Canadian Airline Industry Analysis

Introduction
Airline industry in Canada has evolved over the last three decades to a deregulated sector from the former one which was a monopoly to the formerly known Trans-Canada Airlines. These changes in the airline industry were necessitated by two major reasons which were considered paramount to the efficient to the operation of the industry. First, the regulation of the American Airline industry prompted authorities in Canada to think through ways and means to maintain their competitive notch in the international market. Second, these changes were paramount to cater for the growing domestic demand which were inclined to less government involvement in the operations and management hence increasing the level of competition in the industry (Dom, & Tretheway, 2001, p.g 12).

This resulted to the airline industry in Canada undergoing deregulation which was legalized by a National Transportation Act of 1987 which took effect on January 1988. The internal airline industry has experience some drastic changes and measures across the world. For instance, the airline in United States has experienced bankruptcy which saw the number of carriers operational in the market reduced to maintain profitability levels above the break – even point. Since inception of the European Union, the Economic Union in these countries has been considering the deregulation of the Airline industry in their respective countries (Bradshaw, & Helen, 2000, p.g 23).

Industry Description
In Canada, emergence of Canadian airline was evident in the early 1990s and formed the major competitor to Air Canada that was the preferred carrier in the industry. To improve on efficiency, the entrant of Canadian airline created a stiff competition in the industry and the airlines sort alliances with other international alliances. Canadian airline became part of One World while Air Canada became affiliated with Star Alliance. The airline industry in Canada deteriorated and by the end of 1999, Canadian airline was at the verge of bankruptcy. This prompted Air Canada to take over the Canadian airline emerging as the largest and dominant airline not only in Canada but also in the region but operating on unregulated environment. Since the merge, policy makers and other stakeholders have been juggling with questions of whether the merge really created enough and health competition in the domestic market or not (Reschenthaler & Robert, 2009, p.g 56).

The question of exploitation by the monopoly-like air Canada was also a thorny in the flesh in the domestic market. Policy makers and stakeholders were also concerned by the level of competition in the airline industry in Canada. If the competition was inadequate, they were concerned with ways and means of improving competition to a healthy level to protect and cushion consumers from exploitation of the air Canada which was operating as a monopoly.

Analysis of Force and statement of its relative strength and importance
Competition is health especially in a free market economy. Since deregulation of airline industry in Canada, questions regarding competition have been addressed in depth as discussed above. Therefore, strategists always consider competition as an essential component in the operation of any deregulated industry. In broad definition and for purposes of this analysis, completion will be considered involving far and beyond the rivalry between firms in an industry but also includes threat of substitute products and services, customers and their bargaining power, bargaining power of suppliers as well as the threat of new entrants in the market. These five forces and their interaction form the structural settings of an industry and the competitive interactions within the industry (Bradshaw, & Helen, 2000, p.g 34).

Therefore to understand the operations of Canadian airline, we shall consider each of the above mention five forces with relation to the market and industrial structure of airline not only in Canada but also across the globe. Since airline industry in Canada has experience high intensity of these forces, there is no firm in the airline industry that has experience a substantial amount of returns from their investment. This situation is unlike the industries where these forces are benign therefore firms in these industries are more profitable. As opposed to other factor like service provision, product delivery, level of technology of a firm, the industry structure is a pivotal in determination of competition and profitability levels. The industrial profitability and predictions in terms of growth and expansion can be well studied by thorough scrutinizing the five forces of competitive advantage. Therefore industry understanding is essential especially to strategic positioning. A good strategist therefore should focus on aligning the company’s operations against the competitive forces and orienting them to the favor of the company. The below discussion focuses on the five forces of competitive advantage as discussed by an economist of Harvard College Michael Porter hence commonly referred as the Porter’s Five Forces of Competitive advantage (Dom, & Tretheway, 2001, p.g 19).

Forces that shape competition
Different industries have different configuration of the forces. For instance, the manufacturing industry of aircrafts centered between the dominant players Airbus and Boeing coupled with bargaining power of buyers that is the airlines that places orders is usually very strong. However, the threat of substitute, threat of new entrants and the bargaining power of suppliers are benign.
Porter’s five forces of competitive advantage

Source: Michael E. Porter, 2008

Among these five forces, the strongest force in the industry is considered paramount in the process of strategy formulation of a firm to achieve the highest returns on investment. The strength of each competitive force is a key determinant to the structure of the industry growing from a set of stipulated technical and economic characteristics (Porter, 2008, n.p).
Rivalry among the existing competitors
This force determining the level of competition in an industry takes many forms from price discounting, service improvement, introduction of new products and services as well as advertising campaigns. When the rivalry intensifies, the profitability levels are greatly affected and sometimes go below the break-even levels forcing some firms to withdraw from operations. Profit levels are driven down when rivalry intensifies depending on two key factors. One the basis on which the respective firms compete and second the intensity of competition among the firms (Porter, 1979, n.p).

The intensity of rivalry is high when the firms are numerous with near or equal power and size in the industry. This forces firms to engage in poaching business since there is absence of a market leader. Since there is a fight for market share mostly due to market saturation, the industrial growth is slow. In this kind of a market, the exit barriers are usually very high due to highly specialized assets and management’s commitment to a particular business. Therefore firms are kept in the industry even though they may be earning minimum or negative profits due to the presence of excess capacity resulting to weak firms just hanging on as the profitability of the strong ones deteriorates. When such a scenario is in existence, firms commit all their resources in business especially those aspiring to be market leaders in a specific industry (Porter, 2008, n.p).

The worst case occurs when rivals gravitates their war in terms of prices hence transferring profits from firms to customers. This may happen in an airline industry where firms results to reduced prices to increase their business by attracting more customers. The firms lose while it’s a gain to the customers. This case is commonly reflected in the airline industry especially in Canada due to similarity of products and services offered leaving customers with very few switching options among the airlines. Price wars is also evident when the marginal costs are low with fixed costs leaving firms with an option to increase and expand the capacity to high levels which is difficult to many (Porter, 1979, n.p).

Threat of new Entrants
When new entrants are in an industry, they is intense desire among the firms to capture large market share due to the additional capacity. This exerts pressure on costs, prices and the rate of investment paramount for competition in the industry. Competition is mostly shaken up by the new entrants if they are diversifying from other markets. This is due to their leverage in terms of cash flow strength and existing capabilities hence shakes up competition in the industry. This is well demonstrated when Apple entered the music distribution industry. When entry threat is high, incumbents are forced to lower prices or increase their investment capacity to remain relevant and deter the new competitors. The entry threat is mostly dependant on the barriers of entry and the expectations the new competitors expect or predict from the incumbents (Porter, 2008, n.p).

The barriers of entry are the greatest deterrents to new entrants and are the advantages enjoyed by incumbents over the new entrants. These barriers include the supply side economies of scale. This is an advantage enjoyed by large firms in an industry that enjoy low cost of production per unit. Canadian airline may enjoy this advantage due to the high cost involved by new entrant in purchase of aircrafts and fixed cost establishment. Demand side benefits of scale are another barrier of entry. This is most common in airline industry why customers trust big and established companies as opposed to new ones in the industry. Customer switching costs also poses another barrier of entry. This cost is usually not very high in airline industry and Canadian airline experienced a challenge from Air Canada and other operates hence reduced its profitability levels (Porter, 1979, n.p).

In consideration of capital requirement as an entry barrier, Canadian airline experienced an advantage since other potential entrant requires a huge amount of investment capacity to enter the industry. This not only involves fixed facilities but also the potential of an entry to extend credit facilities to customers, fund up starting losses as well as building inventories. Virtually all regions have experienced new airlines due to sponsors providing financing to new entrants to purchase expensive aircrafts due to high resale value associated with the businesses. Incumbency advantages independent of size provides another barrier of entry (Porter, 2008, n.p).

Incumbents enjoy quality and cost advantages unavailable to new entrants ranging from preferences to favorable geographical locations and proprietary technology in operation. Unequal access to distribution channels posses another threat to new entrants. This has seen up-start low cost airlines completely by-passing distribution by not using agents and encouraging the passengers to book directly with them through other means including internet. Restrictive government policy is the greatest barrier to new entrants. This is mostly seen in regulated industries like Airlines. This was the case in Canadian airline before the deregulation policy was introduced and airlines adopted the merge and affiliation options to remain relevant in the market (Porter, 1979, n.p).

The bargaining power of Suppliers
Powerful suppliers in the market manage to capture of market value to themselves through limited quality of services, charging higher prices and shifting the relevant costs to industry participants. These firms are able to squeeze the profitability levels out of industry and remain in a position to pass on the cost increment on their own prices. A supplier may have powerful bargaining strength due to its near monopoly in service and product provisions in the market. If a firm does not depend heavily on the industry market for its revenue may also exploit this strength. When the switching costs among the suppliers within the industry are also high may also be a determining factor (Porter, 2008, n.p).

The bargaining power of Buyers
Powerful buyers can as well force prices of products and services down, as well as demanding firms provide quality services and products thus reducing the profitability share of the industry. When buyers have a relative negotiating leverage relative to the participants within the industry, they are considered as powerful more so if they are price sensitive. When buyers are few, they possess the bargaining leverage power especially in an industry with high fixed cost relatively to low marginal costs. When the industry is characterized by standard and undifferentiated products and services, buyers have more bargaining power since they play firms against one another. This as well provides buyers with few switching costs among firms (Porter, 1979, n.p).

Threat of Substitutes
A substitute performs a near or a similar function as an industry’s product of a service through similar or different means. For example, a videoconferencing may be a substitute of travelling. Threat of substitute is usually downstream when it replaces the industry’s product or a service. The presence of substitutes is usually not considered so simply because they appear to be different. When the threat of a substitute is intense, the industrial profitability is significantly reduced. This occurs when substitutes are offering attractive price performance exchanges and preferences than the industry’s products and services. Substitutes are always preferred especially if the cost of switching is relatively low hence reducing the profitability levels (Porter, 2008, n.p).

For a good and competitive strategy to be developed, a thorough understanding of the five discussed forces above is paramount. The trend in profitability levels of a company need to be studied continuously and in projector trends. This will help a company incorporate the industry conditions to its strategy.
PESTEL factors (Political, Economic, Social, Technological, Environmental, and Legal)
PESTEL is an acronym standing for Political, Economic, Social, Technical, Environment and Legislative. This is a strategic technique used for planning to provide useful framework that is vital in analyzing the environmental pressures that are eminent in an organization. Mostly it’s used to measure the external factors affecting the industry. In analyzing the company’s external factors for purposes of strategy formulation, these factors should be studied either as macro-economic or micro-economic in nature (Tsiakkiros, 2002, p.g 27).

