-the Causes’’, MIS Quarterly, Vol. 1 No. 3, pp. 17-32.

Delone, W.H. (1988), ‘‘Determinants of success for computer usage in small business’’, MIS Quarterly, Dirks, P. (1994), ‘‘MIS investments for operations management: relevant costs and revenues’’,

International Journal of Production Economics, Vol. 35, pp. 137-48.

Feeny, D.F. and Willcocks, L.P. (1998), ‘‘Core IS capabilities for exploiting information technology’’, Sloan Management Review, Vol. 39 No. 3, pp. 9-22.

Khazanchi, Deepak,(2005) Information Technology (IT) Appopriateness: The contingency theory “FIT” AND IT implementation in small and medium enterprises, The Journal of Computer Information Systems

King, W.R. and Teo, T.S.H. (1996), ‘‘Key dimensions of facilitators and inhibitors for the strategic use of Information technology’’, Journal of Management Information Systems, Vol. 12 No. 4, pp. 35-54.

Martin, C.J. (1989), ‘‘Information management in the smaller business: the role of the top manager’’

Marri, H.B., Gunasekaran, A. and Grieve, R.J. (2000), ‘‘Performance measurements in the Implementation of CIM in small medium enterprises: an empirical analysis’’, International Journal of Production Research, Vol. 38 No. 17, pp. 4403-11

Palvia, P., Means, D.W. andJackson, W.M. (1994), ‘‘Determinants of computing in very small business’’, Information & Management, Vol. 27, pp. 161-74.

Palvia, P. and Palvia, S. (1999), ‘‘an examination of the IT satisfaction of small users’’, Information & Management, Vol. 35, pp. 127-37.

Poon, S. and Swatman, P. (1999), ‘‘an exploratory study of small business internet commerce issues’’, Information & Management, Vol. 35, pp. 9-18.

Schein, E.H. (1992), ‘‘the role of the CEO in the management of change: the case of information Technology’’, in Kochan, T.A. and Useem, M. (Eds), Transforming Organizations,OxfordUniversity Press,Oxford.

Seyal, A., Rahim, M. and Rahim, N. (2000), ‘‘an empirical investigation of the use of information Technology among small and medium business organizations: a Bruneian scenario’’, The Electronic

Journal of Information Systems in Developing Countries, Vol. 2 No. 7, pp. 1-17.

Zuboff, S. (1988), In the Age of Smart Machine: The Future of Work and Power, Basic Books,New York, NY.

Categories
Free Essays

Business plan for an Online Art Gallery

Task 1

You need to do some research to familiarise yourself with the subject area and to gain some ideas about how you can carry out the rest of the project. There are a number of websites that specialise in the sale of paintings and craft items. Use a maximum of 1 hour to review these resources. Bookmark the relevant sites and make notes of information that you can use in your assignment.

Business Plan for the Online Art Gallery starts in the internet. Art gallery business is no different business than the other business that happens in the internet. Now a day various established galleries have adapted to this internet medium and number ofnew business are rapidly developed across world in the internet business. Internet has opened the art business as various major barriers are demolished –distance area and limitation of demand and wants choices by the customer. In past if someone has to buy art material they have to reach to the place where that particular art is located and second thing is there was limitation of choices. lot of time and traveling expenses also beard by the customer .Now if any one like to purchase an European painting they are not failed by choices nor have to go to Europe. The rapid growth level of prosperity in the foreign countries has also given a dimension to the art industry across the world, as more and more people now a day can afford to collect of their prospective and desired products within a short time period if the place of the produced product not in their country boundary. For an example10000 people of America can seeing and buying paintings, drawing, prints, sculptures and photographs by artists of almost all periods from the organized exhibition by the Art gallery situated in the USA. Various Artists are now look for avenues on internet to sell their products and try to get benefit than the analog system of buying and selling the product. Though every artist has no personal website as selling their product to customers is one of the lacings of online marketing. The online site of art gallery will provide a instant platform for artists and will help in selling their product.

Task 2

Produce a project plan for the way you intend to complete the rest of this assignment. For planning, use the timescale you have been allocated for this assignment i.e. from the date you start to the date you submit your assignment. Submit a copy of your plan to your tutor BEFORE you proceed further with the assignment.

Project plan for the site development:

The site development procedure start from the 11th July and the completion date possibly 2 month later from the starting date. The project plan include the resource allocation for the site development, feasibility study for the market, marketing strategy development and implementation, action plan for the project, termination of the project, project funding etc.

Gant chart of the project:

Particular10 days10 days10 days10 days10 days10 days
feasibility study
site development
Marketing strategy development
action plan
the project termination
project funding

Task 3

Marketing plans are detailed strategies of how to go about successfully marketing a product or products and earning a projected amount of return from the effort. A comprehensive marketing plan will consider such important elements as distribution costs, production costs, advertising expenses and any expense related to identifying and marketing the products to the consumers in the targeted markets. The marketing plan may focus on strategies related to the upcoming twelve-month period, the next calendar year, or include a span of three to five years into the future.

The art gallery currently takes a commission of 30% on the price of each painting that they sell and, on average, sells between 6 to 8 paintings by each artist per month. The owner believes that it will be possible to set up similar commission deals with the craftspeople. The possible marketing plan for the project of the art gallery:

Products and Services for the art gallery: The existing products for the art gallery are given below:

Pottery;
Wood sculptures;
Glassware;
Jewellery.

Market Analysis:

The market analysis explains the market situation and the opportunity and the threat of the market. It is one of the parts of industry analysis and this also the global environmental analysis for market. Through this market analyses the company or marketers can understand the chances, strengths, weaknesses and risks.

The art gallery on the online is huge demand to the customer in the local as well as the worldwide. The online art gallery market is expanding day by day. The owner of the art gallery understand the situation by market analysis.by severing different site and the customer they realize that the customer wants to buy this kind of product that they provide in the art gallery. If they launch the online art gallery the local people and the global people can buy their product easily. But they have to consult with online art gallery and develop an effective site where the customer can sell and buy their product. This product has huge demand in the local market and also in the European market as well as global.

Target Market:

The art gallery provides Pottery; Wood sculptures; Glassware; Jewellery to the customers.so the potential customer are available mainly artist, art loving people, and all kinds and all level of people who want to but this product. The Jewellery customers mainly are the female person.

The Competition for the art gallery:

There are many established online gallery in the market .so the new market entrance the gallery should follow the strategy to market growth and expansion policy. The main competitors of this gallery are E-bay, Picasa, slideshow, picture gallery, global art gallery, and so on.

Marketing Plan for the art gallery:

The art gallery currently takes a commission of 30% on the price of each painting that they sell and, on average, sells between 6 to 8 paintings by each artist per month. The owner believes that it will be possible to set up similar commission deals with the craftspeople.

Meeting Customer Needs:

Our customers require fresh Pottery, Wood sculptures, Glassware, Jewellery. The system for establishing customer needs is based on the product offering of our competitors. Pottery; Wood sculptures; Glassware; Jewellery demand in the market is huge and the customer may purchase from the site if the site is launched .the site develop such a way that meet the all demand of the customer. The site develops such a way that product quality and quantity is mentioned in the site. The owner of the gallery tries to meet the customer demand in high quality and provide the mentioned demand from the customer.

Quality vs. Quantity of the art gallery:

the existing artist sells between 6 to 8 paintings per month. If the online art gallery is established then it would be possible to sell at least 30 painting for each artist per month initially. The art gallery site visitors make choice the art paints and the quantities of the product may increase to the site .there are 30 artists make the painting at about 1000 paintings including oil paintings andsculptures; Glassware; Jewellery products at about 1500 made by the 40 artist in this gallery.so product quality and quantity of this art gallery is satisfactory for the launching the online art gallery.

Buying policy of the art gallery:

The art gallery if launch the site the possible payment methods listed below:

By PayPal
By ProPay
By Moneybookers
By Paymate
By Credit card or debit card

Payment methods not allowed on the art gallery site:

In this site buyers can’t ask to sellers to the following things.it is the payment method of the art gallery.so their specific system of payment system

To Send cash through the mail is not applicable
To Send cash or money orders through instant, point-to-point cash transfer services (that are not banks) such as Western Union or MoneyGram
To Mail checks or money orders (except for items in categories specifically permitted in the local and specific bank)
To Pay through bank-to-bank transfers (except for items in categories specifically permitted in the local and specific bank)
To Pay by “topping off” a seller’s prepaid credit or debit card
To Pay using online or other payment methods not specifically permitted in this policy

Promotional activities for the art gallery:

the art gallery’s possible promotion al activities includes the advertising on the social network site life Facebook, Ayol, yahoo messenger, Google talk, Skype and so other site .some exhibition may arrange for the customer attraction to the product. Some completion may arrange for the customer in the online and gift them luxurious product.

Potential domain names

the potential domain name is the big factor to attract the people on the site .so the assistant of the site proposed the tree domain name for the site those are given below:

global art gallery
Vinci art gallery
world art gallery

Advertising and other r promotional cost for the site development: The art gallery estimate that the cost of the site development and advertising and other promotional activities. The competition of the various social site and gift given by the art gallery is about monthly cost $50.the advertising cost will be estimated at about $100.promotional activities of the art gallery cost will be the $50.

Market segmentation for the art gallery:

The art gallery segments the market in different areas such as the local area, global area, sub-local area and far area. The local areas segmented by the owner for the ease of the marketing delivery. Distribution channel of the art gallery globally segmented for the ease of the delivery. The main areas of the art gallery are given below: Georgia, India, Kazakhstan, Kyrgyzstan, Maldives, Mongolia, Nepal, Pakistan, Sri Lanka, Tajikistan, Turkmenistan, Uzbekistan, Bahrain, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, United Arab Emirates, Yemen, American Samoa, Cook Islands, and Mexico.

Task 4

Produce a draft of a Delivery and Returns Policy that could be included on the e-commerce site. In particular the policy should address the following issues:

1. The returns policy that will apply for the art gallery is given below:

Item must be returned withinRefund will be given asReturn policy details
14 days after the buyer receives the products they delivered to the customer.Exchange14 days warranty from the received date will applicable. Buyers are responsible for the returning shipping costs under any circumstances. Return items should include the original packaging and accessories. Refund occurs only when item is lost by the shipping company. Maximum refund amount will be the selling price; shipping cost will not be refund since it has been delivered.

2. The regions and/or the countries that the gallery will deliver to;

Name of the worldwide country that the gallery want to deliver their product:

The art gallery segments the market in different areas such as the local area, global area, sub-local area and far area. The local areas segmented by the owner for the ease of the marketing delivery. Distribution channel of the art gallery globally segmented for the ease of the delivery. The main areas of the art gallery are given below: Georgia, India, Kazakhstan, Kyrgyzstan, Maldives, Mongolia, Nepal, Pakistan, Sri Lanka, Tajikistan, Turkmenistan, Uzbekistan, Bahrain, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, United Arab Emirates, Yemen, American Samoa, Cook Islands, and Mexico.

3. What the cost of deliveries will be:

The local delivery cost will about the product basis. And the quantity of the product differ the cost. The other country that the gallery wish to deliver the product also mention in the site by shipping cost and airline cost for the quick delivery.

Task 5

Presentation

Task 6

Produce a list of ten key questions to ask prospective e-commerce suppliers, who will be required to design, develop and host the new e-commerce site on behalf of the gallery owner. The questions should seek to establish that the successful company has the necessary skills, expertise and track record to ensure that they are capable of providing a high quality level of service.

list of ten key questions to ask prospective e-commerce suppliers, who will be required to design, develop and host the new e-commerce site on behalf of the gallery owner.

Q-1: What are the products graphics tools used in the site that related toll the customers need and wants.

Q-2: what is the time line of the developing the site

Q-3: what are the key material for the picture and other product photography?

Q-4: is there any interaction to the site developer to the artist to manage attractive deign of the site?

Q-5: what amount of money taken by the site developers?

Q-6: how the customers of the art gallery access the site?

Q-7: is there any privacy policy include the owner of the art gallery?

Q-8: should the copyright information needed to the site developer?

Q-19: what category and quality of the product should be maintained for competition in the market?

Q-10: is there any improvement needed to the existing product?

Task 7

Put together a briefing report of no more than 600 words that summarises three of the major types of auctions that can be held, together with the main advantages and disadvantages of each. The note should also include your recommendation on the type of auction that should be used as part of the e-commerce site if the gallery owner decides to go-ahead with this opportunity.

There are three major types of auctions that can be held for the art gallery and those are given below:

1. Buyer Protection for the art gallery

The art gallery makes sure that resolution process when buyers claim to sellers that their item was not received or the item they received was different from what was described in the listing.

Help buyers and sellers resolve disputes in fewer steps, and provide buyers with a more familiar ecommerce resolution experience.
Offer an option to contact the art gallery if buyers and sellers can’t reach resolution themselves. They take a more active role in ensuring transaction problems are resolved.

Someone may ask to help sending or paying for an item and they are not able to. The art gallery doesn’t have the items that are sold on the site. They can ask a seller to send an item, or a buyer to pay for an item, but the art gallery can’t send the item to the buyer or pay the seller. When a buyer or seller doesn’t complete an obligation, they take it seriously and we may limit or suspend their account privileges. They work to make sure that members on the art gallery are honest and fair.

2. Buyer eligibility and other restrictions

Buyers who have purchased items on the art gallery site are eligible for the Buyer Protection Policy. Buyers who file a case through the art gallery Buyer Protection, but who did not purchase an item on the art gallery, will be redirected to the existing resolution process for the site they used, if any Sellers will use the resolution process initiated by the buyer. Resolution responsibilities and protections are outlined on the site of registration.

3. Fraudulent charges not covered

The Fraudulent charges to a credit card or a PayPal account are not covered by the art gallery Protection Policy. If notice any charge on the customers PayPal account that did not authorize, report should be in the PayPal Security Center. Fraudulent charges made through the credit card should be resolved with the credit card company.

Payment methods not allowed on eBay:

In this site buyers can’t ask to sellers to the following things.it is the payment method of the art gallery.so their specific system of payment system

To Send cash through the mail is not applicable
To Send cash or money orders through instant, point-to-point cash transfer services (that are not banks) such as Western Union or MoneyGram
To Mail checks or money orders (except for items in categories specifically permitted in the local and specific bank)
To Pay through bank-to-bank transfers (except for items in categories specifically permitted in the local and specific bank)
To Pay by “topping off” a seller’s prepaid credit or debit card
To Pay using online or other payment methods not specifically permitted in this policy

Reference:
http://portal.ebay.eu/msn-UK/viewed on 24th June,2011
http://pages.ebay.com/securitycenter/index.html analysed on 24th June,2011
http://pages.ebay.com/aboutebay/thecompany/companyoverview.html analysed on 25th June,2011
http://www.ebayonlocation.com/ analysed on 26th June,2011
http://www.randomthink.net/misc/ebay/ analysed on 27th June,2011
http://www.kiwipainting.co.nz/ analysed on 21th June,2011
http://www.net-art.it/artyou/home-e.shtml viewed on 24th June,2011
http://www.mynewsletterbuilder.com/email-marketing/art-gallery viewed on 28th June,2011
http://artmarketingsecrets.com/2009/05/how-to-attract-galleries-to-your-art-website-part-5.html viewed on 22th June,2011
http://www.net-profit-marketing.com/marketing-online-art-gallery.html viewed on 29th June,2011
http://www.thesugarhousegallery.com/art-gallery-marketing-strategy/ analysed on 24th June,2011
http://artistmarketingsalon.wordpress.com/nyc-gallery-list/ analysed on 22th June,2011

Categories
Free Essays

Recruitment and Selection are only effective when they complement HRM Strategy and the company’s overall Business Strategy. Discuss

Introduction

In the twenty-first century, organisations face an intense competitive environment. In order to compete effectively against their rivals organisations have to be indulged in the strengthening of their performance unceasingly. Managers are obliged to go beyond their required duties. Thus they require applying and using alternative ways for their organisations develop, move and learn faster compared to their rivals. “Organisational resources and capabilities that are rare and creating value in a unique way are required such that it’s not easily copied” (Barney, 1986; 1991; 1995). This is called the resource-based view, which states that ‘competitive advantage of a firm lies mainly in the use of the package of valuable resources used by an organisation’ (Conner, 1991; Wernerfeldt, 1984). Thus for a company to gain competitive advantage, it is vital for the latter to manage their capital, financial or human resources efficiently. All financial and capital resources of an organisation are solely managed by the organisations’ human capabilities (employees). Therefore it is vital that an organisation has a skilled, committed and ‘strategic partner’ (employee whose performance align HR and business strategy).

Human resource can be describe as the aggregated skills, knowledge, talents, ability to create, the workforce of an organisation’s values, along with their talents and aptitudes, approaches and beliefs involved. HR professionals should be able to apply best practices of HR. Pfefer (1994) has suggested that “participation, empowerment, incentive pay, promotion from within, and training and skill development are some of the best practices”. HR managers derive new policies and procedures taking into account HR functions in order to have better empowerment and achieve the organisation’s goal. HR functions are recruitment and selection and placement of personnel, training and development by maintain motivation, appraisal of performance and feedback counselling, transfer and job rotation, compensation and benefits (salary, cash and non-cash benefits), social security and welfare of employees, contract negotiation and grievance handling, health and safety, employee and labour relationship, auditing and review of the man-power management within the firm and ensure quality work life and firm’s development.

HR main function interrelationship in most organisations:

Recruitment & Selection

The first and foremost function of HR is Recruitment and Selection of employees as and when required. It can arise due to expansion, strategic alliances (merger and acquisitions), delayering (the need of reducing management due to downsizing or reduction of cost of the organisation) and promotion or someone leaving or temporary requirement. Rynes (1991); Rynes & Cable (2003) outlined that ‘recruitment is the utilization of an organisation’s practices such that the number and types of applicants are influenced to apply for vacancies’. Thus recruitment can be described as the process in which an organisation is indulged such that applicants are attracted to apply for any vacancies arising and selecting the appropriate candidates and ensure that they are armed with the suitable training such that they are able to perform at an optimal level. Recruitment can be internal or external focussed.

Whereas Selection has been best described by Roberts (1997) defined as

“The purpose of the selection is to match people to work. It is the most important element in any organization’s management of people simply because it is not possible to optimise the effectiveness of human resources, by whatever method, if there is a less than adequate match.” (Robert, 1997)

Hence the way that information is collected and evaluated about the candidate and select the appropriate applicant in order to extend employment offer is termed as selection and it is always performed under legal and environmental constraints and also highlights interest of the individual and the organisation.

Once recruitment and selection is over, training is enforced in order the staff is able to perform in accordance to the organisation’s procedures where the vision and mission of the company is also clearly outlined.

Human Resource Management (HRM) has recently been changed into a macro perspective of HRM and been termed as Strategic Human Resource Management (SHRM), (Delery & Doty, 1996).Thus in order for HR policies to be effective, it have to be consistent with other aspects of the organisation. In other words SHRM highlights the very importance of HR practices for a firm’s performance (Delery & Doty, 1996).

Further Dessler (2008, p.86) demarcated SHRM

“The formulation and execution of human resource policies and practices that produce the employee competencies and behaviours the company need to achieve its strategic aims”.

Pfeffer (1994) best practices

“ These best practices are employment security, selectivity in recruiting, high wages, incentive pay, employee ownership, information sharing, participation and empowerment, teams and job redesign, training and skill development, cross-utilization and cross-training, symbolic egalitarianism, wage compression, promotion from within, long-term perspective, measurement of the practices, overarching philosophy”

SHRM objectives are to utilise the best practices and achieve the following:

Ensure company’s goals are achieve
Effective utilisation and maximisation development of HR
Respecting, identifying and satisfying individuals’ needs
Reconciling the employees goals and that of the firm
Provision of well-trained and well-motivated staffs
Morale of staffs are kept high
Ensuring that job satisfaction and self-actualisation is attained to its maximum
Develop and maintain quality of work life
Developing personality of staffs in its multidimensional aspect.
Staff capabilities being enhance to perform actual job
To be responsive at the ethical and social needs of the society
Ensure staffs are equipped precisely and clearly in the transaction of business
Team spirit being inculcate such that team work and inter-team collaboration is gained

SHRM objectives are vital objectives in an organisation as it directly relates to the performance and competitive advantage of the firm. Competitive advantage is attained through continuous HRM and the business strategy being outlined from the outset. Business strategy has been described as the art of and crafting, implementing and the evaluation of cross-functional decisions that allows a firm realise its long-term goals. Whereby the specification of vision, mission and objectives policies and plans being developed and finally allocating resources to implement policies, plans and projects.

An inter-related relationship between HRM and Business Strategy can be illustrated as follows:

Administrative Elements

Of HRM which are transferable between organisation

Firstly the above diagram indicates that it should all start with the inner circle vision, values, objectives and strategies of the organisation. In other words the organisation should set its vision, objectives and then strategies of the organisation firstly. Subsequently the HR roles should be assigned in alignment with the strategic decisions taken when objectives and strategies are set. For the strategic decisions outlined, the organisation’s HR policies are varyingly set and differ from organisation to organisations. Administrative elements of HRM which are transferable between organisations are the grey-blue outer circle.

Hence the diagram clearly outline that the interrelationship of the business strategy, HR practices and HRM.

Ulrich (1997) has mentioned in regards to SHRM and highlighted how HR professionals can be a strategic partner within an organisation. This can be achieved by professional working in accordance to managers who have set up strategies and process such that objectives and set targets are attained by the department to meet requirements of the ultimate business.

While managing an organisation frameworks are set and in accordance to Delery and Doty (1996) the three within SHRM namely universalistic, contingency perspective and configurationally approach. They have established that the three mentioned perceptions are feasible theories within SHRM however they have separate outcome on the firm’s performance and its strategy and HR practices.

The universalistic perspective

Here the best practices of HR are being referred. “The best practices have been mentioned previously and they vital to a firm when undertaking strategy implementation so that sustainable competitive advantage is gained by the organisation” (Huselid, 1993; Pfeffer1994). It is also the simplest theoretical statement in SHRM. Here the argument is that the connections in regards to independent and dependable variables are universal across the firms. The universalistic approach can be established by proceeding with the two following steps:

Identification of strategic HR practices
The urge of looking for the arguments in relation to the practices and the firm’s performance.

Pfeffer (1994) mention sixteen best ones but on the on other hand Delery and Doty (1996) outlines only seven which has been mentioned before.

The contingency perspective

When comparing the universalistic to the contingency perspective, the contingency is more complex as it considers the interaction of instead the linear relations only.

Primarily the contingent factor of an organisation is the business strategy and using this perspective, investigators will have to opt for theories for the organisation’s strategy. Afterwards specification of how the interaction of each HR practices will effect along with the strategy and if enhancement of the organisation performance is attained.

The configurational perspective

Delery and Doty (1996) has debated upon this approach as the most complex one.

Since this perspective does not exclusively focus on internal resources nor on an organisation’s environment but on the shared influence of a set variables.

The unique pattern or the configurations are identified which is assumed to be most effective for an organisation (Delery & Doty, 1996). Hence it models the interrelationships.

Linking Company-Wide and HRM strategies

In the figure below, Dessler (2007) has elaborated on the process and how HR strategies and corporate strategies go along side of each other ‘hand in hand’.

Strategic situations are brought along by the competitiveness, internal strength and weaknesses of the organisation whereby strategic plans are formulated. While formulating the strategies various questions arise. For instance, how cost can be lowered such that profits are maximised, when or where it is best to expand and is there the requirement for diversification. Further the HR strategies which will be formulated and implemented should comply with the overall corporate strategies.

The recruitment and selection, training and development, appraisal of employees are required to be synced such that it supports the strategic plan of the organisation.

The very question of how well does company strategies are aligned to the HR strategies formulated and applied will directly have effect on the organisation overall performance.

The main aim of this model above is to appraise the HR strategies and corporate Strategies alignment. Organisational performance and strategic situation are normally not included in the purpose. But we have taken them into consideration as they are of vital role within the process of aligning. That is due to the fact that the strategic planning’s outcome is the strategic situation and it is essential if in case the constructed plan by the firm does not fit the strategic situation expected. This can affect the HR strategies and the firm’s performance at the end adversely.

Managerial Competencies

Firstly, Westley & Mintzberg, (1989), in Lado & Wilson, (1994) has described that “Managerial Competencies includes exclusive capabilities of the leaders in propagating the strategic vision, communicating the vision and investing in the employees such that the firm is able to realise the vision”. Hence this capability can give rise a very useful environment for the firm. Enacting this organisational environment gives the employees a way to interpret and act upon the vision that was conveyed. The managerial view is seen as a source of competitive advantage due to its decisive nature upon the organisations resources (Lado & Wilson, 1994). Thus one of the HR systems that can enhance this competence is development and creation of managerial competencies. Top managers and middle managers are utilised in the creation of the strategic vision and the managerial competencies are let through the organisation (Lado & Wilson, 1994). Thus the traditional view of effective communication and ease the interpretation and understanding of the vision is vital.

Strategic human resource challenges

Thus from the above it is obvious if these challenges must be made primary and achieved and also much more focus must be made on designing not only execution of strategies.

Conclusion

Hence it is obvious that recruitment and selection is only effective when it complement with HRM strategies and business strategies. As the recruiting of highly qualified and skilled employees cannot achieve anything unless they are armed with the appropriate tools, practices and procedures which are closely managed by HRM within the organisation. The interrelationship between recruitment and HRM and the overall business has been explicitly explained above but the effects of poor recruitment can result in high costs incurred in terms of time of money and time, inefficiency, client dissatisfaction and disability in team work and low morality. Hence not only recruitment and selection needs to be effective but also proper training and appraisals to maintain level of performance and appropriate rewards and benefits are required to motivate the employees to maintain a high level of performance. Whilst the SHRM should maintain a regular high level of assessment throughout the employees performance, environment and other factors affecting directly and ensure that the objectives and the business vision is achieved within the set period. As under the current economic climate businesses tend to cut down on the size such that they can survive thus they should be able to trust be able to rely on effective HRM. A recent example is the Icon Film Distribution Ltd which was taken over by Stewart Till and Access industries and because of the economic situation prevailing in UK and their performance in the film market they have opted to downsizing.

REFERENCES

Schuler, R. S., & Jackson, S. E. (1987). Linking competitive strategies with human resource practices. Academy of Management Executive, 1, 207-219.

Pfeffer, J. 1994. Competitive advantage through people: Unleashing the power of the work force.

Boston: Harvard Business School Press.

Rogers, E. W., & Wright, P. (1998). Measuring organizational performance in strategic human resource management research: Problems, prospects, and performance information markets.

Human Resource Management Review, 8, 311-331.

Elearn Limited (2005) “Recruitment an selection”, Elsevier Ltd, Oxford, UK.

Colakoglu, S., lepak, D. P., Hong, Y. (2006). Measuring HRM effectiveness: considering multiple stakeholders in a global context. Human Resource Management Review. 16, 209-218.

http://www.netlibrary.com.ezproxy.wales.ac.uk:2048/Reader/

http://books.google.co.uk/books?id=zEoAUt-3CVQC&pg=PA228&dq=hr+recruitment+selection+training+and+development+rewards+and+benefits+from+books&hl=en&ei=MayRTaiFHM6DhQf2oOWGDw&sa=X&oi=book_result&ct=result&resnum=2&ved=0CEIQ6AEwAQ#v=onepage&q&f=false

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The modern business environment and embracing modern technologies for further economic gain

1. Introduction

1.1 What is the problem?

In recent times, there has been an intense underlying issue regarding the amount of businesses within the UK that are not adapting to the modern business environment and embracing modern technologies for further economic gain. Noted by the office for National statistics (2009) that 76% of the UK’s business claimed to have a website, yet only 15% had completed transactions online. Furthermore, the issue lies deep within the fundamental business characteristics and the way in which businesses choose to operate and compete, leading to online sales via websites known as e-commerce, reaching ?115bn in 2009. Figures from the same study also demonstrate that the predicament shows no sign of slowing as e-commerce sales increased by 23% from 2008 to 2009, showing a rise of ?22bn, suggesting that many businesses are missing the chance to join the online market place whereby opportunities for the growth of a business appear limitless (Scupola, 2003).

Rosenbloom (2004, cited in Harrison & Waite, 2005) proposed that e-commerce technology is now viewed as an integral part of marketing channels and distribution systems. However the UK government acknowledges that there is a slow uptake of e-commerce in SME’s, particularly among micro businesses (UK Online, 2002) whereby many of the UK’s SME’s may be left behind, leaving the larger companies to dominate the e-commerce world (Harrison et al, 2005). Furthermore, the issue is emphasised through the suggestions of Julia (2002) stating that small and medium-sized businesses (SME’s) make substantial contributions to national economies and account for an estimated 80% of global economic growth (Julia et al, 2002).

This document aims to identify the numerous relevant factors preventing the assimilation of e-commerce and the capitalisation of its benefits within the UK’s SME’s. Conversely, the research also attempts to outline the previous benefits founded with its adoption and the current levels of practice within the recognised SME’s. Such known benefits may provide motivation and incentives for the apprehensive SME’s who are failing to embrace the advances in technology, as well as offering a range of potential opportunities for any traditional organisation to engage in the e-commerce transition whereby a business can ‘dominate the electronic channel and thereby control access to customers and set terms of trade’ (Walters & Lancaster, 1999, p800 cited in Harrison, 2005).

Following similar research in more economically developed countries such as USA, Canada and Australia appear to have made more progress as they have become the global leaders in e-commerce assimilation (Norton, 2000, cited in Quayle, 2002). This investigation will discuss whether these barriers and benefits still exist or that SME’s have adapted to the modern business environment and have effectively engaged in e-commerce. Consequently, have further beneficial or detrimental factors emerged and influenced integration of internet based transactions.

1.2 What is the purpose of this study?

For the purpose of this investigation, the term e-commerce will be used in the true sense of its concept and not divulge into the notion of electronic business (e-business). It will however include activities such as electronic mail (e-mail) and mobile commerce (m-commerce) whereby their fundamentals coincide with the essential aspects of e-commerce.

The primary purpose of this investigation is to identify the barriers in the UK’s SME’s in their adoption of e-commerce. These identified barriers may differ from those faced in other countries, regardless of economic development. In addition, this paper will study the benefits found once the e-commerce transition has taken place and how they may have become advantageous to any developing SME. It also aims to analyse the results and test them against the findings established within other international SME’s. Throughout this analysis, the paper will thoroughly investigate and critique the growth of the UK’s SME’s and how e-commerce has enabled it to do so.

1.2.1 What are the SME’s barriers to entry?

This study aims to investigate the way in which SME’s perceive e-commerce and devise a catalogue of factors that provide obstacles for its adoption. In doing so, the author aims to bring these issues in view of both business and governmental organisations, with the focus on those assisting SME’s to further contribute to both the local and global economy. Whether these issues exist in reality or are just ignorant perceptions, the fact of the matter is that these issues still appear to hinder the assimilation of e-commerce within SME’s. Barriers to adoption can occur for numerous reasons and many issues are inter-related, however, they will not be restricted to only the following factors:

INTERNAL

Start up costs
Technical knowledge/computer literacy
Access to technology
Security of technology

EXTERNAL

Business partner(s) access to technology
Lack of governmental support

(Kshetri, N, 2007)

In addition to the primary aim, the secondary goal is to try and locate relationships between these barriers and whether or not they have a direct correlation with the demographic and financial features of the external environment. Furthermore, it will also attempt to identify any linkages between previous barriers and the technological affluence or perception of SME’s directors as previous research has shown that the owner’s opinion of e-commerce has a major influence on its possible implementation, and if so, what benefits does it bring.

1.2.2 Existing benefits achieved by SME’s

This investigation will recognise the major benefits already achieved by SME’s who have utilised the capabilities of engaging in e-commerce. These benefits may need to be analysed by budding SME’s or MSME’s (micro, small medium enterprises) or any developing business for that matter, in order to fully understand, make relevant and integrate e-commerce successfully within their organisation. This investigation can also be used for governmental organisations to utilise e-commerce as an adaption of its services that supply SME’s, which will in turn provide benefits to both stakeholders involved. This may potentially lead to a future development of electronic infrastructure, which will in turn greater it’s usage and by virtue of EOS (economies of scale) will lead to an increased level of economic efficiency. This study will address those benefits but will not be constrained by such:

Increased audience levels (market reach)
Reduce cycle time
Higher levels of turnover
Increased productivity
Lower marketing and distribution costs
Competitive advantage
Increased profit margin
New business opportunities

(Daniel & Wilson, 2002)

These existing benefits will provide a basis to identify any trends with the demographic data found, along with its barriers. This information will also be examined in comparison to the technological perception of the directors of a given enterprise in order to understand whether or not the attitude of the director directly influences the benefits achieved, similar to that of the director’s perceptions and previous success within the business environment.

1.2.3 SME’s adoption of technology

In order to grasp the usage of technology within SME’s, the author has made efforts to discover more about businesses that have embraced technology and how they may be putting to use the advantages of the internet.

The levels of adoption and the processes put in place in order to assimilate, as well as the trends of usage are all imperative to the overall validity of the investigation. Although the author earlier conveyed that the study will concentrate on the true definitive characteristics of e-commerce, in order to fully investigate the usage and perceptions of e-commerce, the study must consider aspects of e-business to fully identify and understand the correlation of internet usage and the potential benefits it possesses. Furthermore, the study will advance deeper and discuss whether or not linkages exists in the technological affluence, literacy or perception of the SME’s director and the benefits and barriers achieved through the adoption of e-commerce.

2. Literature Review

2.1 The UK market

Throughout the investigation, the author noticed that the majority of research was conducted in more economically developed countries (MEDC’s), with the United States being most popular. However, this study aims to conduct the majority of its research within the UK environment as well as delving into the international and emerging markets whereby the growth of e-commerce is still primarily at an elemental level. Although that particular research is valid, it merely aims to provide a contrasting statistical viewpoint to that found in the UK. Studies by Benjamin (2000) and Pulley and Sessa (2001) indicate that there is a limited amount of analysis of e-commerce in SME’s, however there is a wider acceptance on a number of factors. In particular, SME’s who are determined to achieve a competitive advantage require an improvement in levels of e-commerce and the need to develop credible approaches for its implementation. Further studies conducted by Standing and Stockdale (2003) emphasised further issues of concern whereby the ‘motivation for adoption and use of e-commerce by SME’s are overlooked and underestimated’ (Standing et al, 2003. p;2). Further issues within the same study indicated concern surrounding categorised groupings of SME’s and their perceptions to adoption.

In contrast to the UK market for e-commerce, in developing areas of the world, including countries such as Egypt, research has show that ‘governments have been eager to apply the emerging information and communication technologies to join the world in the development and realization of the digital economy’ (Kamel and Hussein, 2002. P;2). Therefore, e-commerce growth in Egypt and other developing countries may decide to utilise the research and examples of that in the UK in order to greater the adoption levels within SME’s. Conversely, UK governments may choose to analyse the way in which developing countries introduce e-commerce and its technological infrastructure in order to fully understand what factors they provide as benefits or barriers.

Following the studies on the international and emerging markets, the author aims to reemphasise that this research is merely conveyed as a contrasting viewpoint in order to further understand the way in which e-commerce adoption in the UK is both perceived and achieved.

2.2 Barriers

2.2.1 E-commerce growth and development

Originally, electronic commerce was identified as the facilitation of commercial transactions electronically, using technologies such as EDI (Electronic Data Interchange) and EFT (Electronic Funds Transfer) in the 1970’s. Furthermore, increasing developments in technology in the 1980’s lead to the creation of ATM’s (Automated Teller Machines) and telephone banking which were also noticed as forms of electronic commerce. It wasn’t until 1990 that the development of the World Wide Web and the modern day internet also known as the ‘6th Continent’ by Yongxiang, that the term coined e-commerce was specifically designated to the exchange transactions which take place over the internet, including buying and selling of information, service or goods (Schniederjans, 2002).

Since the conceptualisation of e-commerce, researches have studied the barriers that exist which may prevent its adoption within SME’s. Whether these barriers physically exist in reality or whether they are merely a perception, the facts remains that they still provide an obstacle for e-commerce assimilation within the UK’s SME’s. Studies conducted by Cragg and King (1997, cited in Shah et al, 2000) discovered that the strongest inhibiting factors to SME adoption include lack of ICT knowledge, lack of managerial time and limited financial resources. All of which factors appear to apply to resistance to change and possibly suggest an underestimation of the potential benefits to its adoption. Further studies by Dowler and Lawrence-Slater (1998) highlight ‘technological phobia’ and ‘no perceived benefits’ as realistic barriers.

Since these studies were conducted at an elemental stage of e-commerce, further investigations have been carried out since. Investigations undertaken by Marshall and Mckay (2002) found that in recent times, SME’s are reluctant to adopt due to difficulties identifying and measuring costs, benefits and risks associated with IT adoption and investment. Furthermore, research conducted by Edwards (2007) and Hudson et al (2007) indicated that the lack of strategy for evaluation was also a major inhibiting factor to adoption. Although all studies identified provide valid and important evidence, it is the most recent information that supplies the most pertinent, as it considers factors within the modern business environment in comparison to those noted within the primary stages of e-commerce development.

2.2.1 The Role of UK Government in the growth of e-commerce

In order to fully investigate the role that government plays in the adoption of e-commerce, the author aims to find out whether they are an enabler of its adoption or a characteristic of its barriers.

A study by Keindl (2000) portrays that SME’s are generally unwilling to develop e-commerce strategies or to change their current business models, despite the government introducing campaigns such as the CW2000 project, a European funded project to encourage internet adoption amongst SME’s in the West Midlands of the UK. As discussed earlier, there remain a variety of barriers to the adoption of e-commerce and regardless of the government initiatives, certain barriers still exist and are chiefly found within the internal features of an organisation. Kshetri (2007), stating that start up costs and the relevance of e-commerce within a particular SME to be key factors in its adoption. Furthermore, additional research by Beckinsdale and Levy (2004) reported that neither pressure from competitors within the same business environment or governmental initiatives provides any pressure upon the adoption of e-commerce, and that the chief reasoning for its assimilation is concerned with customer satisfaction.

As a result of these findings, certain infrastructure should be implemented in order enable to the transition of adoption as it appears that governmental frameworks are unable to do so.

2.2.3 Perceived barriers to e-commerce adoption

Early studies by Tonatzky and Klein (1982) found that innovation is more likely to be adopted when it is compatible with an individual’s job responsibility and value system. Although this study portrays a vague acceptance of innovation, it is definitely applicable to e-commerce as an innovative entity and its adoption and application within a value system, or for the purpose of the study, SME’s.

Further studies conducted by Ratnasingam (2001, cited in Hussin, 2005) to identify factors that may discourage adoption include the perceived lack of security, customer readiness, organisational inertia and lack of knowledge. Additional studies by Darch and Lucas (2002) also conveys the perceived barriers to adoption as lack of awareness to what e-commerce actually involves and lack of e-commerce related skills. Therefore, adoption is far more complex than earlier studies portrayed and is a decision that involves a variety of interconnected issues, which include both internal and external factors. Adoption therefore, must be seen as a gradual process, rather than an individual occasion and will be discussed further in the levels and stages of adoption sections.

2.2.4 E-Readiness

E-readiness is genuinely defined as the degree to which a society is prepared to participate in the digital economy with the underlying concept that the digital economy can help build a better society (Krull, 2003). Krull makes reference to society as a whole, but for purpose of the study, the author will understand the society as being an organisation or SME. Huang et al (2004) describes e-readiness for enterprises important and that it will lead them to a more positive direction in managing their relationships with key stakeholders as well as providing the opportunity to access quality information, reduce the digital divide and create new business opportunities (Kurnia, 2008 cited in Krull, 2003). According to the e-readiness rankings report (2009) the UK is placed 13 suggesting SME’s are in a good position to adopt e-commerce as all the foundations are in place.

2.3 Benefits

Significant levels of research into the realisation of SME benefits of e-commerce adoption have been conducted thoroughly in recent times. A report conducted by Poon and Swatman (1999) regarding the benefits achieved refers to the fact that e-mail and document transfer have both been useful to SME’s. Since then, e-commerce and researchers have moved on, with many authors agreeing on the benefits of e-commerce, however further discussions have arisen in regards to the way in which benefits are not achieved automatically. Wilson, Daniel and Davies (2006) stating that adoption does not however, of itself, guarantee that the intended business benefits will be achieved. They are also of the opinion that, along with Pawar and Driver (2000, cited in Quayle, 2002) who also conducted similar studies, that despite the awareness of potential benefits, not every firm is ready to embrace e-commerce as a business tool.

2.3.1 Economic Benefits

Once the adoption process takes place, there are two main benefits that a SME can expect, economical and strategical. For the purpose of the study, the author will concentrate upon the economic benefits incurred through the adoption of e-commerce. With the UK’s total spend through e-commerce reaching nearly ?56billion in 2010 (IMRG, Capgemini, 2010) and expectations for the market to grow by 110% in the next decade, the financial benefits are obvious.

Studies conducted in the UK’s SME’s by Clegg et al (2001) concluded that three issues are likely to have an effect on the uptake of the internet by SME’s was the perceived benefits, organisational readiness and external pressures. However, Dongen et al (2002) argued that much of the literature supposes that ICT adoption is for opportunistic reasons, such as cost, rather than for strategic reasons. Furthermore, recent surveys suggest that the main reason for adoption amongst UK’s SME’s is to increase sales (Actinic, 2002 cited in Simpson et al, 2004). Although literature suggests that the chief reasoning behind e-commerce adoption is for financial benefit, the actual reality of attaining economic growth is difficult to achieve. Furthermore, the research by DTI (2001b) suggest that the financial benefits come about through the reduction in expenditure and the increase of opportunity gain, as advertising costs can be reduced through having a web presence.

2.3.2 Illusions and Promises

Additional studies by Chrysostome and Rosson (2004) support the fact that it is certainly difficult to attain economic benefits. Subsequently, they devised a framework, consisting of eight factoring suggestions that convey both the illusions and promises of the growth UK SME’s and they’re engagement in the international market. They highlight the view that not all expectations of innovative advancements are recognised, with an example of the invention of the printing press in 1450. They suggest that many of the perceived benefits are illusions while promises are realistic and attainable benefits through the process of adoption.

4 Illusions:

MARKET PENETRATION (difficult international market)
GLOBAL COMPETITION (intensity)
COSTS (difficult to attain)
LEGALITY DIFFERENCES (foreign trade laws)

4 Promises:

SPEED OF MARKET ENTRY (instant)
VARIETY OF MARKETS (penetrate numerous markets)
ENTRY MODE (choice = minimised risk)
INTER-ORGANISATIONAL NETWORKS (reduced costs)

Chrysostome and Rosson (2004)

2.3.3 Do or Die: Internationalisation

The rate of the occurrence of Internationalisation for an organisation is an important characteristic in any neo-classical approach. Furthermore, in evolutionary theories, stage by stage development is considered necessary so that cautious progress can be made, ensuring that an enterprise can build resources, gain knowledge of international markets and therefore develop a stronger capability (Chrysostome and Rosson, 2004).

Added studies by Peterson et al (2002) found that the internet can speed up the rate of enterprise internationalisation, especially through the reduction in costs incurred by SME’s. As a result, SME’s should worry less about the amount of resources they have when aiming to penetrate the international market. This leads to the ‘Born Global’ concept derived from Knight and Cavusgil (1996) suggesting that SME’s can ‘leapfrog’ the primary stages of the neo-classical internationalisation process.

Although numerous advantages exist through SME internationalisation, there is also an element of risk associated with its development. The most noticeable barriers reported by SME’s are included in the Internationalisation report of European SME’s (2010). The reports illustrates that the barriers exist in two separate categories, internal and external.

INTERNAL

Price of own product or service
High cost of Internationalisation

EXTERNAL

Lack of capital
Lack of adequate information
Lack of adequate public support
Costs/difficulties with extended transport partnerships

Although the majority of the barriers are objective, sum issues within the external barriers are perceived and do not necessarily exist in reality. Consequently, UK SME’s are generally not aware of the existence of public support programmes for internationalisation (Mendoza et al, 2001). Having discussed the promises that e-commerce adoption and its ability to internationalise a business, the author will now examine the illusions that appear to be embedded within the perception of UK SME’s.

Large scale global competition lies waiting for those SME’s who aim to utilise the internet as a tool for internationalisation. Fillis (2002) found that exporting SME’s in the UK experienced pricing and promotion difficulties in regards to those displayed by competitors. This was a greater problem for those who rely upon the internet as its main operational medium. As the enterprises discussed are relatively small in capacity, they’re limited resources make it difficult to match competitors budgets and prices (Sawhney and Mandal, 2000). As well as the intense internet global competition, the so called ‘savings’ will now be discussed.

Contrary to the perceptions of budding SME’s, online business incurs significant levels of cost. In contrast to view that the internet generates cost savings, in reality, these savings are far less noteworthy than initially thought and studies by Fattori (2001) state that in many cases, SME’s have actually experienced higher costs. This is largely accurate for SME’s who have penetrated the international market as Heart and Priskin (2002) state that internet costs savings are cited to most often occur in paperwork, customer service, intermediation and advertising and promotion. However, they also conveyed that the actual savings incurred differed with the size of an enterprise. Further studies showed that larger companies were more likely to save in customer service where as SME’s were expected to save on advertising and promotional costs (Riquelme, 2002). Apart from these potential variant costs, other costly expenditures exist with the initial creation of internet based commerce. These costs consist of website creation, including software and hardware, maintenance and updating and website translation or cultural adjustments should the SME wish to penetrate the international market (Chrysostome and Rosson, 2004). Futhermore, a standard 10 page website with e-commerce capabilities may cost around ?2500 with additional fees for forums, interactivity, Search engine optimization (SEO) and content management [www.toucher.co.uk/website-price, cited in 2011].

2.3.4 M-Commerce

Tiwari (2007) defines Mobile Commerce as any transaction, involving the transfer of ownership or rights to use goods and services, which is initiated and/or completed by using mobile access to computer-mediated networks with the help of an electronic device. As Tiwari explains, m-commerce has the same basic definition as e-commerce, however is achieved with portable technology. Since its origination in 1997 through mobile-phone enabled Coca-Cola vending machines in Finland, using SMS text messages to receive payment, the mobile industry has revolutionised the portability of business transactions (Ahonen, 2002). In recent times, m-commerce has developed greatly and since the invention of Apples, Iphone in 2007, the levels of purchase using a mobile devise has risen dramatically. Findings from the Broadbank m-commerce content report (2010) displayed that 46% of UK consumers had purchased using their mobile phone. Furthermore, Raicu (2001) believes that m-commerce provides numerous benefits including independent access any time, access on demand anywhere and use of devises that suits the needs of the consumer, for example mobile phones, laptops or Tablets. As well as possessing all the attributes of e-commerce, Khosrow-Pour (2006) suggests that enterprises are using mobile devices to re-engineer and speed up internal and connecting business processes. Furthermore, Nysveen et al (2005) suggests that this is possible since employees and partners can connect to ‘back-end’ applications needing the finalise sales and in turn reducing the sales process and eliminates extra travelling costs. Therefore, a SME can utilise m-commerce in the same way as e-commerce with additional benefits of providing accessibility anytime, anywhere (Raicu, 2001).

2.3.5 Benefits for UK SME’s

Following a plethora of literature regarding the concepts and potential of e-commerce, the question remains whether SME’s have benefited from its adoption. During the investigation process throughout this document, the author noticed that Poon (2002) and the degrees of success was a constant barometer. Poon stated that there having been various levels of success and that they are the reasons why e-commerce is more important than ever before. These factors have included the reduction in the adoption process of e-commerce in regards to both hardware and software. Secondly, companies have learnt from either their own experience or the experiences of others and are now finding e-commerce adoption easier. Finally, the rise in resources and programmes offered, many from government provide assistance for SME’s.

Although, many SME’s have utilised the adoption of e-commerce as previously discussed, Poon’s studies (2002) suggest that not all companies have benefited from it. Furthermore, even in favourable organisations with a respectable e-readiness, mixed success rates have been found, and those who have actually achieved benefits have either been insignificant or have had a short life span.

2.4 E-commerce adoption

In recent times, numerous studies have been conducted to investigate the levels of e-commerce adoption for the purposes of SME’s. The focus of this research has concentrated upon three crucial factors: the level of adoption, the stages of adoption and the factors that inhibit or permit adoption.

2.4.1 Levels of adoption

In order for an enterprise to fully understand the levels of adoption, the author will discuss Grewel’s (2001) classification model to support SME e-commerce adoption initiatives.

Firstly, there is a risk in approaching the question of whether SMEs can be seen as a homogenous group in terms of e-commerce adoption, as there is a scarcity of literature. For example, while it is clear that the owner/manager is a significant driver for e-commerce adoption, it is only recently that research has begun to appear that investigates the motivations behind their move towards adoption (Levy and Powell, 2003). Therefore, for the purpose of the study, the author will use the model as a categorisation tool to homogenise SME’s theoretically.

LEVEL 1: Landlubbers – SME’s have no intention of moving to the electronic environment. These businesses tend to be small, have little employees and occupy and small and stable market with no intention of expansion.

LEVEL 2: Toe Dippers – SME’s that have basic computer needs and limited skills in using them. Unwillingness to expend beyond a minimal level but are of the view that the internet can be helpful for tasks on a day-to-day basis for use of e-mail and online banking.

LEVEL 3: Paddlers – Participants of e-commerce and are sometimes registered within an e-marketplace, but carry out virtually no business through it. Have an eagerness to learn but a lack of confidence and ability to advance to a higher level of involvement.

LEVEL 4: Waders – Categorised by SME’s that for reasons of choice or pressure from stakeholders, have moved into the electronic environment. The firms within are initiated in electronic services and are beginning to learn how to participate in online business.

LEVEL 5: Swimmers – Businesses within this level are experts and are comfortable with many e-commerce applications and online trading is an integral part of their business.

Grewel’s (2001) classifications indicate that the diffusion levels are affected the resources and can be best targeted at specific groups to encourage higher levels of e-participation, rather than disperse the resources holistically across all SME’s (Levy and Powell, 2003). Furthermore, findings of Grey (2003) show further evidence that adoption levels are not merely down to resources but that adoption rates differ from country to country and that SME’s throughout the world are at different levels of adoption in comparison to others found in different countries. Additionally, both the levels, stage and rate of adoption is influenced by the conditions within that locality. As discussed earlier, the UK is placed 13th on the e-readiness rankings (2009) suggesting that the UK’s levels of adoption are reflective of the benefits already achieved by its SME’s.

2.4.2 Stages of adoption

The second factor of adoption deals with the stages or phases of adoption. Cater-Steel and Grist (2004) describe the steps that should be taken to further adopt the internet, although they are also of the opinion that e-commerce will only be adopted as the need arises for the integration into the supply-chain and not just for the sake of having e-commerce.

Jeffcoate, Chappell and Feindt (2002) also explored the topic matter and devised a best-practise model for the process in adopting e-commerce. They indentified 11 imperative dynamics of success that are vital during the different phases of the adoption process. However, the most crucial issue raised was that the process which is normally segmented into numerous stages is definitely an ongoing process rather than a one-off event. Similarly, Rogers (1995) also subscribes to the view of adoption as a process with the 5 factors model of innovation adoption. Levy and Powell (2003) further assist Rogers with their adoption ladder framework and are of the opinion that most SME’s only see value at the bottom end of the ladder.Furthermore, there seems to be an overall agreement that the process in the adoption of e-commerce is indeed a process and is implemented in stages rather than an individual one-off occasion. Additionally, the stages are usually adopted at the lower end of the classification model (Grewel, 2001), slowly climbing the adoption ladder towards the more complex aspects of e-commerce.

2.4.3 Influencing factors of adoption

Qi (2007) and Kiong (2004) investigated the reasoning behind moving from neo-classical forms of commerce to the post-modern capabilities of electronic commerce. They identified a wide range of influencing factors, yet most were mainly regarding monetary benefits. However, further studies by Simpson (2004) conveyed that pressure from society was also a pivotal factor encouraging adoption. Scupola (2003) devised a framework that represents the factors influencing adoption. These factors have been categorised into three segmented groups including the external environment, organisational context and technological context. In addition, managers who perceived e-commerce has having a positive effect on the strategic value of an company posses a positive attitude to adoption (Grandon and Pearson, 2003) whereas Ramsey’s (2005) research into the differences in adopters and non-adopters found that adopters are far more proactive and have a greater e-awareness to indentifying technological possibilities.

Following the analysis upon the factors influencing adoption, the most notable appears to be the perceptions and attitudes of managers towards e-commerce within organisation. SME’s that have made to successful transition to utilising e-commerce have all portrayed an positive opinion of technological innovation and that it provides them with a opportunity to create a competitive advantage over rival companies and a basis to build better relationships with any stakeholders involved.

3. Methodology

3.1 Philosophy

Qualitative research has been extensively compared with quantitative research and has found three different theories about how knowledge is accepted known as epistemology (Bryman and Bell, 2007). Quantitative research has been labelled under the natural scientist theory of positivism (Saunders et al, 2007), which collects data and creates facts on what is in front of them. Hypothesis’ are made by reviewing past literature before undertaking research, which is then compared as to whether the predictions are correct.

Qualitative research is labelled at the other end of the epistemological spectrum (Strauss and Corbin, 1998) under Interpretivist or social constructivist (Bryman and Bell, 2007). This theory looks past statistical evidence and penetrates deeper into the information to identify dissimilar answers and read the reactions of people’s behaviour (Saunders et al, 2007). This has a very subjective view due to differentiated opinions and different minds of people (Strauss and Corbin, 1998), which can cause negative outcomes which will be discussed later.

