Sample

Sample Business/Management Writings

Sample 1: Evaluating Effectiveness of Tesco Customer Care and Relationship Management Strategy In UK Retail Industry

Introduction

The UK retail sector represents a fundamental part of the UK economy contributing over 5% of the GDP. The UK retail sector comprises of all enterprises selling goods to the public, ranging from the huge chains and department stores to the relatively small virtual and independent stores operating within the UK economy. This is a very important sector and besides its contribution to the economy, the retail sector also provides more than 10 percent of the employments to the general UK workforce.  Among the largest retail chains in the United Kingdom include; Tesco, Asda, Sainsbury’s, and Morrison’s among others.

According to Tesco (2014), Tesco is among the most well-liked retail chain stores operating in the United Kingdom. The retail chain is considered to be the third biggest globally after Wal-mart of the US and Carrefour in France. Tesco operates stores in about 14 different nations in Europe, Asia, as well as North America, besides being the leading grocery retailer in the United Kingdom, Republic of Ireland, Thailand, and Malaysia. The chain store that was established back in 1919 by Sir Jack Cohen is considered as one of the companies in the UK retail market that has embraced CRM in the contemporary dynamic market.

This paper seeks to evaluate the effectiveness of Tesco customer care and relationship management strategy in UK retail industry. As pointed out by Doyche (2001), the term customer relationship management is today more than an axiom , as the tactical approaches intended to develop the value/worth of the stakeholders through the establishment of the right relationship with key customer bases or important customer segments in a given industry. Basically, CRM is a tool that is based on a thought of basic marketing implying that businesses or companies ought to have a clear understanding of their customers/clients as individuals.

Customer Relationship Management in Retail Industry

The retail industry is considered to be one of the biggest industries across the globe and a huge contributor to the GDP and source of employment in any given country. In fact, retail sector is the oldest and one of the most advanced industries in terms of the use of technology. According to Kumar & Reinartz (2011) and Sugandhi (2003), CRM is a mixture of processes, policies, as well as strategies that organizations implement so as to unite their customer interactions as well as provide a way of tracking customer information. It entails the use of technology in drawing fresh and beneficial customers, while still establishing more lasting bonds with the current/existing customers. In this regard, through the implementation of CRM in the retail industry, individual companies or their marketers are able to maintain their existence in the highly vibrant and competitive marketing environment. To achieve this, the various companies operating in the retail industry are required to gain a deeper understanding of the customer behavior, attitude, and expectations. In addition to this, the companies may be required to develop and maintain customer databases as well as come up with the most innovative customer strategies that will enable them maintain a competitive edge in the market.

What is the CRM and Customer Management in UK

Customer Relationship Management (CRM) and Customer Management in the United Kingdom have emerged as prevailing marketing tools in the contemporary times. The retail industry especially has undergone massive rise in their profit maximization as well as sales through the supportive role played by CRM. The UK retail industry is experiencing immense competition with more and more retailers entering the market and as a result, the major retailers have been compelled to concentrate more on their customers so as to exist plus strengthen their market presence. Major retailers in the United Kingdom such as Sainsbury’s and Tesco among others have been finding new ways to retain their existing customers as well as winning new ones to sustain their growth. This has resulted to an increased rise of more new concepts as well as strategies for CRM approaches. Tesco and Sainsbury’s are known to be among the pioneers of CRM implementation in the UK market.

The Trends in CRM and Customer Management in UK and Supermarket Industry

According to Alexander and Turner (2001), contemporary retailers mainly rely on applying CRM policy frameworks as well as approaches to facilitate their business success. These have largely enabled them to strengthen the current position in the volatile market situation. As mentioned earlier, Tesco and Sainsbury’s have been termed as the best examples in terms of CRM implementation and customer management in the UK, particularly in the Supermarket Industry. For instance, these companies have implemented successful CRM initiatives such as the Nectar Card Scheme for Sainsbury’s and the Tesco Club card scheme. These schemes have managed to spread through a solid customer base with about 15 million for Tesco and 12 million for Sainsbury since their introduction.

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Significance of CRM and Customer Care in Retail Industry

CRM helps retail chains to increase sales. As exemplified by Mehrdad & Seyedeh Faezeh Sadati Seyed (2013), CRM plays a huge role in determining the success of any given Retail Company because it is one of the reliable ways of increasing sales for the companies as well as creation of new selling opportunities. The contemporary retail industry has turned out to be very competitive with more and more companies or retail stores being established. As a result, the different players within the industry have been forced to devise a wide range of innovative ways to establish and maintain a reliable sales momentum. This is through acquiring of new and emerging market segments, enhancing retention of existing target markets, and improving the existing distribution channels to make it more reliable, fast, and effective. CRM is one of the effective ways through which retail chains have achieved these and more, hence impacting positively on the sales of the individual retail companies such as Tesco among others. Following the implementation of Loyalty Card system by Tesco and Sainsbury, the companies recorded increased sales in their annual records in the following years. As noted by Baker (2010), Tesco realized a 5.9% increase in UK sales to about £21.8bn and 5% increased profit to £1,2bn for the half-year period ending 28th of August.

CRM enhances company-customer relations hence increasing customer retention by the concerned retail chains. Ryals (2005) and Fernie & Sparks (1999) notes CRM also impacts positively on the retail industry through increasing the company-customer relations that helps in retaining the existing customers. Through the use of CRM, the various players within the retail industry are able to attain customer loyalty and satisfaction, improve problem solving, and enable the saving of the ‘sensitive’ customers for these companies. Actually, saving such customers translates to increased revenue for such companies when handled in the right way. Furthermore, CRM helps the companies to create a detailed profile of the various customers using their available data and through this; they can be able to make follow ups to ensure that they maintain these customers. In this regard, CRM also helps these companies to enhance customer service. For instance, in the Retail Industry Sainsbury’s and Tesco have been able to maintain reliable customer contains through the loyalty card programs and they keep in touch with these customers to avoid losing them.

Another major benefit that CRM has brought in the UK retail industry and other industries, as noted by Sugandhi (2003), is improvement of distribution and channel management. For the retail chains to win beneficial customers as well as build long lasting relationships with such customers, it is necessary that these companies have the correct insight and products for the right customers and at the least price possible. In this regard, whether it is the online or normal distribution channels, each one of them ought to be flexible, efficient, fast, and properly integrated with any other channel associated with the retail chain. CRM has effectively enhanced the various distribution channels within the retail industry and also enabled a proper design of these channels to incorporate future changes if need be.

Development and Transformation of CRM in UK retail in the last 10yrs

In the past 10 years or so, as observed by Leong (2013), the Retail industry in the United Kingdom and indeed in other developed countries in the world, has made an exemplar strategic shift from laying more focus on the product to laying more focus on the client or the end consumer of their products. In addition to this, the retail sector is believed to have demonstrated a trend of increased adoption of internet technology among other technologies in the past decade. Nonetheless, one of the greatest challenges that continue to pester most of the companies operating in the retail industry within the United Kingdom is on how they could come up with a CRM system or process that will ensure accurate assembly of key information and data regarding their customers to ensure the best customer service by these organizations. It is important to note that the contemporary generation of customers or shoppers is very knowledgeable and well informed and in this case, they will only buy what they need and are looking for (Greenberg, 2004).

As pointed in a case study by Deloitte (2013), CRM in UK retail industry has been transformed by the customer needs over the years. Each year, the customers’ demands go a notch higher in terms of quality among other customer expectations through rising expectations in the products that customer’s desire to buy in the market. In the recent times, Payne & Frow (2005) postulates that the changes in customer preferences in relation to the UK retail industry have complicated business and made it challenging enough for most of these supply chains to retain their customers as well as generate loyalty through the mere keeping of cordial relationships with these customers. This meant that these companies had to come forward and offer to the client enhanced experience for his/her spending. This was the reason why CRM was adopted and has been transforming most of these retail chains like Tesco over the last decade or so (Vogt, 2008).

