The LGBTs in America

 

The subject of sexual orientation and gender identity continues to evoke heated debates and discussions in the United States of America. The US is generally known as the land of the free and as thus, it is expected that all persons would be at liberty to live in this “free” country without undue harassment and discrimination. Sadly, this is not the case, at least not for the lesbians, gays, bisexuals, and the transgender (LGBT). The federal government seems to accord this group of individuals equal rights as the heterosexual persons. The main problem is encountered at the State level. Some states do not recognize the LGBTs. The essay that follows will explore how the LGBT has fared in the US and seek to analyse the social policies that support their existence.

The History of the LGBT in America

The existence of the LGBTs is not a new or current happening. This group of individuals has been in existence since the early 1920s. The very first society that championed for the rights of the gays was established in 1924 in the City of Chicago. About 24 years later, Alfred Kinsley published a book entitled “Sexual Behaviour in the Human Male”, created awareness to the public that homosexuality was more widespread that the public was willing to admit. Then in 1951, Harry Hay formed the Mattachine Society, which served as a national gay rights movement in the US. This Harry Hay is considered the founder of the gay rights movement in the US.

In 1955, the Daughters of Bilitis established the lesbian-rights movement in the city of San Francisco. The Daughters of Bilitis transformed their lesbian-movement into a nationwide association whose mandate was to champion for lesbian rights. The LGBT movement got a reprieve and a boost in 1962 when the State of Illinois became the first State in the US to decriminalize homosexual acts. Then in 1966, the National Transsexual Counselling Unit was established in San Francisco. Matches and activism ensues and in 1980, the Democrats give their support to gay rights. In 1982, the State of Wisconsin became the first State to outlaw discrimination based on sexual orientation. The year 1993 saw the establishment of the infamous “don’t ask don’t tell” policy by the Clinton administration. From 1993 to date, many States have not only outlawed sexual discrimination but also allowed the LGBTs to marry (Nguyen, 1999).

The Current State of Affairs

The history of the LGBTs has outlined the hardships that this group has endured all through. It closes on a positive note with States going to the extent of allowing same-sex marriages. It would therefore be expected that the current situation be better than that of the 1940s. However, this is not the case and in fact, the LGBTs of this age are facing more challenges than the LGBTs of old. The youth who belong to the LGBT group risk being bullied and harassed. Families and neighbourhoods are casting out their members that belong to the LGBT group (Fish, 2012)

The discriminations and harassment that the LGBT youths face has driven most of them to seclusion with some finding comfort in alcohol and drugs while the weak end up attempting suicide. It is apparently clear that the LGBTs are facing many challenges. There is therefore need for a social policy that will address their plight in a wholesome way. Certain social policy decisions and proposals have been proposed to safeguard the rights of the LGBTs. However, not all of these proposed social policies have been accepted by the masses. Following is a brief look at the social policies (Nguyen, 1999).

The current numbers of the LGBT is gradually increasing. This trend has been enabled by the rise in the number of social support groups that champion for the rights of the LGBTs. The strength of the LGBTs rests in the fact that they are united in their cause. There are many associations operating in cohort with one another However, most of the LGBTs have been viewed for a long time as a disability group. Some groups arose to oppose the LGBTs move for equal rights. Some States criminalized homosexuality and this contributed to rejections, harassments, and discriminations.

There have been numerous misconceptions flying around both in society and in media. Some claim that one can tell the sexual orientation of a person by looking at their conduct or mannerism. This assertion is wrong and unfounded. Some of the most popular myths include that LGBTs are condemned by all religions, and that transgender people suffer from some form of mental illness. These two myths have been widely accepted and used to justify the rejection, discrimination, and harassment that the LGBTs are often subjected to. Additionally, other myths such as those that claim that homosexuals are born as they are serve to illicit the acceptance of the LGBT among his or her peers and family (Fish, 2012).

LGBTs have been portrayed in media in both positive and negative senses. Various TV programs and movies have characters that are from the LGBT group. These characters were previously being shown in bad light, but recently the media has decided to show them in good light. Certain advertising companies are not comfortable sponsoring programs and shows that tend to promote homosexuality. President Obama’s public admission that he supported gay marriages helped to promote the LGBTs in good light. Some section of the media, especially the free media like the internet, still record high incidences of stereotypes and hate crimes is still in existence (Cahill, & Tobias, 2006).

 

 

Part 2: Social Policy

Social Policies for the Rights of the LGBTs

The LGBTs face different challenges in virtually all stages of life. The moment a homosexual individual comes out of the closet, he or she stands to either gain acceptance or receive condemnation and rejection. LGBTs face challenges that include discrimination and access to services, financial and family, social isolation, housing, and care giving, lifelong learning etc (Fish, 2012). The youths face hate crimes and other forms of discriminations because of their sexual orientation. The problems and challenges faced by LGBTs become exacerbated with age, that is to say, the occurrence of these abuses is more intense among the elderly LGBTs.

There is a sharp lack of LGBT-specific services in America. The social service department has failed to offer services needed by the LGBTs. Some social centres deny access to any known LGBT. Most social service providers lack the training and expertise needed to handle the problems and issues presented by their LGBT clients. A social worker needs to be culturally competent so that he or she can create forge and foster a positive working relationship with the client (Cahill, & Tobias, 2006).

The problems and challenges faced by the LGBTs can be addressed by following some of these policy proposals:

1. Institute interventions at the macro, mezzo, and micro levels; these interventions will help in addressing discriminations and provide funding to cater for the needs of the LGBTs. Presently, there are many States that have passed legislation that prohibits the discrimination of persons based on their sexual orientation. Additionally, some States have also provided funding for LGBT-specific services. However, more still needs to be done to eradicate homophobic tendencies among the Americans.
2. The rampant violence that is meted on LGBTs can be reduced by the States enforcing laws against discrimination. Criminalizing discrimination will serve to dissuade those who are homophobic from violating the rights of the LGBTs.
3. To address the financial and family related challenges, the States ought to design programs that will educate the families and communities on the need to tolerate their neighbours’ differences and diversity. Laws and policies should be enacted to allow for gay marriages within the States.

I support these policies because they will ensure that the LGBTs receive fair treatment and this will in turn promote both social and economic justice in the United States of America.

 

 

Part 3: The Letter

Grier Destinie (Grierdd)

C/o University of Cincinnati

[Insert Email:]

Date: 20^th November 2013.

To

Ms. Alicia Reece
State Representative
33rd House District C., Ohio

Dear Madam,

Re: Support for Gay Marriages

The purpose of this email is to inform you on how I feel about the rights of gay people to marry.
The American civil Rights movement to me was set in place to get rid of segregation and discrimination of all kinds. To me the gay community is being discriminated against because of their belief in homosexism. The civil rights movement was put in place to put an end to all discriminations against Americans, same sex marriages included. Neither does the civil rights movement not the American Constitution illegalizes gay marriages. In fact, the 14^th Amendment of the US Constitution safeguards civil liberties that contribute to both economic and social equality and justice. I believe that Americans should be able to marry whomever they want to, when even they want to. This includes same sex marriage. We are sending this email to find out if there is anything we can do as individuals to support gay rights in our State. Plus I thought it would be great if you can make an awareness for gay marriage on your next platform.
Sincerely,
Destinie Grier & Tara Hill
We are in the bachelors program in the school of social work at the University of Cincinnati.

References

Cahill, S., & Tobias, S. (2006). Policy issues affecting lesbian, gay, bisexual, and transgender families. Ann Arbor: University of Michigan Press.

Fish, J. (2012). Social work with lesbian, gay, bisexual and trans people: Making a difference. Bristol: Policy Press.

Nguyen, M. (1999). Civil Rights: The history of gay rights. Retrieved from Enderminh.com: http://www.enderminh.com/minh/civilrights.aspx

Utilizing Linear Programming (LP) for Marketing and/or Consumer Research

 

Question one

Linear programming (LP) also referred to as linear optimization is a mathematical method used to determine an appropriate way for achieving the best outcome (such as lowest cost  or maximum profit) in a particular mathematical model as linear relationships represented for some list of requirements (Gärtner & Matoušek, 2006). Nowadays, linear programming has become the most popular mathematical technique utilized in solving a variety of marketing and/or consumer research problems (Roos et al., 2006). Companies gain a major benefit by utilizing linear programming for marketing research which includes helping marketing managers across many fields of the economy to allocate an advertising budget that is fixed to various advertising media (Vanderbei, 2008).

Question two

An example of how linear programming can be used in marketing and/or consumer research includes solving a media selection problem. In this example a weekly budget for advertising should be $8,000 and 4 types of advertising media should be used with budgetary allocations shown in table below.

Decision:  How many adverts should be allocated to each type of advertising media?

Objective:  Maximize audience reached

 

 

 

Advertising Options
Radio (prime time)	Radio (afternoon)	Newspaper	TV Spot
Audience Reached (per ad)	2,400	2,800	8,500	5,000
Cost (per ad)	$290	$380	$925	$800
Max Ads Per week	25	20	5	12

 

 

Other restrictions include: Spending no more than $1800 on radio and having at least 5 radio spots per week.

Decision Variables

P = represents the number of radio spots per week (prime time)

A = represents the number of radio spots per week (afternoon)

N = represents the number of newspaper adverts per week

T = represents the number of TV spots per week

 

Objective Function (in the number of reached audience)

Max 2400P + 2800A + 8500N + 5000T

After the above expression is subjected to the constraints the resulting expressions are:

Budget is $8000: 800T + 925N + 290P + 380A 8000

At Least 5 Radio Spots per Week:  P + A  5

No More Than $1800 per Week for Radio: 290P + 380A  1800

Max Number of Ads per Week for each advertising media is shown below:

P 25              N 5

A  20            T 12

 

Finally nonnegativity T, N, P, A 0

 

 

 

References

Gärtner, B., & Matoušek, J. (2006). Understanding and Using Linear Programming, Berlin: Springer-Verlag.

Roos, C., Terlaky, T., & Vial, J. (2006). Interior Point Methods for Linear Optimization, 2^nd ed. Berlin: Springer-Verlag.

Vanderbei, R.J. (2008). Linear Programming: Foundations and Extensions, 3^rd ed. Berlin: Springer-Verlag.

 

Merger, Acquisition, and International Strategies

 

INTRODUCTION

Evaluation and opinion of the strategy that led to the acquisition of Skype Technologies by Microsoft Corp 

Mergers and acquisitions are corporate strategies used by companies to grow their revenue base and survive in unpredictable and turbulent business environments. Firms undertake mergers and acquisitions sometimes to compete or to diversify into new geographical areas. Companies can also undertake mergers and acquisitions to reap the benefits of economies of scale and economies of scope (Kellner, 2011). Some companies also take over loss making firms to reduce their tax liability to the state. Mergers occur when firms merge to form a new entity whereas acquisitions take place when a company buys the controlling equity stake in a company or the assets of a target company. One of the latest acquisitions undertaken by Microsoft was the acquisition of Skype for the sum of $8.5bn which was Microsoft’s single largest acquisition deal ever.  Microsoft’s acquisition of online telephone service, Skype, broadened Microsoft’s competition with its traditional competitors namely Google and Apple Inc. (Bradshaw, Palmer & Waters, 2011).

Skype, founded in 2003, was acquired by eBay in 2005 for $2.6 billion dollars but the acquisition did not pay off in terms of envisaged benefits as anticipated. EBay sold Skype later in 2009 to a group of tech investors. Despite these initial setbacks Skype was quite successful in getting a large client base (PR Newswire, 2011).   In fact as at the time of the acquisition by Microsoft, Skype’s monthly average users stood at 145million.  The main reason for the increased number of users and subsequent increase in profits was the ability of Skype to connect people throughout the globe. Skype is now the largest medium of communication for both professional and personal use (Kellner, 2011). Skype service is offered as a computer to telephone program or computer –to -computer program throughout the world. Skype communication devises can be located in close proximity to each other as in the same building or in locations in far flung countries in different continents of the world.  The company made its revenues by supporting paid services within its systems known as SkypeOut, SkypeIn and voice mail.  Skype made it easier to make international telephone calls via the user’s computer which was at times cheaper than competitor’s ratings for the same service (Kellner, 2011).  Skype enables users to text voice or video each other on the internet. It enables users to share experiences, hold meetings, tell stories, pass important information, celebrate birthdays or share jokes irrespective of their locations in the world. Skype Technologies enabled users to access Skype through common modern tech devices of mobile phones, TVs and computers (Bradshaw, Palmer & Waters, 2011).

Microsoft is an American multinational corporation which is headquartered in Redmond, Washington. The company was founded in 1975 by Bill Gates and Paul Allen. Microsoft is currently the world’s largest developer and seller of computer software, computer solutions and services. The company develops, manufactures, licenses, sells and supports   computer software, personal computers, consumer electronics and services

(http://www.microsoft.com/en-us/default.aspx).  The company’s best known software products are the Microsoft windows line of operating systems, internet explorer web browser and Microsoft office suite which are used throughout the entire world. The company also deals in Microsoft surface series of tablets and Xbox game console; which are mainly hardware products (Bradshaw, Palmer & Waters, 2011). Microsoft has undertaken many acquisitions and entered into mergers with many companies throughout the world such as the recent acquisition of Nokia hand set and services business, Skype technologies etc.  Skype become a division within Microsoft after the acquisition deal was sealed. Microsoft thereafter was reorganized according to functions by the chief executive officer.

The principle strategic objective of the merger was to broaden Microsoft’s competition against Google and Apple. Microsoft’s competitive strategy was to leverage Skype’s estimated 145million active users on average per month and its existing devises and software platforms to boost the appeal for its products in the market. It was therefore a strategy aimed at boosting sales revenues for its various product lines and beat the competition (Bradshaw, Palmer & Waters, 2011). Microsoft wanted its customers for its hardware devices such as Xbox console and users of Windows Phone and Outlook e-mail to be able to communicate with each other through Skype network. The merger was therefore also aimed at enhancing customer satisfaction to achieve greater levels of customer loyalty to boost revenues by enhancing Microsoft’s value proposition to its customers. Senior executives at Microsoft and Skype held that the deal would give Microsoft an opportunity to enter the booming social networking business by leveraging Skype’s status updates and contacts to link users and boost sales of Microsoft’s products(Bradshaw, Palmer & Waters, 2011).  In my opinion the decision was wise because it gave Microsoft an opinion to enter the booming social networking business to grow its revenues. The deal also enabled Microsoft to enhance its value proposition which enhanced customer satisfaction and loyalty. From Skype’s stand point the decision was also wise as it enabled it to get into a deal with a more established multinational with deep pockets. The company will benefit from the technical and software development skills of Microsoft to improve its current product offering. The company also will benefit from the reputation that Microsoft has in the world to enter new territories and geographical regions.