Finally, Realism could be said to be in the middle of the two extremes, showing characteristics of both a positivist and an interpretivist (Bryman and Bell, 2007). Realism is comparable to positivism (Saunders et al, 2007) with its scientific approach to data but the theory is divided into two mindsets: Direct realism takes more of the positivist approach by looking at the data and producing results from what is in front of them (Bryman and Bell, 2007). However another mindset has been formulated in the form of critical realism (Saunders et al, 2007), looking past the direct realism and believe that complexities occur in data, which leaves the researcher creating their own interpretations of data (Bryman and Bell, 2007).

3.2 Qualitative V Quantitative

It has long been recognised that qualitative and quantitative methods produce different types of information. The use of quantitative methods permits statistical analysis using standardised measures to gauge and compare the reactions of a large number of people on a limited set of questions (Patton, 1997). By contrast, qualitative methods facilitate use of data that are perceived as rich, holistic and real for which face validity seems faultless (Miles, 1983 cited in Howard et al 2001).

These characteristics and the lack of standardisation of much qualitative data make them difficult to analyse and require that the researcher devote much time and effort to managing the data (Howard et al, 2001). In contrast, a number of quantitative indices are generally available and additional indicators can be developed by various means, including satisfaction scales and involvement levels. However, Lillis (2008) states that the knowledge that books and numbers have limitations as it doesn’t tell the whole truth.

Conversely, qualitative indicators are less readily available. A research design that includes a collection of these indicators is important for numerous reasons. Firstly, qualitative research can lead to the findings of unanticipated data that wasn’t previously expected. Secondly, qualitative methods can also assist the decision makers whose main desire is to gain an understanding to what the people studied actually think and why they think that as well as the values and motivations to that particular thought and behaviour (Van Maanen, 1983 cited in Howard et al, 2001). Furthermore, Bryman and Bell (2007) identify qualitative research as too subjective, on a person’s opinion, their perception could be based on a poor experience however, overall perceptions from others could be different. The data is also difficult to replicate, which is therefore a huge difficulty in analysing, unlike quantitative research (Veal, 1998).

To summarise, there is always going to be conflict between the contrasting methods and that both methods have advantages and disadvantages, yet each can be realised when used to research different topics. Furthermore, the author concurs with the opinion of Van Maanen suggesting that qualitative methods provide access to deep-routed answers.

3.3 Approaches

In the approach to deciding upon the research method, two means have been identified including both inductive and deductive approaches (Veal, 1998). Qualitative research takes on the inductive approach, in which a collection of data and a development of theory is a result of data analysis owing itself to paradigms of interpretivism. Whereas, quantitative research uses a deductive approach, in which theory and/or a hypothesis is developed to design a research strategy to test that hypothesis which owes itself to positivism (Saunders et al, 2007).

Although, both approaches provide contrasting paradigms and that they are divided rigidly, Saunders et al (2007) suggest that it is misleading and that not only is it perfectly possible to combine the approaches, but it may be advantageous to do so. However, as the author is aiming to understand why something is happening, rather than being able to describe what is happening, it is more appropriate to undertake the research, inductively.

3.4 Strategies

After exploring both Bryman and Bell (2007) and Saunders et al’s (2007) methods for research literature, the author noticed various techniques to devise a research plan. Taking a quantitative approach may include techniques such as questionnaires or experiments and provide statistical evidence. However, the approach taken by the author to conduct the research is via a qualitative approach and therefore its emphasis upon specific strategies such as observations, interviews and focus groups.

Further strategies may include Glaser and Strauss’ (167, cited in Bryman and Bell, 2007) Grounded theory whereby an alternative strategy for linking both theory and research is available suggesting that the research may build up a collection of theory throughout the ongoing process of research. An additional technique known as archival research makes use of administrative records and documents as the principle source of data. Furthermore, the data is part of an archival strategy and is analysed because they are part of the day-to-day activities (Hakim, 2000 cited in Saunders et al, 2007). This may become relevant for the purpose of the study as it assists qualitative methods of research within suitable environments, such as observations.

3.5 Choices of method

Reference List

Adoption of e-commerce in SME: Lessons from the stage model: Ada Scupola, 2003.

Office for national statistics 2002

Critical factors affecting intermediary web site adoption: understanding how to extend e-participation. Tina Harrison & Kathryn White, 2005.

A classification model to support SME e-commerce adoption initiatives: Rosemary Stockdale & Craig Standing, 2006.

E-Commerce: the challenge for UK SME’s in the 21st century: Michael Quayle, 2002.

Barriers to e-commerce and competitive business models in developing countries: A case study. Nir Kshetri, 2007.

Adoptions intentions and benefits realised: a study of e-commerce in UK SME’s: Elizabeth Daniel & Hugh Wilson, 2002.

E-Commerce operations management: Marc Schniederjans and Qing Cao, 2002.

Management issues regarding e-commerce and the internet: Nilpa Shah and Ray Dawson, 2000.

A study of planning and implementation stages in electronic commerce adoption and evaluation: Chad Lin, Yu-An Huang and Shu-Woan Tseng, 2007.

SME’s and internet adoption strategy: who do SME’s listen to: M Beckinsdale, 2004.

Innovating business through e-commerce: Exploring the willingness of SME’s: Husnayati Husiin and Rafidah Mohamed Noor, 2005.

The internet and SME’s internationalization: Promises and Illusions: Elie Chrysostome and Philip Rosson, 2004.

ICT infrastructure and E-readiness: Assessment report, Estonia. Andre Krull, April 2003.

Beyond the hype: the truth about e-commerce internationalization: Mendoza, Powell, Gezelius, Hellstrom and Klevmarken, 2001.

Barriers to internationalisation: an investigation of the craft microenterprise: I Fillis, 2002.

Make the web world wide: a road for globalization of e-commerce: M Sawhney and S Mandal, 2000.

Commercial internet adoption in China: H Riquelme, 2002.

M-Profits: Tomi Ahonen, 2002.

The Mobile commerce prospects: A strategic analysis of opportunites in the banking sector: R Tiwari and S Buse, 2007.

Broadbank: e-commerce consumer report 2010

Wireless internet: the future is here: I Raicu, 2001.

Emerging trend and challenges in information technology management: Medhi Khosrow-Pour, 2006.

An investigation into the antecedents of organizational participation in business-to-business electronic markets: R Grewel, J Corner and R Mehta, 2001.

Exploring SME internet adoption: Towards an intercontinental model: M Levy and P Powell, 2003.

A investigation to e-commerce adoption profile for small and medium enterprises in Bury, Manchester, UK: B QI, 2007.

Analysis in the state of e-commerce adoption by SME’s: LV Kiong, 2004.

E-commerce adoption support and advice for UK’s SME’s: M Simpson, 2004.

Business research methods: Alan Bryman and Emma Bell, 2007.

Research methods for business students: Mark Saunders, Philip Lewis and Adrian Thornhill, 2009.

Balancing qualitative and quantitative information for effective decision support: Richard Howard and Kenneth Borland Jr, 2001.

Research methods for leisure and tourism: A practical guide: A J Veal, 2008.

E-readiness rankings report, 2009.

IRMG Capgemini, 2010.

DTI, 2001b.

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Free Essays

E-Business in Modern Business

Introduction

E-Business is one of the most emerging buzz words in today’s business sector because it is designed to facilitate the individual and business community so that they remain in touch with their dealings record in 24/7 basis. There have been important progresses in the arrangement of the UK business service division in the past 30 years. As per the study of Devlin (1995), in anticipation of the near the beginning 1970s practical differentiation was principal with numerous supervisory body boundaries forced, one major outcome being limited rivalry both nationally and worldwide. As a consequence, there was serious dependence on usual division based liberation of business services and modest force for alteration. This transformation slowly with deregulation of the business and the progressively more significant position of information knowledge brought rigid opposition and force for speedy alterations. On the other hand, usually these near the beginning online business services were unsuccessful to obtain extensive receipt and were ceased. With fast enlargement of previous types of electronic services mostly on the Internet, in view of the fact that the mid 1990s banks have rehabilitated their attention in electronic form of liberation (Daniel, 1999) and underway offering for the most part business products such as present accounts, saving accounts and so forth by means of the Internet and skill facilitated channels which are cooperatively known as e-banking. The innovative information technology is flattering a significant issue in the prospect growth of business services, and particularly numerous financial businesses. Banks are faced with a number of significant questions, for example how to get filled advantage of new skill opportunities, how e-developments alter the ways customers interrelate with the financial services supplier, etc.

Selected Company: Barlcays

In today’s competitive working scenario most of the businesses are trying to come out of the physical operations and switch their businesses to the virtual world so that they can make their presence possible on 24/7 basis enabling any customer to approach the company without any barrier and hassle free working operations. In case of the banking sector it is important to remain activated all the time so that customers from all the parts of the world can remain in touch with the bank without any problems and barriers.

In order to accomplish this work I have selected the banking industry because E-business is very common and fast developing in this industry. Furthermore I have selected Barclays as the company to focus on its E-business operations like E-marketing and Customer relationship management that how Barclays managing its operations electronically in order to enhance the customer facilitation and employees growth to streamline its business process in order to get high returns and savings on its investments.

Emerging Importance of Internet Banking in Barclays

It is an established reality that Internet banking is turn out to be a middle field of learning by a lot of researchers in Ireland. Purposely, the new learning demeanour in Internet banking is completed by Guriting and Ndubisi (2006) who premeditated Borneo virtual and e-banking. Among the other UK internet banking studies are Ndubisi and Sinti (2006), Ndubisi et al. (2004), Suganthi and Balachandran (2001) and Shanmugam and Guru (2002), to talk about a only some. These studies exclusively proffer an exact sympathetic on Internet banking taking in the middle of Irish. On the other hand, it is incomplete for them to discover the undergraduate’ behavioural purpose over internet banking reception, previous studies were quiet to speak to particularly apprentice as their major objective of investigation (i.e. Karem, 2003; Ndubisi et al., 2004; and Sathye, 1999). Consequently, the present learning is calculated in command to learning undergraduate receiving of Internet banking.

Barclays E-Banking in Current Scenario

In this current scenario of rapid development and progress people find it really hard to go to the branch and perform their banking transactions and other deposits. When people became fed up with the entire branch banking facilities and other formalities then they started to think about something virtual banking facilities so that they can successfully eliminate all the barriers of the banking industry and they can work 24/7 from anywhere and everywhere. This thinking leads them to consider a E-banking option that is very successful nowadays (i.e. Karem, 2003; Ndubisi et al., 2004; and Sathye, 1999).

E-Marketing and CRM in Barclays

It is an undeniable fact that E-business has introduced numerous new and innovative means of performing business operations. Some of them are e-marketing and CRM. These two business process were previously done in physical world by using physical resources and equipments, but now due tot he rapid advancement in technology and electronic these two functions can be performed electronically and in the virtual world successfully.

E-marketing in Barclays

Internet marketing plan in Barclays include, how to begin an Internet business, online e-marketing, and e-marketing scheme, search engine optimization, and providing Internet advertising guru tips have been our centre for several years.

Marketing is the sole of any organization, e- marketing strategy is a process that enables an organization to utilize its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage in the market in which the organization deals. A marketing strategy key concept is that client contentment is the come primary. A marketing strategy is a process that enables an organization to utilize its available resources on the maximum opportunities to promote sales and achieve an appropriate advantage in the market in which the organization deals. Kotler’s describe that marketing is a concept applicable in all organizations not only for profit business corporations”. (Kotler, 1982)

Marketing to organisation and consumers

In this contemporary marketing is become very vast field and people are doing specialisation in organisation and consumers both sectors to gain the maximum benefits out of the marketing. People say it is easy to market the products and services to the organisation rather than individual customers. Because at organisational level we have to give thorough presentation about the product and services and the audience already have some knowledge about the product and services so our little efforts can bring some good revenues for the company but in case of individual customers we have to be very conscious about the individual taste and preference to win their hearts.
Major Roles

Media advertising

Main media publicity was the action hardest hit by the financial plan cuts, considering the sharpest descending amendment in all groups. The cut to medium budgets was the third consecutive periodical descending amendment and was also the main seen for two years.

Direct marketing

On average in last year, direct marketing budgets were left unchanged. This quarter marked an end to the steady upward revisions which have been seen in the past seven quarters. The continued focus on direct marketing can be attributed to its perceived cost effectiveness and accountability

CRM in Barclays

With the emergence of E-busienss most of the business can successfully manage to entertain its customer on 24/7 basis by providing them services and products offerings through internet or any other virtual means. E-business has made it really easy for the customer to access the company to solve it issues measure and matters by remain connected with the company all the time devoid of boundary and any other barriers.

Benefits of CRM

Time saving factor

Electronic banking has given new modes of performing business and dealings. It’s proved to be a very productive and time saving for the business transactions. Now we do not have to wait for two to three days for cheque clearing within few minutes we can transfer our funds and we can also deposit our cash and attain financial statement within few clicks. These procedures have really made our business matters more convenient and fast and it also reduced time in our daily transactions. In fact some of the Banks in Ireland are offering mobile service as well due to which we can check our account transaction anytime and anywhere (Pekka Laukkanen, 2008, pp.440 – 455).

Customer flexibility

E-banking provides utmost flexibility to the customers and it can also provide equal facilities and flexibilities to the bank employees. Now they can make their posting to branch to branch transfers with the help of virtual network or we can also call it virtual private network that is VPN. These systems can really help the employees to build long term relationships with the customers and it can also enhance their credibility in their career. Along with this these internet facilities ensure 24/7 service availability of banking service without any tension or time boundary (Minna Mattila, 2003, pp.514 – 528).

Security

As you’d wait for from a reward winning online banking examination, there’s totally no cooperation when it comes to safety. There are two separate areas of safety that relate to our online banking customers. The primary is our safety system to defend you when you use e-Banking. The moment involves the safety measures you should get to defend yourself when you go online.

Use Cases in Aspect of Customers and Enterprise

The below mentioned cases are the perfect example of e-business application in an online library and online shopping. It can really boost the business performance by adding huge profits and sales in business accounts and financial records.

E-Library OPAC

An Online Public Access Catalog (OPAC) is e-Library website which is part of Integrated Library System (ILS), also known as a Library Management System (LMS), and managed by a library or group of libraries.

Patrons of the library can search library catalog online to locate various resources – books, periodicals, audio and visual materials, or other items under control of the library. Patrons may reserve or renew item, provide feedback, and manage their account.

Online Shopping

Web Customer actor uses some web site to make purchases online. Top level use cases are View Items, Make Purchase and Client Register. View Items use case could be used by customer as top level use case if customer only wants to find and see some products. This use case could also be used as a part of Make Purchase use case. Client Register use case allows customer to register on the web site, for example to get some coupons or be invited to private sales. Note, that Checkout use case is included use case not available by itself – checkout is part of making purchase. Except for the Web Customer actor there are several other actors which will be described below with detailed use cases.

Conclusion

This paper has numerous actions and parameters that can measure the importance of E-business in banking sector scenario and it also gives real analysis about the domestic market that how customer will respond towards this banking facility and services. E-Business, the newest production of electronic banking transactions has released up novel window of occasion to the current banks and monetary institutions. Most of the banks have their own websites but not all of them proffer internet facilities. The major cause of this is that the banks do not have the IT infrastructure and good security description. To increase the self-assurance on internet banking the in general computer literacy must be urbanized. With that ambition management has taken scheme even in the root level to enlarge it literacy in the state.

On the other hand, with banking customers growing more and more relaxing with the digital way of life, but Barclay’s customers are not intended in case of e-banking in Ireland. They are not flattering recognize the influence of knowledge and seek to influence it to get pleasure from better management over their banking operations. To bring to a close that e-banking may also give previous benefits. For example, making new markets, and plummeting functioning costs, managerial costs and labour force are more and more imperative aspects for the banks’ competitiveness, and e-banking may get better these aspects as well. So, UK banks should take these compensation of e-banking in UK as before time as likely.

References

Chen, T. (1999) Critical Success Factors for Various Strategies in the Banking Industry. International Journal of Bank Marketing. Vol. 17, No. 2, pp 83-91.

Cronin, M. J. (1998) Defining Net Impact: The Realignment of Banking and Finance on the Web, in Cronin, M. J. (Ed.) Banking and Finance on the Internet. Chapter 1, John Wiley & Sons, New York, USA, pp. 1-18.

Daniel, E. (1999). Provision of electronic banking in the UK and Republic of Ireland. International Journal of Bank Marketing, 17 (2), 72-82.

Davis, F.D., Bagozzi, R.P., & Warshaw, P.R.(1992). Extrinsic and intrinsic motivation to use computers in the workplace. Journal of Applied Social Psychology, 22 (14), 1111-1132.

Franco, S. C., Klein, T. (1999) Online Banking Report, Piper Jaffray Equity Research, www.pjc.com/ec-ie01.asp?team=2

Guriting, P., & Ndubisi N.O. (2006). Borneo online banking: Evaluating customer perceptions and behavioural intention. Management Research News, 29 (1/2), 6-15.

Minna Mattila, Heikki Karjaluoto, Tapio Pento, (2003) “Internet banking adoption among mature customers: early majority or laggards?”, Journal of Services Marketing, Emerald Group Publishing Limited Vol. 17 Iss: 5, pp.514 – 528

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Free Essays

Ethical Issues with E-Business in Local Authorities in the United Kingdom

Abstract

Studies suggest a need for further investigation in the regulation of e-business and use of systems and technologies (using e-business). The Economy of the United Kingdom is divided into two different sectors that is ever changing and fast moving Private Sector where technology and e-business is used and embraces with open arms due to the need of eliminating rivals at times without looking at the ethical issues that this my comprise or raise. The other sector consist of is organizations like Local Authorities who do not use e-Business or technology as much as they do not like the rapid change is technology and the investment in such new technology normally leads to a balancing act where cost/customer satisfaction/staff satisfaction(organizational culture) out ways the benefits. The squeeze that has been applied on the Public Sector (Local Authorities) in the United Kingdom has raised a need for more research to be taken to look at weather Local Authorities would have been better off investing in an Electronic Business system and look at saving money to try and be self sustaining without having to rely heavily on the funds provided by Central Government.

This research project proposal look at what are the ethical, privacy or security issues that may ariseThe public have lost faith in the government and local authorities’ capabilities to securely hold and preserve the public’s sensitive information due to the highly publicized loss of sensitive. What policies and procedures are in place to support a local authority looking to implement e-businessHow will these policies and procedures be in co operated in to the local authorities business plan, IS Strategy and IT/IS security policies and procedures. What are the organization culture towards change, using new technology and the uncertainty around the implementation e-business?

Background/Introduction

The Public sector who relies on government grants and national funding for business, the goals are more customer or service focused and the rights of customers or service users take a lot of presidencies. Normally Public sector organisations like Local Authorities do not use e-Business or technology as much as they do not like the rapid change is technology and the investment in such new technology normally leads to a balancing act where cost/customer satisfaction/staff satisfaction(organisational culture) out ways the benefits. The squeeze that has been applied on the Public Sector (Local Authorities) in the United Kingdom has raised a need for more research to be taken to look at weather Local Authorities would have been better off investing in an Electronic Business system and look at saving money to try and be self sustaining without having to rely heavily on the funds provided by Central Government.

If Authorities do take the step and decide to try and use new technologies (e-business), what are the ethical, privacy or security issues that may ariseThe public have lost faith in the government and local authorities’ capabilities to securely hold and preserve the public’s sensitive information due to the highly publicised loss of sensitive information as covered by Mack (2011, New Data Breach Incident at Leicester City Council, Leicester Mercury, 23/03/2011) and also by Raywood (2008, USB stick containing children’s details lost in Leicester, Leicester Mercury, 14/11/2008).

Journal

Academy for Legal, Ethical and Regulatory Issues proceedings

Journal of Legal, Ethical and Regulatory Issues

Research Question

What are the ethical and privacy issues in the public sector?

Have these issues have resulted in legal and information governance charges or fines?

What steps or procedures are in place to eradicate these issues?

How can these ethical and privacy issues be resolved?

What are the e-business related ethical issues?

Does these issue only arise in the public sector or do they arise in the

Are these issues the same in the private sector or do they differ and why?

Some local authorities use e-business while others do not, are there any specific reasons(Cost, size of authority, relevance, gap in knowledge, legal implications, ethical implications)

How do local authorities using e-business respond to any of the ethical issues with e-business?

Does local authority have policies and procedures to support the use of e-business systems?

Do local authorities feel the risk of ethical, privacy and security issue related to the use of e-business systems out way the financial benefitsIf so why and how?

Does local authority front line staff resist this change to technology?

Do organizational culture and legal policies hinder the mindset of staff and senior management with in local authorities to change in technology in particular e-business or e- marketing?

Literature Review

Public Sector working has now totally been changed since the end of 2007 and beginning of 2008, the Global Financial meltdown called the Recession that was caused due to the Big Banking Crisis has lead to a drastic change. The new Collision Government has started to put the big squeeze on public spending and local authorities have been stretched to the bone to try and save millions. These uncertain times have also in cooperated with the public loss in confidence that local authorities are able to handle the intense pressure of saving money, reducing staff, providing a good service and also abiding by the ethical and legal rules regarding information and personal data especially on e-business systems.

The Rapid change in technology with new features being developed at the speed of light, this has resulted in an increased risk in people’s privacy. ‘“Computer technology is the most powerful and most flexible technology ever devised. For this reason, computing is changing everything – where and how we work, where and how we learn, shop, eat, vote, receive medical care, send free time, make war, make friends, make love”(Rogerson and Bynum 1995, p.iv)’, (Rogerson and Bynum 2004, p.1). Technology has now helped defined how we live our life, majority of people now days spend more time using technology especially the internet.

The growth of the internet in the late 1990 and early 2000 has lead to a majority of people shopping online, banking online; e-business has slowly become a part of people’s everyday life. This does raise the issue related to security which can has drastic effects like cyber bullying, hacking, identify theft, using personal information for ones gain and to even promote cyber terrorism as identified by Rogerson and Bynum (2004, p209).

Governments do not sell products or services to customers; they perform many functions for their stakeholders. Many of these functions can be enhanced by the use of e-business. Governments also operate businesslike activities; for example buy supplies from vendors and distribute benefit payments of many kinds. Customers (general public) now have the facility to pay their council tax, get a road tax certificate, etc online using e-business. “The use of electronic commerce (e-business) by governments and government agencies to perform these functions is often called e-government” (Schneider, 2007, vol.7, page 226). There is a legal obligation for businesses that operate on the web must comply with the same laws and regulations that govern the operations of all business. If they do not, they face the same set of penalties – fines, reparation payments, court-imposed dissolution, and even jail time for officers and owners – that any business face. This legal obligation has been set by The British Computer Society Code of Conduct which states “You should not misrepresent or withhold information on the performance of products, systems or services, or take advantage of the lack of relevant knowledge or inexperience of others” as listed by Rogerson and Bynum (2004, p194). Clearly, there is scope here for a great deal more research that

• Is based on empirical data of surveys done with local authority staff and the general public;

• operates with a complex understanding of concerns and barriers for local authorities to use e-business;

• Looks specifically at the ways online crime, terrorism and warfare can be reduced and stopped;

• involves more work on the culture difference and change between the public and private sector;

• Aims not only to describe and explain but also to change ethical and legal policies and procedure for the use of e-business in local authorities within the United Kingdom.

Research Methodologies

Local Authorities in the United Kingdom have a reluctance to use new technologies; with the current climate where LA’s are looking to reduce their outgoing cost and still tries to maintain services. E-Business is a new way forward, but LA’s are very reluctant to embrace this new technology and way forward. There may be a few ethical issues with use of E-Business within LA’s due to the issue with privacy and other factors that have undermined the image of Local Authorities due to loss of personal data and information of the general public.

Methodology:

I am look at using a positivism form of the philosophical paradigms where I can gather evidence of formal propositions and quantifiable measures to support my argument regarding the reluctance of local authorities in the United Kingdom to adopt e-business system and the ethical issues that will arise with the use of e-business systems with in local authority.

Data Collection:

I am look at using a quantitative approach to collect data and comments from three different sets of audiences

General Public
Councilors, senior managers and staff within Local Authorities that is not using E-Business
Councilors, senior managers and staff within Local Authorities that is using E-Business

I would look at potential trends, issues, concerns, positives and other comments from the three groups’ l have listed above.

Interviews will be my approach with Councilors and Managers to find out more from the people who take the big discussions higher up.

A series of surveys designed to look at E-Business will be distributed to staff around the different authorities.

A survey will be put to the General Public so I look at collecting quantitative data and also comments regarding E-Business in LA’s, the Ethical Issues this might cause and the concerns from the general public related to these issues.

Data Analysis:

The qualitative data analysis approach will be used in order to gain more depth and analyze underlying issues of the research question at hand. I have chosen this because quantitative data analysis approach might not necessarily capture the emotion behind the answers.

Data Analysis Software Tools:

For the analysis of my quantitative data I would use spreadsheets and statistical softwares to create tables, bar charts, pie charts, line graphs, scatter graphs, etc as specified by Oates (2006, chapter 17, page 250 – 253).

Spreadsheets (like Microsoft Excel) which are useful for analyses such as frequency distributions, means and cross-tabulations. Spreadsheets are also useful for graphic data from individual variables.
Statistical software (like SPSS) which are useful for analyses such as multivariate analysis of variance, factor analysis and cluster analysis.

For the analysis of my qualitative data I would use transcript creation, coding, data organization, hyperlink creation, etc as stated by Oates (2006, chapter 18, page 276).

Project Plan

The most important factor to with a research project is planning and effectively using the time I have to work on the research project. There are 10 useful steps which will help me make sure I am on track to delivering my proposed research project on time as identified by O’Donoghue (2006):

Stage 1 – Choosing the project

Stage 2 – Initial literature review


The literature review will enables me to find out what research has already been undertaken in regards to the Ethical issues with E-Business in Local Authorities in the United Kingdom. An Initial literature review acts as good starting point to help understand and decide the specific area of research you will want to undertake.

Stage 3 – Finalizing the research questions

Ideally your research questions will emerge from the literature review.

Stage 4 – Choosing and developing the methodology

At this stage you need to choose the best approach to enable you to answer your research question.

Stage 5 – Data collection


Collecting the data will be a long process which will end up taking a few months of detailed observation and recording.

Stage 8 – Data analysis


Data analysis includes the systematic organizing of the data and its presentation in a form that readers of your project can understand.

Stage 9 – Drawing conclusions and interpretations

It will certainly involve a critical reflection on the conclusions you have drawn and the methods you have used.

Stage 10 – Preparing the final thesis

The final stage of the project, though, is assembling the final version of the thesis..

The draft project plan attached in Appendix 1; and following the steps listed above has given me more confidence that I can prepare, plan and work to the illustrated timescales to successfully complete the research required.

Conclusion

This research project proposal illustrates that there is scope for a significant amount of research to be undertaken on this selected topic. I feel this proposal has also identifies a specific gap in the ethical issues with the use of e-business systems. E-Business systems can form the future and the possible solution for local authorities in the United Kingdom as a possible investment to help them bridge the gap at a time of uncertainty and push forward a new way to helping local authorities become more self sustaining. By in cooperating e-business in their present business policies and IS strategy, they can start planning for the future more positively. This proposal has also identified the need to look at the ethical, legal and privacy concerns which local authorities might be taking on with an e-business system. Every new system come along with its advantages and disadvantages, I feel the ethical, legal and privacy issues are the main disadvantages with using an e-business system (the other disadvantages are cost, resources and planning). There many be issues where IS/IT professionals may be unprepared to deal effectively with the ethical issues that arise in the workplace as stated by Bynum and Rogerson (2006, chapter 2, page 39).

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Free Essays

Business Process Reengineering

INTRODUCTION:

Business process reengineering concepts comes from management theories and introduce in 18th century. The purpose of business process reengineering is to make the business in best condition. Frederick Taylor says in (1880s) the companies use the reengineering process to make the business in best position and to achieve the company goals. Business process reengineering means not only change but structural change. What kind of structural change in the organization, managing system, employee responsibilities, reward system, and information technology. Many organizations want to change the management of the organization but they not identified which part of work is to be changed. But the business process of reengineering (BPR) is the concept of management and that has been formed by practical experience. (BPR) is not only impact inside the organization but also the external supplier and customer as well. (BPR) is help to increase the organization financial report and customer satisfaction and also find out the way how to create the high productivity with the short amount [Radhakrishnan.R, 2008]. The key driver of the (BPR) is cost reduction, high speed, and quality. Information technology is a technology which use to store, determine and process the data which use in the specific organizations to examine the data and processed the data. And through the information we improve our knowledge and know how to do the work. The information system develops a strategic approach to change the process. For example through reengineering process we provide a wide range of company product online the customers are buying our product with the help of information system. So that is not possible without information system. Information technology is the component of the (BPR) and promotes the companies process. [Hammer and Champy (1993)] say reengineering about innovation. It is help to solve the company entire objectives.

ROLE OF IS/IT IN BUSINESS PROCESS REENGINEERING:

BPR is the much biggest issue for IS executive in 1990s (Moad, 1994). BPR shows the power of the information system and information technology to the decision making because through the information system and information technology the BPR reach the effective position. So the BPR success is based on information system and information technology. The role of IS in the organization is to make the effective strategy according to the business requirement. No other systems change the business such as the information system because the information system put right system on right place. The information is the key of an organization (Byrne, 1992) the IS measure the process and performance of an organization. The good information makes the better position of an organization. By using the customer strategy the IS gets the information out of the organization how the product of the company is running through the market and implement the IS to reduce the time to market. The information system has must be able to vision the information technology in the organization future. BPR is not adopting the new system but also create those system they effect the whole organization (Teer et al, 1994 Moad, 1993). Firstly focus on the business process not on information and then apply the IT tools on those processes. To adopting these steps the IS expert provide the understanding of the information and technology in the business processes. The IS professional have play an important role in the business process reengineering. For example when the California state affiliate of American Automobile Association (CASS) stated the reengineering process the internal IS system was very bad in initial stage they cannot deliver company product on time. The information technology system is good but the IS system is not good. So the CASS identified the problem and solved it. When they removed the IS department error the company come on boom stage. So the result is that when your IS/IT fulfill the requirement then the company comes to upward. The IS/IT are the key of business process reengineering. When the IS and IT department are work effectively then the BPR make the better company position.

The relationship between IS/IT in the BPR is to change the process and identifying, evaluating, and implementing the business strategies. If the business is in dog situation the role of BPR is to remove the barrier. The BPR has overcome on these barrier through IS/IT because if the IS system is working bad than the business goes to downwards so the IS system is effective than the business in good position. How we can make the IS/IT system better. The delivery system of the company is based on the IS system so when the company collect the information form there customer what they want and than the company makes the strategy according to the customer requirement. So the company does all the process under the IS system we can say these are all the component of the IS system. IS system are supporting to regenerate the business process and also analyze the existing assets. A large number of manager are adopt the business process reengineering under the IS/IT system to getting the competitive advantages and also provide effective service to their customers. Willcocks says the IS/IT is the most critical factors of the business process reengineering. These systems are cross the different stages and than identifying the problem and how the previous system works with the project and also collect the information for the reengineering process.

IMPLEMENTAION OF IS/IT ON TOYOTA UNDER THE BPR:

The information system of the Toyota company is been evaluated by SOWT analysis. The Toyota Company achieved the goals globally by using the information system. The Toyota company reach to there customer by using the different website worldwide. These are website based on IS system the IS system work effectively that why Toyota is the world biggest company. For example Toyota reach to there customer through the website there are many website and system in each world regions, north America, Europe etc. The IS department firstly gather the information from there customer what type of the goods they needed than according to the customer requirement the Toyota produce the goods. The Toyota company has develop new opportunity which is transport system and the company develop this system through the IS system because the information system is one of the best key to develop that system. Toyota collect the information from there customer and the other companies as well. That is the marvelous opportunity for the Toyota Company because the Toyota increase there customer on the base of previous customer. The IS system and networking is the key which helps the Toyota Company success. The Toyota Company have no off competitors like as Honda, Ford, Chevrolet, etc. In this competition the Toyota Company is on boom stage because effective IS system. One of the best of the IS system is the Toyota new Hybrid Synergy drive. When the automotive industry is fall in high gasoline crude oil costs, the Toyota develop a new computerized engine system which is HSD. The Toyota introduce that system in there new models cars like Camry, prius which is available in the market. Toyota makes that possible by using the Porters models for the threat of same product. Some other companies copied the Toyota HSD and entered in the market like Nissan, Honda introduce similar technology in there sedan model but the Toyota is super hot in the market because the Nissan and Honda have not good impact in the market yet. So the Toyota has highest impact in the market through IS system.

Toyota Company has got profit on he behalf of Porters five forces because the companies share increase through the porter’s model. By using the HSD the company gets competitive advantages. Toyota HSD has sufficiently maintained their advantages and covers the market. These are all factor makes the Toyota success and gain the competitive advantages by using the information system. Because the information system is major key of the success so the Toyota maintains his information system and get the success. In 2008 the Toyota introduce service the name of that is TOYOTA METAPOLIS, on that service the Toyota created 3-d cars to inspire the people. In 2002 the Toyota introduce a new service in Japan the name of G-BOOK telematics service and in August 2005 Toyota introduce G-Link service for Lexus. And also introduce the theft detection service, tracking service for the G-BOOK and G-link user that are using there vehicles. So the Toyota has done all these step with the help of information technology when the IT system is doing excellent job than the company did not went to downward. In 2007 Toyota bring the mX system in the market for there user and that service is use for getting direction that is the world first technology for auto update the map. In March 2004 the Toyota introduce the CRM (customer relationship management) the information technology develop service to their customer such as provide the information of new vehicles, time for the maintain the vehicle, etc. when the company provide these services to their customer the customer touch with the company gets the more customer on the behalf of previous customers satisfaction. So that is possible when the information technology work effectively. Toyota IT system play very important role in the success of the company. Toyota currently builds up CRM in countries including China, Thailand and Australia where the company want to increase the market share. In 1980s the carmaker was introduce aided design system for designing the part on computer not on paper. Toyota adopt that system the designer of new CAD system firstly asked where we use that particular system where we need that and also what are the requirement, what are the options the designer ask such question for the effective use of the information technology. For example when they analyze the die stamp that is out of parts the die stamp not fulfills the model requirement and than they design best dies on the computer. When the die design completes the Toyota use simple solution take the basic point which is shown on the color diagram. The die designer worked on experience based examined the diagram and made the particular parts. As their competitors adopt that CAD system Toyota maintain it through their engineers and suppliers. Toyota updates that system day by day and its work effectively. After two year the Toyota shifts that system into the CATIA (Computer-Aided Three Dimensional Interactive Application) a world class system. Toyota was very slow implementing that system into the development process, because at the time when the Toyota implement that system the Ford automaker quickly adopt that system and introduced into the market but Ford industry have not effective CATIA system and spending million to adopt that system and confuse the people. After the Ford system failure that the Toyota introduces the CATIA system in the market and gets boots sale from the market, because Toyota put lot of attention to make that system. So the result is that the Toyota information technology system works very well if Toyota has not effective IT system than the company could not come to that point or stage. Toyota Company continuously work on CATIA system by using the effective software and effective engineers when the Toyota introduced the first CAS software in 1980s and within the next 12 months Toyota developed new vehicle. That are all possible when your have advance IT system by using the IT Toyota been successful form 1980s. For example the instruments are done digitally in three dimensions. Toyota used this method in the vehicle design because the engineers kept the list of good and bad characteristics of design and these aspects saved electronically. There is also keeping the data in the assembly plant for the designing purpose. Through these design the engineers check the past problem and assembled the perfect car. So the IT helps to assemble the actual auto vehicle without the errors. So the result is that the Toyota did not adopt the weak and poor development process and also use the most effective IT system. Toyota will take the effective development system which is based on trained engineers and leaders and surgically inserted information technology. Today Toyota is alive on the behalf of IS/IT system because these are the basic keys of the Toyota company success.

RECOMMENDATION:

Toyota auto vehicle share the information with the other companies such as Ford, Nissan etc. That’s not good for Toyota company success when companies share the information with the other companies the companies has to use that information and developed new vehicle and introduced into the market. So that is the drawback of the Toyota Company to share the information with the others. This is the most difficult process to collect the information form the customer or other people what they want. After that the company put that information

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Free Essays

Human Capital management is a vital component in any successful business (SOURCE).

ABSTRACT

This is a study of the various approaches that can be implemented to improve staff performance and how these affect the employee’s motivation, and the organisation’s aims. Staff training, and the management of staff, remains a highly debated topic in the business market; different employees have different attitudes towards work, different commitments, and different abilities. These differences influence the way an individual functions in a work environment, and can determine how successful a business is at attaining their objectives. This study aims to analyse the particular approaches employed of Human Resource management to motivate their staff to work hard and productively.

The study will assess the various theories of “employee recognition”, as well as the different modes of this, the mode that is chosen by staff, and the modes which attain the best results.

The research will then look to investigate motivational systems, such as rewards, and recognise this as a consequence from this approach. The different reward and motivation models can affect the staff member’s perception of the business and their role within it. The study will look into how the reward system can motivate staff members to improve their efficiency at work. The study will then look at the possible challenges of reward systems, and the ways that these risks can be managed.

This research will then analyse the various ideas to motivate staff members, and the restrictions of these ideas. It will contrast the reward systems with motivation to comprehend the relationship between the two systems.

Additional targets are to locate the elements which improve and motivate staff, to comprehend the way in which these reward systems can develop the staffs productivity, as well as to gain knowledge of the ways in which these systems can develop the business’s overall productivity.

The approach taken to answer the above questions was a survey carried out upon staff members of the Royal Mail. The results of this survey were studied through the application of several key research approaches which will be given in Chapter Three.

Overall, this study shows that the improvement of staff members’ motivation and work environment, in which they are recognised and made to feel important to the business, results in better performances at work. Thus, organisations must make sure that suitable systems are in place to motivate and reward their staff.

Yet, these systems must be in balance with the business’s aims. This is because not all individuals are the same, and organisations will have to make sure that there is not one “generic approach” implemented in the organisation.

CHAPTER ONE – INTRODUCTION

1.1. BACKGROUND

The 21st century business market is a place in which there is a huge demand for efficient Human Resource management. Every company is only as strong as its workforce, and thus, HR and Human Capital management is a vital component in any successful business (SOURCE). The influences upon staff performance can be external: the threat of rival businesses, or internal: the degree of organisational ability. Human Capital management is responsible for the organisation of a business’s resources, and the handling of environmental aspects. As Marchinton and Wilkinson (2008) describe: “businesses that do not adopt efficient human resources management are likely to fail.”

In recent times, organisations have implemented and applied a variety of different studies into the ways that HR can achieve better levels of performance from their staff, as well as how this can lead to market dominance in the future (SOURCE). The factors that are considered in these studies are often: the recruitment and handling of talented workers, training systems, reward systems, and the motivational factors provided to motivate workers (SOURCES). The motivational systems can vary from business to business; while in every company staff are required to work hard and reach specific targets, the different companies have to apply different motivational systems to accommodate the differences in employee personality and attitudes. As Porter et al. (2006) state: “those behaviours are influenced by the dynamics of environmental occurrences and their personal philosophy.”

Thus, the relationship between an individual’s attitude and his working climate is what establishes the motivation for the staff member to attain their set aims. Yet, Adair (2004) §claims “motivation arises as a result of the internal urge to attain certain goals.” Therefore, if a staff member is affected by his own interests, or by his external environment, the member’s desire to achieve these goals is influenced by their “intrinsic motivations or materialistic gains as in the cases of extrinsic motivation” (Adair, 2004). The “Theory X&Y” is equal with internal as well as external motivational factors.

Ouchi established the “theory Z” which indicates that staff members will be more productive in an environment that offers the worker “a less intrusive control structure complemented with formal processes” (Mullins, 2010). The statement here suggests that a combination of management measures must be implemented to manage the intrinsic and extrinsic staff behaviour. With the locating of elements which can improve an individual’s desire to work hard, then systems of reward management must not be overlooked: “effective reward strategies helps get people to the appropriate place to do the right thing at the expected time” (Pilbeam and Corbridge, 2006). They then go on to say “that there is no one best practice to reward management, instead organisations should adopt reward strategies that best fits their mode of operations and objectives.”

1.2. CONTEXT

Established in 1516, the Royal Mail has been the dominant business in the handling of letters, parcels and mail logistics in the United Kingdom. The Royal has undergone a great amount of change since its inception: for example, the name was changed from “Consignia Holdings Plc” to “Royal Mail Holdings PLC.” The company has grown and grown, as reflected by the 25% increase in operating profit in 2010, as the company made more than ?400 million (SOURCE).

The Royal mail has more than 180 000 staff members. It is a company that is well known for its “bureaucratic approach” to handling staff members. The company looks to make sure that staff welfare is taken into account and that the company can have an active influence over the decision formulation process, which can be evidenced by the organisations policies as given by “Global Compact” in 2006. This showed that the Royal Mail gives staff members the flexibility to attach themselves to any trade associations, even if they prefer to operate without the problems posed by trade unions. The Royal Mail also makes sure that each individual is given equal treatment, regardless of race, gender or age (SOURCE).

As a result of all of these pro-employee approaches, the Royal Mail is regarded as a “favourable” organisation to work for, as staff are satisfied and are able to attain personal and work aims in a comfortable environment (SOURCE). The company’s efforts to offer staff members motivation towards their work, and to improve performance in the work place, have included a variety of reward and incentives systems. The most recent being “sick leave benefits” in which staff members that have not had any time away from work because of illness are rewarded.

1.3. OBJECTIVES

Research aims are as follows:

Comprehend all fundamental aspects of reward and motivational systems;
To locate influences which improve the performance of staff within the Royal Mail;
To assess the ways the reward and motivation approaches can improve levels of productivity and the efficiency of staff in the workplace.

1.4. RESEARCH QUESTIONS

The key focus points of the study are as follows:

What are the influences that improve staff members’ desire to work harder
Does the staff member prefer a personalised reward system to a “generalised” system
Are staff members more motivated by intrinsic factors or extrinsic influences

What is the reason that the reward and motivation systems can be considered a genuine device to improve worker performance and help to achieve a company’s aims?

1.5. HYPOTHESIS

H0: “Workers do not value monetary incentives over non-monetary incentives”

H1: “Works do value monetary incentives over non- monetary incentives”

H0: “Personalised incentives and acknowledgment does not encourage workers more than generalised rewards.”

H1: “Personalised incentives and acknowledgement does encourage workers more than generalized rewards”

H0: “Workers are not more internally than externally motivated”

H1: “Workers are more internally than externally motivated

1.6. SUMMARY OF STUDY

This study aims to investigate the relationship between a company’s reward systems and motivational influences over a workforce. I will not underline the importance of this study and draw upon the above mentioned study aims.

Chapter 1 offers the context and background to the key concepts of rewards and motivation that are crucial to this study. This chapter offers an overview of the Royal Mail and establishes the intentions, hypothesis, potential restrictions, and objectives of the research.
Chapter 2 provides a detailed investigation of reward and motivation systems. This chapter discusses the different ideas surrounding motivational approaches and the relationship between recognition, rewards and motivation. This is a key section of the study as it outlines current details of reward and motivation systems that are used to steer our comprehension and investigation of these systems. In addition, this chapter will address the first research objective: “to understand the underlining concepts of rewards and motivation.”
Chapter 3 offers a succinct account of approaches that are deployed for the collection of primary data that will be implemented in this study. This chapter will also look to discuss the restrictions, the soundness and consistency of the research technique.
Chapter 4 offers an illustration of the research results and uses this to create a variety of graphs to visually study the qualitative and quantitative findings.
Chapter 5 is the heart of this study; it will take the research results and tie this into propositions of the fundamental theories as mentioned within the literature review. This chapter will reveal if workers are intrinsically or externally motivated. This will highlight the way that traditional approaches like the “theory of needs” are considered to be reconcilable with the workers’ prospects. This chapter will also answer the final two aims of the study.
Chapter 6 offers a conclusion to the study, and will draw together the research findings and will propose important recommendations, based on these results.

This study will be important in aiding the general perception of reward and motivation systems; offering a critique of key theories, the study will be important because it will demonstrate possible restrictions or risks of these theories, and will improve the understanding of individualised staff rewards, and the ways in which a company can relate its business aims with reward systems to maximise productivity. This study will help to locate the key elements that motivate workers and discover how far staff members feel that these influences actually encourage them to work harder.

1.7. POSSIBLE LIMITATIONS OF THIS RESEARCH

There may be possible limitations or challenges to this study, which are outline below:

Unsuitable or insufficient data collected: this could be because the company and its staff believe that their details are confidential and refuse to submit them;
Time and finance shortages: these are both limited resources which could possibly restrict the ability to carry out a thorough study;
Unsuitability of concepts and ideologies of the research to alternative industries

CHAPTER TWO – LITERATURE REVIEW

1.8. Systems of Rewards and Motivation

Researchers and analysis of reward and motivation systems have often imagined a professional environment that permits the “perfect synchronisation” of staff members’ attitudes with the company’s operations so that they compliment one-an-other and maximise the potential for both to be productive. These theories are founded in the observation of what motivates staff members to work hard, and to accomplish a certain task. Researchers have attempted to establish the link between the staff attitude with the organisational expectations. In doing so, the researchers attempt to find a manner in which both parties can operate to achieve both sets of goals. Staffs remain at the heart of HR management, but they are a dynamic entity that can either improve or restrict a business, depending upon their management and attitudes. Contemporary research has established that the relationship between an organisation and its staff “inculcate significant consequences on employee behaviour and the overall organizational goals” (Kinnie et al., 2006). Thus, studying these factors must be limited to just the comprehension of reward and motivational systems.

1.9. RECOGNITION

While it is widely perceived as a device used to develop staff productivity, the recognition of staff members offers a foundation for motivation, because it recognises the hard work of an individual and this motivates them to maintain the high standards of work. Current research has indicated that staff value recognition as equally to as they value their pay; as Dubrin (2009) states, recognition “gives them a motive to carryout available task and create a positive drive to achieve.” However, “recognition should not be fuzzy instead it should reinforce a desired behaviour” (Cindy, 2009). If there does not exists any suitable terms or criterion for which staff members can be acknowledged, then they will be unable to respect the organisation’s recognition system. For example, if in an organisation is unclear as to who or why the recognition is given then this could lead to disputes, upset and disrespect. An employee who believes that they have been the more productive or hard working could resent the recognition given to another employee, who in turn could disrespect the recognition because they are unsure as to why they have been given it.

Recognition can be divided into two categories: that which is supplied through friends, colleagues and informal recognition, or that provided by the company. This is to “support a long-term goal as in the case of formal recognition” (Bowen, 2000).

Ventrice (2003) defines these two groups as “Visible Recognition” and “Invisible recognition.” It is stated that when a manager attempts to recognise a worker’s performance by publicly announcing it, or by supplying the worker with a material rewards, then this is “visible recognition.” Visible recognition is the most common form of recognition amongst workers. Example of visible recognition can be seen in the DHL’s motivation and acknowledgement structures in which managers offer oral or written recognition of a worker’s efforts, and then reward them with material rewards such as certificate gifts. It is believe that this “scheme is necessary to create a world-class working environment that would ensure DHL retains the best of employees” (Bandrowczak in Hoffman, 2005). This focus as shown within the structure of the organisation will be fixed firmly upon the staff, which, it is anticipated, will reorganise DHL’s Top-down organizational culture.

Invisible recognition, however, is usually expressed in a less physical manner. For example, if a manager knows their staff members and calls them by their first names, then this is showing invisible recognition. This suggests that the manager has a relationship with and cares for his workers.

Thus it is important for businesses to recognise their workforce, either invisibly or visibly, to motivate them and encourage them to be successful. As Moskowitz and Levering (2003) state: “No organization can have a great place to work without creating a good way to appreciate its employees.” It is therefore vital that companies establish an environment in which the regularly and openly acknowledge their workforce and that this recognition is of imperative importance.

1.10. REWARDING STAFF

Staff members within a business would like to have a type of reward for their hard-work. This can be described as a “psychological contract” which means that managers have to come up with reward systems. As Pitts (1995) describes, “in plain terms employee reward can be described as those gains attributable to employee performance in certain tasks.”

While people may ask why employees would demand rewards, as their payment is their reward, Elliot (2002) states: “most employees see work as eating into the idea of their stress-free life. Hence it is expected that there is some form of compensation for this disutility.” Thus, systems of “compensation” are systems within a business that offers the workforce and employees some manner of reward for their hard-work.

Some workers can attain intrinsic satisfaction from completing their job; these individuals tend to be characterised by their enthusiasm, motivation and participation in tasks and overtime. Other workers on the other hand will do the minimal amount of work, moving quickly from task to task. This model of workers is described as “extrinsically motivated” individuals because they only work to attain a form of reward offered by some external source.

While some researchers have argued that both intrinsic and extrinsic forces can motivate some workers, Islam and Ismail (2008) have argued that “employees tend to appreciate financial rewards as recognition for good work and a motive for better performance.” Contemporary organizational performance recognitions have shown the influence of extrinsic motivation in improving a worker’s performance.

Paton (2005) states: “the Royal Mail recorded an employee sick leave absence rate of 5.7% in the first six months of the introduction of the no-sick leave benefit scheme. This was lower than that of previous periods and implies that the scheme had a considerable amount of positive effect on the company.” Yet while it appears that this scheme was successful, the approach has a legal implication: as particular workers placed discrimination charges which affected “the credibility of the organization” (Cooper 2005). Cooper (2005) suggests that “the criteria for this mode of reward does not favour workers” who may feel discriminated against. Thus it is imperative that that a fair and equal strategy is implemented across the organisation and workforce.

1.10.1. REWARDS

The ways in which staffs are rewarded are numerous. For example, some organisations offer advances, holidays, or even promotion. James and David (2006) divides the forms of reward into, “Financial rewards” (or “monetary incentives”) or “Non-financial rewards” (or “non-monetary incentives”). “Financial rewards” are rewards in shape of pay increases. “Non-financial rewards” can be awards, increased power, or extended holiday periods. Studies show that financial rewards are the most common modes of reward. A CIPD (2009) survey highlighted that “employees across the private and public sectors were very delighted with their pay increase for a number of reasons.” This image shows the opinion of British staff in a variety of business towards wage increases:

Figure 2?1: CIPD (2009). Pay Management Survey

Yet some people expressed some level of dissatisfaction towards the amount of pay increase. The below image shows the causes of dissatisfaction:

Figure 2?2: CIPD (2009). “Pay Management Survey”

As a company establishes reward systems, they have to consider the prevailing economic climate. Bratton and Gold (1999) establishes that rewards may be distributed either, “directly to the individual, collectively as a team or to the organisation as a whole.”

1.1.1. REWARD SYSTEMS RISK

Companies are at risk of becoming victims of their own reward systems: the below image demonstrates the ways in which a company can be threatened by reward systems:

Figure 2?3: CIPD (2009) “Managing reward risk”

Regarding behavioural and operational risks, companies must establish reward systems which make sure that the workforce display attitudes which are reconcilable with the company’s long-term aims. For example, the Royal Mail could recompense the “best” postman, as per the volume of delivered posts in given time period. Yet, this could not sustain the long-term aims of quality service as the employee in their efforts to deliver the most mail could damage or mishandle the mail.

Regarding governance and legal risks, a company can invest too much into providing rewards so it overlooks all “unethical” and legal connotations. For example, the “unethical” influence of the company’s “NSL reward scheme” which supports workers with disabilities or women who have had to take leave because of pregnancy.

1.1.1. WORKER’S REWARD RISK

Because of the nuances in the reward systems, these impact heavily upon the financial market. The financial Service Authority FSA (2009) observed that “reward cultures in many organizations especially financial organizations could have resulted in employees taking overrated risks that would have had negative impacts on the organization and worsened the prevailing economic recession situation as at the time of the report.”

As a result, specific regulations have been issued for companies to adhere to restrict the impact and risks of reward systems upon the financial sector. A selection of these regulations include: rewards that are synonymous with risk control practices; any large pay bonus must be proportionate; and these proportions must be a reward for an exceptional effort from a staff member.

While these regulations discuss the areas that rewards systems affect the financial market, these regulations can have a large impact on a company as a whole; for instance, the likelihood of “over-ambitious financial staff performances” could be prevented.

1.2. MOTIVATION

Across companies around the globe, staff members are asked to achieve daily aims or objects, as given to them by their managers, supervisors and employers. As a result, the individuals undertaking this work anticipate some mode of reward for their hard-work. Thus, organisations offer remuneration in the way of payment; this is usually an individual’s reason for working. Motivation is a theory that is, thus, believed to come from an organisation’s need to encourage their workforce and improve their productivity.

Adair (2004) states that “motivation is a person’s urge, propelled by factors from within that individual that allows him proceed to achieve a goal.” Pritchard and Ashward (2008) state that motivation is “the way an individual utilizes his inner force to attain specific goals.” Thus, as can be seen, in their definition of motivation these authors exclude a lot of detail. For example, we must consider that workers are not all financially driven; some staff can be driven by external influences, such as whether they enjoy their work, their co-workers or bosses. Alternatively, some people may work harder when they are fearful of losing their job. This fear of being fired or laid off is a consequence of an external sanction. Therefore motivation is nuanced; thus a closer definition is: “Motivation deals with those individual desires influenced by external factors which allows for conscious decision making” (Porter et al., 2006).

Yet within the working world it is anticipated that each worker should have an “individual desire or willingness to carry out a task [which] is directed at attaining organizational goals along with employees needs” (DeCenzo & Steven, 1996). In recent times, the theories and ideas surrounding motivation have seen a lot of change; while workers have consistently possessed the motivation to accomplish particular tasks, it has not been until contemporary studies have fully explored the theory surrounding motivation. For example, Whiteley (2002) claims that Karl Marx was part of the initial party of theorists who dedicated much effort into studying motivational ideology. Mark was part of a party which felt that the majority of workers gained satisfaction from their jobs and were enthusiastic about completing their jobs.