Political: These factors are mostly coupled with Legislative influences of an industry. They concentrate in the effects of elections, the employment laws, regulations for consumer protection, and environmental regulations of a region. Ways government uses to influence the profitability of the business through taxation measures should also be considered. The government involvement in formulation and signing of international trade agreements like NAFTA, EU should be considered.
Economic factors form the core analysis of business for strategy formulation both short and long term. This is vital especially while planning for international trading and collaborations. Other issues of paramount consideration are the prevailing levels of interest rates, level of inflation in terms of employment per capita. The long term prospects and trends for an economy GDP are also vital details to be considered (Cooper, 2000, p.g 9).

The socio-cultural influences on an industry vary from country to country because of different in people’s beliefs and religious practices. The attitudes of dominant consumers on foreign products and services needs to be considered as well in formulation of the strategy, The different setting of gender responsibilities is also paramount besides the living standards of diverse populations.
In aspect of technology, the competing technology development and the available research design for product and service improvement needs to be considered. The rate of technological development and advancement is also paramount, how consumers receive information that is channels of communication and information dissemination. The legislative processes for a technological advancement, growth and practice should also be emphasized in consideration of intellectual property rights, patent and licensing procedures (Kotter, & Schlesinger, 1991, p.g 26).

Conclusion & Discussion of the overall attractiveness of the Industry
The development of a good strategy starts by a thorough knowledge of understanding of all the forces pertinent in an industry that shape industrial competition among the existing firms. To shape up the production levels and improve on its trends, firms should be in a position to understand their profitability levels and the trends of its growth. This can well be achieved by considering the five forces pertinent in the industry and hence allows the company to incorporate the market conditions in its own strategy.

These forces demonstrate the most significant facet s of a competitive environment besides shaping the frameworks to be used by the company to exploit on its strengths and capture the opportunities cushion on the effects of the market weaknesses. The study of these forces and the PESTEL analysis is paramount in assisting the company managers towards realization of fruitful possibilities of formulating a strategic action plan for the company. The study helps the managers to position the company to deal with the competitive forces in the market, predicting the shifts of the forces as well as defining the balancing efforts to these forces to create a new favorable dynamic structure in the industry beneficial to the company.

References
Bradshaw, B & Helen, L (2000), Privatization and Deregulation of Transport, Macmillan Press Ltd, London
Byars, L (1991), Strategic Management, Formulation and Implementation – Concepts and Cases, New York: HarperCollins.
Capron, N. and Glazer, R. (1987), Marketing and technology: a strategic coalignment, Journal of Marketing, Vol. 51 Issue 3, pp.10-21.
Cooper, L (2000), Strategic marketing planning for radically new products, Journal of Marketing, Vol. 64 Issue 1, pp.1-15.
Dom, T & Tretheway, M (2001), Monopoly versus Duopoly in Canada’s Airline Industry: Policy Alternatives and consequences, Centre for transportation studies, University of British Columbia
Jan, Y (2002), A three-step matrix method for strategic marketing management, Marketing Intelligence and Planning, Vol. 20 Issue 5, pp.269-272
John, C & Joseph, P (2002), The Canadian Airline Industry, Retrieved on October, 14th 2011 from: http://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/CIR/892-e.htm
Johnson, G & Scholes, K (1993), Exploring Corporate Strategy – Text and Cases, Hemel Hempstead: Prentice-Hall.
Kotler, P (1998), Marketing Management – Analysis, Planning, Implementation, and Control, 9th Edition, Englewood Cliffs: Prentice-Hall.
Kotter, J & Schlesinger, L (1991), Choosing strategies for change, Harvard Business Review, pp.24-29.
Pearce, J & Robinson, R (2005), Strategic Management, 9th Edition, New York: McGraw-Hill.
Porter, M (1979), How Competitive forces shape strategy, Harvard Business Review
Porter, M (1985), Competitive Advantage, New York: Free Press.
Porter, M (2008), Journal of Business Review: The five competitive forces that shape Strategy, Harvard Business Review
Reschenthaler, G & Robert, B (2009), Perspectives on Canadian Airline Regulation, Institute for Research and Public Policy, Montreal
Robinson, S., Hichens, R & Wade, D (1978), The directional policy matrix-tool for strategic planning, Long Range Planning Journal, Vol. 11, pp.8-15.
Thompson, J (2002), Strategic Management, 4th Edition, London: Thomson.
Tsiakkiros, A (2002), “Strategic planning and education: The case of Cyprus”, The International Journal of Educational Management, Bradford 2002

Airline Industry Analysis 13

Labor Economics

Chapter 15: Job Search: External and Internal
Employees switch from one to employer to another or from one job to the other with the same employer. Employees are forced to search for new employment after layoffs. Fresh graduates search for their first employer. Workers look for other employers with better working conditions. The jobs and workers in the labor market are heterogeneous. The information on jobs and workers is imperfect in the labor markets. These two characteristics of the labor markets create a need for workers to search for employment. The labor market is characterized by a continuous flow of new employees to the market and existing employees from the labor market. Thus, the stock of the unemployed workers in continually replenished and diminished.

The benefit of job search is that the unemployed workers access information on wage offers and thus have a higher chance of getting an opportunity to increase their wages. However, unemployed workers incur costs when searching for jobs in terms of fees paid to agencies, transportation costs to interviews, accessing job advertisements and wage opportunities. Workers incur a major cost quantified by the earnings of the best opportunity available if they choose to continue searching for a job. If workers get a wage offer that is below the acceptance wage, they will reject the offer and continue to look for a better offer. If the wage offer is above the acceptance offer, the worker is officially unemployed and is in search of a job.

If workers expect that the rate of inflation in the economy will increase in future, they will raise their acceptance wage. If the inflation rate increases as per the expectation of the job searchers, it will not have any impact on them. This means that the period of searching for a job remains constant and thus unemployment rate in the economy remains at a natural rate. However, if the inflation is unexpected, the job searchers will not adjust their expectation. Thus, the period of the job search is reduced and the unemployment rate in the economy will be lower than the natural rate. As predicted by the adaptive expectations theory, the decline in unemployment below its natural rate is short lived. The unemployment benefits that the government offers to the job searchers may cause them to prolong their search. This is because the net cost of searching for jobs with higher wages is reduced by the government benefits.

The job search model implies that job searchers may not accept the first wage offer or any offer that is below the acceptance wage. Thus, there will always be vacancies in the labor market despite the number of unemployed workers. Holding all other factors constant, the acceptance wage is high if the expected tenure of employment is long. The model also implies that luck plays an important role in the distribution of wages and earnings. The demand for labor affects the level of unemployment in the economy.

An internal labor market consists of an administrative unit in which rules and procedures control the price and allocation of labor. The demand and supply forces in the labor market determine the wages received by the workers when entering an internal labor market. However, the rules and procedures in the internal labor market determine the subsequent wages. The internal labor markets exist because firms aim at minimizing the recruiting and training employees. These costs are reduced by reducing the labor turnover. The internal labor markets have job ladders with different wages. As employees go up these ladders, their wages increase. Internal labor markets result in efficiency because the wages are determined by procedures and rules instead of market forces. However, some economists support the existence of internal labor markets arguing that they increase the firm’s productivity. Firms reduce on costs of recruiting and training workers. The workers are motivated to put more effort on their jobs to go up the job ladder. In addition, the older employees share their skills with new employees and this reduces on the labor turnover.

Labor unions promote the development of internal labor markets. However, the internal labor markets promote unionization of workers in these markets due to the rigid procedures used in determining the wages. The workers in the internal labor market have specific training on their jobs and this gives a bargaining power especially when they act as a union. However, unions result in written agreements between the employers and the unions. Thus, the procedures become rigid and the internal labor markets expand.

Chapter 16: The Distribution of Personal Earnings
The distribution of personal earnings indicates how wages and salaries are distributed in a country. This distribution can be portrayed through frequency distribution or the Lorenz curve. The frequency distribution of the wages of the US workers in 2007 indicates that the earnings are unequally distributed. The Lorenz curve on the same earnings indicates the same trend of unequal distribution. A high Gini coefficient implies that the earnings inequality in the economy is large. The accuracy of frequency distribution, Lorenz curve, and the Gini coefficient in depicting the inequality in the distribution of personal earnings depends on a number of factors. If the part time or hourly workers are included in these analyses, then the variability in earnings will be greater relative to the analyses conducted using the full time workers.

The inclusion of fringe benefits increases the variability in personal earnings in the labor market. The variability will increase or decrease depending on whether the analyses uses the individuals’ earnings or the household earnings. The measures of inequality are limited in that they do not show how individual employees move within the distribution over the years. Including income from other sources other than the labor market may exaggerate the earnings inequality in the labor market. One the theories that explain the unequal distribution of earnings is the human capital theory. The investments in human capital such as formal education and on-the-job training influences the earnings received by the workers. If all other factors remain constant, formal education is positively related to earnings. Therefore, if formal education is unevenly distributed in the country, inequality in earnings distribution will be high.

The quality of the on-the-job training influences the employees’ earnings. If the training is of high quality, the trained employees will earn higher wages due to their increased productivity. Thus, the earnings inequality in the economy will be high. The other theory that explains the earnings inequality is the modified human capital model. This model uses a multifactor approach to inequalities in earnings. Some of the factors that influence the earnings inequality include a worker’s ability, family background and the risk taking behavior of employees. Other factors in this model include discrimination, education, and training. The ability of a workers influence their earnings with and without human capital investments. The family background may influence a worker’s earnings if it provides a source of income such as family businesses. The family background influences the level of formal education that an individual acquires. The discrimination of employees based on their gender, race, or age affects the earnings distribution in the economy.

The personal distribution of earnings changes from one decade to the other and not yearly. The mobility of personal earnings can be life cycle or churning. The life cycle mobility indicates changes in the distribution of personal earnings with age. In this case, young workers may earn low wages while the older workers earn high wages. Earnings are high in a worker’s prime working years. Churning in personal earnings distribution is independent of age. This means that an employee may start with a low wage as they enter the job market and then the wages increases with a large margin in the subsequent years. Churning is common with workers that earn low wages and those that earn the highest wages in the labor market.

In the United States, the inequality in the earnings of both men have been increasing especially after 1980. One of the reasons for this increasing trend is deindustrialization. The service sector has largely expanded. The sector is characterized by lower wages and high earnings variances relative to the manufacturing sector. The competition between imports and the locally manufactured commodities has reduced the demand for labor. Thus, the wages have reduced in some sectors. Unionism has declined as well and this has had an effect on the wages. The increased demand for skilled workers and the demographic changes have contributed to earnings inequality. The wages of the skilled employees have increased while those of the unskilled workers have remained low. The inequality in earnings cannot be explained by a single factor but is caused by demand and supply forces in the labor market as well as institutional factors. The future of inequality in earnings is unclear and speculative. However, the inequalities may reduce especially if investments in human capital increase.

Chapter 17: Labor Productivity: Wages, Prices, and Employment
Productivity is a relationship between the amount of goods and services produced and the amount of inputs used to produce those goods and services. Productivity indicates the quantity of output that can be produced using a single unit of output. An increase in productivity means that amount of output that is produced by the same unit of input has increased. Labor productivity is the amount of output produced in every one worker-hour. When all other factors remain constant, the total output produced as labor units are combined with capital inputs increases at a diminishing rate. The US BLS productivity index indicated that labor productivity has doubled in the past 48 years.