Theoretical Concepts/Models of CRM in retail industry and linking it with Tesco CRM management strategy

Customer Relationship Management (CRM) are IT enhanced value addition processes that identify, develop, integrate and focuses the competencies of the firm towards value addition. The main goal of CRM is to deliver superior customer value in the long run at a profit to the customers the business has identified. CRM offers organizations a competitive edge based on value addition with the objective of establishing long term relationships between the customers and the organization.  According to Dowling (2002) developing CRM is based on the premise that strong relationships with customers is the best way to entice them to be loyal and loyal customers and organizations stand to make more profits from loyal customers in comparison to the non-loyal customers (p.87). This explains why companies such as Tesco have adopted them. This paper will discuss how CRM works and focus on two models; the S.C.O.P.E model and the Choice model and how they are applicable to Tesco.


How CRM works

 

 

 

CRM Program

Relationships

 

 

 

Use–          Cross selling-          Improved target marketing

–          Better market research

Customer Database

Data mining

 

 

 

Figure 1.0. How CRM works

 

 

As shown in the above figure, CRM schemes helps companies to improve service deliver and customer satisfaction. This results in strong brand recognition, reduced customer churn and decrease in customers’ price sensitivity. The company also has an opportunity to mine data from these schemes, which they can use in cross selling, market research and target marketing. Tesco has been one of the most successful retailers in the world. According to Gilligan (2012), Tesco adopted CRM in early 1990s when it launched loyalty cards schemes (p.3). The Club card has been one of the retail loyalty schemes that have garnered most success in the world. Analysis of the information acquired through these cards helped the company to gain important insights into the nature of its customers.

The company’s CRM is centered on the customers and the company has created personal profiles for each enrolled customer. Its IT system employs data mining techniques to pinpoint the purchases, where and when the customers make them. Moreover, Tesco’s advertisement campaigns are structured around the insight they gain from analyzing the data acquired. This information guides the day to day product decisions the retailer makes. This can influence the supplies ordered and the services the employees are required to offer to the consumers. According to Buttle (n.d.), CRM has become even more important given that products’ quality has risen in the recent past hence it is no longer offer companies a competitive edge (p.3). Tesco’s re-launch of the Club card scheme in 2007 in the face of intense competition underlines the importance of CRM programs.

SCOPE model

A number of CRM models have been developed to help organization develop CRM programs that will result to highest standards. Some models are developed around the employees while others are developed around the consumers. The S.C.O.P.E model, as depicted in figure 2.0 is a good example of models developed around consumers. Suppliers, owners, partners and employees all work to meet the needs of the customers. This is similar to the practices in Tesco where all the information acquired through the Club card scheme is used to align these stakeholders to meet the needs of the customers in order to increase their loyalty and fend off competition. Tesco has well established suppliers and partner networks and a competent workforce. Therefore, the company’s value addition centers on the value addition and creation to ensure that customers get products and services that are worth the money spent at Tesco retail stores.

 

 

 

Suppliers                                                                                  Employees

 

 

Owners                                                                                                    Partners

 

Figure 2.0. The S.C.O.P.E. model

Choice Model

Unlike the S.C.O.P.E model, the Choice model focuses on the processes that can help an organization to increase its profitability. It is based on the premise that customers are rational and CRM programs can help encourage them to spend in a given organization. There are three main strategies that an organization can employ, that is, customer acquisition, customer retention.

Acquisition

The objective is to acquire customers more profitable customers, both in number of customers and average profit per customer. According to Kamakuru et al (2005), customers are acquired through a range of channels and research is important in assessing the efficacy of various acquisition methods. Tesco spends significantly in advertisements and promotions in order to increase its appeal to potential consumers.

Development

The second alternative is the development stage, which entails growing the revenue from the existing customers. The organization encourages these customers to spend in different categories. For instance, Tesco sells a wide range of items and it encourages its existing customer pool to shop both through the retail stores and online.

Customer Retention

According to Kamakuru et al (2005), customer retention can help increase profits by more than 5% (p.286). Therefore, organizations seek to maximize the lifetime value of their customers. Tesco’s Club card scheme helps the company achieve this by encouraging its customers to shop at its stores in order to benefit from its various promotions. In the end, the company experiences unwavering loyalty from these shoppers.

It is clear from these two models that CRM is important in helping organization meet their customer related strategies. Tesco has been one of the companies that have emphasized the application of CRM with a view of maximizing its profitability in the long term by meeting customers’ expectations. It is also important to note that most retailers have begun implementation of similar CRM in order to become more competitive.

Integration of Technology in Customer Care Management at Tesco

As noted by Greenberg (2004) and Tesco (2014), the success of CRM is largely dependent on a successful implementation and integration of information technology by the company. Nonetheless, the reliance on IT has led to a new crop of outsourcing too with more contemporary organizations coming to the realization of the huge role played by IT towards effectual CRM. In an effort to improve customer satisfaction, make the most of the value of customers, and ensure profit optimization, Tesco’s management has ensured that the right technologies and processes are integrated within the company’s CRM for optimum results. A good example is ensuring that the contact centers and online/chat support for customers are well enhanced using the latest technology to ensure that they offer the best results and best customer experience. For instance, in addition to the contact support on the company’s website, Tesco also actively engages with its customers on social networking sites such as Facebook and Twitter and this not only draws new customers but also helps to retain the current ones. In addition to this, Tesco has also invested heavily on customer intelligence services in terms of using the required technologies to ensure proper analysis of customer interactions as well as enhancing the customer experience. Customer intelligence services also play a major role in improving the operational performance within the company (Tesco, 2014). This is through assisting in the gathering and analysis of customer related data that is in turn used in key decision making processes as well as promotional purposes.

As noted by Vogt (2008), through effective implementation of technology, Tesco was able to successfully launch the Tesco Club card. This is a loyalty card system by the British supermarket operating in the United Kingdom, Poland, Hungary and Ireland among other countries. By the year 2010, the Club card had gained more 15 million members. In fact as noted by the Chairman of Tesco, Sir Terry Leahy, the Club card program was able to capture around 85% of the weekly sales, particularly in the first five years of its implementation. According to the company’s management the loyalty program was not only designed to demonstrate loyalty of customers to Tesco, but also as a way of Tesco recognizing loyalty to its own customers. Indeed, the program has turned to one of the best ways of enhancing CRM (Customer Relations Management) for Tesco. Through information technology, the statement of Tesco Club card is sent out to over 15 million customers after every three months, detailing the points earned form the shopping they have done. These statements are also attached with more vouchers and coupons, meant to reward and offer incentives for the behavior of shopping. As a matter of fact, Tesco is known to have more than 250,000 diverse variations as targets. Despite its complexity and sophistication, this is a program that has uplifted the sales of the company since its launch. In addition to the customer rewards from the program, the Club card shopper data also plays a fundamental role. This is due to the fact that the data as well as its analysis is used to shape different decisions involving the company and its customers. In fact, customers are evaluated and assembled into hundreds of diverse fragment permutations as well as combinations, in accordance with such factors as frequency and value, regency, lapse rates, lifestyles, coupon redemption behavior, promotional responsiveness among others (Tesco, 2014).

Indeed, as evident on its official website (http://www.tescoplc.com/) Tesco is among the retail companies known to maintain a permanent drive meant to ensure improvement customer service at all times. The Company has established a whole department to deal with customer care issues and this team is always doing research and engaging with customers both online and at the stores to give them the best shopping experience. Tesco has invested a lot technology wise to ensure that its customer care management is well maintained. Tesco Tech Support is basically the team behind the implementation of customer relations management (CRM) which ensures that customer care management is properly handled within the company. The Tesco Tech Support mainly offers the support to the company’s home technology customers by assisting them with a wide range of challenges that maybe affecting them (Tesco, 2014).