Over the following decades, the ideology of motivation has continued to develop, until it became centralised in McGregor’s “theory X” which claims that contrary to Marx’s ideas, that individuals do not enjoy working. McGregor claims that workers only work if they are offered rewards or driven by sanctions.

In current society, the idea of motivation is now founded in the scientific management theory. A particularly significant development in the understanding of motivation was made by Elton Mayo, an Australian psychologist who concluded that workers display higher levels of productivity if they believe that the organisation treats the individual particularly well, or that the work environment is suitable. In one case study, U.S workers were made to work in two different environments: one of good lighting and the other of poor. Results indicated that the workers were more productive in the well-lit environment.

Across the years, researchers have come up with a lot of different ideas which have enriched our understanding of motivation. The next part of this study will analyse and investigate the rationale that constitutes these ideologies, and the way that motivation can be used to get the most out of staff.

1.2.1. “THEORY OF MOTIVATION”

Abraham Maslow’s “Theory of Motivation” associates motivation with fundamental human requirements. It postulates that workers demand a particular level of requirements which means they establish certain motivations to fulfil their desires. When these requirements are satisfied then the worker looks to satisfying another requirement. The different types of “human need” can be split into five groups, as indicated in the illustration below:

Figure 2?4: Maslow Hierarchy of Needs.

The various stages are psychological, safety, social, esteem and self-fulfilment needs. These are explained as follows:

Psychological Needs: This is when a worker looks to fulfil their fundamental desire for water, food and shelter.
Safety: Once a person’s psychological needs are satisfied then they move onto the next stage, in which the person becomes motivated by a desire to gain safety or protection from perceived threats or conditions.
Social Needs: By this point, the person does not need to solely look to get food or shelter or safety; the worker is now motivated by their relationship with the social life and the world they inhabit.
Esteem: The person now looks to have a lot of respect. The previous stages are not considered to be as important as the desire of attaining objects of status or respect, such as: money, property, academic qualification etc.
Self-fulfilment: This is the final stage; by this point the person is motivated by a desire to make the most of their personal potential. Because every other requirement is fulfilled, the person is only motivated by a desire to make an impression.

The system works so that when one stage is satisfied, the person looks to progress to the next stage. While the constant desire is to “re-satisfy” the lower stages, “these factors would have lost their motivating power on the employee” (Armstrong, 2006). It can be seen that the initial stages can be satisfied easier than the later stages because by this point the person has to make the most of his ability, and getting this type of satisfaction is very difficult. As Maslow (2006) comments, “Man is a wanting animal.”

However, there are limitations to this strategy because within any stage, certain needs may not be entirely met which will cause the person to “hover” near various stages. Another problem is the perceived inapplicability of this strategy to various cultural situations; for example, Japanese workers will have a bigger need for safety and social status because of their culture, than what a European or American worker would need.

When assessing Maslow’s theory, Rivera (2006) states “although Maslow justifies this need by highlighting peek experience e.g. spiritual or emotional experience as self actualizing experiences, they only succeeded in making the individual surpass the motive behind his self actualization.” Thus, this suggests that a person cannot keep track of their own actual desires because they will always be looking ahead to the next stage. Despite this perceived flaws in the system, the “hierarchy of needs” continues to be utilised by managers who feel that they can motivate or reward their workers based on this system. The latter stages can also be seen to be particularly useful in helping managers comprehending the esteem and self-fulfilment needs to be satisfied in the professional workplace.

1.1.1. “MOTIVATION HYGIENE THEORY”

Frederic Herzberg’s “Motivation Hygiene Theory” splits motivation into “Satisfiers” and “Dissatisfiers.” The two types of motivation correlate to the influences which can motivate or demotivate a worker, or even produce feelings of discontent in the workplace: “motivation hygiene theory seeks to identify the variances between job satisfiers and dissatisfiers” (Marchington & Wilkinson, 2008). They then state that “when employees notice one form of discomfort, in a particular aspect of their job, it does not necessarily imply that they are dissatisfied with the whole job, so also does it not imply that if an employee likes the pay rate at his work place he is bound to like his job.” The elements which comprise each group can be see to be:

“Satisfiers”: Satisfiers are sometimes known as “motivational factors” and they are the influences which interest or motivate the workforce. These influences include: Personal achievement, recognition, prospect of promotion, personal responsibility, enjoyment of their work etc.
“Dissatisfiers”: Sometimes known as “hygiene factors”, these are the elements of a position that cause unhappiness or discomfort in workers. These factors have a detrimental effect over the workforce, who are dissatisfied with their wages, the level of supervision, their work security, the company’s policies, work environment etc.

Thus, where “motivational factors” improve the worker’s motivation levels and encourage them to work harder, “hygiene factors” can lessen a worker’s desire to work hard or enjoy their work. However, it has been seen that hygiene factors actually compliment motivational factors because they provide a foundation for which people can gain perspective and better appreciate the advantages of motivational factors. These foundations can be the elements which establish a comfortable environment which will in turn improve the worker’s desire to work hard. In other words, this process suggests that elements such as a person’s wages or the rewards they get for hard-work actually do not encourage workers to work harder; they simply provide people with a foundation for which the worker can utilise the motivational factors.

Yet as organisations will look to establish a working climate which simply satisfies the hygiene factors, then motivational factors will be rendered redundant. As a result this is perceived as binary opposite to “theory X”, which postulates that wages and rewards are the key motivational factors, because the “motivation hygiene theory” categorises these types of influence as “dissatisfying.

LIMITS OF THE HYGIENE THEORY

The above-mentioned theory has a selection of important limitations; for example, it is widely acknowledge to be inconsistent when applied to individuals from various economic of cultural environments. Consider, for example, the factors which would motivate an American worker compare to that of an African worker. It can be assumed that Herzberg’s theory is most suited to workers of first world, or developed, nations. Where the motivation factors for first world workers would be respect or status, the motivating factors for workers in less developed nations would simply be a good salary, enough to afford shelter and food. But the inverse is a situation regarding hygiene factors, which have now become the widespread incentive to increase productivity. Another limitation is the “constricted nature” of the theory; whereas Maslow’s theory which generalises a person’s requirements and the way in which these establish a foundation for motivation, Herzberg’s theory restricts the breadth of an “ideal” working environment because his survey was only given to professional respondents. Thus it remains to be seen what will happen when his theory is put into application with workers who do not have an equal amount of training or professional qualification (like those of under developed nations).

Therefore this implies that this theory will force organisations to make sure that extrinsic hygiene factors which comprise the foundation for motivational factors must be dealt with to make sure that workers will work hard. This climate of the workplace is very important and must be set up so that it permits the work to be a challenge because this will motivate the worker’s desire to be successful. Thus, although this theory has a lot of possible restrictions it is still widely perceived as “one of the most appropriate since it recognizes that the drive to carry out a task come basically from intrinsic factors” (NetMBA, 2010).

1.1.2. “Theory X vs. Y”

While it is widely perceived that workers simply have jobs to earn a wage, many researchers have postulated a theory that claims that there exists other reasons that people seek employment. McGregor’s “theory of motivation” divides people into two different types of personality: the type of person who does not want to work but does because they need the money, and the type of person who gets a job and goes to work because they have an intrinsic enjoyment of their job. These two groups are labelled “Theory X” and “Theory Y” respectively. It can be seen that McGregor’s theory displays similarities with the ideas of internal and external motivational factors. When discussing this theory, Deal and Bolman (2008) state: “employees in theory X category are in most cases unproductive or difficult to motivate necessitating the use of rigid measures like the introduction of sanctions or threats in some cases or the use of enticers like pay increase in other cases.” People in Theory Y, on the other hand, are “more open to change ready to learn new things and are in most cases not particular about remuneration” (Deal & Bolman, 2008). Therefore it would be easier for organisations to motivate people from the Theory Y group than people from the Theory C group. As a result, organisations look to establish an “open environment” for the staff and this “would allow for easy goal achievement & improved performance” (Matteson & Ivancevich, 1999).

However, many researchers have criticised this theory because, they argue, it is “too exclusive” in the approach that it takes towards assessing staff attitudes and the elements which motivate them to work harder (Deal & Bolman, 2008).

The Japanese researcher, Ouchi, proposed a “Theory Z” to offer an interjecting assessment of motivational factors and staff attitudes. “Theory Z” was founded on a range of surveys which were undertaken in Japan and it suggested that the general workforce within organisations comprised both X and Y elements. To put it simply, a person could be prepared to work at a given moment, yet not at another. Thus, for employers to make the most of their workforce there is a need for a workplace climate which ensures staff involvement and is challenging, and yet an environment that also acknowledges and offers remuneration to people who successfully undertake and complete these challenges. Thus, Mullins (2010) says that “management should always strive to ensure that there is decentralized and less invasive control.”

1.1.3. “THEORY OF ACHIEVEMENT”

David McClelland’s “theory of achievement” has progressed and is now a considerable influence over organisations and workforce regarding the behaviour relating to the workplace and motivation. Initially, the theory focused upon motivational factors for staff and what was needed to make sure that they worked as hard as they could and if this was encouraged by their personal desire to achieve. Yet, this perspective has changed so that it is now considered that there is a requirement for affiliation with power, in which a consideration is given to the anxiety of “under achieving” or “over achieving.” These theories of affiliating and power are such that staff members look to “belong” to a certain group who they believe to be inline with their own personal aims and who they think will help them attain these objectives. Through these relationships the staff member can practise some control over a certain degree of subordinate or state factors. As a result, organisations have produced a motivational system which will encourage workers to attain their aims in scenarios in which they are given a lot of responsibility or power. By giving a worker power or “autonomy in decision making which would in one way or the other pose a challenge to these employees” which would encourage them to work harder and attain their goals (Miner, 2005).

However, staff members have been seen to display a strong desire for one of three key elements in this theory. For example, an individual who has a prominent desire for power will not necessarily have good skills to interact with other people, therefore as they try to get control over a certain proportion of the workforce, they could be insufficient at handling people and thus “lacking in their ability to affiliate which in the long-run could be of negative concern to their overall goal” (Chapman, 2009). Stuart-Kotze (2007) also criticised this theory, stating that “the current trend in organizations [is] characterized by employees’ job toggling [which] disagrees with the assertion of this theory”. Thus, as staff members believe that their personal capability to move from one workplace to another workplace reflects their own ability and the speed at which they will be able to be successful.

Regardless of this, McClelland’s theory can be seen to address an employee’s desire for self-fulfilment within the “in-house” situation. Therefore organisations must make sure that internal operations effectively motivate interpersonal relationships, provide a suitable degree of a challenge, and that they always moderate the level of autonomy.

1.1.4. ADDITIONAL THEORIES

Additional theories exist which also helps to enrich the general understand of the behaviours of employees and why staff act in certain ways. Adam Stacy’s “Equality theory” proposes that emplyees often depict apathetic attitudes towards their jobs if they feel that the output that is generated from their efforts is less than what is input; for example, if an experienced logistics manager was given the same wage as an inexperienced, new recruit.

Goodman and Friedman (1971) outline that “employees have stronger precipice for extensive output to input than input to output.” This means that employers must try to use “performance related pay”, in which they reward the workforce in proportion to their contribution, and that “over paid” workers must make an effort to complete tasks that are as much as a challenge as their level pay indicates.

Victor Vroom’s “Expectancy theory” is another theory which postulates that a staff member’s behaviour at the workplace is influenced by their expectations of work. This displays the same foundations as the “equality theory” because it handles the elements which influence the individual’s mental desires and requirements. While this belief is the opposite to the more stricter theories of motivational belief, which claim people are only motivated by an interest in earning greater wagers of acknowledgement, the theory postulates that a person’s desires and expectations are not fixed and can actually change over time.

However, this dynamic is problematic for organisations; they like to support the self-fulfilment of staff but this is rendered difficult if the landscape of their motivation is constantly changing. Thus, the application of these theories in actual workplaces has proven to be very difficult for employees and employers alike. This is because of the dynamic and changing attitudes and desires of staff. Therefore, organisations are constantly on the lookout for ways to get the most out of their workforce and often turn to individualist strategies to achieve this. This makes sure that the organisation gives enough of their resources to comprehending the individual desires, aims and wants of their individual staff members; this will help them to understand their workforce and get the most out of it.

1.2. ASSOCIATING REWARDS WITH MOTIVATION

Therefore, it is vital that the individual worker and their attitudes, dreams and expectations are considered when developing reward and motivation strategies. For example, where one person may consider their job to be an unpleasant reality and, thus, expect some form of extrinsic reward, another person can enjoy their work without these type of motivation. As a result, an acknowledgment in the presence of extrinsically motivated staff has produced key debates surrounding suitable forms of reward and motivation which can be applied to get the most out of a workforce. Festinger (1967) observed “that rewards as a means of improving performance tend to shrink the natural willingness/intrinsic values of employees.” Elsewhere Islam & Ismail (2008) claimed “employees are likely to repeat or improve on good performances so long they know they are going to get significant pay.” Thus, staff members tend to be more interested in what rewards they can get. Pfeffer (1998) says that organisations’ attempts to “improve performance & increase profitability tend to adopt reward strategies that focuses immensely on individual effort” which leads to an “over-ambitious” approach which renders the employer inconsistent with their long-term objectives. This can led to the organisation losing out. Pfeffer (1998) then states “remuneration plans like gain sharing stock ownership etc. form a better basis for aligning employee performance with short term and particular long-term goal since they reward employee performance collectively.”

Yet employers must make sure their standards of rewards are reconcilable with the standard of the staff member’s performance and the likelihood of the organisation of reaching their long-term aims. This will make sure they can avoid particular dangers or the risks associated with reward systems, as discussed

CHAPTER THREE – RESEARCH METHODOLOGY

This section will seek to investigate and analyse the research methods and approaches that offer suitable answers and will help to fulfil the key objectives of this study. As mentioned initially, the key aims of this research are: to comprehend any underlying concepts in reward and motivational systems; the identification of motivational factors that can improve staff productivity; and to assess the way these systems can improve the performance of workforces and, therefore, the organisation as a whole. The main point of interest in this study will be of assessing the various approaches implemented to get the most out of a workforce, and any suitable data that can be utilised to further analyse the reason for certain theories, the application of these theories, and the extent to which these theories are successful at improving a staffs’, and organisation’s, productivity.

The staff members of various companies can display a variety of different attitudes or behaviours towards their work. As Marchington and Wilkinson (2008) have argued: workers “often have different perceptions of what a good working environment should look like and also what the gains of carrying out a task should be.” For example, whereas one particular individual may enjoy their work and not care too much about any reward, other staff members may dislike their work and therefore want heavy rewards as motivation. As discussed this is a severe concern for organisations as they look to handle the different personalities, behaviours and expectations of their workforce to create an effective reward and motivation system which will get the most out of their work force. This is a problem for organisations which draw upon the key concepts of the typical theories of human behaviour and motivation such as the “theory of needs” or “scientific theory”.

While one group of companies could attempt to establish a set of structures that will exaggerate the application of “generalised” concepts to determine a staff member’s performance, such as a desire for achievement or economic stability, this approach is founded in the organisations, and not staff, expectations. This tends to be the situation with current systems, as displayed by Vroom and Stacy. Because attention is always given to “post-performance” rewards that small thought is given towards “pre-performance” incentives. Thus, organisations tend to overlook the central views of the staff.

This study will now correlate the findings of the survey research with the theories discussed within the literature review. The chapter will provide a thorough investigation of key research strategies that will be adopted and will investigate the ways in which suitable information can be collected. The chapter will examine any potential restrictions of the research or adopted methodologies. These processes are expected to produce insights into the perspective of staff members towards reward and motivation systems.

1.3. RESEARCH STRATEGY

Several key researchers have proposed important approaches towards undertaking research; these depend upon the strategies which are taken by the researcher and the sort of data the research aims to attain (Gravetter & Forzano, 2009). In this study, empirical data has been collected because the study aims to generate reliable and relevant answers. This is because “it assists in gaining information that is reconcilable with real world occurrences and practice” (Kothari, 2009).

As discussed, different staff members have different types of expectation or motivational interest at work. Thus, to create a suitable and relevant research strategy, the researcher has to implement a surface evaluation of staff member’s attitudes or else risk been faced with the challenges given by conservative theorists, despite not providing a succinct analysis of the minimal standard of effort. Consequently, the standard of the research needs to be of the highest quality. It needs to deal with the problems as discussed, regarding a staff member’s expectations, motivations, and attitudes to work. This study has chosen to implement an approach that ensures the assimilation of relevant information. This study will look at the Royal Mail, in relation to other similar companies, and as an individual entity.

An experimental study will look to exaggerate their ideas and interests when they want to establish propositions that can be proven via observational efforts and the influence of elements that are associated with the study. This is a popular approach to research; however, it has been scrutinized for being inconsistent which is a problem due to the generalised “assumption” that it “gives all parties to a concept” (Carducci, 2009). Example of this can be seen as an observation which indicates 65% of staff members within a company are influenced by the need to have a challenging workplace climate, this does not mean that this majority influence does apply to each staff member; there is 35% who do not feel this way. Considering this, this research could not be suitable for this study.

Case studies are another form of research that could be implemented in this study. Case studies look at one unit of a complete organisation to identify a certain fashion or trend to comprehend the influences over certain attitudes. Yet some researchers have claimed that this approach “is the most anticipated by most student since it allows for a focused method of data collection” (Biggam, 2008). Also, as Jackson (2009) states, this model of research has a “possibility of bias in presenting findings to suit existing proposition or personal expectation.” Therefore this type of research model may not be suitable. Historic research is a model that seeks to obtain its data from past events or findings. Both case studies and historic research are unable to give an “an authoritative justification for current or future occurrences” (Crooks & Baur, 2010). The study will make use of a survey because it is felt that this approach would be suitable for answering the questions and objectives of this research. Surveys allow the researcher to put forward the exact questions, as they so desire. After all, as Sapsford (2007) states: “the whole essence of a research is to get consistent answers to consistent questions.” Therefore the study has made use of a questionnaire to provide data to the discussed questions and objectives. A survey is different from an interview because it permits the researcher the ability to get a broader range of data from a wide selection of participants.

Yet there is a considerable restriction from using this form of research tool that hinders the study from attaining a broad comprehension of the issue. Regardless of this, because surveys allow for the use of quantitative and qualitative data, it makes it simple for the study to attain a wide perspective of the relevant issues.

For the purposes of this study, a quantitative approach will be adopted because this permits the researcher the ability to analyse different influences and systems within the Royal Mail that are designed to improve the productivity of the workforce. This will allow the researcher to resolve issues such as “how valuable motivation is as a tool for employee performance.” This approach will also be useful in aiding the study in discovering answers to questions such as: “what are the driving factors for employee performance?”

However, there is one considerable restriction of using a quantitative model; the rigidness of its approach to gaining data hinders the study from attaining in-depth information from the research. Because of this, this study will implement “open-ended” questions such as “why will you accept or reject an offer to take up the same job you do from another company?” This will make sure that the assimilation of data collection is not restricted to the researcher’s expectation. Open-ended questions provide an option of broader responses and thus encourage qualitative analysis.

The implementation of this type of research model with the qualitative technique will permit the study to answer key “why” questions such as: “why is reward and motivation a viable tool for improving performance and achieving organizational goals?” This will make sure that the study can interpret the relevant data, and not have to adopt a positivist perspective which tends to assume “a subject matter is independent of impulsive behaviours, the former believes a subject matter can be influenced by the unpredictable nature of humans” (Biggam, 2008). On the other hand, “interpretative perspectives” will display any erratic attitudes or patterns in the staff.

1.4. RESEARCH APPROACH

This study aims to apply qualitative and quantitative approaches to researching and in a formation of a survey questionnaire which will be given to staff members of the Royal Mail to answer. The study that will be applied makes use of a strategic approach to support the close ended and quantitative sections of the survey with open ended and qualitative questions; for example, in question 18, “if another organization gives you a job today will you will you take the offer?” and question 19, “why would you accept or reject the offer?” (see appendix). As can be seen, question 18 looks to get a quantitative answer which is supported by 19, who looks to attain a wider perspective on the reasons for the previous answer to be given. The implementation of both qualitative and quantitative questions will make sure this study gets relevant and suitable data which, in turn, will help the study to achieve its set goals. This study will also make use of convenience sampling to order and chose the participants. The participants in this study will be selected randomly, thus negating the assumption that because the company was selected at random, the findings will not be considered as entirely representative of staff attitudes within the entire postal industry. As with Internet questionnaires, willing participants will be ordered alphabetically with the participant chosen in factor of two. This study will therefore use a structured questionnaire to make sure that the focus remains upon certain criteria as well as the study goals.

A sample of 40 participants will be selected. This is because the study aims to analyse the staff members’ perception of the company, as well as the various influences that motivate a worker in the Royal Mail. This will allow the study to discover and comprehend the amount of which motivational and reward systems are successful in increasing a workforces’ productivity.

This study will be directly aimed at the middle and lower-level management in the Royal Mail. However, detail will be given to the realisation that while the study looks to comprehend the staff member’s perception of the Royal Mail, this does not mean that the overall perception of the entire workforce, in all the different Royal Mail units, will be reflected in the findings of this study.

This study will make use of Internet questionnaire resources, such as “surveymonkey.com”, as well as paper copies to distribute the survey to the participants. The study will make sure that every participant is of a minimal age of 18-years-old.

1.5. DATA ANALYSIS

Statistical and Chi-square tools will be applied to study the accumulated data from the survey. These types of research tools permit a simple and effective way to indicate if the study propositions are correct or not. Yet this study will apply descriptive evaluations to study the data from the qualitative questions.

1.5.1. Hypothesis
H0:“Workers do not value financial incentives over non-financial incentives”

H1:“Workers value financial incentives over non-financial incentives”

H0: “Personalised incentives and acknowledgement does not encourage workers more effectively than generalised incentives.”

H1:“Personalised incentives and acknowledgement do encourage workers more than generalised incentives”

H0: “Workers are not more intrinsically motivated than extrinsically motivated”

H1: “Workers are more intrinsically motivated than extrinsically motivated”

1.6. VALIDITY AND RELIABILITY

Cohen et al. (2007) stated “although it is almost impossible to rule out the impediments to validity and reliability, researchers often learn to curb the effects of these threats by gaining considerable awareness of its existence.” Yet this study will look to deal with the problem of reliability by making sure that the participants are not made to undertake the questionnaire, which is vital to make sure the data given is “honest”. The study will also deal with this problem by making sure participant give their opinion in their own terms, which will be achieved via the implementation of open-ended questions.

While the phrases, “reliability and validity” can occasionally share a similar definition; Gliner & Morgan (2000) specify, “for a research to be valid, the methods of carrying such research have to be reliable.” Thus, the study has to make sure there is “a commendable level of validity by ensuring the use of appropriate and adequate sampling techniques and analysing tools to get findings” (Cohen et al., 2007). This questionnaire will sample a broad selection of staff because it is aimed at low- and middle-level management. As mentioned, this study will also apply statistical tools to investigate research hypothesis as well as to provide a descriptive evaluation of qualitative open-ended questions. A critical evaluation will be given towards the advantages and disadvantages of the different research tools, which will allow the study to make the most of the best strategies and will thus have an efficient study to attain suitable data in a small time period. In addition to this, qualitative and quantitative questions will generate more in-depth answers.

1.7. RESTRICTIONS OF SELECTED RESEARCH METHODS

A considerable restriction of this survey approach is that the findings will be representative of a wider entity; thus it may not present a holistic perception of the scenario as outlined by the study aims. Also, the restricted time and sample size (40) will mean that the study will have to carefully select the questions it chooses to ask and the answers it looks to attain. Lastly, because of the nature of the individual company’s operations and the geographical distribution of employees, the results that are generated from these staff members of the Royal Mail cannot be generalised for workers in the entire postal service industry

CHAPTER FOUR – RESULTS AND ANALYSES

This section will look to handle the results and data attained from the questionnaires. The methodologies and strategies that have been applied to accumulate and analyse this data have been discussed in Chapter 3. As mentioned, 40 participants were chosen at random from the Royal Mail and were each presented a copy of the survey questionnaire. To analyse and visually represent the findings of the research, a selection of percentage frequency distribution and bar charts will be displayed.

Royal Mail

Expected responses 40

Actual responses35

Percentage response rate87.5 %

1.8. ANALYSIS OF QUANTITATIVE DATA

SECTION A: Demographic Distribution

Illustration 1: “Gender”

Table 1. Table showing the gender distribution of the respondents. Source: Researcher’s field survey 2011

SexFrequencyPercentage
Male2066.7%
Female1033.3%
Total30100 %

Figure 1. Percentage distribution of gender. Source: Researcher’s field survey 2011

The table and figure above indicates that there were more men who participated in the study. However, this does not mean that there are more men working in the Royal Mail overall.

Illustration 2: “Age distribution”

Table 2. Table showing the age distribution of Royal Mail workers. Source: Researcher’s field survey 2011

AgeFrequencyPercentage
18 – 241136.7%
25 – 351240%
36 – 45620%
46 – 5513.3%
Above 5500%
Total30100%

Figure 2. Age distribution. Source: Researcher’s field survey 2011

This demonstrates that the majority of participants were aged between 25-35 years of age. A small amount was between 18 – 24 years of age range. The least amount was the 46 – 55 age bracket which indicates that a large volume of the workforce in the Royal Mail are middle aged.

Illustration 3: “Educational background of the respondents”

Table 3. Table showing the educational background of the respondents. Source: Researcher’s field survey 2011

QualificationFrequencyPercentage
High School310%
University degree1343.3%
Masters Degree1240%
Doctorate Degree26.7%
Others00 %
Total30100 %

Figure 3. Educational background of the respondents. Source: Researcher’s field survey 2011

This shows that a large section of participants had a minimum of one university degree, 40% (12) has a master’s degree and 10 % (3) a high school certificate.

SECTION B

Illustration 4: “Duration of employment with Royal mail”

Table 4. Table showing the repondent’s duration of employment with Royal Mail. Source: Researcher’s field survey 2011

DurationFrequencyPercentage
Less than 1 year620%
1 – 2 years1446.7%
3 – 4Years620%
Over 5 years413.3%
Total30100 %

Figure 4. Duration of employment with Royal Mail. Source: Researcher’s field survey 2011

This shows that 47% of the participants have been employed by the Royal Mail for almost two years. Almost a third of the participants had worked at the organisation for almost three years, with a fifth of participants having worked at the company for less than a year. Thus, this indicates that a larger proportion of participants could not be up to date regarding the motivational schemes applied at the business.

Illustration 5: “Management position held in the company”

Table 1. Table showing the management positions held in the company. Source: Researcher’s field survey 2011

PositionFrequencyPercentage
Low Level930%
Middle level1446.9%
No response723.1%
Total30100%

This table indicates that almost half of the participants in the organisation are middle-level managers, while a third are low-level, while almost a fifth chose not to answer this question.

Illustration 6: “Do you like your job?”

Table 6. Table showing the percentage of those who like their jobs and those who do not. Source: Researcher’s field survey 2011

ResponseFrequencyPercentage
Yes2583.3%
No516.7%
Total30100 %

Figure 5. Percentage of those who like their job and those who do not. Source: Researcher’s field survey 2011

It can be observed from these findings that a large percentage of participants say that they enjoy their work, although almost a fifth do not. Yet it is important that a distinction is made so that we can comprehend if these staff members do not enjoy the job type or it is the company they dislike.

Illustration 7: “Do you take interest in recognition for a job well done?”

Table 7. Table showing the percentage of those who show interest in recognition for a job well done. Source: Researcher’s field survey 2011.

ResponseFrequencyPercentage
Yes2996.7%
No13.3%
Total30100 %

Figure 6. Graph showing the percentage of those who show interest in recognition for a job well done. Source: Researcher’s field survey 2011

This above graphic shows that almost every participant does enjoy acknowledgement for their hard work.

Illustration 8: “Do you think you have received the adequate amount of recognition you deserve for your work?”

Table 8: Table showing percentage of those who have received the adequate amount of recognition they deserve and those who have not. Source: Researcher’s field survey 2011.

ResponseFrequencyPercentage
Yes1756.7%
No1343.3%
Total30100 %

Figure 7. Graph showing percentage of those who have received the adequate amount of recognition they deserve and those who have not. Source: Researcher’s field survey 2011

The above results indicate that over a half of the participants from the organisation feel that they have been given a suitable amount of acknowledgement from the organisation. However, 43% of participants feel un-, or unsuitable, recognised.

Illustration 9: “Do you think you have received the adequate amount of reward you deserve for your work?”

Table 9: Table showing the data of those who have received the adequate amount of reward deserved and those who have not. Source: Researcher’s field survey 2011.

ResponseFrequencyPercentage
Yes1343.3%
No1756.7%
Total30100 %

Figure 8. Graph showing the percentage of those who have received the adequate amount of reward deserved and those who have not. Source: Researcher’s field survey 2011

These findings indicate that while staff members may be suitable acknowledged, they do not feel as if they have been suitably rewarded. Over a half of the participants feel that they have not been suitably rewarded for their hard work, while 43% feel satisfied with the type of reward they have received from the organisation.

Illustration 10: “Rank the following types of reward in order of preference. Where 1 shows high preference, and 10 shows low preference.”

Table 10. Table showing the ranks of the reward types in order of preference. Source: Researcher’s field survey 2011.

ResponseTotal scoreOverall rank
Increased Pay2311
Promotion2142
Increased decision making power1693
Paid vacation1664
Awards1535
Christmas benefit1486
Health benefit1307
Share options1048
No sick leave benefit1039
Pension funds8710

“Total Respondents: 30, Score is a weighted calculation. Items ranked first are valued higher than the following ranks; the score is the sum of all weighted rank counts.”

These results indicate that the staff at the Royal Mail place greater importance on salary increases as a type of remuneration; thus it is implied that a large section of the participants from the company prefer financial incentives. The prospect of promotion is another preferred option that is not money-based remuneration.

Illustration 11: “What measures of rewards do you prefer most?”

Table 11. Table showing the preferred measures of reward of the respondents. Source: Researcher’s field survey 2011

Measures of rewardFrequencyPercentage
Financial Measures of Reward2376.7%
Non-Financial Measures of Rewards723.3%
Total30100 %

Figure 9. Graph showing the showing the percentage distribution of the preferred measures of reward. Source: Researcher’s field survey 2011

These findings indicate that a large proportion of participants from the Royal Mail would chose to have a financial incentive, and only a few exist in the “non-financial” group. Thus, from testing one of the above mentioned hypothesis could aid the study of these results.

Illustration 12: “How important is motivation to you as an employee?”

Table 12: Table showing the importance of motivation to the respondents. Source: Researcher’s field survey 2011

ResponseFrequencyPercentage
Very Important2583.3%
Slightly Important413.3%
Less Important00%
Indifferent13.3%
Total30100

Figure 10. Graph showing the importance of motivation to the respondents. Source: Researcher’s field survey 2011

Over 80% of participants have indicated that motivation is very important to them as workers and in improving their productivity at work. While 13% of participants believe that motivation is only slightly important, only 1 participant indicated that, for them, motivational factors are irrelevant

Illustration 13: “Choose amongst the following the factors that motivate you to do your job”

Table 13. Table showing respondents’ motivating factors. Source: Researcher’s field survey 2011.

ResponseFrequencyPercentage
Personal Value930%
External Factors826.7%
Both1343.3%
Total30100 %

Figure 11. Graph showing the percentage distribution of respondents’ motivating factors. Source: Researcher’s field survey 2011

These findings suggest that the majority of participants in the Royal Mail feel that they are encouraged by personal interests and external influences. However, a large section of the participants feel that personal interests are more important than external influences. Further and more accurate investigation will be undertaken by trialling the third hypothesis.

Illustration 14: “How would you like to be rewarded for your work?”

Table 14: Table showing the respondents preferred measure of reward. Source: Researcher’s field survey 2011.

ResponseFrequencyPercentage
Individually2480%
As a group620%
Total30100 %

Figure 12. Graph showing the respondents preferred measure of reward. Source: Researcher’s field survey 2011

These results suggest that most participants would choose to be given a reward individually rather than as a collection. A wider study of this shall be implemented through the trialling of the hypothesis which is relevant to this question.

Illustration 15: “Do you think you get adequate motivation to do your work?”

Table 15. Table showing those who get adequate motivation and those who do not. Source: Researcher’s field survey 2011.

ResponseFrequencyPercentage
Yes1343.3%
No1756.7%
Total30100 %

Figure 13. Graph showing percentage of those who get adequate motivation and those who do not. Source: Researcher’s field survey 2011

The above results indicate that the majority of the participants at the company feel that they have been inadequately motivated, which just more than 40% feel that the motivational systems at the Royal Mail are suitable.

Table 16. Table showing the influence of motivating factors on the respondents where 1 represents strong influence and 10 represents weak influence. Source: Researcher’s field survey 2011

ResponseTotal scoreOverall rank
Pay & benefit2151
Work environment1732
Achievement1703
Bonuses & commission1574
Training1575
Good Inter-personal Relationship1506
Love for work1477
Challenging work1478
Fear of losing your Job1059
Strict rules & sanctions9910

“Total Respondents: 30; Score is a weighted calculation. Items ranked first are valued higher than the following ranks, the score is the sum of all weighted rank counts.”

These results indicate that the majority of participants believed that they are more motivated by financial rewards and benefits. As can be seen, these findings are very similar to the data attained from question 11. Therefore, these results offer a significant indication that the majority of participants in the Royal Mail do in fact prefer money as a form of remuneration. Therefore, it is indicated that these participants are to some degree more externally motivated than by internal interests.

Table 17: Table showing the data of those who would accept another organization’s job offer and those who would not. Source: Researcher’s field survey 2011.

ResponseFrequencyPercentage
Yes1653.3%
No1446.7%
Total30100 %

Figure 14. Graph showing the percentage of those who would accept another organization’s job offer and those who would not. Source: Researcher’s field survey 2011

While this data suggests not a large difference amongst these two different choices, it shows that participants from the organisation state that they would be happy to do the same work for a rival company if this company offered them better benefits or rewards. However, the reasons for this are not universal and are dependent on the participant.

4.2 TECHNIQUES OF DATA ANALYSIS

This study will now present the findings of the research, and analyse these using Chi-square statistical tool in order to trail the above given hypothesis.

The Chi-square formula is: X? = (O – E) ? / E

where O = Observed frequency

E = Expected frequency

Degree of freedom or d.f = (r – 1) (c – 1)

“r” = number of row

“c” = number of column.

The test would be at 5% (0.05) level of confidence.

Decision rule:

Accept H1 When X?c > X?t

Reject H0 When X?c ? X?t

4.2.1 TEST OF HYPOTHESIS I

H0:Workers do not value financial incentives over non-financial incentives

H1:Workers value financial incentives over non-financial incentives

Question 13 (Table 11) shall be applied to Hypothesis 1.

“What measures of rewards do you prefer most?”

RESPONSEO1E1O1 – E1(O1 – E1)?(O1 – E1)?/E
Financial Measures23158644.27
Non-Financial measures715-8644.27
TOTAL303001288.54

Degree of freedom

Df (V) = (r – 1) (c – 1)

= (2 – 1) (2 – 1)

= 1

Level of significance

P = 5% or 0.05

X?t = 3.84

X?c = 8.54

Decision rule:

Reject H0 if X?c ? X?t

This suggests that the Null hypothesis (H0) shall be redundant as the Chi-square calculated (X?c) is greater than the Chi-square tabulated (X?t). H0 indicates that the staff members do not value money as an incentive over non-financial incentives. These staff members do value monetary incentives over non-financial incentives, thus the decision has to accept the alternative hypothesis (H1) which claims “Workers value financial incentives over non-financial incentives.”

Illustration 10 indicates that the research can quickly assume that the workers like monetary incentives over non-financial incentives, the chi-squared test is vital to indicate the financial and non-financial variables are independent.

4.2.2 TEST OF HYPOTHESIS II

H0: Personalised incentives and acknowledgement does not encourage workers more effectively than generalised incentives.

H1: Personalised incentives and acknowledgement do encourage workers more than generalised incentives

Question 16 (Table 14) will be used to test Hypothesis II

“How would you like to be rewarded for your work?”

RESPONSEO1E1O1 – E1(O1 – E1)?(O1 – E1)?/E
Individually24159815.4
As a group6159815.4
TOTAL30301816210.8

Degree of freedom

Df (V) = (r – 1) (c – 1)

= (2 – 1) (2 – 1)

= 1

Level of significance

P = 5% or 0.05

X?t = 3.84

X?c = 10.8

Decision rule:

Reject H0 if X?c ? X?t

The decision rule for chi-squared test demands that it is accepted that H0 if the chi squared estimated is more than or equal to the chi-squared tabulated, then it is accepted that H0 is reverse.

Therefore, the choice is made whether to accept the H1 stating “Personalised incentives and acknowledgement do encourage workers more than generalised incentives”, and to reject H0 which states “Personalised incentives and acknowledgement does not encourage workers more effectively than generalised incentives.”

4.2.3 TEST OF HYPOTHESIS III

H0: Workers are not more intrinsically motivated than extrinsically motivated

H1: Workers are more intrinsically motivated than extrinsically motivated

Question 17 (Table 13) will be used to test Hypothesis II

“Choose amongst the following the factors that motivate you to do your job”

RESPONSEO1E1 O1 – E1(O1-E1)?(O1-E1)?/E
Personal Values910-110.1
External factors810-240.4
Both1310390.9
TOTAL30300141.4

Degree of freedom

Df (V) = (r – 1) (c – 1)

= (3 – 1) (2 – 1)

= 2

Level of significance

P = 5% or 0.05

X?t = 5.99

X?c = 1.4

Decision rule:

Reject H0 if X?c ? X?t

The results as indicated in illustration 14, suggests that the workers are motivated by their internal interest, although a larger section of the participants indicated that they are the most motivated when their internal and external influences are addressed.

Although the application of chi-squared analysis to trail the above mentioned hypothesis can prove that H0 is correct. Therefore, H1 can be rejected which states: “Workers are more intrinsically motivated than extrinsically motivated”, and accept H0 which indicates “Workers are not more intrinsically motivated than extrinsically motivated”

These findings reiterate the data and results accumulated in the tables and graphs, and are also useful towards indicating that staff members are not solely driven by internal or external interest, but a combination of the two.

4.3 ANALYSIS OF QUALITATIVE FINDINGS

This section will look to investigate and examine the data acquired from the qualitative questions of the questionnaire. The results attained, and the conclusions drawn from them, will be useful in supplying answers towards the research aims as raised previously in this study. As it has been discussed in early sections of this study, the survey was deliberately structured to make sure that participants provided qualitative answers in order to support significant close-ended quantitative questions.

When the participants from the organisation were questioned whether they enjoyed their work, 83% of participants said that they did. The majority of the participants who completed the survey therefore do like their work. This means that it would be worthwhile to discover the factors behind their answer, which is why the questionnaire then posed the question: “What is the one specific thing you like about your job?” The answers that were given to this question were particularly useful for the purposes of this study as they showed that, on average, over 20% of the surveyed participants stated that they liked the challenging workplace environment. 10% of participants stated that they enjoyed their work because of the comfortable workplace climate, while 13% of participants stated that they enjoyed the flexible nature of their work. In addition to theses answers, some participants also added that they enjoyed their work because of the level of wages they received, the experience, and the training they received. A minority of participants stated that they were unsure as to the reasons for enjoying their work.

Question 10 was typical of the qualitative questions used in the survey. It was designed to support the prior question (“Do you think you have received the adequate amount of recognition you deserve for your work?”), and through the question “what is the best recognition you have received?”, this study has been successful in figuring out that more than 20% of participants felt the award system was a suitable model of acknowledgement which had been given via the company. Almost 17% of participants said that they were in favour of public commendation, with about 16% of participants wanting some form of written commendation. 3% of participants claimed that the most suitable model of acknowledgment that they were given by the Royal Mail were salary increases or promotion prospects.

Regarding the influence of reward systems, question 12, “What is the best reward you have received?”, is similarly deployed in order to strengthen the data acquired from the previous question, “Do you think you have received the adequate amount of reward you deserve for your work?” Results indicate that about 7% of all the participants felt that awards were the most effective means of reward that was offered by the organisation. Elsewhere, about 23% said that they were motivated by financial incentives. About 17% of participants claimed that the most effective form of reward offered to them by the Royal Mail was paid for holidays or extended time for leave. 13% of participants highlighted the fact that promotion was a very attractive type of reward. Additional answers included commendations, or paid-for lunches.

Lastly, this study was successful in presenting qualitative results which supported the investigation of the way staff members would react if offered a similar job with a rival company if offered better reward or motivational systems. The question that was used in the survey was: “Please give reasons why you would accept or reject the offer” (Question 21). Over one quarter of the total participants answered the question stating that their choice, of if they would accept a role elsewhere would be solely reliant upon the salary offered by the rival company. About 27% of participants said that this decision would be affected by the amount of challenge that would be faced, as well as the amount of experience they would gain should they remain with the Royal Mail or move to a rival company. Additional answers include: the length of time the participant had worked at the Royal Mail, and their level of satisfaction with the organisation.

CHAPTER FIVE – ANALYSIS OF DATA

Following the thorough study and investigation of the attained primary data, it is now important to form a succinct evaluation of the results. This section will therefore look at depicting this evaluation as well as providing an interpretation of the results as outlined by the established aims and goals for this study. Drawing on the results of the last section, it is now possible to conclude that the majority of staff members in the organisation do enjoy their work. This fact is reflected by the majority percentage, more than 80%, of participants who answered “yes” to this section of the questionnaire (Question 6). Yet, it remains unclear the exact reason why so many staff members like their work, although a broad selection of answers have been given. Stride et al. (2007) claims “employees can either derive job satisfaction as a result of their intrinsic values or external influence.” “Job satisfaction” refers to an employee’s “happiness” with their job, which, although different to motivation which refers to the factors that encourage a worker to be more productive, job satisfaction has been recognised as a key motivational influence.

The results attained from question 7 suggest that a large percentage of the participants feel that their work is enjoyably challenging, and that this is a considerable influence over their enjoyment of their jobs. More than 12% of participants identified the flexible nature of the job as a key influence over their enjoyment of the role. Additional answers included the responsibility given to them for decision making, the comfortable workplace climate, and salary. It can be seen that these results are in line with Hackman and Oldham’s “job characteristics” theory which postulates to “satisfy” staff members, thus to have a motivational interest in completing their tasks, key elements such as “considerable level of employee autonomy”, “skill variety/ task significance (challenge)” and “job feedback” have to exist within an organisation (Spector, 1997).

From this study it has been possible to assess that the majority (97%) of participants liked being acknowledged by the organisation for their hard-work. As stated by Ventrice (2003), it can be inferred, then, that worker acknowledgment “goes a long way in ensuring that employees repeat impressive performances, and also that other management processes are worthwhile.”

While the majority of participants enjoy being acknowledged by the organisation, the actual acknowledgement that is issued by the organisation does not actual satisfy the majority expectations of the participants. The results attained from question 9 suggest that almost half of the participants were not happy with the amount of acknowledgement they were receiving from the Royal Mail for a number of reasons: a shortage of positive gestures such as oral or written praise and awards, or a deficiency of “proactive” measures such as “criticism and sanctions” (Michael, 2006). Regardless of this, participants from the organisation did register some model of acknowledgement from Royal Mail. A large percentage of participants outlined that they felt that awards were the most suitable model for acknowledgement. Over 33% of participants claimed that oral or written commendations were the most successful model of acknowledgement. The smallest percentage of participants claimed that the most appropriate form of acknowledgement given by the organisation was either the prospect of promotion or salary increases.

It can be assumed that the participants were not happy with the amount of acknowledgement given by the organisation as the recognition strategy was pointed out as insufficient by the volume of participants whose answers suggest that non-financial rewards (such as awards) were suitable ways to acknowledge employees. In addition to this, this claim can be supported by the results of trailing Hypothesis 1 which accepts that workers value monetary-based rewards over any other form of remuneration.

The results attained from the “reward” segment of the survey suggests that almost 43% of the participants believed that they were suitably rewarded for their hard work, while a larger percentage (57%) of the participants claimed that they were not suitably rewarded by the organisation for their hard-work. The most popular model of reward that was given as answer by participants of the survey were, non-financial rewards (57%), financial rewards (27%), and some participants said that they did not receive any form of reward at all. Over 10% refused to give an answer. Therefore it is evidenced that staff members are not universal in their appreciation of the different types of reward systems. These results are also helpful in showing that the most popular reward models within the organisation were aimed at non-financial rewards. As given in Vroom’s “expectancy theory”, organisations must be conscious of the variation amongst worker expectations when forming their reward and motivation strategies. There is naturally going to be some discordance amongst the individuals in the workforce as to the preferred type of reward, and this may influence the future productivity of the workforce and the company. Yet it can be assumed from these results, and the data obtained from question 14, that the workers tend to be more interested in financial rewards, as this was the most popular answer given for this question.

Regardless of this, it remains crucial to consider that although salary increases were one of the most popular answers, that the prospect of promotion and improved decision making responsibilities were also popular answers. These results suggest that while workers do like monetary incentive, there is a strong change that the majority of the workforce believe that it would be more appropriate to be given both financial and non-monetary types of incentive.

The issue of the significance of motivational factors regarding the productivity of a workforce is relevant regarding both the organisation and the workforce. As Bruce and Pepitone (1999) states: “for employees to put up satisfactory performance, it is necessary that employers align organizational interest with those of their employees in order to ensure that there is a motive to perform.” The organisation will want to have all tasks and objectives completed to the highest professional standards, while staff members have the expectation that they will receive some degree of personal and psychological fulfilment from their work. The “psychological expectations” of the staff member are not universal and will depend upon the individual worker. This is proposed by Vroom and appears to that this study is no exception.

When investigating and analysing the findings, of all the participants, 97% felt that motivational factors were very important in maintaining they worked hard and completed their tasks to their highest standards. Thus, it was also found that the majority of workers felt that this motivational “drive” is important to improve their performance in the workplace. What motivates them, however, is driven by intrinsic and external influences. The results attain from question 17 suggest that a large proportion of the participants feel that they are driven by internal influences, the trialling of the hypothesis showed that this conclusion is not correct. This study has been able to correct this assumption and show that the majority of workers at Royal Mail were in fact motivated by their personal interest and other external influences. The staff members enjoyed their jobs and the availability of external influences translated this enjoyment into greater productivity and a better work ethic.

The majority of the participants of the questionnaire said they were not suitably motivated by the Royal Mail. The answers given to the survey indicate that this could be due to a variety of factors such as the lack of acknowledgement: the answers attained from question 19 showed that salary and rewards were the primary influences in motivating the workforce. Yet previous research has suggested that acknowledgement from the organisation, as well as the reward system, implemented by the organisation often seemed to offer more non-financial rewards.

Thus, this has been evidenced in the answers given when asked about the staff member’s attitude regarding their work and the company as a whole. The data collected from question 20 reflect that more than half of the participants would actually move to a rival company. In these situations then it is assumed that each person’s enjoyment of work is redundant; it is more about what can be earned from the job.

Yet for question 21 the participants from this organisation all provided suitable reasons for their “decision”; the most common answer was that they required a greater salary or an improved challenge. These answered certify the results which indicate that staff members at the Royal Mail are internally and externally driven.

CHAPTER SIX – CONCLUSION

This study was undertaken with the objective of gaining an insight and comprehension of the effectiveness of reward and motivational systems put in place by organisations such as the Royal Mail to get the most out of their workforce. The study has investigated the key theories surrounding this subject, and been able to formulate important conclusive findings from each part of this process. The study would be useful in aiding staff members in developing their productivity and for organisations to satisfy their own objectives. By identifying and gaining an understanding of the reward and motivation systems the study has been able to conclude that acknowledging and rewarding staff members for their hard-work must be an essential part of any successful organisation. By doing this the company indicates to its workforce that it does care and consider the welfare of its employees which will in turn further motivate the workers to work harder and be more productive.

Also, organisations must be selective when establishing their reward and motivation systems; there remain possible dangers and threats to improper reward structures, which may engender occurrences such as over-ambitious employees, a sense of inequality or the loss of self-esteem in the staff. Regardless of this, it remains crucial that organisations make sure that their reward structures allow for the simple and systematic fulfilment of a worker’s intrinsic aims.

This study has been successful in concluding that, while there are some universal elements to motivation and reward which encourage workers to be more productive, it must be considered that these systems cannot be generalised as the workforce is a dynamic entity and different individuals will have different goals and expectations. For example, if an organisation were to handle its staff using the typical theory that workers are motivate to be more productive because of the interplay of elements in the “hierarchy of needs”, then workers could feel that these factors are different from those given by this theory and this will be better motivation to them. Therefore, this study concludes by suggesting that organisations must make sure that the issues pertaining to worker “hygiene factors” are suitably dealt with. If this is handled, then a foundation for which suitable motivating factors can flourish and thrive will in turn produce more productive workers.

This study also concludes that the rewards and motivation system is the most dynamic performance improving technique because, as the accumulated data suggests, motivation handles the staff members attitudes towards work and why these attitudes differ. An organisation which is rigid in their approach to motivating staff members will not necessarily be able to motivate all of its workers. A more flexible approach can potentially develop the staff member’s abilities, self-esteem and completion of goals. This suggests that by properly managing their workforce through the correct implementation of suitable reward and motivational schemes, an organisation can create a more productive workforce which will in turn help the organisation achieve its own goals and be more successful in the future.

CHAPTER SEVEN – AFTERWORD

Before I began working on this dissertation, I believe that the work and processes that I would have to undertake for my study would be similar to the work I have done in the past and in the course of writing my term time assignments. Yet I was soon surprised by the challenges I faced in the effort to complete this study.

I had first handed in a proposal to undertake an investigation of “strategic human resource management”, with the Royal Mail as the organisation I would focus on. I wanted to gain an insight and understanding of how Strategic HRM could be useful in assisting organisations with gaining a competitive advantage of their competitors. Yet this was a very broad topic and, due to my time and resource restrictions, I accepted that I needed to narrow my ambitions and moved my focus to the more concise idea of the rewards and motivation structures that were implemented by organisations to improve workforce productivity, and which was more specific to the dynamic parts of Strategic HRM.

I established a new aim and a new study point: I sought to comprehend the ways in which reward and motivation systems functioned, they role they served within organisations, and the way they were perceived by the workforce they sought to address. I was particularly interested in the way that these systems affected, and were affected by, staff member’s attitudes and how these influenced the productivity of a company.

I became further compelling with this subject when I studied more about the dynamic temperament of staff expectations with regards to these systems. I looked at the work undertaken by behavioural scientists, such as McIlwraith (2006) and this developed my interest in understanding the differing nature of staff behaviour.

When I began further research into this subject I began to come across a series of challenges: firstly, the restriction of resources was a big problem; I found it very difficult to get access to relevant texts and resources for my research. Another issue was making sure that my propositions were fully reconcilable with the study aims that I had established. It became clear that an effort at understanding and dealing with these study objectives was becoming increasingly more difficult: more questions and issues emerged as I continued my research. Another considerable issue that I had was regarding the assimilation of my research data. Although I had direct access to the organisation due to a close friend who worked in the middle-level management of the company, it was a challenge to find the 40 participants for my survey. Overall it took four weeks to get the answers from all 40 participants. This was the biggest challenge to my study. However, I was fortunate enough that I was buoyed by a good selection of secondary texts and analytical tools which enabled me to work quickly with the data I accumulated.

In hindsight I would have began working on this study much earlier. I feel that I began the research too late and, as a result, was very pressured by time which meant I had to abandon my initial idea of having a comparison study of another two postal services. This also meant working for long hours on my dissertation, as well as having additional proofreading and supervision with the format and styling of the work.

If I had more time I would have carried out further research and, as mentioned, additional comparative studies into other postal services and then cross examine the results attained from the various organisations. This would be very revealing and would allow me to further investigate the ways in which employee’s expectations of motivation and reward systems can be generalised or whether they are more dynamic, geographically and individually (i.e. do the majority of staff in one area share the a similar expectation which differs from the shared expectation of staff from another area).

Nonetheless, this study has been successful and enriched my understanding of proper research processes. I feel that I have developed my time keeping skills, my analytical and evaluating abilities, and my capability to critically analyse primary information. Also I have developed my academic writing skills, and learnt how to structure and formulate a well-paced yet convincing study of an interesting topic. I have thoroughly enjoyed undertaking this research and have found the subject to be engaging, stimulating and very interesting.

Lastly, this study has developed my comprehension of reward and motivational systems that are implemented in organisations and, as a result, has possibly developed my personal skills. I am now very confident that I can take the theories that I have investigated forward into a dynamic working environment and implement them to benefit the workforce and the organisation itself.

I would like to thank my supervisor once again for their immense patience, and for my friends at the Royal Mail for allowing me this opportunity and giving me their time and effort to complete my survey, without which I could not have completed this dissertation.

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Pilbeam, S. & corbridge, M. (2006) People resourcing:contemporary HRM in practice 3rd Edition. Essex: Prentice hall

Pitts, C. (1995) Motivating your organization: Achieving business success through reward and recognition. London & New York: Mcgraw-Hill Book Co.