The BLS productivity index considers the labor productivity in the private sector alone. This means that the public sector is excluded from the index. One of the shortcomings of the index is that it understates labor productivity because the quality of the output produced by the workers is not considered. The BSL index also implies that labor is the only factor that influences productivity, which is not the case. However, the index is still useful in describing the changes in labor productivity in the private sector.

An increase in the productivity is the basis for increases in wages and the living standards of the workers. The increase in productivity is also important in the economy since it offsets any increases in the nominal wages. Higher levels of output cause firms to demand for more labor. If the demand for labor increases at a faster rate than the supply of labor, then the real wages will increase. In addition, if the increase in productivity is equal to the increase in nominal wages, the labor costs incurred by firms in the production process remain the same. Thus, the firms will not increases the prices of their products and the inflation rate in the economy remains unchanged. However, if the increase in nominal wages is higher than the increase in productivity, the labor costs will increase. Consequently, the inflation rate in the economy will increase.

Productivity growth is caused by improved quality of labor, efficiency in the combination of factors and the availability of capital goods to the workers. The efficiency in the combination of factors is enhanced by technology and economies of scale. A favorable legal-human environment and better organization of resources in a firm increase efficiency as well. Labor productivity demonstrates a cyclic pattern in the short run. This means that the growth in labor productivity falls below the long run growth rate during in a recession and goes beyond the long run growth rate in an economic recovery. These cyclic changes in the growth of labor productivity result from changes in the use of labor, plant, and capital equipment. Changes in the components of the aggregate output contribute to the cyclic changes in labor productivity. Cyclic changes are dependent on the state of the economy and have an influence of the economic policy that a country adopts.

The growth rate of labor productivity will increase during an economic upturn and decrease when the economy is in a recession. The growth in labor productivity implies that the society can produce more goods with fewer human resources and the quantity of output can increase. Increasing the level of output will require that firms employ more workers. Therefore, the growth in labor productivity results in employment. Falling per-unit costs and higher levels of output characterize industries with high productivity growth. However, industries with low productivity growth have increasing per-unit costs, lower levels of total output and high unemployment rates. There is no statistical evidence of a relationship between employment and productivity growth.

The growth rate of productivity in the US increased rapidly in the 1990s. This rapid growth is attributed to the increased use of information technology, advanced technology and increased efficiency. In the second half of 1990s, many firms increased their level of investment in information technology such as computers, hardware, software and communication technologies. The production of information technology products increased as technology advanced in this period. Technology enabled the firms to increase their production efficiency. If technological progress is sustained, production growth rate are likely to record an increasing trend in the coming years.

Chapter 18: Employment and Unemployment
The employed people are the citizens above 16 years who are working at private and government firms, self-employed and those that have jobs but are off due to illness, weather, disputes, or vacation. The unemployed people are the individuals above the age of 16 with no jobs. The unemployed include those who are actively searching for a job, waiting to be recalled to their previous employment and those waiting to report to a new job within 30 days. These definitions are used when collecting statistics on the rate of employment and unemployment in the economy. The total population consists of the individuals in the labor, those not yet in the labor force and proportion of the population that is below 16 years. In 2008, the total US population was 304.1 million people. 154.3 million people were in the labor force, 79.5 million people were not in the labor force, and 70.3 million people were below the age of 16 years. Of those in the labor force, 8.9 million were unemployed while 145.4 million people were employed.

According to past statistical data, the employment population ratio has been increasing in the past 48 years. The unemployment rate has recorded great variability in the same period. The household data on employment and unemployment has been criticized based on the sampling techniques used to collect data, the time spent before the data is released, and the disaggregation of the data. The official statistics of employment and unemployment are limited in that they include the part-time workers as part of the fully employed workers. For a person to be considered as unemployed, they must be actively looking for a job, which is not always the case among the unemployed. The data does not also include the sub-employed workers. Other limitations include the possibility of households providing false information and the acceptance wages are not considered when generating the data.

The equilibrium or the natural rate of unemployment is the unemployment rate that exists when there is no excess demand or supply of labor in the market. The natural rate of unemployment is the unemployment rate in the longrun when the expected rate of inflation is equal to the actual rate of inflation. Full employment is estimated at the level where the unemployment rate is between 4 and 5 %. The level of employment in an economy depends on the supply and demand forces in the labor market. Frictional unemployment exists when employees leave their jobs voluntarily or change their jobs. This kind of unemployment will also occur when new workers enter the labor force or old workers reenter the labor force. Frictional unemployment is common in a labor market that has heterogeneous workers, imperfect information, and continuous labor mobility. Frictional unemployment can either be wait unemployment or search unemployment. Search unemployment indicates the time that the unemployed workers take to find a job. Wait unemployment indicates the time workers take as they wait to be recalled to their former employment.

Structural unemployment is caused by a mismatch between the skills that an employer requires and the actual skills that the employees possess. A geographical mismatch between the location of workers and the location of jobs leads to structural unemployment. Workers can only exploit the job opportunities that are within their reach. Displacement of workers due to mass lay offs results in structural unemployment. Workers are displaced when a plant or a manufacturing unit is closed and when employers decide to cut off their employees as a way of reducing their production costs. Demand-deficient or cyclic unemployment is the kind of unemployment that results from decrease in aggregate demand. During economic depressions and recessions, the demand for products reduces and this has negative impact on the profitability of firms. The firms cut on their output levels and thus require fewer workers to produce the lower level of output.

A decrease in demand for products leads to a deficiency in the demand for labor. The wage rates reduce due to unionism, layoffs, the nature of contracts between employers and employees and the insider-outsider relationships. The fiscal policy is in most cases used to reduce the demand-deficient unemployment. However, the fiscal policy is limited by time lags, crowding effects and the resultant inflation in the economy. Unemployment varies across race, age, and occupation.

Insert Surname Here 13

Techniques for Maintaining Interest in Training

Currently in the world, training has become the order of the day. The world is evolving in terms of economical and technological aspects, and this calls for continuous trainings at work places to match the growing trends. In addition, consumer taste and preference keep on changing. Every organization that wants to stay in businesses must ensure that its employees are up to date in experience and technical knowhow (Barbazette, 2006). Scholars have suggested various ways in which training programs can be made interesting for both the trainer and the trainee.

The first technique is use of discussions or participatory approach in training. People become interested in a program when they know they have some control over the activity. Discussion allows a room for questions from both parties. This way, the trainees will feel that the trainer appreciates their knowledge of the subject matter; hence motivation and interest is created (Kirkpatrick & Kirkpatrick, 2010).

The second aspect scholars have talked about is creating an environment conducive for learning. This entails the trainer allowing trainees to make decisions on what aspects they want to learn or be able to perform at what specific step of the training program. This motivates trainees to put a lot of emphasis on the training program knowing that they are their own judges of whatever outcome (Silberman & Auerbach, 2011). Brainstorming here serves best to allow trainees raise their views of the best ways of learning.
Lastly, the third aspect is use of varied techniques. In this aspect, a trainer uses different techniques to introduce different topics. People tend to lose interest on something that is done the same way every time. Having varied ways of doing things will boost trainees’ interest on the program (Kirkpatrick & Kirkpatrick, 2010).

References
Barbazette, J. (2006). Training needs assessment methods, tools, and techniques. San Francisco, Calif. Chichester: Pfeiffer John Wiley distributor.
Kirkpatrick, D. & Kirkpatrick, J. (2010). Evaluating training programs: the four levels. Sydney, NSW, Australia San Francisco, CA: ReadHowYouWant.com Berrett- Koehler Publishers.
Silberman, M. & Auerbach, C. (2011). Active training: A handbook of techniques, designs, cases, examples and tips. San Francisco: John Wiley and Sons Publishers.

MAINTAINING INTEREST IN TRAINING 2

Running head: MAINTAINING INTEREST IN TRAINING 1

Part 1: Exxon Mobil

Company’s Vision and Mission Statement
Exxon Mobil Corporation’s vision is to take on the world’s toughest energy challenges. To achieve this vision, the company’s mission statement is to continuously achieve superior financial and operating results while simultaneously adhering to high ethical standards (Exxon Mobil 1)
The Company’s Industry
Exxon Mobil Corporation is in the oil and gas industry, which is competitive and volatile.

Business Model
The Corporation has a business model that integrates a long-term perspective with excellence in operations, superior cash flows and a disciplined approach to its investments so that the shareholders’ value is maximized. Exxon Mobil tests its projects in different economic situation to ensure that there is resilience (Exxon Mobil 1).

Exxon Mobil’s Value Chain
As indicated earlier, Exxon Mobil has three business lines. The upstream businesses extract oil and gas resources from the remote geographical locations. Such extractions are capital- intensive and Exxon Mobil has invested in technology to facilitate the extraction of the resources. Global technological leadership has enabled Exxon Mobil to explore and extract gas and oil resources despite the challenging environments in which they are located. The company has explored all geological environments as well as geographical locations to extract the required resources. In addition, the corporation has unique geosciences capacity that enables its upstream businesses to extract gas and oil resources of the highest quality.

Some of the projects that Exxon Mobil has undertaken include heavy oil, tight and shale gases, LNG and sour gas projects among others. Supportive technology such as seismic imaging, drilling, reservoir simulation, and designing of facilities has enabled Exxon Mobil to reach some deposits of resources that other companies have not managed to exploit. Technology leadership has been a source of a competitive advantage for the corporation and has enabled it to extract more resource from new and mature reservoirs (Exxon Mobil 1).

The downstream business operations of Exxon Mobil refine and distribute crude oil and feedstock products. Exxon Mobil has a global network of manufacturing, transport, and distribution systems that ensure that the downstream products reach the target customers. The company has recruited and trained field personnel that are responsible for distribution and supply of its products in the local and international markets. Exxon Mobil’s products reach millions of customers every day. The marketing activities of these products are carried out through the retail service stations and the global business segments. The global business segments in charge of marketing activities include industrial and wholesale, marine, and aviation segments. One of the marketing strategies that Exxon Mobil uses to beat its rival is to produce high quality products for its customers and ensure that the customers are able to access the products conveniently (Exxon Mobil 1).

Exxon Mobil is one of the largest producers and suppliers of petrochemicals worldwide. The corporation has established specialty businesses for its chemical products that rank among the top companies in the world. These specialties operate on low cost structures and offer the customers products with a high performance relative to the other products in the market. The specialties offer the customers a wide range of products to meet a wider range of their needs (Exxon Mobil 1).

Core Competencies
One of the core competencies of Exxon Mobil is its investment in innovation and technology. Extract of gas and oil resources require advanced technology and the corporation has realized the need to invest in such kind of technology. Technological leadership has kept Exxon Mobil ahead of its competitors. The company leading technology and capabilities has enabled it to reach new reservoirs of natural resources. Technology has also enabled the corporation to extract more resources from new and existing reservoirs. Consequently, the corporation can assure its customers of a constant supply of oil and gas products. Exxon Mobil has well built global network of manufacturing, transporting and distributing its products to its global customers. The corporation has trained its personnel and established marketing networks to create awareness of its products in the global markets (Exxon Mobil 1).