Challenges of Tesco Customer Care Management Strategy – Applying SWOT Analysis

Tesco is well known as a leader in utilization of new technologies and communication in its customer care strategies. As exemplified by Hayes & Dredge (1998) Tesco has a strong sense of new technology when it comes to its customer care services. Its social media, alongside customer service teams are leaders in the industry when it comes to social customer engagement and customer service.  With an enlarging operation in several contact centers, linking knowledgeable agents directly with the customer base of Tesco, this mega supermarket is able to offer personalized, local service to the biggest fan base of the industry in the U.K.

Nonetheless, despite its leading aspect in integrating new technologies and communication in its customer service strategies, Tesco has not been able to use these services to offer first contact resolution, which is an essential aspect in delivering positive customer experiences to individuals who reach out for help. This implies that though Tesco is leading in utilization of technology in its customer care strategies, it has not been able to fully utilize this technology to reach out directly to all the customers. Connecting the entire business to social media implies that the knowledge the staff holds in different departments is able to be shared socially, and extremely fast. Tesco has not been able to put real service agents with an all round knowledge of the whole company products, services, as well as, deals so that the replies of the company can deliver real value instantly.

Lafley & Martin (2013) noted that the threats that Tesco customer care strategy is exposed to is that of speedy emerging technologies that could wipe out its current ones. Implementing new technologies into its customer care operations is expensive. Given the rate at which new technologies are emerging, Tesco may be forced to invest massively in updating its existing ones. Failure to do this, it might not be able to be well connected to customers who need help, which is one of its competitive strategies, giving it a competitive advantage in the industry. Eliminating this threat means keeping up with new technology, and applying it appropriately into its strategies in order to remain at the top in this industry.

How Effective Customer Care Management Increases Competitiveness of Tesco in the Industry

According to Cooks (2011), Customer care is an extremely crucial factor in the success of any business. Every contact with the customer is a chance for improving the businesses reputation, in addition to increasing the propensity of additional sales. Almost all aspects in the business influence the manner in which the business is viewed by customers.

Customer feedback, alongside contact programs strategy

Tesco has an extremely effective customer care strategy that has enabled it to increase its competitiveness in the industry. It has customer feedback, alongside contact programs that increase communication with their customers. These present brilliant opportunities to listen to customers, as well as, letting them know more about what Tesco offers. Through this program, Tesco is able to know how customers perceive its products since it gives them an opportunity to forward their objections, or suggest changes, and even endorse the current processes. It also provides Tesco with an opportunity to listen to what the customers are saying and act upon it. Tesco uses these programs to assist in delivering tailored information to its customers. These programs have been of extreme importance as they reactivate relationships with lapsed clients.

Well trained customer care personnel strategy

Tesco, through its well trained customer care personnel, has been able to understand its customers’ needs. It has been able to avail a high-level customer care that has been able to understand the customers and what they require. As exemplified by Cook (2011) through this strategy, Tesco is able to establish its most valuable clients, as well as potential customers, thus targeting the premier levels of customer care in their direction. Additionally, Tesco is able to utilize the information gathered from customers in its operations. It has established a customer care policy, which is assigned to a senior manager as the champion of the policy, though all the members of the customer care are involved.

The highly trained customer care personnel also handles customer’s complains with utmost intelligence, not dismissing the customer’s problem, even when they are convinced that they are not at fault. Though it might be seen as contradictory, a complaint from a customer represents a brilliant chance for the business.

Conclusion

This report sought to evaluate the effectiveness of Tesco customer care as well as relationship management strategy in the UK Retail Industry. Being among the biggest industries in the world, the Retail sector just like other sectors is extremely reliant on the customers. It is in this context that customer relationship management (CRM) was established particularly for the big companies operating in the retail industry and other big sectors. CRM involves different policies and organizational strategies established to ensure a proper interaction between the company and its customers, in addition to provision of a reliable way to track customer data.

It is clear that CRM and customer care plays a fundamental role in the retail industry. CRM, for instance, is one of the things that impact positively on the sales of a retail company in addition to assisting the company to generate new selling opportunities. CRM also impacts positively on UK retail because it helps company-customer relations that help in retaining the existing customers besides winning the trust and loyalty of new ones. It assists in winning customer loyalty and satisfaction, improve problem solving, and enable the saving of the ‘sensitive’ customers for these businesses. Finally, this paper has also established that CRM is important in the improvement of distribution and channel management within the retail industry.

In the last one decade, CRM in UK has undergone tremendous development and transformation. The sector has made a standard strategic shift by shifting the main focus in business from being product-oriented to become customer/consumer-oriented. Moreover, the UK retail industry has embraced technology, particularly information technology, which has played a huge role in transforming the industry through enhanced CRM. In addition to this, the customer needs, demands, and desires have played a major role in the incorporation of CRM into the UK retail industry. In fact, Tesco is a good example of how CRM has transformed the UK retail industry. More importantly, it is clear that Tesco has integrated Technology very perfectly to come up with one of the best CRM within the industry. Nonetheless, based on the SWOT analysis it is clear that despite the fact that Tesco has implemented the CRM perfectly, there also some weaknesses and threats that require to be addressed as well as key opportunities that could be seized.

Recommendations

Numerous companies in various the retail industry and supermarkets are improving their CRM abilities, alongside their analytics, and are fetching the fruits of leading growth in the market, alongside excellent performance. Nonetheless, Harison & Hoek (2008) postulated that this has not come easily as there have been various challenges. More specifically, businesses have to be ready to break down boundaries between tasks that, at a time, had been separated, namely CRM-kind procedures including sale, as well as marketing, and SCM procedures including logistics and procurement. The idea here is that businesses should align demand and supply more precisely and in so doing, they bring increased responsiveness.

Through the strategies mentioned above, Tesco has been able to acquire a significant market share. It has increased its competitiveness in the industry through its customer care programs. Its profits have been seen to rise every year and its competitors have been seen not being able to catch up due to their poor customer care strategies.

Tesco should therefore breakdown CRM and SCM procedure in order to deliver a better customer service. Additionally, through it highly trained personnel, it can utilize information collected from customers to strengthen its weaknesses, to explore new opportunities and to minimize the existing results. The customer care team should be able to listen to customers in order to understand their needs, and through this, they are able to satisfy an adequate number of customers, in addition to retaining them and attracting new ones. Keeping its CRM at high levels would lead to a perception by the customers, as a business with high quality products, and which puts its customers as first priorities. This is the best way to grow and obtain a competitive advantage in this industry.

CRM has now moved to greater levels. It is not like in the early days where inadequate sophistication resulted to companies such as those offering financial services to offer services that they already had with the same supplier, for instance. Additionally, as exemplified by Harrison & Hoek (2008), businesses that did their customer analysis on their place of residence, instead of what they spent their money on, would offer garden products to individuals who lived in places with no gardens. With the advanced CRM, it is extremely easy for companies such as Tesco to establish the exact needs of their customers, and provide them with exact products they can spend their money own. This is creating business. Through the advanced CRM, Tesco’s customer care will be able to work efficiently thus increasing competitiveness in the retail industry and supermarkets. Integration of technology in CRM will give Tesco an upper hand the market since it will be in direct contact with its customers, which are the greatest assets in business.

References

Alexander. D. & Turner, C., 2003. The CRM Pocketbook. Management Pocketsbooks Ltd., Alresford.

Baker, R., 2010. Customer loyalty boosts Tesco results. Available At: <http://www.marketingweek.co.uk/customer-loyalty-boosts-tesco-results/3018916.article> [Accessed 24th March 2014].