Probable benefits of a possible merger of Novelos Therapeutics, Inc. and Advaxis, Inc.

Novelos Therapeutics, Inc. is a public pharmaceutical company which engages in the development of chemical compounds for diagnosis and treatment of cancer.  The company was founded in 1996 and was registered as AVAM International Inc.  The company adopted the name Novelos Therapeutics, Inc. in 1998 after AVAM International Inc. joined Novelos Therapeutics Inc.  The company does not have a history of mergers and acquisitions like Microsoft Corp. The company main products are three cancer-targeted compounds known as LIGHT, HOT, GLOW2 and Cold which are used for diagnosis and treatment of cancer (http://www.novelos.com/). The company has an asset base of about USD$ 20 Million. Novelos Therapeutics Inc. can reap immense benefits by merging with Advaxis Inc.  Advaxis, Inc. is a clinical development stage biotechnology company which deals in the development of immunotherapies for infectious disease and cancer. It uses live attenuated bacteria that are bio-engineered to secrete an adjuvant fusion protein that is aimed at boosting human immune system and redirecting the boosted immune system to fight cancer cells in a patient’s    body.  The company has developed a chemical compound callled ADXS-HPV which is being evaluated in Phase 1 and Phase 2 in clinical trials stage for HPV-associated diseases including anal cancer, invasive cervical cancer and HPV-associated head and neck cancer.  The company has up to 15 compounds at various stages of development. Advaxis, Inc. asset base is currently at about USD $5 million (http://www.advaxis.com/)

. Both companies are listed on the securities exchange. If Novelos Therapeutics, Inc. merges with Advaxis, Inc, they will both reap many benefits from the merger. The benefits that can be derived from a merger of both companies could include growth in asset base which can be relied upon to obtain financing for expansion. The other benefit could be sharing of skills and information on cancer research which could help the companies to develop better and more efficient compounds for treating cancer and other infectious diseases. The companies could also access more financing through capital markets jointly than individually. The companies will also benefit from the joint management expertise drawn the pool of managers that will be brought on board into the new company. The companies will also benefit from economies of scale and scope. The companies will also complement each other in research and development of cancer drugs and hence obtain synergies in the business. Novelos Therapeutics, Inc will also grow its product lines by adding onto its existing product lines new product lines that are handled by Advaxis, Inc which will translate in a bigger market share and revenues.

Microsoft’s international business-level strategy and international corporate-level strategy and recommendations for improvement

On the business level strategy, Microsoft is organized into four divisions in line with PC mature business divisions by function namely Operating System, Apps, Cloud and Devices. These divisions a headed by a division head who reports to the chief executive officer. The division head in charge of each strategic business unit or division is charged with setting the strategic direction of the division, formulating strategic goals and objectives and laying out strategic tactics that will enable achievement of the strategic objective and goals of the division (Massingham, 2004). The strategic objectives of each division are derived from the corporate level strategy which is the overall strategy that guides the entire organization. Business level strategy is responsible for tactical and strategic operations of each division. Even though this business level strategy seems plausible, i could recommend that the organization organizes its business by products instead of by functions. This is because the company has products in different stages of the product life cycle. Lumping together mature products with products that are declining in the market may not assist the business because each product at each stage requires different strategies. The company is headed by a board of directors who direct the corporate level strategy (Sharma, 2004). The board of directors makes decisions touching on the strategic direction of the forms. The directors make decisions relating to the business that the company is supposed to be in and the business that the company should be in. On this level i would recommend that the company. The company’s current strategy of embrace, extend and extinguish could be repealed (Watson & Wooldridge, 2005). This is because the strategy which is at the corporate level creates an aggressive culture among employees.  The company should at ways of embracing corporate social responsibility strategies and also a flanker strategy instead of offensive strategy. The more it pursues the aggressive strategy the more it will face antitrust suits and increasing negative publicity. A flanker strategy will enable the company to develop new products that meets needs that have not been met or have not been identified even though they exist (Sharma, 2004).

An evaluation of the proposed Novelos Therapeutics, Inc one business-level strategy and one corporate-level strategy

For Novelos Therapeutics, Inc. the most ideal business level strategy that would meet this company’s business level objectives is by organizing itself according to functions. This will enable the company to identify skill sets that can drive each function. This will assist in sourcing for competent professionals for each function identified. The company should also adopt an organic structure (Watson & Wooldridge, 2005). This is because an organic structure is ideal for relaxed environments where tasks performed are mental in nature. In an organic structure the level of control is reduced and the organizational structure is more flat (Sharma, 2004). It encourages sharing of opinions and ideas. This structure will enable professionals within the company to interact with each other and share their findings freely which will enable development of new chemical compounds for treatment and management of cancer. At the corporate level strategy the company should form board committees to look at various affairs in the company. The company should invest more in research and development and should embrace mergers and acquisitions with medical research companies that are involved in cancer to get more skills and findings which will help them to develop new medicines for the treatment of cancer. The company should also seek to integrate forward by forming mergers with large drug retailing companies like Pfizer Inc which can use its established distribution markets to sell. Such a strategy will enable the company to sell more and access finances for expansion (Massingham, 2004).

References

Bradshaw, T., Palmer, M., & Waters, R. (2011, May 11). Microsoft’s skype gamble. Financial Times. Retrieved from http://search.proquest.com/docview/865917178?accountid=45049

http://www.novelos.com/

http://www.advaxis.com/

http://www.microsoft.com/en-us/default.aspx

Kellner, M. A. (2011, May 11). KELLNER: It’s the post-merger, folks, after deal for skype.McClatchy – Tribune Business News. Retrieved from http://search.proquest.com/docview/866064091?accountid=45049

Massingham, P. (2004). Linking business level strategy with activities and knowledge resources. Journal of Knowledge Management, 8(6), 50-62. Retrieved from http://search.proquest.com/docview/230331717?accountid=45049

Sharma, B. (2004). Marketing strategy, contextual factors and performance: An investigation of their relationship.Marketing Intelligence & Planning, 22(2), 128-143. Retrieved from http://search.proquest.com/docview/213159566?accountid=45049

Skype in possession of microsoft. (2011, Oct 19). PR Newswire. Retrieved from http://search.proquest.com/docview/898857241?accountid=45049

Watson, A., & Wooldridge, B. (2005).Business unit manager influence on corporate-level strategy formulation. Journal of Managerial Issues, 17(2), 147-161. Retrieved from http://search.proquest.com/docview/194166206?accountid=45049

 

 

The Outage of Fido

The Situation: What Happened?

On Wednesday, October 9, 2013 Fido Solutions’ network went missing in Vancouver, Canada. Although the problem was reported to have started at 6:30 pm ET on Wednesday, it extended for more than 3 hours on the same day (O’Rourke, para. 1-3). On the same Wednesday, customers could neither receive calls nor text messages from their beloved friends and relatives. At the same time, customers could not receive any internet connectivity. The lack of internet connectivity further affected customers who complained that for quite a while their cell phones had been rendered for more than 4 hours. The outage came at the time when Fido had the largest share of mobile and wireless customers in Vancouver and the entire Canada at large. As such, Fido 9.7 million customers remained in a state of despair for the better part of the evening after returning home from work due to lack of network.

At 1:45 am ET on October 9, 2013, Nadir Mohamed, the President and the CEO of Rogers Communications, sent an apology message to the news rooms. This is apology message was sent on behalf of Fido Solutions which is a subsidiary company of Rogers Communications. In his message, Mohamed noted that Fido’s network outage affected the entire 9.7 million Fido customers across Canada (Bruno WS). Mohamed also cited that Fido’s management had rectified the problem and the network services had resume to a state of normalcy. The CEO regretted and apologized that Fido’s customers had been inconvenienced by the incident despite that it was unexpected. Through the message, Mohamed further noted that Fido’s disaster management team had responded quickly to reinstate the service. However, Mohamed fell short of specifying the cause of the problem. Nevertheless, Mohamed promised to offer one day-free services to Fido’s post paid customers. This move was perceived to not only be meant to gain the customer’s trust, but also to compensate the customer for the time that had elapsed since customer who are on postpaid services are often charged a constant amount of money for the services. This implied that despite that there was no service rendered, the customers on postpaid service were still going to be charged.

Mohamed’s apology came at a time when Fido’s customers were criticizing the wireless company for incompetency. Most customers were contemplating severing there relationship with the company. Despite Rogers’ CEO apologized to its clients in a bid to assure then of optimal service, he did not mention the cause of the outage.  However, told Fido’s customers to be patient because the company was investigating the cause of Fido’s outage. Nevertheless, reports emerged from the media fraternity that Fido’s problem was caused by software problem (O’Rourke, headline). However, Rogers’ quietness over the cause of Fido’s outage had annoyed Fido’s customers. Most of them went on social media such as Twitter and Face Book citing that they were going to switch allegiance to another mobile internet service provider. For instance, Mark Carcasole tweeted that he was wondering how he was going to convince his mom that he had “tried” calling her, but could not get through because the Rogers services network was unavailable (O’Rourke, para. 20). On the other hand, Justin Ling tweeted that Rogers’ customers who were “experiencing the outage” would only get their mobile phones working if they switched to other mobile service providers (O’Rourke, para. 21). The companies that could benefit from Fido’s outage included Zipwhip which offered both texting and voice call services. Zipwhip supports cloud texting and landline short message services (SMS). Zipwip also enables its customers to connect to the internet via desktops and laptops (Lauer et al.). This implied that Zipwhip’s customers would have varied options to connect and communication to their families and friends.

However, if Fido’s customers went ahead to enact their threat of switching their allegiance to other rival company’s, such moves would reduce Fido’s customer base. A reduction in Fido’s customer base would translate into a reduction in Fido’s revenue collections.

Intervention: The Survey

The Survey Process

To determine the cause of action the customers were going to take following Fido’s network outage, a survey was conducted in Vancouver and its environs. A sample of 50 customers from Vancouver and the environs were interviewed on their planned course of action after the incident. The sample contained 24 men and 26 women; all the respondents were above 18 years of age. All the customers who had used Fido’s services network for the past 6 months or longer were interviewed. Seven (7) questions were employed to obtain responses from Fido’s customers. The first question was an open-ended question and was used to test the customers’ experience of Fido’s service for the time they had been using the network for both communication and internet connectivity. The second question was meant to determine Fido customer’s initial reaction to Fido’s network outage on Wednesday 9^th October, 2013. The third question was meant to determine Fido customers’ second course of action after Fido’s outage crisis. The fourth question was meant to determine whether Fido customers’ used alternative means of communication to reach their friends and relatives. The fifth question was meant to determine whether the customers contemplated switching to another service provider. The second-last question sought the customer’s advice on what Fido Solutions should do to avert the crisis if it happened in future. The last question sought to discover Fido Solution’s take on Rogers CEO’s apology and one day free service offered to the postpaid customers.

All the information from the interviews was recorded, transcribed, and analyzed. Observations were also made and included in the interpretation process.

The Results: Key Highlights

The results indicated that the majority of Fido’s customers (83%) felt that Fido’s wireless services were the best in Canada while 12 percent cited that they had not had the experience to compare Fido’s services with other service-providers. The remaining 5% reported that Fido’s services were fairly good. At the same time, 34% of the respondents’ first reaction was that their phones had a hardware problem while 13% enquired from their friends on what was wrong with Fido’s network. In addition, 23% could not understand what was going on while 3% threw away their phones thinking that they had been spoilt while the remainder (27%) switched to other mobile service providers. Majority of those interviewed (67.6%) reported that they kept on trying to connect to the Fido’s services hoping that the connectivity would resume, 30% went to the landline telephone booth to reassure their friends and families that they were safe while the remainder (2.4%) switched off their phones until Thursday morning. Interestingly, more than 85% of the respondents urged Fido solutions to correct the problem once and for all arguing that they were not leaving to other wireless service providers. About 10% of the respondents stated that they were contemplating seeking the service of another service provider. However, about 45% said that Fido’s apology was not sufficient and that the company needed to do more to assure them (its customers) of consistent service reliability.

After the survey, it became apparent that most (90%) people could not understand how the problem occurred. For example, Ann Schmidt a resident of North Vancouver cited that the outage was a rare occasion since she had never experienced such outage in Canada. Rodgers, a resident at Port Coquitlam wondered why it had taken Fido Solutions too long to correct the anomaly, yet the outage happened across the country. As such, Fido solutions should advance its disaster management and response operations to rectify the problem in the future. In fact, it is advisable that Fido Solutions take its customers seriously because of the fact that customers are often “right” when it comes to the relationship between the business and the customers (Keh and YI 732-742). As such, Fido should acknowledge the fact that customers have the right to complain. In fact, with the Canadian government having come up with morechoices.com many Fido’s customers have the right to switch loyalty in search for better mobile and internet service providers.

Reflection

Fido’s customers suffered from the company’s outage on Wednesday, 9^th October, 2013. Majority of the customers suffered from psychological distress because they were unable to connect to either their families or friends. For instance, 67% of the customers who kept on checking their phones for connectivity to Fido’s services reached a point where they suffered from anxiety. Moreover, the anxiety was aggravated by the fact that Fido’s outage took place during the evening hours. As such, most people were unable to communicate to their friends, neighbor’s, children, spouses, and parents. Besides, most people were not able to share their experiences on Twitter and FaceBook because there was no internet connection. In addition, most people were unable to apply for jobs among other experiences. In other words, Fido’s outage created a situation similar to anarchy since Fido’s customer base is almost a third of the total population in Canada.

Therefore, Fido’s management together with Rogers’ should team up to repair the damage caused by the outage as the customers suggested. One measure that the company need put in place is to embrace social media platform as a means to reach out to its customers. Research indicates that social media such as FaceBook and Twitter have the potential to improve both the image and enhance customer loyalty to Fido’s services (Mangold and David 357-365). For instance, Fido should to keep on providing its customers with online updates of the changes that it is making in a bid to improve its services.