Exxon Mobil offers its customers products that are of the highest quality in the industry. Technology and innovation have enabled the corporation to continually improve the quality of their products. In addition, the company offers a wide range of products to its customers especially from its chemical and downstream businesses. Consequently, the corporation meets more of the customers needs and production strategies ensure that there is a constant supply of the products. Exxon Mobil’s global strength is one of its core competencies. The corporation has operations in different countries and thus has a wider market for its products. The corporation’s strong integration and flexibility in its operations has enabled to increase its efficiency in the chemical and downstream businesses. This has reduced the operational costs and increased the profits for the corporation (Exxon Mobil 1).

Exxon Mobil has adopted high standards in all its operations. Its standards rank high in the industry and in the global landscape. Thus, its products record high performance and are diverse as well. This improves the satisfaction of the corporation’s customers. Exxon Mobil has set high values including integrity, which are observed in all its businesses. Consequently, the corporation is able to give high returns to its shareholders and high quality products to its customers (Exxon Mobil 1).

Internal System Of Corporate Governance
Exxon Mobil’s board of directors consists of Michael Boskin, Peter Brabeck-Letmathe, Larry Faulkner, Jay Fishman, Kenneth Frazier, William George, Marilyn Nelson, Samuel Palmisano, Steven Reinemund, Rex Tillerson, and Edward Whitacre. These directors serve in the audit, compensation, board affairs, finance, public issues and contributions and executive board committees. Most of them are in more than one committee but they serve in the executive committee on rotational basis. Apart from the board of directors, Exxon Mobil has corporate officers in all its affiliate companies. The presidents in the upstream businesses include Duffin (development), Greenlee (exploration), Kruger (production), Ortwein (research), Walters (gas and power marketing) and William (XTO energy. The downstream companies’ presidents include Cramer (fuels marketing), Glass (refining and supply company), Kelly (lubricants and petroleum specialties and Wojnar (research and engineering). Pryor is the president for the chemical company and Milton is the president for the global services company (Exxon Mobil 1).

Sec Edgar Search Findings
There are no reports of inconsistencies in Exxon Mobil in the Sec Edgar database. There are no inconsistencies filed in terms of vision, mission, or corporate governance in this database. This means that the corporation’s operations in all its business segments have been consistent with its vision and mission. The corporation has also been keen on following its corporate governance guidelines.

Strategy
Exxon Mobil is committed to integrity in all its operations, which has enabled it to record leading results in the industry. The other supporting strategies include investments in technology and innovation, product quality and diversification and integration of its internal processes. Investment in advanced technology and innovation is one of the successful strategies that have enabled Exxon Mobil to reach deposits that have not been tapped by other companies. This strategy has also enabled the corporation to extract more resources from the mature and new reservoirs. For instance, Exxon Mobil is utilizing the newest technologies at the Kearl oil sands project to reduce GHG emissions during the mining process. This is also part of its commitment to integrity strategy. The investment in technology enabled Exxon Mobil to increase its oil production by 4.4 million per day in 2010. Technology has also contributed to improved manufacturing processes in the Corporation (Exxon Mobil 1).

Exxon Mobil reckons that its commitment to integrity as a business strategy has been the driving force behind its leading results in the industry. The corporation has established an operations integrity management system that consists of risk assessment and management strategies, change management, human resource management, information integrity, facilities design and construction among other things. This strategy has been successfully implemented in the company as indicated by the latest financial results. In the year 2010, Exxon Mobil recorded earnings amount to $30.5 billion and 22% return on capital employed. The cash flow was estimated at $ 51.7 billion from operations and sales of assets (Exxon Mobil 1). In addition, Exxon Mobil was recognized by Moody’s and Standards & Poor’s for its superior financial performance and strength. The Corporation received the highest rating in the industry for its obligations. Exxon is also among the few firms that have managed to maintain high credit ratings in the industry and its discipline in investments has contributed to this kind of performance.

Exxon Mobil is committed to maintaining the best practices and high standards in its operations. This strategy has enabled the corporation to produce high performance products especially in the chemical company. Its specialties rank either the first or the second globally in terms of the market position and cost structures. Exxon Mobil strategy of integrating the manufacturing, transport, and distribution systems across the globe has not been as successful in meeting the global demand for energy. However, this challenge is not unique to Exxon Mobil since the demand for energy is increasing with higher margins each year. This means that Exxon Mobil does not meet all the energy needs for its customers despite its global distribution strategy. To meet all the energy demands higher levels of investment are required as well as providing alternative sources of energy (Exxon Mobil 1).

Core Drivers in the Industry
Exxon Mobil is the largest among the petroleum companies that has been recording the highest revenues and income in the industry. However, its major competitors include BP, ChevronTexaco, Total, ConocoPhillips, and Dutch Shell. To maintain its competitive position, Exxon Mobil has invested in the latest technology and has maintained high standards in its operations. Consequently, the corporation has managed to explore new deposits and produce high performance products for its customers. Investment in technology has enabled Exxon Mobil to offer a wide range of products to its customers. Investment in technology and innovation is a continuous process at Exxon Mobil. According to the 2010 annual report, Exxon Mobil is committed to increasing its investments in capital and in implementing its integrity strategy. If the corporation maintains its high standards and best practices in its operations, it will maintain its leading position in the industry. The standards and practices adopted by Exxon Mobil are the highest in the industry (Exxon Mobil 1).

Exxon Mobil’s Sustainability
One of the ways that Exxon Mobil can be sustainable is by developing production strategies that minimize on the environmental damage. Extraction and refining of oil and gas products poses great dangers to the environment. For Exxon Mobil to maintain its position in the market, it has to maintain its commitment to integrity. Part of the operations integrity system concerns taking care of the environment. Exxon Mobil is committed to investing in the newest production technology. This might lead to high production levels in the existing mines and the resources therein might be exhausted. For sustainability, Exxon Mobil should focus of exploring new mines and geological sites. Minimizing the environmental damage and exploring new deposits or reservoirs may have costs implications for Exxon Mobil. Both strategies will require additional investment in technology and capital. However, the company will benefit from the sustainable profitability and improved image in the market.

Part II
Question 14
Alfred Rappaport introduced the concept of maximizing the shareholders value in 1986. Rappaport criticized the trend that had been adopted by many firms of focusing on short-term profit maximization goals. According to Rappaport, firms should concentrate on maximizing the long-term shareholders’ value. Some of the ways that Rappaport outlines include developing strategies that will maximize the expected value and shunning control or guidance of the earnings. Firms should consider the expected value when making acquisitions and when choosing the kind of assets to maintain in the business. The other principle outlined by Rappaport involves returning cash to shareholders when an investment is not credible. Companies should reward their chief executive officers and other senior executives as well as the operations executive. The middle managers and the frontline employees should be rewarded as well. A company’s senior executive should be willing to join the shareholder in bearing the ownership skills. The investors should have access to all the relevant information on value (Rappaport 3).

Reland indicates the concept of shareholder value maximization was misinterpreted and this led to global economic crisis (91). This implies that the focus of shareholder value maximization is one of the factors that contributed to the collapse of the global economy. However, the concept did not receive as much attention as the other contributing factors. Following the crisis, many economists began to criticize the concept arguing that the employees, customers and products are more important to an organization than shareholder value. Thus, organizations should shift their focus to these stakeholders and shun from the goal of maximizing shareholder value.

Many managers misinterpreted Rappaport’s point of view and became single minded about shareholder value maximization. Consequently, other business strategies were neglected and this resulted in a global economic meltdown. The business strategy adopted by a firm should target all the stakeholders and not just the shareholders. Many organizations failed to integrate other strategies with the shareholder value maximization. The resultant global economic meltdown resulted in social and political unrest in many parts of the world (Giraud and Renquard 3; Reland 91).
Corporate social responsibility is the obligation and commitment by an organization to pursuing goals and objectives that have a positive effect in the society. It includes integrating the welfare of the society in an organization’s business strategies. Some of the benefits that accrue to organization from corporate social responsibility include customers’ loyalty, easier access to the best human resources and building a good reputation for the organization. Corporate social responsibility can enable an organization obtain the license from the local government to conduct its business by demonstrating how the community will benefit. CSR can be a source of a competitive advantage for an organization as well (Barnett 794.

Some of criticisms that have been raised against CSR include the unclear motives of organizations and the resultant ethical consumerism. Some of the organizations’ operations do not target the community but other stakeholders. Thus, they may not participate in community development thereby losing their competitiveness in the market to the participating firms (Banerjee 41). The core argument against CRS is that is the additional costs incurred for non-core activities. Despite the criticisms, CSR is advantageous not only to the organization but also to the community. If all organizations shun from CRS in fear of criticism, the community will remain underdeveloped and this may have an impact on the long-term purchasing power of the consumers.

Question 15
Conscious capitalism is the kind of capitalism that focuses on corporate performance in terms of profit while simultaneously recognizing other factors such the environmental, social, and economic factors that affect the organization. With conscious capitalism, organizations recognize their interdependence in the global market. Some of the companies that have adopted conscious capitalism include Zappos, Google, Whole Foods, and the Container Store. Other companies include Commerce Bank, Jet Blue, Nordstrom, Southwest Airlines, and Wegmans among others. These companies have made service to others as their primary goal beyond profit making. Social entrepreneurism involves identifying a social problem or need and establishing a business whose main aim is to eliminate that social problem. In this case, entrepreneurs use their ability to achieve social goals instead of profit maximization goals. Some of the organizations that started as social entrepreneurships include Northland Institute and Institute for Social Entrepreneurs (Rubenstein 74).

Organizations have used CSR as a way of showing concern for the communities and the issues facing them. However, CSR cannot be equated to conscious capitalism or social entrepreneurship. As Barnett indicates, CRS decisions are not treated in the same manner as the other investment decisions (794). For conscious capitalists and social entrepreneurs, service to others is primary and not secondary as it the case with CRS. Conscious capitalism and social entrepreneurism influence the kind of policies and strategies that an organization adopts. The strategies adopted are aimed contributing to the welfare of the society and thus their implementation should leave the society at a better position.

Corporate philanthropy involves organizations giving part of their profits or earnings to the non-profit organizations or to projects that enhance the welfare of the community. Organizations donate cash or some of their items such as properties, their products, services, and loans among other things. Such donations can be given to the communities directly or through the non-profit organizations (Milam 1). Lobbying is a way of influencing the decisions made by the governments through acts such as volunteering or community development. Lobbying is common among corporations that need licensing from the government to carry out business activities in a community. Such corporations may support the community through voluntary projects as a way of influencing the government’s decision on their proposed business. Sometimes corporate philanthropy is viewed as lobbying and this causes communities to question the motives of organizations that claim to serve them. Thus, a community might not embrace conscious capitalism and social entrepreneurship if the community cannot establish the sincerity of the organization’s motives.