Buttle, F., n.d. The S.C.O.P.E. of Customer Relationship Management. Kits Hoff Gleaves, available at: <http://www.kitshoffgleaves.com/uploads/downloads/books-articles/Francis_Buttle_The_S.C.O.P.E_of_Customer_Relationship_Management.PDF> [Accessed 24 March 2014].

Cook, S, 2011. Customer care excellence how to create an effective customer focus. London Philadelphia: Kogan Page.

Cook, S., 2011. Customer care excellence how to create an effective customer focus. London Philadelphia: Kogan Page.

Deloitte., 2013. The Changing Face of Retail, the Store of the Future: The New Role of the Store in a Multichannel Environment. Available At: <http://www.deloitte.com/assets/Dcom-Germany/Local%20Assets/Images/06_CBuT/2013/CB_R_store_of_the_future_2013.pdf > [Accessed 24th March 2014].

Dowling, G., 2002. Customer Relationship Management: In B2C Markets, Often Less is More. California Management Reviews, 44 (3), pp.87-104.

Doyche, J., 2001. The CRM Handbook: A business guide to customer relationship management. Pearson Education: New Jersey.

Fernie, J. & Sparks, L. 1999. Logistics and retail management: insights into current practice and trends from leading experts. Boca Raton, Fla. London: CRC Press Kogan Page.

Gilligan, C., 2012. Tesco’s Club card Customer Relationship Management Programme: The Challenges of Coming to Terms with a Changing Market. McGraw-Hill Higher Education, available at: http://highered.mcgraw-hill.com/sites/dl/free/0077140001/990096/Online_Case_Ch16_Tesco.pdf> [Accessed 24 March 2014].

Greenberg, P. 2004. CRM at the speed of light: essential customer strategies for the 21st century. New York [u.a.], McGraw-Hill/Osborne.

Harrison, A. & Hoek, R, 2008. Logistics management and strategy: competing through the supply chain. Harlow, England New York: Prentice Hall Financial Times.

Hayes, J. & Dredge, F, 1998. Managing customer service. Aldershot, Hampshire, England Brookfield, Vt., USA: Gower.

Kamakura, W., Ansari, A., Bodopati, A., Fader, P., Iyengar, R., Naik, P., Neslin, S., Sun, B., Verhoef, P.C., Wedel, M. and Wilcox, R., 2005. Marketing Letters, 16(3/4), pp.279-291.

Kumar, V., & Reinartz, W. 2011. Customer Relationship Management Concept, Strategy, and Tools. Berlin, Springer Berlin.

Lafley, A. & Martin, R, 2013. Playing to win: how strategy really works. Boston, Mass: Harvard Business Review Press.

Leong, J 2013. Price Dispersion in Online Grocery Stores: An Analysis of the UK Market. Atlantic Economic Journal, 41 (2), pp. 185-187.

Mehrdad, H, & Seyedeh Faezeh Sadati Seyed, M 2013. Effect of Knowledge Management on Success of Customer Relationship Management in Eghtesad Novin Bank of Tehran, International Journal of Business Management & Economic Research, 4, (6), pp. 839-848.

Payne, A, & Frow, P 2005. A Strategic Framework for Customer Relationship Management. Journal of Marketing, 69 (4), pp. 167-176.

Ryals, L 2005. Making Customer Relationship Management Work: The Measurement and Profitable Management of Customer Relationships, Journal of Marketing, 69 (4), pp. 252-261.

Sugandhi, R. K. 2003. Customer relationship management. New Delhi, New Age International.

Tesco., 2014. Tesco PLC. Available At: <http://www.tescoplc.com/> [Accessed 23rd March, 2014].

Vogt, H. 2008. Open source customer relationship management solutions: potential for an impact of open source CRM solutions on small- and medium sized enterprises. Hamburg, Diplomica-Verl.

 


 

Sample 2: PINGLE NOOK CARE HOME BARROW UPON SOAR STRATEGIC SERVICES MARKETING PLAN FOR 2014 – 2015

Table of Contents

Executive Summary. 3

1.0 Introduction. 3

2.0 Analysis of Services/Products of Pingle Nook Care Home. 4

2.1 Marketing Objectives. 5

2.2 A Simple Conceptual Framework for Your Marketing. 5

3.0 Market analysis – Using 7ps. 8

3.1 Positioning Strategies. 11

3.2 Perceptual mapping. 12

3.3 Quality Assessment – Using Servqual Model15

4.0 Measuring Objectives [SMART option]19

5.0 Conclusion and Recommendations. 20

Appendices. 24

Appendix 1:  Table of SWOT. 24

Appendix 2: Table of PEST. 25

Appendix 3: Table of Segmentation. 26

 

 


Executive Summary

 

In the contemporary and highly competitive market, businesses need to be highly competitive to sustain growth. This can be easily achieved through effective marketing which starts with a carefully and tactfully formulated strategic marketing plan. This report is based on a development of a strategic services marketing plan for 2014 – 2015 for Pingle Nook Care Home Barrow upon Soar.  Pickle Nook Care Home is the only care home in Barrow upon Soar and has a capacity of accommodating 16 people. Pingle Nook Care Home gives care to the elderly people in general, people with physical disability, and those with dementia. This strategic plan begins with a description of the organization’s profile and product analysis as well as defining the key marketing objectives for the institution. A simple conceptual framework is presented and explained before embarking on an extensive market analysis using the 7Ps framework. The plan also analyses key positioning strategies and perceptual mapping for Pingle Nook Care Home before performing a service quality of the organization using the Servqual Model. The marketing objectives were also measured using the SMART option to ensure that they are reliable. Based on all the analysis, including SWOT and PEST analyses, appropriate recommendations were obtained and presented together with the concluding remarks of the report.

1.0 Introduction

According to HousingCare.Org (2014) and BestCareHome (2009), Pingle Nook Care Home is a care center for the aged or the elderly and is located in Barrow upon Soar. Over the last two decades or so, the organization has been in operation, serving people from the multi-cultural as well as diverse town. Through the services it offers, the organization has helped the old people from the town to live in an independent way as much as possible through reception of care as well as support it offers in line with their disabilities and incapacities. The conditions cared for in Pingle Nook Care Home include old people in general, people experiencing physical difficulties, and people suffering from dementia among others. The care offered may take different periods or lengths of time and these periods’ maybe short stay and respite as well as longer stay. Pingle Nook is dedicated to providing high standards of individual care for the aged through provision of care for all residents in a way that is equivalent to care provided by loved ones or relatives. Within the institution, residents are allowed certain aspects of their lifestyle such as bringing their own furniture and their favorite pet too. However, most of these will have to be arranged in close collaboration with the management. This report is based on the development of a strategic services marketing plan for Pingle Nook Care Home Barrow upon Soar (2014 – 2015).

2.0 Analysis of Services/Products of Pingle Nook Care Home

Barrow Signpost (2014) and Carehome.co.uk (2014) note that Pingle Nook Care Home is registered to provide care to older people, including those with physical disabilities or dementia. Currently, the home can provide care to people and being located on Barrow upon Sour’s outskirts, the institution has access to the village amenities. The rooms for the clients are situated on the ground and the first floors of the property. The first floor of the building can be easily accessed through either a passenger lift or stairs. Other than one shared room and 3 with unsuited WC, the rest of the rooms are meat to offer single to the clients. The bathrooms within the facility have assisted bathing facilities in both the ground and the first floor. As noted by HousingCare.Org (2014), all people within the institution can be able to access a lounge, which is adjacent to a sitting room, as well as a dining room. To the side and the front of the building, there are some patio areas which are also accessible to the people within the facility.