Porter, K. Smith, P. & Fagg, R. (2006) Leadership and Management for HR Professionals. 3rdEdition. Oxford: Butterworth-Heinemann

Pritchard, R. & Ashwood, E. (2008) Managing motivation: A manager’s guide to diagnosing an dimproving motivation. New York: Routledge

Sapsford, R. (2007) Survey research. 1stEdition. London: Sage publication

Spector. P (1997). Job satisfaction: application, assessment, cause, and consequences. sage publication: London

Stride. C, Wall. T & Catley. N (2007) Measures of job satisfaction, organizational commitment, mental health and job related well-being: A benchmarking manual, 2nd edition John Wiley & Sons: West Sussex

Stuart-Kotze, R. (2007) Motivation theory. Available at: http://www.goal-setting-guide.com/motivation-theory#respond [Assessed on: 17th March 2011]

The Global Compact (2009). Royal Mail Group UN Global Compact Communication on Progress. Available at: ftp://ftp.royalmail.com/Downloads/public/ctf/rmg/Royal_Mail_Group_UN_Global_Compact.pdf [Assessed: 12th February 2011]

Tracy B. and Gary K. (2005) Critical thinking: a concise guide. 2nd Edition. USA/Canada: Routledge. Available at: http://books.google.com/books?id=QEJVAaWwm0oC&printsec=frontcover&dq=critical+thinking&cd=5#v=onepage&q=&f=false [Assessed: 14th April 2011]

Ventrice, C. (2003) Make Their day: Employee recognition that works. USA: Berrett-Koehler Publishers

Ventrice, C. (2009) Make Their day: Employee recognition that works: Proven ways to boost morale, productivity and profits (Revised & expanded). USA: Berrett-Koehler Publishers

Whiteley, P. (2002) Motivation. 1stEdition. Oxford: Capstone publishing

BIBLOGRAPHY
Bruce, A. (2006) How to motivate every employee: 24 proven tactics to spark productivity in the work place. New York: Mcgraw Hill

Crouse, N. (2005) Motivation is an inside job: How to really get your employees to deliver the results you need. USA: Personal Alternatives

Griffin, R. & Moorhead, G. (2010) Organizational behaviour: Managing people and organizations. 9th edition. USA: Cengage Learning

Kovach, K. (1996) Strategic human resource management. Boston: University press of America. Available at: http://books.google.com/books?id=hecig5s4fnUC&pg=PA15&dq=employee+motivation&hl=en&ei=bjGrTdDVJMqq8QPA1cW4Ag&sa=X&oi=book_result&ct=result&resnum=6&ved=0CFgQ6AEwBTge#v=onepage&q=employee%20motivation&f=false [Assessed: 16th January 2011]

Podmoroff, D. (2005) 365 ways to motivate and reward your employees every day – with little or no money. USA: Atlantic Publishing Group

Categories
Free Essays

Strategic business management planning

Introduction

Training has great value in business .The trained employees also gives the benefits to the business. Training programs give more value for the organizations where programs reflect the key measures of business performance. Training also helps the management to filter the employees on the basics of training outcomes.

There are two catageroys of trained or untrained employees in business .when we talk about the trained workers they are highly skilled and more beneficial for business .Our business also depend on the employees.

Importance of training

Training is important for any business .without training we cannot successful in our business .staff training is essential for the business .we cannot avoid the staff training for the better future of the business .

So being a HR manager of the company, after long investigation into the requirements to reduce costs by visiting and passing through the current situation of companies who are terribly affected by crises Financial due to the recession. I would suggest to the board to continue spending on staff training rather than stopping completely, because I think that trained, competent, dynamic and qualified staff numbers is an asset to our organization and that training programs and employee benefits to attract and motivate our staff to work more effectively to achieve the objectives of our organization and they want to stay and work with our organization.

Value of Staff coaching

When business is slow then it is time for new leaders within your company. We need leaders to move and motivate our existing employees because in bad times employees look to the CEOs. Thus, each employee cannot set their own targets they need help from leaders.
Training improves the efficiency of the workforce and enables them to perform their tasks more efficiently. The increase in employee productivity can save more to reduce the training budget.

Human resources and value of Training budget

Training budget is also included in business. The training must be seen as an investment, and as a business tool. For example when we talk about the large they have budget for the training .we do not spend our budget in a non profit expenses. Investing in training is an investment will be return in future.

Budget and talent assessment

We built our budget on training and retention of talent of our employees, but before selecting staff for further training or development of their talent, I would suggest to go for talent assessment of each employee.
In terms of talent management, we can make an assessment of our employees, for two main areas of performance measurement and capacity. Current performance of the employee in specific job has always been a standard tool for measuring the cost-effectiveness evaluation of the employee. However, talent management also tends to focus on the potential employee that is the future of an employee if given the proper skills and responsibility.

Funds and training

Funds are necessary to develop, retain, evaluate and attract the workforce. To provide prompt and professional customer service or support.

This is important for the board of directors to continue spending on staff training rather than stopping it completely because I think that trained, competent, dynamic and skilled workforce is an asset of our organization as well as training programs and its benefits to the employees will attract and motivate our staff to work more efficiently to achieve the objectives of our organization and they would like to stay and work with the organization.
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Training helps to achieve organizational goals

Collect reliable and convincing showing how the achievement of course learning outcomes provide tangible benefits to the organization. How would we like training programs help reduce error rates, more satisfied customers, more sales, or anything that our management team considers it importantIn some cases we might need to calculate the return on investment (ROI) of a training program to prove the value of baseline.

Skills

The employees feel motivated when the company recognizes that improving their skills will help firm’s results, and employees can continue to contribute to the better.

Compete better

If we do not train people to our competitors will do it. Having the best staff in all aspects of today is the key to success in business. Not just having a good product, good service, but with good training.

Time of recession

At the time of recession our organization also faced with a low response to advertisements from our company and because of low sales and low return on investment (ROI) Board of Directors decides to cut the budget for training before the business becomes profitable, but it’s time to look at how our employees are training and what type of training they require to make our company more profitable.
In these difficult times, our employees look to their leaders so that the time to prepare a few more competent staff, so they can benefit from our organization.

So being an HR director I conclude that training is main part of the job and HR department should not be cut down the training budget. It is the driving force behind the organization’s success. If we do not train our staff it will effect on the productivity and organization will go to the loss instead of success.

Conclusion

So, we must decide how to focus on training. Invest in training that would meet the previous requirements.

Not all workers are entitled to a training program, the selection according to the needs of businesses and workers need to be done. Diagnosis of training needs to be done, preferably through and outsourcing company, so we can find out what our basic training needs.

We do not stop investing in training, it is easy to cut costs that way, but our business future may be damaged.

Education should be seen as a strategic tool for business success. So it is also important tool of success in business.

Reference

www.business knowhow .com

www.businessball.com

Categories
Free Essays

Ship Masters Business

Introduction
As per this scenario own vessel was on a voyage charter,if on a voyage charter the ship owner provides the charter party with details of ship particulars,capacity and Registry.

The ship shall proceed with reasonable dispatch.Vessel shall proceed with Reasonable dispatch,after this the owner shall undertake to carry the cargo destination.

A list of expected perils.

The charter agrees to pay freight and provides full cargo,as per voyage charterer if the vessel does not arrives at a certain Port on a certain day ,the cancelling clause gives the charter the full right for cancelling the contract.

Own vessel loaded a cargo of high grade steel pipes,On loading some steel appeared to be rusty.None of the concerned parties appointed a surveyor.

Own vessel also accepted a letter of indemnity from the seller and signed a clean ‘Bill of Lading’(BOL).A clean BOL means that contains no positive defective condition ,The importance of BOL is it is an evidence of contract and it is a receipt of goods carried.

It is the duty of master to check cargo practically as stated in the BOL and if it mets the criteria as stated then he should sign the BOL.

By signing a bill of lading without checking the cargo the Master has become to party of fraud,Due to this no claim will be covered by the P&I,In this case Master should have signed a CLAUSED BOL.Its a BOL that contains a positive notation of a defective condition of the cargo covered,material ,of its packaging

Own Vessel sailed out with faulty Navigational equipment(RADAR)and this fault was aware to the Master and also the company.this showed that the Master of own vessel did not exercise due-deligence to make the vessel sea worthy and sailed out for Sea with faulty navigational equipment,which lead to a collision with the container vessel. Due-diligence means all efforts should be made ,So that the vessel meets all the requirements to make the vessel seaworthy.

To meet these requirements the vessel shall be properly manned and should have qualified , competent and well trained staff on Board.Ensure that the vessel can proceed to sea without any harm or danger to the Personnel,Property or Marine environment.

Ensure that the vessel carries all the necessary equipment as per SOLAS regulations.

Also the Equipment, Cargo,Hatches is well maintained and in good condition.Cargo shall be looked and maintained on board until it is finally discharged.This will ensure that the Master and the company has exercised Due-diligence.

The container vessel which had sailed out in a seaworthy condition,this vessel was complying with SOLAS regulations and H-V rules when she sailed out for sea.But a day before the collision the vessel was short manned as 2nd officer was Medically evacuated due to serious injury and rest all officers were working short handed,This lead to short manning which eventually caused fatigue to its officers and thereby breached SOLAS regulationsThis made the container vessel unseaworthy at the time of collision.

But the MCA Guidelines (MSN 1778 (M)),allows a vessel to sail for shorter voyage ,if in incase of emergency ,in the case of short manning ,on a condition that the remaining officers on board are not undergoing through stress or fatigue,due to short manning and also the ILO guidelines of work are observed(ILO guideline 174),in this case the owner of the vessel could be had liable ,if apart from breaching SOLAS regulations,the guidelines from MCA has not been followed.

Apart from these liabilities ,that has caused by the vessel’s owner due to the breach of statutory regulations and requirements,this incident of collision leads to further liabilities,Own vessel besides the liability incurred by the vessel’s owner due to violation of article 3 of Hague rules to provide proper documentations and a seaworthy Vessel.

Due to collision and the vessel being towed to port of refuge,Liability will also be incurred due to the delay caused in delivery of cargo on time.Also the vessel was loaded with high grade steel pipes,since the vessel collided and suffered collision damage on N0 1 Hold,due to water ingress might have also caused damage to the steel pipes.Expenses incurred due to damage to a ship and its cargo.

Own vessel suffered damage at forward N o 1H-port side,which resulted in partial flooding.The container vessel suffered minor Hull damage forward and several containers were lost at sea and some were being jettisoned to help the vessel to prevent water ingress.Master’s duty is to do whatever,necessary or reasonable,so that he can save the ship and cargo from any loss or damage.This allows him to Jettison the cargo,so that is prudent and safe continuation of the voyage.

Both vessels were towed to port of refuge for emergency dry dock repairs.

As per Hague Visby rules “ the carrier is bound, before and at the beginning of the voyage, to exercise due diligence”.

Make the ship seaworthy.

Properly manned, equipped and supply the ship.

After receiving the goods into his charge the master or carrier or agent,on demand of the shipper ,issue to the shipper a Bill of lading[1]

CONTRACTUAL OBLIGATIONS OF THE MASTER

When there is a collision the MASTER shall follow the following steps:-

Inform the company,owners,charterers,P&I clubs and Port Authorities .

EVIDENCE COLLECTION.

Details of both the ships.

Deck and Engine log books with entries.

All the printouts and graphs from bridge equipments.

All the navigational charts before and after collision.

All navigational equipment in use at time of collision.

Weather conditions at the time of incident.

At the time of contact the vessels estimated courses and speed.

Communications and signals made a the time of collision.

Statements from witnesses after collision.

Details of VTS or Port Control if any in operation at the time of incident.

Mitigate losses to ship owner.

“ The owner should exercise burden of proof relating to the exercise of due diligence as the vsls navigational equipment was faulty which eventually led to a collision with the container vessel. Whenever loss or damage has been resulted on account of unseaworthiness the burden of proof of due diligence should be on the carrier or the other person claming exemption under this article. The onus is cast on the carrier in relation to proof of due diligence, until the other party has established that the vessel was unseaworthy and his loss was due to that fact, alternatively the burden of proof should rest with the carrier who is the only party to have access to the whole fact”[2]

A prudent Master should act reasonably as per the regulations to mitigate liabilities. So the vessel’s owners has to protect themselves under Marine Insurance at all times and mitigate liability it is necessary to ensure compliance with statutory regulations and requirements.

2.

Salvage:

“As per the scenario the master has two possible choices, salvage options under LOF, or consider a contract of towage ,master should make a risk assessment of the situation in consultation with his senior management team, due to the unreliability of the navigational equipmet ,and damage to the vessel master should not consider moving under his own power, he considered contract of towage or to hire a salvor which would result in 4 to 5 times more then the contract of towage, however a prudent master shall inform his owners that he considers it necessary to engage a salvor, The next decision is to accept which salvor services, as there are large number of salvors offering their services , often advise is taken from the shore back up team including the Average adjusters before salvors are hired .The master has to ensure that a careful logging of all events is required thru out the salvage operation, while enroute to the port of refuge he must discuss & plan with owners and managers how he will handle the first few hours when alongside and he will need full support of his ship management team”[3]

Cargo jettisoned for the safety of vsl will be allowed general average, after collision both vsl proceed to a port of refuge, the expenses of entering & leaving such a port shall be allowed as general average, as stated in the York Antwerp rule X. Loss of freight due to cargo damaged or lost or allowed to lost shall be covered under general average. when the damaged cargo is sold at a loss, General average allowed will be the difference between the net proceed of sale & net sound value

General average

General average In simple is a partial loss caused by or directly consequential upon a general average act.

The General Average as defined in the MIA 1906 s. 66 and York Antwerp rule 2004 rules

“There is a general average act where an extraordinary sacrifice or expenditure is voluntarily and reasonable made or incurred in time of peril for the purpose of preserving all the property imperilled in the common adventure’’[4].

As per GA act damages incurred are usually divided amongst the owner and the shipper,it will depend on the type of charter as to how the expenses will be divided,the Jettisoning of the cargo shall be equally divided between the owner and the shipper.

In the given scenario the vessel had to jettison some containers to assist the vessel to prevent the water ingress for the safety of the ship so this sacrifice was for preserving the property hence eligible for G A. Thus all parties interested in the venture, ship – owner, charterers, and cargo owners etc, will proportionally contribute to ship – owner expenses and for port of refuge for emergency dry dock repairs.

These are the main five parts which will show whether that act is classed under the GA or not, in fact GA arises when sacrifices have been made for the safety of the ship against cargo and freight, from some peril of the sea or from its effects. The total of such G A allowances is shared between the various parties who stood to lose each contributing in proportion to his percentage of the total values involved.

The purpose of G A is to ensure that the owner of the ship or cargo who has incurred an expenditure or suffered a sacrifice of his cargo in time of peril for the purpose of preserving property receives a contribution to his loss from all those who have benefited from the action, G A acts are allowed under the H & M repairs,Expenses incurred due to damage to a ship and its cargo and of taking direct action to prevent further damage to the ship and its cargo is taken as Particular Average.

Hull and Machinery Insurance

The duration of this insurance is for the maximum period of 12 months.this insurance is covered for the damage by herself caused to the vessel due to marine peril.

It is the protection of liabilities’s of :-

? ths collision liability :

The underwiter agrees to pay the ? of any sum due to the loss:-

Damage caused to the other vessel ,also the loss of property and the general average or salvage of other vessel.

General average and salvage:-the adjustment made should be according to the law.

The insurance covers loss to the ship caused by following incidents:-

O Fire and Explosion

O Accident during loading and discharging ,shifting cargo .

O Jettisoning of cargo

O Piracy

O Earthquake /Tsunamis

O Peril of the sea,river/lake or any navigable water

O Boiler bursting ,defect in machinery,shaft breakage.

O Barratry of master/officer/crew.

O Contact with land conveyance ,dock or harbour equipment.

O Contact with helicopter,aircraft or falling object.

In this scenario own vessel has sailed with a faulty Radar ,this proves that the master had not showed due diligence and will not be getting any compensation.

P&I Insurance

Charterrs and ship owners are offered various class of coverage by the P&I clubs.

PROTECTION COVERS FOLLOWING LIABILITIES:-

O Collision

O Cargo claims ,crew claims

O Oil pollution

LIMITATION AND P&I COVER:-

The P&I club has a board of directors who decide how to limit and restrict the cover that is given to the members.

The towage of the ship may cover if the member is liable under contract of towage.

The club covers the pollution liabilities only to the liability that the pollution is an extent to the escape or discharge of oil or any substance.

In this case own vessel had an inoperational radar,The marine insurance contract had been breached,so the insurance company may refuse to pay the amount.

Due-diligence shall be maintained at all times so that the insurance policy can cover the cargo and the ship against damages at all times.

3.

Master’s actions are very crucial to obtain cover under Insurance policies.

A prudent Master shall act reasonably with the codes and regulations ,Compliance with the rules and regulation will also reduce the carrier or owner liabilities regarding salvage, Master assess the situation thoroughly whether to take salvage.

The right to salvage can only arise in respect of maritime properties.

The terms and conditions on which the salver agrees to salve the property is divided into two basis:

O The daily hire basis

OThe Lloyds open form (L.O.F)

The term salvage applies to

Othe service performed by a salvor

Othe reward paid to a salvor in respect of his successful services.

Since there is no formal contract as to the money which the salvor is due on successful completion of the contract such a method is only employed when the marine environment are in grave danger.

“L.O.F’’ is the most widely used “no cure – no pay’’ salvage contract, in return for salvage services, the salver receives a proportion of the “salved value ’’the value of the ship, its cargo and bunkers on board the ship.

As per scenario own vessel sufferd severe collision damage on the forward end of the No 1 HOLD-Port side,resulting in partial flooding ,Due to this effect vessel was in grave and imminent danger and threat to environment, in shortest time Master decided to take L.O.F to tow the vessel to port of refuge for emergency dry dock repairs.

Own vessel was under Llyods open Form

Choosing the L.O.F is a matter of getting the best expertise possible in the shortest time, the Master/ owner have insufficient time to arrange a daily hire contract, their need not be a formal signing of the form, the terms and conditions can be agreed on communication the words ‘’L.O.F 2000’’ clearly being spoken during acceptance.

In this incident the container vessel suffers minor hull damage and vessel was not imminent danger and not any threat to marine environment so the Master preferred to organize a daily hire agreement.

The daily hire agreement would work out more economical and less complicated compare to the L.O.F.The salvage operation and its remuneration are as per the Lloyd’s rules and regulations whereas the towage contract depends upon the rules and regulation entered by the two signatories i.e. the ship owner and the towing company. The time factor is essential for the Master to make a prudent decision contacting the owner who sought advice from H & M and P & I club to draw satisfactory action plan. H & M and P & I, insurance policies covered some losses, however, the Master action are extremely important to obtain cover under the different insurance policies.

BIBLIOGRAPHY
College notes – shipmasters business by STC

Carriage of goods by sea by john F Wilson

Shipmasters business companion by Malcolm maclachlan

MCA Guidelines-2003

REFERENCES
www,google.co.uk

www.nortonrose.com

Introduction

As per this scenario own vessel was on a voyage charter,if on a voyage charter the ship owner provides the charter party with details of ship particulars,capacity and Registry.

The ship shall proceed with reasonable dispatch.Vessel shall proceed with Reasonable dispatch,after this the owner shall undertake to carry the cargo destination.

A list of expected perils.

The charter agrees to pay freight and provides full cargo,as per voyage charterer if the vessel does not arrives at a certain Port on a certain day ,the cancelling clause gives the charter the full right for cancelling the contract.

Own vessel loaded a cargo of high grade steel pipes,On loading some steel appeared to be rusty.None of the concerned parties appointed a surveyor.

Own vessel also accepted a letter of indemnity from the seller and signed a clean ‘Bill of Lading’(BOL).A clean BOL means that contains no positive defective condition ,The importance of BOL is it is an evidence of contract and it is a receipt of goods carried.

It is the duty of master to check cargo practically as stated in the BOL and if it mets the criteria as stated then he should sign the BOL.

By signing a bill of lading without checking the cargo the Master has become to party of fraud,Due to this no claim will be covered by the P&I,In this case Master should have signed a CLAUSED BOL.Its a BOL that contains a positive notation of a defective condition of the cargo covered,material ,of its packaging

Own Vessel sailed out with faulty Navigational equipment(RADAR)and this fault was aware to the Master and also the company.this showed that the Master of own vessel did not exercise due-deligence to make the vessel sea worthy and sailed out for Sea with faulty navigational equipment,which lead to a collision with the container vessel. Due-diligence means all efforts should be made ,So that the vessel meets all the requirements to make the vessel seaworthy.

To meet these requirements the vessel shall be properly manned and should have qualified , competent and well trained staff on Board.Ensure that the vessel can proceed to sea without any harm or danger to the Personnel,Property or Marine environment.

Ensure that the vessel carries all the necessary equipment as per SOLAS regulations.

Also the Equipment, Cargo,Hatches is well maintained and in good condition.Cargo shall be looked and maintained on board until it is finally discharged.This will ensure that the Master and the company has exercised Due-diligence.

The container vessel which had sailed out in a seaworthy condition,this vessel was complying with SOLAS regulations and H-V rules when she sailed out for sea.But a day before the collision the vessel was short manned as 2nd officer was Medically evacuated due to serious injury and rest all officers were working short handed,This lead to short manning which eventually caused fatigue to its officers and thereby breached SOLAS regulationsThis made the container vessel unseaworthy at the time of collision.

But the MCA Guidelines (MSN 1778 (M)),allows a vessel to sail for shorter voyage ,if in incase of emergency ,in the case of short manning ,on a condition that the remaining officers on board are not undergoing through stress or fatigue,due to short manning and also the ILO guidelines of work are observed(ILO guideline 174),in this case the owner of the vessel could be had liable ,if apart from breaching SOLAS regulations,the guidelines from MCA has not been followed.

Apart from these liabilities ,that has caused by the vessel’s owner due to the breach of statutory regulations and requirements,this incident of collision leads to further liabilities,Own vessel besides the liability incurred by the vessel’s owner due to violation of article 3 of Hague rules to provide proper documentations and a seaworthy Vessel.

Due to collision and the vessel being towed to port of refuge,Liability will also be incurred due to the delay caused in delivery of cargo on time.Also the vessel was loaded with high grade steel pipes,since the vessel collided and suffered collision damage on N0 1 Hold,due to water ingress might have also caused damage to the steel pipes.Expenses incurred due to damage to a ship and its cargo.

Own vessel suffered damage at forward N o 1H-port side,which resulted in partial flooding.The container vessel suffered minor Hull damage forward and several containers were lost at sea and some were being jettisoned to help the vessel to prevent water ingress.Master’s duty is to do whatever,necessary or reasonable,so that he can save the ship and cargo from any loss or damage.This allows him to Jettison the cargo,so that is prudent and safe continuation of the voyage.

Both vessels were towed to port of refuge for emergency dry dock repairs.

As per Hague Visby rules “ the carrier is bound, before and at the beginning of the voyage, to exercise due diligence”.

Make the ship seaworthy.

Properly manned, equipped and supply the ship.

After receiving the goods into his charge the master or carrier or agent,on demand of the shipper ,issue to the shipper a Bill of lading[1]

CONTRACTUAL OBLIGATIONS OF THE MASTER

When there is a collision the MASTER shall follow the following steps:-

Inform the company,owners,charterers,P&I clubs and Port Authorities .

EVIDENCE COLLECTION.

Details of both the ships.

Deck and Engine log books with entries.

All the printouts and graphs from bridge equipments.

All the navigational charts before and after collision.

All navigational equipment in use at time of collision.

Weather conditions at the time of incident.

At the time of contact the vessels estimated courses and speed.

Communications and signals made a the time of collision.

Statements from witnesses after collision.

Details of VTS or Port Control if any in operation at the time of incident.

Mitigate losses to ship owner.

“ The owner should exercise burden of proof relating to the exercise of due diligence as the vsls navigational equipment was faulty which eventually led to a collision with the container vessel. Whenever loss or damage has been resulted on account of unseaworthiness the burden of proof of due diligence should be on the carrier or the other person claming exemption under this article. The onus is cast on the carrier in relation to proof of due diligence, until the other party has established that the vessel was unseaworthy and his loss was due to that fact, alternatively the burden of proof should rest with the carrier who is the only party to have access to the whole fact”[2]

A prudent Master should act reasonably as per the regulations to mitigate liabilities. So the vessel’s owners has to protect themselves under Marine Insurance at all times and mitigate liability it is necessary to ensure compliance with statutory regulations and requirements.

2.

Salvage:

“As per the scenario the master has two possible choices, salvage options under LOF, or consider a contract of towage ,master should make a risk assessment of the situation in consultation with his senior management team, due to the unreliability of the navigational equipmet ,and damage to the vessel master should not consider moving under his own power, he considered contract of towage or to hire a salvor which would result in 4 to 5 times more then the contract of towage, however a prudent master shall inform his owners that he considers it necessary to engage a salvor, The next decision is to accept which salvor services, as there are large number of salvors offering their services , often advise is taken from the shore back up team including the Average adjusters before salvors are hired .The master has to ensure that a careful logging of all events is required thru out the salvage operation, while enroute to the port of refuge he must discuss & plan with owners and managers how he will handle the first few hours when alongside and he will need full support of his ship management team”[3]

Cargo jettisoned for the safety of vsl will be allowed general average, after collision both vsl proceed to a port of refuge, the expenses of entering & leaving such a port shall be allowed as general average, as stated in the York Antwerp rule X. Loss of freight due to cargo damaged or lost or allowed to lost shall be covered under general average. when the damaged cargo is sold at a loss, General average allowed will be the difference between the net proceed of sale & net sound value

General average

General average In simple is a partial loss caused by or directly consequential upon a general average act.

The General Average as defined in the MIA 1906 s. 66 and York Antwerp rule 2004 rules

“There is a general average act where an extraordinary sacrifice or expenditure is voluntarily and reasonable made or incurred in time of peril for the purpose of preserving all the property imperilled in the common adventure’’[4].

As per GA act damages incurred are usually divided amongst the owner and the shipper,it will depend on the type of charter as to how the expenses will be divided,the Jettisoning of the cargo shall be equally divided between the owner and the shipper.

In the given scenario the vessel had to jettison some containers to assist the vessel to prevent the water ingress for the safety of the ship so this sacrifice was for preserving the property hence eligible for G A. Thus all parties interested in the venture, ship – owner, charterers, and cargo owners etc, will proportionally contribute to ship – owner expenses and for port of refuge for emergency dry dock repairs.

These are the main five parts which will show whether that act is classed under the GA or not, in fact GA arises when sacrifices have been made for the safety of the ship against cargo and freight, from some peril of the sea or from its effects. The total of such G A allowances is shared between the various parties who stood to lose each contributing in proportion to his percentage of the total values involved.

The purpose of G A is to ensure that the owner of the ship or cargo who has incurred an expenditure or suffered a sacrifice of his cargo in time of peril for the purpose of preserving property receives a contribution to his loss from all those who have benefited from the action, G A acts are allowed under the H & M repairs,Expenses incurred due to damage to a ship and its cargo and of taking direct action to prevent further damage to the ship and its cargo is taken as Particular Average.

Hull and Machinery Insurance

The duration of this insurance is for the maximum period of 12 months.this insurance is covered for the damage by herself caused to the vessel due to marine peril.

It is the protection of liabilities’s of :-

? ths collision liability :

The underwiter agrees to pay the ? of any sum due to the loss:-

Damage caused to the other vessel ,also the loss of property and the general average or salvage of other vessel.

General average and salvage:-the adjustment made should be according to the law.

The insurance covers loss to the ship caused by following incidents:-

O Fire and Explosion

O Accident during loading and discharging ,shifting cargo .

O Jettisoning of cargo

O Piracy

O Earthquake /Tsunamis

O Peril of the sea,river/lake or any navigable water

O Boiler bursting ,defect in machinery,shaft breakage.

O Barratry of master/officer/crew.

O Contact with land conveyance ,dock or harbour equipment.

O Contact with helicopter,aircraft or falling object.

In this scenario own vessel has sailed with a faulty Radar ,this proves that the master had not showed due diligence and will not be getting any compensation.

P&I Insurance

Charterrs and ship owners are offered various class of coverage by the P&I clubs.

PROTECTION COVERS FOLLOWING LIABILITIES:-

O Collision

O Cargo claims ,crew claims

O Oil pollution

LIMITATION AND P&I COVER:-

The P&I club has a board of directors who decide how to limit and restrict the cover that is given to the members.

The towage of the ship may cover if the member is liable under contract of towage.

The club covers the pollution liabilities only to the liability that the pollution is an extent to the escape or discharge of oil or any substance.

In this case own vessel had an inoperational radar,The marine insurance contract had been breached,so the insurance company may refuse to pay the amount.

Due-diligence shall be maintained at all times so that the insurance policy can cover the cargo and the ship against damages at all times.

3.

Master’s actions are very crucial to obtain cover under Insurance policies.

A prudent Master shall act reasonably with the codes and regulations ,Compliance with the rules and regulation will also reduce the carrier or owner liabilities regarding salvage, Master assess the situation thoroughly whether to take salvage.

The right to salvage can only arise in respect of maritime properties.

The terms and conditions on which the salver agrees to salve the property is divided into two basis:

O The daily hire basis

OThe Lloyds open form (L.O.F)

The term salvage applies to

Othe service performed by a salvor

Othe reward paid to a salvor in respect of his successful services.

Since there is no formal contract as to the money which the salvor is due on successful completion of the contract such a method is only employed when the marine environment are in grave danger.

“L.O.F’’ is the most widely used “no cure – no pay’’ salvage contract, in return for salvage services, the salver receives a proportion of the “salved value ’’the value of the ship, its cargo and bunkers on board the ship.

As per scenario own vessel sufferd severe collision damage on the forward end of the No 1 HOLD-Port side,resulting in partial flooding ,Due to this effect vessel was in grave and imminent danger and threat to environment, in shortest time Master decided to take L.O.F to tow the vessel to port of refuge for emergency dry dock repairs.

Own vessel was under Llyods open Form

Choosing the L.O.F is a matter of getting the best expertise possible in the shortest time, the Master/ owner have insufficient time to arrange a daily hire contract, their need not be a formal signing of the form, the terms and conditions can be agreed on communication the words ‘’L.O.F 2000’’ clearly being spoken during acceptance.

In this incident the container vessel suffers minor hull damage and vessel was not imminent danger and not any threat to marine environment so the Master preferred to organize a daily hire agreement.

The daily hire agreement would work out more economical and less complicated compare to the L.O.F.The salvage operation and its remuneration are as per the Lloyd’s rules and regulations whereas the towage contract depends upon the rules and regulation entered by the two signatories i.e. the ship owner and the towing company. The time factor is essential for the Master to make a prudent decision contacting the owner who sought advice from H & M and P & I club to draw satisfactory action plan. H & M and P & I, insurance policies covered some losses, however, the Master action are extremely important to obtain cover under the different insurance policies.

BIBLIOGRAPHY

College notes – shipmasters business by STC

Carriage of goods by sea by john F Wilson

Shipmasters business companion by Malcolm maclachlan

MCA Guidelines-2003

REFERENCES

www,google.co.uk

www.nortonrose.com

[1] College notes-shipmaster’s business

[2] Carriage of goods by sea by Jhon F wilson

[3] Commercial management for ship masters (A practical guide) Robert L Tallack.

[4] Shipmasters business by Malcolm Malcalahan

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Free Essays

The History of International Business Taxation and the Effect of International Tax Competition

Abstract:

With the globalization of world economy, international business taxation plays a vital role in international trading. This essay introduces the history and the development of international business taxation in aspects of tax reform and the changes in corporate income tax briefly, meanwhile, analysis the negative and positive effect of international tax competition.

Key Words: history of international business taxation, international tax competition

Introduction:

This essay is aim to present the history of international business taxation and the tax reform in the past few decades and discuss the effect of international tax competition. In the first paragraph, we will introduce the history of international taxation from the World War I to recent years. The tax reform in the last two decades of EU and G7 countries also be indicate in this paragraph. As the development of international economy and business taxation, countries compete with each other in order to attract foreign investment. In paragraph two, we will introduce the international tax competition and present some empirical evidences of international tax competition. However, the effect of international tax competition has been debated fierce in recent years. In paragraph three, the negative effect of international tax competition will be discussed and the positive effect will be discussed in the following paragraph.

James (1998) states that taxation is “A compulsory levy made by public authorities for which nothing is received directly in return”. It is necessary to review the international trade before we discuss the international taxation. International trade can be date back to over two thousand years which stated by Liu (1998, p.xiii) traders from Mesopotamia, Greece and Phoenicia made themselves very rich by engaging in Mediterranean trade. The international trade grows with the development of international economy. The first Bilateral Tax Agreement was signed between Belgium and France in 1843 when the international business taxation is still in an embryonic stage. Nevertheless, the international taxation system has been actually recognized since the World War I which plays a significant role in international finance, trading, and investment. At the beginning, international trade has been taxed trough indirect ways. The international business tax has been derived from customs duties when the goods and services imported from abroad. After the World War ?, the international business taxation system has been increasingly liberalized which the basic principles of international tax agreements have been laid out and spread quickly. The means of international trade taxed have been changed with a related increasing in direct sources. The whole taxation system were developed around how business profit being taxed. With the rapid growth of international economy, issues arose from the conflicts between jurisdictional rights to tax. Jurisdictions care about where the cost and revenue were generated and will be expensed. The profits and returns were taxed in forms of direct tax in the country which permanent establishment can be found or simply in forms of withholding tax. Double taxation becomes the central problem of international taxation. Tax treaties have been emerged in order to reduce the bad effects of double taxation, enable tax neutrality, to avoid double tax and facilitate the international trade and investment. It provides the possibility to visit and invest overseas without paying large amount of tax. The OECD, USA and UN have produced model treaties after the World War ?. The commentary and OECD treaty being always updated which has been treated as a starting point for negotiation. The treaties defined and allocated the rights of countries to tax. Generally speaking, the returns on overseas investment should be taxed by residence principle whereas the business profits of companies are taxed by source principle. This compromise concealed the conflicts between countries which were mainly capital-exporters and capital-importers. While the international tax agreements are useful and practical tool to resolve the jurisdictional rights between countries to tax income created by multinational companies, it is necessary to require continual renegotiation between countries as a result of countries compete with each other to attract foreign investment. Tax reform especially the corporate income tax in industry countries has been considered from the 1980s. The average statutory rates have been decreased from 48% to 35% from the beginning of the 1980s to 2001. The corporate tax rate has been declined over this period except Spain and Italy. In 1992, the EU appointed that the minimum statutory corporation tax rate has been proposed to 30% which is at the bottom of that time except the Ireland. At the end of 1990s, nearly half of the EU countries’ statutory corporation tax rates were at or below 30%. For instance, the main corporate tax rate in the UK was below 30% all the time over the past few years. According to the tax reform in the EU and G7 countries, the tax reform movements are almost universal such as lower tax rate and broaden tax base in order to attract new foreign investment.

To some extent, the universal tax reform movement of reduce the tax rate may indicates the signal of a process of international tax competition. In this tax competition world, the tax rates are not set absolutely freedom as it is necessary for countries to pay attention to what their rivals have been doing. Different tax jurisdictions use their tax system to compete with each other thereby attracting foreign investments. There are two kinds of foreign investments in broadly; they are portfolio investment and foreign direct investments respectively. The portfolio investments do not involve running a business which including bank deposits, company shares holdings, government securities holdings, bond holdings and so on. On the other hand, the foreign direct investment involves found the business such as subsidiaries and branches in another countries. In this essay, we focus on the tax competition based on the foreign direct investment. There are a number of forms of tax competition which the most common one is the lower tax rate. In addition, the tax-free zones, tax holidays, reduction or elimination of withholding taxes, particular investment allowance, and accelerated depreciation deductions for foreign investors are common forms of tax competition as well. There are some empirical evidences of tax competition of the last two decades. The figures 1 demonstrate there is a steady decrease of corporate tax rates in the EU from 1995 to 2006 and the figure 2 indicates the evolution of corporate tax rates for OECD and EU from 1995 to 2007. If we confirm the international tax competition accompany with the corporate rates reduction, the evolution of the EU tax systems in the last two decades is a perfect instance of international tax competition between each tax jurisdictions. Tax rates have significantly decreased as a consequence of international tax competition. Specifically, the figure 2 shows the average tax rates have decreased by nearly 10% for EU15 from 1993 to 2007 and declined to less than 20% in 2007 for EU 10. The entry of new members of the EU in 2005 may take more pressure on the international tax competition of the old EU.

Figure 1: Statutory corporate tax rates in the EU from 1995 to 2006

Figure 2: The evolution of corporate tax rates in OECD and EU, 1995-2006

It is obvious that as the accelerating of the process of globalization, countries expand the tax competition for mobility of tax base and attract investment. But the issue arose from how does international tax competition works. On the one hand, from the literature review, there is no controversy about the harmful of international tax competition in the world. W. Oates (1972) states that “The result of tax competition may well be a tendency toward less than efficient levels of output of local services. In an attempt to keep taxes low to attract business investment, local officials may hold spending below those levels for which marginal benefits equal marginal costs, particularly for those programs that do not offer direct benefits to local business.” Consequently, the negative effect may obtain from the international tax competition on suboptimal level of public expenditure. Local governments may found themselves involved in a tax rate war which similar to the market price war so as to attract tax bases. There will be a loss of tax revenue and the earnings will be gone to multinational companies instead thus the government would be more difficult to supply public goods and service. Furthermore, the international tax competition might lead to an unfair tax system. In order to balance the financial resources, the shortfall in corporate tax as a result of tax rate reduction caused by international tax competition will be passed on to the property tax, consumption tax, income tax and other tax base with relatively weak mobility. In addition, the international tax competition provides the possibility for the transfer pricing and international tax avoidance. For instance, subsidiary A within a multinational company located in low tax regime supply goods and services to subsidiary B within a multinational company located in high tax regime for “high” price thus the profit of subsidiary A is higher and the opposite of subsidiary B. Therefore, the net profit after tax within the group will be increased as a result of transfer pricing. In economic literature, competition to some degree seems to be a special value and meaning. Competition is the key variable of the market mechanism which can lead to improve the efficient allocation in public sector. However, it is opposite in tax domain, an inefficient allocation might occur when there is an international tax competition between countries. Different tax jurisdictions tend to attract tax bases through the mobility of consumers and corporate. Tax bases will be reallocated among countries as a result of this mobility. Multinational companies will endeavor to exploit the possible tax arbitrage by transfer into the more beneficial regions. The gain of the tax base by one jurisdiction comes from the loss of another. Hence, tax externality between countries would be caused by the mobility.

On the other hand, there is another voice for support the tax competition. Other things being equal, the country who takes part in international tax competition will attract more cash flows thereby promoting the development of the country’s economy. The case of Ireland provides an excellent instance of benefit from international tax competition even if this particular regime expired at the end of 2005. There are a number of benefits can be obtained by shareholders through the using of Irish financial service centre companies such as 200% deduction for rental expenditure, 100% reduction for equipment or refurbishment in relation to buildings, 10% tax rate and exemption from stamp duty. Ireland has been highly successful in tax competition and attracts a large number of financial service companies to run business in Dublin which has overtaken Luxembourg as the EU’s leading jurisdiction for cross-border life assurance. Furthermore, the value of investment fund assets has been grown faster than other countries especially in hedge funds which facilitate the stock market to manage the funds established outside the EU. Ireland has become a significant cross-border services financial market.

Besides, in general, high tax rates, unfair taxation and non-standard tax system will affect the taxpayer’s decision-making behavior and resulting in unnecessary loss, damage the tax neutrality. However, international tax competition will lead countries to reduce their tax rates and broaden the tax base, thereby reducing the distorting effects of tax in economy and conducive to implementing the principle of tax neutrality.

Summary:

Since the World War I the international taxation system has been recognized and afterwards the tax competition has been emerge with the development of international economy and tax system. Countries compete with each other to attract foreign investment. Even though the limit harmful of international tax competition is undisputed, we cannot neglect its positive effect.

References:

Bernauer, T. and Styrsky, V. (2004) Adjustment or VoiceCorporate Responses to International Tax Competition. European Journal of International Relations, 10 (1): 61-94.

Devereux, M.P., Griffith, R. and Klemm, A. (2002) Corporate income tax reforms and international tax competition. Economic Policy, 17 (35): 450-495.

Edgar, T. (2003) Corporate Income Tax Coordination as a Response to International Tax Competition and International Tax Arbitrage. Canadian Tax Journal, 51 (3): 1079-1158.

Ferrett, B. and Wooton, I. (2010) Competing for a duopoly: international trade and tax competition. Canadian Journal of Economics, 43 (3): 776-794.

Gravelle, J.G. (1986) International Tax Competition: does it make a Difference for Tax PolicyNational Tax Journal, 39 (3): 375-384.

Ida, T. (2006) International Tax Competition and Double Taxation. Review of Urban & Regional Development Studies, 18 (3): 192-208.

Lymer, A. and Hasseldine, J. (2002) The international taxation system. Boston, Mass. ; London: Kluwer Academic Publishers.

Enrico Buglione (2010) Tax Competition and Fiscal Federalism in Italy. OECD Conference on Tax Competition Between Sun-central Governments Bern, 31 May- 1 June 2010 Available at: http://www.oecd.org/dataoecd/46/17/45470565.pdf

Oates, Wallace E. (1972) Fiscal Federalism, New York, Harcourt Brace.

http://www.oecd.org/dataoecd/33/0/1904176.pdf

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Free Essays

Business process re engineering

Introduction

A management approach concerned at making the improvements and developments to the business by raising the efficiency and effectiveness of the processes that exist within and across the organisations. The key for an organisation to success the business process reengineering is to look at their business processes from a clean slate prospect in order to determine how they can improve and better build these processes to lead their businesses.

THE IMPACT OF BPR ON AN ORGANIZATIONAL PERFORMANCE

The people and the processes are the foundation of any organizations and business process reengineering renovates an organization in ways that directly affect performance. If the individuals are motivated and working hard, than the processes of the businesses are manageable and the nonessential activities remain, the execution of organization will be poor. The key to transforming how people work is business process reengineering, which becomes visible to be minor changes in processes and can have dramatic effects on cash flow, the delivery of the service and the satisfaction of the customer.

The best technique to map and improve the organization’s procedures is to take a top down approach, and not undertake a project in isolation.

Beginning with mission statements, which define and describe the purpose of the organization, what it apart from others in its sector or an industry.
Producing vision statements which define where the organization is going, to provide a clear picture of the desired future position.
Establish these into a comprehensible business strategy, which derives thereby the objectives of the project.
Defining behaviours, which makes possible for the organization to obtain its goals.
Produce the key power measurements to seek out progress.
In relationship of the efficiency improvements to the culture of the organization.
Identifying initiatives that will improve performance.

CONCEPT OF BPR

The concept of BPR generally includes the use of computers, information system and Information technology to organize data, project trends, etc. Many large companies are giving high importance to software integration, they want to build strong links between business systems and make information flow better and avoid to access data stored in multiple systems.

Let us take an example, suppose a person wants to place an order over the internet. An integrated software solution take that order, shift it and allocate them to the manufacturing plant on one hand and place order for the raw materials on the basis of the stock, update the financial position of the company with respect to suppliers and the inventory on the other hand and so on. Different names have been given by the people to the integration of ERP, SCM, BPR and CRM. These names include e-business, c-business, m-business and KM etc. There are many softwares that do these integration activities. To name a few software these are known as Baan, Fourth Shift, Frida, JD Edwards One World, Manage 2000, Masterpiece – MP/Net, Micro strategy, Oracle e-Business Suite, People Soft and SAP R/3.

ADVANTAGES OF BPR

It locates the customer at the midpoint of the organisation.
It helps to reorganize business functions, identify the core activities and processes as well as inefficient or obsolete ones.
It helps them to focus on overall corporate objectives and promotes greater staff involvement.
It reduces the new product development and process activity times and can condense the response of the customer as well.
It can lead to `quantum leap’ improvements and developments in business results–if planned and implemented carefully.
It can improve the current industry position, an inefficient and reorganize business processes and can make them the industrial leader.

DISADVANTAGES OF BPR

It is more suited to products and services that involve logical sequences in production.
It may be less suitable for highly variable processes.
It may require a high level of investment in IT and requires good teamwork and a high degree of planning and implementation expertise.
It can be seen as a real threat to jobs.
Success is not automatically guaranteed.

ROLE OF IS/IT FUNCTION IN BPR

Top management must have the full support to BPR to succeed. The leader must be willing to “drive” change, even to the point of ruthlessness, if resistance is encountered.

“Although, BPR has its roots in IT management, it is primarily a Business Initiative that has broad consequences in terms of satisfying the needs of customers and the firm’s other constituents”. (Davenport & Stoddard 1994)

The IS/IT group may need to play a behind-the-scenes advocacy role; convincing senior management of the power offered by IT and process redesign. It would also need to incorporate the skills of process measurement, analysis, and redesign.

It is essential to differentiate between information technology (IT) and information systems (IS) to understand the role that information systems play in today’s business environment. IT is the term employed to describe the hardware of computer, the software, and the tools of infrastructure of network – in other words, technology itself. IS describes the broader prospect in which IT is employed by the management to create and the systems of support which make it possible for the organization to chase and achieve its strategic goals. When discussing IS, it is important to consider all three of its dimensions: IT, management, and organizations. As a practical matter, it should be noted that the terms IT and IS are often used interchangeably, particularly by those who are not directly involved in the IS or IT field.

Information technology is persistent in all the organizations and society as a whole. Businesses are based on IT and telecommunications to achieve their day-to-day goals. In fact, the collection, storage, and retrieval of data and information are both more sophisticated and more ordinary than they have ever been. The information which a company gathers about its procedures of management is a valuable tool of resource for planning.The organizations are able to create and implement new strategies by the innovative use of existing information technologies and systems of information.

For example, FedEx upgraded its parcel tracking system to provide the direct access through the website of the shipment information to its customers. This upgrade reduced the cost to provide the service to the customers and simultaneously increased the quality and the availability of the service. This example shows the possibilities of IS while adopting new strategies.

IT PROCESSES AND DEVELOPMENT

Today, we find a great number of advances in the IT’s has being employed in the companies. In one way, the remarkable advances in personal computers and the communications make it possible to employees to work outside the office while still being always connected to the office. The employees can work of the house or other places. The communication systems of multi-media, which send and receive audio and video signals, help us by making decisions by employing the email, the transfer of file, or the videoconference. The techniques of computer-aided design/manufacture/technology (CAD/CAM/CAE) take account of the design of products, manufacture, and the coordinating activities of technology.

By gaining new IT tools, it enables companies to gain important advantages such as:

1) Cost savings, improvement and recovering the accuracy of exchanging information.

2) Avoiding inherent human errors so complex and repetitive tasks are used.

3) Saving money because it reduces errors and the time it takes to accomplish tasks.

4) Integrating and coordinating several functions immediately.

5) Improving the effectiveness and the effectiveness of organization by elimination delay, the administrative intermediaries, and the unessential stages of transformation and by providing a better access to information.

The environment of today quickly requires companies to develop and offer the products which will satisfy the needs for customers. The companies cannot be able to do this if they apply processes with many stages and rare collaboration. Consequently, this environment forces a change of the processes of businesses to the mediation reduced by device and increased collaboration.

To diminish the degree of mediation and increase the degree of collaboration, Firstly companies must reduce the degree of mediation in processes. That is, they must convert processes with a great number of stages of intermediary of processes which take part directly in the final results.

The IT’s that make this modification easy might be:

1) Shared databases: Different functions are allowed to take part directly by employing information stored in the data bases. Each function can approach, write, or recover the information of this data base the moment when it is necessary.

2) Imaging technology: Several people may work at the same time on a digitalized image of documents or graphics.

3) Electronic data exchange and electronic funds transference.

Furthermore, shared computing resources make it possible for different functions to have access to information at any time.

Second, the companies must increase the degree of collaboration in the processes so that the implied functions share information. IT that makes the collaboration easy among the different people can be technologies of communication. These allow the transfer of information by using tools such as the email, the videoconference, and the File Transfer Protocol.

IMPORTANCE OF IS/IT IN BPR

All organizations would like to grow and extend. In order to reach this growth and prosperity, organizations place long-term goals. Their roles as a financial manager are to be helped to develop the organizational strategies which facilitate and obtain those goals. The future growth and prosperity of any organization is essential in an effective management and use of information technology (IT) and information systems (IS).

In today’s organizations, the vast majority of the data to support organizational activities and decisions comes from IS, which incorporates IT, data and information, and business procedures. Organizations with poorly designed information systems face numerous problems.

Consider the case of the Hershey Foods Corporation, which found it unable to effectively ship candy for the Halloween season following the implementation of a new computer system. The company faced a 19% drop in profitability because of this problem. Yet at the same time, organizations that effectively design and manage their information systems can gain tremendous benefits. A recent study by Jeanne Ross and Peter Weill found that organizations that effectively manage their IT decision making experience financial performance levels about 20% higher than those with less effective IT management.

IS/IT should not be used as a cure-all for organizational problems because technology can create as many problems as it solves if it is not understood properly and its applications are not actively managed. The key to developing a good strategy to achieve an organization’s goals is to build well-designed and well-managed systems.

CONTRIBUTIONS OF INFORMATION SYSTEM

IS contributes to organizational goals when people use data, information, and information technology through a set of procedures.

IMPACT OF IS/IT IN AN ORGANIZATION

All medium to large organisations depend on information technology (IT) for their continuous survival. Consider organisations like British Gas, British Telecom, the Power and Water companies having to manually calculate, millions of customer bills every month or quarter. Similar opinion applies to many other organisations such as the high street banks, central and local government. A recent article in the Daily Telegraph IT supplement suggested that many large organisations could last no longer than 24 hours without IT support! There should be a little wonder that attitudes to the development of information systems have changed over the years from an ad hoc almost cavalier approach to a professionally managed, disciplined, planned, and engineering approach.

IT can prove to be useful during the process of redesign and reengineering analysis. The graphics software and the tools of CASE can produce the charts of process maps, the spreadsheets and the costing software take account of the analysis of the cost activity-based, the data base can track the satisfaction and the complaints of the customers and display boards of E-mail of “lamp-shade” can be introduced to capture suggestions of the employees. Moreover the E-mail and the groupware can facilitate the communication and coordination through the geographical and organizational barriers.

It is recommended that during the process of implementation stage, companies follow these basis rules:

Recognize that IT is only part of the solution: it allows managers to collect, store, analyze, and communicate and distribute information better.
Cut and paste the IT tools needed.
Bring in an internal or external IT expert: their knowledge, skills, intelligence, and experience are invaluable.
After implementation, continually monitor IT performance and keep up with new IT developments.

Mentioned below are some examples of the companies experience that show the role and implementation of IS/IT in business process redesigning

To exhibit the advantages of BPR, Ford Motor was chosen by Hammer [1990]. By applying the data bases shared in the process of accounts payable, which includes the purchase, receiving, and the accounts payable, Ford reduced its labour of the employees by 75 percent.

Hewlett-Packard changed the functioning model of its salesmen. Using the portable computers, they were connected to the data base of the inventory of the company. They obtain the information of period on time, activate and apply directly for promotions, changes of the prices, or discounts. Pointless to say, their time devoted to the customers has increased by 27 percent and sales, of 10 percent.

When Citibank transformed its system of analysis of credit by reducing paper dispensation, it obtained an increase of 43 percent at time devoted to gather new customers. The credit of IBM took two weeks to finish a claim of financing because there were five stages to the process. By redesigning the process and while making take part the general practitioners who work with data bases and telecommunications networks, it takes now only four hours.

LIMITATAIONS TO TECHNOLOGY

There are limits to what a technology may accomplish. For example, when the video conferencing technology of communication became the first time available, much were excited about the prospect to employ the visual communication to finish the need for business trip, or reduce-the least substantially it. While there is no question which the visual communication can be employed for some aspects of communication of businesses, it did not finish the need for travel, partly because of the nature slightly limited of the medium and the human desire for the contact head to head.

Still another, and really undefeatable, the question which limits the use of the video conferencing communication is physical distance and the notion of the time zones. Consider a situation where a senior executive in Vancouver tries to arrange a video conference with sales offices in Eastern Canada, Europe, and in Asia. Taking account of the time zones, there is no overlapping time of covering during the normal working hours which will allow parts in these four geographical regions to meet.

CONCLUSION

To be successful, business process reengineering projects need to be top down, taking in the complete organization, and the full end to end processes. It needs to be supported by tools that make processes easy to track and analyze.

BPR is a methodology by which important improvements are obtained, although it requires big changes in organization and work style. This involves the need to change or even increase working styles, job functions, needed knowledge, and organization values.

Reengineering requires long-time dedication, resources, and effort. These are made easier by using elements called enablers. Its role is crucial because it allows a company to alter processes in two ways: collaboration grade increase and mediation grade decrease through the implementation of shared databases and communication technologies.

So, IT may help companies to obtain important improvements on variables such as costs, quality, and delivery time. Although these are not the only important elements, also bear in mind structural changes, company culture, and human resources.

RECOMMENDATIONS

BPR must be accompanied by strategic planning, which addresses leveraging IT as a competitive tool.
Place the customer at the centre of the reengineering effort — concentrate on reengineering fragmented processes that lead to delays or other negative impacts on customer service.
BPR must be “owned” throughout the organization, not driven by a group of outside consultants.
Case teams must be comprised of both managers as well as those will actually do the work.
The IT group should be an integral part of the reengineering team from the start.
BPR must be sponsored by top executives, who are not about to leave or retire.
BPR projects must have a timetable, ideally between three to six months, so that the organization is not in a state of “limbo”.
BPR must not ignore corporate culture and must emphasize constant communication and feedback.
BIBLIOGRAPHY

Berman, Saul, Strategic Direction: Don’t Reengineer Without It; Scanning the Horizon for Turbulence, Planning Review, November 1994; Pg. 18.
Brown, Tom, De-engineering the Corporation, Industry Week, April 18, 1994; Pg. 18.
Cafasso, Rosemary, Rethinking Reengineering, Computerworld, March 15, 1993; Pg. 102.
Caldwell, Bruce, Missteps, Miscues — Business Reengineering Failures, InformationWeek, June 20, 1994; Pg. 50.
Chew, Angie, How Insurance Firms Can Reengineer for Success, Business Times, June 20, 1994; Pg. 11.
Cone, Edward, Technology Chief of the Year; All the Right Moves — Tom Trainer of Reebok International Successfully Teamed Business Reengineering with Information Technology, InformationWeek, December 26, 1994; Pg. 35.
Davenport, Thomas H., Will Participative Makeovers of Business Processes Succeed Where Reengineering FailedPlanning Review, January 1995; Pg. 24.
Economist Newspaper Group, Reengineering Reviewed The Economist, June 1994, Pg 24.
Ettorre, Barbara, Reengineering Tales from the Front, Management Review, January 1995; Pg. 13.