Works Cited
Banerjee, Subhabrata. Corporate Social Responsibility: The Good, the Bad and the Ugly. Edward Elgar Publishing, 2007. Print
Barnett, Michael. Stakeholder Influence Capacity and the Variability of Financial Returns to Corporate Social Responsibility. Academy of Management Review . 32.3(2007): 794-816. Web
Exxon Mobil. About US. 2011. Web. 13 October 2011 http://www.exxonmobil.com/Corporate/about.aspx
Giraud, Gael., and Renquard, Cecile. In Search of an Alternative to Shareholder Value Maximization. 2011. Web. 13 October 2011 http://hal.archives-ouvertes.fr/docs/00/60/91/53/PDF/WP1108.pdf
Mackey, John. Conscious Capitalism. 2007. Web. 13 October 2011 http://www.flowidealism.org/2007/Downloads/Conscious-Capitalism_JM.pdf
Milam, Jennifer. Corporate Giving. 2011. Web. 13 October 2011 http://learningtogive.org/papers/paper17.html
Rappaport, Alfred. Ten Ways to Create Shareholder Value. Harvard Business Review. 2006. Web. 13 October 2011 http://xa.yimg.com/kq/groups/20541140/519818019/name/Ten_ways_to_create_sharholders_value-Alfred_Rappaport.pdf
Rubenstein, Doris. The Good Corporate Citizen: A Practical Guide. John Wiley and Sons, 2004. Print

Insert Surname Here 1

Sony Store: Giving Back to the Community

Introduction
One of the strategies that organizations use to fulfill their corporate social responsibility is through giving back to the community. The initiatives of giving back to the community are aimed at meeting the needs of the community above the needs met by a company’s products or services. The community in which an organization is situated supports the success of the organizations by purchasing its products. Organizations benefit from the sales revenues as community members purchases their products or services. The community provides an organization with human resources and invests in the organization. The investments of a community in an organization helps in raising additional capital and thus the organization can expand its operations. Human resources are important to the long-term success of a business (Horrigan, 2010).

Organizations give back to the community as a way of appreciate the community’s support and contribution to their success. However, sometimes organizations give back to the community for their own gain in terms of building their reputation, attracting high quality employees and increased profitability among others. The strategies that organizations use to support the community depend on the social issues and needs in the community as well as the nature of the organization’s operations (Kolter & Lee, 2005).The prevailing organizational culture influences corporate social responsibility. Organizational culture can be used to predict the involvement of an organization in the community’s social welfare (Ubius & Alas, 2009). This means that if the organizational culture adopted in an organization incorporates the needs of the community, the organization is likely to give back to the community. Thus, the management of an organization should cultivate a culture among the employees that incorporates the needs of the community.

Sony Store
Sony Store is an organization that deals with electronic products such as Television sets, cameras, audio devices, computers, laptops, memory devices, and batteries. The store also deals with software and entertainment products such as movies, music, and play stations. Sony Store is located in located in Sydney, Nov Scotia. The Store has experienced tremendous growth in its profitability and performance. The community in Sydney has played a significant role in the increased profitability and performance over the years. The community prefers Sony electronics and the Sony Store is the sole supplier of these products in this area. The Store’s customer records indicate that many customers have been loyal to the Store and have helped in bringing new customers to the Store. The customers have been purchasing different kinds of electronics from the store and replacing their old electronics with products from the store. The highest percentage of employees in the Store is from the Sydney community. Sony Store intends to give back to the community as a way of appreciating their contribution to its success. To this extent, Sony Store has allocated 3% of all its revenues in the current financial year to community support and development. The strategies that Sony Store intends to use to give back to the community are outlined below.

Education Initiatives
Education is an important aspect in the community and the quality of education that children get influences their future career path. The quality of education also determines the quality of the future work force that the community will offer to organizations. The level of education that children get influences their future income, which in turn influences their purchasing power. Sony Store will support the education initiatives that other non-profit organizations have established. Non-profit organizations in Sydney have initiated plans to support the poor families educate their children up to the university level. Sony Store will give cash donations to these initiatives at the start but in future, the store will start its own educational support programs. The education initiatives that Sony Store will support include the education of orphans and other children living in children’s homes.

The other way in which Sony Store will support education initiatives in Sydney is through seminars and career talks. Sony Store will conduct career talks in all the elementary schools in Sydney. Such talks help in shaping the future characteristics of a community by influencing the decisions of its young people. The Store’s employees will advice the student on careers in the field of technology. However, Sony Store will invite other professionals from different companies in the area to give advice on their professions. These professionals may offer free advice to the students but in the event that they require compensation, Sony Store will cater for that compensation. Sony Store will work hand in hand with school administrators to identify other needs in the schools that need to be addressed. For instance, Sony Store will help the schools in acquiring the equipment required by physically challenged students. Sony will also help schools in acquiring stationery, books, sanitary facilities, and sports equipment among others.

One of the challenges facing schools that have integrated technology in their learning process is unreliable internet connections. Such schools lack the technical support to ensure that the installed technology is reliable and running continually. When the internet connection is interrupted, learning is interrupted as well. Some schools cannot afford to hire their own technical support team due to financial constraints. Thus, Sony Store will visit the schools in Sydney and ensure that their internet connections are safe and reliable. The safety of students when using the internet is a concern for many parents and teachers. Therefore, Sony Store will help the schools in installing internet security software in the students’ computers. Sony’s future educational programs will involve sponsoring students with outstanding performances who have an interest in the field of technology. The Store will also support the students whose parents cannot afford to pay for their fee.

Free Repair Services and Products Disposal
Sony Store offers free repair and maintenance services to its customers within the warranty period. Upon the expiry of this period, the customers have to cater for the repair of the products on their own. The initiative to offer free repair services will target the customers who have purchased products from the store and their warranty period for those products has expired. Sony Store will notify the community through the media and fliers for the customers to bring such products to the store. In case the products are too bulky for the customers to bring to the store, the Store’s technicians will visit the customer’s in their homes and offices. The free repair services will be offered for five days after the initiative is well publicized.

Electronic waste has a negative effect on the environment and human health. Metals produce harmful chemicals in to the environment as they rust. Many households are unaware of the proper methods of disposing their old electronics. Such households pile the electronics in their homes or dispose the waste in the environment. The knowledge of recycling electronic waste is yet to reach some households despite the campaigns by government authorities and other organizations. The rapid growth and expansion of technology has increased the rate at which people dispose the electronics. Thus, the environment is at a risk of increased pollution from electronic waste if communities are not advised on how to dispose such waste (Letcher & Vallero, 2011). Sony Store will conduct a training program to the community in Sydney advising the households on how they can dispose or recycle their old electronics. This advice will be available at the Store and will be communicated through the media as well.

The Store will print brochures with summarized procedures of disposing the waste and offer telephone lines through which customers can make enquiries on the same. This training will be offered through the indicated channels for a month. The training will target the whole community. However, the customers who wish to dispose electronics that were purchased from the store will be allowed to bring them to the store. The Store will dispose or recycle the products on behalf of their clients. Helping the community with the disposal of the electronics will not only help them get rid of the waste but also protect their environment. The community will be safe from the diseases that result from improper disposal of electronic waste.

Employee Volunteer Day
Sony Store has cultivated an organizational culture among its employees that support the development of the community and treating the community members in an ethical manner. The employees are trained to treat each customer with respect. The employees and the management team will be actively involved in giving back to the community. Sony Store is willing to spend money on community development as well as the energy and time of its employees. The employees will volunteer in cleaning the environment, planting trees and flowers along the streets. The employees will be divided into different groups and each group will have its own activity to carry out. The members of the community will be allowed to join in these activities but the Store’s employees bear the responsibility of ensuring that the activities are completed.

Part of the activities on the employee volunteer day will involve giving foodstuffs, clothing and household items to the less fortunate families in the community. Sony Store has teamed with the community leaders and has identified the locations of these families. In subsequent charity events, Sony Stores will help the homeless in the community get alternative housing. However, this will require planning and collaboration with other organizations in Sydney. The Store plans to build sanitation facilities and drainage systems in future. The funds used to facilitate the activities on employees’ volunteer day are contributions from the employees and the Store’s income. These activities will be conducted on a working day. This means that the employees will forfeit their commissions and salaries for that day to participate in community development.

Sony Store has initiated a program for its employees that enable the employees to support the community as they earn. A specific percentage of their salary goes to charity work in the community. The accumulated funds from this program will be distributed to charitable organization such as nursing and children’s homes. The employees are free to participate in charity work of their choice as a group or as individuals.
Gifts and Discounts
Some of the electronic goods that the store deals with are expensive and therefore some of the community members cannot afford to purchase. As a way of giving back to the community, Sony Store will offer discounts on some selected items. This sales campaign will be carried out for a month and will be publicized. The Store will also allow customers to exchange their old products with new products and meet the additional cost. This trade will be open for products that have been purchased in the last six months and will be limited to office and home appliances. The customers can pick the same item they had purchased or a new product in the same category. This initiative will only run for a week and will be limited to the items in stock during that week.

The Store will give gifts in form of its electronic products to the community. These gifts will include donating computers to the schools in the area especially the schools that have not integrated technology in the leaning process completely. A few laptops will also be donated to the school administrators and teachers in such schools. Part of the activities during the employee volunteer day will involve helping the schools to install programs in these computers and training the teachers and students on how to use them. Teachers waste a lot of time instructing their students on how to use technology instead concentrating on the subject matter. The Store will offer continuous technical support to these schools until the technology is fully integrated in to the learning experience.

Other gifts will be given to the regular consumers who buy expensive products from the store. Such customers will be allowed to pick a smaller item within a specified price range after making a purchase. Apart from the donations to schools, the Store will donate electronic goods to the less fortunate including homes appliance. The Store’s technical support team will instruct these families on how to use the electronics and offer any other help that the families may require.

Supporting Charitable Events and Other Social Events in the Community
Many charitable organizations in Sydney organize events to raise funds for their course. For instance, the Davis town RSL Charity Market, Point Clare Charity Market, UNICEF, and Ourimbah Lisarow RSL Markets among other organizations participate in community development (OnlySydney, 2011). These organizations hold fundraising and other entertainment events and the proceeds of these events go to charity work. Some of these events are held annually while some like the fundraising are held when a social need is identified. Sony Store will participate in these events by through cash donations and buying tickets into the events. Through the collaboration of many organizations in charity work, most of the social issues in the community are eliminated. Some of the events organized require electronic appliances. Sony Store will donate such electronics to the concerned organizations. The Store’s employees will also be involved in setting up the donated appliances at the venue of the events.