HousingCare.Org (2014) further notes that while the registered categories are basically three; dementia, old age, and physical disability, Pingle Nook Care Home has a wide range of specialist care categories and they include; Alzheimer’s, Orthopaedic, Visual Impairment, and Parkinson’s disease. The facilities and services at Pingle Nook Care Home can be summarized as; personal care, respite care, own GP when needed, physiotherapy, own furniture if need be, pets through arrangement, proximity to shops, close to public transport, transport provision, no smoking requirement, passenger’s lift, residents’ garden, wheelchair access, television point in personal rooms, and phone point in rooms (Barrow Signpost, 2014).

2.1 Marketing Objectives

  • Improve Pingle Nook Care Home brand
  • Increase  service/product awareness and increase sales
  • Establish Pingle Nook Care Home in the market properly through growth and expansion
  • Ensuring practical competency as well as commitment of each and every staff member involved in developing and implementing this strategic plan.
  • To expand the facility to hold at least 30 people within the next 12 months, and a regular progress update will be taken on a monthly basis.

2.2 A Simple Conceptual Framework for Your Marketing

As postulated by Bitner (1990) and Wells & Foxall (2012), Shostack’s (1985) defined service encounter as ‘a period of time during which a consumer directly interacts with a service’. The definition by Shostak’s includes each and every aspect of a service firm, such as the Pingle Nook Care Home, that interacts with the consumer. This includes personnel, physical facilities, as well as any other tangible element. This section of the strategic plan is based on an establishment of a simple conceptual framework for the marketing. A conceptual framework is a model of presentation where a marketer can represent the relationships between variables in the plan as well as show the relationships graphically or diagrammatical. In the case of Pingle Nook Care Home, the conceptual framework diagram below represents a number of independent variables that will contribute to successful marketing as the dependent variable.

 

 

Independent Variables                                                Dependent variable

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 1: Conceptual Framework Diagram


3.0 Market analysis – Using 7ps

As exemplified by Enache (2011), the 7Ps will helps in the evaluation and description of key issues that affect the marketing of products as well as services of companies or institutions like Pingle Nook Care Home and are mostly described as the 7Ps Framework or the marketing mix for the digital generation. According to Manning (2002) and Baines, Fill & Page (2010) the 7ps Framework is an upgrade of the conventional 4ps (product, price, place and promotion) and was invented and published by E. Jeromy McCarthy through his 1960 book, Basic Marketing.  Through the use of this model, companies can be able to set objectives, carry out SWOT analysis as well as carry out competitive analysis. It is one of the most practical frameworks of evaluating existing businesses and works through suitable approaches at the same time as assessing the mix elements (Baines, Fill & Page, 2013; Langford, 2009). In the case of Pingle Nook Care Home the 7Ps is a perfect method of undertaking the competitive analysis of the institution as well as determining how best to improve it in future based on the individual mix elements as it shall be explained here below:

Products/Services

As postulated by BestCareHome  (2009), currently, the organization provides care for the elderly members of the society and in particularly those with dementia as well as physical difficulties. The capacity of the institution enables it to accommodate a total of 16 residents in one shared room and ten single rooms. The care period ranges from short and respite to the longer stay. The staff within the organization tries to be as nice and helpful to the people within the institution as possible. The home is maintained the people within are fed well and treated with respect and dignity. Nonetheless, it can be argued that there is always room for improvement and therefore the institution should always ensure that all the quality of services is maintained and that the people within the home experience another ‘home away from home’.

Prices/Fees

According to HousingCare.Org (2014), the pricing model is very important in any business or company and it can either draw customers or scare them away. While businesses must strive to sustain profits in their venture and avoid losses, the pricing model must be done well so as to avoid the perception of customer exploitation. Basically the fees or prices range from £325 to £410 weekly on personal care single and £325 to £350 per person for personal care shared. Nonetheless, it is important that the pricing model be reviewed on weekly basis to ensure that it not only conforms to the current market prices but is also not exploitative in any way. This can be easily achieved through customer based pricing tactics as well as flexible pricing mechanisms.

Place/Access

As noted by Barrow Signpost (2014), the accessibility of any business or company is very important and is a major determinant on its success. Though it is located in the outskirts of Barrow upon Sour, Pingle Nook Care Home is located in an accessible area that serves both the city residents and those living in areas bordering the village. However, the online presence of Pingle Nook Care Home is wanting and therefore a better and new way of increasing its accessibility can be through the enhancement of the company’s online presence. 

Promotion

According to Carehome.co.uk (2014), Promotion is a reliable tool through which businesses can increase sales of goods and services. Based on the fact that Pingle Nook Care Home is a relatively small institution, it has been relying on the small scale type of advertising and sales promotion tactics such as printing of flyers and other small scale print advertising among others. However, based on there new and more innovative methods of contemporary promotion that are being used today, the company can add to or substitute the mixture within paid as well as non-paid media. While some online media such as commercial websites may offer advertising services for the organization, social media may turn out to be an effective un-paid media for the organization to advertise on.

Physical Evidence

Customers require a wide range of physical evidences in businesses to get some form of reassurance in relation to the institution or the company. This may be in relation to the buildings, the general facilities, and the staff members among others. One of the physical evidence that gives the customers of Pingle Nook Care Home and their family reassurance are the staff members working within the organization. Most of them are known to treat customers and their family with a lot of respect and dignity. Similarly, some of the facilities within the organization such as the bathrooms that have assisted bathing facilities enhance the services given to the customers. However, in relation to the building used by the organization, it might not be as appealing or impressive as it ought to be. This might be based on the fact that it was designed as a residential property before being converted into a care home. In this case, the institution must always find more ways reassuring customers like redesigning investing in more buildings, which will also increase the capacity and ensuring that all staff members are well trained in relation to customer care among other things (Carehome.co.uk, 2014).

People

The people represent the workforce behind the delivery of goods and services to the customers within a given organization. At Pingle Nook Care Home, the workforce has proved to be a dedicated and passionate one. Based on a wide range of customer feedback, the staff members at the institution are known to give the people within the institution quality services.  Nonetheless, at times there are challenges of handing the individual cases of each and every client at the same time because of inadequate number of the employees at times. Therefore, the organization may need addition of staff as well as enhancing a consistent customer support to each and every person within the institution (Barrow Signpost, 2014). 

Partners

At times, partnerships or seeking to partner with other businesses and stakeholders becomes necessary for business survival. Currently, apart from the strategic relations that the care home has with different suppliers, it does not have other formal partnerships with other businesses. However, in future, it may become necessary for the institution to seek new partners as well as manage the existing ones properly to sustain its profitability.

3.1 Positioning Strategies

Sengupta (2005) noted in his book that competitive positioning strategies entail a clear definition of how one differentiates his/her service/product as well as creating value for one’s market. It entails carving out a pustule in the competitive background and laying focus on one’s company to deliver on the strategy. In this regard, competitive positioning strategy ought to be the basis of Pingle Nook Care Home’s entire business. There are different position strategies that might proof useful to Pingle Nook Care Home and these include such things as: low-price strategy where the institution can position itself as an affordable care home; specific demographic where the company can develop a target group to serve; and affinity strategy where the institution positions itself to play on a given group’s loyalty. While Pingle Nook Care Home has had different position strategies in future, this is something that should be reviewed on regular basis. To come up with a reliable position strategy at all times, Pingle Nook Care Home and the management concerned will require to follow a number of simple steps and these include; profiling of the company’s market, segmentation of the market, evaluation of competition, defining unique selling point, and staking a position for Pingle Nook Care Home in the market (Hooley, Piercy & Nicoulaud, 2008).

