Effect of Globalization on Organizations
Globalization refers to the opening up of the local and national perspectives to a broader outlook into other parts of the world. This is mainly associated with such practices as the free movement or transfer of capital goods and services. It has several impacts on the organizations including the fact that it has provided the businesses with expanded markets. This means that businesses that previously operated nationally are able to supply their goods in other countries. This has a direct impact of increasing the sales that the companies make. The high sales made by the company imply that the profit levels are also high.
Another effect is on the organizational culture where the organizations must embrace an international perspective in their organizational culture approach. The organizations start addressing such issues as the cultural differences that occur in the different regions in which they operate. Many multinationals have by this learned to adopt different standards in different regions of the world. This is done because adopting a similar culture in the different regions results to loss in some regions. The companies, therefore, conduct promotions and communication strategies differently. They also consider the products which will receive reception in the different places and therefore alter products in the different regions.
Another way that globalization affects organization is in the technological aspects. Businesses are forced to meet a higher technological expectation a factor that requires them to meet a higher expectation from the wider global region. Globalization has also affected the system of leadership where the formerly embraced autocratic style has been replaced by the transformational leadership. The transformational leadership is more focused on team work and a centrally decision making organization.
Leadership has also been affected as it is the style of leadership embraced by multinational companies is highly dependent on the stage of the company in its set lifecycle. This is unlike in the past where the leadership applied was similar in all situations and circumstances.
Globalization also has an effect in the wage disparities that are offered by the organizations.
The globalization concept has also affected the gender roles within organizations. The place of a woman has been changed by the globalization trend where women have taken on the role of leadership unlike in the former times.
Globalization also has an effect in the wage disparities that are offered by the organizations. The same job pays better for people in western countries than for people in third world countries. Some people rate this as exploitation on the people from the third world countries and lack of equality. People from these countries, however, tend to embrace it as they have high unemployment levels in their countries. The organizations have, however, gone into a level of using child labor in these underdeveloped countries a factor that is harmful.
From a Christian view, some of the effects that globalization has on organizations are harmful while others are useful. Some of the harmful practices that result from globalization include child labor and wage disparities. These practices treat people from the third world countries differently and it tends to exploit them. The organizations should consider paying equal wages to people in the different regions. The other aspects including change of the organizational cultures are not detrimental but they are only so when they degrade moral values.
Effects Of Globalization On Organizations 2
Effects Of Globalization On Organizations 1
Homebuyers are fully aware that speculative bubbles have cropped up in various countries and asset markets. When there is a housing price bubble, homebuyers believe that a home considered too expensive for them at the present has an acceptable pay for since they will be a major price increase in the future. This means that homebuyers will not have to save money. They anticipate the increased value of their homes to do the saving because it leads to huge profits. Homebuyers recognize housing investment as something that is relative to stock market. They believe that no matter what happens to the price of housing, they will still get people to buy their homes.
Homebuyers are also fully aware that if bubbles are endogenous and are maintained by rising prices, then the more inelastic places will have longer and bigger bubbles due to the rising demand. The rising demand is more likely to interpret into rising prices. Homebuyers are motivated by the fact that the commercial real estate markets display a pattern that is quite comparable to housing market. The most common factors that influence price movements in both markets are demographics, demand, income growth, and changes in financing mechanisms or interest rates. This means that any future decline in house prices will be due to negative influence of the factors that affect price movements.
Homebuyers do not anticipate a very huge decline in home prices in future if demand for housing falls. This is because the elasticity of supply has been a key factor in the recurring performance of home prices. Homebuyers perceive the link between supply inelasticity, and an exogenous bubble as somewhat related to the link between elasticity and any exogenous shift in demand. They trust that when there is a bubble, places that are more inelastic will witness large shift in prices, and the extent of inelasticity required for the bubble to continue to exist increases with time. Homebuyers believe that such effects will cause greater welfare losses through overbuilding in areas that are more elastic because the construction reaction to the high optimism is more severe, and hence there is need for house seekers to buy homes that has already been build.
HOUSING BUBBLE 1
Stakeholders and coalitions
For an organization to achieve its objectives, it has to involve everyone who has an interest in its operations (Freeman, 2007). Involving all the stakeholders brings more ideas on the table; increases output, and promotes a better understanding of the surrounding society. Any business should figure out who its stakeholders are, what issues they may bring with them, and which of them need to be involved and at what level. This would enable the company to engage in a participatory process that ensures it gains all the advantages that comes with stakeholders (Greenwood, 2007).
This paper seeks to discuss the various challenges in encouraging stakeholders to form a coalition that would assist me in achieving my goals, as well as, the various steps I would take to overcome these challenges. The paper will also analyze the various primary and secondary stakeholders groups, their roles, and relationships. This will enable me to recommend ways stakeholders may influence the destiny of both the business and the society. The paper will conclude by discussing the range of issues that revolve around a business, as well as, the society surrounding it.
Challenges in forming a coalition
This section will anticipate any challenges in encouraging stakeholders to form a coalition and also elaborate on the steps I would take to overcome each of the challenges. A coalition refers to a group of individuals or organizations that agrees to work together towards a common goal (Taylor, 2007). A coalition may be a loose association whereby members work together for a short period of time to achieve a specific goal, after which it is disbanded. Coalitions may draw from a community, a region, a state, or even the nation as a whole. Irrespective of their structure and size, they exist to create, as well as, support efforts to attain specific objectives.
In most coalitions, the democratic principles of members from one side may not always be acceptable to members that have a lot of resources and power. As a result, it is very difficult to convince a less powerful organization to create a coalition with an organization that has more resources. For me to benefit and achieve my goals from a coalition whereby one member is less powerful and has lesser resources, I would carefully seek to define the relationship between the two different member groups. There are numerous benefits in coalition building which may go beyond increased power among member groups. A well defined coalition may strengthen members and enables them to be more effective in other arenas.
The second challenge in encouraging stakeholders to create a coalition is the likelihood that members may be distracted from their work. In such a situation, non-coalition efforts may become less effective and the organization may be weekend by the coalition. This is usually the case when stakeholders will be forced to contribute most of their resources and time towards into the coalition. I believe that a coalition of organizations may assist in winning more fonts as compared to a single organization working alone, hence increasing the potential for success. However, when the members contribute all their expertise and resources towards the coalition, the individual organization may deprive itself of technical or personnel resources necessary in achieving its objectives. To overcome this challenge, a coalition should develop new leaders (Taylor, 2007). New and experienced leaders can be able to step forward and lead the coalition openings and strengthen the groups and the coalition as a whole.
The biggest challenge in encouraging stakeholders to create a coalition is overcoming the mindset among most people that one must constantly cater for one side to keep a coalition together especially when negotiating tactics. It is a common belief that if one member in a coalition prefers high profile confrontational tactics, then they may dislike subdue tactics since they are not exciting enough to mobilize support. Other members may choose a low profile stature and conciliatory members may be alarmed by confrontations fearing that they might escalate the conflict and make the eventual victory unattainable. To overcome this challenge, I would strive to increase the impact of each organizational member’s effort towards the success of the coalition. This would result in increased involvement in the coalition hence more people would have a better understanding of each other’s issues.
A coalition can be as strong as its weakest link. When members form a coalition, they receive different levels of resource contribution, experience, as well as, different internal problems. As a result, organizations that contribute a lot of resources and leadership may be frustrated with other member’s shortcomings. Individual stakeholders may also not receive credit for their contributions towards a coalition. On the other hand, stakeholders who contribute a lot may feel as if they did not receive enough credit. In most cases, coalitions are made up of stakeholders who have never worked together before. They all come from diverse backgrounds and different viewpoints. As a result they have to figure out how to honor each other’s differences and combine forces to achieve the coalition’s objectives (Greenwood, 2007). This provides a platform that allows the duplication of efforts and improves communication among key players.
Influence of stakeholders to businesses and the society
In this section, I will recommend some of the various ways stakeholders can influence the destiny of both businesses and the society. Stakeholders are made up of people who have a strong interest in the philosophical, political, as well as, economic identity of an individual or organization. In most cases, stakeholders develop an interest in organizations based on whether they can affect or be affected by it. As a result, the more they stand to lose or benefit from the organization, the stronger their interest grows. The more heavily involved stakeholders are within the society, the stronger their interest as well. The following are some of the approaches stakeholders can take to influence the destiny of both businesses and the society.
The first approach is implementing social change. Stakeholders may seek to improve the social harmony that could alter the social climate for members of both the racial or ethnic minority, as well as, the majority (Freeman, 2007). Stakeholders should also involve workers in decision making. This would improve workers attitude hence make people more satisfied with their jobs. Stakeholders should engage in environmental protection programs. This may include conserving natural resources, paying attention to climate change, as well as, other environmental efforts.
Primary and secondary stakeholder groups
A primary stakeholder refers to the individuals or organizations that may be most affected by the outcome of a project whether positive or negative. According to most analysts, primary stakeholders are often divided into different groups based upon the prevailing demographical factors such as socioeconomic status, age, ethnicity and gender. A secondary stakeholder refers to organizations or individuals that are not affected directly by the outcome of the prevailing project yet they still have an interest in the venture. Secondary stakeholders often assist primary stakeholders, thus may include government agencies and banks (Taylor, 2007). When conducting a stakeholder analysis, one has to consider the fact that both the primary and secondary stakeholders will have a vested interest in the outcome of the project and they may affect its implementation processes. In most cases, an organization’s secondary stakeholder may be the most vocal even if they do not hold a financial stake in the company.
In summary, stakeholders refer to those individuals or organizations that have vested an interest in the company. Identifying and involving stakeholders is significant in understanding the nature of their interest in the effort. With such understanding one is able to invite their involvement, demonstrate how the effort may benefit them, as well as, address their concerns. Keeping stakeholders involved and supportive can be made easier by conducting a stakeholder analysis.
This helps in determining their levels of interest and influence over the effort. Once one has such information, they can make an informed decision on the appropriate approach for each individual and organization (Greenwood, 2007). Depending on one’s goals for the effort, one may decide to focus on those with the most interest and influence, or chose those that are most affected by the effort. As in most societies, working with stakeholders as a coalition has to continue for the long run so as to achieve the desired level of participation and support needed to achieve set goals and targets.
Freeman, E. (2007). Strategic Management: A Stakeholder Approach. Brooklyn : Harvard University Press.
Greenwood, W. (2007). Issues in business and society: readings and cases. New York: Houghton Mifflin.