Communities value their cultural diversities. Sony Store will collaborate with other organizations to sponsor cultural events as a way of appreciating the communities’ cultural diversities. In addition, the store will sponsor other social events such as sports, entertainment, music concerts, arts, and other recreation activities. The social events will target both the children and the young people. It is through such events that good morals are instilled in the children and young people. They learn to be responsible and are less idle. Thus, the levels of crimes are reduced in the community. Social events provide an opportunity for the participants to display their talents and gifts. It is for these and other reasons that Sony Store is willing to organize and sponsor social events in the community. Some organizations sell products whose proceeds go to charity work. Purchasing such products will be part of the support that the Store will give to the community. Sony Stores will also give cash donations to foundations in the area and other youth initiatives. Some of youth initiatives create employment opportunities for the young people and thus the Store will participate in their empowerment.

Health is an important aspect to every community and the poor in a community suffer the most if the present health facilities are inadequate. The poor may not afford the health services and thus their health status may deteriorate due to lack of finances. Therefore, Sony Store will collaborate with hospitals and other organizations in the area to hold medical camps for the community. These medical camps will offer free check ups and treatment to the community members. Each medical camp will offer a different kind of medical care to ensure that most of the community’s health care needs are met. The Store will also participate in upgrading hospitals and other medical centers in the community. Some of the appliances that the store deals with can be used in hospitals as well. Thus, the store will make regular donations of such appliances to hospitals and offer repair and maintenance services to the hospitals as well.

Conclusion
Giving back to the community is one strategy that organizations use to fulfill their social responsibilities to the surrounding community. Communities support organizations by purchasing their products and services, providing human resources and providing additional capital though investments in stock. Sony Store is one of the organizations located in Sydney. The community in Sydney has played a significant role in the success of the store. Thus, Sony Store intends to give back to the community as a way of appreciating the community and fulfill its social responsibility. Sony Store will support the education initiatives in the area, hold career talks, and offer technological support to the schools in Sydney to improve the quality of education. The store will assist the community in disposing electronic waste and offer free repair services to its customers.

Other initiatives by Sony Store include employee volunteer day, giving products and gifts to the community and support the charitable events in the community. The store will actively participate in the elimination of some of the challenges in the community such as unemployment, inadequate health care and sanitary facilities among others. Sony Store will initiate its own community programs and collaborate with other organizations in the area that are involved in community development. The outlined strategies require large amounts of funds that the store cannot raise at once. Thus, the strategies will be implemented in phases. Sony will also mobilize funds from other organizations to implement the strategies.

References
Horrigan, B. (2010). Corporate Social Responsibility in the 21st Century: Debates, Models and Practices across Government, Law and Business. Edward Elgar Publishing
Kotler, P., & Lee, N. (2005). Corporate Social Responsibility: Doing the Most Good for your Company and your Cause. John Wiley and Sons
Letcher, T, M., & Vallero, D. (2011). Waste: A Handbook for Management. Academic Press
OnlySydney. (2011). Charity and Fundraising. Retrieved 21 November 2011 from http://www.onlysydney.com.au/
Ubius, U., & Alas, R. (2009). Organizational Culture Types as Predictors of Corporate Social Responsibility. Engineer Economics. 1(61), 90-100

Sony Store 1

Human Resources and Relation Management

1.0 Introduction
The royal Family of Dubai founded emirates Airlines in 1985. Over the years, the airline has expanded to become the biggest carrier in the gulf region. In addition, the company is equally ranked among the top 110 global airlines in terms of both passangers and sales (Airliner World 28). The company`s human resource department is tasked with the responsibility of ensuring that employees are satisfied and that they work in an efficient manner. The department works toward helping the company meet its strategic goals and objectives by effectively managing and maintaining employees (Emirates Group Careers 1).

1.1 Five Functions of Human Resource Department
1.1.1 Manpower Planning
The human resource department at Emirates Airlines has the responsibility of determining how many employees- pilots, flight operators, cabin crews among others- the airline will require in the future, and what skill sets they should possess. A number of factors affect labor planning. These include employee turnover, which is the number of employees leaving a particular job, the projected growth in passangers carried by the airline, technological changes that may call for new skills and render the current skills redundant, and the productivity level of the employees.

1.1.2 Job analysis and Description
The Human Resource Department at Emirates Airlines in job analysis and description for all vacant positions. Job analysis is the procedure employed to gather information on the responsibilities, duties, requisite skills, work environment, and outcome for a particular vacancy. Job description on the other hand refers to written statements that explain the duties, responsibilities, main contributions, deliverables required from a position, necessary qualifications that candidates must possess, and the reporting relationship associated with the holder of a particular job or office.

1.1.3 Determination of Salaries and Wages
Human resource management is also concerned with undertaking market surveys with the objective of detrmining and setting salaries and wages for various positions within Emirates airlines. Such decisions may be arrived at in consulattaion with the executive team and the Finance department. This function is particularly important because if for example the salaries of pilots are set too low at Emirates airlines, the company will experience high employee turnover rsulting in increased costs associated with training and recruitment.

1.1.4 Recruitment and Selection
Recruitment refers to the process of searching for qualified labor to meet the staffing requirements of the organization, and attract qualified applicants for employment. The process of recruitment begins when a vacancy in the organization is identified and ends when a set of candidates have been identified from whom a selection will be made. In the process of recruitment, the HR department must fully take into account the organization`s future requirements and growth prospects. When the recruitment process ends, the selection process begins. The most qualified candidate is selected from the identified pool of applicants. Positions that have greater responsibility often attract comples selection process. The selection process includes stage-by-stage screening, preliminary interviews, and tests to assess aptitude, attitude, psychological and behavioral responses, health assessment, and employment interview among others (Orgchart 1).

1.1.5 Appraisal of Performance
Once employees are successfully recruited as employees, it is the fubcton of the human resource department to assess their performance from time to time by using relevant performance appraisal mechanisms. Gergely and Kovacs (5), performance appraisal can be defined as the process of estimating and evaluating individual employee`s performace over a specific period of time. Such evaluations and assessments help the company to ascertain whether the evaluated employees are best suited to fulfill their assignments. Performance appraisals are often directly linked to job rellocations and promotions. However, in most cases, they help HR managers to know the knowledge and skills that specific employees need more training and development to enhance their productivity.

1.2 How HR Activities Relate to Line Managers and Other Departments
It is worth noting that line managers perform line functions, that is functions that advance the work if a company. On the other hand, HR activities are staff activities that are activities that facilitate wor by enabling overall effectiveness and efficiency. This explains how human resource activities relate to line managers and other departments. Both the human resource managers and line managers have a common interest in ensuring that the organization achieves its goals. By working as a team, line managers become more acquainted on major human resource functions. Consequently, the HR personel have more time to focus on strategic human resource management (Emirates Group Careers 1).

Second, it is through HR activities that employees in under line managers and other departments are supported. Human resource and line managers communicate frequently to identify the necessary skills and qualifications for seamless operation of departmental functions. For example, when there is a vacancy in the cabin crew department at Emirates Airlines, a line manager at the department will sit together with the HR specialist to assess the job description for both accuracy and completeness. Even during the recruitment process, the HR departments has to advise the cabin crew line managers on the best benchmarks to use in identifying qualified candidates and capabilities for the new departmental staff member (Mayhew & Ruth 2).

The third relationship relates to training and development. It is through HR activities that line managers are prepared for various leadership assignments. For example, HR trainers at Emirates airlines formulate learning outcomes based upon the understanding of line managers on the companys`s training and development philosophy. Leadership training topics often include best ways to offer employees feedback and the best way to undertake unbiased and fair aoppraisal of employee performance. HR managers and line managers collaborate in ensuring that the company maintains a consistent approach to performance appraisal (Mayhew & Ruth 3).

1.3 Positive HRM Practices and their Benefits in terms of Costs and Quality
1.3.1 Training and Development
Training and development is one one of the best HRM practices that has positive effects on the organization both in terms of cost and in terms of quality. In the modern nformation age, companies are valued not only because of their physical capital but also because of their intellectual capital. Giving the employees the necessary skills reduces mistakes and boosts their job morake. Untrained employees may be costly to the organization because the many mistakes they commit compromise the quality of goods and service delivery. In addition, when employees know that the organization cares for them they work extra hard to reciprocate the favor given. This leads to more returns, greater profit margins and reduced average cost. Trained employees equally ask for less help, which improves the overall efficiency of the organization (Six Sigma Online 1).

1.3.2 HR Planning
Human resources planning are the second best practice. It anticipates the number of employees the organization will need in the future and the type of skills they should possesss. Quality enhancement measures such as technological change cannot be achieved if the required human resources are not available. A company may have the financial and physical resources; however, without adequate work force output quality will be low. Second, HR planning results in cost savings through foreseeing possible future redundancies and consequently plan to check the human resources and change management techniques. It equally enhances the contribution of HR functions, rsulting in high sales, turnovers, and reduced costs.

1.4 Key Aspects of UAE Employment Law
1.4.1 Emiritization
Emiritization refers to the government`s employment policy aimed at ensurng that UAE nationals get employment opportunities in the private sector. Employment quotas are placed on companies operating under various private sectors and strict penalties are imposed for non-compliance. The policy was intended to reduce the unemployment rate among UAE citizens. Emiritization has given rise to significant challenges in HRM practices. To begin with, HR managers find it difficult to find qualified UAE nationals to fill the available positions. The best alternative would be to employ foreign expatriates. Howevr, given that the quota has to met, companies have to spend more on training, and development to impart the UAE nationals will the necessary skills. Emiritization equally promotes a cross-cultural work environment by limiting the proportion of employees coming from one of the three nationalities- Bangladeshi, India, and Pakistani. Consequently, HR managers must lran to handle employees from different socio-cultural backgroungs (Kantaria 1).

1.4.2 Part-time Work Permits
In 2010, five new types of internal work permits were introduced in the UAE, a move that was welcomed by both employees and the private sector. Part-time work permits have positive impacts on HR management. From an a human resource perspective, part-time work permits offer an efficient alternative to save miney especially where full-time employees are not necessary. It helps an organization to employ highly experienced and skilled labor without paying full-time salary. It equally helps the organization to deal with production in peak seasons without having to incur the financial burden associated with full-time employees (Mondaq 3).

2.0 Emirates Airlines
2.1 Five Steps in Job Analysis
Step 1: Deciding on the method to be used in data gathering because this determines the type of data and the method of data collection.
Step 2: Reviewing relevant background information for example, process charts, job description, and organizational charts. Organization chart indicates how work is distributed in the whole company, how the specific position relates to other positions, and whete the job fits in the entire company. A process chart offers a detailed view of the workflow.
Step 3: Choosing Representtaive Positions. This is often the case when thesairlines has many identical positions to analyze.

Step 4: undertaking the job analysis. This is done by using the information gathered on the jonb`s activities, necessary working conditions, employee behaviors, abilities and human traits.
Step 5: verification of job analysis information with the employee assigned to the job and with their supervisor
2.2 Two HRM Challenges Currently Facing Emirates Airlines
2.2.1 Shortage of Talent
Shortage of skilled labor is a major problem current facing Emiates airlines. Despite high Emiritization levels (35%), the company has been forced to lay off some employees because of skill shortage. Areas that are affected most include production operators, engineers, mechanics, finance, and accounting. This has has been a major challenge to the HR department because despite the importance of emiritization, the company cannot employ individuals who do not possess requisite skills.