REFERENCES
http://jobfunctions.bnet.com/abstract.aspx?docid=390451&promo=100511&tag=bn-left
http://www.teamtechnology.co.uk/business-process-reengineering.html
http://www.comp.glam.ac.uk/pages/staff/tdhutchings/chapter1.html#head1

http://www.netlib.com/bpr1.shtml#recom
http://www.entrepreneur.com/tradejournals/article/100012316_2.html
http://www.kmbook.com/bpr.htm
http://www.susanto.id.au/papers/BPEASAP.asp

Categories
Free Essays

Microcredit concept in business and banking organisation

Introduction:

The buzz word the Microcredit is the new concept in business and banking organisation. Microcredit is the extension of small loans to help the poor people that they can start small business and overcome poverty (Microcredit Summit, 1997). The topic really appeals me to do select for research of my dissertation. It will be helpful for my future career and very much related of my academic study.

1) Reason For My Chosen Research topic:

The reason I choose the base of Bangladesh for this topic is one is my familiarity with the nationality and the other is Grameen Bank (Bank for the poor) Professor Muhammad Yunus(2006 Nobel Peace Prize winner), founder of the Grameen Bank which invented the easiest way to go to the people who needs help(grameenbank.com).

Grameen Bank methodology is almost the reverse of the conventional banking methodology. Conventional banking is based on the principle that the more you have, the more you can get. In other words, if you have little or nothing, you get nothing. As a result, more than half the population of the world is deprived of the financial services of the conventional banks. General features of microcredit in Bangladesh Grameen bank are: It promotes credit as a human right. The main mission of the microcredit is to help poor people or families to help themselves to overcome poverty. its targeted specially poor women. Its not based on enforceable contract, based on Trust. Grameen bank provied door-step service where people should not go to the bank, bank should go to the people.

For my research I choose this topic, because the disbursement of small finance to the poor people in the rural area seemed to be successful. And women’s position ware less honoured to the family in Bangladesh culture but when Grameen Bank (architect of micro credit in Bangladesh) started delivering special credit scheme opportunity to the women and they started implementing and earning for the family, the status of the women ware changed and their contribution to the decision making in to the family became more important.

2) Possible Research Question:

As we know methodology for a research question is very important and has to be chosen to fulfil the purpose of the research. On my research I would like to dig out the provision of the grameen bank microcredit in the rural area in Bangladesh . My possible research question would be:

Understands the nature and characteristic of Grameen Bank Microcredit Program and how the Impact of Grameen Bank Microcredit Program changed the lifestyle of the poor people in Bangladesh.

3) Identify four authors who will inform my topic:

Yunus,M(2004)Grameen Bank, Microcredit and Millennium Development Goals.Economic and political weekly. September 2002 Vol.39 No.36 Pp 4-10

This paper traces the evolution of the ideas and practice of microcredit as pioneered by the Grameen Bank. Over the years, microcredit programmes in Bangladesh have grown, providing a wide range of services to meet the economic and social needs of its citizens, mostly poor women. It comes up with suggestions regarding the emerging issues of financial self-reliance and institutional sustainability of microcredit programmes.

Rahman.A (2001). Women and microcredit in rural Bangladesh: anthropological study of the rhetoric and realities of Grameen Bank. 2nd ed. oxford: Westview. p12-14.

In this book the chapter microcredit in development project considers the history of starting microcredit process of grameen bank. It considers how the bank has grown and extend loans in rural Bangladesh, specially to poor women. its also consider the figer of parcent of people who under this program and money the borrowed.

M.L. Narasaiah (2008). Microcredit and women. India: Discovary Publishing House. p1-61

The research objective considers in this book how grameen bank develop a micro-lending program to help the poorest people. It also concerns about how This program has empowered thousands of people–many of them women–and surprised experts in economic development who never believed that the very poor would find the initiative and ability to repay even the smallest ($25-$500) loans.

Benton E. Gup (2003). The future of banking. Westport: Quorum Books. p319-331

The research objective considers in this book the chapter named “Microcredit for the poorest country”. its explained origin of microcredit, summary of Grameen bank, Empowering the poor through microcredit in bangladesh and aslo some case study.

4) Extents meets the criteria of my research question are:

The word “microcredit” did not exist before the seventies. Now it has become a buzz-word among the development practitioners. Microcredit in Bangladesh grameen bank who said bank for poor people made me really fascinated to do my research on this topic. Because women’s position ware less honoured to the family in Bangladesh culture but when Grameen Bank (architect of micro credit in Bangladesh) started delivering special credit scheme opportunity to the women and they started implementing and earning for the family, the status of the women ware changed and their contribution to the decision making in to the family became more important. Also their strategy is different then any other conventional bank in Bangladesh.
To develop my research on time I will partly depend on the secondary data that has published in some of the literatures, books, reports and partly on the primary data that will be collected from the field survey by me or my representative, and may also take some telephonic conversation if needed. So it’s might not possible to develop everything but would be possible to make a clear view within the project time frame.
During my work the main obstacles might be faced to collect the secondary data, as the microcredit is not available all over the world. For primary data I need some representative in Bangladesh and also need to take some telephonic conversation.
My chosen topic The Impact of Grameen Bank Microcredit Program in Bangladesh all about banking system for the poor people in Bangladesh. Its have a clear link to theory. I explained what is microcredit and how it work. What is Grameen bank microcredit program in Bangladesh and how its work. What is the different between conventional banking methodology and Grameen bank methology ect. It is relate clearly to the idea of research question.
The topic really appeals me to do select for research of my dissertation. It will be helpful for my future career and very much related of my academic study. Strategic and finance management cover the banking knowledge, whereas I can use in the research method. Although my study gives me knowledge of global business organisation structure, but it can be key method to do research of my work.
Reference:
Yunus,M(2004)Grameen Bank, Microcredit and Millennium Development Goals.Economic and political weekly. September 2002 Vol.39 No.36 Pp 4-10
Rahman.A (2001). Women and microcredit in rural Bangladesh: anthropological study of the rhetoric and realities of Grameen Bank. 2nd ed. oxford: Westview. p12-14.
M.L. Narasaiah (2008). Microcredit and women. India: Discovary Publishing House. p1-61
Benton E. Gup (2003). The future of banking. Westport: Quorum Books. p319-331
What is Microcredit (2011) Grameen bank [Online] available at; http://www.grameen-info.org/index.php?option=com_content&task=view&id=28&Itemid=177 [Accessed 21/05/2011]
Is Grameen bank different from conventional bank (2011) Grameen bank [Online] available at;

http://www.grameen-info.org/index.php?option=com_content&task=view&id=27&Itemid=176

[Accessed 22/05/2011]

Karim,L. (2008). Demystifying Micro-Credit. The Grameen Bank, NGOs, and Neoliberalism in Bangladesh. 20 (1), p5-29.

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Evaluation of China as a business destination

Introduction

China also known as PRC (People’s Republic of China) is the third largest country in the world. The country stands first with its population estimating to a 1,330,141,295 (1.3 billion) as of July 2010. China is also predicted to consume 29% of the world’s luxury goods by 2015 which precisely signifies the consumers spending ability. China has a high spending middle class even after the financial instability which makes it a prospective business destination. Beijing is the capital of China and Shanghai also known as the financial capital of the country is the largest city in China. Beijing, Shanghai, Guang Zhou, Shen Zhen is China foremost cities for business and commercial activities. Although China is one country by itself, due to the history and differences in culture in every province, this makes every province akin to small little countries that has different needs and wants. For example, there are different policies in certain provinces; also, due to the differences in geographical area that is spreading horizontally throughout the globe and difference in weather, consumers from different provinces have different needs and wants. Thus, any firms that wants to enter into different provinces in China has to do a thorough research before entering and not taking granted by using the same entry strategies, knowledge and marketing efforts to enter into different provinces in China. Even though, new market entry is likely to boost a company’s revenue, productivity and profit, Market entry without proper analysis will be a costly experience for the company but a hasty decision to not enter may lead to loss of extensive profits and market shares (Hollensen, 2004). However, in our project, we will only be looking into Shanghai as it is the financial capital of the country and has the most robust commercial activities as compared to the rest of the china. Shanghai has been growing exponentially since the past few years and is expected to grow even more (BBC News, 2011). As Takeomega 3 is looking for international market, especially in China, we are here to explore the feasibility and attractiveness of Shanghai market using PEST analysis.

Political Factors:

China acts like a single unit where the Chinese communist party (CCP) governs all the political powers. The above map shows the different administrative zones of the country. According to Euromonitor International (2005a) there are three areas which threaten the political stability of the country.

1] Differences in the rich and poor areas in China: The tensions are growing between these two areas and also the government has to handle the separatist movements in Tibet, Xinjiang. (Euromonitor International, 2005a)

2] Unstable Pension system: The pension system in the country is on the verge of a breakdown. As of now only 6 out of 31 regional pension funds are solvent. (Euromonitor International, 2005a)

3] International issues with neighboring countries: There are issues with the neighboring countries like Taiwan on the basis of political belongings, and also issues with Hong Kong with pro democracy activists and with Japan on the topic of exploitation of natural resources (Euromonitor International, 2005a). These factors can lead to political instability which can hamper the market entry for our firm.

Other factors that can be linked with issues relating to our market entry are issues like corruption in the country and the business entry procedures. Transparency International Corruption Perceptions Index indicates China with a 3.2 index compared to 8.2 of Europe and 3.9 of Asia, corruption index being 1 as highly corrupt and 10 being the lowest.

Factors influencing Business procedures:

Some of the upcoming business destinations can be middle-east and emerging markets. It is important to consider the time taken to complete business procedures. The business procedures to enter the Chinese market are however a bit problematic. On an average it takes 12 separate procedures and 41 days to start a business compared to 9 procedures and 61 days to start a business in Middle East. Moreover the system is also strict in closing down the business. It approximately takes 2.6 years to close down compared to 1.8 years compared to OECD countries. To enforce a contract, 20 separate procedures and 180 days are required compared to 18 procedures and 213 days in OECD countries (Business monitor international, 2006a).Thus it can be seen, compared to other emerging business destinations China has a monotonous approach for business procedures.

A few advantages:

When it comes to do business overseas, it is essential to know the global reputation of the country or its market. There are institutions and governing bodies which help international trade. China being a member of the IMF (International monetary Fund), World Bank, Asian development Bank, General Agreements on Trade and tariffs and most importantly WTO (World trade organization) promote orderly and stable foreign exchange markets, maintain free convertibility among the currencies of member nations as well as reduce international barriers to trade and provide liquidity to counteract temporary imbalances in international finances. This can be an advantage for our firm since it makes our target country reliable to carry out business (Jeannet & Hennessey, 2004).

Weakness of the market for business:

In spite of these advantages China has been known for its weak IPR (Intellectual property rights) and has also been blamed by its previous trading partners for inducing price dumping strategies to overcome its competitors (Business monitor international, 2006a).There have been developments to protect IPR since it became a member of the WTO however these laws have not been implemented that efficiently with fines still being imposed (Business monitor international, 2006a). This in turn can be hazardous for the business hence maintaining control on these things is of utmost importance to enjoy profits as well as keep the brand name established. To overcome these negative impacts on the firm and avoid counterfeiting the following steps can be taken:

1] To register the product and the logo in China, doing so will overcome the issue of counterfeiting the product by local manufacturers.

2] The next step is to get the product certified by the SFDA (State food and drug administration).

Economic factors:

China is undoubtedly playing as a primary engine of growth considering the role played by United States of America since mid 2003. Despite the financial crisis the global growth in emerging countries remain favorable. With China’s rapid start in 2010 economic growth is likely to slow down because of the partial normalization of the macro policy stance and some property measures. The GDP growth for 2010 as a whole is expected to be around 9.5% and 8.5% for 2011.But the advantage here is that the growth will be less investment driven and more because of external or foreign trade (World Bank group, 2010). The GDP of the Shanghai region individually is $450bn (?225bn). Furthermore the Shanghai region along with the two neighboring provinces contributes to 30% of China’s foreign exports and attracts 25% of all foreign investment into China (Schifferes, 2007).This makes it favorable for a firm to export Shanghai with increasing potential for profit margins. Shanghai has high number of FDI’s rather than foreign loans moreover FDI are less risky compared to any other financing source. The country itself is still the largest receiver of FDI’s in the world (Business monitor international, 2006a). Inflation would remain in limit this year due to nonexistence of price pressures. Inflation is increasing but core inflation remains low (World Bank group, 2010).Active labor force comprises of approximately 737 million and unemployment rate is 3.6 %and is also expected to increase due to internal migration and urbanization (Business monitor international, 2006a).

Moreover Shanghai is known for its sophisticated and affluent consumers and highly educated skilled labor force. By 2020, shanghai is expected to expand greater than New York in 1997 which was the richest city in the world (Schifferes, 2007). This is the reason why choosing Shanghai over any other cities in China is preferred.

Taxes:

China has decreased its import tariffs by 40 % since 1990.China has dual tax regime imposing different for Domestic and foreign firms more importantly the same in Shanghai. Although the state tax rate for foreign companies can be reduced by 15% if the firms are located in special administrative zones (Business monitor international, 2006a). The standard rate of VAT is 17%. This is generally applicable on sale and import of goods. There is a reduced rate of 13% which is applicable for books and certain types of oils. Small sized businesses with a turnover of less than the legally defined limit pay 3% VAT (www.worldwide-tax.com, 2011).

Social and cultural factors:

The society in China and till a certain extent across the globe has come to a stage of “mistrust” due to the exaggerate claims in advertisement made by the merchants. Consumers have lost confidence in nutritional products and find it difficult and confusing in believing and judging in one. At the initial stage, merchants advertise to create awareness amongst consumer about the quality of their products. The more advertisement it has, higher will be the sales they would be able to attain. However, too much advertisement brings about a question of quantity Vs quality. As many a times those claims made by the advertisement concluded to be false. Eventually consumers came to a stage where their mindset has changed. They have started to believe that consuming natural food itself is better than consuming processed food supplements. Furthermore natural food gives better results than the fake and over exaggerated food supplements – “??????”. This has led the Chinese government to impose strict laws in China especially Beijing and Shanghai in order to deal with the trust level in China’s market. Shanghai being the most crucial city for new businesses it is essential to deal with this matter in a thoughtful way in order to be able to sell your product and achieve brand recognition.

Shanghai’s life expectancy has increased to that of the economically developed economies and figuratively is 75.18 and 79.21 for women (shme, 2011). The average age is 25-59 years and is dominated by male population (Euromonitor International, 2005a). As of 2009, the per capita income was $6500 which has increased compared to previous years and is the highest in Asia (Datamonitor, 2010). The average per capita savings deposit among local residents had skyrocketed from 166 yuan in 1978 to 20,909 yuan in 1997 and has been still increasing (shme, 2011). This indicates decline in poverty which means increase in purchasing power of the consumer. This signifies a potential market.

Statistics have shown that there is a growing market for health products (supplements) and demand mainly comes from 2 groups of people – white collar consumer who face pressure and work in high risk profile companies and also employees that involve lots of entertaining work and consume very high cholesterol and carbohydrate enriched food like seafood and high protein food like eggs and also animals organs (which is highly popular amongst the Chinese). With development of Shanghai’s economy, consumer now has higher income to pay and care about their health by purchasing these health supplement products and this precisely explained why the increasing growing trend of these products in the country. Increasingly, Chinese consumers are behaving like their counterparts in the developed world. They are more demanding and pragmatic than ever as their horizons expand beyond basic concerns about product features. Also, they are willing to pay for better value and quality and are spending more time researching and are exploring product nuances. Yet McKinsey’s 2010 survey of China’s consumers also found that they are blazing a uniquely Chinese trail. The country obviously offers some of the world’s biggest growth opportunities—but only for consumer product companies that understand and respond to this rapidly evolving marketplace.

The floating population which means internal migrated population was recorded at 140 million in 2005. Due to urbanization a lot of population keeps migrating to the major cities like Shanghai and Beijing, which provide cheap labour but puts stress on the city infrastructure and most of the people remaining unemployed (Datamonitor, 2010).Adult literacy rate of Shanghai is 91.6% which signifies knowledgeable customers and more potential target market (Datamonitor, 2010).Although because of the one child policy there have been issues with ageing population. As a result it is expected to increase in forthcoming years and decrease in productive output and target consumers for the future (Datamonitor, 2010). Moreover Shanghai population has one of the highest savings rate in the world where people prefer to save more than invest due to cultural risk. This issue needs to be given a thought and dealt in productive manner since people don’t invest which indicates more liquidity in cash flows.

Cultural factors affecting business procedures:

Chinese consumers remain brand conscious but, unlike shoppers elsewhere, they focus on value so intensely that brand loyalty is often secondary. Since there are so many brands in Shanghai itself it becomes difficult for a consumer to choose and hence they opt for a product defining high value or comparatively low cost. The needs or interests of their families have greater importance for them than for their counterparts in the developed world. Word of mouth has become a more significant source of product information than it is elsewhere, thanks largely to fast-growing use of the Internet, which Chinese consumers see as a credible information source.

Most intriguingly, though, Shanghai’s consumers prioritize purchases across different product categories by trading off among them: the Consumers maximize their buying power by spending more in the categories they care about most and less in others. Also, the trends in the target market keep changing depending on the local circumstances.

Chinese have a high context culture hence it is crucial to know the cultural background of the partner (Johansson, 2003). People from Shanghai mix emotions with business hence they value individualism and work towards economic welfare (Chen, 2004). People in Shanghai treat foreigners equally and laws are more stringent than any other parts of China (Chen, 2004). People in China more importantly in Shanghai are influenced by the packaging. Especially colors play an important role for example: red exemplifying happiness.

Many companies that have struggled to find a niche in China may therefore now find a market for their products and attract partners. Conversely, companies that have relied on low-cost, low-quality business models may end up on the losing end of trade-off decisions and could require a shift to value

Technological Factors:

In recent years, American and Europe supplement products have taken a different and more innovative route by developing new design, new function, new way of consuming, new style supplement products. This knowledge has also been transferred to China through its financial capital Shanghai. This better and more advanced technology brings about better purity and quality and enhances the absorption capability in the body to take place. These occur in capsule, tablets and recently into liquid and concentrate products. These supplements are also offered in candy form, biscuit, can, vinegar and Mi Jian- dry preservatives fruits. Products that are targeting at low cholesterol, low fats and carbohydrates market are proven to be the most popular amongst all nutritional products. Products that are offered in herbal type like tea, protein, herbal plants, has the highest sales relatively. Thus the technical knowhow of manufacturing, packaging and other functions is well advanced in Shanghai (China) and hence it can get difficult for a foreign company to keep up with the competition.

Moreover R&D spent in China is 2% in 2010 and is aiming to increase it to 2.5% by 2020 (Business week, 2006). Transportation network has improved immensely through the expressways. The length is 74000 km as of 2010. Moreover Shanghai is building the world’s largest container port at an island connecting with a six lane bridge to the city (Schifferes, 2007). This will provide assurance for safe and faster transportation of the products and prove beneficial not only for TakeOmega3 but its competitors as well.

Bibliography

BBC News. (2011, February 22). China Country Profile. Retrieved February 24, 2011, from BBC News: http://news.bbc.co.uk/1/hi/world/africa/country_profiles/1287798.stm

Business monitor international. (2006a). Business Environment: China Q2 2006. United kingdom: business monitor international ltd.

Business week. (2006, March 31). Blinding Science: China’s Race to Innovate. Retrieved March 5, 2011, from Bloomberg Businessweek: http://www.businessweek.com/globalbiz/content/mar2006/gb20060331_921612.htm

Chen, M. (2004). Common culture,different stiles. China Business review , 31 (5), 53-58.

Datamonitor. (2010). China: Country analysis report. Datamonitor.

Euromonitor International. (2005a). China. United Kingdom: Euromonitor plc.

Hollensen, S. (2004). Global marketing: A decision-oriented approach. Edinburgh: Pearson Education limited.

Jeannet, J. P., & Hennessey, H. D. (2004). The global economy. In J. P. Jeannet, & H. D. Hennessey, Global marketing strategies (Vol. 6th edition, pp. 47-50). boston: Houghton Mifflin.

Johansson, J. K. (2003). Global Marketing: foreign entry, local marketing, & global management. New York: The McGraw Hill companies Inc.

Schifferes, s. (2007, May 7). Shanghai: Creating a global city. Retrieved March 10, 2011, from BBC Home: http://news.bbc.co.uk/1/hi/business/6618163.stm

shme. (2011, march 10). whats shanghai. Retrieved march 10, 2011, from sh me: http://www.shme.com/intro/people.htm

World Bank group. (2010). Quarterly update-June 2010. Beijing: World Bank office.

www.worldwide-tax.com. (2011, March 4). China V.A.T. and Other Taxes 2010. Retrieved March 4, 2011, from www.worldwide-tax.com: http://www.worldwide-tax.com/china/chi_other.asp

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Emerging business and non-profit partnership in india

Abstract

Purpose- In the steadily increasing stream of CSR, one of the most important issues addressed is the role of external stakeholders. This research involves one aspect of the issue of the external stakeholders, specifically the partnership approach to CSR and more in particular the relational process that underpins social innovation within strategic cross-sector partnership between different types of actors involved in the partnerships (Mailand. M, 2004). Moreover the study aims to discuss the duality of success and failure in strategic collaborations between non-profit and for-profit organizations in an Indian context.

Methodology- The analysis is based on an ongoing social partnership between for-profit organisation (ONGC) and non-profit (Helping hand for cancer care patients). This study includes interviews with managers and other employees along with the use of existing knowledge on social partnership between organisations to support the methodology.

Findings- The findings provide a grounded framework based on previous research that provides a step-by-step approach for implementing corporate social responsibility through social partnership.

Research limitations- The structure developed in this paper provides an opportunity to examine to what extent does social partnership between NPO and BUS has been implemented in organizations as well as alternative approaches for implementation.

Key Words- Non-profit organisation, Business, Partnerships, implementation, NGO, CSR.

Chapter 1. Introduction

1.1. Introduction:

For many years, community development goals were philanthropic activities that were seen as separate from business objectives, not fundamental to them; doing well and doing good were seen as separate pursuits (Kotler P, Lee N, 2005). Companies are now beginning to recognize how greater social and environmental responsibility can improve the firm’s performance (Zadek, 2004). In a market oriented economic structure, corporate sector is the originator of economic growth. According to Wood (1991),” the basic idea of Corporate Social Responsibility (henceforth CSR) is that business and society are interwoven rather than distinct entities.” (Dean, P., 2007).The notion that business has duties to society is firmly ingrained. According to Werther. B. W, Jr., and Chandler. D., 2010, the entirety of CSR can be discerned from the three words: Corporate, Social and Responsibility. CSR defines society in its widest sense and covers the relationship between the corporation and society within which it interacts. The idea of Business looking beyond profits to their roles in society is generally termed as CSR.

The concept of Corporate Social Responsibility has gained increased significance in recent years. While Government is responsible for setting rules and parameters within which society and business operate. On the other hand businesses are largely responsible for creating wealth and driving progress within the society. In addition NGO’s and NPO’s exists to do social good without seeking profits, they reach into areas where profit and politics do not reach. Implementing CSR is facilitated through standards and common codes of conduct. Although firms themselves have set the standards, governments have played a role in defining common rules (Nourick, S., OECD, 2001). It is therefore imperative that corporations come forward & shares the responsibility for inclusive & redistributive growth (CSR, Whitepaper KPMC).The context of CSR is very dynamic due the ideal mix of business goals and societal expectations which is constantly evolving.

CSR is currently characterized by many unsystematic practices which lack transferability (Seitanidi M,Crane A,2008).If CSR is to develop from solid grounds , it is necessary to foster its future development through embedding societal issues and expectations raised by legitimate stakeholders in the day-to-day strategies, policies, and operations of the organization (Nijhof A, Bruijn T,Honders H, 2008). Most CSR scholars and societal actors therefore assume that CSR can only be fully developed in partnership; partnerships in which the exploration of new roles is a central element (Nijhof A, Bruijn T,Honders H, 2008).Over a decade ago, the Committee for Economic Development one group of business leaders advocated the formation of a “government-business partnership for social progress”. It was understood by them that the society’s problems were too complex to be tackled by business alone. Recent developments such as the Millennium Development Goals and Make Poverty History campaign have also raised awareness of the world’s development challenges and increased recognition that no one sector-Government, Business or civil society can solve these challenges alone (Doh and Teegen 2002) (Concern Universal Org.2010).According to Frederick. C. W, 2006 the notion of Social partnership for resolving social problems are a powerful idea and the future of CSR lies in this direction.

Often it has been assumed that the emergency of CSR is a function of economic and social development. For this reason it is been followed by the observation that CSR appears to be faster in Westernized countries than other countries like Asia. However, according to Matten and Moon 2004, CSR is often implicit in Asian countries and more a function of national business systems rather than development per se.

The focus of CSR has changed the attitude of business all over the world. As one of the world’s fastest growing economies, India certainly cannot be ignored in this regard. A survey of global business executives conducted by McKinsey & Company found that Indian executives were “the most enthusiastic proponents” for a wider social role for business, with 90% reportedly endorsing the “public good dimension” (“McKinsey Global Survey,”2006).Historically speaking, social responsibility of companies is a well-established phenomenon in India, and the country has one of the world’s richest traditions of CSR. In its oldest forms, CSR in India included the concept of corporate philanthropy. The philanthropy first practiced by Indian businesses was initially rooted in religious belief and culture, but with the changing times, there has been a significant shift in the approach (Sharma, Seema G, 2009). Indian families such as TATA and Godrej have a significant industry presence and reputation for social responsibility. TATA steel is one of the first companies to produce a corporate sustainability report. In recent years some large Indian companies have started signing up to voluntary international CSR initiatives. There are 87 Indian companies which have signed up the UN Global Compact’s nine principle on Human rights, labor and environment (Hopkins, M., 2007).

1.2. Significance of the study:

India (Mumbai) where the research has taken place has a long rich history of CSR. Companies like TATA and Birla have set an own unique benchmark in the field of CSR in India. In spite of such successful examples CSR is yet in the nascent stage in India. CSR is coming out of the purview of ‘doing social good’ and is fast becoming a ‘business necessity’ (Times internet ltd, 2010). This study moves ahead of CSR stimulus that has previously been dealt with, into an examination of new trends within relatively old frontiers. It will investigate the relationship between ONGC (BUS) and Helping Hand for Cancer Care (NPO). The significance of this study lies in the following:

1) In spite of the long history of CSR in India, there have been not much empirical evidences in terms of implementing CSR through partnership. This study is exclusive, due to the research investigation of a partnership between a Business and an NPO in India with an aim of identifying the kind relationship and partnership they share.

2) To indentify the kind of partnership they share, this study takes into consideration Setanidi and Crane 2008, Cross-Sector Partnership model. Furthermore to classify the level of relationship they share, studies of Selsky and Parker 2005:855 on cross-sector partnership to address social issues (henceforth CSSPs) have been used.

3) Seitanidi’s holistic framework 2010 has been used to set the research questions with some changes for this study. Since there was no scope for the use of quantitative research, this study is based on qualitative research. The use of Semi-structure interview is used to collect the primary data. Furthermore there is a need of closer examination by academicians on long-term relationships as most studies have been focused on examining short-term relationships (Selsky and Parker, 2005).

1.3. Aim of the Research:

The research question for this study address the phenomena of CSR, socially responsible restructuring and firm’s performance and their relationship (L.Zu, 2008). The aim of this research is to evaluate and investigate the relationship of a Social Partnership for carrying out CSR between ONGC (BUS) and Helping Hand for Cancer Care (NPO) in India.

To achieve the significance of this study, it has been divided into a series of guiding questions:

1. The first section examines the context of business and civil society interactions. Which forms of CSR interventions have been formed for promoting community development in IndiaHow has social development been enhanced by CSR?

2. The second section elaborates the Company-Community Collaborations (henceforth CCC). Who are the stakeholders of CCCWhat kind of partnership can be developed between Corporations, community and government in the context of CSR What commitments can they make?

3. The third and the last section explore the role of government in social partnerships, the obstacles and opportunities and to find effective ways to promote such partnerships in India.

1.4. Objectives of Research:

In order to achieve the above aim, the objectives of this research are;

Present and briefly describe the understanding of CSR in India.
To investigate the relationship between ONGC and Helping Hand for Cancer Care in terms of implementing CSR through Social Partnership.
To analysis and evaluate the Social Partnership by employing Seitanidi’s holistic framework (2010) in terms of the three stages of partnership. For each stage of the analysis, all or some of the research questions adopted by Seitanidi (2010) will be utilised at different states.
Explore the findings of the analysis in order to derive the useful information that can help further research the subject matter.
Examine, based on the findings, whether this relationship can be considered a partnership.

1.5. Research Questions:

In order to evaluate the impact of Social Partnership between ONGC and Helping Hand for Cancer Care the following questions arise;

Q1. How is CSR understood in India?

Q2. How is Social Partnership understood in India?

Q3. Can Social Partnership be successful in implementing CSR?

Q4. The level of Commitments between the Partners ?

Q5. Recommendations for implementing CSR in better ways within the Social Partnership context

1.6. Structure of Dissertation:

The dissertation is divided into six chapters. Brief description of these chapters has been presented below.

Chapter 1: Introduction. This chapter covers introduction of the dissertation and significance of study for Implementing CSR through Partnership in India. Research aims and objectives are also covered in chapter.

Chapter 2: Literature review. This chapter covers previous studies conducted in the field of topic. Partnership selections and its stages, meaning of NPO in India and the history of CSR in the Indian context.

Chapter 3: Company Profile. This chapter covers the background and history of ONGC and Helping Hand for Cancer Care on which this study is based.

Chapter 4: Methodology. This chapter contains a description of research methodology involved in this study. Research strategy, methods and context of study are important features of this chapter.

Chapter 5: Data Analysis and Discussions. This chapter summarizes finding from participants’ responses and evaluates the findings of the interview with the literature review.Chapter 6: Conclusion. This is a final chapter of the report and presents final conclusion of the project as well as further research recommendations

Chapter 2. Literature Review

2.1. Introduction:

CSR is a shifting concept and the espousal of CSR has become a matter of attention worldwide. People often talk about it as it was a recent phenomenon, but in reality its core is the ongoing effort to understand what it means to comprehend business as part of society (Ward. H, & Smith. C, 2006). Furthermore that it is an attempt as old as business Endeavour (Ward. H, & Smith. C, 2006).The issue of CSR is a very controversial subject that continues to attract a lot of attention, from those who argue that the whole issue is irrelevant to business (Freeman and Liedtka ,1991) through those who see the relevance, but think it is a bad idea for business(Friedman,1962 cited in Scribd, 2010), to a vast group of writers who think that CSR is of strategic importance of business (Asongu. J. J., 2007).There has been no shortage of history to dwell on to the debate about CSR. CSR is an area which investors, especially institutional investors are showing a growing interest. Academics, Business, NPO/NGO sectors have also gained escalating attention in the subject of CSR, which has resulted in extensive body of academic and practical literature.

With the help of recent development CSR partnership has becomes one of the effective way to meet the challenges a company may face. Despite the volume of writings on both CSR and partnerships, the literature review will focus on those areas most relevant to the research questions (Concern Universal Org.2010).

2.2. The history of CSR: Concepts and Practices

2.2.1. History of CSR:

The history of CSR is as old as the history of business itself, even though the concept was not formally formulated until recently (Asongu. J. J., 2007). The evolution of theCSR constructs established in the 1950s in United States. Until the 1990s publications on CSR came in peaks and troughs, rather than a steady rise (De Bakker, et al.2005). Business practices in the 1900’s that could be termed socially responsible took different forms; philanthropic donations to charity, services to the community, enhancing employee welfare and promoting religious conduct (Banerjee.B.S, 2007). In the early writings on CSR, it was referred to more often as social responsibility (SR) than as CSR. The decade of 1960’s marked a significant growth in the attempt to formalize what CSR means (Carroll.A , 1999 38: 268).

2.2.2. Concepts of CSR:

The first and most prominent writer to define CSR was Keith Davis, who defined SR by arguing that it refers to “businessmen’s decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest” (Davis, 1960, p. 70 cited in Crane, A., et.al 2008). Definitions expanded during the 1960s and proliferatedduring the 1970s. In the 1970’s there was mentioning about the Corporate Social Performance (CSP) and CSR. One of the major writers for CSP was S. Prakash Sethi . Sethi stated that,” whereas social obligation is proscriptive in nature, social responsibility is prescriptive” (Sethi 1975, cited in, Carroll.A , 1999 38: 268). In 1980’s the research of CSR gave way to alternative concepts such as CSP, stakeholder theory and business ethics. In 1991 Archive Carroll revisited the four part definition, he stated that, “For CSR to be accepted by the conscientious business person, it should be framed in such a way that the entire range of business responsibilities is embraced. It is suggested here that four kinds of social responsibilities constitute total CSR: economic, legal, ethical and philanthropic. Furthermore, these four categories or components of CSR might be depicted as a pyramid. To be sure, all of these kinds of responsibilities have always existed to some extent, but it has only been in recent years that ethical and philanthropic functions have taken a significant place” (Carroll.A , 1999 38: 268).

Figure 1 Carrol’s CSR Pyramid: (Source: CSR Quest, 2010)

The pyramid of CSR depicted the economic category as the base (the foundation upon which all others rest), and then built upward through legal, ethical, and philanthropic categories (Carroll, 1991, p. 42). Carroll’s pyramid of CSR (Carroll, 1991) (Cited in Crane and Matten, 2007), CSR can be divided in four categories, in a hierarchical format. This model’s graphical representation implied a hierarchy of responsibilities moving from economic and legal through to more socially oriented ones of ethical and philanthropic responsibilities (Meehan, J., Richards, A., Meehan, K.,2006, cited in, Carroll, 1991)

According to Carroll and Buchholtz (2000:35) (cited in Crane and Matten, 2007) “The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organisations at a given point in time”.

Stakeholder Concept:

The next important concept which made a difference in CSR was the stakeholder theory (ST). The ST concept can be traced back to 1963, where it was first mentioned by name in a Stanford Research Institute Memorandum (Freeman, 1984 cited in Freeman, E., Hitt, M., et al ,2001). Since then ST has gained increasing use in strategy development literature. Its popularity has increased with the seminal publication of Freeman’s (1984) Strategic Management: a Stakeholder Approach (Polonsky.M, 1995). ST is based on the principle that “The firm takes into account all of those groups and individuals that can affect, or are affected by, the accomplishment of organizational purpose” (Freeman, 1984 cited in Polonsky.M, 1995). In one case a stakeholder might have a legal claim on the organization; for example, owners expecting a given level of financial performance. In another case a stakeholder, such as the general public, may simply be interested in how the organization affects the country’s economic growth. As can be seen stakeholder importance can vary, as can the specific organizational issues they are concerned with (Polonsky.M, 1995). Businesses come into regular contact with customers, suppliers, government agencies, families of employees, special interest groups. Decisions made by a business are likely to affect one or more of these “stakeholder groups” (Tutor2u, 2010). A major reason for increasing adoption of a Stakeholder Concept in setting business objectives is the recognition that businesses are affected by the “environment” in which they operate(Tutor2u, 2010) .

Figure 2: Stakeholder Model: (Source: Qwick Step.com, 2010)

Some other definitions: The World Business Council on Sustainable Development (WBCSD), 2010, defines Corporate Social Responsibility (CSR) ,”as the continuing commitment of business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”

Despite the growing awareness and popularity of the term CSR, there is no general consensus as to what it actually means. Plotting the future of CSR presents some basic challenges (Ward, H., Smith, C., 2006). The first is the basic uncertainty over how to define the scope and content of CSR. The lack of a single clear definition of CSR and its objective can often seem like a blockage in building common understanding on how best to move forward (Ward. H, & Smith. C, 2006). CSR as a term varies equally in its meaning across the economic literature as authors understanding of CSR differ regarding the evaluation of corporate purpose and motivation (Crane & Matten, 2004).The concept of CSR encompasses many dimensions of business activity ranging from the social (e.g. community programmes), to economic (e.g. employment) to the environmental (e.g. waste reduction).

The CSR definitions describe observable facts, but fail to present any guidance on how to manage the challenges within this phenomenon (Dahlsurd, A.2006). Therefore, the challenge for business is not so much to define CSR, as it is to understand how CSR is socially constructed in a specific context and how to take this into account when business strategies are developed (Dahlsurd, A.2006). CSR as a term varies equally in its meaning across the economic literature as authors understanding of CSR differ regarding the evaluation of corporate purpose and motivation (Crane & Matten, 2004).The concept of CSR encompasses many dimensions of business activity ranging from the social (e.g. community programmes), to economic (e.g. employment) to the environmental (e.g. waste reduction) (Beril,Z., Burcu, O., 2007).The theoretical approach to CSR is based on the question of what organisations are responsible for and what they are motivated by (Bueble,E. 2008).

2.3. Perceptions and Practices of CSR in India:

A group of Economist and Politicians have given a name to the emerging countries from different continents the ‘BRIC countries’ Brazil, Russia, India and China. The term was first used in the Goldman Sachs 2003. The BRIC’s economic and political context provides a general context for the future of CSR (Mullerat. R., 2010)

The notion of CSR is not new in India. It has a long tradition of paternalistic philanthropy. Corporate Philanthropy and industrial welfare has been put to practices since the late 1800’s in India (Gupta, A.2007). The arrival of the East India Company in 1620 was a milestone in the history of trade and of socio-political in India. Over the subsequent 200 years, the purely trade and business interest of the East India Company changed to social and political management of the country by company executives until 1885, when India came under the British crown. The business leaders of emerging indigenous industry remained rooted in the tradition of philanthropy, which gradually metamorphosed into CSR (Gupta, A.2007). According to Chakraborty, 1997 the strength of Indian traditions and classical literature provides an underlying ethos that reinforces CSR, but also argues that modern business practices are likely to erode this. The market liberalizations process, which began in 1991, heralded a new era of change in India, it promoted a more pragmatic and western –style ethical stances (Fisher et al. 2001; Sharma, S.2009).

A survey by the Tata Energy Research Institute (TERI) called ‘Altered Images: the 2001 State of Corporate Responsibility in India Poll’ Traces Back the History of CSR in India and suggests that there are four models of CSR (TERI, 2010).

1)Ethical model : The origin of the first ethical model of corporate responsibility lie in the pioneering efforts of 19 th century corporate philanthropists such as the Cadbury brothers in England and the Tata family in India. The pressure on Indian industrialists to demonstrate their commitment to social development increased during the independence movement, when Mahatma Gandhi developed the notion of ‘trusteeship’, whereby the owners of property would voluntarily manage their wealth on behalf of the people. Gandhi’s influence prompted various Indian companies to play active roles in nation building and promoting socio-economic development during the 20th century. The history of Indian corporate philanthropy has encompassed cash or kind donations, community investment in trusts and provision of essential services such as schools, libraries, hospitals, etc. Many firms, particularly ‘family-run businesses’, continue to support such philanthropic initiatives.

2)Statist model: A second model of CSR emerged in India after independence in 1947, when India adopted the socialist and mixed economy framework, with a large public sector and state-owned companies. The boundaries between the state and society were clearly defined for the state enterprises. Elements of corporate responsibility, especially those relating to community and worker relationships, were enshrined in labour laws and management principles. This state sponsored corporate philosophy still operates in the numerous public sector companies that have survived the wave of privatization of the early 1990s.

3)Liberal Model: Indeed, the worldwide trend towards privatization and deregulation can be said to be underpinned by a third model of corporate responsibility – that companies are solely responsible to their owners. This approach was encapsulated by the American economist Milton Fried-man, who in 1958 challenged the very notion of corporate responsibility for anything other than the economic bottom line. Many in the corporate world and elsewhere would agree with this concept, arguing that it is sufficient for business to obey the law and generate wealth, which through taxation and private charitable choices can be directed to social ends.

4)Stakeholder Model: The rise of globalisation has brought with it a growing consensus that with increasing economic rights, business also has a growing range of social obligations. Citizen campaigns against irresponsible corporate behaviour along with consumer action and increasing shareholder pressure have given rise to the stakeholder model of corporate responsibility. This view is often associated with R. Edward Freeman, whose seminal analysis of the stakeholder approach to strategic management in 1984 brought stake holding into the mainstream of management literature (Freeman, 1984). Ac-cording to Freeman, ‘a stakeholder in an organisation is any group or individual who can affect or is affected by the achievement of the organisation’s objectives.’ (TERI, 2010).

Corporate India has always boasted a strong tradition of corporate philanthropy, where business leaders have been viewed as leaders of social development (Mohan 2001). Regardless of this strong tradition of philanthropy, CSR research in India in the recent past has primarily focused on identifying the ideal ‘how to carry out CSR,’ often leading to contradictory findings on the related practices (Kumar et al. 2001). According to a survey done by the Teri Foundation, the most apprehensive national problems which Indians are concerned about are Overpopulation, environmental problems, spread of human diseases, and depletion of natural resources.

Using the framework of CSR, the Indian definition of CSR would view the following at descending order of importance (Pratiyogita Darpan Aug 2008):

a)Activities aimed at communities that benefit them in sustainable manner (Philanthropic, Social, Investment, or Commercial initiatives).

b)Basic Business practices that go beyond legal compliance to benefitting the disadvantaged amongst the company’s stakeholders.

c)Advocating change in public policy and laws that benefit disadvantaged people.

2.4. Global Practices of CSR:

Despite of the different definitions and meanings, CSR comprises of six broad set of initiatives and techniques; Responsibility and monitoring framework, Financial SR indexes, International Conventions and the Millennium Development Goals, Principles, standards and norms (United Nations Environment Programme,2009).

2.5. Government Initiatives’ for CSR in India:

India is an emerging economic powerhouse, Indian business has traditionally been socially responsible and some of the business houses have demonstrated their efforts on this front in a laudable manner yet poverty, health problems, environment problems remains the reality for most of the Indian population (Goyal, 1999;Gangrade, 2001; Siddiqui, 2003). The culture of social responsibility needs to go deeper in the governance of the businesses. In order to assist the businesses to adopt responsible governance practices, the Ministry of Corporate Affairs has prepared a set of voluntary guidelines which indicate some of the core elements that businesses need to focus on while conducting their affairs (Ministry of Corporate Affairs Government of India, 2009).

Implementation Guidance:

1) The CSR policy of the business entity should provide for an implementation strategy which should include identification of projects/activities, setting measurable physical targets with timeframe, organizational mechanism and responsibilities, time schedules and monitoring. Companies may partner with local authorities, business associations and civil society/non-government organizations. They may influence the supply chain for CSR initiative and motivate employees for voluntary effort for social development. They may evolve a system of need assessment and impact assessment while undertaking CSR activities in a particular area. Independent evaluation may also be undertaken for selected projects/activities from time to time.

2) Companies should allocate specific amount in their budgets for CSR activities. This amount may be related to profits after tax, cost of planned CSR activities or any other suitable parameter.

3) To share experiences and network with other organizations the company should engage with well established and recognized programmes/platforms which encourage responsible business practices and CSR activities. This would help companies to improve on their CSR strategies and effectively project the image of being socially responsible.

4) The companies should disseminate information on CSR policy, activities and progress in a structured manner to all their stakeholders and the public at large through their website, annual reports, and other communication media.

The above guidelines are cited in Corporate Social Responsibility Voluntary Guidelines 2009, Ministry of Corporate Affairs Government of India.

2.6. Partnership:

According to Waddock (1988:18) social partnership is “A commitment by a corporation or a group of corporations to work with an organisation from a different economic sector (public or nonprofits). It involves a commitment of resources – time and effort – by individuals from all partner organisations. These individuals work co-operatively to solve problems that affect them all. The problem can be defined at least in part as a social issue; its solution will benefit all partners. Social partnership addresses issues that extend beyond organisational boundaries and traditional goals and lie within the traditional realm of public policy – that is, in the social arena. It requires active rather than passive involvement from all parties. Participants must make a resource commitment that is more than merely monetary”. Partnership is a general term that encompasses a board range of types of relationships. It is an activity to do something together, a correlation that consists of mutual or attuned objective and an acknowledged distribution of specific roles and responsibilities among the participants (Mullerat.R, 2010). At the World Economic Forum in 1999, UN Secretary-General, Kofi Annan, presented the Global Compact challenging business leaders all over the world to ‘embrace and enact’ a set of universal principles in the areas of human rights, labour standards and the environment(UNRISD, 2010). The Compact also encourages business to engage in cross-sector partnerships with the public sector and civil society in order to promote development (UN Global Compact, 2010). At the World Summit on Sustainable Development in Johannesburg in 2002 the need for and the importance of collaborative alliances between the three sectors was highlighted further. Partnerships as a new approach to development were put very high on the agenda and during the 9 days of the summit more than 300 partnerships between governments, NGOs and business were announced (Johannesburg Summit, 2010). Since then the partnership model has gained further ground as a new approach to development and an important tool for the realisation of the Millennium Development Goals. The partnership model is not only supported by the development community. It is also widely embraced by the private sector. When the term partnership was employed it was primarily used to refer to partnerships between the Government and Business usually termed as “PPP” (Public-Private Partnership”). According to Googins and Rochlin (2000), “partnerships offer the chance to form a strong arrangement where each party’s distinctive capabilities and resources are combined, complementing and strengthening each other, thus creating results that are a lot better than any results each sector could create on its own”. In the past 25years, collaborative activities are becoming more prominent and extensive in all sectors (Alter & Hage, 1993: 12).Many significant activities by business in society involving CSR require collaboration partnership with others, and particularly public sectors (Selsky and Parker,2005).

2.6.1.Cross-sector Partnership:

Cross-sector partnerships bring together actors from two or more sectors to work on problems whose solutions often require the information and capacities of more than one sector (Brown. D. L., 2005). According to Seitaindi. M, and Ryan, 2007, cross-sector partnerships have been one of the most exciting and challenging ways that organizations have been implementing CSR in recent years. NPO-BUS partnership is one of the four different types of partnerships (Figure 1) that represent what is referred to as ‘social partnerships’ (Waddock 1988; Googins & Rochlin 2000) or as ‘Cross-sector partnerships that address social issues’ (CSSPs) (Selsky and Parker 2005:1).

Figure 3: Cross Sector Partnership (Source Seitanidi.M, 2007)

One type of collaborative engagement is partnerships among business, government, and civil society—the three main societal sectors that address social issues and causes (Austin, 2000; Stone, 2000; Young, 1999). In these cross-sectors social-oriented partnerships, or CSSPs, organizations jointly address challenges such as economic development, education, health care, poverty alleviation, community capacity building, and environmental sustainability. According to Selky and Parker, 2005 CSSP’s is defined as, “Cross-sector projects formed explicitly to address social issues and causes that actively engage the partners on an ongoing basis. Such projects may be transactional– short-term, constrained and largely self-interest oriented or integrative (Austin, 2000 cited in Selky and Parker, 2005) and developmental—long-term, open-ended and largely common interest oriented” (Googins & Rochlin, 2000; Wymer & Samu, 2003 cited in Selky and Parker, 2005).

2.6.2. Selection of Partnership:

Partnership implementation does not begin after a strategy has been planned and designed, but is integral to its selection in the first place. The first phase of partnership implementation is therefore Partnership Selection, which commences with the decision to choose ‘partnership’ as the preferred associational form rather than other forms of community involvement (Seitanidi and Ryan, 2007). The selection of partnership done in this study is influenced by Selky and Parkers (2005) study on CSSP’s and as an operational device for this review, its division into four different grounds,

1)Represents partnerships between non-profit organizations and businesses that encompass social issues and causes. They tend to center on environmental issues and economic development initiatives but also address health, equity, and education issues.

2)Represents partnerships between governments and businesses. The main form here is the public-private partnership (e.g., Rosenau, 2000a). They tend not to concentrate directly on social issues or causes but on infrastructure development and public services such as water and electricity that have important social implications.

3)Represents partnerships between governments and non-profit organizations. This encompasses contracting out of public services and “third way” public policy approaches (Salamon, 1995). Studies in this arena tend to concentrate on job development and welfare.

4)Represents partnerships that involve actors from all three sectors. This arena focuses on large-scale national or international multi sector projects, but sub national projects are also included. Studies in this arena tend to focus on economic and community development, social services, environmental concerns, and health.

5)Represents transactional type of partnership, which may be described as a one way transfer of resources that is being termed as ‘partnership’ (Austin, 2000).

The partnership selection in this study consists of external stakeholder, which is Non-profit organisation in this case. The focus of this study will be only one type of Cross-sector partnership i.e. BUS-NPO Partnership, as described in the above arena no.1 which represent a brief explanation of BUS and NPO partnership.

The criteria employed to select the case were:

1)The scope of activities (international/national);

2)The purpose of the partnership (focusing on an environmental or social issue);

3)Type of resources exchanged across the partner organisations (financial/ nonfinancial);

4)the type of organisational reputation (a combination of three level scales of high–medium–low and positive–neutral–negative was employed based on the media content assessed for the original research)

5)The style of activity among the two organisations which here was constant (collaborative interaction) since the issue under examination was partnership implementation.

2.6.3. Defining the terms:

The focus of this study will be only on one type of partnership, i.e. NPO-BUS partnership with in a developing economy. It is important to discuss the terms that employed within the literature in order to justify their selection.

Non-Profit (NPO): Non-profit organizations are usually classified as either member serving (addressing the needs of only a select number of individuals) or public. The non-profit sector is a collection of entities that are organizations; private as opposed to governmental; non-profit distributing; self-governing; voluntary; and of public benefit. It often referred to as the third sector, independent sector, voluntary sector, philanthropic sector, social sector, tax-exempt sector, or the charitable sector (Learning to give, N.A).

Business (BUS): Business refers to a collection of individuals and structures grouped under the legal form of corporation in order to increase and maintain profit within particular spheres of interest (Seitanidi.M, 2010).

2.6.4. How is NPO/NGO understood in India?

India has a long tradition of volunteerism and charity. Movements for liberalisation, social reforms, welfare and development, and conscientisation per se have taken place in this country and continue to do so. During the latter part of the past century, there has been a tremendous increase in the number of civil society organizations in every part of the world. The growth in non-profit organizations (NPOs) and nongovernmental organizations (NGOs) have experienced exponential increase in the number and scope around the globe.

The long history of voluntarism has provided a plethora of terms to represent such entities: voluntary organisation, voluntary agency, philanthropic organisation, people’s organisation, community-based organisation, non-government organisation, non-profit organisation, etc. There have been efforts to define these terms. These have at least facilitated categorisation of the entire sector under two subdivisions: one is popularly called ‘intermediary organisation’ and the other ‘grass-roots organisation’. There are several theories that have attempted to explain the origin and growth of the voluntary sector. According to Sen (1993), the status of NPOs is described purely on the basis of their structure and operation, and not their purpose or their source of income. However the term NGO is negative and non-explanatory because it includes private sector organisations, development corporations, etc. According to the UN (1968), ‘NGOs are any of those organisations which are not part of a government and which have not been established as a result of an agreement between governments’ (UN, 1968, cited in Ravichandran.N, et.al , 2006).

In India a voluntary non-governmental or non-profit organisation is what the law says it is, it does not recognise the term “non-government” in any sense or context. According to the Indian National Accounts System there are only two sectors: public and private, and within the latter, business enterprises and households. Due to this there are no separate categories for NPO within private sector, which means that there are located in household sector. Hence the Indian National Accounts System prevents the use of definition for NPO, due to the absence of such category ( Ravichandran.N, et.al , 2006).

2.6.5. Stages of CSSP’s:

According to Selsky and Parker (2005: 854), CSSPs can be examined according to ‘chronological stages’. Using several studies done by different researchers the three stages of building a cross-sector partnership between BUS-NPO, under which several studies are incorporated are;

1) Formation

2) Implementation

3) Outcomes.

1). Formation: Trust is one of the formation stages of CSSP and is viewed as an input to collaborative relationship (Hardy, Philips, & Lawrence, 1998; Iyer, 2003). But trust may have different meanings in the corporate world and in the non-profit sectors (Parker & Selsky, 2004). In the corporate world the term trust is traditionally based on controlled contractual exchanges, and in the non-profit sectors it is based on solidarity with the mission or on shared

values (Parker & Selsky, 2004). According to Huxham and Vangen, 1996, there are three motivation levels behind this kind of partnerships:

a)Meta-goals or the common goals,

b)Goals of each partner,

c)Goals of specific individual involved.

Mostly goals of each partner are taken into consideration while doing a research. A frequent topic regarding the partner’s goal is that the goals of a Non-profit tend to be more altruistic (Milne et al., 1996), while the goals of the business may be to enhance corporate image, selling products, gathering social capital ect. (Alsop, 2004).

2. Implementation: Implementing a shared or common vision among independent actors (Gray, 1989) typically means developing a common culture held together by shared values, common interests, and clear communication(Selky and Parker, 2005). The shared meta-goal is one source of CSSP identity building (Hardy, 1994). There may be difficulties often arising while implementing partnership between two different sectors. To overcome these complications Westly and Vredenburg, 1991 suggest on focusing on the meta-goals, by realigning partners expectations. It is also very crucial to develop a clear communication between partners.

3. Outcomes: Outcomes of business-non-profit partnerships have been measured at three levels: direct impact on the issue and its stakeholders; impact on building capacity, knowledge, or reputational capital that can attract new resources; and influence on social policy or system change. Direct impacts are most frequently measured, and more often in businesses than in nonprofits (Selky and Parker, 2005).