Taylor, L. (2007). Stakeholders, Advocacy Coalitions and the Policy Process. New York: Florida Atlantic University.
Running head: STAKEHOLDERS AND COALITIONS
Running head: STAKEHOLDERS AND COALITIONS i
Business Communication Trends: Websites and How Businesses Communicate With Customers and Employees through Intranets and Extranets
Communication is an essential aspect of any business organization. This is because a rapport must exist between two parties for a deal to materialize. At the same time, the marketing process for goods and services, as well as the production process is effected through proper communication. This means communication is part of business activities and takes place inside and outside the organization. Business communication is accomplished through several means. In the first place, information is passed through word of mouth, written means, and visuals means. The same information is passed via several instruments, including websites, fax, intranet, extranet, and social media among many. This paper deals with business communication using websites, intranets, and extranets.
Websites and Business Communication
A website refers to a page designed in a special format containing special content in form of texts, videos, images, and audio information. A website is hosted on a server accessed through a network. A network in this case is a private local network within a certain area or an Internet. Access to any website is made possible through an address abbreviated as URL or uniform resource locator in full. There are myriads of websites hosted on myriads of servers all over the world. As long as one has an Internet connection, he or she can access any public website all over the world. As a result, all websites together constitute a world wide web (www). The attraction of websites to audience is based on several factors, including the content, and layout of the content. Since the information is displayed on a webpage, the design of a webpage is an essential aspect of website communication.
A webpage is essentially a document with plain texts formatted using special instructions. Information on the webpage can be accessed anywhere in the world. Whenever one writes the URL address of a particular website in a browser, the webpage is transported from the host computer with the hypertext transfer protocol (HTTP) to the user’s webpage content. Websites comes in varieties of forms and design, but they are constructed from the basic formatting language of a web page (Best of the best business websites, 2010).
Websites are essential tools for business communication. Business organizations design their sites to communicate mostly with customers and suppliers. In this case, the site is designed with details about the organization and products offered. In some cases, a video presentation of products or service is embedded on the site to communicate to the audience about the company. Through the website, links to various information, product gallery, and mailing list can be accessed to enhance communication. To encourage feedback, a provision for blog is made on the company’s website whereby the audience communicates their views. In addition, websites have direct phone lines where the customer can call and make some inquiries. Websites are also vital for online selling. In this case, a special page is designed to facilitate the sale. The customer is required to fill a certain form with relevant information, make online payment, and wait for the delivery of goods and services requested. Websites are accessed anywhere in the world without restrictions. This means that business organizations have a wide audience (Best of the best business websites, 2010).
Intranet and Business Communication
This is a computer network within an organization that uses Internet Protocol expertise to operate systems, share information, and provide computing services. Intranet contrasts with Internet in that an intranet is a network within an institution, but Internet is a network between institutions or organizations. An intranet mostly composed of numerous local area networks and is at times referred to as an institution’s internal website. Its importance is to help each individual organize their work in their desktops with minimal cost and time as well as helping them be competitive and put all efforts to increase productivity (Madely, 2003).
An intranet has the capability to host several private websites and comprise an important constituent and central point of domestic communication and collaboration. It also constitutes popular Internet protocols, such as SMTP (E-mail), FTP (file transfer protocol), and HTTP (web services). It can also be understood as a concealed analog of the Internet, or as a confidential extension of the Internet limited to an organization (Madely, 2003).
Uses of Intranet
Intranet use is on the increase in business operations, such as delivering applications and tools to enhance productivity. Other uses also include a platform for corporate culture change. For instance, a group of employees can share important job matters in an intranet forum. As a result, they can birth new ideas in quality, management, productivity, and other corporate matters. Intranet also allows accessibility to public Internet by use of firewall servers, especially in large businesses. It provides security to user by screening inbox messages as well as the outgoing messages. Experienced users of intranet work together with the technology and editorial team to create in-house sites. In larger institutions, intranets are most commonly managed by the human resource or the communications departments or even both of them (Madely, 2003).
Benefits of Intranet on business organization
Intranet has several benefits on business organization. The first one is workforce productivity. Through intranet, users can trace and view information quickly and use applications related to their responsibilities and roles. By the help of a web browser interface, users can access data available in any database the institution wants to provide anytime and anywhere. An intranet also saves time in an organization. Through intranet, employees are enabled to access relevant information conveniently with no discriminations of interference whatsoever. An intranet is an essential tool for communication. Intranets are reliable tools for communicating within an institution both in top-bottom and bottom-up communication. Workers therefore, get privileged to keep-up-to date with the main focus of the organization. Information is conveyed through e-mail, blogs or chat messages.
Intranets enable an organization to undertake web publishing. By use of web technologies and hypermedia, intranet allows easy maintenance, and access to cumbersome corporate knowledge. Examples include company policies, employee manuals, business standards, training, benefit documents, and news feeds. Through intranets, business operations, and management are enhanced. Intranets serve as platforms for development and deployment of applications that sustain business processes and ideas across the Internet worked enterprise. Intranets are cost-effective. Intranet reduces manual documentation, such as internal phone list, requisition forms, and procedure manuals. Instead, users are allowed to access information and data through web-browser. In addition, collaboration is enhanced. Teamwork is encouraged by use of intranet because information is accessed easily by all authorized members. Other benefits include cross-platform capability, building of one audience, common corporate culture is promoted, and access to immediate updates (Madely, 2003).
How a Business Communicates Through an Intranet
Business communication through an intranet is illustrated in the figure below:
Figure 1: Intranet communication and collaboration tools
From the diagram above, intranets provides a channel through which business communicates in the whole organization. Various departments are linked through an intranet thereby providing a channel for collaboration and communication. Based on the above diagram, business communication is accomplished using faxes, voicemail, paging, groupware, and electronic mail. Through the intranet, personnel from various departments collaborate on a given task. Collaboration involves communication. The diagram below illustrates collaboration through the intranets:
Figure 2: collaborating through an intranet
From the diagram, it can be seen that the intranet provides various tools for collaboration. They include data conferencing, video conferencing tools, chat system, voice conferences, electronic meeting system, and discussion forums. Collaboration is done considering the fact that business organizations has large departments that must be interlinked for the general success of the entire organization.
Extranets Use in Business Communication
An Extranet is a form of private and secure Internet communication practices in business organizations. The primary purpose of extranets is to share to private and confidential information to customers, business partners, collaborating firms, and suppliers. This means that an extranet is an extended form of intranet to allow the outside collaborators communicate with a particular business organization when a need arises. Extranets are enhanced through Internet connection (Vlosky, Fontenot & Blalock, 2000). The diagram below represents the basic circuit diagram of an extranet:
Figure 3: circuit diagram of an extranet (Wifi Notes, 2012, p. 1)
From the diagram, it can be seen that the extranet is enhanced by an Internet connection, and the local area network. A customer or a collaborator accesses the local area network or intranet through an extranet severs powered by an Internet. The extranet server connects specific organizations of places and thus it is secure and private (Vlosky, Fontenot & Blalock, 2000).
Application of Extranets in Business Communication
Extranets are vital in maintaining business relationship with customers and suppliers. The principle working of extranets is similar to the intranet with the difference being on the coverage issue. The general goal of extranet is to communicate with clients, partners, and suppliers. However, the application of extranet in business communication is wide, depending on the nature of the business organization. In manufacturing, extranets are used for sharing and transferring manuals for various machines. In financial services, extranets are used for sharing customer information among various banks. During communication, the same tools used in intranet communication are applied in extranet communication (Callaghan, 2002).
Extranets presents several advantages on organizations’ communication. In the first place, a large amount of electronic data is shared thereby improving on the efficiency of communication. Through extranet connection, companies share product catalogues to companies exclusively known to the business. Joint development and training programs are also facilitated through extranets. Through extranets, various essential services are obtained by business organization. For instance, online banking service system is managed by one bank on behalf of other banks or companies. However, extranets are expensive and are prone to security threats (Vlosky, Fontenot & Blalock, 2000).
Business Communication through Intranets and Extranets
Intranets and extranets form an interconnected link in an organization. The diagram below indicates the relationship between in Intranets and Extranets in business communication:
Figure 4: Intranet and extranet communication in business organization
From the diagram above, a relationship between intranets and extranets in communication can be deduced. From the diagram, a company maintains a corporate intranet linked to various departments and other sister companies. The major departments, including engineering, marketing, human resources, and legacy data maintains their separate servers linked at the corporate intranet. On the other hand, customers, and suppliers are linked to the intranets. This means that anyone from any department liked to the intranet can communicate with customers and suppliers via the intranet. In conclusion, the communication trends in the current business organizations are maintaining intranet and extranets at the same time to reap on maximum benefits.
Callaghan, J. (2002). Inside Intranets & Extranets: Knowledge Management and the Struggle for Power. Palgrave: Macmillan.
Wifi Notes. (2012). What is Extranet? Retrieved January 21, 2013, from wifinotes.com: http://www.wifinotes.com/computer-networks/what-is-extranet.html
Vlosky, R. P., Fontenot, R., & Blalock, L. (2000). Extranets: Impacts on business practices and relationships. The Journal of Business & Industrial Marketing, 15(6), 438-457. Retrieved from http://search.proquest.com/docview/222015430?accountid=1611
Madely, d. P. (2003). Internets, intranets and extranets: New waves in channel surfing. Online Information Review, 27(5), 372-373. Retrieved from http://search.proquest.com/docview/194491365?accountid=1611
Best of the best business websites (free resources): The 2010 selection. (2010). Reference & User Services Quarterly, 50(2), 132-134. Retrieved from http://search.proquest.com/docview/818743327?accountid=1611
WEBSITES, INTRANETS, AND EXTRANETS COMMUNICATION 11
Running head: WEBSITES, INTRANETS, AND EXTRANETS COMMUNICATION
Etisalat’s Strategy and Solutions to Compete in the Global Market
The Emirates Telecommunications Corporation
The Emirates Telecommunications Corporation (Etisalat) is a UAE-based telecommunications services provider, currently operating in 18 countries across Asia, the Middle East and Africa. Etisalat is considered the 13th largest mobile network operator in the world with a total customer base of 100 million. Etisalat recently announced several ambitious strategies to take the corporation into the forthcoming era of competition. This paper investigates the strategies used employed by Etisalat in an efforts to expand its business. The investigation further involves products and supply chain of the company.