3.2 Perceptual mapping

This as noted by Strouse (2004) and Easey (2009) refers to graphics techniques that marketers use in an attempt to visually exhibit the insights and discernments of customers and/or potential customers. It provides an exceptional capability of communicating the intricate relationships between competitors in the market and the criterion that buyers use when making key purchase decisions, in addition to yielding appropriate recommendations. A perceptual map for Pingle Nook Care Home will; assist the company in understanding where it is ranked by the consumer in terms of features as well as in relation to other competitors and also gives the company an idea on the ideal points by the consumers in regard to the ideal combination of service/product features.

 

 

 

 

 

 

 

 

Key

Beaumanor Nursing & Residential Home –

Lingdale Lodge                                         –

Bhajan Kaur Rai Hall                               –

Primrose Lodge                                        –

Pingle Nook Care Home                          –

Figure 2: A Perceptual Map showing Pingle Nook Care Home and Other Close Competitors

Figure 2 shows consumer/potential customer perceptions of various care homes in the UK, particularly those that can be described as being in the same level with Pingle Nook Care Home. This is because the selected homes are some of the close competitors of Pingle Nook Care Home and hence the perceptual map clearly shows how the institution is ranked by consumers in regard to two key dimensions of relatively costly/affordable and conventional facilities and technology in care provision/modern facilities and technologies of care. 

Lingdale Lodge

It is situated in Lingdale, East Goscote in Leicestershire. It gives care to the elderly members of the society, individuals with physical challenges, and those with mental disability as well as with dementia. The care period ranges from longer stay, short stay as well as respite. Lingdale Lodge can accommodate 48 residents in its 40 single plus 3 shared rooms (en suite). The institution is also purpose built with its own garden and was established in 1998 (HousingCare.Org, 2014; Carehome.co.uk. 2014).

Primrose Lodge

Primson Lodge is located in Lingdale, East Goscote in Leicestershire. It offers care for the elderly people, people suffering from physical difficulties and those with dementia. The care period here is longer care and the institution can accommodate 15 residents in the 15 single rooms (en suite) (HousingCare.Org, 2014; Carehome.co.uk. 2014).

Beaumanor Nursing & Residential Home

This is located in Cartwright Street, Loughborough in Leicestershire. It gives care to the elderly people in general; those will physical difficulties as well as those suffering from sensory impairments. The care period includes longer stay, short stay as well as respite. The institution can accommodate 53 residents within its 53 single rooms (53 en suite). This is one of the care homes that are purpose built with own garden, besides being in operation since 1997. In addition to this, the family and/or friends can even stay overnight in the facilities (HousingCare.Org, 2014; Carehome.co.uk. 2014).

Bhajan Kaur Rai Hall

This is situated in Epinal Way Care Centre, Hospital Way, Loughborough in Leicestershire. The conditions it cares for include elderly people in general, people suffering from physical difficulties as well as those with dementia. The facility offers just the longer stay periods of care. Accommodation in the home is 33 residents in the 33 single rooms (en suite). This is also a purpose built home with a garden and has been in operation since in 2000 (HousingCare.Org, 2014; Carehome.co.uk. 2014).

Evaluation

Based on the above table it is clear that while Pingle Nook Care Home may be rated as the organization with the most conventional or traditional facilities as well as technology of care by the consumers, majority of them actually believe that it is the most affordable among the others that were incorporated in the perceptual map. A careful analysis on each of them as illustrated here below shows that the others have more modern and well designed buildings as compared to Pingle Nook Care Home and also have invested a lot in terms of care facilities and modern technologies. However, these have pushed their charges or fees upwards making Pingle Nook Care Home to be the most affordable among them.

3.3 Quality Assessment – Using Servqual Model 

Customer satisfaction and service quality, as exemplified by Zou & Fu (2011), are key concepts that any company should understand so as to maintain a competitive edge as well as sustain its growth in the market. In this regard, it is very important that Pingle Nook Care Home is able to measure such constructs based on the perspectives of the consumers for better understanding of their needs, hence customer satisfaction. Service quality is a major contributor of customer satisfaction, cost reduction, high profitability, customer retention and loyalty among others (D’annunzio-Green, Maxwell, & Watson, 2004). A close analysis of Pingle Nook Care Home based on the Servqual Model reveals that the organization has tried its best in fulfilling the 5 key factors of service quality in the Servqual Model. Figure three demonstrates these aspects and what the organization has done about each one of them.

Item 1 2 3 4
Description Good buildings Quality facilities Well furnished rooms Bathrooms with assisted bathing facilities
Item 5 6 7 8 9
Description Expert and reliable staff Good management Adequate rooms and other facilities to serve all Proper customer care systems Reliable suppliers to ensure that no supplies misses within the institution
Item 10 11 12 13
Description Staff are helpful and nice The people within the organization are attended to promptly when in need of help The family members are attended to accordingly The contact lines are responsive enough
Item 14 15 16 17
Description Trustworthy and honest staff Highly experienced staff who are sure of what they are doing Assures customers of getting quality for their pay An institutional management that instill confidence on its employees
Item 18 19 20 21 22
Description The staff strive to give the best care to the customers People are encouraged to channel their concerns to the staff for assistance Though the number of employees is overwhelmed by the people within the organization, their families and friends, the try as much to give them individualized attention. The people within the organization are encouraged to be emphatic to their colleagues. The institution also encourages the friends and families to constantly visit the people

Figure 3: A Servqual Model Showing how Pingle Nook Care Home has made an effort of fulfilling each one of the five factors of service quality.  

4.0 Measuring Objectives [SMART option]

As noted at the beginning of this strategic plan the key marketing objectives include:

  • Improve Pingle Nook Care Home brand.
  • Increase service/product awareness and increase sales.
  • Establish Pingle Nook Care Home in the market properly through growth and expansion.

While these goals are relevant to Pingle Nook Care Home’s strategic plan, it was important that each of the goals be cutinized critically and more deeply. A reliable way to do this is to use the SMART mnemonic which assists in testing and ensuring that the marketing objectives are effective enough to make an impact on the organization (Richman, 2006). In this regard the marketing objectives had to be in line with the SMART Criteria:

S SPECIFIC The goal has to detail what requires to be done/carried out
M MEASURABLE The progress/achievement should be easy to measure
A ACHIEVABLE The objective needs to be acceptable by all the stakeholders
R REALISTIC The objective ought to be possible to achieve
T TIME-BOUND/TIMED There should be a clear timeline or time period for the attainment

Based on the above requirements, the goals had to be measured to ensure that they were in line with the SMART Criteria:

S SPECIFIC Improve Pingle Nook Care Home brand
M MEASURABLE Increase service/product awareness and sales.
A ACHIEVABLE Establish Pingle Nook Care Home in the market properly through growth and expansion.
R REALISTIC Ensuring practical competency as well as commitment of each and every staff member involved in developing and implementing this strategic plan.
T TIME-BOUND/TIMED To expand the facility to hold at least 30 people within the next 12 months, and a regular progress update will be taken on a monthly basis.

5.0 Conclusion and Recommendations

Pingle Nook Care Home is the only care center in Barrow-upon-Soar and it gives care to the elderly members of the society, people with physical disabilities and those suffering from dementia. With a capacity to hold 16 people, Pingle Nook Care Home is a relatively small organization but based on the marketing objective in this strategic plan, this is expected to change within the next one year. In line with the established marketing objectives as well as the conceptual framework, it is clear that for the organization to succeed in marketing; both the physical as well as human resources shall play a huge role.  A market analysis using 7ps reveals the current position of the organization and what needs to be done for future success in relation to product/services, prices/fees, place/access, promotion, physical evidence, people, and partners. Based on this the plan spells out how the organization needs to come up with positioning strategies and how well to establish these. Through the use of perceptual mapping, it is clear that the organization currently lags behind in terms of the use of conventional facilities and technology in care provision, in relation to the perceptions of the consumers and potential consumers but has a huge advantage of being the most affordable in relation to the rest. Through the use of a Servqual method, the plan demonstrates the current efforts put within the institution in an effort to improve service provision. Finally, the marketing objectives were measured and evaluated using the SMART option to ascertain that they are effective and have the potential of making an impact on the organization within the next one year. In this regard, it is recommendable that the company fully commits itself to the attainment of the set marketing objectives and to fully address the current challenges that have been noted in this plan particularly the need to upgrade a wide range of physical resources within the institution as well as adding upon both the physical and human resources for expansion within the next one year.