Conclusion

The Outage of Fido Solution in Vancouver and Canada at large occurred as a surprise to its customers. The outage caused a lot of inconveniences to the Company’s customers. Fido’s response to the outage was not a guarantee that it could restore customer confidence and repair the damage caused by the outage. So far, customer reactions to the crisis as evident in the survey suggested that Fido did not take appropriate, efficient, and prompt action to correct the damage. It is recommended that Fido Solutions should put in place measures that would enable it to restore customers’ confidence in its services.

 

 

 

 

 

 

 

Works Cited

Bruno WS. “Rogers CEO apologizes for outage.” Youtube.com. 10 October 2013. Web. 25 November 2013.

Du, Shuili, C. B. Bhattacharya, and Sankar Sen. “Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication.” International Journal of Management Reviews 12.1 (2010): 8-19.

Keh, Hean Tat, and Yi Xie. “Corporate Reputation and Customer Behavioral Intentions: The Roles of Trust, Identification and Commitment.” Industrial Marketing Management 38.7 (2009): 732-742.

Lauer, John, et al. “Short Code Provisioning and Threading Techniques for Bidirectional Text Messaging.” WIPO Patent No. 2010096348. 27 Aug. 2010. Web. 26 Nov. 2013.

Man gold, W. Glynn, and David, J. Faults. “Social media: The new hybrid element of the promotion mix.” Business horizons 52.4 (2009): 357-365.

Nazimoglu, Özge, and Yasemine, Özsen. “Analysis of risk dynamics in information technology service delivery.” Journal of enterprise information management 23.3 (2010): 350-364.

O’Rourke, Patrick. “Rogers blames software problem for mysterious nationwide outage.” O.canada.com. 9 Oct. 2013. Web. 25 November 2013.

Tax, S. Stephen and Stephen, W. Brown. “Recovering and learning from service failure.” Sloan Management (2012). 2012. Web. 26 Nov. 2013. <http://www.sciencedirect.com/science/article/pii/S0007681309000329>

 

 

Appendix

The Interview Questions

1. What is your experience of Fido’s services for the time you have been?
2. What was your first reaction after you had discovered that Fido’s services were not going through?
3. What did you do after discovering that their phones were not working?
4. Did you opt for any other wireless service to communicate to your friends and relatives and which company did you switch to (if any)?
5. Do you plan switching to another mobile or landline service provider?
6. What do you think Fido should do to prevent the problem from re-occurring?
7. What s your take on Rogers CEO’s apology and the one day free service to Fido’s postpaid customers?

Case study – Leading and Managing Change

Executive Summary

Organizational management is a dynamic process that requires the integration of management theories, models and personal experiences to foster the management process. Additionally, it becomes necessary for managers to appreciate that leadership driven by the need to enforce organizational vision and nurturing of new leaders into delivering standards. One instance of transformational leadership is that experienced at the Heinz organization which decided to expand its operations into a multi-national business venture. It attempts to penetrate and enter the Australia market was rather more problematic than it was identified during a market survey. After several bids of mergers and acquisitions the traditional corporate culture was diluted by the merged companies. Furthermore, continued expansion of the market to include New Zealand, Japan and Korea. Because of the dynamics of operating in foreign countries with a complete different business environment as compared to the parent corporation, Heinz became a victim of a mismatch in cultural changes which triggered a change in management hierarchy, structure and organizational strategies. In order to relate the performance experienced by Heinz organization under the leadership of Widdow who is the senior manager for the subsidiary plant based in Australian, it is prudent to integrate an analysis of the organizational culture, structure and strategies into the cultural web.

 

 

Aims and scope for this report

The aim of this paper is to create awareness regarding the transformational leadership theories and philosophies that are paramount to driving organizational change. For instance, the case of internationalization strategies applied at Heinz Australia gives an insight into organizational change, culture, the cultural web, relevant analysis and dynamic management theories that are essential for instigating change.

The scope

The scope of this paper is limited to the reforms that were initiated by Willows who reforms the management theories, framework and models which imply that management designs could influence a company’s efforts towards increased productivity.

Conceptual framework

1. The cultural web presents an interconnected list of six elements that are collectively referred to as a paradigm or a pattern representing a model of a real work environment (Grant & Marshak 2011). An analysis of the six factors relating them to Heinz organization will be helpful in creating a bigger picture of the corporate culture which must have been used by Widdow during the transformation period. Looking at the element on stories, the company has a successful past in the United States. Furthermore the boards of directors located in the parent company have a dislike for failing or underperforming subsidiaries. As a result of the high expectations downed upon the manager before Widdow was appointed to head the Australian subsidiary, the management diverted its attention from rewarding employees for success but specialized in punishing employees. Consequently internal stories told by the employees became a sad story that demoralized employees by diverting their attention from focusing on the benefits of a creative workforce. With the new culture, the immortalization of Widdow’s as an industrious, caring and accommodative manager was of great deal in reverting the right attitude among employees.

Rituals and routines as an element inclusive in the cultural web played the role of intimidating employees in the previous regime whereby the management was so afraid of taking risks that the company’s culture turned into punitive. Because of fear of victimization, employees developed a negative attitude towards the company which subsequently promoted absenteeism and high staff turnover which became the routine among employees before Widdows was appointed as the new Chief Executive Officer. The symbols used by an organization represents dress code and code of conduct among employees/ apparently Widdows introduced new slogans that encouraged solidarity among employees thus reforming the culture of the organization. The advancement of the organizational structure initiated the need for reforms in the management structure to match the new organizational culture (Dibella 2007). The control systems were previously not clearly defined as all the powers were centralized in the CEO who was the sole decision maker. Widdow encouraged a decentralized system of control which made the employees to feel appreciated.

The power structure previously used by Heinz Australia was bureaucratic whereby the top management was to get orders from the parent organization in the United States. The bureaucratic power structure was slow especially when urgency was required in decision making. Additionally the management had lacked backing from the employees who had a resentful attitude which made them shun away from expressing their ideas to the management. With Widdow, the leadership haze was broken as decision making was decentralized making it an inclusive process that encouraged the employees into being active participants in reforming leadership. Reflecting on the transformational changes initiated by Widdows, it is advisable that the manager instigates two philosophies of management (Sirkin, Keenan & Jackson 2005). The reason behind the selection of two theories of management is the need to incorporate efficiency in the management process while at the same time making the employees to have a feeling of satisfaction and self-worth.

Commitment based and control based theories of management can be contrasted so as to select the best. Evidently the previous manager of Heinz Australia applied control based which made the employees to feel pressured to achieve targets. With the shift of the management theory from control based to commitment based, Widdows seems to have won the trust of the employees. This is implied by the ease with which the workers have made new designs and product lines, reduced staff turnover by 83% and absenteeism was significantly reduced. Basically the commitment based theory helped the manager in restructuring the environment insuch a way that the employees are made to take advantage of opportunities arising within the workforce. With such opportunities the employees have to practice creativity, innovativeness and above all practice self-discipline. This is because the commitment based design of management molds employees into becoming innovative which is a big stride towards invention of great ideas that will increase productivity of the organization (Sturdy & Grey 2003).

Apparently the commitment based philosophies of management are supported by the McGregor’s management theories which are identified as theory X and theory Y. (Senior & Swailes 2010). The commitment based model is an equivalent of theory Y because it encourages the manager to foster participation and openness among employees. Additionally the theory nurtures employees into becoming self-disciplined, self-motivated and innovative just like with the commitment based philosophies. On the other hand, theory C which equates to the control based management philosophies has been known to breed lazy employees who cannot take initiative or develop new ideas to promote productivity or cost saving strategies. This is because the manager fails to appreciate employees but instead punishes them for their failures thus creating fear of the unknown which is unnecessary for an organization like Heinz Australia which strives to get the best results out of each and every employee.

As illustrated in the preceding question, a cultural web audit exemplified that previous and current state of Heinz’s corporate structure was shaped by management philosophies relating to the treatment of employees. In this question, John Kotter’s change models will be illustrated in relation to the cultural web model. Kotter suggested the following eight steps of leading change; first stage involves convincing the employees to necessitate change. A manager needs to induce the employees into swift action that is aimed at achieving organizational change. From the case study, Widdow’s initiated slogans to motivate employees into necessitating change. This strategy of managers necessitating change relates to the element of rituals and routines which was handled by change of employee behavior and attitude to institutionalize the right attitude. As a manager, Widdows demonstrated this by behaving with respect and showing willingness to listen to the teams. The second stage entails creation of a clear guideline to lead the change process. This is possible by allocating the employees into groups headed by a team leader. Responsibilities are then issued basing on the level of specialty identified among the group members. Widows managed this by trimming down the organizational structure where 25% of inefficient employees were laid off from work.

Kotter’s change model suggests the third step as being the development of a vision to guide change. A vision enables employees and stakeholders to focus their efforts on achieving organizational goals and objectives stated in the guideline created to facilitate change. Apparently this is an element of control system as illustrated in the cultural web. By developing a vision and mission statement which aimed at improving the health of the employees and initiating a novel and flexible working week schedule was a visionary move aimed at making the employees more responsible as supported by the commitment based management philosophies. The fourth step involves communicating the vision made in the third step (Hardy & Phillips 2004). Widdows used negotiation skills to convince the work groups into operationalizing the vision and change strategies which were institutionalized into slogans and organizational logos aimed at making Heinz a great place to work. Fifth, Kotter suggested the need for broad based action in empowering the employees. In order to achieve this Widdows had to scan the internal business environment and restructure the firm as well as the systems to facilitate the achievement of set objectives. The empowerment process was further supposed by empowering employees and motivating them into developing risk evasiveness attitudes which helped in fostering success among employees and other key stakeholders.

Step six involves generation of short term goals. These are specific plans to help in the achievement of the long term goals. Widdows made sure that the goals increased chances of success of the new product lines as well as in determining suitable reward schemes for employees who came up with the ideas. Step seven of the Kotter’s change model entails never letting up on the vision (Hardy, Lawrence & Grant 2005). Given the fact that Widdows had managed to change the firm’s structure, policies and system into fitting the corporate culture at Heinz, the whole organizational structure was now better than it was previously. New employees were hired, appraised, promoted and trained to improve efficiency of the firm and by so doing the change process was boosted by virtue of the organization attracting and recruiting people suitable to the job descriptions. The final step stated by Kotter involves institutionalizing change into the organizational culture. At this point the leadership structure for Heinz Australia was totally reformed which made it more autocratic as compared to the bureaucratic corporate structure that had been used by the previous manager (Meaney & Pung 2008).

2. The new organizational culture institutionalized by Widdows was supported by the need for employee motivation. Motivated employees have been associated with cost saving and high productivity. With the biting economic crisis, employee motivation at Heinz Corporation was on the downslope because of frequent layoffs and pay cuts which are demotivating to the employees (Ka¨rreman & Alvesson 2009). The fear of failure and the punishment that came with it further made the employees to be withdrawn from the organization making the performance to decrease drastically. Widdows six years of experience as the managing director at Heinz Australia helped him realized that organizational performances are strengthened by rewards and motivation. Motivation can be achieved through developing reward strategies to cover for challenging work procedures. Usually, the design of the performance management process is fostered to assist employees in learning essential skills and information expected to bring constant growth to the company. The human resource department holds the key to success of any given organization but success is not whole dependent on the quality of human resource rather on the organizational strategies and its corporate culture. In relation to this apprehension, Widdows uses several leadership theories to enhance the possibility of success of the newly instigated corporate culture (Homan 2010).

Likewise the decision by the directors at Heinz U.S to appoint Widdows as the CEO for Heinz Australia is supported by trait theory which classifies and identifies leaders according to personality traits. Gone are the days when people believed that leaders are born and cannot be developed through experience, today leaders can be identified depending on their characteristics such as empathy, decision making skills, negotiation skills, motivation, likability, assertiveness and integrity. Secondly there is the behavioral theory which focuses on classifying leaders according to behavior into autocratic, democratic and laissez-faire leaders (Ford, Ford & D’Amelio 2008). This theory was developed by Kurt Lewis who specified that behavior affects a leader’s performance. Thirdly there is the contingency theory which states that good leadership is dependent on situation or circumstance. The fourth theory is power and influence theory which emphasizes that the way a leader uses power determines the success of an organization.

3. Based on the improved performance indices exhibited by Heinz Corporation, it becomes acknowledgeable to apply relevant management and organizational theories with the hope of maintaining its current organizational practices. A contingency theory deal with the shaping of employee behavior thus it is classified as a behavioral theory. The theory is relevant in appreciating that there is no single defined management model that guarantees 100% success thus each and every organization ought to devise its own corporate culture suited to the business environment in which it operates. This implies that the parent plant needs to give autocratic powers to Heinz Australia as one way of eliminating bureaucracy which might force the company to revert to the undesirable bureaucratic culture. This means that Heinz United States could consider funding training programs for its employees, board of directors and even the CEO.

Secondly the contingency theory further supports that it would be profitable for Heinz Company to institutionalize a scientific approach to management (Ford & Ford 2010).  The theory is strict on emphasizing the need for specialization of labor, employee motivation and training. It further emphasizes the need for seasoned management policies that complement the organizational structure. Combatively, the contingency theory is relevant in solving organizational issues relating to human resource department as well as management issues. The human resource management can be maintained by breaking down the hierarchy structures that previously existed in Heinz Australia. The essence of such an action will be to ensure that the communication channel is streamlined to encourage employees to air their ideas that could be helpful in promoting the growth of the company in its foreign markets (Jos, Marjolein & Thijs 2012).

The mechanistic management models of management also have to be transformed in favor of organic models of management. The use of organic designs have been applauded by economists because it plays the role of incorporating multiple work groups into a seamless group that works in unison towards bettering the organization and enhancing its chances of reaching its financial projections. Likewise the organic design of management encourages vertical dissemination of ideas and information. The reason behind such a management design is supported by the need to create a suitable atmosphere for learning within the Heinz Company. This objective can further be achieved by decentralizing the process of decision making to incorporate a system of reward whereby employees whose ideas become successful upon implementation are rewarded with promotions or financial incentives. This strategy is further supported by the commitment based theories of management which has been known to advocate for a highly motivated group of employees (Di Virgilio & Ludema 2009). By so doing the organization will also enjoy reduced costs on monitoring compliance among employees.

Conclusion

This paper compiles management theories and models such as commitment based management philosophies which illustrate the need for Heinz Australia to motivate employees by rewards and autonomy. The need for a commitment based theory is cemented by the need for the application of Douglas McGregor’s theory X and Y which elucidate the need for committed employees rather than workers who wholly depend on the managers. Likewise the paper illustrates the integration of the cultural web into the John Kotter’s change model which is defined by the eight stages of change. Contingency theories of management support the course of the company and it could be essential in managing the change process.