The growth of Telecommunication sector in the United Arab Emirates is pegged on the growth of Etisalat. Etisalat has enjoyed a monopoly of telecommunication market in UAE for some time before the entry of DU, another telecommunication company, into the market in 2006 (Etisalat Annual Report, 2010). By the DU came into the UAE, the telecommunication market was already saturated by the services of Etisalat. Although Etisalat has been a dominant force in UAE telecommunication market, it has not taken its dominance for granted. The company has put some strategies in place to ensure its market share is maintained. This has been done through the introduction of various ranges of products to maintain the customers (Etisalat.ae, 2010). It should be noted that the telecommunication market is volatile.
Although Etisalat has saturated, the probability of being replaced by another company like DU is high. From 2000 to 2005, Etisalat recorded a steady growth in revenue, net profit, number of subscribers, and number of national and international calls. However, from 2005 to 2010, the company started registering a decline in the mentioned areas. This means that there has been a reduction in the market in UAE for Etisalat. The reduction is as a result of the slowdown in the global economy and the entry of DU into the market. Also, Etisalat had already saturated the market by 190% by 2008 and thus there was no room for further growth (Kashyap, 2011). This has prompted Etisalat to develop a global expansion strategy.
Analysis of Etisalat’s Global Expansion Strategy
Etisalat has identified the Middle East, Asia, and Africa as its main focus areas for its global expansion strategy. The entry into this market is done through the analysis of the underserved area and introducing innovative and value-based high quality services. The company penetrates the new market through local telecommunication companies in the region indentified whereby it buys major or minor stakes for the local companies. Also, Etisalat has been penetrating the international market through establishment of fully owned local subsidiaries. The global expansion strategy of Etisalat has been succeeding since its inception, such that the company is among the fastest emerging global brands with coverage in about 18 countries. Whenever Etisalat enters new market, it expands a subscriber base with speed and introduces innovative products.
A case of Etisalat Nigeria
In 2008, Etisalat entered Nigeria, the most populous country in Africa with a population of more than 100 million people. Etisalat formulated an expansion strategy to capture 22% of the telecommunication market. By June 2008, the company had captured about one million subscribers through its aggressive marketing campaign (Sambidge, 2012). During its time of entry in Nigerian telecommunicating market, Etisalat focused on quality to beat competition. The strategy worked well because by the end of 2008, the company was voted by the national telecom regulatory authority of Nigeria as the best service provider. By the end of 2010, the company had acquired more than five million subscribers. The information is shown in the graph below:
Figure 1: Growth of subscriber base of Etisalat Nigeria (Roger Field, 2012, p. 3)
Analysis of the Future Strategy for Etisalat
Although the global expansion strategy has improved the performance of the Etisalat, the future of the company depends on efforts to strengthen the current markets and venturing into new markets. The market in the UAE is supposed to be the capital base for the expansion program. However, the market in the UAE has already saturated and other players, such as DU have entered the market. This means that the future strategy depends on the new markets. Some of the current markets, including, Sudan, West Africa, Pakistan, and Tanzania are underserved. For instance, Sudan has a fixed line penetration of 2% meaning that there is potential for Etisalat to penetrate the Sudanese market in future. New markets, such as India, and Sri Lanka are potential exploits (Roger Field, 2012). The information in the table below indicates calculation of the possible market penetration size in future:
Table 1: calculates the future market potential for Etisalat (Kashyap, 2011, p. 5)
In addition, the UAE has put in place some plans for economic growth. They include Abu Dhabi 2029, and Dubai 2015. These plans involve diversification in industries, such as defense, SME segment, ICT, trade, and media. The establishment these sectors will boost the business of Etisalat because they will relay on Etisalat in their telecommunication needs. This means that Etisalat needs to strengthen its current grasp in UAE by remaining a leader in telecommunication services.
Business and Consumer Solutions
Etisalat has gained its market strength through its business products and consumer solutions. The company provides a variety of services in telecommunication. They include Internet services, mobile communication, and fixed line communication. Etisalat is among the leading providers of Internet connectivity services in the Middle East, and part of Africa, including Nigeria, and Egypt. Toward the end of 2008, Etisalat had 510 roaming agreements across 186 nations. The company further enables Voice roaming, GPRS, Third generation (3G) technology in mobile communication, and smart phone services, including blackberry. Etisalat further operates Point of Presence (pop) in richest cities in the world, including Network, London, Singapore, Frankfurt, and Amsterdam (Zawya, 2009). Etisalat has also launched variety of services for business and personal use as discussed in the section below:
The company combines three of its most admired services in a single access network. They include cable television, fixed-line broadband Internet, and landline services.
Solution for Business
Business enterprises are provided with varies of services. One of them is a multiprotocol Label switching connectivity, which gives secure and private network to business organizations. It has a speed of up to one GB between local and international offices. In 2011, the company announced a retail of mobile terminal and devices in 17 countries in Africa.
Mobile yellow pages portal
This service allows Etisalat mobile subscribers to access yellow pages services across all parts of the world.
Cable installation and maintenance services
Etisalat through its subsidiary company E-Marine PJSC offers cable maintenance services, cable installation, and sea bed survey work. The company is also installing a fiber optic marine cable from India to Europe (Carvalho, 2012). This will boost its telecommunication network.
Etisalat has unexplored potential in the mobile market. The company should exploit mobile content market and monetization of the mobile content. Also, the company has planned an expansion into new technologies. They include cloud computing services and a service called machine to machine (M2M). According to a study done by Infonetics in 2009, there were 87millionmobile devices embedded with M2M connections (Kashyap, 2011).
Supply Chain of Etisalat
Etisalat is among the largest telecommunication company in the world. The company has a wide network of customers all over the world. Also, the company relies on a network of suppliers, and subsidiary companies. As a result, its supply chain is extensive and complicated. However, the supply chain can be simplified into three main entities; customers, suppliers, and production or manufacturing unit. For the case of supplier, Etisalat has myriads of needs for its activities. Suppliers are varied and depend on the products. The management of most suppliers is decentralized meaning that suppliers are managed at branch level. The next segment of the supply chain is the production unit. The major production center is located in UAE. The production process of the company is a complicated process involving technical process of manufacturing innovative products renowned to the company. The manufacturing part is managed by various technical personnel, and engineers in various capacities. In the countries whereby the company has stakes in local companies, the production process is managed by the team from the local company and Etisalat (Today Dubai, 2012).
The production segment of the supply chain is also managed by contractors, and subsidiary companies. Then subsidiary companies plan their own production process and deliver a complete product and service to Etisalat customers. One of the subsidiary company is called E-Marine PJSC, which is concerned with installation of cable services for Etisalat customers. E-Marine PJSC further undertakes repair of data cables and has been instrumental for the smooth operations of Etisalat’s cable services. Another important supplier of Etisalat is Huawei Technologies Limited, which is involved in the supply of 3G devices for the Etisalat (Huawei Technologies, 2012). The last segment in the supply chain is the customer. Etisalat maintains a wide network of customers all over the world. Customers also include companies and institutions, such as banks that benefit from the services of Etisalat.
Strategy to Improve the Supply Chain
Etisalat has been endeavoring to provide quality products and services to its customers at a cheaper price to have a competitive edge over its rivals. As a result, it must develop its supply chain to ensure smooth delivery of telecommunication services that does not require delays. The services of the company are spread throughout the world meaning that the management of the supply chain should be enhanced to involve customers in all parts of the world. These means that the company ought to introduce services, such as cloud computing to run its services in one cloud for efficient management.
Recommendations and conclusion
Based on the strategies in place, it can be concluded that Etisalat is marching toward the right direction in telecommunication business. However, the company should guards its position in the developing markets because changes are inevitable in the undeveloped market, including Africa and Asia. As a result, it should carry out periodic market analysis and adjust to the predicted changes accordingly. Since the market in UAE has been saturated, the company should maintain its customer base by providing cutting edge products. The company should also venture into develop market, including Europe and USA by collaborating with already established companies. Although the company has grasped the market, it ought to continue being aggressive to retain its place.
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Etisalat’s Strategy To Compete In The Global Market 2
Running head: ETISALAT’S STRATEGY TO COMPETE IN THE GLOBAL MARKET
Chrysler Corporation: Strategic Management and Competitiveness
Competition in the 21st century’s global economy is becoming difficult, and challenging. It is filled with competitive opportunities and threats. Strategic management and competitiveness can help firms to enhance performance while competing in turbulent and unpredictable environments. The global economy has created a competitive landscape whereby events change constantly and unpredictably. The paper will discus, the impacts of globalization and technology changes on Chrysler Corporation, how Chrysler Corporation could earn above-average returns, the influence of Chrysler’s vision and mission statement on its overall success, and the impact of each stakeholder on the overall success of the corporation.
Impacts of globalization and technology changes on Chrysler Corporation
The world automobile industry is witnessing an unparalleled scale of change. Technology changes have seen the evolution of internet and World Wide Web that has helped the corporation to the lower the costs of communication as well as trading costs. Such move has enabled the development of online markets and this has enhanced trading all over the world. Furthermore, technology changes have largely reduced the costs of transportation. The reduced costs have created a considerable increase in international trade. The same old factors that allowed Chrysler Corporation to grow at an inspiring rate over the last several decades by taking advantage of comprehensive sourcing opportunities to produce lower cost products, and invest savings into innovative designs. Globalization has changed financial reporting and relationships with financial markets and major market players for Chrysler Corporation.
Globalization has seen Chrysler cooperation merger with Daimler-Benz and this has increased their rapidity and capacity to break through into new segments such as SUV, minivans, economy cars thus increasing the diversity of their products. On the other hand, internationalization of markets and industries makes it increasingly difficult to think of some firms as domestic companies. For instance, the merger between Chrysler and Daimler-Benz to form DaimlerChrysler. Furthermore, globalization has allowed Chrysler to influence mass-market manufacturing and outsourcing expertise.
With globalization, Chrysler Corporation has gained capability and image that is necessary to penetrate luxury exigent and complementary lines. Globalization has led to increased international clout for Chrysler products. This means that the speed and ease of entry into Europe and other markets for Chrysler products has been enhanced by globalization.
Globalization has seen Chrysler Corporation source its products in countries where low wages, poor working conditions, and human rights problems were rampant thus making the corporation to be heavily criticized. Globalization has enabled Chrysler Corporation to monitor its suppliers strictly. Chrysler has pushed its suppliers to comply with standards through increased monitoring and inspection efforts. Such move has created a strong enticement in the midst of its suppliers (Kang, 2001, P. 39).
Models of above average returns
The models that can be used to determine how Chrysler Corporation are; earning above average returns are industrial organization model and the resource-based model.