2.2.2 High Costs in Terms of Salaries and Allowances
Increased payroll costs have been a challenge to the airline. The increasing high life living conditions in the UAE necessitates increased salaries and allowances.
2.3 Recommendations
Skill shortage can be addressed by employing highly qualified expatriates in positions that require more skills. Second, functionons such as payroll manegemnt can be outsourced to other organizations. With regard to high costs in allowances and salaries, the HR department can take advantage of part-time work permits to employ some people on a part-time basis. This will help the company reduce on its wage bill. In addition, the company can adopt international best practices in HRM by setting its salaries and allowances based on international standards.

3.0 Conclusion
In conclusion, unlike other airline companies that make their independent decisions, Emirates airlines operates under significant government influence. the government`s policy of “Emiritization” has affected the company`s recruitment policy. In addition, the company`s recruitment process as indicated in appendix 1is significantly hefty as it involves many interviews and tests. In addition, to curb the shortage of talent and staff turnover in the company, the company should pay its employees a competitive wage given that other airlines in the industry have better remuneration.

Works Cited
Airliner World. Emirates, 25 Years of Excellence: Building a global network. Stamford, UK: Key Publishing. 2013. 28-37. Print.
Emirates Group Careers. “Human Resource.” 2012. Web. 28 Feb 2013. <https://www.emiratesgroupcareers.com/english/Careers_Overview/human_resources/Human_Resources.aspx>
Gergely, Eva. & Kovacs, Dienesne “The Analysis of some Issues Concerning Performance Management and Motivation.” 4th Aspects and Visions of Applied Economics and Informatics, (2009): 785. <http://www.avacongress.net/pdf/45.pdf>.
Kantaria, Samir . “Recent Key Developments in UAE Employment Law ” 2012. Web. 1 Mar 2013. <http://www.tamimi.com/en/publication/publications/section-3/july-august/recent-key-developments-in-usae-employment-law.html>.
Mayhew, Ruth & Media, Ruth. “Why Should HR & Line Managers Work Together?” 2013. Web. 28 Feb 2013. <http://smallbusiness.chron.com/should-hr-line-managers-work-together-10377.html>
Mondaq. “The New Part-time Work Permit In The UAE: Much Ado About Nothing? – Employment and HR – United Arab Emirates.” 2012. Web. 1 Mar 2013. <http://www.mondaq.com/x/167526/Employee+Rights/The+New+Parttime+Work+Permit+In+The+UAE+Much+Ado+About+Nothing>.
Orgchart. “Recruitment and Selection as HR Function ” 2012. Web. 28 Feb 2013. <http://www.orgchart.net/wiki/Recruitment_and_Selection_as_HR_Function>.
Six Sigma Online. “The Benefits Of Employee Training and Development.” 2008. Web. 1 Mar 2013. <http://www.sixsigmaonline.org/six-sigma-training-certification-information/the-benefits-of-employee-training-and-development.html>.

Appendix
Recruitment process at Emirates Airlines

Job Analysis Process

Insert Surname 10

Logistics Design Alternatives

How Nissan’s logistical system can be improved
The global network of Toyota includes centers for consolidating motor parts in Mexico, US, Brazil, South Korea, Thailand, Europe and China as the company contemplates opening two more consolidation centers in India. Materials are completely consolidated at the centers of origin and loaded into full containers that are later packed and made ready for delivery at various plants (Waters, 2010). The company has noted that consolidating materials at original centers and fully loading containers leads to increased regulation of material flow, improved visibility, enhanced use of internal network and improved transit periods. Nevertheless, the company has opportunities that need transport efficiencies to be improved through ensuring that certain ports in some regions are unconsolidated. These include the North America, where Toyota is likely to shift to 54ft standard containers (McKinnon, Browne & Whiteing, 2012).

The above engineering logistics are crucial to the supply chain of Toyota and the company has learnt that the only way for them to significantly move costs is by changing the footprints of suppliers. Fifteen percent cube efficiency is not likely to have great impacts compared to shifting from 120 miles away to come closer by 90 miles. The company believes that the increased use of international water shipments is driving the costs up every mile per part due to the expensive cost of global ocean transport. This is worsened by the risks associated with failure to meet supply. The reality is that per mile is effective in measuring the efficiency level of a supply chain (Waters, 2010).

Toyota can take advantage of working together with tier suppliers, and other manufactures on logistics and agree to take up such emerging opportunities of working together with other suppliers and product manufactures. Its collaboration with other manufacturers and tier suppliers is likely to result into reduced prices. The company has a variety of opportunities to collaborate with other manufactures and providers across the region, which is expected to enhance the engineer networks. Toyota can open new facilities in Russia, Vietnam and Indonesia. This means the company urgently needs more advanced services than what is currently being offered. Toyota must struggle to obtain advanced logistics companies engaged in network engineering services for Brazilian markets. The company must take this as a basic service because it rarely exists in markets such as Indonesia and Vietnam (Waters, 2010).

Another area of improvement is through the standardization of containers and packaging in supply chains. Logistic companies have reported spending less time on authorization than they are expected. Toyota must focus on the elimination of waste with the key objective of using ergonomic containers. To be specific, Nissan’s logistical system should engage companies specialized in the provision of reusable packaging solutions and put emphasis on the importance of maximizing cubic measurements when packaging shipments. In addition, the necessity of balancing is a critical factor. The company is shifting massive air because it is primarily concerned with fulfilling line side demands. It is necessary for Toyota to meet with both the packaging and logistics providers to develop potential ways of waste reduction. Among the solutions to this problem would be establishing a common containers’ pool offering standardized packaging solutions to a wide range of commodities. If the company adopts the appropriate bulk container, it will reduce the amount of sea containers by 20% (McKinnon, Browne & Whiteing, 2012).

References
McKinnon, C., Browne, M., & Whiteing, E. (2012). Green logistics: Improving the
Environmental sustainability of logistics. London: Kogan Page.
Waters, J. (2010). Global Logistics: New Directions in Supply Chain Management. London:
Kogan Page.

LOGISTICS DESIGN ALTERNATIVES 3

Running head: LOGISTICS DESIGN ALTERNATIVES 1

Company Case Study

Describe Flydubai’s pricing strategy. How do you evaluate it?
Flydubai uses the cost pricing strategy. The main aim of the company to lower its operating cost, then place the prices slightly above the total costs. The main aim is make a small profit per ticket sold but has a large customer base. This will enable the company to offer tickets at the very low prices. This helps Flydubai beat the high competition in the airline industry. This will enable many people to be able to use airline due to reduced cost. The pricing strategy may work in the beginning but its sustainability is difficult. This is because the emphasis on reduced operating cost may lead to compromise on quality of services which is critical in airline industry.

Is this business model sustainable?
The sustainability of the business model adopted by Flydubai is not guaranteed. The company has not taken into consideration the macroeconomic factors that may affect the business. Their business model is to bring as many customers to use the airline as possible, make little profit from each and build a loyal customer base. This is sustainable only to the extent the external business environment remains constant. Further, airline industry is a service industry where the main differentiator is quality service. Therefore, the emphasis on low cost may end up compromising the quality of service.

Describe flydubai’s target markets. How price-sensitive are they?
The business model adopted by Flydubai will mostly target the middle and the low-end market segment. This are people will little income and also the middle income earners. This is a large market segment which can lead to success of the airline. However, this market segment is very sensitive to price change. Therefore, in case the business model fail and the air line is forced to revise its prices upward, many of the customers may discontinue their use of airline which may end up hurting the business.

How do you evaluate flydubai’s offering in Ramadan? Do you think its going to be successful given the fierce competition?
The offering of 100% reimbursement on fare is a very ambitious promotional move for the company. This is the best there is in the market. This is a good strategy for solidifying its customer base. However, the promotion may only attract the frequent airline users. This is because there is nothing to gain for customer who may not be flying before December 2010. I believe the offering will be successful given the target market who may take that as a 100% gain upon using the airline.

What challenges do you expect flydubai to face in the near future?
Flydubai will continue to face fierce competition. There are many airlines that target the same market segment. They offer economy airfares which target the low income customers. This gives them an advantage over flydubai. The Flydubai business model may be hard to sustain. If there is any change in macroeconomic environment, an attempt to increase prices may hurt the business since that market segment is very price sensitive. Further, the company may not be able to offer quality services and at the same time maintain the low prices. The airline industry, the primary concern is the quality of services. Therefore, the company may find it hard to maintain the high standard at low prices of tickets.

COMPANY CASE STUDY 2

Running Head: COMPANY CASE STUDY 1

Organizational Culture

The MNC has to adopt a culture that addresses the cultural aspects that are practiced within the chosen market. The company must take into consideration the as[pects that are practiced within each of the countries as each of the three nations has different cultural dispositions. The company must therefore carry out an extensive reasechh into each of the markets. This must be followed by ensuring that the workers are fully edu ted on the different cultural dispositions. They must be taught on the incorporation and full practice of these components as they provide their services in the nations.

The MNC must fully understand the differences between the American and the Indian. One conspiquous difference existing between the two countries is the family relations aspect. Indians value family relations while the Americans focus more on the individual orientation. The company must understand that the Indian culture does not priorities goals as is common in the American culture. The company should ensure that its golas are not helpd more prominently than the family realtions in Idia. It should ensure that thwe products are desi gned with a consideration for the family unit. Use of products that are offered for the family unit will work towards ensuring that the market feesls their values are addressed. The family can offer discounts for family purchases as opposed to individual sales as this will ensure that cust omers accept the product more.

The orhanisat ional culture should also ensure that it potrays st ability in the re gion by seting up permantt premioses. Inidans love an assurance of stability as opposed to high mobility preferred by the American culture. The organization can also att ain this by hiring Indian employees as tthis wil create a sense of permancy about the company’s stay in the region. This will add to its stability and this is likely to translate inot more sales for the company. the coamny shoud also employ a culture that highly honours hierarchical re altionships within the organization. this means the comny should avoid the American culture that does not value hirachy as in India the cust omers and employees are likely to re ject this approach. The employeys should also ensure that they t ake on a friendly approach toards the customers as this serrves to increase the customer loyalty within the organision. They shouls also undertand that the culture in the market encourages the maintainace of harmonious re altionshipsand should thus en sure that they make this a priority as they serve the cust omers in the new regions. They MNC employyes should avoid confrintaional moments as these will only weaken the cust omer ties to the organisat ion. they should also en suer that they convnje the cust omers that the company will fulfil their long term needs. this shall answer the the gret orientation held maong chincese where deals are made to ensure that the long term vision is fulfilled.