2.6.6. Seitanidi’s Holistic Framework:

Most of the literature of cross-sector partnership focuses on its strategic use. Seitanidi’s Holistic Framework diverges the literature by examining if the partnerships can deliver benefits that extend beyond the organisational to the societal level resulting from the intentional combined efforts of the partners (Seitanidi, 2010).

The framework is very essential as it critically examines Selky and Parker’s ‘Chronological stages’ of partnership and allows observation beyond any single stage. Therefore, this study will adopt Seitanidi’s holistic framework (2010), in order to evaluate a relationship in a holistic way.

Chapter 3.

Company Profile

3.1. Company Profile:

ONGC is a Stated-Owned Company, which was incorporated in 1959. Its sale is Rs82.00 billion (US$4.52 billion), and it has 47,757 employees working with it (Reference for Business, 2010).

3.2. Background Information:

The Oil and Natural Gas Corporation (ONGC) is one of Asia’s largest companies involved in exploration and production of oil. It produces more than 77% of India’s domestic petroleum and more than 81% of natural gas. The Petroleum Intelligence Weekly ranked ONGC as the 32nd largest oil company in the world. ONGC has its operations spread all over the country, both on-land and offshore. ONGC has an extensive installed infrastructure of drilling and workout rigs, onshore/ offshore production facilities, well stimulation services, subsea and land pipelines, gas processing and fractionation facilities, refineries, exploration and transport vessels, storages facilities and other infrastructure located throughout the main oil and gas producing regions of India (Mital.A, 2008).

The main objective of ONGC as laid down under section14 of the ONGC Act 1959 reads as “ The commission shall plan, promote, organise and implement programmes for the development of petroleum resources and the production and sales of petroleum and petroleum products produced by it and to perform such functions as the central government may assign to the commission” (Singh. B.A, Singh. A, 2004).

3.3. History:

The importance of petroleum to India’s energy needs cannot be overstated. Currently, oil comprises approximately 34 percent of India’s total energy consumption and has been growing gradually as a share of the country’s energy consumption in recent years.

During the pre-independence period, the Assam Oil Company in the north-eastern and Attock Oil company in north-western part of the undivided India were the only oil companies producing oil in the country, with minimal exploration input. After independence, the national Government realized the importance of oil and gas for rapid industrial development and its strategic role in defence. Until 1955, private oil companies mainly carried out exploration of hydrocarbon resources of India. In Assam, the Assam Oil Company was producing oil at Digboi and the Oil India Ltd. was engaged in developing two newly discovered large fields Naharkatiya and Moran in Assam. In West Bengal, the Indo-Stanvac Petroleum project was engaged in exploration work. The vast sedimentary tract in other parts of India and adjoining offshore remained largely unexplored.

In 1955, Government of India decided to develop the oil and natural gas resources in the various regions of the country as part of the Public Sector development. With this objective, an Oil and Natural Gas Directorate was set up towards the end of 1955.

Soon, after the formation of the Oil and Natural Gas Directorate, it became apparent that it would not be possible for the Directorate with its limited financial and administrative powers as subordinate office of the Government, to function efficiently. The corporate history of ONGC began in 1956, with the mandate for exploration and production (E&P) of hydrocarbons in India. So in August, 1956, the Directorate was raised to the status of a commission with enhanced powers, although it continued to be under the government. In October 1959, the Commission was converted into a statutory body by an act of the Indian Parliament, which enhanced powers of the commission further. The main functions of the Oil and Natural Gas Commission subject to the provisions of the Act, were “to plan, promote, organize and implement programmes for development of Petroleum Resources and the production and sale of petroleum and petroleum products produced by it, and to perform such other functions as the Central Government may, from time to time, assign to it “.The act further outlined the activities and steps to be taken by ONGC in fulfilling its mandate.

In July 1991, the Government of India adopted liberalized economic policy which sought to de-regulate and de-license the core sectors including the petroleum sector. In 1993 after the adaptation of business of the former Oil & Natural Gas Commission to that of Oil & Natural Gas Corporation Limited, the Government disinvested 2 per cent of its shares. ONGC was thereof re-organised as a limited company under the company’s act 1956, in February 1994 (ONGC India Limited, 2009-2010).

3.4. Helping Hand 4 Cancer Care:

Helping hand for cancer care is a non-profit organisation which has grown out of Jaslok hospital. It is an initiative of Dr. Geeta. S.Advani and her husband Dr. Sh.H.Advani, an eminent medical oncologist. The organisation has been in existence from the past 6 years with the collaborative effort of the oncologists, oncology social workers, patients and their families and volunteers from all walks of life. Mobile Mammography breast clinic which aims to detect breast cancer at an early stage is the dream project of helping hand for cancer care. The literacy rate in India is low especially amongst women, which makes them unaware of diseases like breast cancer. Hence NGO like helping hand for cancer care help in spreading awareness of breast cancer in women between the age group of 40-70 years. The Mobile Mammography screening Van which runs all over Mumbai, is sponsored by ONGC. This initiative undertaken by ONGC and helping hand for cancer care is to teach and encourage the women for self breast examination which is necessary once a month (Helping Hand 4 Cancer Care, /).

Chapter4. Methodology

4.1. Introduction:

This chapter shall discuss the research methods available forthe study and what is applicable for it to use in response for research questions in chapter 1 which is directed towards the impact of Social Partnerships between ONGC and Helping Hand for Cancer Care.

Similarly, this chapter presents the various procedures and strategies in identifying sources for needed information on the analysis and evaluation of the Social Partnership.

Therefore this part of the study specifies the method of research used, research design, respondents of the study, data collection, conducted semi-structures interview, data representative and data analysis of the gathered data.

4.2. Methods of Research Used:

As there is no Quantification involved in this study, Qualitative research was utilized. ‘Qualitative Research means any type of research that produces findings not arrived by statistical procedures or other means of quantification’ (Strauss,A.,L., and Corbin. J.,1998). This research methodology is proven to be very important in the analysis of the relationship between business and society (Harrison and Freeman, 1999). In explaining qualitative research, Denzin and Lincoln state that, qualitative implies an emphasis on processes and meanings that are not rigorously examined, measured (if measured at all), in terms of quantity, amount, intensity, or frequency. Thus, there are instances, particularly in the social sciences, where researchers are interested in insight, discovery, and interpretation rather than hypothesis testing (Noor. K.B., 2008).

4.3. The Research Design:

In order to come up with the most suitable research approaches and strategies for this study, Saunders et al. (2003) the research process onion is used. With the said process, it is easy to create an outline on what measures are most appropriate to be applied in the study. According to Saunder’s et al 2003, the central issue on how to collect the data needed to answer the research questions, there are important layers of onion that needed to peeled away.

4.4 Research Philosophy:

The research philosophy used for this study is Critical Realism. Critical Realism sees not only to understand but also to explain the social world (Kasi.P.M., 2009:96). According to Bhaskar (1998:2) critical realism is

‘A specific form of realism whose manifesto is to recognize the reality of the natural order and the events and discourses of the social world and holds that we will only be able to understand and so change-the social world if we identify the structures at work that generate those events and discourses…..These structures are not spontaneously apparent in the observable pattern of events; they can only be identified through the practical and theoretical work of the social sciences’.

This study is a combination of various theories and practical information collected from ONGC and Helping Hand for Cancer Care patients, to identify the cross-sector partnership.

4.5.Research Approach:

Within Qualitative research, this study is based in an inductive design. According to Bryman and Bell (2007: 12), in an inductive method

‘the researcher infers the implications of his or her findings for the theory that prompted the whole exercise. The findings are fed back into the stock of theory and the research findings associated with a certain domain of enquiry.’

Observations/Findings Theory

Figure1: Induction theory

Source: Adopted from Bryman and Bell (2007), Business research methods, p.14

This study evaluates whether a specific cross-sector partnership between ONGC and Helping Hand for Cancer Care can be considered. This requires an in-depth understanding and exploration of the relevant literature needed.

4.6. Research Strategies:

According to Yin (1998) the term case refers to an event, an entity, an individual or even a unit of analysis. It is an empirical inquiry that investigates a contemporary phenomenon within its real life context using multiple sources of evidence. A single case is used for this study. Among other CSR partnerships of ONGC, only Helping Hand for Cancer Care Patients has been used to classify the social partnership between them. Hence the Case Study approach is the most suitable research strategy for this study. As said by Noor, (2008) case study is not intended as a study of the entire organisation, rather is intended to focus on a particular issue feature or unit of analysis. A case study is being concerned with the ‘how’ and ‘why’ questions, which allow the investigation of contextual realities and differences between what was planned and what, actually occurred (Anderson, G., 1993).

4.7. Data Collection Methods:

Data has been collected from a variety of sources, allowing for a number of different perspectives to be taken into consideration in the development of the recommendations.

Secondary Research:

This study would be incomplete without secondary research. According to Stewart D. W, and Kamins M.A, (1993) ‘Secondary information consists of sources of data and other information collected by others and archived in some other form’.This data collection method is quicker, inexpensive and at most times a point of departure for primary research.

For this study, the secondary data was collected from written documents such as company reports, other documents, and online information. Other information which structure the theory were journals, books, other policy documents, and reviews complement the study.

Primary Research:

Primary Data is any information collected specifically for the investigation at hand (Boone et al, 2007). The primary data for this study is gathered by conducting Semi-Structured interview. Semi-structured interview is one of the principal methods for collecting primary data. The choice of semi-structured interview rather than any other data collection method was employed because it is non-standardised and offers more flexibility to approach different respondents differently while still covering the same areas of data collection.

With the permission of the participants the interviews were tape-recorded for the insurance that all data will be noted.

Respondents of the study:

In this study from the ONGC side the respondents’ were the H.R. Manager of ONGC, the retired officer of the CSR department, the General Manager and the interns of the CSR department for the interview.

While from Helping Hand for Cancer care patients the respondents’ for the interview were one of the Doctors, A trusty of the NPO and a few patients.

4.8. Data Analysis of Methods:

The most commonly used qualitative analysis approach in the domain of social science is the organisation of data according to topics, ideas or concepts often called themes (Swanwic. T., 2010). The method of analysis chosen for this study was Thematic Analysis which is a process for encoding qualitative research (Boyatzis, 1998). According to Kellehear et al (1997), thematic analysis is a search for themes that appear as being vital to the description of the phenomenon. It is a form of pattern recognition within the data, where emerging themes become the categories for analysis (Fereday. J.,Muir-Cochrane.E., 2006). As the primary data for this research was qualitative, thematic analysis was found to be the most suitable, as its focal point is to recognize themes and patterns of behaviour (Aronson, 1994).

Chapter 5. Data Analysis & Discussions

5.1. Introduction:

This chapter will present and discuss the findings by employing the Holistic frame work laid down by Seitanidi, (2010) and Chronological Stages described by Selsky and Parker (2005).More specifically; the findings will be grouped through the application of the framework.

5.2. Application of the Frame work:

According to Seitanidi’s (2010) Holistic frame work and the Chronological stages as mentioned in the literature review, there are three stages of a partnership.

1).Partnership Formation stage:

The Formation stage of the social partnership consists of a set of construct.

Formation Stage

Organisational Character Historical Evolution Motives

Of the relationship

A}. Organisational Characteristics:

In this section the structure of each organisation under examination before the collaboration will be presented, based on each organisation’s characteristics. Since, it is possible that the structure of an organisation affects its relationships.

ONGC is a leading public sector company of oil and natural gas engaged in E&P (Exploration and Production) activities in India. It is a state owned company; hence the Indian Government has the majority of stake in the company. The Government together with two states energy firms maintain an 84.11% in O.N.G.C. (Ganguly, S. 2007). O.N.G.C has a 47,757 employees working with it, and its sales is more than 4.52 billion $.

O.N.G.C. Organisational Chart

Source: O.N.G.C. official website 2009-2010.

Available at : http://www.ongcindia.com/organogram.asp

It has a hierarchical organisational structure rather than flat. It means that it has more layers of management and a more formal leadership style (Berger et al., 2004). The benefits of this type of structure are the quick decisiveness and action by the powerful people ((Berger et al., 2004).

ONGC’s very first Sustainability Report was produced in2009-2010. On the basis of this report, a CSR guidelines report was also made in July 2009. According to these guidelines report, their new CSR approach emphasised on transformation of CSR from ‘Philanthropy’ to ‘Stakeholder Participation’

http://www.ongcindia.com/%5Cdownload%5CCorp%20Sust%20Report%5CONGC_Sustainability_Report_2009-10.pdf.

ONGC is spearheading the United Nations Global Compact – World’s biggest corporate citizenship initiative to bring Industry, UN bodies, NGOs, Civil societies and corporate on the same platform (http://www.ongcindia.com/people.asp).

Helping Hand for Cancer Care:

It is an NPO established in 2002, and formed as a registered organisation in 2005. It is an initiative for helping patients’ surviving from cancer. Its dream project is to have more Mobile Mammography clinic for the early detection of breast cancer in Indian Women. While interviewing a member of the NPO, it was stated that:

“The helping Hand is doing a stupendous job in bringing for the masses a costly test for breast cancer detection at affordable rates so the Breast cancer detection reaches out to a large population”.

In spite of the progress India is making, the literacy rate among women is relatively low, which makes them unaware about the health issues. The mobile mammography clinics make it easier to reach the mass audience and spread awareness. This is clearly stated from a Dr. Working for the NPO

“This initiative of Mobile Mammography and Cancer awareness is an excellent media to spread the message of awareness for the early detection and prompt diagnosis for early management of Breast cancer. The impact it leaves behind among the common masses after the camp is tremendous.”

Organisational Chart

Source: Help for cancer care org.

Available at: http://www.helpforcancercare.org/Meet%20the%20Team.html

The organisational chart of this NPO is small and hierarchical in structure. According to Berger et al., (2004), the smaller the NPO, the more flexible, energetic and eager it will be. They may also appear to be more accommodating to the company, more malleable, more willing to accept risk, and more likely to offer exclusivity. It is more like a small team joining hands for a common cause.

B}. Historical Evolution of the relationship:

ONGC has CSR projects like undertaking villages, developing schools, hospitals ect in parts of the rural India. But in a city like Mumbai, where it has its head office, development of schools and hospitals was not needed. Hence it wanted a partner who needed their help in one of the CSR areas in which ONGC is involved.

Helping Hand for cancer care served ONGC’s CSR needs in the health sector. The NPO was suggested by the Additional Chief Medical General of ONGC, as he had consulted and worked with the NPO before.

As stated by him,

“Helping hand is professionally managed NPO which is serving the community and the poorer section of the society for early detection of Breast cancer.”

According to Seitanidi. M.(2010) the historical evolution of a pre-existing relationship can be either due to previous interaction between partners which included collaboration regional offices or consultation on special issues.

The formation of the partnership took place in 2009. A simple MOU was signed by both the partners. The agreement was to donate a mobile mammography clinic to the NPO for fighting breast cancer.

C}. Motives associated with each partner:

To set a particular criterion for a partnership selection, it includes a number of factors which enable the decision to partner with a particular organisation. Partner motivation is one of the frequent topics of discussion in the formation stage. Motivational differences are said to derail collaborative intent (Selky & Parker, 2005).

Regarding the motives of each organisation, in term of ONGC which is a state owned company, the motives were;

1). Firstly to involve ‘stakeholder participation’. NGO/NPO has always been one of the stakeholders. Hence the participation of an NPO was necessary and it also lead to the indirect participation of people at the grass root level.

2). To enhance organisation’s reputation (Seitanidi, M. 2010).

3). Seeking synergy with the partner who can support in the delivery of the goals.

4). Cost- effective relationship (Seitanidi, M. 2010).

5). Covering similar geographical area.

According to Iyer (2003) a common motive for a BUS is to pursue self-interest like enhancing corporate image (Alsop, 2004; Zammit, 2004). The motives of some organisation also tend to examine the effects of internal and external stakeholders. In this case, ONGC views stakeholder management as a means to an end (Sleky & Parker, 2005).

In most of the case studies, the motives of the non-profit tend to be altruistic in nature (Milne et al., 1996). Along with this, the NPO may also view their partnership with the BUS as a way to influence the society and to become important intuitional actors (Doh & Teegen, 2002).

In the case of Helping Hand for cancer care, the motives were;

1).To enhances organisation reputation.

2). Financial support in order to increase its activities.

3). Reaching as many people as possible and covering similar geographical area.

4). To encourage and educate the women.

From the findings of each organisation’s characteristics and each party’s motives, it can be argued that, ONGC’s collaborates with the NPO is for enhancing organisation image. Due to loss of public confidence towards the governmentin India and changes in the philanthropic giving’s (Weisbrod, 1997), it was necessary to enhance partnership with a private NPO like Helping Hand for Cancer Care.

While the NPO perspective is to seek financial help, make a social change at a bigger platform through the help of partnership and improve organisation reputation.

2). Partnership Implementation stage:

Moving towards the second stage of a relationship, the implementation stage here the objective is to investigate the evolution of the dynamics between the two organisations and to identify the phases of the partnership process (Seitanidi, 2010). The Holistic framework of Seitanidi involves three stages of partnership implementation;

Implementation Stage

Partnership PartnershipPartnership

Selection Designinstitutionalisation

A}. Partnership Selection:

The partnership selection stage is the first step of partnership implementation. It commences with the decision to choose partnership as a preferred form of association. As ONGC’s CSR policies have changed from Philanthropic to stakeholder participation, it is clear that social partnership is the ideal form of association.

B}. Partnership Design:

The second phase is to identify the design of the partnership. There are many sub-sections involved in the designing procedure, among which only a few are utilized in this partnership.

This stage involves experimentation with partnership relation, like drafting a Memorandum of Understanding (MOU) and setting up partnership objectives (Seitanidi, 2008). An MOU was also drafted in case of ONGC and helping hand for cancer. The MOU was also necessary as a part of the government policy. Another area of partnership design is the partnership structure which involves several departments. In this study, as seen in the organisational structure the medical department fall under the H.R. department. The NPO was bought in by the medical department, while the documentation work was done by the H.R. department and the implementation was carry forwarded by the corporate communication department.

To summarize, although this partnership has undergone the experimentation and partnership structure phase, the partnership design is not completed. One of the most crucial phases is the ‘Virtual team’ (Seitanidi, 2008). This phase comprises a team of people from the BUS to help in the smooth functioning of the NPO. This leads to the ultimate adaption of the partnership. Hence this relationship went one step back and instead of strengthening its interactions, they separated their activities.

C}. Partnership Institutionalisation:

Reaching to a partnership institutionalisation stage is a long process. The relationship has to pass a few tests for a partnership to reach the institutionalisation stage. The first stage is known as ‘Relationship mastering’ stage. It means that although a crisis may occur, it can be resolved rather than cause a serious problem in the relationship (Seitanidi, 2010). The second stage involves familiarisation on personal level rather than just organisational level. This stage is known as the ‘Personal Familiarisation’ Seitanidi, 2008).

The relationship in this study as stated before is formed by the advice of the Additional Medical officer of ONGC, who had worked with the NPO before. Hence there is evidence of personal familiarisation in this partnership. But the partnership did not pass the relationship mastering stage.

To conclude with, the partnership in this study did not pass all the levels of the designing stage. As the level of familiarity was long before the formation stage, it can be argued that this relationship did not begin at the ‘selection process’ (Seitanidi, 2010). The design and institutionalisation stages are not completely passed by the organisations. The ‘Virtual Team’ phase could be relevant both the stages which could smoothen the relationship and pass the partnership designing stage completely.

The dynamics of this relationship involve the level of interaction between the organisations (Seitanidi,2008). According to Le Ber and Branzei (2010), (cited in Yaziji and Doh, 2009) if the BUS and NPO have a high level of engagement and interact frequently, than the strategic value of the partnership is also high. This leads to a more resourceful cross-sector partnership (Rondinelli and London, 2003). Although there seem to be clear communication between the two organisations in this study, it was more in an informal way. This resulted in lack of integration at some levels.

3).The Partnership Outcomes:

The outcomes of the BUS-NPO partnership have been measured at three levels: Organisation, Social, and Societal benefits (Selky, 2005) (Seitanidi, 2010). Although the partnership didn’t go through all the stages successfully, the outcomes of the partnership were benefitted to all. The motives and goals which each organisation had planned were achieved through this partnership.

The outcomes achieved by BUS:

1} ONGC has built a very health corporate reputation in terms of business and community involvement. This kind of CSR practice was taken up for the first time. This relationship did the work of filling up the gap of communication between the stakeholders and people at grass root level (Selky, 2005). This has enhanced the reputation of ONGC even more.

2} ONGC spends 16.5% in the health care sector; hence it needed a partner in this sector only. It has developed few cancer care hospitals in Assam and other parts of India. But setting up a hospital in a city like Mumbai would take a huge investment. Hence it joins hand with helping hand for cancer care for a cost-effective relationship.

3} To spread awareness among women of breast cancer.

The outcomes achieved by the NPO:

1} The financial support given by ONGC, helped to accomplish a very important dream of having a Mobile mammography clinic to help breast cancer.

2} After having a partnership with ONGC, it started bring recognised as a serious NPO, as it got more associates to help them. It also has a trust, which helps in giving finance to deprived people for cancer operation and treatments.

3} It also helped in improving its facilities and increasing public awareness. Now it also has its own Yoga centre for Cancer patients.

4} Along with all this, there were many successful stories of pre-medical treatment and recovery of cancer patients.

“…. It is a very inspirational organisation, which is working for a very noble cause. Breast cancer in India has been ignored a lot”. (A patient from the NPO).

Another outcome which both the organisation gained was the learning outcome. According to Waddell (1999) and London et al., (2005) learning is an important outcome in the cross-sector partnership. The learning process of ONGC started when it shifted its CSR policies from philanthropic to stake holder participation. After the transformation in the CSR policies, the partnership between ONGC and Helping Hand for cancer care was the first to be formed. Hence there were many flaws in it. The first learning outcome for the BUS was to develop more interpersonal skills which would make the partnership more resourceful, social learning that can lead to needed innovation (Waddell, 1999).To be involved in the partnership till the end.

The NPO learned the administrative skills, technical skills. Along with this they also learned that traditional sectors solutions cannot address certain challenges and therefore form social partnership to enhance learning and borrowing from organisations in other sectors.

To conclude this, although the partnership did not go through all the stages successfully, it had a positive outcome. According to Seitanidi (2010), societal outcomes ‘refer to the unique benefits that accrue for society through the partnership relationship’. The partnership helped in spreading awareness about breast cancer in women, along with this through the help of this partnership the NPO got recognition which helped it develop the yoga centre and the give financial aid to the poor cancer patients. In this respect even though the partnership may not be the kind of social partnership described in the theories, its foundation still has a lot of positive societal outcomes.

Chapter 6. Conclusion

Conclusion:

The concluding chapter of this research will assess the study as a whole. It will provide a brief summary of the findings. It will also identify whether the relationship can be considered as a partnership.

6.1. Summary of the Dissertation:

There is a lot of literature available in regard to CSR. But in spite of this, CSR is relatively a new approach to corporate management (Campbell, L., J. 2006). Different writers have suggested different approaches and meanings of CSR. One of the most discussed and important approach is the Cross-sector partnership. It is a partnership between Businesses-Government- Social sector.

This dissertation aims to evaluate the cross-sector partnership between a BUS (ONGC) and an NPO (Helping Hand for Cancer Care) in India. This partnership will be evaluated with the help of the Seitanidi’s holistic framework (2010) because Seitanidi was the first one to have an in-depth study of the stages of cross-sector partnership. The stages have also been identified by Selky and Parker (2005). But the Holistic framework provides a much clear view to analysis the partnership.

The literature review of this study discuss the practices and concepts in India, examine the cross-sector partnership according to Seitanidi, (2007), it also explains the stages of cross-sector partnership. As far as methodological approach is concerned, this study used an inductive qualitative research, with both primary and secondary data that were analysed through the utilisation of a thematic analysis.

6.2. Identification of the Partnership:

The partnerships between BUS and NPO share a high level of social legitimacy, because of the importance given to cooperation and mutuality (Seitanidi 2006). Hence these kinds of relationship have the potential to meet the demands faced by both sectors. But on a conceptual and practical level the implementation of partnership remains problematic (Mohiddin 1998).

According to Kumar et al., (2001) the primary focus of CSR in India is to identify ‘how to carry out CSR’, which often lead to conflicting findings on related practices.

The literature of this study identifies four models of CSR suggested by a survey of TERI foundation; Ethical model, Statist Model, Liberal model and the stakeholder model. The CSR structure of ONGC is based on the Stakeholder model. The identification and involvement of the stake holder (NPO) is present in the relationship, but the interaction level between the organisations is relatively low and so is the participation of ONGC in the activities of CSR. As stated by Hakansson and Ford, (2002) ‘A relationship development is a matter of joint action and it is always necessary to mobilize the other organisation in the process’.

As per the findings of the literature provided in this dissertation, it is identified that the partnership between ONGC and helping hand for cancer care cannot be considered a full-fledged partnership. According to the data collected with the application of the Holistic framework, the partnership has gone through the formation and outcome stage but has not completely passed the implementation stage.

Due to the failure of not passing the stages, the partnership according to Austin (2000), may merely be another transactional type of relationship.

A research by Googins and Rochlin (2000), identifies this type of partnership.

‘In U.S. 140,000 such ‘partnerships’ were formed in theUS by the 1990s, centred on educational improvement, the nature of these so called partnerships might in reality be better described as enduring transactions: The number [of partnerships] appears overwhelming, and the potential for change in the U.S. education system seems vast. It takes just modest investigation to determine that most of these engagements are about a one-way transfer of resources- i.e., a corporate benefactor provides some Dollars and used supplies to a needy school. As such this does not appear to satisfy the intuitive conditions of ‘true partnership’ between the sectors (Googins and Rochlin 2000: 132) ‘.

To conclude this, even in spite of the positive outcomes, the relationship seemed to be transactional, because of the level of interaction and the voluntary effort from the BUS side. The partnership can only be completed when both the organisations not only share their resources, but also work together. To put this in practical, the NPO’s in future must empower themselves which will further assist in prioritising the process and the intermediate nature of the interaction as a source of change that might lead to more symmetry (Seitanidi, 2007).

Recommendations for implementing CSR

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Business environment

Introduction

generally th it is to be understood by saying business environment is that circumstanse where business runs or do its operations generally business environment can be divided in tow sectors one of them is external environmentswhich is known as PESTEL to academics another is internal environment which is more familiar as SWOT.

Business environment show two kind of environment of business. Richman & Copensaysthat the most important two part of business environment is External environment and internal environment. Lanworthington and chrisbritton say two kind of environment are Macro and micro environment of business environment.

Internal Environment:

Business has got an internal environment that was first identified by French physiologist Claude Bernard (1813–78), Adrian palmer & Bob Hartley rightly said Micro environment and Macro environment is the part of internal environment. Richman and Copen, mention that Primary Activities and Support Activities are the part of internal environment.

Macro Environment

It is to be understood by macro environment is the outer elements of the business such as political, economical, social and so on, for most of the cases business has no control on macro environment.

Political Environment

Political environment has an important impact on the business. Political environment is not stable and can change quickly. The political environment in which the firm operates (or plan to operate) will have a significant impact on a company’s international marketing activities. The greater the level of involvement in a foreign markets, the greater the need to monitor the political climate of the countries business is conducted. Changes in government often result in changes in policy and attitudes towards foreign business.

Adrian palmer & Bob Hartley explain Political environment include PEST

Political System: The basic role of a political system is to integrate the parts of a society into a viable functioning unit, bringing together people of different ethnic or other backgrounds and allow them to work together to govern themselves. Political systems are founded upon political policies, which are established by combining different points of view that are articulated by key constituencies, such as politicians, businesses, or other special-interest groups.1.Totalitarian state, 2.Democratic State
Economic forecast: Business is a micro economic unit. The only function of economic forecasting is to make astrology look respectable. John Kenneth Galbraith
US (Canadian-born) administrator & economist (1908 – 2006)
Social forecast: The term Social Forecasting is not a recent addition to business vocabulary. The use of social forecasting stems from recognition that social pressures are becoming an increasing determinant for the success of any organization. The various indicators indicate that the society will be experiencing a total change in next few years. Some of these changes have to be anticipated and must be incorporated in any long-range plans of an organization. Economic forecasting is essentially concerned with modelling how people behave using financial criteria as a means for maximising welfare. It is dependent on certain assumption of people behaviour. Elements for social forecast is1.Identification of important phenomenon, 2.Selection of phenomena for deeper study, 3.A system of measurement, 4.A time-scale
Technology: Information technology refers to the management and use of information using computer-based tools. It includes acquiring, processing, storing, and distributing information. Most commonly it is a term used to refer to business applications of computer technology, rather than scientific applications. The term is used broadly in business to refer to anything that ties into the use of computers.

The Socio-Cultural Environment

This is perhaps the most difficult element of the macro-environment to evaluate, manifesting itself in changing tastes, purchasing behavior and changing priorities. The type of goods and services demanded by consumers is a function of their social conditioning and their consequent attitudes and beliefs.

Core cultural values are those firmly established within a society and are therefore difficult to change. They are perpetuated through family, the church, education and the institutions of society and act as relatively fixed parameters within which marketing firms are forced to operate. Secondary cultural values, however, tend to be less strong and therefore more likely to undergo change. Generally, social change is preceded by changes over time in a society’s secondary cultural values, for example the change in social attitude towards credit. As recently as the 1960s, personal credit, or hire purchase as is sometimes known, was generally frowned upon and people having such arrangements tended not to discuss it in public. Today, offering instant credit has become an integral part of marketing, with many of us regularly using credit cards and store accounts. Indeed, for many people it is often the availability and terms of credit offered that are major factors in deciding to purchase a particular product.

The Technological Environment

One example of how technological change has affected marketing activities is in the development of electronic point of sale (EPOS) data capture at the retail level. The ‘laser checkout’ reads a bar code on the product being purchased and stores information that is used to analyze sales and re-order stock, as well as giving customers a printed readout of what they have purchased and the price charged. Manufacturers of fast-moving consumer goods, particularly packaged grocery products, have been forced to respond to these technological innovations by incorporating bar codes on their product labels or packaging. In this way, a change in the technological environment has affected the products and services that firms produce and the way in which firms carry out their business operations.

So technology, has an great impact business its potential for the business to updated with the technology all the tme

Micro Environment

Customers

Organizations survive on the basis of meeting the needs, wants and providing benefits for their customers. Failure to do so will result in a failed business strategy.

Employees

The main element of micro environment is employees because it the force which move other resources of the organization, they have the controlling power of mobility.

Suppliers

su

Figure 1Micro Environmental Factor/Stakeholder Analysis

Supplier got the bargain power , that is why they are potential to the business. The have the power of controlling demands. Good relationship with supplier may facilitate business development.

Shareholders

Share holders for the public limited company and private limited company`s are important, because by law they are the partial owner of the organization, as result the got the voting power to select the governing comity those who run the business on their behalf.

Media

Positive or adverse media attention on an organizations product or service can in some cases make or break an organization. Consumer programmers with a wider and more direct audience can also have a very powerful and positive impact, forcing organizations to change their tactics.

Competitors

Business rivals are need to be consider in business environment, because their strategic plan promotion and policy affects the organization.

External Environment

A business does not function in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as external factors or influences. These will affect the main internal functions of the business and possibly the objectives of the business and its strategies.

Main Factors

The main factor that affects most business is the degree of competition – how fiercely other businesses compete with the products that another business makes.

The other factors that can affect the business are:

Social – ultimate’s buyer, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population.

Legal –new legislation in society affects the business. E.g. changes in employment laws on working hours.

Economic –economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and European and global economic factors.

Political – changes in government policy might affect the business e.g. a decision to subsidies building new houses in an area could be good for a local brick works.

Technological – rapid pace of change in production processes and product innovation affect a business.

Ethical – what is regarded as morally right or wrong for a business to doFor instance should it trade with countries which have a poor record on human rights?

Changing External Environment

Markets are changing all the time. It does depend on the type of product the business produces, however a business needs to react or lose customers.

Some of the main reasons why markets change rapidly:

Customers develop new needs and wants.
New competitors enter a market.
New technologies mean that new products can be made.
A world or countrywide event happen e.g. Gulf War or foot and mouth disease.
Government introduces new legislation e.g. increases minimum wage.

Business and Competition

Though a business does not want competition from other businesses, inevitably most will face a degree of competition.

The amount and type of competition depends on the market the business operates in:

Many small rival businesses – e.g. a shopping mall or city centre arcade – close rivalry.
A few large rival firms – e.g. washing powder or Coke and Pepsi.
A rapidly changing market – e.g. where the technology is being developed very quickly the mobile phone market.

A business could react to an increase in competition (e.g. a launch of rival product) in the following ways:

Cut prices (but can reduce profits)
Improve quality (but increases costs)
Spend more on promotion (e.g. do more advertising, increase brand loyalty; but costs money)
Cut costs, e.g. use cheaper materials, make some workers redundan

Social Environment and Responsibility

Social change is when the people in the community adjust their attitudes to way they live. Businesses will need to adjust their products to meet these changes, e.g. taking sugar out of children’s drinks, because parents feel their children are having too much sugar in their diets.

The business also needs to be aware of their social responsibilities. These are the way they act towards the different parts of society that they come into contact with.

Legislation covers a number of the areas of responsibility that a business has with its customers, employees and other businesses. It is also important to consider the effects a business can have on the local community. These are known as the social benefits and social costs.

Conclusion

The topic was about Business Environment. Topic gives a brief of Internal and external environment and some critical analysis of them. Differentissue stand base of topics. How business environment runwhat r the process What based on business environment?

These were the assignment was about.

Bibliography
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The business and marketing environment / Adrian Palmer and Bob Hartley London; New York: McGraw-Hill, c1996. Xiii, 340 p.: ill. ; 25 cm. Bib ID- 2721834.
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“Developing Your Strategic SWOT Analysis.” Austrainer. 1999. http://www.austrainer.com/archives/1397.htm. (5 Dec. 1999).
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The Impact of Tax Havens on Business Decision-making

Introduction

OECD’s initiatives have exemplified that tax havens have attracted more and more attention in recent years (OECD, 1998, 2000, 2004). Compared with nonhaven countries, tax havens have lower levels of corruption, better political and legal systems, and that they could defer or reduce tax liabilities to other countries through strategic use of debt among subsidiaries or transfer prices strategy. A 100% owned abroad subsidiary of a multinational company (MNC) can manipulate their interests, management fees, transfer prices and royalties charges, which can cause the subsidiary to avoid some tax payments in home country.

Generally, a MNC could minimize taxable income arising in high tax countries, increase investments in low tax countries to reduce the average tax rate on their profits, or in order to delay the investment income from high tax jurisdictions, they could keep these earnings in a very low-tax country before they are used (Miller and Oats, 2009). If firms can get low tax rates abroad, they may not bring the money back to their home countries which have high tax rate, as a result, when the MNC recycles its foreign profits arising abroad, these earnings could be exempted from being retained earnings or foreign borrowings. Tax havens could be used as a means to protect portfolio gains from foreign direct investment profits. This is mainly because the infrastructure in tax havens is much more suitable to mobile portfolio income. This paper through analyzing three aspects of tax havens: its characteristics; its role in international market; the practical uses, mainly explains the impact of tax havens on business decision-making.

Characteristics of Tax Havens

Actually, the definition of tax havens still hasn’t been defined standard. Typically, in tax havens foreign investors can enjoy very favorable tax regimes, such as low or nil withholding tax rates or corporate tax rates on all or certain categories of income. In recent years, although the national tax group shares more and more kinds of information, another feature of tax havens – bank or commercial secrecy laws – is still very significant.

Tax havens are low-tax jurisdictions, and in these areas investors have opportunities to get tax avoidance. No matter in what shape or form of tax havens, these countries and jurisdictions try to gain competitive advantages in commercial competitions through their particular tax systems. These tax havens are often recognized as offshore financial centers, which usually means “any shifting of funds out of the country of taxpayer residence for tax planning or tax evasion purposes” (Miller and Oats, 2009, p226). In offshore financial centers transactions with non-residents often exceed the related domestic transactions to a large extend (Dixon 2001, as cited in Miller and Oats, 2009, p225). These offshore financial centers normally have favorable regulatory system, legal environment and tax regime; MNCs perhaps adopt new financial products quickly and flexibly in the favorable legal environment.

Dharmapala and Hines (2006) illustrate some characteristics of tax havens compared with nonhavens. In general, tax havens countries or territories are virtually wealthier than nonhavens. They usually have smaller population size, and their geographical characteristics are more likely to be islands with scarce natural resources, which can easily lead to economic openness. They also have substantial differences from nonhavens in legal origins and political institutions. Typically, tax havens have stronger governance institutions than comparable non-haven countries, and they are more likely to be dependent territories, have better legal and political systems. The examples of tax havens jurisdictions include Hong Kong and Singapore in Asia, Luxembourg and Ireland in Europe, and some Caribbean island nations in the Americas, and that within some countries there are also low-tax jurisdictions, for example special economic regions in China.

The Gordon Report, prepared for the US Treasury in 1981, states some more characteristics of tax havens. Income and capital in tax havens countries usually can get lower or zero tax rate and banking or commercial secrecy provides some opportunities to tax avoidance and/or tax evasion. There is no exchange control, but it provides a provision of offshore banking facilities. Additionally, tax havens often have good communication facilities and political stability; they can provide an opportunity for multilateral tax planning. Foreign capital in these countries can get favorable disposition; professional advisers are always available for foreign investors. Furthermore, their convenient locations and decent communications climates, especially the freedom from excessive regulations,

The Role of Tax Havens in International Market

There is a traditional “negative” view that tax havens play a disproportionate role in the world’s foreign direct investment (FDI) (Slemrod and Wilson, 2006), however, an emerging “positive” opinion of havens implies that their existence may not make high-tax countries get worse (Hines, 2006, 2007; Hong and Smart, 2007). High-tax countries may tax immobile firms more heavily, but tax havens impose lower tax rates on highly mobile firms. Given all other considerations equal, tax policies can affect MNCs’ FDI; lower tax rates could increase after-tax returns, thereby increasing investment funds. Generally, tax havens don’t have the responsibilities to provide the same function for all MNCs. The larger tax haven jurisdictions are (given the sizes of local economies), the greater opportunities taxpayers have to locate taxable profits.

The same investment activities in countries with different tax rates may get very different opportunities for tax avoidance. MNCs can achieve tax avoidance in various manners, such as intrafirm trade, dividend repatriations, royalty payments, and intrafirm debt. Many enterprises use transfer prices within business transactions to reduce their overall tax burden, in fact, this approach is being widely suspected. MNCs typically can obtain certain benefits from allowing affiliates in high-tax countries to reduce the prices of goods and services provided to affiliates in low-tax countries. Transfer prices may be paid by groups not related to these transactions, however, when pricing issues relate to some special proprietary and differentiation provisions, this situation is getting to be quite complicated. Because of some legal looseness firms completely can adjust transfer prices without violating any laws.

According to Hines and Rice (1994), tax havens can be used by MNCs to gain profits away from high-tax countries, but can also help to repatriate taxes from activities in low-tax jurisdictions. For mitigating double taxation a country can provide some credits to MNCs and use deferral policies before profits are repatriated. As a result, this approach may increase this country’s tax liabilities when repatriating profits earned in low-tax jurisdictions. Altshuler and Grubert (2003) state that through kinds of ownership arrangements tax havens can make deferral of repatriation taxes available.

Practical Uses of Tax Havens

A former employee of a Liechtenstein bank sold business information to Germany’s tax authorities, in February 2008 this international scandal was exposed. This news made some German residents being prosecuted for tax evasion, and meanwhile it attracted tax havens’ more attention on tax evasion issues, because some individuals use tax havens to avoid home country taxes illegally. Countries with income tax systems tax their residents’ overseas earnings, such as the interest, dividends and capital gains, whereas tax payers can evade these taxes because of some loopholds in bank secrecy laws. If foreign individuals don’t report their income arising in tax havens countries to their home country, their home country won’t know this income, because bank secrecy in tax haven countries will not provide information about these earnings to home country (Desai, Foley and Hines, 2004).

As a general matter, individuals’ use of havens can be evaluated by foreign portfolio investment (FPI). International portfolio diversification provides insurance against the economic risks from investor’s home country, so investors can get substantial gains (French and Poterba, 1991). Investors have many nontax advantages for international diversification in tax havens, whereas they have to spend some efficiency costs on the benefits of FPI. For the purpose of evasion more and more investors locate their portfolios abroad, however, the issues of fairness and confidence in the tax system is undermined (Desai, Foley and Hines, 2006a). The costs caused by individuals’ use of tax havens largely depend on the degree of tax evasion. Some significant amounts of revenues are lost by countries as a result of illegal tax evasion through havens.

Firms also invest large amounts in tax havens, but the firms using of havens may be quite different from individuals. The firms, which prefer to operate in tax havens, are most active abroad, technology-intensive and with extensive intrafirm trade, and these firms always are large MNCs. In order to get tax avoidance in tax haven operations, these firms could allocate taxable income away from high-tax jurisdictions. In larger tax haven jurisdictions the firms primarily reallocate taxable income, whereas in smaller tax haven countries the primary use of these firms is to facilitate deferral of home country taxation of foreign income. If a tax haven operation could generate a 1.5 to two percent greater sales and investment growth, in non-haven countries it’s only one percent greater likelihood (Desai, Foley and Hines, 2006b). Generally, these firms are not seeking to evade home country corporate taxes; they use tax havens for getting tax planning activities and tax avoidance legally.

MNCs can use havens to defer or reduce their tax liabilities to other governments. Most nonhaven countries have two approaches to taxing their resident corporations’ overseas income: a “worldwide” system (used by the US, the UK and Japan) provides a foreign tax credit (FTC) for taxes paid to foreign governments to avoid the double taxation; a “territorial” system (used by most capital exporting countries, such as Germany and the Netherlands) exempts abroad income from home country taxation (Hong and Smart, 2007). For MNCs in territorial countries, income from the home country or some other high-tax country could be reallocated to a tax haven. Actually, a worldwide system is not pure, for example the US allows the taxation of overseas earnings to be deferred until these earnings are “repatriated” to the US. Moreover, the tax paid to the tax haven government is low or nil, thus, MNCs based in countries prefer to use tax havens to reduce or defer their tax liabilities, and they can use of debt among affiliates and transfer pricing to achieve this aim.

When subsidiaries of a MNC trade between themselves, the prices they used can affect the allocation of the MNCs’ income within different jurisdictions. Governments generally ask firms to use “arm’s-length” prices; however, arm’s-length markets may don’t exist for some transactions. Take intellectual property for example, subsidiaries of same MNC can choose the place to locate research and development activities in order to attract other subsidiaries’ royalty payments into lower-tax countries; or MNCs can also have affiliates in tax havens lend to affiliates in high-tax jurisdictions. This “interest stripping” or “earnings stripping” generates interest deductions in high-tax jurisdictions and makes interest payments flowing towards low-tax jurisdictions (Desai and Dharmapala, 2006). Though governments impose some restrictions on capital structure to restrict this situation, apparently it’s less successful.

Conclusion

In many countries the governments make policies to reduce the tax burden of their residents, but they cannot make people avoid taxes totally. If the exemption method of taxation is used simply, the residents may pay nothing on their income arising in a tax heaven country. Thus, there is a limited relief on the income from tax haven countries. The firms in tax haven countries could reallocate taxable income earned in high-tax jurisdictions and defer repatriation taxes on income from low-tax jurisdictions. Operations of MNCs in tax haven countries can be treated as part of their international tax avoidance strategies. Tax havens usually attract MNCs to establish affiliates there, and high R&D industries and intrafirm trades with large volumes prefer to invest there as well. Presumably, larger tax haven countries are likely more suitable for subsidiaries to reallocate income, and to reflect the effects of transfer pricing enforcement. Apparently, firms investing abroad at faster rates are more likely to establish new tax haven operations to avoid taxes.

References

Altshuler, R. and Harry, G. (2003) Repatriation taxes, repatriation strategies and multinational financial policy. Journal of Public Economics, 87 (73)-107

Desai, M. A., Foley, C. F. and Hines, J. R., Jr. (2004) Economic Effects of Regional Tax Havens. NBER Working Paper, No. 10806

Desai, M. A., Foley, C. F. and Hines, J. R., Jr. (2006a) The Demand for Tax Haven Operations. Journal of Public Economics, 90: 513-531

Desai, M. A., Foley, C. F. and Hines, J. R., Jr. (2006b) Do Tax Havens Divert Economic Activity?. Economics Letters, 90: 219-224

Desai, M. A. and Dharmapala, D. (2006) Corporate Tax Avoidance and High Powered Incentives. Journal of Financial Economics, 79: 145-179

Dharmapala, D. and Hines, J. R., Jr. (2006) Which Countries Become Tax Havens?. NBER Working Paper, NO. 12802

French, K. R. and Poterba, J. M. (1991) Investor Diversification and International Equity Markets. American Economic Review Papers and Proceedings, 81: 222-226

Hines, J. R., Jr. and Rice, E. M. (1994) Fiscal Paradise: Foreign Tax Havens and American Business. Quarterly Journal of Economics, 109: 149-182

Hines, J. R., Jr. (2006) Will Social Welfare Expenditures Survive Tax Competition?. Oxford Review of Economic Policy, 22: 330-348

Hines, J. R., Jr. (2007) “Corporate Taxation and International Competition” In A. J. Auerbach, Hines, J.R., Jr. and Slemrod, J. (eds.) Taxing Corporate Income in the 21st Century. UK: Cambridge University Press.

Hong, Q. and Smart, M. (2007) In Praise of Tax Havens: International Tax Planning and Foreign Direct Investment. CESIfo Working Paper, No. 1942

Miller, A. and Oats, L. (2009) Principles of International Taxation. 2nded. UK: Tottel Publishing, Haywards Heath. pp. 225-229

OECD (1998) Harmful Tax Competition: An Emerging Global Issue.Paris: OECD

OECD (2000) Towards Global Tax Cooperation: Progress in Identifying and Eliminating Harmful Tax Practices. Paris: OECD.

OECD (2004) The OECD’s Project on Harmful Tax Practices: The 2004 Progress Report. Paris: OECD.

Slemrod, J. and Wilson, J. D. (2006) Tax Competition with Parasitic Tax Havens. NBER Working Paper, No. 1225

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Free Essays

How moral intensity and ethical decision making differs between uk business students and accounting professionals?

Introduction

As a result of major scandals within the business world such as Enron, WorldKom, Kmart and more recently the Bernard Madoff Ponzi scheme, the importance of business ethics has increased, consequently there has been great concern that business professionals do not have correct ethical values. Waddock (2005).It has been suggested by Jones et al (2003) that many scandals could have been prevented if professionals had better ethical decision-making processes and in the case of Enron, could have produced a different audit opinion. Freidman (1970) believed that “The social responsibility of business is to increase its profits” and in some cases unlawful methods have be used to insure this resulting in lengthy jail sentences and expensive lawsuits. If ethical behavior is to be improved it is vital that the components involved in the process of making ethical decisions is understood and according to Jackling et al (2007), education in accounting ethics would help cure the professions ethical collapse. Ahadiat and Mackie (1993) suggested that if accountants and business professionals are to have the ethical standards expected of them in the industry, university business schools and places that offer professional training, must insure graduates are given the correct training to effectively deal with any ethical dilemmas they may come across in the

industry.

Ethical decision making models show variables that have an impact on ethical choice and create a foundation for how ethical decisions are made within organisations. Rest (1986) formed a model consisting of four stages that an individual is subjected to when making an ethical decision.The process begins with an individual identifying a ethical dilemma, making an ethical judgment, their intention to act ethically or unethically and finally the ethical action taken as a consequence. Jones (1991) provides the “most comprehensive synthesis model of ethical decision making” Loe et al (2000) pp-186. Jones (1991) combines in his model, previous ethical decision making models, with a particular focus to Rest’s (1986) model of ethical action, using it as a bases to introduce the concept of moral intensity. Many educational programs can be designed using the components of moral intensity, as Leitsch (2006) makes clear, further empirical research using Jones’s (1991) model is imperative as it would increase our knowledge of the ethical decision making process. The purpose of this dissertation is to incorporate Jones’s (1991) theoretical model into the ethical decision making process of UK business students and accounting professionals, using different ethically challenging scenarios. The understanding of the ethical decision making process of business students and accounting professionals will help recruiters identify areas that may need further attention in teaching courses, ensuring graduates are well trained and subsequently thwart the escalation of more headline scandals within the business world.

Background Literature

Early ethical studies were based around normative models that stated what should take place in an ethically challenging situation. Thorne and Ferrell (1993) criticised these early approach’s to business ethics, as they assumed strict rules that had to be adhered to when making ethical decisions in an organisation. Hunt (1991) agreed with the thoughts of Thorne and Ferrell (1993) expressing that positive models provided a guide that helped to improve our understanding of business phenomena hence positive ethical decision making models were fashioned. Hunt and Vitell (1986) produced a model on the general theory of ethics that concentrated on personal, organizational, industrial and cultural factors. The contingency framework of Ferrell and Gresham (1985) focused on individual, cultural and opportunity factors, whilst Trevino (1986) produced a situational-individual model directed on job and organizational factors.

The Jones (1991) moral intensity model, incorporates the factors that effect ethical decision making used in the previous models mentioned above, Loe et al (2000) makes clear that Jones’s (1991) model, represents the overall agreement regarding the variables embodying the ethical decision making process, by including the concept of moral intensity. Both Ford and Richardson (1994) and Loe et al (2000) in their reviews on the empirical literature concerning the ethical decision making process, recommended that there be further testing. In agreement with the reviews, Ming et al (1998) acknowledged that there had been “limited empirical literature pertaining to Jones’s model”, hence further empirical testing of the moral intensity model is desirable. Similarly empirical studies that have looked at education, years of education and differences between students and professionals, were described by both, Ford and Richardson (1994) and Loe et al (2000) to have mixed results and deemed inconclusive. As a result of these non-significant or mixed results and a lack of empirical studies on the Jones’s (1991) model, the variables used in this investigation have been produced.

Processes involved when making an ethical decision

Rest (1986) believed that when making any form of ethical decision an individual goes through four key steps shown bellow. The first step is the identification of an ethical dilemma, Larkin (2000) states that the “ability to identify ethical and unethical behavior is essential in all professions”, he goes on to add that when a person acknowledges the moral aspects of an issue there opinions, choices and goals are influenced.

After noting an ethical dilemma, Rest’s (1986) model moves on to the second stage, ethical judgment. Blasi (1980) states in his critique, “without judgment, an action, no matter how beneficial, would not be moral”. It is for this reason that the second stage to Rest’s (1986) model is vital because without ethical judgment, a decision can’t be deemed right or wrong. Kohlberg (1969) formulated the concept of cognitive moral development (CMD), this is an important factor in Rest’s (1986) model, as much of ethical judgment is determined by an individual’s moral development. According to Wyld et al (1994) “Relating Kohlberg’s model to business decision making and behavior has been central to the building of theoretical frameworks”, particularly Jones’s (1991) model.

Once an ethical judgment has been made the individual then decides whether to act ethically or unethically. This third stage in the model demonstrates the individuals “intention to act, which is determined by the value an individual places on the ethical course of action versus the value of other courses of action”, Sweeney et al (2010).

Research by Laczniak and Inderrieden (1987) and Chonko and Hunt (1985) found that this stage was vital in understanding ethical behavior as it had a profound effect on the ethical action taken by the individual, in the final stage of Rest’s (1986) model. Rest (1986) put forward the question, “why then would one ever chose the moral alternative, especially if it involves sacrificing some personal value or suffering some hardshipWhat motivates the selection of moral values over other values?” (pp. 13-14).Various theories have made an attempt to answer this question. Staub (1989) implied that that majority of moral motives depended on the individual’s personal aspirations. Bandura (1990) theorised two sources of intent, self-sanctions, which are supportive of Staub’s (1989) findings and social-sanctions. Social Sanctions enthused people to base their intention to act ethically or unethically on the approval of others, to prevent censure within the organisation. These theories suggest that moral intentions are influenced by personal aspirations and social-sanctions from others. It can be seen that in answer to Rest’s question people use moral alternatives because the choice shows who they are and how others view them.

The final stage in Rest’s model is performing the ethical action; there has been little research into this due to problems measuring and observing behavior, Jones et al (2003). Critics of Rest’s (1986) model such as White (1999), found that in some extreme situations individuals may act immorally even if they are capable of moral reasoning. As a result of these skeptics, Jones (1991) introduced his own independent variable of moral intensity, which he found influenced the ethical decision making process initiated by Rest’s (1986) four stage model of ethical action.

Moral Intensity

Moral intensity relates to the issue itself and to every unique situation Shaub (1997). Consequently Jones (1991, p372) described moral intensity as being “a construct that captures the extent of issue-related moral imperative in a situation”. Ethical dilemmas tend to be evaluated within the context of the situation; hence an evaluation of the situation is imperative in understanding if a situation is ethical or not Dewe (1997). The conception behind moral intensity has often been related to the criminal justice system; in that your punishment is proportionate to the severity of the offence you commit Davis et al (1988). According to Jones (1991) moral intensity is a multidimensional construct and he identifies six characteristics that make up the moral intensity model.

Magnitude of consequences is defined by Jones (1991, p374) to be “The sum of the harms (or benefits) done to the victims (or beneficiaries) of the moral act in question”. The idea is brought about from the basic mechanics of human nature; some moral issues have much harsher consequences and in turn, are more morally intense than an action with less serious consequences Barnett and Valentine (2004).