Industrial organization model
The industrial organization model of above-average returns explains the dominant influence of the external environment on a firm’s strategic actions. The model helps to study the external environment, especially the industry environment, locate an industry with high potential for above average returns, and identify the strategy called for by the attractive industry to earn above average returns. The model can also use the firm’s strengths to implement the strategy. This will lead to superior returns (Hoskisson and Hoskisson, 2008, p. 11).
The Resource-Based Model
The resource-based model assumes that each organization is a collection of unique resources and capabilities that provides the basis for its strategy and that is the primary source of its returns. The model helps to identify the firm’s resources, study its strengths and weaknesses compared with those of competitors. The model also determines firm’s capabilities that can allow the firm to do better than its competitors. Furthermore, resource-based model helps the firm to determine its potential resources and capabilities in terms of a competitive advantage as well as locating an attractive industry. What is more, resource-based model helps the corporation to select a strategy that best allows the firm to utilize its resources and capabilities relative to opportunities in the external environment. This will lead to superior returns leading to earning of above-average returns (Hoskisson and Hoskisson, 2008, p. 13).
The influence of Chrysler’s vision and mission statement on its overall success
Vision and mission are two different perceptions reflecting different existential periods. Vision is an optimistic projection of the corporation in an indeterminate future, mature and flourishing position. Mission is an unspecified accountability of the corporation untaught from its shared goals. Mission replicates the way in which vision can be transformed into a substantial continuation for the corporation. Chrysler vision Statement is To build cars that people will want to buy, are fun to drive, and will want to buy again. In order to realize its vision and mission statement, Chrysler Corporation has come up with short-term solutions such as fix quality problems, cut development time, improve marketing image, and improve stock price. Chrysler’s mission and vision statement has influenced the overall success of the company negatively. In trying to build cars that people want to buy, Chrysler compromised its quality. In the end, poor quality and outdated styling and technology have turned off customers (Conger and Kanungo, 1998).
Impact of each stakeholder on the overall success of the corporation
Chrysler Corporation seeks to be transparent about its activities, collaborate with and learn from others, and understand how they are affecting both the environment and the society. The major stakeholders of Chrysler Corporation are the local community, suppliers, future generation, shareholders, employees, trade unions, creditors, and management. Employee participation in the corporate governance system of Chrysler Corporation has increased transparency in management decisions. It has also allowed the corporation to restructure the asymmetry of information between management and market thus increased volume of sales. Stakeholders have maintained the corporate identity of Chrysler and in so doing, they have helped to the corporation to generate jobs, create wealth, and pay taxes.
Employees at Chrysler Corporation have demonstrated consistency and credibility at all levels. This has enabled the corporation to maintain its reputation and remain competitive. The local community has ensured the corporation operates in an environmentally sensitive way thus maintaining its competitive edge. Managerial employees are usually responsible for coordinating organizational resources and ensuring that an organization’s goals are successfully met. The involvement of stakeholders has built a trust between the government and civil society, which has led to long-term collaborative relationships. Stakeholder involvement has contributed to the transparency of public and private actions, because different groups involved monitor them. Stakeholders’ engagement in the corporation management ensures that there is consensus at early stages for issues in the corporation reducing the likelihood of conflicts, which can harm the implementation, and success of the projects in the corporation.
Conger, J. A., & Kanungo, R. N. (1998). Charismatic leadership in organizations. Thousand Oaks, Calif : Sage.
Hoskisson, R. E., & Hoskisson, R. E. (2008). Competing for advantage. Mason, OH: Thomson/South-Western.
Kang, N. (2001). New patterns of industrial globalisation: Cross-border mergers and acquisitions and strategic alliances. Paris: Organisation for Economic Co-operation and development.
Chrysler Corporation 4
Comprehensive analysis of InterContinental Hotels Group (IHG)
InterContinental Hotels Group (IHG) is a British multinational organization headquartered in the United Kingdom. The company owns a chain of luxurious hotels around the world. In 2012, IHG was voted the biggest hotel in the world with a room capacity of 661159 and 5604 hotels distributed in 102 countries around the world (Koushiket al., 2012). IHG has a long portfolio of luxurious hotels and resorts including Hotel Indigo, Crowne Plaza, InterContinental Hotels, Staybridge, Holiday Inn, Candlewood Suites and Holiday Inn Express. Other customized products for IHG include Holiday Inn Club vacations, HUALUXE, EVEN hotels, ANA-Crowne Plaza, ANA-Holiday Inn and ANA-InterContinental (InterContinental Hotels Group, 2012).
Besides, IHG also owns the biggest customer loyalty program in the world, Priority Club Rewards (PCR). The club has over 53 million members distributed across the world (Koushik et al., 2012). The strategic management of IHG hotels is through lease, franchise agreements and self-ownership. Of the 4500 hotels, 85 percent are managed through franchised agreements, 14 percent are managed through leasehold agreement while IHG owns only 1 percent (Koushi et al., 2012, p.45). This paper describes external and internal analyses, strategy formulation, strategy selection and strategic plan of IHG. Strategy implementation and evaluation is also described. Finally, a conclusion and recommendations are made based on the organization’s business strategy.
External analysis entails assessment of the external market environment to an organization. As described by Okumus (2004), an organization survivies in a dynamic environment comprising of legal, economic, technological, political and cultural forces. In view of this, it is imperative that organizational management carry out an external analysis to establish these forces and their effects to the business. In this case, external analysis of IHG include the analysis of its macroenvironment using PESTEL analysis. PESTEL is an acronym for Political Economic Social Technological and Legal factors that affect an organization in a given market environment (Shilei, 2009; Bowditch & Buono, 2004).
The political environment of an organization is the political forces that can affect its business operations. The political forces may include the legal constraints in doing business in a given market environment. In this case, IHG operates in the nation state environments, which have prescribed legal requirements for business (Miles, 1980). Such requirements may include minimum wage laws and environmental protection laws (Okumis, 2004). Different countries have different legal requirements that govern the conduct of business organizations. In this case, IHG hotels must adhere to minimum wage laws of each market environments. Variations in minimum wage requirements have caused differences in operational costs across the chain hotel’s brands. For instance, the minimum wage requirement and labour cost in the United States is higher than in China (Ashenfelter, 2012). These variations imply that operational costs of IHG brands in the United States are higher than in China.
Political forces can also manifest through political instabilities during and after elections. This is a rampant case in Africa and the Middle East. In 2007, post-election violence in Kenya paralysed the economy leading to poor performance of business organizations. The political fiasco disrupted tourism because of insecurity. The economy of Kenya was much affected because the country is a key destination of western tourists. InterContinental hotels and Crowne Plaza operate in Kenya. The halting of tourist activities during post-election chaos led to lack of customers for many tourist hotels in Kenya. IHG’s main customers are tourists (Brown, 2012).
Economic factors arise from economic performance of a given market environment. The state of the economy affects the operation of tourism and hospitality industry (Brown, 2012). The most critical lapses in the operation of the hotel industry arise during global economic recessions. Economic recessions cause a rise in inflation rates, a decline in customer purchasing power and a change in consumer behaviour. Inflation in tourist source countries such as North America and Europe leads to a sharp decline in the number of visitors to tourist destination countries like Kenya and Dubai. The decline in the number of visitors implies a decline in business activities of tourist hotels. Dubai and Kenya are business markets for IHG brands. Therefore, inflation in western countries affects IHG’s business activities in Kenya and Dubai. Global economic recession an also affect the business operations of IHG hotels and resorts. The 2008 global economic crisis led to a sharp decline in the operation of hotel industry in the United Kingdom. IHG brands were worst affected because United Kingdom is a confluence of all its products (Price Water House Coopers, 2011).
Socio-cultural factors entail variations in the social and cultural paradigms of people in different market environments (Miles, 1980) . For instance, in some countries like Saudi Arabia, lodgings and accommodation hotels are regarded as brothels of sexual immorality. The rigidity of Islamic culture in such cases affects the operation of tourist hotels. Most internal travellers with such cultural prejudice will opt to board at their relatives when travelling that boarding in hotels. Culture and social beliefs also determine the eating habits of people. For instance, shrimps and lobsters are protein diets for some Asian natives. Therefore, IHG hotel brands in such hotels must include such dietary offers for their customers. The case is different in Africa where shrimps and lobsters are detested. Many social paradigms determine the attraction and repulsion attitudes of people. For instance, Chinese and Japanese travellers feel free and warm to board at places where employees are their fellow citizens. This sociocultural attitude was behind IHG’s strategy of developing products such as HUALUXE Chinese and ANA for Japanese customers.
Technology is the yardstick of effective customer service in tourism and hospitality industry. Employment of technology gives a company a competitive advantage over market competitors (Barrett, 1995). IHG hotels and resorts have invested in Hi-tech music systems and video and teleconferencing facilities to add value to their customer services. Besides, most IHG brands have internet service portals in the rooms. State of art teleconference and video conference facilities has made IHG hotels dominant service providers for group meetings. IHG have also developed an online accommodation application system which allows customers to login and apply for rooms from anywhere through the company website. For instance, a Canadian customer prospecting to travel to china can book a room in one of the IHG brands in China before even boarding the flight. The extensive use of technology for group and transient service provision has made IHG a competitive choice for all sorts of customers (Koushik et al., 2012).
Internal market analysis
Internal organizational analysis deals with market forces that fall within an organization’s control. SWOT analysis is the best tool kit for assessing the internal forces of an organization. SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats (Parke, 2004).
The main strengths of IHG hotels and resorts are extensive market presence and effective management strategies. IHG has 5604 hotels and resorts with over 661159 rooms distributed in 100 countries around the world (Baker, 2007). The extensive market presence makes IHG the preferred accommodation provider in the hospitality industry. Customers who are looking for a hotel with a strong brand with high service consistence and reliability will pick on IHG. IHG chain hotels are the strongest hotel brand in the United States, Canada, Japan and the United Kingdom (Company watch, 2012).
The second strength is product differentiation. IHG has over eleven branded hotels and resorts each designed and customized to offer customers a variety. The various brands of IHG include Hotel Indigo, Crowne Plaza, InterContinental Hotels, Staybridge, Holiday Inn, Candlewood Suites and Holiday Inn Express. Other customized products for IHG include Holiday Inn Club vacations, HUALUXE, EVEN hotels, ANA-Crowne Plaza, ANA-Holiday Inn and ANA-InterContinental. Each of the above brands is designed for a given market segment and customer tastes and preferences. For instance, HUALUXE hotels and resorts are designed to meet the tastes and preferences of Chinese customers (Fleming, 2007). 2012). Table 1 shows the statistics of IHG hotels as of march 2012.