Environmental scanning environment
Economic aspects
India is in the process of developing an open market economy and this is a favorable aspect for the MNC company. thios is advantageous as the country was intitialy closed as afr as the economy is concerned. The economic liberilisation that happened in the economy is very beneficial for the company as it makes the entrance into the market easier than before. This especially refers to the reduct ion of controls for foreign direct investment in the country. The MNC will enter into the country’s business operations. China’s economic disposition is also favorable as the country has a diverse ra nge of economic sources. The sources include farming, service industry, handicarfts and other modern industries. This enables many people to have a source of income and thus they are able to perfom their purchases ocmfotrably. This is a favor able aspect for the MNC. despite these advantages, the country faces some challenges that make some people not able to meet more than the basic economic needs. these include the fact that most of the people are engaged in farming activities as the only alternative and this limits their productive capacity. However the market is easily esacalating and thi sis a favor able factor.

Industry market
The foot wear industry in India is significant especially due to the leather industry that is highly valued. The leather industry forms a significant part of the Indian economy and sheos are the main output. The MNC will therefore face major competition especially as india is the second largest shoe producer in the world. This means the market is highly populated and they will have to edge their way to a highly competitive market. The company will however rbeat competition by offering alternative options as the mainproducts in China are leather shoes.

Social environment
The social enviroemt in India is also conducive for the MNC especially because of the cultural diomension that esilyu accepts new products into the region. The social at mosphere is thus open ansd receptive of new products and thus it is easy for the company to sell its ware in the region. The other favorable social aspects is the ethnical composition where the Indo Aryan form 72% of the total inhabitants wile Dravidian ethnic group form 25% of the population. This means that the MNC has to only study the two cultural inclinations for successful marjeting. It implies that resear ch wil be relatively cheap based on the fact that the region has only few tribes.
Politiocla environment
china uses a democratic system of gorvenance and this allows for views to easily be aired by the different gorvening aprties in the nation. This means that there is no dictaat orial leadership as the different political views have a chance to air their views ansd also to campoaign for a condiucive marketing environment. Tyhis has allowed the advocacy of the foreign direct investment which is favorable for the MNC. The other advantageous factor for the MNC in India is the afct thjat there is peace and tranquility within the country borders. This is easily attractive for foreign direct investors as they can easily invest in to the nation without the fear of losing their investments. The MNC will thus invest in an area of low political risk and this will result to high sales and high returns too.

Technological environment
India has been making technological advancements in most of its history and this has resulted to an advancement in the technological advancements in the market. This will allow the company to easily operate due to the advanced technology in transport and communication. Ease in transporation will wnsure that the MNC is easily able to transport its products into the country and also within the country. the advanced technology will also alow the MNC to easily communicate to its clients within the nation in advatrisinments and also through the internet and phones due to the ease of connection.

Regulatpry G
The leagsl and re gulatoty system in India allows and supports the ioperations of MNCs within the country. this will ensure that the MNC operates effectively within the nation without limiting laws. The MNC will thus be favored by the re gualtiosns and thus the cost of enrty will be favorable.
Enrty strategy
The first alasternative that can work for the company is the use of direct expoerting where the company can intitially use distributors and agents to reach to the various destinat ions in India. This will ensure that the product reaches many points in the nation and that the MNC does not have to set up many

Works cited
http://www.leatherindia.org/products/footwear.asp

Insert Surname 5

Project Risk Management

Introduction
Project risks play an important role in either driving the project forward or stalling it. There are an increasing number of stalled projects in all disciplines because of poor management. Since project risk management is an important aspect of project management, this paper will focus on various approaches to realize proper risk management.
Project risk management is recognition, evaluation and dealing with issues that could impede the progress of a project and have negative delivery. Risk management is a vital facet of project management in any given field because risks are threats to the success of projects. It entails the possibility of risk occurrence and their impact on the project and the response to such risks during the project period. Risks are unpredicted incidents that occur in the project implementation process that may offset the desired results. Risks that are anticipated are better handled by the team, unlike risks that emerge from nowhere in the course of the project. Project management should be free of risks that may hinder realization of objectives. Management of risks provides a favorable environment for successful delivery of projects.

Thesis statement
Statistics indicate that 25% of projects by organizations fail, 50% are high above their budget or do not meet schedule while only 25% succeeds. This calls for a procedural approach to aid in identification and evaluation of risks, application of essential methods of risk control on potential risk factors to realize successful project completion and achieve customer satisfaction. a major risk facing many organizations is insufficient resources and inadequate time.

Risk Management
Proper risk management prevents an organization from incurring losses due to failed projects, regulatory fines and business partner defaults. The most crucial component of risk management is proper identification of risks in the early stages of the project. This is done by assessing a list of all possible sources of risks and having a competent team deliberate on them. Another important factor in risk management is communication of the risks and assessing the impact of each risk on the project. Considering threats and opportunities is important part of risk management. Some opportunities could be profitable to the organization because of reduced input in terms of both resources and time making the project more efficient. All the risks should be prioritized since some are have a higher probability of occurrence and impacts than others do. Identification of the root causes of risks and their impacts on the project is essential. Developing responses and corrective measures of the risks is important to avoid recurrence. It is important to keep records of risks for monitoring purposes together with being up-to-date with the current situation regarding risks.

Risk management has an influence on all features of the project right from the budget to implementation. In tackling problems, side effects and long term repercussions on the overall project should be considered (Dormer, 1996). Time and resources should be available for project to run efficiently. Every project has a set of requirements that govern operational procedures set to achieve the objectives. A team of competent personnel is always at the helm of project implementation. They give directions on the requirements Project management should focus on how to control introduced desired changes by taking into consideration people needs.

Changes in a project are inevitable because new requirements come up in the course of the project. Project developers should clearly define performance, cost and dependability to satisfy the projects’ objectives. Requirements define a set of metrics that describe the accomplishments to be realized by the end of the project, (Serenko & Bontis, 2009). This becomes a vital monitoring and evaluation model for project standards. As the project progresses, new specifications and requirements are realized this will have an effect on the expected results. For a project to be successful, technical, design and functional requirements must be in place (Aloin et al, 2007). User-based requirements can help in fulfilling specifications of the system (Huang, 2009). In coping with the changes, project developers should ensure that change in one aspect of the project does not predispose other aspects to potential risks. When planning and making changes, one must consider the overall effect of the change on the system (Dormer, 1996)

It is specifically important to identify, analyze and manage risks in a project. This creates prior knowledge of risks and prepares project developers to tackle them effectively. Risks consist of scenarios, likelihood and consequences, (Ajmal et al, 2010). Risks can show up in the early stages or later in the course of the project. Prior analysis of the project uncovers possible side effects and long-term consequences. Lack of instant obvious negative effects should not be understood that right measures had been taken (Dormer, 1996). This means that risk assessment and management should be a continuous process throughout the project duration.

Another effective way of managing risks is by eliminating criticism of ideas. Dormer, (1996) suggests that failure is a habit of thought (pg 14). Better management of risks involves informed discussions to identify the possible risk factors. Brainstorming is not an effective method of risk management. The only quick way to solve problems is in the way of thinking (Dormer, 1996). People’s thoughts are faulty because of hidden agendas and inspirations. Failure develops steadily and every small mistake contributes to the ultimate demise. Deep discussions on risk factors help in identifying faults and gaps in every idea. Project managers have a responsibility to keep records of each quantitative idea, and develop it for later quality assessment (Caniels & Bakens, 2012)

Success of projects implies effective elimination of risk factors. Any aspect of the project could become a risk factor towards its success. Successful projects have clearly spelt out goals. Goals help in identifying actions and procedures that will drive towards the desired results. Issues that impede goal realization result to project failure. For clarity, project developers should disintegrate the goals and isolate each case in order of priority. All issues cannot be tackled at once, thus a list of all the risks should be organized. A distinction between central and marginal issues should be clear and dealt with differently. Central problems produce common peripheral problem (Dormer 1996). Money is the best example of a central risk. Availability of money determines resource acquisition.

One of the best risk reductions in project management is to work towards achieving many goals. Problems should be tackled in relation to each other to avoid another risk creation in the attempt of solving the other. It is important to understand the relationship of variables in a project. Risk project management requires construction of strategies that foster effective project development and implementation. Strategies are series of makeshifts, bringing knowledge to influence practical life (Dormer, 1996). This requires keeping record of changes and adaptations which are contrary to expectations. Before application of a particular idea on a situation, the concept should be strategically analyzed it to ascertain that it is the suitable method.

A well structured strategy comprises all the necessary materials to cater for all possible risks. All projects have possible risks making risk management an important aspect of project management. Failure to manage risks effectively can lead to project failure (Morris, 2010). Project managers draw attention to possible problems by effective risk assessment. This is helpful for sponsors to handle their expectations on the project. Risk management is an integral part in project management in measuring the viability of projects.

Conclusion
Risks are numerical values resulting from probability and consequence (Kwak & Anbari, 2009). Project risk management should focus on correct identification and assessment of risks. This gives a general outlook determining the survival of a project success in a given environment. It also increases the chance of project success by creating awareness of risks involved in implementation of the project, citing careful approach and measures to deal with any eventuality. Identification of risks cites chances of certain goals and activities happening in the wrong way.
All organizations and businesses should have clearly outlined underlying rules that govern risk management. Management of risks helps curb losses that would have been incurred because of project failure. This procedures and policies ensure that project objectives are met. Proper management guidelines also create a favorable working environment for project implements, reducing unnecessary strain which could slow down progress.

References
Ajmal, M., Helo, P., & Kekäle, T. (2010). Critical factors for knowledge management in project
business. Journal of Knowledge Management, 14(1), 156-168.

Aloini, D., Dulmin, R., & Mininno, V. (2007). Risk management in ERP project introduction:
Review of the literature. Information & Management, 44(6), 547-567.

Caniels, M. C., & Bakens, R. J. (2012). The effects of Project Management Information Systems
on decision making in a multi project environment. International Journal of Project Management, 30(2), 162-175.

Domer, D. (1996). The Logic of Failure: Recognizing and avoiding error in complex situations. New York, Metropolitan Books.

Huang, D. W. (2009). Fast breaking papers-2010. Nat Protoc, 4(1), 44-57.

Kwak, Y. H., & Anbari, F. T. (2009). Analyzing project management research: Perspectives
from top management journals. International Journal of Project Management, 27(5), 435-446.

Lee, E., Park, Y., & Shin, J. G. (2009). Large engineering project risk management using a
Bayesian belief network. Expert Systems with Applications, 36(3), 5880-5887.

Meredith, J. R., & Mantel Jr, S. J. (2011). Project management: A managerial Approach. Wiley.

Morris, P. W. (2010). Research and the future of project management. International Journal of
Managing Projects in Business, 3(1), 139-146.

Serenko, A., & Bontis, N. (2009). Global ranking of knowledge management and intellectual
capital academic journals. Journal of Knowledge Management, 13(1), 4-15.

Waters, D. (Ed.). (2010). Global logistics: New directions in supply chain management. Kogan
Page.

Running Head: PROJECT RISK MANAGEMENT