Social consensus is labeled by Jones (1991, p375) to be “the degree of social agreement that a proposed act is evil (or good)”. It does however bring up the question of whether a person knows what is deemed good ethics or bad ethics in a situation. A strong level of social consensus against behavior that was unethical would help an individual understand when a behavior was wrong or right. Empirical testing by Laczniak and Inderrieden (1987) found that illegal decisions were rejected on more occasions than unethical decisions, implying that people had a strong social consensus against illegal decisions, as the impact to them would be much greater than unethical decisions. Laczniak and Inderrieden (1987) concluded that for a subject to respond appropriately in a situation they needed to have a consensus of what originally was the right course of action to take.Previous studies that have concluded social consensus to be the key dimension have used student samples, where as studies finding magnitude of consequences to be the key dimension used managers and professionals Barnett and Valentine (2004).

The probability effect is defined to be a “Joint function of the probability that the act in question will actually take place and the act in question will actually cause the harm (benefit) predicted” Jones (1991, p 375). The lower the probability the lower the moral intensity. Research by Singer et al (1988) has found that the probability dimension is a significant factor of whistle blowing. Studies by Kahneman et al (1982) found that individuals were not good estimators of probabilities.

Temporal Immediacy was explained by Jones (1991, p376) to be “the length of time between the present and onset of consequences of the moral act”. The shorter the length of time the greater the immediacy of the act in question. Jeanette et al (2009) states that Jones (1991) has included the construct of temporal immediacy for two reasons. The first being that people tend to disregard the impact of events that happen in the future and that people are generally more worried about events that effect the short term, than those that effect the long term.The second is that large differences in time, increases the probability that the act in question will cause harm or benefit, reduces.

According to Jones (1991, p 377) “The concentration effect considers the inverse function of the number of people affected by an act of given magnitude.” In other words it corresponds to the amount of people affected by a given act.

When there is a low concentration of effect it can be assumed that in the case of accounting professionals, a greater number of people will be affected by earnings management decisions. This would result in accountants being more likely partake in acts that involve earnings management. Studies by Carlson et al (2002) and Chia and Mee (2000) found that the concentration of effect had no effect on the ethical decision making process, however as there is limited information surrounding the implications of the concentration effect on moral intensity it will be included in this study.

The last component of the moral intensity model is known as the proximity factor. Jones (1991 p376) defines this as “the feeling of nearness (social, cultural, psychological or physical) that the moral agent has for victims (beneficiaries) of the evil (beneficial) act in question”. It is natural for people to be more concerned about those who are close to them; a simple example is comparing an individual’s relationship with their family to that of a stranger. Frey (2000) therefore identifies that with higher levels of proximity moral intensity increases.

Concordant with Jones (1991) all six components of the moral intensity model represent the characteristics of a moral issue and are interlinked with each other. In general his theory insinuates that as any component of the model increases so too does the overall level of moral intensity.

Hypotheses and Research Methods

Identification of an Ethical Dilemma

All four stages in Rest’s (1986) model of Ethical Action will not be investigated in this paper as previous studies by Hunt and Vitell (1986) and Trevino (1986), found that measuring actual behavior was extremely difficult. Jones (1991) suggested that issues with high moral intensity well be identified by individuals as being a moral issue much more frequently than issues of low moral intensity. Marshall and Dewe (1997) found that ethical dilemmas that are more salient will appear less casual and therefore be more likely to lead to an ethical predicament. Studies that have found an association between moral intensity and the identification of an ethical dilemma have been mixed. Singhapakdi et al (1996) identified that moral intensity and the identification of an ethical dilemma were strongly related in all of the scenarios used. In contrast, Marshall and Dewe (1997), Chia and Mee (2000) and May and Pauli (2002) found that a positive correlation between moral intensity and the identification of an ethical dilemma was not always related to all of the components of Jones’s (1991) model. Research by Marshall and Dewe (1997) and Chia and Mee (2000) found that out of the six characteristics forming the model, only social consensus and magnitude of consequences were found to relate to the identification of a moral issue. In the case of May and Pauli (2002) moral intensity was strongly related to the identification of an ethical dilemma but in only one of the two scenarios they used. It is clear from the lack of consistency in results from the various studies conducted further testing is needed.

H1 From previous findings it can be hypothesised that as moral intensity increases so too will the identification of an ethical dilemma.

Ethical Judgment

The relationship between ethical Judgment and moral intensity has been researched extensively and is the component of Rest’s (1986) model that has received the most amount of attention empirically. In general most studies such as those by Barnett (2001), Harrington (1997), Morris and Mc Donald (1995) and Singer and Singer (1997) have found supportive evidence that there is a strong relationship between magnitude of consequence and social consensus in regard to ethical judgments. The above studies have found that in most cases if an act is deemed to have very severe negative consequences for example imprisonment, they are in most instances considered more unethical than acts believed to have less serious consequences. Singhapakdi et al (1996) found that not only the magnitude of an action’s consequences and social consensus to be positively related to ethical judgements but also temporal immediacy and the probability of harm to be notably related to ethical judgement. Jones (1991) found decisions that are identified to have high moral intensity (more unethical), require and individual to take more time gathering facts, information and key values surrounding the issue. Situations that are less unethical would not require so much attention. For this reason it can be suggested that,

H2 As moral intensity increases so too will the level of ethical judgement.

Ethical Intentions

When making an ethical decision, Hunt and Vitell (1986) found that an individual’s intention to act ethically is based on the probability that he or she will engage in a particular action. The ethical decision making models of Dubinsky and Loken (1989) and Hunt and Vitell (1986) as with the models of Rest (1986) and

Jones (1991), incorporate the formation of intentions as a component to the ethical decision making process. Jones (1991, p387) proposed that “moral intent will be established more frequently where issues of high moral intensity are involved than where issues of low moral intensity are involved” and studies by Harrington (1997) identified significant associations between ethical intentions and magnitude of consequences.It was also noted that when proximity and social consensus was high individuals may try and avoid situations of negative responsibility by forming behavioral intentions that we more ethical Fisk and Taylor (1991).

H3 Ethical intentions and moral intensity will be positively linked

The effect of moral Intensity being issue related

It is known that the components of moral intensity and the effect they have on the ethical decision-making process are influenced by the type of situation. Sweeney and Costello (2009). Wright et al (1998) established that the recognition of an issues moral characteristic along with the moral intensity of an issue was greatly influenced by the type of situation. Silver and Valentine (2001) found that undergraduate students understood the moral intensity of the situations presented to them and acknowledged differences between the different scenarios. Leitsch (2004) also found that the type of situation influenced the students in the studies awareness of the moral intensity components, as well as their moral judgment. From Leitsch’s (2004) study, it was concluded that accounting students judgments towards the ethical nature of issues, as well as their perceptions of moral intensity varied depending on how unethical an issue was deemed to be. Other researchers such as Barnett and Brown (1994) established differences in ethical judgments depending on the situation an individual found themselves in, where once again differences were recognised to be between less unethical and more unethical issues. From these findings it the following hypothesis could be established.

H4 The nature of the situation presented to accounting professionals and business students, will influence how important they perceive the moral intensity components and the ethical decision making process to be.

Demographic Variables

Flory et al (1992) found that demographics had no relationship to ethical decision making although others disagreed with this. According to Ford and Richardson (1994) gender was investigated in more empirical studies than any other single variable. The majority of studies such as those conducted by Vitell and Singhapakdi (1990), Callan (1992) and Serwinek (1992) found that there was no relationship between gender and ethical decision making. Other studies by Chonko and Hunt (1985) and Ferrell and Skinner (1988) found that females were more ethically sensitive than males. Loe et al (2000) articulates that although gender is the most highly researched area of business ethics, research in the area still remains inconclusive. Further developments on methodology are needed when conducting ethical research in this field hence, as part of this study gender will be observed.

Prior research by Lysonski and Gaidis (1991) found that students were good assistants to managers as particularly those in their final year of study, were able to think and make ethical decisions similar to that of their more experienced counterparts. Lysonski and Gaidis (1991) concluded that students had similar ethical sensitivities to managers as there were no significant differences in their reactions to ethical dilemmas. Contrasting to the views of Lysonki and Gaidi (1991), Borkowski and Urgras (1988) observed that there was no connection between the ethical attitudes of major and non major business students. Silver and Valentine (2000) found that the moral intensity component of social consensus was substantially different between major and non-major business students. Examinations by Kidwell et al (1987) recognised that those with more years of employment exhibited responses that were more ethical than those with less years of employment. In addition to these studies, Arlow and Ulrich (1980) along with Stevens (1984) found that professionals were more ethical than students. By analysing the various research studies around the education and employment backgrounds of individuals, Loe et al (2000) identified that research investigating the differences between the ethical decision making processes of professionals and students produced mixed results. He produced similar conclusions to that of Ford and Richardson (1994), realising that a clear understanding of the relationship between professional experience and level of education required further analysis. In this study the impact being an undgraduate business student or accounting professional on moral intensity and the ethical decision-making process will be scrutinised in this study.

Other demographic variables that have been investigated include personality, beliefs and values, organisational effects and Industry type. Once again these are areas requiring further empirical testing as evidence has proved to be inconclusive, however the components of ethical decision making used in this study are not suitable to include these factors.

Research Method

Quantitative analysis was deemed to be the best way to evaluate the hypotheses brought forward in the study. Questionnaires allow large quantities of information to be collected quickly and economically Brennan (1998)Sweeney and are a good source to quantify data from. As previous studies examining the ethical decision making process used quantitative analysis it was beneficial to repeat the process as it allowed for better comparability of results.

Questionnaires were self administered to business students within the University of Hull and given to two university students from two other institutions within the UK (Queen Mary University of London and Leicester University) who handed out and collected questionnaires from fellow business students within their departments. Another selection of questionnaires were emailed to the HR departments of various accounting firms within the UK and personally given to one accountant working at a commercial firm to hand out to accounting professionals within two of their offices. The sample used therefore consisted of undergraduate business school students from three UK universities and professional accountants.

Those administered questionnaires were assured that participation was entirely voluntary and both students and professionals were promised that results would be kept confidential. It was also reiterated that it was not necessary to put any form of identification on the questionnaire, just an acknowledgement of what course you were studying for university students. Accounting professionals were given a slightly different questionnaire that did not include the option previously mentioned for administrative purposes when collecting results.

Research Instrument

Scenarios, vignettes and questionnaires were used by Singer et al (1998) and Cohen et al (2001) to recreate ethical situations individuals may find themselves in at work. The majority of studies on the ethical decision making process used these methods and they have thus far been proved the most effective way of testing the ethical decision making process. The scenarios used in this study have been adapted from those previously used by Leitsch (2006), Flory and Phillips (1992) and of Dabholka and Kelarris (1992) where each scenario recreated a business dilemma that may occur in the workplace. The first scenario-based questionnaire administered to students included a scenario that the majority of business students from a non-accounting background and even some who were from an accounting background could not understand. This resulted in many students simply guessing an outcome they thought appropriate or many simply left the question blank, due to the issue needing an in-depth knowledge of business that many hadn’t acquired yet. To rectify this, scenarios were altered to represent business issues of which both business students and accounting professionals could fully understand.

Scenario one is developed from Dabholka and Kelarris (1992), in their ethical scenario a sales person booked tickets with a particular air line because they were given promotional vouchers which they could use for their own personal use. The individual did this this knowing that ticket prices for that airline were higher than its competitors. Respondents were required to evaluate the situation and asked whether the actions posed an ethical dilemma. Flory et al (1992) produced a scenario that addressed similar ethical issues found by Dabholka and Kelarris (1992) however they incorporated an accounting focus to the issues presented. Flory’s et al (1992) study included scenario’s based on videotape footage produced by the Institute of Management Accountants. The video included five ethically challenging situations that the authors believed could be encountered within the workplace. Flory et al (1992) formed scenarios that were roughly 200 words in length and attempts were made to ensure the ethical complexities from the videotape were transferred to the written forms.

At the end of each scenario was an action taken in response to the ethical dilemma ensuring that all respondents were acting in response to the same stimulus.

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Is studying for a degree a good business decision?

INTRODUCTION
The decision to undertake a degree is always one that is backed up by an internal cost benefit analysis of the individuals facing a strategic choice in life. The decision is one that is personal to many different students and some may argue that going to university is, or has been, a good business decision, whilst other may argue it is not.The relationship between work and higher education is complex and is constantly changing as a consequence of changing assumptions, values and expectations of students, graduates, employers, academics, politicians and civil servants. As a result of recent changes the growing acceptance of the concept of a learning society; the pervasive idea that learning in the classroom is of greater value than learning in the workplace is now being challenged.Employers seek flexible, fast, learning adaptive workers and reward education because such traits are associated with higher education levels. But many graduates are realising that their B.A. and B.Sc. degrees qualify them for no particular profession-unless of course they drift into teaching- prefer to stay on for further degrees in the hope of becoming research assistant’s and eventually being appointed academic staff which is a long process. Some graduates have realised that they have to settle for humbler jobs than they have been led to expect- the kind of jobs, moreover, for which the higher education they have received must seem to have been largely irrelevant, if not a waste of time, this has put the question forward: is pursuing a degree a good business decision

It is easy to forget that until quite recent times training for some professions- law, accountancy, as well as engineering- was undertaken almost entirely on practical work based lines without a formal degree qualification being necessary.Learning on the job had the advantage of being founded on first-hand experience, an advantage that is retained in the polytechnics’ sandwich courses; the disadvantage was that it was slow.

As the necessity for a through grounding in theoretical principles increased, however membership of professional institutes could only be gained by passing a written examination and, before long a three-four year university course provided the most suitable short cut for students exempting them from the hard graft of a long-drawn-out article apprenticeship.As late as 1970, however, individuals wishing to become solicitors were advised that while a degree was an asset it could not be accepted as total exemption from apprenticeship as an article clerk, and in the immediate post-war years that a BSc. (engineering) was no substitute. But the advance of the credentials system was implacable. The world over, universities took over the responsibility for professional training and in so doing became the main agencies for professional job allocation. Everywhere the belief that people who credited with having received more’ education’ usually earned higher incomes and higher status than those who had less, provided the mainspring for expansionist policies. In the U.K these policies were a less explosive than in a country on rapid modernization like Japan, which had one university in 1890, forty-seven in 1918, 379 in 1969 and 685 in 1976.

From an early age children have been conditioned to believe that their entire future depends upon paper qualifications that they can only obtain through formal schooling, ‘Everyone must go to College’ ‘Education pays- stay in School’-[1] these are the kinds of slogans constantly publicised in the U.S.A where currently more than half the pupils completing high school go on to some kind of full-time course of higher education, but recently more plainly, the promise of social justice, supposedly inherent in the concept of ‘constant mobility’, has proven to be delusive, by encouraging the youth to climb higher and higher up the educational ladder of prospects it has lulled them into imagining not only that there is room at the top but room for nearly everyone.Times have changed as one “In 1944 the problem was to convince more pupils that they were capable of getting a degree- and more parents that they could afford to let their children go to university- the problem now it can be said is to ‘cool out’ the masses who take it as a matter of course that a higher education owes them a living”.

A new national survey of young adults ages 18 to 25 finds that the vast majority of today’s young adults — be they African American, Hispanic or Latino, Asian American or White -strongly believe in the value of higher education. The survey, “High School: young people talk about their hopes and prospects was conducted by the non-profit, non-partisan opinio2n research organization public agenda – the majority of the young adults surveyed said that their parents inspired the goal of going to college and most had a teacher in high school who took a strong personal interest in them and encouraged them to go on to college. Money plays a big role in decisions about where — or whether — to go to college or university. Nearly half of young people who do not continue their education after high school cite lack of money, the wish to earn money or having other responsibilities as reasons why they don’t go. “Life after High School” also shows that while money is not a factor in college selection for most young White Americans (60 percent), it is for most young African Americans and Hispanics. Sixty percent of both groups say that they would have attended a different college if money were not an issue. About half (51 percent) of young Asian Americans say this as well. The survey raises troubling concerns about the prospects for young workers without university degrees. Compared to those who have a two- or four-year degree, these less-educated workers fell into their jobs more by chance than by choice and far fewer think of their job as a career. Young people with no degree are substantially less likely than those who have a degree to say their parents urged them to go to college.

There has been much discussion, now with increasing support from government, employers and academia for the idea that learning does, and should, continue after formal education stops. One of the many important changes in the size and shape of higher education during the last few years that have taken place are for example, the number of degrees awarded over the years has steadily increased, twenty years ago just one young person in eight entered higher education today more than one in three do so, over the same period the number of undergraduate degrees awarded in Britain has risen. In 2009/10 there were 350,860 first degree graduates compared to 333,720 in 2008/09, showing an increase of 5%.

This does not mean that the quality of a degree is necessarily any the less but it does signify a university degree is no longer as distinguishing a qualification as it once was.Nevertheless, the economy has in addition moved on and the demand for graduates has grown at the same time as the supply has increased.

Although graduates are still in demand, especially in certain sectors, their employment prospects are being affected by the recession – two fifths (38%) of employers have frozen graduate recruitment and additional 10% are recruiting fewer graduates than last year. So it is not surprising that in the UK the unemployment rate of university graduates has been gradually increasing each year. In the US, two in five students who start don’t get a bachelor’s degree within six years, according to the U.S. Department of Education. The ones who finish confront the same weak job market that everyone does. In the US there are approximately 2.3 million holders of bachelor’s degrees looking for work. All too often college graduates incur crippling debt and don’t improve their job prospects’ [1] The average starting salary offer to 2010 graduates was $48,700, down 1.3% from the year before, according to the National Association of Colleges & Employers.[2]

John McGurk, CIPD adviser, learning and talent development states “A feature of the boom years was that graduates more or less expected to walk into a top job of some kind with a reasonable 2:2, and to get into a big accountancy firm or the City with a 2:1,”.”[3]Today this is not the case. The recession and the poor economy have impacted recruitment, major recruiters like BT, have even dropped graduate schemes altogether,

setting a precedent for others to follow and other smaller recruiters, meanwhile, are reassessing their relationships with graduates. “The recession has had a massive impact on the way we’re looking at recruiting graduates this year,” says Stephanie Oerton, head of talent and development at National Express’. Worry over labour market trends for university graduates was expressed strongly in the USA, for example by Hecker (1992) and Shelley (1994).

President Obama has set a goal to increase the percentage of Americans with two- or four-year college degrees from 40% now to 60% in 2020. But the job market still very quite some may argue this not a good decision and a wasted effort. Bureau of Labor Statistics analysis of data related to the employment of college graduates indicates that there are more jobseekers with college degrees than there are openings in jobs requiring a degree

In Europe the question has been examined in the wider framework of trends in over education or bumping down, i.e. to which point workers with high schooling levels are accepting jobs requiring lower skills and consequently forcing low skilled workers into unemployment.Rising returns to university education cast uncertainty on the idea that graduate workers are increasingly taking jobs for which they are overqualified. Since the early 1970’s, the data suggests a growing proportion of college graduates are in jobs that usually do not require at least a bachelor’s degree. But it can be argued that‘ It is not possible to precisely identify and measure the number of jobs that require a college degree’ . It can be argued that generally new jobs just don’t require college graduates. It has been stated that In USA of the 30 professions with the highest likely growth from 2008 to 2018, merely 8 require a bachelor’s degree or higher. “The fastest-growing occupation in the country, registered nurse, requires only an associate’s degree, of the top ten together with home health aides, customer service legislative body, retail salespersons and office clerks require only short-term on-the-job training”.For students pursuing a degree there will be the consideration is it really worth it. The gains of a degree can be measured in a variety of ways; these may include elements such as increased knowledge, the development of transferable skills, increased potential earning power and even the social aspects of higher education, cost may include but not be limited to the direct financial costs, such as tuition and living costs, which will usually result in high student loans and overdrafts which from studies and statistics show are progressively increasing and are having a direct impact on students.

Figure 1: Source: Education at a Glance 2000: OECD Indicators. OECD Publications, 23 November 1998.

On the other hand before the financial downturn, UK graduates profited more than anyone else from degrees. A global comparison proves that graduates in the UK obtain an elevated rate of return from higher education, in terms of improved employment prospects and income. The rate of 17% positions in the UK in a group of its own compared with 10% to 15% in Denmark, Netherlands, France, US and Sweden and 7% Japan and Italy, reported by the organisation for Economic Co-operation Development. The OECD’s recent yearly education at glance indicators emerges to support the UK government’s case for studying for a degree to be a worthwhile investment. The College Board, GE Foundation, The George Gund Foundation, the W. K. Kellogg Foundation and Knowledge Works Foundation funded the study.

The ultimate decision to carry out a degree is constantly one that is backed up by an interior cost benefit analysis of the persons facing a strategic alternative in life. The decision is one that is delicate to many different students and some may disagree that going to university is, or has been, a good business decision, whilst others may dispute it is not.In regards to student fees “The Global Higher Education Rankings” report found that British graduates aged between 30 and 44 earn 76% more than non-graduates in the UK.Students pay an average of almost ?7,000 a year for their education and as fees are to rise again making Britain one of the most expensive country in the world for study. The universities will now be able to charge home and EU students ?6,000 a year, and up to ?9,000 in special circumstances.

The new tuition fee system will make UK higher education even more expensive and its affordability ranking will fall, the cheapest place to study is Finland, where one year of education costs an average of ?1,820, followed by Holland at ?1,826 and Sweden, which comes in at ?2,186. The rest of Europe clusters into a band with costs ranging between ?2,914 and ?4,030. In Finland, higher education costs students the equivalent of ?590 a year, in Japan; students pay ?9,974, while in the US students pay around ?8,400.British students receive an average grant of ?597, compared with ?275 in Finland. American students receive around ?2,120. OECD figures also suggest that the earning premium of British graduates, relative to non-graduates, is amongst the highest in the world.

Despite the costs, Britain has the third-highest participation rate of the 15 countries, behind the Netherlands and Finland. The result is that most of today’s students receive no grants to cover living costs, about half must pay something towards their tuition costs, and all face more crowded lecture theatres and less individual time with staff. However, one effect of the mounting cost of getting a degree has been to increase the popularity of vocational degree courses. The top five courses (graded by undergraduates entering in 2003) are: Business and Management Studies, Computer Science, Law, Psychology, and Primary Education.

Figure 2: Change in spending on education, enrolment and expenditure [14]

It can be understood that there is one important way in which universities have not changed as much as many expected: they remain largely the preserve the students of middle-classes. Over 70% of the children of professional classes now attend university compared to just 13% of children of unskilled workers. Amongst the protests concerning tuition fees, students will continue to speculate whether they are getting a good deal, but future employment patterns suggest they are almost certainly better off investing their money in a degree. Full time education prepares hardly anyone for anything specific, nearly every person is still dependant on the charity of employers for training and experience in the job carried out, most of the education it can be argued is often completely irrelevant. And it has been questioned is a degree really worth having. It can be alleged a university degree does help a person to discipline himself. But it is not the sole factor for him to accomplish a professional future. To accomplish a bright career, the person must have both discipline and practical knowledge. It is up to an individual to build up the practicality of his job.

It is true university education is viewed as a prestigious achievement. It may not guarantee a job immediately, but someone who has it, has a better way of approaching life than one who does not have it or an equivalent. It can be simply said, “A university degree does not guarantee one future success but it helps to broaden the horizon of the individual”. It is in recent times, that Government has come to realize that university education is central to the development of a country as a prosperous knowledge based economy and as an inclusive society they are central to any countries competitiveness and graduates provide a pool of talented persons who are capable of promoting the exploitation of knowledge.A study led by Professor Phil Brown, of Cardiff University, and Dr Anthony Hesketh, of Lancaster University Management School, found young people having to go to great lengths to stand out in an increasingly crowded marketplace. Being good is no longer good enough, it says. Analysing work trends in the UK and the United States, the report confronts current assumptions about the growth in demand for graduates in a knowledge-driven economy.

While there is a commonly held belief that the UK’s economic competitiveness will be shaped by the quality of potential employees, the vision of a good salary doing appealing work in a big organisation is still available only to the lucky few.Study says that broadening access to higher education has done little to boost the chances of working class graduates joining these professional elite. Professor Brown alleged: “The evolving system of mass higher education in the UK has intensified the mismatch between the skills needed to get a job and those required to do it well.

“Given a chance, many graduates may prove excellent when it comes to doing the job itself but fail to find employment because of the ‘over supply’ of suitably qualified candidates.”The study points out that a huge proportion of working class graduates attend new universities. Given this, it notes that one organisation received 14,000 applications for 428 vacancies. Graduates from Oxford University had a one in eight chance of success whilst the ratio for those applying from new universities was one in 235.Professor Brown said: “Our analysis suggests it is inevitable that with so many similarly qualified candidates applying for too few places, individuals will try to stand out in the crowd in any way they know how. Cost benefit analysis is used to determine, first the individual rate of return to educational expenditures.

This relates expenditure on higher education including the ‘opportunity costs’ of income forgone during the period of time spent in education to subsequent income derived in the post-qualification period. People decide to go into further education because they feel that by completing their education and getting a degree they will have a higher chance of getting a job quickly. As when you apply for a job the competition is usually high as there will be many other candidates that will be applying for the same job.However, some individual’s feel that they should have went into employment and gained some experience, as that is what employers look for. For example, if there are two people applying for the same job and one of them had a degree and the other candidate had a high level of experience it is not necessary that the person with degree is likely to get the job as the employer may give the job to the person with the experience.

A degree is not always useful to a person when applying for jobs but an awful lot is dependent on the nature of the job, for instance, if you are applying for a admin job and a applicant has got a degree in business administration, the employer may feel that this person is over qualified for the job and may give it to the person with a high level of experience. Therefore, sometimes getting a degree does not always help in the long run. Higher education trends statistics have shown rise in higher education despite the factor of fees and high living costs in some regions, more women are pursuing university education and of older age in Great Britain.

Figure 3: Age participation [14]

Other statistics shows hundreds of thousands of would-be students have already applied to university in an attempt to secure a place before the increase in tuition fees. Data published recently shows 344,064 people had submitted their applications to start courses this year. This is a 2.5 per cent increase on the same period the earlier year, so an extra 8,000 people applying as last year. The figures from UCAS, the university admissions service, imply that plans to triple tuition fees at English universities from next year are the reason for the rush. From the study it may possibly be established that as applicants race to beat the top-up fee heat university education is a popular step to pursue but the financial costs are one of the many obstacles stopping perspective students to follow it. So on the whole universally degrees are a popular option to take.

If we look at a university degree as a business decision we need to consider this as an objective decision rather than a subjective personal preference. For this we need to consider the evidence. If we look at the evidence, this is not clear-cut, just as there are many self made business people who have never seen a collage and many graduates who are out of work and broke. On this basis the obtaining of a degree itself cannot be seen as an immediate route to success, and may even hold some individuals back, preventing them from working in the commercial world, making contacts, developing ideas and gaining experience as well as being able to put money in the bank. If we look for evidence to back this up we can look at the measure of success, for example, the Business Week UK Property Rich list the majority of names on here did not have a university education. For some there may not have been the need. For example, at the top of the list is the Duke of Westminster, and in second place were David and Frederick Barclay who also did not have a university education. These individual inherited the property and as such they did not feel there was any need to take their education further. There are also individuals who have not inherited, but seen their property empire grow through their own good business judgment; for example John Whittaker (Urquart, 2000). However, the majority on the list inherited their wealth. It is remarkable how much or how little great inventors and scientists learned at university. Thomas Edison never attended one, discovering his genius instead while working as a teenage telegraph operator. Charles Darwin went to Cambridge to study for the church but derived the most benefit to his career during long rambles with J.S. Henslow, a professor of botany. Darwin was known in his student days as “the man who walks with Henslow.” What Cambridge did give Darwin was the opportunity to reinforce his capacity to work hard and systematically and to expand the range of his enquiring mind.

“ If we look at the evidence for a university education we can cite the value of learning as well as the financial advantage. It is often cited that those who have attended university and gained a degree will have enhanced social skills due to the way in which education impacts on personal interaction and communication skills” (Hill, 2000). The same exposure to the social aspect of university and the cross over between learning and transferable skills may also give a greater ability to appreciate real differences, and appreciate diversity as well as divergent views” (Hill,2000). Whilst a university education is not needed, a side effect of the education process is to open the mind and increased the ability to assimilate information from different sources. The skills are not only of benefit in social life but are also the skills that employer’s value. Often with a university degree it is not the topic of the degree that is important, but the skills, such as research and communication skills that were gained in obtaining the degree, which are important (Hill, 2000). This makes an individual more employable and also more likely to get on in their employment much more easily and has an upper hand then a person with no university education. For example In the Times Top 100 Graduate Employers. (The edition was based on the largest ever survey of university students.) In this study there are well over 1000 major employees who actively recruit graduates from UK universities and countless small and medium size businesses that employ predominantly recent graduates within their workforce.

The top 100 that emerges from the research is a bold league table of the UK’s most dynamic and sought after graduate employees. Examples of some of the well known companies in the UK putting their trusts in graduates include for the fourth year running it is headed by Accenture (formerly Anderson Consulting), Three other recruiters-Anderson, one of the ‘Big Five’ accountancy and professional services firms; PriewaterhouseCoopers, the UK’s largest graduate recruiter; Procter & Gamble, the international fast-moving consumer goods company-and Goldman Sachs which are ranked in fifth place who are the first investment bank to reach the top ten are all examples of well established companies recruiters of graduates. Across the whole Top 100 there are nineteen new organisations. Two of the highest-ranked of these new entries are Marconi who has entered the table in 36th place and Cisco Systems who are just outside the top fifty. Across the full league table, there appears to be little correlation between the numbers of graduates and employer recruits and where they appear in the top 100.The majority of organisations listed in the table recruit 50 graduates each year, but there are at least twenty employers who recruit in excess of 200 graduates annually. The UKs largest employer of graduates is currently PricewaterCoopers who recruited over 1200 gradates, there are further three organisations who take on up to 1000 recruits, the figures and company names could be shown as evidence that a university education is taken in elevated esteem with top employers. There are long-term financial benefits in pursuing university education. A study in the US demonstrated the way in which those with a degree are likely to earn more on the long run.The graduates may start off behind non-graduates and take a while to catch up, but if we look at the average earnings of graduates between the ages of 30 – 30 years of age there has been the opportunity for all to settle into their careers.For males the average earning were 69% higher for the graduates, equating at this time to $21,500 a year more than those who did not graduate. By the time they get to the 40 – 44 age group the difference has increased to 82% (Hall, 2000).

The same effect is seen in the female population, but not to the same level. Between ages 30 – 34 years the average graduate will have a salary 63% greater than a non-graduate, which increased to 74% for age group 40 – 44 (Hall, 2000). There is also a trend to see this gap increasing ever since the 1970’statistics.

There are also increasing number of drop outs from universities maybe from students who have realised it is not worth the time and effort to study and they may as well go straight to the job market and the recognition that university graduates require long period of training in their first job before they are of any use to the company that employs them, they might as well skip university.It can be argued that education is the means by which some people kid themselves they are entitled to a better life than the rest of society.

CONCLUSION

Overall most of society may feel that studying for a degree is a good business; however, a number of individuals may want to go into higher education and study for a degree but may not get the chance to, as there are many factors such as cost that will affect the individual. Nevertheless the government in the UK are offering students with loans and grants that will help them with their education. Conversely some students feel that they do not want to end up in a long debt to pay after they have finished their education and therefore do not go into further education.Although the government in the UK does its best to provide help to students so that they can afford to study. Therefore cost is one of the major factors why some individual’s feel they do not want to go into higher education and study for a degree although they may be aware of it is a good business decision in the long run.A learning society means lifelong learning for everyone. It is recognised that the nature of jobs will continue to change, and that job mobility will increase. It is therefore suggested by the proponents of the learning society that only by continuous learning throughout their working life will individuals remain employable and societies remain competitive. As Stephen Uden, head of skills and economic affairs at Microsoft, said in a recent BBC Radio 4 debate: “The UK’s only going to succeed as an economy if it’s a high-skills economy. So we need to widen participation in higher education.” If this means that high-level skills and education will touch a wider range of professions and employers than ever before, then it must be a good thing. However, the place of universities in a learning society is as yet unresolved. If all organisations became “learning organisations” it might become more difficult to claim a special role for universities.

Studying for a degree does not promise students that they will obtain their dream occupation, but maybe it does assist in getting them ready for searching for a career. Furthermore, the aim of career preparation is at least part of the motive that more than 1 million students received the bachelor’s degrees in 2000. Encompassing a degree is believed to be one of the greater methods to achieve a competitive edge, typically graduates studying for a degree may benefit by having more job prospects to improved earnings when compared to people that have never studied for degree.

A degree may indicate that for many people there will be a cost benefit analysis that indicates to get a degree is a good long term business decision for most, but not for all, after all, the aims and personal circumstances and even individual personality need to be considered.

References

[1] Urquart Conal (2000, Dec 14), The rich can look down on learning, The Times.

[2] Hill Kent, (2000, May), the value of ASU as a provider of education services, AZB, Arizona Bu Abramson, M. G. et al (1989) Forging Higher Education Links with an Isolated Community: West Cumbria College as a Case Study. Newtown: New Polytechnic.

[3] Branson Richard, (2002), 20/20 Hindsight: From Starting Up to Successful Entrepreneur, by Those Who’ve Been There, London, Virgin Books

[4] Acker, S. (1981) No-Woman’s-Land: the British Sociology of Education 1960-1979, Sociological Review, 29, (1), 77-104.

[5] Acker, S. (1992a) New Perspectives on an Old Problem: the position of women academics in British higher education, Higher Education, 24, 57-75.

[6] Acker, S. (1994) Gendered Education. Buckingham: Open University Press.

[7] Ainley, P. (1994) Degrees of Difference. London: Lawrence and Wishart.

[8] Ainscow, M. et al (1994) Creating the Conditions for School Improvement. London: David Fulton.

Newspapers

[9]

Guardian

[10] Independent

[11] Mail

[12] Mirror

[13] Telegraph

Websites

[14] The Times Higher Education Supplement

http://www.thes.co.uk/statistics

Categories
Free Essays

Copyrights law of television industry in different countries (U.K and India) and its fair use in media business.

Abstract

This report explores most of the criteria of Copyrights and its vast area which protect creativity, invention and artists’ originality by laws and regulations about intellectual properties. A large number of researches depict different kind of rules and their implementation for healthy business environment in media industry (Television) in different countries such as UK and India. Where appropriate information about Intellectual property and copyright gives full knowledge about report, as well as other side way of these properties’s fair use helps to understand media and its creative environment. Discussion and background research are influencing conclusion with their logical elements and issues. Key point such as definitions, area of law, types of intellectual property, differences between constitutions affect topic very well and discover a wide range of knowledge.

Introduction

Creativity is a major part of invention and every artist and inventor tries to save his/her invention. Every kind of intellectual property needs appropriate law for its protection by misuse and fair use. Wilson L. (2005, p.8) states that ‘‘Most people realize that copyright protects works of art like poems and short stories, photographs, paintings and drawings and musical compositions. It may be less obvious that copyright protects more mundane forms of expression, including such diverse materials as advertising copy, instruction manuals, broachers, logo designs, computer programmes, term papers, home movies, cartoon strips, and advertising jingles’’. In this quote writer clearly mentioned safety issues and area of creative work. In this report we will be discussing about this kind of intellectual properties which use in television industry. As well as according to this quote we understand that copyright is a unique way to protect creative works such as books, music and different kind of art and commercial work. Non commercial work and commercial work has categorised in intellectual property law according to there use, In simple words we can say that copyright laws prevent artistic work from unauthorised use. This report informed about different kind of copyright laws in different countries, behalf of this some important questions such as how to prevent creativityFair use of creative works on Television Industry, Which parts of television area comes in intellectual properties?

Television Industry always works on wide range of new inventions and creative ideas where intellectual property is a necessary part of this media industry. Although matter is about new T.V shows, concepts, technologies, music or advertisements every part of this industry reflect copyright and its law. Many inventors already had given brilliant creative, entertaining and profitable ideas to media industry which still works for other companies and television channel for their profit via fair use, so it is very important issue to protect this kind of art. A Television company have different facts such as it is a commercial industry, advertisement technique, democratic organisation or institution, a medium between government and organisation, cultural visualisation technique. It is bigger than a thinking of business. While its only a source of entertainment for viewers on the contrary it is a big system which belongs to monetary term

Copyright and media have a unique connection which makes a wonderful business environment. Journalism, media, cable and broadcasting industry, advertisement agencies and their software’s, videos, music etc. every part of television have a interesting fact about laws and terms and condition. Fisherman A. (2004, p.2) said that ‘‘The U.S. Constitution gives Congress the power to protect works of authorship by enacting copyright laws. But it is up to Congress to actually write the copyright laws and decide on the details of what should be protected and for how long’’. According to this statement we can understand that copyright and intellectual law system generated in U.S via Congress and copyright issues also have some eligible time period, every kind of intellectual property which relates to television and its factor have a different time ratio according to its type and sources.

Research

Rights and Power

Matsuura, Jeffrey H (2003, p.9) shows that ‘‘Copyright law provide ownership to the creators of the original works that are fixed in tangible form. It grants those creators several fundamentals right to use for the work they create. One of those right is the right to create copies of (duplicate) the work. Another of those rights is the right to distribute the work. Copyright law also grants the creator of an original work the right to perform or to exhibit the work publicity’’. Quote indicate that In television companies a producer or director have right of his copyright video to make copies for public display, video and soundtracks of video, distribution CD for profit by rent or sale as well as digital transmission etc. On the contrary Matasuura, Jefferey, H (2003. p.98) states that the video industry avoided many content right battles that confronted their print and music industry colleagues in the early days of the internet. In part, the delay in encountering those issues was caused by the relative scarcity of consumer access to broadband capacity adequate to support high-quality digital video content distribution. With time, however, that respite for the video content industry is ending and thus the relative good fortune of the digital video content industry is rapidly fading. The video industry now faces many of the same difficult rights management issues that the other media industries are already attempting to resolve. The same challenges as control over content in digital form that the print publishing and music industries have faced for several years are now confronting the television and motion picture industry’’

Collections

One of the valuable limitations according to television copyright is the fair use techniques and valuation, every subject have to know about the fully terms and conditions about copyrighted product such as video or programme theme. There is only one copy can be copy and distributed but only when they don’t use it for profit and make the copy available to the general public. On the other side it is not possible to get another copy from copyright holder.

Infringement and Strategy

CREEBER (2008, p.49) illustrate that ‘‘The USA, one of the biggest producers of media distributed – often illegally – around the world, passed the Digital Millennium Copyright Act in 1998 in an attempt to control unauthorized downloading of intellectual property. In 2001 the European Union (EU) crafted the EU Copyright Directive along similar lines. Many other nations also adopted such legislation, but in some areas of the world, most notably China, digital piracy continues with abandon.’’ the site explains more about the concept of which procedures would be ideal to apply to a particular piece of research. Participant observation, direct observations about copyright implementation period in different countries. Its clearly shows that copyright system implementation had a very important issue which protect creative work by media people and stop the unfair use of intellectual property. Althought some countries have not participated in this mission but gradually after a period country realised that they need a particular law for this problem. According to a internet news on Indian television website writer said that ’’The Anti-Piracy Coordination Cell, constituted by Federation of Indian Chambers of Commerce and Industry (FICCI) with the support of the HRD Ministry and the industry, will coordinate the efforts at combating the menace of piracy across sectors. Such a cross-sectoral initiative will lead to a synergized approach to a common and increasingly menacing problem’’ the statement informed that Indian government also participating gradually to remove piracy and unfair means in indian media. Any one who try to get profit by unfair means will be taken seriously by Indian judiciary.

Although every country implement laws and regulation to remove piracy from intellectual property but one question is still remaining that ‘‘ How others can fair use of creativity of genuine work and which kind of duration and laws they have to follow ?’’

Anything which use for social, cultural or political benefit and affect harm to copyright owner it comes to infringement. Specially when its not permitted. To avoid claims of piracy while we try to consider anyone else work we always beware that protect our self to become a piracy victim. We should aware and use a checklist before fair use of anyone work. For example we must research about the work and its background, we should get knowledge about works creator and his/her demands and authority belongs to work, some time if we use any kind of video or soundtrack we have to pay royalty amount regarding use of genuine work where on the contrary author or director of work provide NOC without any monetary terms. Media and television have a very complicated and deep amount of lawful information. Different catogry of fair use have different options such as if we want to use a broadcasted video or footage for public or social or culture related task we have to confirm its limitations and conditions for this statement Wilson L, (2005, p.71) believes that ‘‘ There is no definite boundaries between fair use and infringement, because no general rule defining infringement is possible – remember, the infringement evaluation must be made by weighing particular circumstances’’. It states that copyrights for intellectual properties specially in broadcasting system and cable tv is very strange. It is very necessary to get appropriate permission or license for fair use. Here the major point to understand is that difference between permission and license, use a particular stuff or work without monetary terms comes in permission and other side if we have to pay some amount for use works of someone else it comes in license section and similarity in both is that both depends on particular duration such as works area duration, time or date till then work can be use etc. One of the very good example is case study of international TV formats trading in the absence of IP protection where states that ‘‘The format is not necessarily reliant on legal protection. It certainly helps there is a degree of perceived legal protection but the industry at large is aware of how dubious that protection is’’ this statement basically describe about piracy and legal dimensions where a particular new invented TV show copied by different copycat producers. In this article there is a brief example has given about famous TV Show Pop Idols or American Idols which produced in different countries by various method such as Indian idol in India etc. Producer said that it is theft to make the same programme with few changes where concept and theme are quite same.

Internet Television Rights

New age and digitalization is making new innovative ideas of entertain audience where television become the part of life everyone’s other side some digital companies was ready to adopt a new television technology ‘‘internet streaming television’’ which provide all visuals of live streaming and recorded programmes on internet. Although was really creative innovations but intellectual property law and their law also quite different for this kind of technologies. Kretschemer M (2007, p.101) illustrate that Broadcasters, cable TV operators, content programmers, and television set manufacturers all agree that even if the digital transmission and interoperability issues are settled, the quandary over internet piracy and the possible distribution of high-definition content on the internet still needs to be resolved. Every procedure has a different evaluation according to its process if genuine director or producer allow his /her work to copy on internet by other websites then might be it’s a extrea profitable for them because in this case they can get royallity or other kind of amount such as license fees for there work, but if they have any contract or sponsorship with any company or label then contract paper decide the laws value for original creator.

REFERRENCES :

Wilson L (2005). fair use and use by permission. 1st ed.10 east 23rd street New York: Allworth Press.8

Wilson L (2005). Fair use free use and use by permission. 10 east 23rd street New York: Allworth Press. 71.

Attorney Stephen Fishman (2004). The Public Domain. 2nd ed. CA Nolo,: Berkeley. 2.

Matsuura, Jeffrey H (2003). Managing intellectual assets in the digital age . Boston: Artech House. 9.

Matsuura, Jeffrey H (2003). Managing Intellectual Assets in the Digital Age . Boston, MA : Artech House. 98.

CREEBER (2008). DigitalCulture: Understanding New Media. ENGLAND: Open University Press. 49.

n/a. (2010). Govt aims to align Indian Copyright Laws with global standards. Available: http://www.indiantelevision.com/headlines/y2k10/oct/oct118.php. Last accessed 14th march 2011.

Kretschemer M & Singh S. (2010). Exploting Idols. A Case study of international TV format trading in the absence of IP Protection. 1 (1), 15.

Castaned M. (2007). Television & New Media. The Complicated Transition to Broadcast Digital Television in the United states. 8 (1),

Categories
Free Essays

Outline the principle strengths and weaknesses of accounting and business research.

Abstract:

This project/essay is broadly based on a research article “The management of accounting number: case study evidence from the ‘crash’ of an airline” by Ann Jorissen and David Otiey (2009 publishing date) and “Earnings quality in ex-post failed firmsby Juan Manuel Garcia Lara, Beatriz Garcia Osma and Evi Neophytou (December 2008 publishing date). Main body is mostly concentrated on the research methods used and the strengths and weaknesses of the two approaches and the methodologies used by the researchers in these empirical papers.

Introduction:

The empirical papers which I have chosen for “accounting and business research” have done research on an “airline company” {Case I} and “bankrupt firms” {Case II} and they have conducted several interview, used multi-theory method (upper-echelons, power-circulation & strategic choice) and sampling method & many models to justify there research respectively.

Research method:

Case I company:

The researchers had selected SA irgroup (former Swiss Air) as there case company to study process and mechanism triggering to manipulation of accounting numbers.

Case I data:

Interview of different ex-employees was conducted and different categories of archival data were used by researchers like:

i. Bonus and stock option plan SA ir-Executives – 1997-2000;
ii. Bonus and stock option plan Sabena – Executives – 1999-2000: etc was used.
Case II company:

The researchers selected a junk of companies of UK by sampling method which had gone bankrupt and had data available in FAME entering bankruptcy 1998-2204 or continuing firms which had full data available in FAME 1995-2004.

Case II data:

The data used by researchers was taken from the FAME.

Method used:

Case I

They analyzed data in two phases wherein embedded design was employed which implied multiple levels of analysis (Eisenhardt, 1989). They had adopted interview method for there research but also included archival data. There research was based on both accounting as well as management perspective.

First phase:

In the first stage they arranged data in chronological order and reviewed all internal and external data available. Herein they analyzed data in directionality of the relationships assumed in traditional accounting research. They used a multiple case approach by considering each investment of the SA irgroup in a foreign airline. Each case they analyzed served to confirm inferences drawn from the analysis of the choices made in relation to the SA irgroup’s first investment in Sabena (Yin, 2003). The collection of data on all accounting and real choices with regard to all events and transactions would involve an immense amount of data so they used “disaggregated approach”.

Second phase:

The analysis in second phase is based on theories like upper-echelons, strategic choice and power circulation. Then by combining results of the both phases they could explain more about the directionality between the different variables, one employed in financial misrepresentation and the other employed to create the necessary discretion to engage in managing accounting numbers.

Case II

In the first stage they collected all data they needed for the research via sampling method and then they used “working capital version” model of Jones (1991). They used this model first because research had indicated that management had more discretion over current accruals & and moreover manipulation of long-term accruals such as depreciation was unlikely due to their high visibility & low flexibility (Becker et al 1998; Young, 1999). After working capital version model they used “modified jones model” which works on the assumption that revenues are not discretionary i.e. the model disregards that managers also engage in real activities manipulation.

The next model which they have used was “Kasznik model” (1999). The model incorporates the change in operating cash flow as an explanatory variable to account for the negative correlation between accruals and cash flows. The formula to obtain a measure of abnormal working capital according to Kasznik model is as under:

Where, WCA is working capital accruals, ?REV is change in sales, ?CFO is change in cash flow from operations and TA are total assets, and t is the time period indicator. Next, for each firm, we calculate abnormal working capital accruals (AWCA) as follows:

Where, a0,a1 anda2 are the fitted industry-coefficients from equation.

After Kasznik model they used Chariton et.al (2004) model to calculate the ex-ante one-year-ahead probability of bankruptcy of all failed firms. The formula what they used to calculate it is as under:

Where, Pjt (Y = 1) is the probability of failure for entity j at the end of year t.

The next model they used was of Roychowdhury (2006) & Ball and Shiva kumar (2005). The earlier model was used to analyze the existence of real activities manipulation. Herein was focus was on sales manipulation. The later model was used to measure the different recognition speed of economics gains and losses in earnings by using time series & accruals based measures of conditional conservatism.

Strengths:
Case I Case II
i.Inclusion of both perspective i.e. accounting & management (multiple methods) helped them for understanding the process of financial misrepresentation while as previous studies used accounting perspective only which couldn’t give much clarifications of the process.
ii.This multi-theory perspective allowed them to discover various additional elements of discretion on top of the variables used in the extant literature.
iii.According to me face-to-face interviews as conducted by the researchers is that the answer of the interviewee is more spontaneous, without any extended reflection and manipulation.
iv.This disaggregated approach has the potential advantage of yielding precise, directional predictions based on the researches’ understanding and

Analysis of how decision- makers trade off the incentives associated with the accounting object of the study (Francis, 2001).

v.The biggest advantage what these researchers had was having access to group’s internal information which helped a lot in carrying out there researches and justifying there conclusions.

a) Jones working capital & modified model could analyze a proxy for manipulation capturing only pure accounting manipulation & a proxy that pools together accounting and real activities manipulation.b)By using UK sample they were advantageous as the insolvency code are allowed for a wider definition of bankruptcy, with different implications, than in the US (Franks et al 1996; Bradbury, 2007).

c) The best part of sampling method is that it is straightforward and probably the simplest method and is usually unbiased.

d)There access to FAME database and deriving data regarding bankrupt companies made an ease in making assessment of these and setting up there research.

e) Since the researchers have selected or used purposive sampling wherein probability of getting astray is minimum and variance is low in this case of sampling.

Weaknesses:
Case I Case II
Interview is a complex and demanding technique (Frey & Oishi 1995:02 )
“An unusual degree of trust is likely to lead to willingness on the part of the subjects to answer the questions carefully and with validity. This is especially advantageous when the questions are of a sensitive nature” (Lull 1990:53).
Personal bias may b involved in interview method or understanding factor may become hindrance.
According to me data taken by the researchers was too big in size so accuracy of the result was at stake.
Sampling method can lead to the consequences of redundancy and thus hampering the accuracy of the result.
Using data from data base is complex method and time consuming.

Impact of methodology on my dissertation:

The methods used by the researchers to conduct there research i.e. “sampling” and “interview” and then applying different models and methodologies to derive the results or elaborate there research gave a perfect insight as to how a research should be conducted and then concluded. But I would like to go for “interview”, “available public information” and “questionnaire” method for my dissertation in coming months which would be on “Development in Banking sector in Kashmir” most probably. According to me interview method of collecting information is one of the best as the interviewee has very less time to respond and cannot manipulate answers so quickly in his brain and moreover interview method can help in extracting much internal information if the interviewer has those tactics and attitude of extracting as much information as possible. The questionnaire method gives an insight regarding what people or what the subject think about the given topic or question, it is one of the easiest methods and helps in figuring out the situation or the subject opinion from there point of view and this method would be the most important for my dissertation. Excess to public information and internal information will give positiveness to the dissertation because sometimes these information’s contain very important elements which throw light on various aspects which one researcher is looking for. I would try to rectify all disadvantages of the methods and apply then on my dissertation.

References:
“Basic statistics for business and economics” by Paul G Hoel and Raymond J. jessen
Ball, R. and Shivakumar L. (2005). ‘Earnings quality in UK private firms: comparative loss recognition timeliness’. Journal of Accounting and Economics, 39(1):83–128.
“Elementary business statistics: the modern approach” by Freud and Williams
“Earnings quality in ex-post failed firmsby Juan Manuel Garcia Lara, Beatriz Garcia Osma and Evi Neophytou (2008)

http://ezproxy1.hw.ac.uk:3114/eds/detail?hid=22&sid=2644bf2b-4378-4ae6-bb5f-e0d067d1ee89%40sessionmgr12&vid=1&bdata=JnNpdGU9ZWRzLWxpdmU%3d#db=buh&AN=39883573

Frey & Oishi (1995:02) “ how to conduct interviews by telephone & in person”

http://www.aber.ac.uk/media/students/aeo9702.html

Jones, J. J. (1991). ‘Earnings management during import relief investigations’. Journal of Accounting Research, 29(2): 193–228.
Lull, James (1990) “ Inside family viewing”; London Routledge
Roychowdhury, S. (2006). “Management of earnings through the manipulation of real activities that affect cash flow from operations” Journal of Accounting and Economics, 42(3): 335–370.
The management of accounting number: case study evidence from the ‘crash’ of an airline by Ann Jorissen and David Otiey (2009)

http://ezproxy1.hw.ac.uk:3114/eds/detail?hid=22&sid=1db6a896-b761-43fb-8f14-c493473c5b2f%40sessionmgr15&vid=1&bdata=JnNpdGU9ZWRzLWxpdmU%3d#db=buh&AN=48633863


Categories
Free Essays

Study of the Organisation structure of SICT, business environment, description of projects and activities of Staffordshire County Council

Abstract:

This report is delivered in accordance to the experience gained from a year placement at Staffordshire County Council. It includes the organisation structure of SICT, business environment, description of projects and activities involved during the placement period. It also illustrates one’s interpersonal and technical skills acquired from the work experience. The report is produced in conclusion to what was learned and achieved by the end of the placement year.

1 Introduction

The role of Industrial Placement programmer was appointed in SCC as a part of sandwich degree for placement year on 21st June 2010. It was a fixed term contract until 21st of June 2011. The unit was ICT under Strategic Core Directorate. The contractual hour of work were 37 hours per week and was under probation period for 6 months. The assigned role was of a student placement Programmer in MIS Team. This offered role provided an opportunity to gain exposure in providing business analysis support, working on technical specification, completing new developments and supporting existing systems within a team environment.

A year placement in SCC has turned out to be the first step into a professional world. It was an opportunity to experience a wider variety of work in a diverse working environment and knowledge of an organisation structure. There were opportunities to deal with the business and clients directly and understood the importance of delivering services to them efficiently and within the given timeframe.

2. Background

Fig 1: Staffordshire County Council Logo

Staffordshire county council first came into existence on 1st April 1974 when the Local Government Act 1972 came into force. During the restructuring of an existing local government structure, entirely new ‘two-tier’ system replaced an administrative counties and county boroughs and created metropolitan and non-metropolitan counties.

Staffordshire county council is situated in Staffordshire, seventh largest shire county in England which is in the West Midlands with a population of over 800,000. It is a big organisation and Staffordshire’s largest employer with 32,279 jobs. Besides serving the large population its responsibility include more than 400 schools, libraries, a wide range of complex social services in very different urban and rural communities, an extensive road system, and some of the country’s most important natural areas. For the better improvement of the prosperity, health, safety and environment of the whole county, it works with other partner organisations such as district and parish councils, police, and fire and health authorities. Some partner Local Authorities in Staffordshire are as follows:

Cannock Chase District Council • East Staffordshire Borough Council
Lichfield District council • Newcastle Borough Council
South Staffordshire District Council • Stafford Borough Council
Staffordshire Moorlands District Council• Tamworth Borough Council etc.