 

 

References

By, R 2005, Organizational change management, Journal of Change Management, Vol. 5 No. 4, pp. 369-80.

Di Virgilio, M & Ludema, J 2009, Let’s talk: creating energy for action through strategic conversations, Journal of Change Management, Vol. 9 No. 1, pp. 76-85.

Dibella, A 2007, “Critical perceptions of organizational change”, Journal of Change Management, Vol. 7 No. 3, pp. 231-42.

Ford, D, Ford, L & D’Amelio, A 2008, Resistance to change: the rest of the story, Academy of Management Review Journal, Vol. 33 No. 2, pp. 362-77.

Ford, J. & Ford, W, 2010, Stop blaming resistance to change and start using it, Organizational Dynamics Journal, Vol. 39 No. 1, pp. 24-36.

Grant, D & Marshak, R 2011, Toward a discourse-centered understanding of organizational change, The Journal of Applied Behavioral Science, Vol. 47 No. 2, pp. 204-35.

Hardy, C & Phillips, N 2004, Discourse and power, in Jablin, F.M. and Putnam, L.L. (Eds), The New Handbook of Organizational Communication, Sage Publications, London, pp. 299-316.

Hardy, C, Lawrence, T & Grant, D 2005, Discourse and collaboration, Academy of Management Review, Vol. 30 No. 1, pp. 58-77.

Homan, T 2010, Organizational Dynamics, Academic Service, The Hague.

Jos, H, Marjolein, C, & Thijs, H 2012, Professional discourses and resistance to change, Journal of Organizational Change Management, Vol. 25 Is: 6 pp. 798 – 818

Ka¨rreman, D & Alvesson, M 2009, Resistance to change: counter-resistance, consent and compliance in a consultancy firm, Human Relations Journal, Vol. 62 No. 8, pp. 1115-44.

Meaney, M & Pung, C 2008, McKinsey global results: creating organizational transformations, The McKinsey Quarterly, August, pp. 1-7.

Senior, B & Swailes, S 2010, Organizational Change, Pearson Education, Harlow.

Sirkin, H, Keenan, P & Jackson, A 2005, The Hard Side of Change Management” Harvard Business Review

Sturdy, A & Grey, C 2003, Beneath and beyond organizational change management, Organization, Vol. 10 No. 4, pp. 651-62.

BUSINESS STRATEGY: ASDA SUPERMARKET (UK COMPANY) IN FOCUS

 

PART 1

Executive Summary

Business strategy is one thing that cannot be ignored. Strategy refers to the unique plan that when applied, is capable of making an organization attain the set goals. A strategy is usually useful in attainment of goals especially where uncertainty aspect is available. With the existence of limited resources, it is important to note that strategy becomes very useful since it enables a business entity to attain its goals under such condition. This is because strategy makes the process of achieving a certain level of set goals easier and proactive. Strategic evaluation refers to the process through which a business entity looks at its wellbeing and productivity as well as the future direction of activities. This is usually carried out through looking beyond the normal factors which influence the productivity and state of a business. Strategic evaluation is usually known to look at the possible factors that may influence a business in future. It is important to look at the history, development and growth of an organization so as to come up with the necessary information for planning purposes.

With companies in the retail business facing stiff competition in the market, it is important for ASDA to come up with a strong business strategy. ASDA Stores is a well known chain of supermarkets in the United Kingdom American owned. It handles clothing, foodstuffs, general merchandise, financial services and toys for children. It has an interest in the telecoms industry. Associated Dairies & Farm Stores Limited was the initial name of the company. ASDA operates under a mission statement ‘to be Britain’s best-value retailer exceeding customer needs always’. Additionally, the chain of supermarkets is known to have a vision statement ‘to be the undisputed champion at making everyday life better for our customers by making our products more affordable’. ASDA has also been able to come up with a strong alignment of its aims and objectives.  Showing dominance in the industry of operation and offering fair prices in the market are some of the main notable objectives of ASDA. The Vision, Mission, Values and Objectives are all well placed in the current market where ASDA operates. This has been able to create a strong base for the company to profit from the industry. Additionally, the aims and objectives have been able to lead the ASDA to a path which makes it get endeared by the society.

The external analysis of the company revealed certain opportunities and threats. The opportunities identified are able to take ASDA high in terms of market ranking. The treats identified are also not too hard to handle, meaning that they can easily be handled. All these have shown that with proper management, the company can be able to gain from the market as per expectation. The internal analysis of the company has been able to reveal a number of strengths and weaknesses of ASDA. The identified strengths of the company have been found to be good enough to propel the company to greater heights. The weaknesses are not grave as per the internal analysis of the company; meaning that they can be converted into strengths for the benefit of the company. The internal and external analysis of the company is carried out by the use of the applicable theoretical tools.

 

 

Table of contents

1. ………………………………………………………………………………………………………….3
2. The Company………………………………………………………………………………………………………..3

2.1 The history of ASDA, development and growth ASDA………………………………………..3

2.2 The development and growth ASDA…………………………………………………………………..3

• Mission Statement, Aims and Objectives and Strategic Vision of ASDA ……………….4
  • Mission Statement OF ASDA………………………………………………………………….4
  • Aims and Objectives of ASDA………………………………………………………………..5
  • Strategic Vision of ASDA………………………………………………………………………6

3. Conclusions…………………………………………………………………………………………………………..7 ………………………………………………………………………………………………………..8

 

 

 

 

 

 

 

 

 

1. Introduction

Strategic management is one thing that should not be ignored by companies (Jones & Hill 2009). This is because it forms the backbone of the way forward towards success in the industry. With many challenges facing the supermarkets retail industry, it is important for companies in the industry to be extra vigilant. This means that ASDA has to come up with a good business strategy. Business strategy refers to the means through which a given business entity plans to achieve its set objectives (Johnson, Whittington & Scholes 2011). Business strategy can also be defined as the decision that the executives of an organization come up with regarding the way the business entity will triumph or win in terms of getting maximum value for the company.  Coming up with a good business strategy requires proper analysis of the companies. This means that external and internal company analysis is quite necessary. The aims and objectives, vision and mission statement of the companies should be looked at to check whether they are the best for the business (Thompson 2001).

2. The Company

2.1 The history of ASDA, development and growth ASDA

ASDA Stores limited is a supermarket chain in Britain. This chain of supermarket is American owned. ASDA is usually involved in retailing clothing, foodstuffs, general merchandise, financial services and toys for children. ASDA is also known to be involved in the telecommunications industry through the Vodafone network. ASDA is headquartered in Leeds, West Yorkshire at a building known as ASDA House. This business unit was incorporated in the year 1949. It is worth noting that the original name was Associated Dairies & Farm Stores Limited. A merger occurred in the year 1965 between Associated Dairies & Farm Stores Limited with Asquith and Dairies. This merger is what brought about the name ASDA which is an abbreviation of the two names.

2.2 The development and growth ASDA

ASDA started to develop consistently. There are several factors which contributed to the development of the supermarket chain. One of these things which ASDA took advantage of is the abolition of retail price maintenance. This move was carried out to create an opportunity for large-scale supermarkets which did business under low cost models. The chain of supermarket was also assisted by the fact that GEM retail and West Bridgford was taken over in November 1964. The already established names of these two business enterprises made it possible for ASDA to develop faster. For example, the sales of GEM were able to improve from 6,000 pounds per week to 60,000 per week. This was one specific thing which contributed to the good development of ASDA Stores Limited. ASDA-MFI plc held ASDA stores Limited for a short time in the year 1980. ASDA-MFI Plc also had MFI and Allied Carpets. After the sale of these two companies, the company changed its name to ASDA Group plc.

• Mission Statement, Aims and Objectives and Strategic Vision of ASDA
  • Mission Statement OF ASDA

The mission statement for ASDA is ‘to be Britain’s best-value retailer exceeding customer needs always’. According to Johnson, Scholes and Whittington (2009) and Barney and Hesterly (2010), mission statement is one of the things which determine the decision making process of a business entity. This helps in ensuring that ASDA does not work aimlessly in the industry. It helps in defining the aim of the supermarket chain. The management of the supermarket makes continuous appraisal of the mission. This helps in ensuring that the mission does not get out dated. This mission for ASDA helps in setting out the side the business is heading to. It also helps the stakeholders of the supermarket to understand where the company is headed to. The mission statement for ASDA is supported by the presence of statement of purpose. The statement of purpose assists in giving the stakeholders and other interested parties an understanding of why the supermarket exists (Minzberg, Ahlstrand & Lampel 2004).

• Aims and Objectives of ASDA

ASDA has also been able to set up certain aims and objectives. This has been in an effort to guide properly its direction. One of the aims is to dominate the world in the industry it is operating. This aim is supposed to ensure that ASDA is well known in the supermarkets’ industry. Another objective of the company is to make the prices of the things it offers affordable. This objective is aimed at making people rely almost solely on ASDA for their day to day shopping needs. ASDA has also been able to set an objective of beating the other players in the industry such as Tesco and Sainsbury’s.

The aims and objectives of ASDA have been very beneficial in the supermarket company. According to Thompson, Strickland & Gamble (2010), aims and objectives of a firm are usually able to make focusing on the supermarket’s business easy. This is through creating an opportunity to see the main areas of development and achievement. The aims and objectives have been very useful in planning any new ventures for the supermarket. This has been through giving guidance of the various new initiatives of the supermarket company. The aims and objectives of the company have been very useful in determining the future vision of the company. The aims and objectives of a company are a very good thing in determining the way the company is supposed to achieve success through utilizing its main plan (Olsen 2007). These aims and objectives of the company have been very instrumental in defining concisely the nature as well as purpose of the supermarket. Considering the aims and objectives of a company in policy formulation is very important (Wheelen & Hunger 2010). It is a very good thing for creating a good way of management through objectives. Since the aims and objectives of ASDA have been good, they provide a good avenue for chasing company’s success.

• Strategic Vision of ASDA

ASDA has also been able to come up with a vision statement. The Vision statement for this company is’ to be the undisputed champion at making everyday life better for our customers by making our products more affordable.  This is what has been driving the company’s efforts towards success. This vision statement for ASDA has been able to create a link between the current as well as future of the supermarket. ASDA has also been getting a lot of inspiration from its own vision statement. The inspiration has been forth coming since the vision statement gives hope for the coming days of the organization’s operations. The vision statement for ASDA has also been very useful in the decision making of the company. It is worth noting that the vision statement of a business entity guides the decision making process (Dyson 2010).  This has been through giving guidance in the process of making several decisions for the supermarket company. It is worth noting that the vision statement for the supermarket chain has been instrumental in determining its character as well as the avenues it can exploit so that it gains presence and benefit from any market it penetrates in. Therefore, the vision statement for ASDA has been a pillar of its success and a determinant of the direction the supermarket chain pursues. It has also been a big determinant of the satisfaction the customers receive once they purchase any of the company’s products. Good service supports the customer service strategies of an organization (Wheelen & Hunger 2010).

3. Conclusion

The development and growth of ASDA shows that there are options which can make an organization take the lead in the market.  The options for success of a company are usually subject to strategic planning (Minzberg, Ahlstrand & Lampel 2004). Strategic planning cuts the path for an organization (Lynch 2006)

  

Bibliography

Barney, JB & Hesterly, WS 2010, Strategic management and competitive advantage: concepts and cases. New Jersey: Prentice Hall

Johnson, G, Scholes, K & Whittington, R 2009, Fundamentals of strategy, Harlow: Pearson Education Limited

Olsen, E 2007, Strategic Planning for Dummies. Wiley Publishing

Dyson, JR 2010, Accounting for non-accounting students. 8th ed. Harlow: Pearson Education.

Jones, GR & Hill, CW 2009, Strategic Management Essentials. 2nd ed. Southwestern: Cengage Learning

Lynch, R 2006, corporate strategy. 4th ed., Harlow: Prentice Hall.

Minzberg H, Ahlstrand, B & Lampel, J 2004, Strategy bites back. London: Prentice-Hall.

Thompson, JL 2001, Understanding corporate strategy. London: Thomson Learning.

Thompson, AA, Strickland, AJ & Gamble, JE 2010, Crafting and executing strategy: the quest for competitive advantage – concepts and cases. London: McGraw-Hill

Wheelen, TL & Hunger, JD 2010, Concepts in Strategic management and business policy. 12th Ed. New Jersey: Prentice Hall.

 

 

 

PART 2

Executive Summary

It is always for all people in business to have a business strategy. Strategy refers to the unique plan that when applied, is capable of attaining the set goals. According to Johnson, Whittington and Scholes (2011), a strategy is usually useful in attainment of goals especially where there is uncertainty. With the existence of limited resources, it is important to note that strategy becomes very useful since it enables a business entity to attain its goals under such condition. This is because strategy makes the process of achieving a certain level of set goals easier and proactive. Strategic evaluation refers to the process through which a business entity looks at its wellbeing and productivity as well as the future direction of activities. This is usually carried out through looking beyond the normal factors which influence the productivity and state of a business. Strategic evaluation is usually known to look at the possible factors that may influence a business in future. The success of strategic evaluation lies in the ability of a business entity to precisely analyze and predict several paths that enable it to come up with the best plan possible so as to succeed in future.

ASDA Stores is a well known chain of supermarkets in the United Kingdom. It is an American owned company situated in Leeds. This company handles clothing, foodstuffs, general merchandise, financial services and toys for children. It has an interest in the telecoms industry. Associated Dairies & Farm Stores Limited was the initial name of the company. It obtained its current name as a result of a merger. The merger enabled the company to grow at a better rate than before. This led to an interesting growth rate in sales of the company.

Looking at the organization’s leadership of ASDA, a lot of positive things are identified. The CEO comes out as an asset to the company. The organizational structure is found to be hierarchical. This gives an indication of complex processes and systems. The organizational culture on the other side is quite good. It helps in positioning the company well in the society and market in general.

The evaluation of the existing and the potential strategies has been instrumental in analyzing the company. Looking at how the strategy at ASDA is synchronized has also been useful. Analysis of the external and internal environment of the company has been carried out by the use of the best tools. SWOT, PEST, PESTLE, TOWS and Porter’s Five Forces Model have all come in handy in the analysis. This has been able to give the company’s position internally and externally. This means that the position of the company with regards to its strengths and weaknesses is well revealed.  Furthermore, the analysis of the company’s financial health has revealed good state of affairs. All financial data has been looked at with a keen eye. This is necessary to ensure that all indicators pointing to the financial state in a company are well handled.