References

Baines, P., Fill, C., & Page, K. 2010. Marketing. Oxford, Oxford University Press.

Baines, P., Fill, C., & Page, K. 2013. Essentials of marketing. Oxford, Oxford University Press.

Barrow Signpost., 2014. Pingle Nook Care Home. Available At: <http://www.barrowsignpost.info/pingle-nook-care-home/> [Accessed 28th March, 2014].

BestCareHome., 2009. Pinglenook Residential Home. Available At: <http://www.bestcarehome.co.uk/services/view/pinglenook-residential-home> [Accessed 28th March, 2014].

Bitner, M 1990. Evaluating Service Encounters: The Effects of Physical Surroundings and Employee Responses, Journal Of Marketing, 54 (2), pp. 69-82.

Carehome.co.uk., 2014. UK Care Home, Residential Home & Nursing Home Search. Available At: < http://www.carehome.co.uk/care_search.cfm> [Accessed 28th March, 2014].

D’annunzio-Green, N., Maxwell, G. A., & Watson, S. 2004. Human resource management: international perspectives in tourism and hospitality. London, Thomson.

Easey, M. 2009. Fashion Marketing. Chichester, John Wiley & Sons.

Enache, I 2011. Marketing Higher Education Using The 7 Ps Framework, Bulletin Of The Transilvania University Of Brasov. Series V: Economic Sciences, 4 (1), pp. 23-30.

Hooley, G. J., Piercy, N., & Nicoulaud, B. 2008. Marketing strategy and competitive positioning. Harlow, England, FT Prentice Hall.

HousingCare.Org., 2014. Retirement Housing & Care Homes. Available At: <http://www.housingcare.org/> [Accessed 28th March, 2014].

Langford, PH 2009. Measuring organizational climate and employee engagement: Evidence for a 7 Ps model of work practices and outcomes, Australian Journal Of Psychology, 61 (4), pp. 185-198.

Manning, A. D. 2002. Making sense of strategy. New York, AMACOM.

Richman, L. 2006. Improving your project management skills. New York, American Management Association.

Sengupta, S. 2005. Brand positioning: strategies for competitive advantage. New Delhi [u.a.], McGraw-Hill.

Strouse, K. G. 2004. Customer-centered telecommunications services marketing. Boston, Artech House.

Wells, V., & Foxall, G. R. 2012. Handbook of developments in consumer behaviour. Cheltenham, Edward Elgar Publishing.

Zou, S., & Fu, H. 2011. International marketing: emerging markets. Bingley, Emerald Jai.

Appendices 

Appendix 1:  Table of SWOT

  Have a Positive Impact on Marketing Objectives Have a Positive Impact on Marketing Objectives
Internal Factors Strengths

  • Has been in operation for about two decades
  • Draws its strength from its employees/staff who are considerably experienced and dedicated to customer service
  • Offers personal care single and shared at relatively cheaper prices as compared to other care homes of similar scale within selected places in the UK

 

Weakness

  • Located in a conventional single building that was converted from a residential property.
  • Based on its small scale, it cannot be able to benefit from economies of scale.
  • Has limitation of not only certain key resources but also has relatively limited workforce in relation to a wide range of responsibilities.
External Factors Opportunities

  • The fact that it is the only care home in Barrow upon Soar is a huge opportunity for the institutional growth and development.
  • High potential for market growth and expansion.
Threats

  • This is a highly competitive venture and more so, a higher number of ventures may continue to rise in future.

 

Appendix 2: Table of PEST

Factors Opportunities Threats
Political
  • The UK government recognizes this as a fundamental service industry
  • The government may establish some policies in future impact on the industry negatively.
Economical
  • The institution can get expansion capital from a wide range of areas such as banks, government, and private sources.
  • The expansion plan will require a huge amount of capital that may not be readily available.
Social
  • As the aged population, particularly continues to grow, so shall the market.
  • The population may be influenced by other competitors
Technological
  • New technology is likely to have a huge impact in regard to competitiveness of the organization in the market.
  • Use of new technology may be too costly for the organization to handle.

 

Appendix 3: Table of Segmentation

What Pingle Nook Care Home Should offer: Need-Based Segmentation The various customers’ or consumers’ needs ought to be the main driver of Pingle Nook Care Home’s product/service development.
Focus on the Next Customer of Pingle Nook Care Home: Sales-Effectiveness Segmentation This kind of segmentation is based on focusing on the various prospects likely to buy the product or service and these include; the aged members of the society, the people with physical challenges, and the people suffering from Dementia among others.

 

 


 

Sample 3: Globalization and International Media Policy

Introduction

According to Burtic (2012), globalization is a reality that we can’t refute or escape from. Azizi & Noruzi (2011) notes globalization has different definitions and these may include social, cultural, and economic globalization. Just like the way it has influenced many other disciplines, globalization has also impacted on the communications or media industry. As a matter of fact, communication or media industry has been a critical arena in relation to globalization based on the role it has played in the whole process of globalization. In fact Rantanen (2005) refers to the media or communication industry as the central nervous system to the globalization process. This is something that has an impact on a wide range of issues in this particular industry including policy and policy making. Due to its effect, policy makers in the contemporary times are required to manage the situation tactically and to view things from a global point of view rather than just locally. This essay seeks to extensively explore the topic of globalization and international media policy with a perspective of Canada. Globalization has impacted international media policy in different ways, particularly in terms of influencing countries to yield to international pressures to devise and implement policies that are internationally acceptable.

Globalization and International Media Policy

As postulated by Azizi & Noruzi (2011), globalization can be defined as the phenomenon/trend of augmented integration of the global economy as characterized by the growth of worldwide trade as well as factor economy. On the other hand, international media policy refers to standard regulations and frameworks which media is expected to conform across the globe. In early 1990s and before then, majority of ordinary media had a national scope. However, as postulated by Mirrlees (2013), with the emergence of globalization, most of the communication media have been transformed to become more global. Internationally, the media has been undergoing immense transformations based on the effect of globalization among other things.

As noted by Mirrlees (2013) in Global Entertainment Media book, despite the fact that globalization is a periodizing term, it also refers to different interrelated economic, cultural, political, as well as technological processes said to be amalgamating the world, resulting to more interdependency as well as interconnectedness between different nations in the world.  There is economic, political, cultural, and technological and media globalization. As noted by Mirrlees (2013) in his book, globalization could not happen devoid of the media, that media and globalization operate in ‘concert and cohort’, and that these two have been in partnership through the whole of human history.

Through integration of the global market and finance issues, globalization has moved the decision making process and responsibilities in regard to media policy among other issues from the national level to other levels such as regional, supranational, transnational and trans-local levels among others.  In the globalization era, Mirrlees (2013) argues that, the decision makers are not only located at the national level. These decision makers may be located even in other levels that are beyond the jurisdiction of the country. Therefore, influential policy actors are in a wide range of bodies other than the national government, which may be charged only with the regulation or policy making touching on just the local conduct of the media. However, it is important to note that unlike in the case of local government policy makers, in the globalised setting, the wide range of policy actors involved normally take part in the process of making policies in an informal setting which may not be easy to map out or document.