The third strength is effective management strategy. Out of the 5604 hotels and resorts, 85 percent of them are owned through franchised agreements, 14 percent are lease managed and the parent hotel company owns only one percent. Franchising a business reduces the establishment cost in a new market environment. It also helps a new business organization to ride on al already successful management strategy. Therefore, franchising reduces the probability of failure of IHG hotels in new market environments (Jones, 2009).
Weaknesses: The major weaknesses of IHG chain hotels and resorts are the use of mergers and acquisitions for business expansion. Mergers and acquisitions are delicate entities because of the differences in the business models and organization cultures of parent corporations (Krishnamurti & Vishwanath, 2008). Telesse (2001) notes that many business expansions involving mergers and acquisitions fail because of overvaluing the incoming companies and differences in business models. IHG has expanded to become the biggest hotel in the world through mergers and acquisitions.
Differences arise in mergers and acquisitions because each parent organization consider its business model a success. The variations in staff compensation is also a critical issue in managing mergers and acquisitions. These differences expose an organization to high risks of failure. IHG is not an exception to this threat (McClure, 2012). The second threat to IHG is the vulnerability of its large global network to economic downturns. The global presence makes IHG affected by regional and global economic crises. For instance, the occurrence of an economic crisis in any part of the world will affect the productivity of IHG (Business Analytic Center, 2012).
Threats: The successful business model of IHG can be a threat to its future survival. Intercontinental Hotels Group has used mergers and acquisitions as the main business expansion strategy since 2000. IHG has grown to become the biggest hotel in the world since 2003 through mergers and acquisitions. This progress has been achieved in a competitive market environment. The threat arises from the fact that the great feat of success has been achieved while other big competitors are watching. Competitors such as McDonald Hotels Group, Park Inn, Accor Hotels and Embassy Suites can copy the business model. This can greatly increase market competition and reduce the market share of IHG.
Opportunities: There is more opportunity for IHG expansion. The success of mergers and acquisition at IHG underscores that the organization can still scale its business growth using it. The high market command of the long product line of IHG implies that the chain hotel can successfully introduce new customized brands for new market segments. This can apply best in Africa where IHG has a low market presence. From table 1, it is seen that Holiday Inn Club vacations and Hotel Indigo have lesser market presence in the world. IHG can explore new markets for these two products and use them as an expansion strategy (Business Analytic Center, 2012).
Strategy formulation at IHG takes six fundamental stages. The first step is setting objectives. The main objective of IHG is to make its hotels the preferred hotels for guests around the world. This objective helps IHG to identify and select appropriate business strategies. The second step is analysis of the organizational environment. This entails using SWOT analysis to identify the organization’s strengths, weaknesses, opportunities and treats. The management of IHG also carries out competitor analysis. The competitor’s weaknesses form a critical business opportunity for IHG. The third step is setting quantitative targets. IHG has a Corporate Revenue Management (RM) Team, which liaises with brand revenue managers to set financial targets (Koushik et al., 2012).
The quantitative targets are essential in assessing the profitability of each brand products. The fourth step is contextual aiming with the plans of the brands. This step deals with the analysis of the contribution of each of the eleven brands to the profitability of IHG. Strategic plans are put in place for each brand based on their contribution to the overall business. The fifth step is performance analysis. This step entails the evaluation of the difference between desired performance objectives and the actual performance of the organization. The process entails assessment of past and present performance of the organization. Then, the established trend is used to project future performance of the organization. New strategies are formulated based on the persistence of the discrepancies in performance. The last step is strategy selection.
Selection of a strategy at InterContinental Hotels Group follows a predefined process. The first step involves assessment of various options to establish the most effective one. The second step is evaluation of literature to establish theoretical viability of the strategy. For instance, in 1997, The IHG explored the ways of increasing business activities in the United States. The first available option was increasing the number of hotels of the then existing brands. The second option was launching of a new brand customized for a dedicated market segment. Increasing the number of hotels of the existing brands was considered not viable. There was insufficient theory to proof that the move will increase profitability of the chain hotel. New hotels of the same brand would mean creating extra service outlets without creating the need for the service. The second option was considered viable.
Introduction of a new brand meant creation of a new product that adds value to the existing products. Therefore, IHG hotels launched Staybridge Suites for provide extended group accommodation for travelling families. Staybridge Suites became the fastest growing IHG brand reaching 51 hotels within the first two years of operation (Koushik et al., 2012). The tremendous growth of Staybridge made IHG the biggest chain hotel in the United States by 2001 (Koushik et al., 2012). The third step is assessing the practicality and affordability of the strategy. Practicality assessment evaluates whether the strategy in implementable. For instance, the management of IHG conceived a need to extend business operations in Japan.
The easiest option was formation of a merger or acquiring an existing Japanese chain hotel. This would help the organizational to ride on an already establish and successful business model and infrastructure. Evaluation of applicability of the strategy entailed establishment of the possibility of getting an existing chain hotel whose owners will be willing to sell or to merge with IHG. Implementation of the strategy saw IHG and All Nippon Airways (APA) form a joint venture to create IHG-ANA Hotels Group in Japan. The joint venture made IHG the biggest chain hotels in Japan with three brands. That is ANA Crowne Plaza, ANA InterContinental and ANA Holiday Inn. Affordability of the move entailed established of the cost involved against the projected profits. The last step in strategy selection is implementation.
A strategic plan is a detailed guide on how an organization will achieve its stated objectives and vision. The five major elements of a strategic plan include the vision, mission statement, strategies and actions for set objectives, recommended tactics and a strategy map or schedule.
Organizational philosophies: The main of InterContinental Hotels Group is to create great hotels that guests love. The vision is to become the preferred chain hotels and resorts in the world. The organization purposes to make its employees feel that IHG is the best place to work, to make its hotels the most sought in the industry and to create wealth for the shareholders. The objectives/goals of Intercontinental Hotels Group is to make its branded hotels the first choice for travelling guests.
Strategies of IHG
Strategies are measures or actions that need to be taken to achieve the set goals and organizational vision. The main IHG strategies include developing appropriate business models and developing relevant market segments.
Appropriate business models: IHG uses franchised agreement to manage most of its hotels. Franchising is shifting responsibilities to a third party. This management model reduces increases the possibility of business success by utilizing an already existing management wealth. IHG does not incur operational and management costs. As of December 2011, 3832 IHG hotels were franchised, 637 managed through leasehold and 11 owned by the parent company.
Relevant market segments: IHG has eleven branded hotels each designed and customized for a given market segment. The various brands include InterContinental hotels and resorts, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn express, Holiday Inn Brand Family, Holiday Inn Club vacations, Staybridge Suites, Candlewood Suites, HUALUXE and EVEN among others. InterContinental hotels and resorts are five star hotels located in the main capital cities of countries in the world. The brand provides executive accommodation with great facilities for first class guests. Crowne Plaza hotels and resorts is a four star chain of branded hotels. They provide unique meeting and business facilities to group guests. Hotel Indigo is a boutique four star chain hotel customized for quests who appreciate art and design. Holiday Inns are four-star branded hotels that provide extended accommodations to group guests, majorly travelling families. Staybridge suites also provide extended accommodation for guests on long trips. HUALUXE and EVEN are four star hotels and resorts customized for the Chinese guests. Figure 2 shows the strategy map for IHG strategic plan.
Strategy implementation and evaluation
Implementation and evaluation are the final stages of strategic planning. The two business strategies of IHG are creation of appropriate business models and relevant market segments. Developing an effective business model entails determining the most profitable and risk free management model. In this case, the action plan entails assessment of the effectiveness of franchising, leasehold management and ownership. An evaluation is carried out to establish the most effective business model in terms of profitability and propensity of success.
On the other hand, creation of relevant market segments entails market research to establish consumer tastes and preferences. Market segmentation entails zoning of consumers with similar tastes and preferences. A product, in this case a hotel brand, is designed for each identified market segment. Evaluation is carried out to establish the effectiveness of the brand in addressing the consumer needs. Changes and innovations are added to the brand in case it is not effective for the designated market segment.
Conclusions and recommendations
Intercontinental Hotels Group (IHG) is the biggest chain hotels and resorts in the world. The chain hotel has 5604 hotels with 661159 rooms spread in over 100 countries around the world. IHG have carried out extensive market segmentation and developed customized branded hotels for each segment. The brands include InterContinental hotels and resorts, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn express, Holiday Inn Brand Family, Holiday Inn Club vacations, Staybridge Suites, Candlewood Suites, HUALUXE and EVEN.
The external market analysis of IHG entails evaluation and analysis of political, economic, socio-cultural and technological factors. On the other hand, internal analysis is the SWOT analysis of IHG. The key strengths of IHG are franchised management, a long product line of branded hotels and strong market presence. The main weaknesses of the chain hotels include a vulnerable global network and the fluidity of mergers and acquisitions. IHG have grown within a period of eight years to become the biggest chain hotel in the world through mergers and acquisitions. Mergers and acquisitions are very delicate owing to the differences in staff compensation, organization cultures and business models of the parent companies.
The low market presence of Holiday Inn Club variations and Hotel Indigo is a business opportunity for IHG. The chain hotel can increase the market presence of the two branded hotels to expand its business operations. The success of mergers and acquisitions coupled with franchised management can also be used as business expansion opportunities into African and Middle Eastern markets. Some IHG brands are not popular in African and the Middle East.
The threats to IHG are the market competitors. Hotel and hospitality industries have other major players such as Hilton hotels, Accor Hotels, Embassy suites and McDonald Hotels Group. These organizations can intensify market competition leading to the loss of IHG’s market share. Other analyses described in this paper include strategy formulation, selection and implementation at IHG. The main business strategies of IHG include development of appropriate business models and creation of relevant market segments.
In view of the above weaknesses and threats, the following recommendations are strategic to the business model of IHG.
The first recommendation is change of business management model. From literature, it is seen that 85 percent of IHG hotels are franchised, 14 percent are on leasehold management while only one percent is owned. IHG have contracted more than one franchise companies to manage 85 percent of the hotels. The variations in the organization culture of franchise companies dilute the brand position of IHG. Ownership is the best management strategy of promoting brand position and a harmonized staff compensation scheme.
The second recommendations regard the use of mergers and acquisitions as an expansion strategy. Mergers and acquisitions are very fluid arrangements. The variations in the organization cultures and business models of parent organizations can lead to the downfall of IHG.