On the other hand, the position of the company with regard to the opportunities and threats has also been revealed.  Additionally, ASDA has been operating even with existence of competition in the market. The indications brought about by the diverse analysis of ASDA should not be ignored. This is because they determine the decisions which should be taken by the executive.

Table of contents

1. Introduction………………………………………………………………………….13
   • Aims and objectives…………………………………………………………..….13
2. Internal Analysis of ASDA………………………………………………………….14
   • The Structure, culture and leadership of ASDA………………………….………14
     • Structure……………………………………………………………….14
     • Leadership……………………………………………….……………….14
     • Culture………………………………………………………….…….…..15
   • Company Performance……………………………………………….…………..16
     • Financial Analysis……………………………………………….……….16
   • Company Strategies (strategy and strategic choice at ASDA. …………….…….17
     • Existing strategies at ASDA………………………………………….….17
     • Potential strategies of ASDA…………………………………………….23
     • Synchronizing Company strategies………………………………………24

3. External Environment Analysis………………………………………………………26

3.1 Macro Environment Analysis…………………………………………………….26

3.1.1 ASDA PEST/PESTEL …………………………………………………….26

3.2 Micro Environment Analysis……………………………………………………29

3.2.1 Porter’s Five Forces .Model………………………………………………29

4. SWOT Analysis of ASDA…………………………………………..……………….31
5. Conclusions…………………………………………………………….…………….32
6. Recommendations……………………………………………………………………33

Appendices………………………………………………………………………………………34

Appendix1: The organizational structure Chart of ASDA………………………………………34

Appendix 2: The Organizational Culture diagram of ASDA……………………………………34

Bibliography……………………………………………………………………………………..35

 Introduction

A business entity should always ensure that the plans which are capable of achieving the set goals in a better way are arrived at efficiently. This brings about the strategic concept in business management. Business strategy is one of the things which require proper management. This is because the kind of strategy brought about in a business determines the direction the business takes. The strategies should touch on all areas of the business. To come up with the best strategies, it is important to have thorough knowledge regarding the business. This is achieved through the use of the best business analysis tools. These tools of analysis should be applied on the internal as well as the external environment of a business.

• Aims and objectives

The aims and objectives of this business report is to bring about an understanding of the link between the external environment and the internal environment. The report is also aimed at looking at the level of improvement brought about to a business by proper management of strategies.

To be able to achieve the said aims, the report will;

1. Look at the existing and potential strategies of ASDA.
2. Evaluate the way strategy is put together at ASDA.

• Evaluate ASDA Company’s external competitive environment.

1. Evaluate the financial position of ASDA.
2. Combine the analysis information to draw the best conclusions and come up with recommendations.
3. Internal Analysis of ASDA
   • The Structure, culture and leadership of ASDA
     • Structure

ASDA has a very complex organizational structure. This is why ASDA has a hierarchical structure. This is usually brought about by the fact that ASDA has many business units and activities to take care of.  This means that information passes through many people even before the CEO gets wind of any action taking place. This is as a result of subordinates reporting to many people. Each of the many levels of ASDA is overseen by a person. It is worth noting that this type of structure has many layers or levels. The CEO is supported by directors, Managers and then the rest of the staff members. This is well reflected in Appendix 1.

• Leadership

The leadership of ASDA Stores Limited is under the CEO and President Mr. Andy Clarke. Mr. Clarke has been sitting at the helm of this company since May 11, 2010. Before taking over as the CEO and President, he was the Chief Operating Officer of ASDA Group Ltd since the year 2007 up to May 2010. He has been in ASDA since the year 1992, where he has gained rich experience as a store manager, business unit director of categories such as Frozen, Bakery and Produce and retail managing director for Asda’s central division among other positions.

CEO Andy Clarke Asda is known to be under a very good leadership. The company is led by a CEO. The CEO for ASDA has been found to be an asset for the company. One of the reasons is because he is a leader. It is always important for a CEO to be a leader so that a business may end up successful. This is important because he is in charge of various teams. Secondly, the ASDA CEO is known to be strategic. This helps the group in achieving most of its set goals. This is usually shown through the fact that he always knows what to do and how o do it. The other reason why the leader of ASDA group creates success is through the fact that he is always clear. This is witnessed whenever he is issuing instructions to the workforce. An employee is left quite sure of what needs to be done.

• Culture

 

 

 

 

 

 

 

It is said that ASDA has a very good corporate culture. In fact it has been enlisted as one of the best companies to work for. Whenever people are talking, they all come to an agreement that it is worthwhile to work at ASDA.

The company is usually considerate enough to its employees and public in general. The company has also developed a culture of engaging the workforce and the community in its plans. ASDA is also involved in corporate social responsibility activities as part of the rituals and routines. ASDA is usually under the leadership of CEO. The appointment of the CEO is usually very sensitive due to the competition and value in the supermarket chain company. This makes organization of the power structures manageable. ASDA has a very convenient organizational structure. The structure is necessary to create efficiency in the company. For example good corporate culture was the power behind ASDA’s ‘People, Prices, Planet’ campaign which focused on imparting sustainable business practices to the people. The company is also known to be quite ethical and conscious on matters of health among others. This was made more successful by coming up with the best fitting banner. The company ensures that the trade symbols are all well planned to capture the mood of the community and market.

• Company Performance
  • Financial Analysis

ASDA has been performing well financially. This has been possible to tell due to the increase in market share in the industry as compared to the other players in the industry.  For example, recent research shows that the company controls 17.5% of the grocery market. This is the second largest market share in Britain. Recently, the company posted an increase in sales of this line by 8.5%; the biggest increase in revenue among the players in the industry. This can be clearly indicated from the table below;

	Supermarket	Consumer		Market share		Increase from		Decrease from
	Spend (£000s)		Mar-09		Mar-08		Mar-08
	Tesco	6,453,370		30.40%		4.30%		N/A
	ASDA	3,411,938		17.50%		8.50%		N/A
	Sainsbury’s	3,239,500		16.10%		5.70%		N/A
	Morrisons	2,327,583		11.80%		7.20%		N/A
			2012		2011		2010		2009	2008
Operating Results
Net sales			$443,854		$418,952		$405,132		$401,087	$373,821
Net sales increase			5.9 %		3.4 %		1.0 %		7.3 %	8.4 %
Comparable sales in the United States (1)			1.6 %		-0.6 %		-0.8 %		3.5 %	1.6 %
ASDA U.S.			0.3 %		-1.5 %		-0.7 %		3.2 %	1.0 %
Sam’s Club			8.4 %		3.9 %		-1.4 %		4.9 %	4.9 %
Gross profit margin			24.5 %		24.8 %		24.9 %		24.3 %	24.1  %
Operating, selling, general and administrative expenses, as a percentage of net sales			19.2 %		19.4 %		19.7 %		19.4 %	19.1 %
Operating income			$  26,558		$  25,542		$  24,002		$  22,767	$  21,916
Income from continuing operations attributable to ASDA			15,766		15,355		14,449		13,235	12,841
Net income per share of common stock:
Diluted net income per common share from continuing operations attributable to ASDA			$      4.54		$      4.18		$      3.73		$      3.35	$      3.15
Dividends declared per common share			1.46		1.21		1.09		0.95	0.88
Financial Position
Inventories			$  40,714		$  36,437		$  32,713		$  34,013	$  34,690
Property, equipment and capital lease assets, net			112,324		107,878		102,307		95,653	96,867
Total assets			193,406		180,782		170,407		163,096	163,200
Long-term debt, including obligations under capital leases			47,079		43,842		36,401		34,549	33,402
Total ASDA shareholders’ equity			71,315		68,542		70,468		64,969	64,311
Unit Counts
ASDA U.S. segment			3,868		3,804		3,755		3,703	3,595
ASDA International segment			5,651		4,557		4,099		3,595	3,093
Sam’s Club segment			611		609		605		611	600
Total units			10,130		8,970		8,459		7,909	7,288

 

From the above table, the net income of ASDA stands at $443,854. This shows a very good position considering that the company has experienced a consistent growth in net sales.

The gross profit movement of the company is as follows;

	2012	2011	2010	2009	2008
Gross profit margin	24.5 %	24.8 %	24.9 %	24.3 %	24.1  %

 

This shows how the company has gone down in terms of profitability. This is because the gross profit margin has experienced a drop from the year 2010. In the year 201, the gross profit margin stood at 24.9%, but dropped to 24.8% and 24.5% in the years 2011 and 2012 respectively.

The net income of the company is also good since it shows an increase from the year 2008 to 2012. This is as illustrated below

2012	2011	2010	2009	2008
Net Income Per Share of common stock Diluted net income per common share from continuing operations attributable to Asda	$      4.54	$      4.18	$      3.73	$      3.35	$      3.15

 

31-Dec-12		31-Dec-11
Employees	178,792	0.93%	177,144	2.72%
Turnover	22,843,400,000 GBP	4.56%	21,847,700,000 GBP	6.33%
Cost of Sales	—	—
Gross Profit	—	—
Operating Profit	840,900,000 GBP	-0.59%	845,900,000 GBP	5.07%
Pre-tax Profit	774,300,000 GBP	0.85%	767,800,000 GBP	3.88%
Post-tax Profit	609,900,000 GBP	6.37%	573,400,000 GBP	-5.69%
Balance Sheet	31-Dec-12		31-Dec-11
Net Assets	6,167,900,000 GBP	9.48%	5,633,700,000 GBP	8.34%
Total Assets	12,823,600,000 GBP	7.01%	11,983,100,000 GBP	6.04%
Total Liabilities	6,655,700,000 GBP	4.82%	6,349,400,000 GBP	4.08%
Cash	418,500,000 GBP	-3.59%	434,100,000 GBP	1.62%
Tangible Assets	8,626,500,000 GBP	3.28%	8,352,700,000 GBP	7.91%
Intangible Assets	519,800,000 GBP	3.05%	504,400,000 GBP	2028.27%
Fixed Assets	9,146,300,000 GBP	3.27%	8,857,100,000 GBP	14.07%
Current Assets	3,677,300,000 GBP	17.64%	3,126,000,000 GBP	-11.60%
Stock	1,159,700,000 GBP	14.17%	1,015,800,000 GBP	1.73%
Other Debtors	1,967,400,000 GBP	26.84%	1,551,100,000 GBP	-19.15%
Miscellaneous Current Assets	1,900,000 GBP	0%	1,900,000 GBP	-96.56%
Current Liabilities	5,914,900,000 GBP	6.32%	5,563,200,000 GBP	2.43%
Trade Creditors	1,934,500,000 GBP	1.70%	1,902,200,000 GBP	-6.65%
Trade Debtors	129,800,000 GBP	5.44%	123,100,000 GBP	-9.88%
Bank Loans & Overdrafts	—	—
Other Short Term Finances	2,910,700,000 GBP	8.14%	2,691,600,000 GBP	4.44%
Miscellaneous Current Liabilities	1,069,700,000 GBP	10.35%	969,400,000 GBP	18.80%
Other Long Term Finances	35,200,000 GBP	-3.83%	36,600,000 GBP	9.58%
Total Long Term Liabilities	740,800,000 GBP	-5.77%	786,200,000 GBP	17.45%
Salaries and Dividends	31-Dec-12		31-Dec-11
Wages & Salaries	2,464,700,000 GBP	4.35%	2,362,000,000 GBP	3.64%
Directors Emoluments	9,220,000 GBP	4.54%	8,820,000 GBP	-33.73%
Shareholder Funds	6,167,900,000 GBP	9.48%	5,633,700,000 GBP	8.34%
Dividends Payable	—	—
Other	31-Dec-12		31-Dec-11
Audit Fees	300,000 GBP	0%	300,000 GBP	0%
Taxation	-164,400,000 GBP	15.43%	-194,400,000 GBP	-48.28%
Retained Profits	609,900,000 GBP	6.37%	573,400,000 GBP	51.69%
Net Worth	5,648,100,000 GBP	10.11%	5,129,300,000 GBP	-0.91%
Depreciation	397,100,000 GBP	4.58%	379,700,000 GBP	-1.33%
Capital Employed	6,908,700,000 GBP	7.61%	6,419,900,000 GBP	9.38%

 