The organisation structure of SCC consists of three directorates which are “Development Services”, “Children, Young People and Families” and “Social Care and Health” along with Strategic Core which is made up of the Chief Executive’s Office, Finance, ICT, Communities and Culture and Law and Governance. More focus has been given to Customer Services and strategy by concentrating on ‘People’ and ‘Place’ rather than in current structure providing the needs of customer better than ever before.

2.1 Aim

The aim of Staffordshire County Council is to provide high quality services providing value for money and focused on, and delivering around the needs of our customers and communities. To provide better services to the customers, SCC’s new Strategic Plan 2010 – 2015 called “Staffordshire Unites” has been set which intends to achieve the vision of SCC i.e. “Through pride and passion in our county we will maximise opportunities for improved wealth, health and well-being. Staffordshire County Council is here for Staffordshire People.”

2.2 Staffordshire ICT:

SICT is the central unit of SCC. SICT works in collaboration with other council services and partners to improve the delivery of services through the efficient use of ICT. SICT Service Management, SICT Improvements and Staffordshire Learning Technology (SLT) are the three main functional areas identified by SICT for delivering the requirements of the authority in an efficient way.

SICT service management takes responsibility of management of ICT infrastructure and its daily services such as Help Desk function, desktop function, desktop equipment, applications etc for the whole SCC, including schools and council’s partner. SICT Improvements develops ICT services such as project management, tendering services and system development of the ICT systems which add value to the business by helping them to transform their services. ICT services are delivered to all County schools and the other education establishments on a trade basis by Staffordshire Learning technology.

2.2.1 Organisation Structure of SICT:

The current organisational structure of SICT is mainly divided into three functional areas in order to enable the transformation of the services throughout the Staffordshire by the efficient use of the ICT.

All of these service areas report to the Director of ICT Sander Kristel.

Refer to appendix E – pg no. 24

2.2.3 ICT Delivery Model

Fig 2: ICT Delivery Model (sourced from intranet)

3 Hardware and Software System

3.1 Hardware:

The approved hardware packages used in SICT consist of standard equipments such as thin Client devices, laptops and desktop PCs for design application which include 22” inch TFT, keyboard and mouse. Standard printers in use are HP DeskJet 7000(manual), HP LaserJet 3015dn, and HP LaserJet CP3535dn etc.

3.2 Software System:

SCIT provides standard SCC Desktop Software Applications for ICT devices which includes software packages that are approved and available as additional cost options.

The standard SCC Desktop Software Applications are listed below:

Standard SoftwareName and version of product Additional

SoftwareName and version of product1) Operating SystemMicrosoft Windows XP Professional1) Project

SoftwareMicrosoft Project 20032) Office SuiteMicrosoft Office 2003 Professional2) Design softwareMicrosoft Visio 2003 Professional3) Internet BrowserInternet Explorer 83) IXOSIXOS4) PDF File viewerAdobe Acrobat Reader 8.04) TRIMTRIM

5)Anti-Virus ProtectionMacAfee Virus scan Enterprise 8.05) AutoCADAutoCAD6) Desktop Support Remote Control eLANDesk 8.7

The additional software packages downloaded for work purpose are listed below:

SoftwareName and version of product
1) NetbeansNetbeans 6.0
2) Microsoft Visual Studio1) Visual studio 2008

2) Visual studio 20103) Microsoft SQL Server Microsoft SQL Server 20084)SAP1) SAP BW (3 environments : development, QA, Production)

2)SAP NetWeaver Portal 7

3)Reporting Tool :

a) Report Designer,

b) BEx Query Designer

c)BEx Web Application Designer and BEx Analyzer

4) ECC6

5) SAP CRM5) Microsoft Visual SourceSafeMicrosoft VSS 2005

3.3 Business Environment

3.3.1 SAP Services:

The SCC runs SAP as its corporate ERP and is implementing a SAP Children’s Social Care Solutions which were first introduced in 2003. The core SAP ERP Services of SCC are HR, Payroll, Finance and Procurement whereas the SAP Social Care Solutions are based on CRM, RM, BI and adobe forms. SCC also uses SAP Security based on Roles and authorisation. The SCC runs the following systems which require SAP interfaces; SAP SCUK, ECC6, TRIM, Respond, LG45/SAP CRM, FACE, Trojan, Contact point, Capita One Range of Service. The main objective of integrating these systems with SAP is to provide ‘single source’ of information more system integration in future improving the performance and productivity level of the services provided the customer.

Fig 4: SAP Social Care – Technical environment (sourced from intranet)

3.3.2 System Development:
There are currently over 200 application range of in house written and purchased system used in SCC to provide different services. Among them several application systems are used corporately, within Directorates or for specific group. These applications are designed and created with the effective use of wide range of technologies such as dot NET, Java, Oracle and SQL database. There are several application systems that are used corporately, within Directorates or for specific group.
GIS/ Local view – graphical information systems
ONE/SIMS- education management system
Web- CMS, collaboration
Oracle LG45 CRM – CRM system for Staffordshire connects partnership
The major system developments are related to SAP, Customer First, Traffic management, Adult and children case management system

4 Work Placement

4.1 Job Description:

The job title was Student placement programmer, involved working with senior developers of MIS team and Solution Design team and reporting to the placement supervisor.

4.2 Daily Basis Tasks:

The day to day jobs included updating appointed tasks in SharePoint (a web application to record projects and task done or appointed to an individual), recording the hours of work done in Time Recording system, monitoring scheduled data load in BW and updating it in the web portal, helping customer with their problems through remote connection to their machine and reporting the work to the appointed business client.

4.3 Responsibilities:

Scheduling Data Loads and Maintaining Process Chains in BW

BW is one of the application systems of SCC that are relevant to “Information”. Extraction, Transformation and Load (ETL) Layer is responsible for extracting data from a specific source, applying transformation rules and loading it into the Data Warehouse. The master and transactional data from different source systems are loaded into BW InfoObjects such as DSO, Info cube, Multiprovider etc. The InfoObjects are used to extract data out for creating reports. The data load in BW is performed by using process chains which need to be scheduled so, that the data load runs automatically on its scheduled date and time. Data load was scheduled every month for daily, weekly and monthly ones and all the jobs automatically get cancelled on bank holidays.

Maintaining Consistency between all environment in BW System

The SAP BW Solution operates on three tier system as follows:

DEV (Development)
QA (Quality Assurance and Test)
PRD (Production)

All the developments were carried out and tested first in development environment before transporting developed objects across QA for further testing. After successful testing in QA, the objects are transported again from development to production environment for publishing live updated data. For better performance and future reference it was necessary to maintain all three environments inline as automatic updates are only available for production system. Consistency between all environments were maintained regularly by manually carrying out data loads in DEV and QA environments and adding missing objects which already exist in production system.

Managing BW transport

Normally in SAP BW , the objects that are either installed from Business content or developed in DEV systems can be transported from DEV systems to QA and Production systems.SAP BW allows to transport works like configuration, objects, roles, and business Explorer(BEx) objects. Transports can be internal transport i.e. between different systems of BW or external transport which is between source systems such as ECC6, CRM to SAP BW system and takes place using RFC (Remote Function Call) during uploading. Internal transportations are carried out according to the need of the user at anytime whereas external transportation takes place only in certain days and has to be informed b filling the transport request form.

Transport packages created in DEV environment has its own transport ID which is needed to identify one’s transport to avoid conflicts. The results of either successful or failed transports are displayed in BW system that enables to manage transport across different system.

Meetings with team members, business client and placement tutor

Team meetings in MIS team were held normally twice in a month whereas in solution design team it used to be once in a week where team manager will notify the latest happenings and news of the SCC, any projects that is going to be start, any health and safety matters, feedbacks of the customer on the ongoing or released projects and other work related issues

The meetings with business clients were attended to discuss about the specification and requirements of the products they requested and the deadlines when they want it to be delivered and feedback of the finished product.

The placement visit from our placement tutor took place in the office twice in a year. The visit was very beneficial as the tutor tracked down the progress of our work by consulting with our supervisor and team member. The assessment and the advice from the tutor were very helpful to find the state of one’s capability to carry out job and encouraging oneself to keeping up the hard work.

Attending inductions, trainings and demos

SCC organises inductions and trainings for all the internal employees for their benefits and to maintain their standard of working. In the beginning of the placement period, induction had to be attended where briefings were given about the organisation structure, health and safety policies, rules and regulation, equality and diversity, security policy and other work related issues. In accordance to the job role, ICT Training centre of SCC also gave ICT induction to provide the information on standard equipments and software, computer security, electronic filing and corporate software which helped to get on with the job during first stage.

Any applications developed or changed had to be presented to the customer for which demos were conducted upon the request of customer.

Creating, Maintaining and Deploying BW Reports

In accordance to report specifications reports were designed and created using BEx query analyser and BEx web designer. The web templates were later published into SAP web portal.

Writing new applications and maintaining existing system

As a developer’s main responsibility, new application were designed and written upon the request of business and also maintained the ones which are already in use. The maintenance required addition of new functionality and validation, updating the version of software and implement further testing. Reuse of code, performance issues, functionality and robustness were the major points to be implemented whist developing a new application.

Implement Testing

Implementations of testing were required to ensure the functionality and robustness of the applications and reports created for business clients. Unit testing were done for the block of codes written in java or visual basic for applications in accordance to the test plan designed by the development team.

Helping Customer with their problems and issues:

Customers were provided all the information and solutions to their queries and problems. If necessary they were given further help through remote connection to their machine or through individual phone calls. The issues like setting up customer’s account in ECC6 system, installation of software and showing how to use application functionality were dealt whist providing customer the easy and effective way to solve a problem.

5 Project Descriptions:

5.1 PISCES Reporting:

PISCES is the new Social Care solution for Children’s system which went live on 25th of April 2011 after the successful migration of business partner cases into the system from CISS database system. Reports for PISCES system are produced using SAP BW suite of reporting tools. The reports are accessed via the SAP Portal, using standard Internet Web Browser.

Two of major reports of PISCES namely “Children Subject to CPP Statutory Visits” and “Looked after Children Statutory Visits” was created in accordance to the given specification from CYP& F directorate. The reports were created using the BEx Query Designer and BEx Web Analyser which were later published into Web portal for user access.

Refer to Appendix B- pg no 21

5.2 ECC6 Upgrade Testing:

SCC upgraded SAP R/3 source system to SAP ERP central component ECC6 which went live on 25th of October 2010. SCC uses ECC6 as the main enterprise resource planning software for Human Resources, Payroll, Finance and Procurement to collect and combine data from these different modules and provide to the organisation under one instance. The main reason behind this upgrade was to enable products to function upon foundation of central component.

SAP BW uses ECC6 as one of its main source system and projects the source system changes. It is necessary to ensure that upgrading the source system on SAP BW environment would not impact the data modelling object built-in SAP BW system. To implement the changes in production system, tests were first required to carry out in development environment followed by QA environment.

In this project, the assigned role was of a tester and the responsibility was to implement testing in accordance to a test plan designed by BW analysts. The test involved switching of the source system, data reloading to have the initializations and deltas to come from the new system. During test the old source system (both transactional and master) were deleted in the BW system before reloading data from ECC6 to ensure the consistency in the data from a system. After the successful completion of testing in BW Development and QA environment, the upgrade was finally implemented in production system which was also tested after the go live process.

5.3 In House Applications Development:

The system development areas involved adding functionality to the existing applications, rewriting codes for the existing system, analysing business requirements, designing, implementing and testing the new systems, writing user guides and technical manuals. The software development team use Agile Software development to develop their new system and maintain existing system. The advantage of Agile based approach is modification of the requirements which is often applicable in a fast changing environment and deliver functionality rapidly to ensure customer satisfactions.

5.3.1 Time Recording

The Time Recording application is an electronic time recording system used by SCC’s staff to record their flexi time. It allows user to know the duration of time they have worked, whether they are up or down on their time. Using this application senior managers calculate the average working pattern and needs of their staff of to see the true cost of projects and resources. It provides a central repository of the time recording information and an easy interface with level of functionality to the user. This application comprises of custom frontend developed by using Java programming language making it user friendly and SAP backend architecture providing the scalable and robust underlying architecture.

For this existing application, it was required to add a new functionality to the system which allows user to filter the list of products and its related activities from the frontend and restricts user to input any times following the 30th April for any given financial year. A new custom filtering form was created to implement these functionalities.

Refer to Appendix C – pg no. 22

5.3.2 School Crossing Patrol

School Crossings is an application designed and developed for Road Safety Office to manage the information about school crossings, patrols that staff a school crossing and the physical location of the actual school crossings. It was required to design the new system to replace the existing Access database which did not meet most of the needs of the School Crossings Patrol service and was not supported by ICT. Thus, this application was rewritten as it is crucial to the running of the service both operationally and from a performance management perspective.

The new system consists of a web based frontend written in Visual Studio 2010 IDE using ASP.Net and Visual Basic (VB) and the backend uses a Microsoft SQL Server 2008 database. There is an integration of SAP into the new system to avoid data duplication. The database for this system was designed and created which was then integrated with the frontend application. Designing of basic framework, applying windows authentication and validations, adding functionality such as establishing hyperlinks, creating menus for web page, data grid views, adding, editing and removing data from the frontend were the tasks involve during implementation of this project.

6 Benefits:

The placement was beneficial in regards to development of personal and technical skills. More self-confidence was build to face any real time problems and challenges.

6.1 Interpersonal Development:

During the placement period, working with two teams with a wide range of members enabled to successfully initiate, maintain and manage positive social relationships with them in a range of contexts.

Providing good customer services in a manner that customer is provided all the required information and quality products in time.
Working cooperatively and effectively as a part of a diverse professional team contributing more effort with best conduct.
Improvement of communication skills and ability to communicate confidently with the seniors and other colleagues about the work related problems and query.
Ability to prioritise time during work to fit around study commitments and social life.
Understanding of the establishment and functions of organisation structure. Analysing business requirements and importance of delivering quality services before deadline.

6.2 Technical Skills Acquired:

A year experience in SCC has enhanced the technical knowledge and skills in programming and developing systems.

Sound knowledge of SAP software, architecture and its modules such as ECC6, CRM, BI and SAP NetWeaver.
Better understanding of Business Intelligence, analytical, reporting and Data Warehousing solution provided by SAP BI System. Efficient use of reporting tool “SAP NetWeaver BI” and a web browser “SAP NetWeaver Portal”.
Introduction to the ABAP programming language specifically used in SAP modules.
Practical experience of using object oriented programming language, utilising the concurrency/multithreading concepts and implementation of Hash table in java for better performance and memory management purpose.
Integration of SAP ECC6 with java application by the use of Remote Function Calls (RFC) modules from the java platform.
Use of ASP.net programming language to create web based GUI application and adding a windows authentication for security.
Creation and population data tables, views using SQL statements and design database diagrams in Microsoft SQL server.

7 Conclusions:

In conclusion, an experience of a year placement at SCC has been invaluable and memorable moments of the life. It has been very beneficial providing knowledge of organisation structure, working environment and methodologies, customer services and development of both technical and personal skills. There is a strong belief that everything learned during this period will contribute in final year project on analysing requirements, managing time, selecting the suitable programming language and IDE for developing application, utilising new programming and testing methodologies. It will help in the accomplishment of future career goals i.e. to stand out as a successful developer in any competitive business market.

References and Bibliography:

1)Staffordshire County Council History

http://en.wikipedia.org/wiki/Staffordshire [accessed 09/04/2011]

2)Staffordshire County Council (2011) Organisation Information

http://www.staffordshire.gov.uk/yourcouncil/home.aspx [accessed 10/04/2011]

3)SAP NetWeaver Business Intelligence

http://www.sap.com/services/education/catalog/netweaver/bi.epx [accessed 10/04/2011]

http://en.wikipedia.org/wiki/SAP_NetWeaver_Business_Intelligence [accessed 10/04/2011]

Categories
Free Essays

Define the main accounting principles and explain how they affect the running of a business?

Introduction

In this essay I am going to discuss and explain about the main accounting principles and also explain how they affect the running of the business. Accounting is generally concerned with calculating the profit and loss in a business and how the business is performing financially. In order to do this an accountant must collect analyzing and communicating financial information. The information is then used by the owners of the business and they see where action and decisions need to be made fast and also work out how much they are making and what they are losing and who owes them money and were debt needs to be paid. Accounting is also necessary for stakeholders to make decisions regarding the business and changes to the business as a whole if necessary.

In any case it is vital for the accounting information to be relevant in terms of what is appropriate when the information is analysed. The business should easily be able to access the information relevant to them to weigh up the upsides and downsides of the financial side of the business. One of the most important reasons the business would need the appropriate information to hand is to analyse what is cost effective and what exactly the business is carrying as a liability. The stakeholders then can use this information to make the changes.

In businesses accounting is a necessity, because it is the process of managing, calculating and recording ones financial records. The management of a business’s financial record can involve the recording of various different transactions such as; expenses or revenues, this then helps individuals who manage financial system of the business to determine how much one owes or is owed, without basic accounting a business would not be able to function properly. (Financial-Dictionary)

In order to manage a business effectively account are considered as the main base for a successful business any errors could lead the business to a loss and put them in financial state it also states how much profit and loss the business is making a year which also help process the forms that we need to comply tax return forms to ‘Her Majesty Revenues Custom and Revenue and customs’ which is essential in every business .Account give a brief outline of the business financial dealing side but must be very accurate so they can compared every year to see what is occurring and any improvements that need to be made.( TheTimes100

The first accounting principle That I am going define is the Going Concern principle The term ‘Concern’ is based from the early 20th century which means that is a ‘business’ or a ‘enterprise’ Accountant’s believe a company cannot go bankrupt or broke, unless there is reliable evidence backing the assumption. The concept does not guarantee that a business will be making money and remain in the future time coming. This assumption affects the value of assets of the company and also help accountants to make financial statements in action of assuming and in order to know that the business will not go bankrupt or liquidated which means that whether certain liabilities of a company and find out for certain if assets and apportioning assets and converting them in to cash to pay of the depts. So based on the financial details and evaluation an accountant has on a business which helps predict that the business shall stay for the foreseeable future coming.

The concept also supports the assets of a business that it will remain for a period time for example machinery, land, equipment so that all the assets can be utilized which basically means that securing and getting complete benefit from what the business in earning but if the business is not doing as well as it should be doing then all the assets would be sold within a year paying of the creditors and bankers would be paid out and whatever money is remaining would be given to the owners of the businesses which would put the business where it started off they would have no debt to pay but would not really own anything .

Overall the concept predicts that the business will maintain to commerce for the time coming and give accountants the taste of what the value of the business assets are going to be like whether it is going to make profit or loss and also for the future accounting period predict whether revenue or costs .But however without this concept the accountants would have to write of all their assets in the current period and in the long-term period that still have profitability benefit in the future.

The other principle Separate entity principle this concept involves where the job of the accountant involves keeping all of the business transactions of a sole proprietorship separate from the business owner’s personal transactions. The reason behind this is because for the purpose of the accounting it is considered to be two different entities however for legal purposes they are considered to be as one.

The effect that this has on the business is that the personal expenditure of the owner is kept separate from any costs incurred by the business meaning the owner’s transactions will not show under the business statements. If this principal isn’t followed then this may result in tax implications on the business as the accounts will not show a true reflection on the two different sets of transactions.

Also the consistency Concept which basically involves that when accountants are using one method on a business they should use it the same for any events or transaction in a business. This method is very valuable for a business in order for it compare it results and when the accounts are l0ooked at they can compare accounts from previous years to see whether any profit or loss has happened example is depreciation, once a method has been chosen it should be used every year . (happy accountant)

Prudence principle

This concept is also known as the ‘Conservatism’ this involves accountants to calculate roughly in arranging periodic accounts which are used mostly by small business that have less inventories .If in business the stock that is sold has become damaged it shall be sold and recorded for a lesser value and not it original value and also be more precise about the value of assets and about the profit in a business and not to overestimate them. .This concept entitles you to be very accurate about your assets and profits in a business. The concepts affect the running of the business by clearing uncertainties that surround many transactions by taking a conservative approach to recording such transactions. Accounting principles

For example if you have a business you need to calculate all yeah business and yeah over head straight away .However one of the disadvantages of this concept is that it should not be used for overestimate potential losses which could mislead to business accounts.

Verification principle

This concept involves that all statements in business account must be effective and efficient and verified by and independent person so that all the total of the revenues and expenditures in a business must be the same figures as in the books, ledgers of the business.

The matching and accrual principles are closely linked. Accrual is a form of accounting while matching is a principle which almost goes hand in hand with accrual accounting. The matching principle means that a transaction will only be recognised wen income and expenditures are actually incurred and not on the timing of the cash flow. In simpler words it requires revenues to be matched with expenses. The accrual principle means that income received should be recognized in the same period as the relevant expenditure incurred in earning it. Cash may actually not even be received in that period but it will still be recorded.

Any company or firm that is trading publically is required use the accrual accounting. However it is generally seen as good practice so many businesses use it anyway even though they are not legally required to do so. This helped the creditors and investors in getting a clearer picture of the business’ account.

One of the main benefits of accrual accounting is that during a certain period it creates a more accurate picture of income earned. This is essential for management when they want to make operating decisions. Another benefit is that it helps with cost control as expenses are reviewed more or less as they are earned. Because the account is reviewed on a more regular basis managers can be held more accountable for managing the accounts.

Another principle is the historical cost convention this principle means that the value of items or assets on a balance sheet or financial statements will be recorded as a historical value and not it current value. In the term the historical cost is actually the cost that the buyer paid for the item or the asset in the first place. The cost is usually associated with the purchase invoice. However there is an exception to this principle which is the recording of ‘marketable securities’ which will be shown on the balance sheet on the financial statements in their current value. This principle leads to a state where after several years the historical cost of an asset or an item will bear very little resemblance to the market value.

And lastly the Materiality principle this principle basically means that although all important and relevant information is made available to all parties in questions, any information that is irrelevant or insignificant need not be shown or documented for the view of the parties in question. The reason for this is that the information that is irrelevant or insignificant does not influence the decisions of the parties in question. For example there will be information about the business that need not be communicated to an investor as it will have no bearing or influence on the decision that the investor may take. A term that is used is material facts. Facts that as less significant are not regarded as material facts. To grade the information as material and not material is fully dependant on the party who the information is for. For example a debtor would need see invoices raised and amount outstanding during a period and this information would be considered material. Also the level of detail can also be considered material or not material. It just depends on what level of details the party in question needs to see. And details that are insignificant can be left out as it is not material.

In conclusion I think that Accounting principles are vital for business in order to see what is happening outside and inside of a business

Accounting principles?[onlihttp://www.accountingcoach.com/online-accounting-course/09Xpg01.html

ne]. Available from: http://www.blacksacademy.biz/ba/civ/XG9hg1anx/0u5RXzvoeo.pdf

Conclusion

http://www.accountingcoach.com/online-accounting-course/09Xpg01.html

References

J.R.DYSON (2004). ACCOUNTING FOR NON-ACCOUNTING STUDENTS. GREAT BRITAIN: FT PRENTICE HALL. P36-40

FRANK WOOD & ALAN SANGSTER (2002). BUSSINESS ACCOUNTING 2. : Financial Times /Prentice Hall. P143 -P149.

ETER ATRILL & EDDIE MCLANEY (1995). ACCOUNTING AND FINANCE FOR NONE-SPECIALIST. HERTFORDSHIRE: PRENTICE HALL. PAGE 19

legalzoom. General accepted accounting principles Stephanie Paul 2008[Online]. Available from:
http://www.legalzoom.com/business-management/running-your-business/general-accepted-accounting-principles-or

TheTimes100. Accounting Principles[Online]. Available from:
http://www.thetimes100.co.uk/theory/theory–accounting-principles–112.php

Financial-Dictionary. What is accounting ?[Online]. Available from:
http://financial-dictionary.thefreedictionary.com/Accounting

http://www.docstoc.com/docs/1929180/Basic-Accounting-Principles

happyaccountant.The Cnsistency Concept [Online]. Available from:
http://happyaccountant.wordpress.com/2007/04/13/the-consistency-concept/]

http://www.accountingcoach.com/online-accounting-course/09Xpg01.html

http://www.accountingcoach.com/online-accounting-course/09Xpg01.html

http://accountingaide.com/examples/inventory-systems-perpetual-periodic.htm for periodic table words

http://www.ehow.com/about_6323345_accrual-accounting-vs_-matching-principle.html

http://financial-dictionary.thefreedictionary.com/Historical+Cost+Accounting+Convention

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Free Essays

Explore the opportunities for a company looking into international expansion to grow its foods and confectioneries business overseas

INTRODUCTION

The purpose of this study is to explore the opportunities for a company looking into international expansion to grow its foods and confectioneries business overseas. Some relevant models will be used to assess the industrial analysis, country’s attractiveness, and risks. I will also look into some strategies it can use to survive after it enters into the country. Based on my analysis, I will identify and evaluate opportunities and at the conclusion recommend the necessary entry strategy to be used by the company to enter the new country.

BACKGROUND.

The sector that will be examined is the food and beverages sector. The sector to be considered is the food and beverages sector that has different industries in its sector and the value chain of this sector has Farming that deals with raw agricultural commodities, then the processing industry that is into food beverages and confectioneries likewise distribution which deals with groceries, quick service, and casual restaurant. Based on the value chains, the processing can be classified as food, beverages, and confectioneries. The top key players are Nestle, Kraft foods, Unilever and Cragill. In terms of groceries, top players are Asda, Tesco, Iceland and some other (Food and Beverages Global Report 2010 A-i).

Pfitzer, M et al (2007) reckoned that, ‘the food and beverage industry has a distinctive role in escalating economic prospect because it is universal to human life and health.’ In 2008, food and beverages was valued at $5.7T while food processing generated revenue of $3.2t. In 2008, food processing consumption constitutes 58% of the developing countries. It was anticipated that by 2013/2014 food and beverages projected value will be at $7t while estimated revenue will be at food estimated revenue @$4t (SOURCE: F&B GLOBAL REPORT 2010, A-i).

Amongst all the firms under the food sector, I will be considering LIDL because it does not yet exist in Brazil. It will be very vital to consider what their culture is like in this country. LIDL is one of the successful chains of grocery stores expanding strongly throughout Europe and beyond the borders. LIDL takes pride in providing top quality products at the lowest possible prices to all our customers across Europe and the UK. It has its headquarter in Germany. Their products are groceries, drinks, confectioneries and so on and LIDL will continue to play a major role in the exploration of new markets in Europe and beyond. As a multinational company, they are aware of their size and presence of operations. They also respect cultural variety and recognise differences in values and traditions. (LIDL official website).

If a company decides to enter another country in the process of raising awareness of the presence of their operations, it is imperative for the company to decide which country it wants to enter. Kedia L.B et al (2002) concluded that, ‘some organizations focus primarily on domestic operations and export products or services, while other firms establish subsidiaries or business units of varying autonomy in host countries that concentrate on the specific needs of those particular markets.’ This is what LIDL needs to consider before entering into Brazil by looking into the market, culture, economy. It should enter to concentrate on the specific needs of those particular markets, which needs to be tapped into. According to Radebaugh et al(2003 p.3), they concluded that, ‘ a company working in the international business field will engage in modes of business such as exporting and importing, that differs from those familiar with a domestic level.’ It is very clear that this company is one of these types of company as it has grown even with the economic recession in the past, it has thrived and succeeded, and it is still growing.

Looking into the Brazil, It is South America’s most influential country, one of world’s biggest democracies. Brazil’s culture reflects from Population, cuisine, religion to art. The major religion in Brazil is Christianity with population confirmed by united Nation as 195.4 million. (BBC NEWS)

The expectations of consumers cannot be overlooked when considering going abroad. Segal-horn, S. et al (1999 P. 61) claimed that, ‘the necessities and welfares of consumers are becoming progressively consistent all over the world.’ Therefore, customers’ expectations repeatedly changes temporarily . The table below will show customers’ expectations in relation to customers and the overall individuals in the world.

TABLE 1: CONSUMERS’ EXPECTATIONS

COMMUNITARIANISM SECURITY
TASTE CHOICE
FRESHNESS FUNCTIONAL
NATURALITY CONVENIENCE
HEALTH ARTIFICIAL
ENVIRONMENT

SOURCE: FOOD INTELLIGENCE REPORT. (2007)

Consumers’ expectations are becoming very high, as they want good taste, fresh, and natural foods/groceries to buy. Consumers also wish their environment could be a friendly environment that they will be able to adapt themselves to the environment easily and enjoy convenience and security in the environment. Customers are now very conscious of their health, which create chances available for any company going abroad.

PUSH AND PULL FACTORS

The factors that influence Multinational companies are the pull factor, push factor and facilitating factors. The Pull factors are the proactive factors that drive people to a new place, Push factors are the reactive factors, which drive people to leave their home country. These factors will help to evaluate Brazil Market attractiveness as these factors have effect on all Multi-national food companies that are under the food sector. Therefore, all these factors are considered in table 2 below.

TABLE 2: FACTORS INFLUENCING INTERNATIONALISATION

PUSH FACTOR (REACTIVE)PULL FACTOR (PROACTIVE)FACILITATING FACTORS
Spreading of risk Unexploited marketsLower Tariffs
Increased taxes Thinking ahead of rivalsLower Labour standard.
Economic conditions High Profit MarginsRemoval of barriers to entry
Domestic Market Saturation Reduced Labour and Overhead costRelaxed regulations
Consolidation of Buying Power PopulationInducement to enter New markets
Public Buying Policy Entrepreneurial Vision

SOURCE: ADAPTED FROM WRIGLEY AND LOWE (2002)

WHY DO LIDL NEED TO ENTER BRAZIL?

There has been increased growth in international business in this century we are now. Companies have moved from competing glocally to global competition. According to Deacon, J. H (2011) Glocally means business carried out among companies at the local level or in their home country.’ The company needs to enter Brazil as they have a different culture compared to other various countries that exist currently. It needs to consider the population of people, their culture, the lifestyle of the people, taste, and their cuisines and so on. However, a large population as mentioned above does not mean LIDL can be successful if it goes to Brazil because even in the international business environment, the market place is complex, interdependent, and dynamic. It needs to make a wise choice of entry strategy that will help them to gain a strong ground in another country. LIDL has subsidiaries in over 22 countries around the world and will even continue to gain more ground due to global competition. Based on these, the strategy to be used to enter these countries will be in accordance to their culture and some other factors.

LIDL need to go to Brazil to increase its sales, acquire more resources, and diversify their sources of sales. Due to too much competition in the countries where they exist already, they still need to look for other countries to invest and grow in order to spread their risks. Radebaugh et al (2001 p.7) concluded that , ‘motives for industries pursuing international business then could also have been to increase sales, attain resources, diversify source of sales and supplies and minimise competitive risk.’ Realistically, some things must have happened in the recent decades we are now to have brought about increased growth in international business.

Companies do not just go global but some factors motivate them to go. There are some basic drivers and customers’ expectations needs to be well considered as customers are very vital in any organisation. Radebaugh et al concluded that, ’each nation possess certain demographic, human and behavioural characteristics that constitute its identity and that may affect a company’s method of conducting business effectively in that country. With respect to LIDL’s statement that, ‘they respect cultural variety and recognise differences in values and traditions.’ LIDL needs to consider these factors by aligning their mission with what they will be delivering to their customers. This is why it is also important to do a thorough R&D about a market before going there. Most people are conscious of their health these days and would want to buy foods that will benefit their health.

Considering the EXTERNAL BUSINESS ENVIRONMENT

The environment of this company will be analysed by using PESTLE analysis that means Political, Environmental, Social, and Technological.

Political factors

Changes in government laws and regulations
Changes in government policies
Political instability in developing countries
Economic factors

Consumer purchasing power
Foreign exchange rates
Tax regimes in different locations

Social factors

Increase in world population – Demographic change
Changing in consumer taste
Awareness on consumer health – Obesity, Diabetics
Low per capital income – Developing country
Technological factors

Dynamic technology – equipment and information system.

Considering the external environments, Radebaugh L. H (2001) argued that, ‘these affects how a company operates and the amount of adjustments of adjustments it must take to its operations in a particular country in relation to how it produces and market its products, staff its operations maintain other things. The amount of adjustments is influenced by how much the environments of home and host countries resemble each other.’

SWOT ANALYSIS

This will help to know how they position themselves in the market and how they are able to satisfy their customers in a competitive environment.

LIDL SWOT ANALYSIS

STRENGHT

Good supporting infrastructures
Leading Global discounter
Environmental friendly operations
Leading global discounter
Rapid expansion in existing markets
Low cost operating model
Unique ownership model
Varied portfolio
Centralised buying operation
Discount range adaptation
OPPORTUNITIES

Increase in Food demand and varieties
Health-related products e.g. low calories food
Increase in low income customers
Further domestic discount expansion.
Further international expansion
Expanding product offering, especially fresh foods

WEAKNESSES

Weak cultural understanding – Norway
Reliance on a discount format
Relations with some branded manufacturers
Sales performance per store
Domestic customer loyalty
THREATS

Rivalry from competitors
Threats of new entrants
Sole focus on low price.
Retailer consolidation.
Increased complexity of operating model.
Price retaliation from other retailers.
Local opposition to central buying.
Competition from discount operators.

Managers need to analyse the business environment for the company’s survival and success of business strategy for the coming future. The business is affected by the investors, customers, suppliers, and competitors impacts a company on a daily basis.

KEY SUCCESS FACTORS AND CORE COMPETNECIES

KEY SUCCESS FACTORS.• Quality products

• Good supporting infrastructures

• Low price

• Understanding of Culture – AdaptationCORE COMPETENCIES• Nutritional food production

• Cheap products

• Production innovation

• Operational excellence

• Global supply chain

ENTRY STARTEGY

Having undertaken the analysis of the country’s attractiveness and decided positively to enter, it is important to work out an entry strategy that covers entry objectives, timing entry, and mode of entry to enter a new country. Mata, J and PORTUGAL, P. (2000) cites the work of Beamish and Makimo (1998) that, ‘One of the crucial decisions when deciding to expand into a new market is the decision on whether to set up a new venture or to acquire an existing ?rm.’ It is very vital for LIDL to make a wise decision about its entry into Brazil.

With reference to Table 1 and 2, they have to continue improving their market and gain entrance to important assets, and possibly continue to gain knowledge. Radebaugh et al (1999 p. 4) argued that four major objectives that influence companies to engage in international business are to expand sales, acquire resources, to diversify sources of sales and minimise competitive risks.’ All these are important but some other thing is missing. Does it mean knowledge and learning is not needed as part of their objectives influencing their entering a countryNo. I disagree with this author’s conclusion because for a company to achieve all objectives that influence their entering a country there is need for knowledge and learning. Knowledge of the market they are entering into, knowledge to manage risks. In support of my argument, LASSERRE, PHILIPPE (2007 p.191) concluded that, ‘a company going into another country wants to develop the market, access critical resources, capture knowledge available in the country and to finally set up a global centre for coordinating various activities.’

It is very important for a multinational company to manage knowledge even at a global level. SEGAL-HORN,S and FAULKNER,D (1999 p.126) cites the work of NONAKA(1989) where she talks of the need to manage globalization as a self-renewing process in which information is the key to success. She also inferred that, ‘globalisation comes about through the interaction of articulated globalized knowledge and tacit localized knowledge, partly through the hybridization of personnel and consequent internationalization of learning.’ Learning is very essential for the success of a multinational company. Johnson, G et al (2011 p. 94) agreed that, ‘as organisations become larger and more complex, the need to share what people know becomes more and more important but increasingly challenging. So, organisations that can share knowledge exceptionally may gain competitive advantage over those that do not.’

Lasserree, P(2010 p.193) reasoned that, ‘learning objectives are the basis of investments in countries where the industry is state of the art and in which a foreign investor gains knowledge and competencies by being present, even if the long-term market prospect is not favourable.’ There is a saying that, knowledge rules the world. In my own understanding, knowledge rules the world but what about other things that is needed to compliment these resources, which are the other objectives of a company entering into a country.

Lasserre, P (2007) also concluded that, ‘resources access based on the presence of a key resource such as human, agricultural and mineral which contributes to competitive advantage. He also said that a country offering size and growth is an opportunity with good co-ordination of their activities’ Brazil has key resources such as mining, agricultural that could be tapped. Based on the various objectives that influence entry of a company to another country, the timing factor is very important for companies to look into the current economy that might help them decide on which mode of entry to adopt. It cannot take a first mover advantage because competitive companies are there already.

Looking into the Brazil economy, some factors influence the entry mode such as country risks (political and operational risks), opportunities, companies’ internal capabilities, time pressure and governments’ requirements and corporate global strategy. Even though, the recession is still battling with all the economy. Jansen Robert(2010) said that, ‘the new economic dynamics will not only help revive investments in infrastructure, but above all it means that instead of going abroad to obtain cheaper money and longer term loans, now local companies can just go around in the country corner.’ Creating bigger companies in the information technology sector is considered one of the greatest strategic challenges for the Brazilian IT industry, which is very dynamic, but also very fragmented. Now is the time to take advantage of all the converging positive elements. It is an opportunity that cannot be afforded to lose.’

The government, investment entities, and companies are well aware of the window of opportunity in Brazil and are working towards building the proper framework that will help stimulate the necessary consolidation initiatives. This shows there is an opportunity for them to tap into as they are recovering back from the recession. It will be advisable for LIDL to use Acquisition strategies.

I think entering through acquisitions because it will give them access to markets when other opportunities are closed, there is also immediate availability of resources. Lasserre, P (2007) construed that, ‘This will also give them immediate availability of resources, assets and competencies; high control and penetration into the market and low technological leak.’ There is nothing beneficial that does not have a limitation. Using this entry mode, its limitations are that the acquiring company may not possess cross-cultural integration skills. This is why understanding of culture is very important and LIDL needs to find a way to turn it into strength. In considering the push and pull factors, the market is saturated with competitors in the country which means the company needs to use this factors to tap into their culture.

Ferraro, G.P (p.134) concluded that, ‘when negotiating within our own culture, there is every possibility of operating effectively at the intuitive level or unconscious level but when we leave our known cultural context to enter into international business, the scene changes dramatically. Different cultures have different values, attitudes, morals, behaviours and linguistic styles.’ It is very vital for them to negotiate across Brazil’s culture by communicating and interacting with people who have been there or are still living there. The aspect of culture should not be overlooked because Brazil is different from Germany, UK and other countries and this will enhance the result of their proposed entry.

It is also important they have a clue about the culture and after succeeding in entering, they should ensure they build a long-term relationship with their customers and all other stakeholders. Ferraro, G.P (2010) also consented that, ‘companies should avoid cultural cluelessness and concentrate on long term relationships because when negotiating with people from very different cultural backgrounds, the chances of misunderstanding increase enormously. For example, LIDL failed in Norway and people interview there think they did not understand their culture very well and their values.

According to a research carried out by a student, who looked into LIDL by taking a stakeholder approach. He said, some Norwegians believed that they ignored Labour unions. Some will tell you that they never shopped there, because they didn’t want to support a foreign company that ignored the labour unions, build large and unattractive buildings in their towns, only had unfamiliar food in the shelves and who sent the profit out of the country.’ LIDL needs to be careful when they enter into Brazil and ensure they put goods consumed by Brazilians on the shelf. Ferrarro, G.P (2010) concluded that, ‘successful international business negotiating is conducted in a cooperative climate in which the needs of both sides are met and in which both sides can emerge as winners. He said it is only under this circumstance that a business relationship will have a chance of lasting well into the future.’

Considering the Hofstede’s framework, Power distance, and uncertainty avoidance is very high and it is much of Masculine is very high. The only limitation of hofstede’s framework is that it was done through survey in different countries. Power distance affects culture and the way we communicate, so in Brazil, Power distance is very high which reflects that there is distance between the rich and the poor. This is why Attitude really matters when considering the culture of an organisation. It reflects underlying values. WILD, J.J et al (2010) concluded that, ‘just like values, attitudes are learned from role models and differs from one country to another because they are formed within a cultural context. He also said that people in the Latin America and Mediterranean cultures are casual about their use of time, they maintain flexible schedules and would rather enjoy their time than sacrificing it to unbending efficiency.’

Organisations should be able to bring in place things that will reflect values and customs of people. Laura Luo (2011) concluded in his lecture that, ‘Major problems of cultural collision are likely to occur if a firm implements practices that do not reflect local customs and values and/or employees are unable to accept or adjust to foreign customs and that religion can be a powerful cultural force in societies of all levels of economic development.’ It is vital for organisations to consider the main religion in a country. Brazil’s main religion is Christianity.’ According to Pew Global Attitudes projects in 2002 researched that Number of respondents saying religion is very important in their lives are 80%. This shows there is opportunity for LIDL here unlike Malaysia that is constituted mostly with Muslims and they mostly rely on Halal products.

Some other limitation is that nationalities may view acquisition by foreigners unfavourably and costly which often associated with high acquisition premiums and high political risks. Food production will be there always because people eat and it will not die but innovation of new ideas is needed. If an organisation cannot lead change, then they should be managing to catch up. Is it riskyNo, it is not risky since it can continue, just that it can change. There is existence of political risks and economic risks are very high. If risk is high, we need to avoid risk and risk avoidance is the key factor. Low risk means more attractiveness. Brazil market is a growing market, and then it is attractive

Despite all the attractiveness, there is tendency of some risks either economic/operational risk or political risks. This is why it is important for multi-national companies to look into the timing factor and see what is currently happening in the country they intend going. It is important for LIDL to consider their capabilities, scan the external environment to compliment whether they should go or not. It is important for companies to take risk because it means they are so confident that even though the future is uncertain. This is why the proactive issues were explained above. Looking into Brazil, Lasserre, P (2007) concluded that, ‘operational risks directly affect some countries because government regulations and bureaucracies add costly taxation or constraints to foreign investors or because the infrastructure is not reliable.’

Considering the Brazil, John Paul Rathbone(2011) said in the report that, ‘Cheaper imports have made Brazilians feel richer, feeding a consumer boom but domestic manufacturers have appealed for help and the same kind of tariff protections that characterised the doomed economic model of bygone years. Finally, to deal with the global financial crisis, the government opened up the taps and has only just started to withdraw the stimulus. Ultra-low interest rate in the United States, Europe, and Japan has flooded the country with capital, pumping up the economy further. Bank credit is now growing at a 20 per cent annual clip.’ This implies some of the economic factors

In BBC news, the political factors determine the risks of doing business in a country. In January, there was a change in government on Brazil where Ms Rousseff Dilma was sworn in as the first woman president of Brazil. Rousseff singled out his work over the last eight years to reduce poverty and promote economic prosperity. The most determined struggle will be to eradicate extreme poverty.’ We can be a more developed and fairer country. Hill, C. W (2011) argued that, political forces cause a drastic change in a country’s business environment that adversely affect profit and other goals of a company. He later said political risk tends to be greater in countries experiencing social unrest and disorder. A change in political regime can result in the enactment of laws that are less favourable to international business. Since LIDL has strengths in providing low cost products and the newly elected president believes there is still poverty and some people are suffering, it is an opportunity for this company.

Considering the core competences of LIDL, which are Nutritional food productions, cheap products Production innovation, Corporate Social Responsibility, Operational excellence, Global supply chain. Paula A. I (2011) reported that Jacques Sarfatti, from recruiter Russell Reynolds said that, ‘Europeans have been coming to Brazil, but not Americans and are seeing opportunities there and that one of the key sectors for foreigners is energy, mostly because of the country’s expanding oil and gas exploration industries. There are also opportunities in infrastructure, mining, retail, and finance. Interest in Brazil is increasing as the country gears up to host the World Cup in 2014 and the Olympic Games two years later.’ This shows that there are opportunities for this company entering into the country as it is now recovering well.

Considering the above discussion, it is important for this company to use a model that will fit into the culture of Brazil. Then, how about marketing internationallyIf LIDL is entering through acquisition into Brazil, it should consider how to market its product internationally. This will depend on the segments they are targeting in the country because marketing strategies depends upon a firm’s marketing orientation and targets markets because what sells in one company does not mean it will be bought in another company. The best ways to identify consumer market segments within and across countries include demographics (Gender, Religion, Income and age) and Psychographics (lifestyles, values, and attitude). However, there might be some challenges to global brands such as language factors, brand acquisitions, country of origin images, internet, and electronic commerce.

In conclusion, sometimes when a company is just entering into another country, products needs to be changed to suit the culture. There might be some alterations in the product policy due to some legal reasons, cultural reasons, and economic reasons. In addition, when using an entry strategy, they should choose a price strategy that will suit them and considering brands, currency value and inflation rates. I belief with the discussion made, going through an acquisition of a company already in existence in Brazil will give them the chance to understand the culture better and produce products that will meet the needs of the society rather than putting things they would not buy on shelf. This gives an opportunity to acquire an existing company there that will give them a grounded understanding of how things work in their company.

BIBLIOGRAPHY

Marc pfitzer and Ramya Krishnaswamy. 2010. http://www.fao.org/fileadmin/ user_ upload/ivc /docs/ UnileverandProjectNovella.pdf
LIDL official Website. http://www.lidl.co.uk/cps/rde/xchg/lidl_uk/hs.xsl/4035.htm(05 May 2011)
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Free Essays

Strategic Review of Associated Business Consultants and their use of IT

Introduction

Over the years businesses have become extra reliant on technology and moreover throughout the current economic climate as there is a huge importance for a business to keep up to date technology. Competition is driving companies to become more efficient and effective through the purchases of IT developments. Gaining competitive advantage over rivals can play a major part in the use of information technology.

Based on the business structure, I have looked at the IT systems that are currently in place to see if there can be any alterations to help increase productivity and also business strategies. The following report goes through this.

General Background

The firm is a large sized business based on the fact that there are over twenty offices throughout the UK with 50 partners and also 350 support and administration staff. The firm provides business and financial information to clients, so it is vital to have a system that holds the relevant information and in one secure place. The current system consists of standard office software which includes basic word processing, access to spreadsheets and also a range of specialist software. Some IT provision has been inherited; therefore creating a wide range of systems between sites and has consequently meant communication has been limited to email.

SWOT Analysis

A SWOT analysis of the competitive environment is used so that the business can identify its position in the market place and recognise potential future strategic options.

Figure 1 – SWOT Analysis

The strengths of the business include factors such as the firm expanding quickly as per the success in various consultancy projects. This has meant the need for work to be required overseas and is to become a huge benefit to the business. Other strengths are that the business holds many offices across the UK, which will also provide future prospects.

The main weakness are that the business is running on a wide range of IT software and systems, meaning that all data will be scattered around the various sites and almost everything will be in a different format. These issues cause problems in terms of wanting or needing files that are saved on a different computer in another office. This also interferes with the lack of communication between sites. Communication can be shown in all different ways by means of voicemails, meetings, emails, and reports. In terms of this business, the current system has only allowed communication between sites to be via email. In a business of this size, poor communication can result in a lack of planning and also mistakes by employees that later cause complication to the business. This is a major problem as the ability to communicate is one of the biggest factors in business success and an essential part of a smoothly running business, for example business partners need to discuss future goals and tactics.

Another concern is the lack of corporate IT policies and procedures throughout the business, therefore adding to the communication problem. Policies & procedures are required when there is a need for consistency in day-to-day working activities. These procedures allow employees to understand their roles and provide the ability to work to the same rules when dealing with activities that are of importance to the business, such as the acquisition of hardware and software. There are different IT policies that are needed within the business environment and would include IT Administration, IT Asset Management, IT Training and Support, IT Security and Disaster Recovery and Software Development. Despite the fact that these offer a firm background, they do not provide the employees with any formal training.

While the strength of the business is growing, the opportunity for working overseas has become available, therefore creating many opportunities for future business and in turn more projects.

Although the existing system has provided the ability to grow, it is hugely noticeable that due to the quick expansion, the IT system needs to be reliable and accessible in different offices, which the current system is not. Therefore, the current system is not providing the best resource, so is not allowing the business to give the best possible service. So the need for a decent system is an important part in the running of this business. Even though a new system is needed as a matter of urgency, there can be several threats that come about due to the transition from the old system to the new system. These problems can be anything from teething problems to the loss of important data, so planning is important. Another possible threat is the competitors, as they can use their IT systems to gain advantage.

Competitive Advantage

A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.

The most significant model for assessing the nature of competition in a business is Michael Porter’s Five Forces Model. It shows how a firm can use these forces to obtain a sustainable competitive advantage. According to Porter and the model below, there are five areas of the external environment that affect the profitability of the firm. These include supplier power, buyer power, threat of new entrants, threat of substitutes and also Industry rivalry. These are used as an action plan to exploit the information system by investigating how IT might spawn new businesses.

The business can use their IT systems to gain competitive advantage using Porter’s five forces to do this.

Figure 2 – Porter’s Five Forces

To gain advantage through the threat of new entrants, the business must raise the level of competition by means of providing a unique service that no new entrant can compete against, thereby reducing its appeal.

To gain advantage through the threat of substitutes

To gain advantage through bargaining power of suppliers,

To gain advantage through bargaining power of customers,

To gain advantage through Intensity of Rivalry

Porter suggests that any firm can be profitable in any industry, it all depends on the strategy that the firm adopts. There are two significant strategies that any firm can follow to improve their profitability. The firms that fail are those that do not follow any strategy, or try to follow both. These firms get ‘stuck in the middle’.

Low-cost Strategy

The firm adopts a position trying to minimise all its expenses. It should set prices below other firms in the market. Ordinarily this would seriously constrain profit margins, but the second aspect of this is that the costs of providing the product are pushed down even further so even though the firm sells at a lower price it still makes more profit than other firms in the industry.

Differentiation Strategy

If the firm’s competitors are trying to undercut the prices of its products, there are two choices. Fight them in a price war to keep matching or undercutting their prices, or make the products different so that it doesn’t matter how low their prices go, there will still be some customers that prefer the goods that the firm produces. The price war has a tendency to reduce profits almost completely, so obviously a different product is the slightly more desirable method. This is why there are so many subtly different products on the supermarket shelves.

PEST Analysis

Also by using the PEST framework we can investigate many different factors in a firm’s macro environment that may be affected by a change in the way the business will be run following an upgrade in an Information System.

Figure 3 – PEST Analysis

Advantages of a New IT System

As with any investment and also every business, many advantages and disadvantages need to be considered to establish the best way forward. The intention of a new system is to provide a structured framework and a practical approach, providing major increases in processing speed, cheaper memory and improved storage capacity.

Other advantages and benefits of updating a system include:

Better safety

Improved service

Competitive advantages

Less errors

Greater accuracy

Higher-quality products

Improved communications

Increased efficiency

Increased productivity

More efficient administration

Further opportunities

Reduced labour requirements

Reduced costs

Superior financial decision making

Superior control over operations

Superior managerial decision makingAdded value to products (goods and services)

Disadvantages of a New IT System

However, every business must consider start-up costs when implementing an IT system. In addition to the cost of hardware and software, some technology dealers require businesses to purchase user licenses for each employee that will be operating the system. There are also other costs that need to be anticipated when introducing new software into a business; these can include the cost of training employees and maintenance costs and could therefore get expensive. Although the initial costs would be high, the possibility of greater competition is of a greater advantage.

Other difficulties include business opportunities being missed, lack of integration of systems, and also priorities are not based on business needs. Some or all of these can occur when the firm does not have the means to plan and manage information systems strategically.

Whilst the business works with data, a key concern is the security of the data, as the input of a new information system would enable the business to process more and more personal data. For instance, as more data is set up and the more information is exchanged, there becomes a greater risk that the information will be lost, corrupted or misused.

Information technology systems are vulnerable to security breaches, mainly when they are accessible via the Internet. If the correct measures are not in place, this data could be lost or misused.

The Data Protection Act says that:

“Appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data.”

Data Protection Act 1998

The statement above is taken from the Data Protection Act and is the seventh data protection principle. It means that you must have appropriate security to prevent the personal data held being accidentally or deliberately compromised. If data is not properly safeguarded, this can seriously damage a business’s reputation. To protect the business, it must make sure it has the right security, backed up by policies and procedures and also the use of reliable staff.

Recommendations

There are 50 partners and 350 support staff that require office software and a range of specialist software that include customer and project management packages. The business would help from a WAN (A wide area network), this is a computer network that covers a broad area and are all connected together. Their software packages could be held in a centralised place and customers details held on the central server so each employee has access to them and be synchronised, which creates a more secure system and better data integrity. A WAN could allow for an intranet for better communication purposes, overseas and internationally. Another advantage of a WAN is the allowance of being able to have remote access from where ever in the world, and due to the firm now achieving business overseas, this is essential.

In addition to the WAN, the business would also benefit from the investment of up to date software in both word processing and spreadsheets, as these would help both the employees and also at managerial level. Offices these days try to keep up to date software as it helps the general running of day to day activities.

Conclusion

Short Term Goals

In terms of short term goals, I recommend that all computers are updated immediately with the latest version of office software as this can be done easily with the right planning. I also recommend that the IT policies and procedures are written and implemented to start bringing all the offices and staff together to create one whole business across the various sites.

Long Term Goals

It is imperative that the long term goal of the business is to look into updating and combining their systems. In order to do this, a strategic plan must be put in place which looks into all aspects of combining systems throughout the business. This may include the advantages and disadvantages, costs and also problems that may come about in the process. Once an agreed time limit and plan has been agreed, work can be started to merge the office systems into one.

Bibliography

http://www.ico.gov.uk/for_organisations/data_protection/the_guide/principle_7.aspx

http://www.bbc.co.uk/dna/h2g2/A593345