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Comprehensive analysis of InterContinental Hotels Group (IHG) 1
Table1: statistics of IHG brands as of March 2012
A Battle Past: iPhone 5 versus Galaxy S4
The battle between Samsung and Apple is one of epic proportion that has in effect decimated other competitors within the field of smart phone and tablet. The two firms’ profits amount to 99% of the total market profits in the two segments. Competitors, such as Microsoft (Windows 8 for smartphones and tablets, Nokia), Motorolla (Google), LG, HTC and Blackberry are working continuously to reinvent themselves but remain under the backbench of irrelevance and afterthought of consumers.
The flagship brand for Samsung in the smartphone segment is the Galaxy lineup, particularly Galaxy S product range. Apple on the other hand has a limited number of products categories unlike Samsung, rather it creates exclusivity for its products by having few product categories; the number three firm worldwide according to capitalization has less than twenty five products on sale in the market unlike Samsung’s over a hundred products. It is also imperative to note that the two products ranges from these firms occupy the upper echelon of smartphone sales, which the firms continuously reward by producing products that are a class over other smartphones. This comes to the fore especially, when comparing iPhone 5 and Samsung S4; the differences are less distinct but which are nonetheless magnified by the glaring eye of consumers due to the mass following of these products.
The pricing of Apple iPhone 5 and Samsung Galaxy S4 is for premium clients. The pricing of the products creates exclusivity for the brands. It is no wonder, when Apple launches, long lines of individuals wait in line even for whole days to buy a device. For those without, the money to purchase the products consumers may save over a long period hoping to have put enough in cash before a launch. The Samsung Galaxy range has earned growing rave reviews from consumers and tech experts thus slowly increasing its ability to earn a fan base comparing to that of Apple. In this premium market, price is not the issue nor is performance as both products performance exceeds the needs of consumers. The brand value, aesthetics and user experience count more in this market (Castanon, 2004, p.5).
The First Battle Ground
The overall design is one of the much-touted factors that hold sway but the actual difference between the two phones is but a matter of personal difference. As the phone dimensions will be later analyzed, Samsung has a larger screen size but has is just heavier with just fourteen percent at 128 g; overall both are lightweight but it is the finish that iPhone 5 has an upper hand. Apple’s aluminum finishes in either black or white (same colors as Samsung) flaunts the premium nature of the phone. The Samsung S4 with a plastic (polycarbonate) body material falls to the wayside consenting to the dominance of the iPhone 5 in this regard.
The Samsung S4 battery is a Li-Ion with iPhone 5 being a Li-Polymer. Both firms’ products are similar in battery performance with both having 648 minutes talk time. The capacity of the Samsung S4 battery is 2600 mAh while iPhone 5 stands at 1400 mAh. With Samsung, wireless charging is an addition on an optional basis.
First comparison iPhone 5 and Samsung S4 and will be evident that the Samsung trumps the Apple. This is on screen size with a twenty-five percent larger (diagonal) screen size of 5 inches. The screen length and width of Samsung S4 is at eleven percent and eight percent larger than the iPhone 5. The result is that the screen size of the Samsung S4 is thirty-one percent larger than the iPhone 5. Furthermore, the iPhone 5 is just four percent thinner than the Samsung S4. The proponents of the larger screen size claim it makes for a better experience for games and email viewing while those against it claims it is too large for a handheld phone. The choice basing on the phone dimensions will depend on personal references but other factors hold sway.
First off, Samsung blazes the trail with a super AMOLED screen in comparison to Apple’s IPS LCD. In this regard, Samsung S4 delivers on clearer and more detailed display while the Apple delivers with a retina display that provides slightly higher color saturation. This is no mean achievement, to be able to deliver a display comparable to Samsung’s even if at a lower clarity. This is because Samsung S4 overall screen resolution is close to three times greater than iPhone 5 (at 640 x 1136 pixels in comparison to Samsung S41080 x 1920 pixels). With the larger screen size the difference reduces considerably to just a thirty-five percent more pixels per inch at 441 PPI (Samsung S4) in comparison to 326 PPI (iPhone5).
Evidently still, Samsung has a better display but either smart phone’s touch screen is capacitive or multi-touch, has 16 777 216 colors. The Samsung S4 screen has similarly to iPhone 5 a light sensor and proximity sensor additionally though; Samsung has a Gorilla Glass, scratchproof screen.
Packaging weight on consumer choice is usually high for non-differentiated products or products that deliver the same service. Marketers thus expand this concept to create packaging that stands out such as dominating a particular color, having a different shape than competitors or having a unique concept behind the package. In store, experience creates a ton of difference towards stimulating consumer purchase, operating as a packaged store.
In this regard, Apple captures the heart of consumers; its stores are more than exceptional, in not only design but also culture (fan). The aluminum packaging of the iPhone 5 stands outs as it delivers exceptional quality for a premium product. Samsung falters in packaging with its plastic material and lack of true in-store experience. The unique size of the Galaxy S4 is its redeeming quality as it promises a bigger screen size (31%) and has better quality screens (Fitzgerald, 2003, p1).
Samsung has an obvious advantage due to its display it however its polycarbonate body material is a disadvantage while the phone large screen dimensions is a matter of personal preference. Given this considerations, the phone’s quad core processor must be its overall redeeming feature that reduces any gap between the Samsung Galaxy 4 and iPhone 5 while exceeding expectations. It is not a wonder then that the Samsung S4 Krait 300 quad core processor is 46% faster than the iPhone 5 dual core apple swift yet its battery performance is on the same level as the iPhone 5, a true indicator of the hardware exceptionality of the Samsung S4.
The Samsung S4 has Qualcomm Snapdragon 600 APQ8064T system chip while iPhone 5 has Apple A6 system chip with aAdreno 320 graphics processor in comparison to PowerVR SGX543MP3 for Samsung S4. The system memory of the Samsung S4 is also truly exceptional at twice that of iPhone 5, at 2048 MB RAM in comparison to 1016 MB RAM (iPhone 5). Furthermore, while both have an internal storage capacity of 16GB, Samsung S4 has additional storage expansion (MicroSD/ microSDHC/ microSDXC) of up to 64 GB.
Samsung’s S4 camera also wins hands down over the apple iPhone 5. The Samsung S4 features a13 MP back facing camera with a 2MP front facing camera. The iPhone 5 has an 8 MP back facing camera with a 1.2 MP front facing camera. The Samsung S4 camera stands out with 66.7% and 62.5% superiority advantage in the front facing and back facing camera feature. This is highly significant, as smartphone cameras have overtaken the need to have separate camera and phone increasing the ability of smart phone users to take high quality pictures at their own convenience.
Other specifications for Samsung S4 include Focus 2.2 aperture size with a camera sensor size 1/3.06″ camera sensor size at 1080p High Definition (30 frames per second) for both camcorder and video capture; with digital media stabilization. Additional features include Back-illuminated sensor (BSI); Auto focus; Touch to focus; Digital image stabilization; Face detection; Smile detection; Exposure compensation; White balance presets; Digital zoom; Geo tagging; High Dynamic Range mode; Panorama, Scenes; Effects; Self-timer; Voice activation The iPhone 5 has a Focus 2.4 aperture size with a 1/3.2 inch camera sensor size. It has a 1080p High Definition (30 frames per second) camcorder with digital image stabilization and video calling; the video capture is at 720p High Definition (30 frames per second). Additional features include Back-illuminated sensor, Auto focus; Touch to focus; Digital image stabilization; Face detection; Geo tagging,; High Dynamic Range mode; Panorama ( thechatwire, 2013).
The top range hardware of the Galaxy S4 creates glaring advantages over its close competitor Apple. The better quality of the phone appeals to the consumers who have higher regard for gaming experience and app use. This is pre-dominantly computer lovers. However, to the common consumer the effects of the hardware advantages are less noticeable (Kruger, 2004, p.4).
Maintaining the Winning Streak
The considerable advantage of the Galaxy S4 does not receive a dent to its performance taking into consideration the multimedia, internet browsing, technology, connectivity and phone features. This is because both firms are equal to the challenge on this battlefront (Porter, 2008, p.80).
The multimedia features are comparative. This includes similar support for music player and video playback formats. This includes, MP3 and AAC (music player); MPEG4 and H.264 (video playback). This is in addition to supporting other media formats. The speakers provided include earpiece and loudspeaker. The internet browsing experience of the phones surpasses consumer expectations with HTML and HTML5; so does technology capacity as both phones support GSM, UMTS and LTE networks. Data capacity is not a letdown with UMTS, EDGE and GPRS. Global roaming, positioning and navigation are added features of these phones. The Bluetooth 4.0 connectivity with Wi-Fi, mobile hotspot and USB are standard though Apple iPhone 5 spots proprietary connector.
The Game Changer
Even though the iOS 6 user experience ranks lower than the iOS 7, it is still better than the Android user experience. One of the key reasons behind the better user experience is the massive app ecosystem at Apple iStore. The iStore reflects the work ethic at Apple as it expects its app developers to deliver on top quality. This allows only the very best on the iStore, which Android loses out by letting in all nooks and cranny. Given some apps are exclusive to each store but there are so much more high quality exclusive products at the iStore such as Passbook and Face Time. The iPhone provides a better social networking experience through easing the uploading of updates due to the deeper integration.
Android, on the other hand, provides consumers with choice, the choice of hardware. The choice of hardware or phone category under iOS is only Apple products while Android has over 600 phones options. This provides consumers with choice of a smart phone across different prices, sizes and phone features. Clear leaders within the Android stratosphere include Samsung, Sony and HTC. Samsung’s Galaxy range of phones provides Apple with a competitor equal to the challenge of the iPhone. The Galaxy S4, for example, exceeded expectations with its display resolution, hardware performance (internal memory and processor speed) and camera quality Apple’s iPhone 5 winning on the phone packaging (body material) front. Thus, the S4 came out as a clear winner with the phone packaging, operating software and phone size being the tiebreakers. However, the recent launch of the iPhone 5s overcomes some of these discrepancies.
The customization element of the Android software piques at the interest of developers and manufacturers. Developers and manufacturers have more control within the Android than iOS ecosystem. The consumer emerges the clear winner due to this functionality with the OS and apps providing more room to customize the user experience.