31-Dec-10		31-Dec-09		31-Dec-08
Employees	172,458	-37.67%	276,673	3.32%	267,789	3.09%
Turnover	20,546,400,000 GBP	3.58%	19,836,400,000 GBP	6.80%	18,572,800,000 GBP	10.94%
Cost of Sales	—	—	—
Gross Profit	—	—	—
Operating Profit	805,100,000 GBP	-10.45%	899,100,000 GBP	49.40%	601,800,000 GBP	-2.68%
Pre-tax Profit	739,100,000 GBP	-7.46%	798,700,000 GBP	53.48%	520,400,000 GBP	-2.31%
Post-tax Profit	608,000,000 GBP	-6.49%	650,200,000 GBP	59.05%	408,800,000 GBP	1.29%
Balance Sheet	31-Dec-10		31-Dec-09		31-Dec-08
Net Assets	5,200,000,000 GBP	5.82%	4,914,000,000 GBP	7.01%	4,592,000,000 GBP	10.89%
Total Assets	11,300,400,000 GBP	5.75%	10,686,000,000 GBP	21.92%	8,764,500,000 GBP	2.89%
Total Liabilities	6,100,400,000 GBP	5.69%	5,772,000,000 GBP	38.33%	4,172,500,000 GBP	-4.68%
Cash	427,200,000 GBP	23.40%	346,200,000 GBP	173.68%	126,500,000 GBP	232.02%
Tangible Assets	7,740,700,000 GBP	2.20%	7,573,700,000 GBP	1.36%	7,471,900,000 GBP	3.74%
Intangible Assets	23,700,000 GBP	-10.57%	26,500,000 GBP	-9.86%	29,400,000 GBP	-8.98%
Fixed Assets	7,764,400,000 GBP	2.16%	7,600,200,000 GBP	1.32%	7,501,300,000 GBP	3.68%
Current Assets	3,536,000,000 GBP	14.59%	3,085,800,000 GBP	144.28%	1,263,200,000 GBP	-1.57%
Stock	998,500,000 GBP	9.14%	914,900,000 GBP	-0.78%	922,100,000 GBP	-5.02%
Other Debtors	1,918,400,000 GBP	15.14%	1,666,100,000 GBP	1900.12%	83,300,000 GBP	-44.47%
Miscellaneous Current Assets	55,300,000 GBP	690.00%	7,000,000 GBP	337.50%	1,600,000 GBP	6.67%
Current Liabilities	5,431,000,000 GBP	4.71%	5,186,500,000 GBP	42.93%	3,628,700,000 GBP	-6.07%
Trade Creditors	2,037,800,000 GBP	6.40%	1,915,300,000 GBP	9.61%	1,747,400,000 GBP	13.36%
Trade Debtors	136,600,000 GBP	-9.89%	151,600,000 GBP	16.89%	129,700,000 GBP	5.45%
Bank Loans & Overdrafts	—	—	—
Other Short Term Finances	2,577,200,000 GBP	3.22%	2,496,700,000 GBP	114.46%	1,164,200,000 GBP	-27.43%
Miscellaneous Current Liabilities	816,000,000 GBP	5.36%	774,500,000 GBP	8.00%	717,100,000 GBP	-0.04%
Other Long Term Finances	33,400,000 GBP	-3.19%	34,500,000 GBP	-0.86%	34,800,000 GBP	-2.52%
Total Long Term Liabilities	669,400,000 GBP	14.33%	585,500,000 GBP	7.67%	543,800,000 GBP	5.76%
Salaries and Dividends	31-Dec-10		31-Dec-09		31-Dec-08
Wages & Salaries	2,279,000,000 GBP	8.32%	2,104,000,000 GBP	-0.23%	2,108,900,000 GBP	10.80%
Directors Emoluments	13,310,000 GBP	13.37%	11,740,000 GBP	20.29%	9,760,000 GBP	12.83%
Shareholder Funds	5,200,000,000 GBP	5.82%	4,914,000,000 GBP	7.01%	4,592,000,000 GBP	10.89%
Dividends Payable	230,000,000 GBP	27.78%	180,000,000 GBP	12.50%	160,000,000 GBP	-20.00%
Other	31-Dec-10		31-Dec-09		31-Dec-08
Audit Fees	300,000 GBP	0%	300,000 GBP	0%	300,000 GBP	0%
Taxation	-131,100,000 GBP	11.72%	-148,500,000 GBP	-33.06%	-111,600,000 GBP	13.56%
Retained Profits	378,000,000 GBP	-19.61%	470,200,000 GBP	0.64%	467,200,000 GBP	129.47%
Net Worth	5,176,300,000 GBP	5.91%	4,887,500,000 GBP	7.12%	4,562,600,000 GBP	11.04%
Depreciation	384,800,000 GBP	5.66%	364,200,000 GBP	8.17%	336,700,000 GBP	5.15%
Capital Employed	5,869,400

 

Liquidity of the company

The company’s liquidity ratio stands at 0.43

The other liquidity values are as below

Date	Value
31 Dec 2011	0.38
31 Dec 2010	0.47
31 Dec 2009	0.42
31 Dec 2008	0.09

 

This means that the company’s liquidity is weak. This is because the higher the ratio the better for a company.

 

• Company Strategies (strategy and strategic choice at ASDA)
  • Existing strategies at ASDA

ASDA has been able to realize the importance of strategies in an organization. This has led to the creation of strategies for the chain of supermarket. This British supermarket has been able to come up with strategies of different types. These ranges from;

• Visionary- ASDA has managed to ensure that their strategies are quite visionary.
• Extrapolation- Extrapolation strategies are the ones which are developed from data analysis, trend identification and conclusion
• Reactionary- The market is sometimes unpredictable. This means that some unforeseen occurrences take place from time to time. This means that ASDA has to come up with strategies to handle certain conditions in the market.
• Emergent- Emergent strategies are the ones which just come up from the normal operations of a company. This means that these strategies are just come up as necessary to support the various operations of the company

 

ASDA has been able to come up with strategies in all areas. These strategies include;

                                            i.            ASDA Marketing Strategies

                                          ii.            Distribution strategies-It is worth noting that distribution communication is one of the things that companies should ensure are effective. This leads to companies coming up with various distribution strategies.

                                        iii.            Growth Strategies- ASDA has also been keen to include growth strategy in its strategy collection. Growth strategies involve the addition of new goods or services (David 2011).

                                        iv.            Product Differentiation Strategies- These refers to strategies which are aimed at using the products of a company to gain competitive advantage in the market.

                                          v.            Pricing Strategies

• Potential strategies of ASDA

There are other potential pricing strategies which ASDA can use. These include;

·         Premium pricing strategy- This is where ASDA can be able to set the prices of its products and services above that of the competitors. This can be applied whenever ASDA believes that one of its products or services is unique. This is means that whenever the supermarket gets something which is quite distinct in the market, it can apply the premium pricing strategy. This also means that whenever ASDA stocks a product or service which is first in the market, the premium pricing strategy can be applied to ensure that the maximum profit possible at that time is obtained. Whenever ASDA plans to enter a new market, premium pricing strategy is the best to apply.

·         Penetration pricing strategy- This is another useful strategy which ASDA can apply. This is a strategy which is useful whenever a company is trying to penetrate a market. It is a strategy that ASDA can use when it is planning to enter a new market. It is a very useful pricing strategy when it comes to getting a share in a new market. It usually involves setting prices which are a bit lower than those of the other players in the market. This makes consumers to turn their attention to the new company in the specific market. It is worth noting that the use of the penetration pricing strategy may translate into losses for the company. However this is believed to be for a given period of time, upon which the popularity generated translates into positive results for the company.

                                        vi.            Acquisition Strategies

Acquisition strategies are about a company getting capital to acquire another company or business (Wetherly & Otter 2008). This is usually aimed at increasing the company’s revenue. This gives the acquiring company an opportunity to gain from the existence of the acquired company.

Synchronizing Company strategies

ASDA has been able to put its strategy together by handling each strategy individually as well as jointly. This has made the supermarket company to succeed because of proper strategy formulation.

For example ASDA puts together its marketing strategy through use of the five step process. This is as follows;

3. External Environment Analysis

3.1 Macro Environment Analysis

3.1.1 ASDA PEST/PESTEL Analysis

PEST analysis involves the evaluation of a company’s position with regard to political, Economic, Social and Technological situation at a given time (Wetherly & Otter 2008). On the other hand, when the environmental and legal factors are brought on board, the PEST analysis expands to make the PESTEL analysis. To show this, the PEST and PESTEL analysis has been carried together.

Political

ASDA being in Britain enjoys one of the countries where democracy is deemed to be fit. This means that the political situation in the country is fair for business. ASDA operates in a country where the politics are pegged around a constitutional monarchy. The Monarch is usually the highest person to hold a political office in Britain. There is usually the head of government. The Prime Minister is the head of government in Britain. There are also the governments of Scotland and WALES. These tow governments are usually under devolution. Britain is one of the places where multi-party system has been adopted. The Conservative Party and the Labor party have been the two big political parties in the country. Currently, there is a coalition of the two parties; which has never happened again since 1974.

The political temperatures in Britain are just perfect for business. This gives ASDA the right political environment to carry out its duties.

Economic

ASDA operating in Britain gets the opportunity to be in one of the sixth largest economy in the world. Britain is ranked sixth in the world in terms of national economy measured by nominal GDP. This means that the rating of Britain in terms of exports and imports is good. For example the United Kingdom was ranked number 11 in terms of exports and 6^th in terms of imports. The GDP OF Britain is also not bad. 78% of the Britain’s GDP is comprised of the service sector’s impact. The retail sector in Britain is also a major contributor in the GDP of the country. This places ASDA at a very good economic environment. Utilized well, this good economic environment can spell success for the supermarket chain.

Unemployment in Britain has been lower than expected, giving an indication that the economy is fair. However, the GDP has been a bit flat than expected. The inflation is also a cause for alarm in Britain since it has been rising recently. The country has been fighting debt. This has led to reduced government spending among other related issues. This can be indicated by appendix.1, 2 and 3.

Social

Britain just like many countries in the world was exercising social castes system. This has been replaced by the existence of social classes in Britain. Britain is one of the countries in the world where social classes exist. It is worth noting that there are traces of marriages within the same social classes as well as hereditary tendencies. However, the social norms in Britain have changed a lot since the World War 2. There has been a solid change in the way the role of women in the society is viewed. The way people cooperate has also changed thus helping in shaping the social environment in Britain.

Technological

Britain is one of the places where technology has received high levels of appreciation. The technological environment on Britain is impressive. This gives business people such as ASDA an opportunity to develop from this good technological environment. There have been numerous technological start ups in Britain giving the economy a big boost. A company such as ASDA will be able to benefit through the good technological systems in the market. This will be able to provide efficiency in operations among other processes.

ASDA has been able to benefit from technological advancements in Britain through things such as stock control. The British government has also been able to pump money into research on technology. This is one thing that is likely to benefit ASDA more. Running of ASDA requires energy; something which is taken care of by the fact that Britain is ahead in terms of energy generation and cost control.

Environmental

The increase in demand has been very instrumental in decision making on things which might affect the environment. Things like packaging have been very challenging to decide on. The need to pack for all clients has sometimes been hard to carry out on environment friendly substances. The government has been very clear that every person should be able to pack in environment friendly way.

Recycling has also been an initiative which the government has been fighting for. This is one thing that ASDA can take advantage of and get involved in related activities.

Legal

Luckily, the legal system in Britain is good. Systems have been streamlined to ensure that everybody gets justice. Several guidelines have been drafted to ensure that the law is followed. This has been able to create clarity on issues related to competition, employment and regulations of trade among others. The good legal platform created in Britain is good for ASDA to take advantage of so that operation may be smooth.

3.2 Micro Environment Analysis

3.2.1 Porter’s Five Forces Model

This is an industry analysis and corporate strategy development model introduced in   the year 1979 by Michael Porter (Analoui & Karami 2003).This model is one of the most useful ones in market analysis. This model brings an argument that a market is always controlled by five forces at any given time. These include;
• Threat of Entry

New entries in a market are usually a source of more competition. It is always important to ensure that the company is ahead when it comes to market command. The new entrants in the market harm the business in that they also add more substitutes. ASDA has this threat since many companies are aiming at entering into this market due to its good business activity. ASDA should be able to position itself in a way which reduces the effects of new entrants

• Threat of Rivalry

Rivalry is the force which gives this model its strength. This force argues that competition is a big contributor to the way the company performs. This force advocates that a company should always work towards earning competitive advantage. ASDA has many competitors, whose threat can be fought using the best rivalry techniques. These competitors include Wal-Mart and Ocado Limited.
• Threat of Substitutes

The existence of options that clients can turn to is dangerous to accompany. At ASDA will not be able to do things such as raising prices of its products and services. This means that ASDA should be able to strategize so that the clients find the substitutes insignificant. This will be able to put ASDA in the forefront when it comes to market command.
• Threat of Suppliers

This force argues that the suppliers of a company play a major role in determining its success. ASDA should be able to manage its affairs well with regard to suppliers. Proper communication channels should be established with suppliers so that efficiency exists. The way suppliers determine the market forces is also important to plan about. Sometimes suppliers are known to gang up so that they get a bigger share in the industry which is harmful to businesses.
• Threat of Buyers

The buyers are also very influential to the performance of a business. It is important for ASDA to determine the power of the buyer in the industry. This will make sure that the supermarket strategizes properly.

4. SWOT Analysis of ASDA

SWOT analysis is a process which shows the findings of an internal as well as external environment audit on a company. For ASDA the SWOT analysis brings about the impact of political, economic, social, technological, environmental and legal factors on Asda.

	Positive	Negative
Internal	Strengths powerful retail brand Advanced in use of Information technology. Wal-Mart support on non food area	Weaknesses Large volume stocks (lack of smaller supermarkets) Lack of flexibility Too much control from Wal-Mart
External	Opportunities Enjoying buying power from Wal-Mart Availability of merger opportunities Purchase of a smaller supermarket (Netto)	Threats High Tax rates on consumers from the government Unemployment Uncertainties

7. Conclusions

Setting up good mission statement, Vision statement, aims and objectives of a company is a good step towards success of a company (Thompson, Strickland & Gamble, 2010). Components involved in formulation of the above should be well controlled to ensure that only the best is achieved.

Development and growth of a company lies in the way it handles its affairs. The development and growth of ASDA is shown to be a result of the supermarket’s proper plan and strategy. All strategies should always be brought together so that they work to the benefit of the company.

6. Recommendations

ASDA should be able to improve on the strategy development process. Consulting experts on strategy would be a very helpful thing to do. The potential strategies should be tried out along the other existing ones. The ones which seem fruitful should be implemented fully in the company. The strategies to concentrate more on should be able to create unrivalled competitive edge in the market. This will be necessary in the efforts towards making the aims and objectives of the organization get achieved.

Proper management of the organization structure would improve the company’s efficiency. This would be possible through reducing the number of people a person has too report to.

 Appendices

Appendix1: The organizational structure Chart of ASDA

 

 

Appendix 2: The Organizational Culture diagram of ASDA

 

  

Bibliography

Analoui, F & Karami, A 2003, Strategic Management in Small and Medium Enterprises. London: Thomson Learning.

Campbell, D, Edgar, D. & Stonehouse, G 2011, Business Strategy an Introduction. 3rd ed. Basingstoke: Palgrave. Macmillan.

David, FR 2011, Strategic management: concepts and cases. 13th Ed. New Jersey: Pearson Prentice Hall.

 

De Wit, B. & Myers, R 2010, Strategy: Process, Content, Context – An international perspective. 4th ed. Andover: Cengage Learning EMEA.

 

Grundy, T & Johnson, G & Scholes, K 1998, Exploring strategic financial management. London, Prentice Hall.

Johnson, G, Whittington, R & Scholes, K 2011, Exploring corporate strategy, 9th ed., Harlow: Pearson Education Limited.

Jones, GR & Hill, CW 2009, Strategic Management Essentials. 2nd ed. Southwestern: Cengage Learning.

Vineberg, H, Ahlstrand, B & Lampel, J 2004, Strategy bites back. London: Prentice-Hall.

Thompson, AA, Strickland, AJ. & Gamble, JE 2010, Crafting and executing strategy: the quest for competitive advantage – concepts and cases. London: McGraw-Hill.

 

Wetherly, P. & Otter, D 2008. The business environment. Oxford: Oxford University Press.

 

 

 

Should Universities Increase Their Tuition Per Year?