Brands today work to deliver exceptionality in terms of product quality and efficiency; the market leaders are created by creating consumer experience. It is with card that Apple beats Samsung even with the exceptionality in quality and performance. First, apple’s user experience using the iOS far surpasses that of Android the in sore experience and product packaging is ahead of the pack of competitors. The overall branding of apple is extremely strong in the United States and much lower international. The result is Apple has higher market control in The United States while Samsung Galaxy has more consumers internationally. Samsung is seeking to improve the its consumer experience international by among other strategies phasing out the use of plastic covers for the next Galaxy S (Frazier, 2006 p.5).
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Samsung s4iphone 5DESIGNDevice typeSmart phoneSmart phoneOSAndroid (4.2.2)iOS (7, 6.1, 6)Form factorCandybarCandybarDimensions5.38 x 2.75 x 0.31 inches (136.6 x 69.8 x 7.9 mm)4.87 x 2.31 x 0.30 inches (123.8 x 58.6 x 7.6 mm)Weight4.59 oz (130 g)the average is 4.5 oz (128 g)3.95 oz (112 g)the average is 4.5 oz (128 g)Body materialPolycarbonateAluminiumSide KeysLeft: Volume control; Right: Lock/Unlock keyLeft: Volume control, OtherColorsBlack, WhiteBlack, WhiteDISPLAYPhysical size5.0 inches4.0 inchesResolution1080 x 1920 pixels640 x 1136 pixelsPixel density441 ppi326 ppiTechnologySuper AMOLEDIPS LCDColors16 777 21616 777 216TouchscreenCapacitive, Multi-touchCapacitive, Multi-touchFeaturesLight sensor, Proximity sensor, Scratch-resistant glass (Corning Gorilla Glass)Light sensor, Proximity sensorBATTERYStand-by time 9.4 days (225 hours)the average is 21 days (492 h)Talk time (3G)17.00 hoursthe average is 11 h (648 min)8.00 hoursthe average is 11 h (648 min)Stand-by time (3G)15.4 days (370 hours)the average is 19 days (468 h) Stand-by time (4G)13.3 days (320 hours)the average is 17 days (403 h) Music playback 40.00 hoursVideo playback 10.00 hoursCapacity2600 mAh1440 mAhTypeLi IonLi PolymerNot user replaceable YesWireless chargingOptional HARDWARESystem chipQualcomm Snapdragon 600 APQ8064TApple A6ProcessorQuad core, 1900 MHz, Krait 300Dual core, 1300 MHz, Apple SwiftGraphics processorAdreno 320PowerVR SGX543MP3System memory2048 MB RAM (Dual-channel) / LPDDR31016 MB RAM (Dual-channel, 1066 MHz) / LPDDR2Built-in storage16 GB16 GBStorage expansionmicroSD, microSDHC, microSDXC up to 64 GBCAMERACamera13 megapixels8 megapixelsFlashLEDLEDAperture sizeF2.2F2.4Camera sensor size1/3.06″1/3.2″FeaturesBack-illuminated sensor (BSI), Auto focus, Touch to focus, Digital image stabilization, Face detection, Smile detection, Exposure compensation, White balance presets, Digital zoom, Geo tagging, High Dynamic Range mode (HDR), Panorama, Scenes, Effects, Self-timer, Voice activationBack-illuminated sensor (BSI), Auto focus, Touch to focus, Digital image stabilization, Face detection, Geo tagging, High Dynamic Range mode (HDR), PanoramaCamcorder1920×1080 (1080p HD) (30 fps)1920×1080 (1080p HD) (30 fps)FeaturesDigital image stabilizationDigital image stabilization, Video callingFront-facing camera2 megapixels1.2 megapixelsVideo capture1920×1080 (1080p HD) (30 fps)1280×720 (720p HD) (30 fps)MULTIMEDIAMusic player Filter byAlbum, Artist, PlaylistsAlbum, Artist, Genre, PlaylistsFeaturesAlbum art cover, Background playbackAlbum art cover, Background playbackSupported formatsMP3, AAC, AAC+, eAAC+, FLAC, WMA, AMR, OGGMP3, AAC, eAAC, WAV, M4A (Apple lossless)Video playback Supported formatsMPEG4, H.263, H.264, DivX, WMVMPEG4, H.264, Motion JPG, MOVSpeakersEarpiece, LoudspeakerEarpiece, LoudspeakerYouTube playerYesYesINTERNET BROWSINGBrowser SupportsHTML, HTML5HTML, HTML5Built-in online services supportYouTube (upload), Picasa/Google+YouTube (upload)TECHNOLOGYCDMA 800, 1700/2100, 1900 MHzGSM850, 900, 1800, 1900 MHz850, 900, 1800, 1900 MHzUMTS850, 900, 1900, 2100 MHz850, 900, 1900, 2100 MHzLTE800 MHz, 850 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2600 MHz700 MHz Class 13, 850 MHz, 1800 MHz, 1900 MHz, 2100 MHzDataLTE Cat3 Downlink 100 Mbit/s, LTE Cat3/4 Uplink 50 Mbit/s, HSDPA+ (4G) 42.2 Mbit/s, HSUPA 5.76 Mbit/s, UMTS, EDGE, GPRSLTE Cat3 Downlink 100 Mbit/s, HSDPA+ (4G) 42.2 Mbit/s, UMTS, EDGE, GPRS, EV-DO Rev.A, EV-DO Rev.Bnano-SIM YesGlobal RoamingYesYesPositioningGPS, A-GPS, GlonassA-GPS, Glonass, Cell ID, Wi-Fi positioningNavigationYesTurn-by-turn navigationCONNECTIVITYBluetooth4.04.0ProfilesAdvanced Audio Distribution (A2DP), Attribute Protocol, Audio/Video Control Transport Protocol (AVCTP), Audio/Video Distribution Transport Protocol (AVDTP), Audio/Visual Remote Control Profile (AVRCP), Bluetooth Network Encapsulation Protocol (BNEP), Device ID Profile (DID), Generic Access (GAP), Generic Attribute Profile (GATT), Generic Audio/Video Distribution (GAVDP), Handsfree (HFP), Headset (HSP), Human Interface Device (HID), Logical Link Control and Adaptation Protocol, Message Access Profile (MAP), Multi-Channel Adaptation Protocol, Personal Area Networking Profile (PAN), Public Area Network (PAN), Security Manager Protocol, Serial Port (SPP), Service Discovery Protocol (SDP), SIM Access (SAP) Wi-Fi802.11 a, b, g, n, n 5GHz, ac802.11 a, b, g, n, n 5GHzMobile hotspotYesYesWi-Fi DirectYes USBUSB 2.0YesConnectormicroUSBProprietaryFeaturesMass storage device, USB Host, USB chargingUSB chargingHeadphones connector3.5mm3.5mmHDMIvia microUSB Charging connectormicroUSBProprietaryOtherNFC, DLNA, MHL, Tethering, Computer sync, OTA sync, InfraredTethering, Computer sync, OTA syncPHONE FEATURESPhonebookUnlimited entries, Caller groups, Multiple numbers per contact, Search by both first and last name, Picture ID, Ring IDUnlimited entries, Caller groups, Multiple numbers per contact, Search by both first and last name, Picture ID, Ring IDOrganizerCalendar, Alarm, Document viewer, CalculatorCalendar, Alarm, Document viewer (Office 2007, Office 2003, PDF), CalculatorMessagingSMS, MMS, Threaded view, Predictive text inputSMS, MMS, Threaded view, Predictive text inputE-mailIMAP, POP3, SMTP, Microsoft ExchangeIMAP, POP3, SMTP, Microsoft ExchangeInstant MessagingGoogle Talk, ChatONYesGames YesOTHER FEATURESNotificationsService lights, Haptic feedback, Music ringtones (MP3), Polyphonic ringtones, Vibration, Flight mode, Silent mode, SpeakerphoneMusic ringtones (MP3), Polyphonic ringtones, Vibration, Flight mode, Silent mode, SpeakerphoneAdditional microphone/s for Noise cancellation, Video recordingSensorsAccelerometer, Gyroscope, Compass, Thermometer, Barometer, Humidity, GestureAccelerometer, Gyroscope, CompassHearing aid compatibility M4, T4OtherVoice dialing, Voice commands, Voice recordingVoice dialing, Voice commands, Voice recordingREGULATORY APPROVALFCC approval Date approved14 Mar 201312 Sep 2012FCC ID value: A3LGTI9505FCC ID value: BCG-E2599A FCC measured SAR Head0.50 W/kg1.18 W/kgBody0.65 W/kg1.18 W/kgProduct Specific Use0.67 W/kg1.18 W/kgSimultaneous Transmission1.17 W/kg1.57 W/kgAVAILABILITYOfficially announced14 Mar 201312 Sep 2012SHOPPING INFORMATIONAccessories Apple EarPods with Remote and Mic, Lightning to USB Cable, USB Power Adapter, Documentation
A BATTLE PAST: IPHONE 5 VERSUS GALAXY S4 6
A BATTLE PAST: IPHONE 5 VERSUS GALAXY S4 5
Running head: A BATTLE PAST: IPHONE 5 VERSUS GALAXY S4 1
CSR Strategy for a Fortune 500 Company: Case Study of Wal-Mart Corporation
Corporate Social Responsibilities (CSR) are social engagements of a company that it employs to keep ethical standards, laws and norms and also giving back to the society it operates in. It is the responsibility of a company to encourage positive actions through its activities on the environment, consumers, employees, community and all the stakeholders. Wal-Mart Stores, Inc., branded as Wal-Mart, is an American multinational retail corporation that deals in department and warehouse stores. It has been ranked the best by Fortune 500 list in 2013. Being a global organization, it has offered a number of services to the world. It deals in nine different forms of retail formats: supercenters, food and drugs, general merchandise stores, small markets, cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants. Sam Walton, the founder says that the company’s contribution to the society is what has enabled the organization to operate efficiently. He also says that lowering the cost of living for its customers with their policy powerful force for good is their major responsibility to the society. In my opinion, their strategy is completely out of place as CSR involves all the stakeholders. In 2008, Forbes magazine ranked them sixth in terms of donations whereas there were a number of lawsuits and issues regarding its workforce.
Brussels wonders how an organization like Wal-Mart will pinch pennies when it comes to labor yet it is so oriented in the social good of the society. The organization has concentrated on multibillion projects in green energy and waste recycling, this is very positive in terms of environment management but it is so shocking to find out that half of its employees lack health insurances. A very basic factor like health is being denied to employees who are the core unit of production. According to Leslie Dach, an executive at Wal-Mart, you can only remain relevant to the community by doing great things because you are in a position to recruit any retailer. Wal-Mart could bring social performance closer to home by synthesizing their operations to their labor force. Based on the executive utterance, employees are nowhere in their scale of preference. It is ironical for Wal-Mart to make headlines in the year 2005 becoming the first partner of Feeding America to donate a billion meals whereas their employees are basically survivors. I call them survivors because it is worrying for workers of such an organization to lack personal bank accounts. This simply means their wages are too low for even saving. CSR revolves around ethical standards, and it beats logic for Wal-Mart to refer itself as socially responsible and they cannot afford to feed their laborers. It experiences an estimate of 70% labor turnover per year reportedly leaving due to low wages and poor working environment.
Ethics, laws and norms are the most valuable components of CSR. Starting from the company’s public relation, human resource relation to customer’s relation, if one of this is not taken care of then the organization has failed in CSR. Wal-Mart has adopted a policy of selling products that contain low fats and salt. This is a brilliant idea to customers but the other component of human resource makes their CSR incomplete. Brussels in his article suggests that if the company has decided to improve its financial position by addressing social ills then it should fully integrate social performance on staffing and laborer’s welfare. In support of his statement I think for a company to increase its profits, production must be of high quality. Moreover, for production to be high employees must give a hand by working extra hard. How will they work hard if they are hungry, not motivated and even without job security? An organization that has failed to form a union for workers shows how less they care for their employees. That is taking away workers’ voice that they cannot air their grievances and address issues affecting them. These conditions lead to misuse of employees and exploration. Despite the numerous lawsuits, it is still difficult for an employee to win a case filed against Wal-Mart without a trade union. Generally, CSR refers to the positive morals towards the society, ensuring that the company does not tamper with your existence in a negative way. Nevertheless, when it reaches a point where an employee in this era cannot afford a bank account and health insurance cover it leaves us to wonder what their real wage is?
Supporting local small firms and providing clean green energy is a very positive move adopted by Wal-Mart. Also getting involved in waste recycling is a paramount factor in ensuring that our environment is clean and good for human stay comfortable. However, when you come to realize what happens to their laborers it covers all that positive moves and makes us forget them. As the saying go charity begins at home, Wal-Mart should start by making their workers comfortable before going to the consumers. Ensuring their working conditions are perfectly met and also a workers union should be formed. CSR implies positive deeds to all stakeholders in the industry.
Brussel, Joe Van. Leslie Dach, Wal-Mart VP, On Business and social Good. Huffington Post. Web. 5 Nov. 2013. <http://thewordenreport.blogspot.com/2013/03/corporate-social-responsibility-at.html>
Brussel, Joe Van. Leslie Dach, Wal-Mart VP, On Business and social Good. Huffington Post. Web. 5 Nov. 2013.
People Management Practices of Southwest Airlines
Southwest Airlines is based in Dallas, Texas and is the third largest airline in terms of the number of passengers handled annually. It was co-founded by Herb Kelleher and Rollin King in 1967 (Southwest Airlines Corporation, 2006). The success of the company is related to its focus on success strategies such as the corporate culture and the strategy philosophy that are hardly explored by the competitors. The impeccable employee management practices portrayed by the management has motivated them leading to improved performance and overall success of the company. Some of the employee motivators include the presence of the strong set of values, rewards and recognition, performance and a mission that is dedicate to a high service level. The essay below discusses the employee management practices of the Southwest Airlines through focus on various strategies such as employee rewards and recognition, company’s culture, Competitive Advantages and Disadvantages and differentiation framework.
Southwest’s People Management Strategy: Describe the company’s overall people management strategy.
The overall people management strategy focuses on enhancing the competitive strategy through emphasis on employees’ welfare and role synergy. According to West (2005), the management ensures maximum employee output through encouraging teamwork. The involvement of the workers in decision making enhances responsibility as they are subject to the formulation of organizational policies and procedures. The servant leadership that the company applies instills a feeling of ownership among employees. The company’s accommodative culture has nurtured loyalty as well as a sense of attachment and duty among employees.
The most distinctive cultural competency of the company is its ability to establish and build relationships anchored on the premise of the shared goals, knowledge and mutual respect. Gittell (2003) asserts that the company’s focus on relationships is the principle engine of the leadership, structure and coordination. The employees value their connections with one another and coordinate effectively across all the company processes and functions. Possession of the shared goals motivates individuals to act beyond what is best for their areas of responsibility. Possession of shared goals among workers motivates them to perform for the collective benefit of the whole organization. This also minimizes the internal competition that may exist between the various sections of the organization (Gittell, 2003).
Southwest’s Employee Rewards and Recognition Program: Discuss its approach to employee rewards and motivation.
Southwest Airlines’ employee rewards and recognition program enhances motivation and improves performance. According to Brelis (2000), the culture of the Southwest airline company allows employees to be prioritized as the single most crucial improvement asset. Recognition is also undertaken through maintenance of a sustainable culture and the promise of extra benefits when they are promoted. According to Bergmann and Scarpello, (2008), other rewards are offered in terms of cash bonuses, telecommuting work and training opportunities. The company’s relaxed working environment, in combination with decent living-standard salaries, acts as a reward and motivator for the employees. According to Smith (2004), the company employees are provided with decent working attire, mutual-respect amongst their colleagues and team-building gatherings among other benefits. The program is designed to motivate and enhance the performance of the company.
Southwest’s Culture: Evaluate the company’s culture. Compare and contrast which aspects are most appealing, and which are most concerning.
Southwest Airlines’ culture was incepted in 1971 with the commencement of the company operations. The cultural integrity and popularity is sustained by the willingness of the management to apply innovativeness in conducting the company operations. One of the most appealing aspects of the company is the maintenance of low fares. Southwest airline is committed to ensuring excellent customer service through the delivery of services in a culture of hospitality, company spirit, individual pride and friendliness (West, 2005). Another appealing aspect of the company’s culture is the low-fare principle.
This is designed to ensure that the quality of services or work compensation rates is not affected. Instead, various cost-cutting measures such as a reduction of the hefty allowances for company executives are used as a compensation for the low costs of the company services (Gittell, 2003). Although the low cost culture enables the company to receive high profit margins, the strategy is not the cure-all prescription for the problems facing the company i.e. the strategy is vulnerable to the loss of advantage in fuel and increased employee costs. In fact, the unit costs for the company have been increasing for a long time. The trend of the unchecked growth in employee compensation can be disastrous to the company’s profitability.
Southwest’s Competitive Advantages and Disadvantages: Analyze the company’s ability to attract and retain employees. List the company’s competitive advantages and greatest disadvantages.
The company’s bottom line profitability and popularity has been enhanced by its cost cutting measures and attractive marketing strategy. The company attracts and retains employees through involving them in the transformation process and acknowledging their input in decision making, providing opportunities for profit sharing, and making independent decisions. The company incorporates new technological innovations in enhancing performance and worker motivation. The application of the long linked technology such as linking the database system and oracle software implies that the corporation’s culture is characterized by stability and detailed orientation compared to other organizations that applies intensive technologies but experience low growth (Russell, 2007:
Chatman and Jehn, 1994). Southwest Airlines provides their employees with a stable, working environment that has equal opportunities for learning and personal growth. The improvement in employee effectiveness is enhanced through encouraging innovation and creativity. The culture accords employees a standard work place through virtuous treatment such as respect, concern and a caring attitude, which they are expected to share with their colleagues. According to Holstein (2008), the employee-oriented culture enables the organization to attract highly skilled employees.
The management places minimal emphasis on adherence to the formal processes that may hinder information dissemination and enhance transparency e.g. the company meetings are recorded in tapes and the procession contents distributed to the employees. This acts as a motivator due to the principle of inclusivity as the employees are recognized as crucial constituents of the company. One of the disadvantages of the low-fare policy is that it has made the check-in areas and terminals to remain cramped. Additionally, the flight time is not always convenient. According to Smith (2004), the rate of risk is relatively high because the tight schedules and turnaround times denies the company any room for tardiness and effective handling of mishaps. The lack of assigned seats may inconvenient the passengers that might be planning to travel together. The cultural set-up of the company may encourage the junior leaders to spend most of their valuable working time scheming for favors from the chief executives while ignoring their responsibilities (Schein, 2004).
Southwest Airlines Differentiation Framework: Determine, which framework, Jack Welch’s 20-70-20 model, or Brian Becker’s A Positions model, this company uses to assess their employees and whether or not you think it is the best choice.
The company’s management treats all employees equally to ensure uniformity in role play and performance. Although the company considers all employees as equally significant in the enhancement of the company performance, they have a mechanism of assessing Good/Average/Poor performers that represents 20%/70%/10% of the staff. The top performers are well rewarded through showering them with affection, praise and financial rewards. They are also encouraged to team-up with average and low performers to encourage them improve their performance. The average performers are trained, coached and educated on goal setting to encourage them to become top performers.
According to Sedam (2005), keeping the average performers motivated is the most difficult task of the managers because they cannot risk losing them. The poor performers are normally interdicted and replaced. However, the application of Jack Welch’s 20-70-20 model is not the best choice for Southwest Airlines because the model is characterized by a myriad of challenges. The forced rankings undermine teamwork because the employees are encouraged to engage in destructive and wasteful competitions to ensure they gain credit over their colleagues. Sedam (2005), reported that forced rankings leads to lower productivity, reduced collaboration, mistrust in leadership, inequity and skepticism.
Southwest’s Workforce Strategy: Make recommendations for strengthening the company’s workforce strategy (what would you do differently, how would you do it, and why?)
I would orient all the new employees thoroughly to ensure that the Silo mentality that is pervasive and rampant in the American corporate environment does not exist in the southwest airline corporate environment. Orientation should also be geared towards making the employees understand that the company is characterized by one mission but not a conglomeration of individual missions. I would also harmonize the employee compensation to curb unfairness whereby senior executives receive hefty allowances while the employees receive unsustainable perks. The management should also apply transparency in rewarding employees to ensure that they reward genuine performers but not those that make the most noise. The management should also produce other incentives such as contracts, guarantees of terms of payment, and job security (Gelinas, 2005).
The recipe for effective employee management in Southwest Airlines is comprised of the focus on the clarity of vision, enhancing credible communication, encouraging the growth of interpersonal skills, sincerity, self-mastery, and high levels of motivation. Efficient employee management has led to low rate of abseentism, high employee productivity and low turn-over.
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PEOPLE MANAGEMENT PRACTICES OF SOUTHWEST AIRLINE 7
Running head: PEOPLE MANAGEMENT PRACTICES OF SOUTHWEST AIRLINE 1