Tuition is a critical source of revenue for every university to expand and execute its operations. Universities often impose tuition rates while enrolling students to cater for various needs including salaries and other facilities. Nevertheless, despite that tuition is important for universities; these institutions usually capitalize on tuition charges by increasing its rates every year whenever students are enrolled for different courses. For instance, “64 out of 122 institutions” in England are planning to increase the average tuition costs to as much as £900 per student[1]. These charges usually suppress the students’ budget plan and their financial potential to sustain the cost of university education. In most cases, the students take more time before they graduate, borrow loans, and engage in different part-time jobs to get income[2]. At the same time, students lose class hours in major subjects while involving in other jobs to raise money for tuition. The fact that increasing tuition charges by universities strain students and their financial supporters; compel students to engage in part-time jobs to sustain themselves financially and cater for tuition fees; and results into poor academic performance due to time loss justifies that  universities should not increase tuitions.

Universities have continued to increase their tuition rates every year for varied reasons. First, the continued increase in the rate of inflation causes the average tuition increase because of the high costs required to sustain and run the university. For instance, Universities UK often increase their tuition rates in-line with inflation because of the fact that the total income generated from fees often do not sustain the outreach, retention, and various programs that these intuitions are supposed to support for successful operation[3]. This is because increases in the inflation rates often suppress the financial budget of the universities. Typically the universities are mandated to collect fees to finance its projects without expecting support from the government. However, in the case where the institutions are not able to full finance their budgets using the fees, they are usually compelled to push the cost to the students through tuition. At the same time, most universities also increase their tuition charges because of insufficient funding from the government[4]. This is due to the reduced budget allocation for the universities from the government’s treasury. For instance, the San Francisco State University’s (SFSU) administration hiked its tuition rates due to reduced government funding into the public universities[5]. Based on this assertion, it is evident that the government does not fully subsidize the cost of education that is meant to help the students enroll into the universities as it might be perceived. Therefore universities are further compelled to increase their tuition rates in order “to balance the books” and run efficiently without interruption[6]. This balancing of accounts is what is broadly referred to as the technique of harmonizing the credit and debit column of the books of accounts at the end of the accounting period. In most cases, the debit column of books of account tends to be higher than the credit column. Owing to the imbalance between the debit and credit side of the books of accounts, the universities often bridge the gap between the two sides into equilibrium by increasing the tuition rates every year irrespective its impacts on the students.

Ironically, these tuition increases by the university are often made without incorporating the students’ view. As such, the increments in the tuition rates are often met with opposition from the students and the parents because of the perceived strain that such increment would pose to the students’ financial capacity as well as academic performance. The increased tuition fees mostly force the parents to borrow loans in order to sustain their children’s university education. Nevertheless, borrowing loans have led to foreclosures and lying off parents from jobs. At the same time, students from poor families often have the option of pursuing part-time jobs and loans to sustain their education and family demands as a result of increased tuition rates on frequent basis. For instance, Rebeka Phillips (a student at SFSU) entirely relied on three loans and two jobs to pay for a half of the whole year fee and not other basic needs despite the cost of paying off such loans[7]. Students can sacrifice to such extent in a bid to access education; this is because education is perceived to be the most significant aspect that most students give first priority especially if a student is coming from poor background. Since the tuition rates increase could be projected to go up more in the future, the students would be forced to transfer from universities to colleges that they perceive to be cost effective. For example, Rebeka Phillips changed from SFSU to community college because her family could not afford the increasing tuition rates at the university[8]. Therefore, students often make hard decisions to continue with work and studies, rather than stop working and continue with their studies.

There are varied strategies that can be employed to offer solutions to students and parents. The governments should reform the education system to incorporate the poor and most needy students to pursue their studies. In other words, the government should offer “more loans, grants, and bursaries for those from poorer families” at low interest rates[9]. This would a significant step because it will help cushion the parents from financial burden caused by the increased tuition rates. On the other hand, reforming the education system at the university will help the students to study at the universities of their choice without changing. The financial aid program can also benefit countries because they are able to retain and nurture potential talents that students possess thus improving the reputation of such countries. The second solution is to educate parents and students to “establish a financial plan” without assuming a tuition-rate increase by the universities on regular basis[10]. This suggestion is important because it would assist the parents and students to prepare for the future. For instance, the parents could save some money for their children in order to cater for their university studies in the future rather than waiting to borrow loans to pay for anticipated increased tuition rates.

At the same time, it is prudent for the parents to research the tuition rates of varied universities before enrolling their children to any of them. This would particularly act as a measure and precaution to parents and guardians thus ensure that they choose and enroll their child in universities charging favorable tuition fees without regular increments. Finally, the universities can also help reduce the tuition rates through the creation of programs, which support the needy and bright students. For instance, scholarships can help to retain more students with financial difficulties into the university programs irrespective of their inability to pay the increased tuition fee[11]. Unlike loans, students do not repay back scholarships and therefore, would not be strained in the entire educational life. The use of bursaries and scholarships would also reduce the effect of tuition inflation especially when the scholarship programs are full grants.

In conclusion, universities should not increase their tuition rates because it impacts the students’ learning process, compel students to engage in part-time jobs at the expense of academics and strains the students and parents financially. Universities often increase tuition because of various issues including, but not limited to inflation, insufficient funding from the government, and the need to balance the books of accounts. Tuition increments are often met with opposition through the parents and parents often end-up borrowing loans, doing part time jobs, and changing universities to continue with their quest for education. Nonetheless, the idea of increasing tuition and imposing burden on poor families can be emanated by education reform, financial planning, and scholarships. These measures will benefit parents, students, and countries because it would reduce the burden of increased tuition rates thereby allowing a nation to nurture potential talents and improve their reputation. Nonetheless, “tuition fees” is not unethical issues, increasing it is what should be discouraged.

 

 

Bibliography

Amador, V. Paul. A Study of the Governor Guinn Millennium Scholarship Program’s Influence on Tuition Inflation at Public Nevada Institutions of Higher Education. ProQuest, 2007.

Caldwell, Tanya. “Current College Struggle to Survive Rising Tuitions.” New York Times 15 February 2012.

Liu, Chunfeng, Jincai, Chang, and Aimin Yang. Information computing and applications second international conference, ICICA 2011, Qinhuangdao, China, October 28-31, 2011, proceedings. Berlin [etc.]: Springer, 2011.

Paton, Graeme. “Most universities ‘to raise student tuition fees in 2013’.” The Telegraph 13 January 2013.

 

Bottom of Form

 

[1]Graeme Paton, “Most universities ‘to raise student tuition fees in 2013’” (The Telegraph 13 January 2013), para. 1

[2]Tanya Caldwell, “Current College Struggle to Survive Rising Tuitions” (New York Times 15 February 2012), para. 11

[3]Paton, para. 17

[4]Chunfeng Liu, Chang Jincai, and Yang Aimin, Information computing and applications second international conference, ICICA 2011, Qinhuangdao, China, October 28-31, 2011, proceedings (Berlin [etc.]: Springer, 2011), p. 687.

[5]Caldwell, para. 10

[6]Ibid, para. 3

[7]Caldwell, para. 13

[8]Ibid, para. 13

[9]Paton, para. 22

[10]Caldwell, para. 17

[11]Paul V. Amador, A Study of the Governor Guinn Millennium Scholarship Program’s Influence on Tuition Inflation at Public Nevada Institutions of Higher Education (ProQuest, 2007), p.2

Biology Article for Cathy Toliver

Modern genetics is extensively expected to fundamentally convert medicine and health and bring significant advantages in the future. The article argued that, while it is uncertain that numerous promised benefits of genetic studies will be realized, a gradually invasive genetic perception and expectation about prospective genetic inventions is intensely molding conceptions of diseases and health and main concerns in healthcare (Petersen, 2006). Additionally, it proposed that arguments about the justice and normative propositions of new genetic innovations thus far were limited by bioethics discussions that have tended to structure questions restrictively in terms of the best way of ascertaining the security and endorsement of human rights (Petersen, 2006).

The development of genetics has a major influence on the study of biology at the undergraduate level. Understanding the effect of genetics on the practice of medicine is important, as genetics have introduced new methods, new understanding and even different conventions in medicine. Therefore, learners of biology stand to benefit greatly from the proposals made in the article including invasive practices and aspects of bioethics. The issue of ethics in biology will also be relevant to individuals studying biology in the current health sector owing to the increased awareness and enforcement of human rights.

The article was interesting due to its succinct and precise nature in handling genetics in biology. All the topics in the article proved to be highly relevant and related to genetics. The inclusion of other fields such as human rights and justice was also streamlined and tailored to fit in a biological context. Taxpayer’s money should be significantly invested in this research for several reasons. When it comes to medicine, most people fail to understand the extent and magnitude of their rights. Increasing the research will also open up understanding and solutions concerning genetics. Compared to other topics in biology, the research into genetics can be considered relatively pressing.

 

References

Petersen, A. (2006). The genetic conception of health: is it as radical as claimed? Health, 10, 4, 481-500.

COMPETITION IN THE BANKING INDUSTRY OF THE 21^ST CENTURY

Introduction

The banking industry all over the world is facing rapid transformations. Many factors can be attributed to this new trend; these include deregulation of financial services, technological innovations, opening up of to international banks, changes in corporate behaviour, and the growing rate of disintermediation. Additionally, these pressures have been accentuated by the recent banking crises that have hit different banks on the globe. Global banks have also been transformed because of the wave of privatization of State-Owned banks, which had previously dominated the banking industry in the past (Gup, 2003). The paper that follows will attempt to discuss how competition in the banking industry has increased dramatically over the past 20 years. In order to achieve this end, the essay will scrutinise and illustrate the factors that drive bank competition.

The paper opens up with a review of the competition policy in banking followed by a discussion on the forces that drive changes in the banking industry. Following this will be a scrutiny of how these forces are influencing the structure of the global banking systems through domestic mergers, privatisations, and entry of the foreign banks. An analysis of the effect that these factors have on economies of scale and competition within the banking industry will then follow. The paper will also present an overview of the consequences of competition in the banking industry and apply Porter’s five forces of competition to analyse the cutthroat competition that has characterised the banking industry of the 21^st Century.

Competition Policy in Banking

There is a general assumption in the banking sector that tends to allude to the fact that banking systems possess a special status. This assumption is founded on the fact that the banking industry is more vulnerable to instability than other industry or sector of the economy. Another fact fuelling this assertion is that banks have many less wealthy shareholders that hold non-negligible shares in form of small amounts of bank deposits. A look at the manner in which banks looks at its assets and liabilities reveal that they use a traditional view. According to this view, banks analyse the profitability and viability of all project proposals presented to them by entrepreneurs prior to their granting loans to these entrepreneurs. Additionally, banks heavily depend on short-term demanded deposits that they receive from their customers (Ratnovski, 2013). They pool these small deposits and invest them in long-term projects. The maturity mismatch between the bank’s assets and liabilities makes the banks crucial providers of liquidity to depositors.

The 21^st Century has witnessed close cooperation between banks. Most if not all banks of this century are involved in interbank payment and lending systems. These banks happen to borrow from and lend to each other with an aim of cushioning each other from any liquidity fluctuations that might impede on their daily operations. The modern day banks are also involved in large value transactions on their customers’ behalf. They mediate transactions such as wire transfers from one bank to the other and so forth (Ratnovski, 2013).

The competition policy that affects banks can be classed into three main business practices; mergers, cartels, and abuse of dominant position. Cartels have gained notoriety in distorting, preventing, and restricting competition in the banking industry. Cartels can be formed horizontally between producers and distributors or vertically between producers and suppliers. Anti-competitive cartels are notorious in limiting technical development, markets, productions, and investments within the banking industry. Abuse of dominant position occurs when one or more firms occupying the dominant banks exert some form of anti-competitive behaviour on the market. Mergers can also reinforce a dominant position and enforce anti-competition tendencies on the banking industry (Ratnovski, 2013). It is worth noting at this point that banking has always been regarded as a special sector and as thus, the reinforcement of the competition policy has been left to regulators within the banking industry.

Forces for Change

The cutthroat competition witnessed in the banking sector of the 21^st Century can be attributed to forces that include external opening up of local banking sectors to foreign competition, changes in corporate behaviour and crises in the banking sector. These forces are what are said to have occasioned the changes witnessed in the level and intensity of interbank competition. The forces or drivers are briefly discussed hereunder:

1. Deregulation and opening up to foreign competitors

Traditionally, the banking sector was highly protected and tightly regulated by governments and other banking regulators. The sector was characterised by pervasive restrictions foreign and domestic entry. This situation persisted for long and it was only challenged by technological inventions and macroeconomic pressures that hit the industry in the 1990s. These interventions and pressures forced the regulators to loosen their grip on the banking sector and allow deregulation that also opened up financial markets to both domestic and financial competition. Consequently, geographical and bank borders disintegrated leading to a build up in competitive pressures among banks in emerging economies (Gup, 2003). This has since led to pronounced changes in the structure and composition of the banking industry. These changes have included privatization of State-owned banks, mergers and acquisitions, increased entry and establishment of foreign banks, and establishment of new financial institutions such as deposit taking micro-finance (DTM) institutions.

1. Changes in Corporate behaviour

Corporate behaviour has been influenced by the new capabilities that information technology has afforded the banking industry. Most of the modern day firms use IT in their operations. These technology-dependent firms continuously seek funding for their projects from established lending institutions such as banks. However, most banks are unwilling to finance new technologies because of the element of uncertainty that is attached to such projects. As a means of circumventing this challenge, large firms have turned to the capital market as a source of funding. These firms issue their securities in the stock markets and they acquire loans from the capital markets at better lending rates than those offered by banks (Gup, 2003).

1. Banking crises

Serious banking crises that occurred in the markets of the 1990s caused regulators and governments to rethink on strategies that would cushion banks from crises. These crises were more pronounced in emerging economies than in the industrial world. The players in the banking industry were therefore forced to embrace deregulation and entry of foreign banks into the local banking markets to offer the much-needed reprieve for the ailing and crises-ridden banking sector (Gup, 2003).

Consequences of Competition in the banking industry

Some people are of the opinion that competition in the banking sector imparts some effect on economic growth and financial stability. However, not all of the effects are positive; some are negative and they cause problems in the banking industry. Two conflicting school of thoughts exist in the financial system; on the one hand it is argued that economic growth and efficient financial systems results from higher completion. Another school of thought argues that the stability of the banking sector results from monopoly and market power.

Different theoretical models can be used to identify and analyse the effects of heightened competition on the banking sector. Based on competition, banks can be grouped as being perfect competition banks, oligopolistic bank, and monopolistic bank. Monti-Klein model describes a monopoly bank as being one that represents the whole banking industry (Zopounidis, 2002). This model presents the demand for loans as a downward slope and supply of deposits as an upward slope. The banks make their profits by taking the difference between margins on deposit and the sum of loans and management costs. This model implies that the bank margin is reduced when the bank customers, who are the firms and households, get substitutes to the financial products being offered by the bank (Freixas and Rochet, 2008).

Another model is one that relates to perfect competition. According to this model, the bank is considered a price taker and as thus, it equates the firm’s intermediation margin to the management costs’ margin. Consequently, an increase in loan rate emanates from the fact that there is an increase in the supply of loans, while a decrease in the deposit rate depicts a decrease in the demand for deposits (Freixas and Rochet, 2008).

Vives (2001) argues that the perfect competition model of banking sector is not realistic because of the many barriers to entry, information asymmetries, and switching costs. Freixas and Rotchet (2008) vouch for the use of an oligopolistic model that has an infinite number of banks. According to the oligopolistic banking model both the deposit and loan rates depend on the number of banks in the market and the intermediation margin is lowered when the number of banks in the industry increase. This means that as interbank competition intensifies, profits earned from the difference between deposit and loan rates is cut down or reduced substantially.

The oligopolistic model of the banking industry suggests that an increase in interbank competition lowers the rates charged on loans and increases the returns made by depositors. Aside from that, this competition in the banking industry also affects macroeconomic performance in terms of financial stability and economic activity (Khatkhate, 2009). Numerous studies have confirmed the existence of a positive relationship between competition in the banking sector and the level and nature of economic growth. One of such studies asserts that capital formation is often impeded by a monopoly banking system. This assertion is founded on the fact that monopolistic banks have gained notoriety for rationing credit by imposing high interest rates on loans and pay low interest on deposits, and this causes a slower rate of economic growth. Conversely, Dell’Ariccia et al (2001), presents a theoretical model, which demonstrates  how higher competition in the banking sector lowers both deposit and loan rates and in turn affect macroeconomic performance by promoting capital accumulation.

Vives (2001) provides another explanation on the effect of increased competition on the efficient allocation, which ensures that credit is offered at the lowest price. This means that in a concentrated market, a bank makes profit by supplying limited amount of credit at higher interest rates. This model has been faulted by those that assert that the model will only hold true if the bank devices a way by which they will be able to distinguish between credit-worthy and bad borrowers.

Smith et al (2003) contribute to the discussion by supporting the existence of a monopoly banking system. The duo argue that young firms stand higher chances of getting loans at lower rates from a monopolistic bank than from banks in competitive environments. The monopolistic bank offers lower rates on loans with an expectation that it will obtain a greater share of the returns obtained by the firm in the future.

The discussion presented in the above paragraphs happens to be contradictory in nature. On one hand, heightened competition is said to allow access to finance at lower rates, drives commodity prices down, and ensures efficiency in resource allocation. These effects work jointly to boost capital formation and accelerate economic growth. Conversely, monopolistic banking is favoured because it ensures financial stability and affords cheaper loans to young firms. However, close regulations ensure that the consequences of high risk taking under perfect competition are checked and incentives aimed at monitoring the borrowers that have been created under monopoly.

Porter’s Five Forces of Competition

It is worth noting at this point that the banking business is huge and almost all banks serve the same customer base and offer similar products. In order to make a profit in the market, banks operating in a perfect or oligopolistic market must position themselves through pricing, product differentiation, promotion, and marketing. Porters’ Five Forces of competition can be applied to explain how banks deal with the competitive nature 21^st Century’s banking industry. This is described hereunder as follows:

1. Competitive Rivalry

Rivalry is fierce within the banking industry. Banks follow closely the innovations adopted by their rivals. This ensures that the banks maintain their market share. Innovations such as internet and mobile banking have been replicated in all banks. This has deterred customers from changing banks to access the innovated services (Hill, & Jones, 2010).

1. Threat of New Entrants

New entrants coming into an already saturated banking industry must be careful on how they enter the industry. Some offer value added services while others offer their products at discounted rates with a hope of attracting customers from other banks. Entrants that were previously businesses such as supermarkets, insurance companies, and cooperative societies use their current client list as a pint of entry into the banking industry (Hill,., & Jones, 2010).

• Threat of substitute services and products

Traditional banks enjoyed monopoly in provision of products and services. However, the 21^st Century banks are faced with competition from non-bank financial institutions that provide similar products and services as the banks and at times, they do so in prices that are below the bank rates.

1. Bargaining power of buyers

The success of any business hinges on its ability to come up with innovative products and services that address the needs presented by their customers. Failure by one bank to address the needs presented by its customers might occasion an exodus of multiple personal businesses headed to the nearest bank that is both ready and willing to listen to the customers. The departure of many customers at one time might affect the well-being of the bank (Hill,.& Jones, 2010).

1. Bargaining power of suppliers

Customers, governments, and international money markets are the suppliers of the money needed by banks. The central banks of countries are responsible for printing money in paper, coins, and electronic forms.

Conclusion

In summary, the banking industry of the twenty-first century has been hit by a wave of change. These changes have been brought about by forces that include bank crises, deregulation, and opening up to foreign competitors, and changes in corporate behaviour. Competition witnessed in banks is expressed through three main business practices i.e. mergers, cartels, and abuse of dominant position. All of these practices exert some effect on the nature of competition that the banking industry undergoes at one time or another. There are three types of inter-bank competition; these include monopoly, oligopoly, and perfect competition. The success of one bank in an industry that has many banks can be determined by analysing the industry by use of Porter’s Five Forces of Competition. These forces include threat of new entrants, competitive rivalry, threat of substitute services and products, bargaining power of buyers, and bargaining power of suppliers. Many more changes will continue to occur as competition between banks continues to stiffen.

 

References

Altig, D., & Nosal, E. (2009). Monetary policy in low-inflation economies. New York: Cambridge University Press.

Dell’Ariccia, G., Dell’Ariccia, G., & International Monetary Fund. (2001). Bank Competition and Firm Creation. Washington, D.C: International Monetary Fund.

Freixas, X., & Rochet, J.-C. (2008). Microeconomics of banking. Cambridge, Mass: MIT Press.

Gup, B. E. (2003). The future of banking. Westport (Conn.: Quorum Books.

Hill, C. W. L., & Jones, G. R. (2010). Strategic management theory: An integrated approach. Boston, MA: Houghton Mifflin.

Khatkhate, D. R. (2009). Money, finance, political economy: Getting it right. New Delhi: Academic Foundation.

Ratnovski, L. (2013). Competition policy for modern banks. Washington, D.C.: International Monetary Fund.

Smith, B. D., Boyd, J. H., Smith, B. D., De, N. G., & International Monetary Fund. (2003). Crisis in Competitive versus Monopolistic Banking Systems. Washington, D.C: International Monetary Fund

Vives, X. (2001). Oligopoly pricing: Old ideas and new tools. Cambridge, Mass. [u.a.: MIT Press.

Zopounidis, C. (2002). New trends in banking management: With 42 tables. Heidelberg [u.a.: Physica-Verl.

7-Eleven’s Organizational Structure

The 7-Eleven company was founded in the year 1927 as a Southland Ice Company in Texas. The business whose initial area of operation was on selling ice learnt from one of their employees that they could branch out into offering other services and selling products that was complementary to their Ice business. The idea birthed by Uncle Johnny that included the selling of milk, eggs, and bread from the Icehouse was soon picked by Jefferson Green, of the leaders at the Icehouse, who duplicated the concept and spread the new line of business in all the branches of the Ice Company. This in effect birthed the whole concept of convenience shopping.

The massive customer satisfaction that followed caused 7-eleven to offer more services and products tailored to address the needs presented by the customers. 7-Eleven’s willingness to listen to the needs of their customers has seen it grow in leaps and bounds and a small ice company that begun in a small town in Texas has since transformed and made its presence felt on the international markets. The expansion that the company has witnessed over the 86 years that it has been in operation has caused it to come up with an organizational design that ensures smooth operations in both the local and international branches of 7-Eleven.

The 7-Eleven company has three types of stores: franchised, corporate, and licensed. The franchises are stores built by the company and leased out to individual entrepreneurs. In this arrangement, the company owns the property and the equipment. The franchisee pays an agreed amount of money to the company as a franchising fee. The corporate stores are owned and run by the company. The company appoints managers from its employees to manage their corporate stores. Licensed stores are akin to the franchise stores and they only differ in ownership: licensed are owned by the entrepreneurs who are licensed by 7-eleven and they have to design their buildings and everything to ape the design and layout of 7-eleven. The licensee pays the company a licence fee for the licence stores.

The success of every organization hinges on the kind of organization structure it operates has. An organization structure is of paramount importance to the firm because it determines the level of efficiency that the firm’s operations will enjoy. This structure also plays a cardinal role in define the chain of command used by an organization (Mills, 2007). Additionally, jobs and tasks are coordinated, grouped, and divided based on the organizational structure. The importance of a firm’s organizational structure places a demand on the firm to come up with a structure that will address its needs in a wholesome manner.

Figure 1. Below shows the organizational structure used by the 7-eleven US branch. The company uses a line organizational structure. This kind of structure is very specific in terms of the chain of command. The CEO is at the helm of the organization. He occupies a level designated for the head of the company. He is in direct contact with about nine senior managers that includes the CFO, COO, and CIO and other heads. Each of these heads man several departments under them (Corporate 7-Eleven.com/ Home., n.d.).).

 

 

 

 

Fig  1: 7-Eleven’s organizational Structure

This organizational structure is not ideal for a magnanimous company such as 7-Eleven. This is because the CEO looks overwhelmed by the number of officers that report directly to him. I believe that the organizational chart needs to be reorganized to take the shape of a geographical organizational structure (Baligh, 2011).

Figure 2: Showing a geographical organizational structure.

The geographical seems ideal for a company such as 7-eleven because of the nature of the company. The organization has multiple stores spread all over the globe. A geographical organizational structure will ensure that all the branches of the firm report to the CEO. The branches can be headed by the branch managers with fully-fledged executive members to cater for matters finance, sales, operations, and information. Such a design is ideal because it will hasten the speed at which changes and innovations are applied across all the branches in the world (Baligh, 2011).

Agency Problem at 7-Eleven

Agency problem arise when the welfare of the shareholders is dependent on the actions taken by the managers that have been appointed by the shareholders. In this case, the shareholders are the principal while the managers take the agent role. Thence, the principal-agent relationship is established. Generally, the shareholders expect the managers to act in a manner that will reflect positively on their welfare (Madura, 2007). However, this is not always the case. The managers have a challenging task of meeting the demands placed on them by the other stakeholders in the firm. These stakeholders may include creditors, the government, the customers, and the firm’s employees. The principle-agent relationship extends to include all the stakeholders (Madura, 2007).

Agency problem arises when the principal has to motivate the agent sufficient so that the agent will look out for the principal’s interest and not his own. This problem arises because the agent is often more knowledgeable than the principal and the agent can use this fact to their advantage. The shareholders of a company such as 7-eleven appoints a Board of Directors to run the affairs of the company because they might be lacking the time or skills and expertise needed to manage such a magnanimous business enterprise (Madura, 2007).

The agency cost arising from the agency problem in 7-Elevens might be too heavy for the shareholders to bear. Therefore, the shareholders can adopt certain strategies to cushion themselves from high agency costs. These strategies may include pegging managerial compensation to performance. The shareholders can offer bonuses to the management in case the performance is good. The shareholders can offer the management what is commonly called the executive share options plan. This plan is designed in such a way that the employees will but the company’s shares at a fixed price after a certain date. This will ensure that the employees at 7-Eleven work hard to improve the value of the business. If the agency problem persists, the shareholders can also used deterrent measures that include threats of firing and hostile takeovers (Madura, 2007). All these measures when correctly applied will ensure that the agency costs arising from the agency problem is reduced to a manageable level.

Job Dimensions at 7-Eleven

The job design used by the company is organized around a functional design. This type of design classifies employees according to the kind of work they do in the organization. The CEO is the head of the entire organization and he is at the helm of the organization. He is directly connected to senior executives that include the COO, CFO, CIO, Heads of International branches, Mergers and Acquisitions, Human Resource, Stores and Logistics, Legal and Secretary, and Marketing (Corporate 7-Eleven.com/ Home, n.d.).). The senior executive officers of the company report directly to the CEO. Each of the senior executive supervises and manages a number of departments that fall under their dockets.

Figure 3: Showing the Arrangement of Jobs according to the functional design

The Job design at 7-eleven is ideal for a business of its capacity. The functional design groups employees according to the job they do. Some are grouped under sales and marketing which falls under the dockets of both stores and marketing managers. The creation of a post for a manager of international operations affords the company a competitive advantage and ensures exogenous growth is attained at all the company’s branches.

Compensation and Remuneration at 7-Eleven

The employees at the organization are remunerated based on their job descriptions and responsibilities. The CEO and other senior executives are entitled to an annual enumeration that is above $500,000 each plus other bonuses. The salaries paid to the other employees ranges from $131,000 to $34,000 annually. The highest paid non-executive employee is the senior marketing manager who bags a cool $131,000 annually. The lowest paid employee happens to be the support staff that may include clerks and janitorial staff (Ishikawa, & Nejō, 1998). Aside from paying these rates to the employees, the company also has a compensation package for work done over and above normal working time. The company also offers bonuses and incentives to its employees on periodic basis.

The compensation package is effective for the purposes of the company. However, this can be improved to motivate the employees and inspire them to work harder. The shareholders can offer the senior management an executive share option plan to motivate them to work harder and minimize the occurrence of agency problems.

 

 

References

Baligh, H. H. (2011). Organization structures: Theory and design, analysis and prescription. New York, N.Y: Springer.

Corporate 7-Eleven.com/ Home. (n.d.). Corporate 7-Eleven.com > Home. Retrieved November 27, 2013, from http://corp.7-eleven.com/

Ishikawa, A., & Nejō, Tai. (1998). The success of 7-Eleven Japan: Discovering the secrets of the world’s best-run convenience chain stores. River Edge, N.J: World Scientific Pub.

Madura, J. (2007). Introduction to business. Mason, OH: Thompson/South-Western.

Mills, A. J. (2007). Organizational behaviour in a global context. Peterborough, Ont: Broadview Press.