Globalization has resulted to considerable international pressures from multilateral bodies like WTO (World Trade Organization) and Transnational Corporations on particular nations such as Canada, particularly due to the fact that communication remains fundamental to the economic as well as political national interest. In the conventional setting, as postulated by Chrisman (2013), national governments have always been charged with the responsibility of regulating communication and media sectors, through the assumption that communication goods are a representation of some sort of ‘public good’ in terms of technological resource as well as culture. Nonetheless, multilateral bodies like WTO (World Trade Organization) and Transnational Corporations are influencing countries on policy formulation in relation to the media sector, particularly based on the fact that it is an item of public policy (Munteanu, 2011).

Globalization has also affected international media policy through promotion of economic of integration among different nations whereby governments in different nations are considering economic interests as a key factor when formulating different media policies. As exemplified by Munteanu (2011) and Burtic (2012), as globalization effects such as technological and political economic changes alter the conventional limits of the state involvement in policy-making matters, it is worth noting that media policy or control of this industry is directly associated with the economic welfare of any contemporary nation-state in relation to foreign investments, exports and taxable revenues, employment generation and so on.

In this regard, governments more and more link media policy to a wide range of economic interests for the involved country. For instance, the governments may enforce intellectual property rights, promote exports that are based on the information and communications technology or the ICT-based exports, put in place measures to ensure right to use the up-to-the-minute telecom infrastructure for different firms including the private ones, and subsidize foreign communications-related industry investments as a strategy of development among issues. Nonetheless, as noted by Burtic (2012), Rantanen (2005), and Chrisman (2013), away from the economic interests, governments maintain the capacity, and actually utilize it, to have control over the media as a way of reinforcing legality or fortifying a hold on power by a given regime. While this has been largely associated with the ‘backwardness’ of the third world countries that are governed by rather totalitarian regimes, this has now become a common thing in developed countries like Canada and the United States, particularly due to such issues as ‘War on Terror’ among others (Parnis, 2000).

Moreover, globalization has made such bodies as the WTO to bring together different countries, urging them to establish open-door policy increasing trade between themselves. Consequently, the WTO as a multilateral body of telecommunications governance has exerted much pressure on countries such as Canada to regulate telecommunications, reflecting neoliberal trade norms. For instance, as pointed out by Siochru (2002), at the end of the GATT Uruguay Rounds in 1994, 60 nations committed themselves to liberalization of the value-added services such as cellular phones, private leased networks and so on though just eight of them were ready to liberalize fundamental telecommunications as well as public-data networks. Nonetheless, after about three year negotiations, ABT (Agreement on Basic Telecommunications) was established and this was aimed at ensuring that each of the 69 signatories gradually liberalized their telecommunication markets (service market) fully in addition to establishing independent regulatory agencies.

According to Chrisman (2013), based on the impact of globalization, media companies have taken up a new way of survival and expansion through concentration of ownership. This is facilitated by mergers and acquisitions, as a way of rationalization (cost reduction) particularly in terms of production and distribution in vertical and horizontal means. Therefore, through this trend, globalization has influenced the acceptance of cross-ownership norm in the media and communication industry both in Canada and other countries across the globe. This is something that has not been taken well by the civil society, who has put strong opposition particularly in regard to the possible detrimental impacts this has on authentic diversity of opinions as well as market entry. Nonetheless, one thing that the concerned policy makers have put into consideration is the costly nature of digitization, a thing that has been highly propelled by globalization.

Digitization itself is a product of globalization. Digitization, according to Hendy (2000) irrespective of whether it is television or radio, requires considerable amounts of funding and this is the reason why there has been more consolidation of companies and services in the media industry. Actually, Parnis (2000) explains that the Canadian broadcasting industry had a successful lobbying to ensure consolidation of ownership in the media industry from a single AM and FM station to a wide range or multiple license model since the year 1998. In this regard, the Canadian regulator CRTC (Canadian Radio-television and Telecommunications Commission) had to facilitate and shape the radio landscape by changing the ownership requirements and the broadcasting format. This also had an effect on simulcasting or the broadcast of a single item on more than one station simultaneously (Parnis, 2000). This was achieved through ‘replacement technology’ that allowed CRTC to offer exceptional consolidation allowances as well as simulcasting hence breaking away from established restrictions to a larger extent. Furthermore, through ‘replacement technology’ dialogue, CRTC made advancement towards a policy that was easily justifiable and hence somehow legitimate in regard to the concerns of critics.

Finally, globalization has had a huge impact on the international media policy in regard to media freedom. Globalization has opened up media freedom. According to Hutton & Fosdick (2011) and Munteanu (2011), globalization extends democracy as a key standard of good quality governance. Free press or media freedom is associated with democracy and in fact, it is considered as a keystone to democratization. This is through models such as social network among others. In such platforms people can exchange ideas freely without regulations. Hutton & Fosdick (2011) further notes that through globalization, the fundamental media freedoms have been campaigned globally, with most of these campaigns having an impact on the policy makers formulating any policies that touch on the media. International information flows have been enhanced by the establishment and improvement of new technologies, global capitalism, and the rising commercialization of global media (such as television among others). These have come as a result of the effects of deregulation policies implemented by different counties in Europe and America, facilitating the proliferation of satellite channels as well as cables among other methods of transmissions.

Conclusion

This essay has extensively discussed international media policies, citing specific examples such as Canada, in the perspective of globalization. In the globalization era, the policy making touching on different industries such as the media industry is no longer under the responsibility of the national policy makers. In fact, it is clear that following the impact of globalization, the international media policy is highly swayed by most of these external forces. Multilateral bodies like WTO (World Trade Organization) and transnational corporations operating in different countries have for instance had an impact in the media policy formulation across the globe. Also, globalization has promoted economic integration which has in turn highly influenced international media policy since countries have to put into consideration key economic interests that will sustain key trade relations, particularly when legislating or establishing different media policies. The need to digitize has also been promoted by globalization and based on the fact that this is a costly affair, media companies have turned to concentration of ownership as a way of expanding and ensuring their survival in future. Furthermore, through globalization, media freedom has gained grounds across the globe particularly based on the impact of social media among others. Indeed, it is clear that globalization has impacted international media policy in different ways, particularly in terms of influencing countries to yield to international pressures to devise and implement policies that are internationally acceptable.

References

Azizi, F., & Noruzi, M. (2011). Globalization and Policy Making; what capabilities and competencies should policy makers obey in globalization? (Market orientation). Journal of Public Administration & Governance, 1(2), 1-6.

 

Burtic, D. (2012). Globalization and Mass-Media in the Context of Economic Crisis. Annals of the University Of Oradea, Economic Science Series, 21(1), 255-261.

 

Chrisman, R. (2013). Globalization and the Media Industry. Black Scholar, 43(3), 74-77.

 

Hendy, D. (2000). A political economy of radio in the digital age. Journal of Radio Studies. 7 (1), 213–34.

 

Hutton, G., & Fosdick, M. (2011). The Globalization of Social Media. Journal of Advertising Research, 51(4), 564-570.

 

Mirrlees, T. (2013). Global entertainment media: between cultural imperialism and cultural globalization. New York: Routledge.

 

Munteanu, N. (2011). Effects of Globalization on Mass Communication. Revista Academiei Fortelor Terestre, 16(4), 426-433.

 

Palevic, M., & Djordjevic, S. (2013). Freedom of information and abuse of media in the process of globalization. Webology, 10(1), 1-9.

Parnis, D. (2000). Tuning in the future: digital technology and commercial radio broadcasting in Canada. Journal of Canadian Studies, 35 (3), 231–50.

Rantanen, T. (2005). The Media and Globalization. London: SAGE.

Siochru , Sea, O., Bruce, G. and Amy, M. (2002). Global Media Governance: A Beginner’s Guide. Boulder, CO: Rowan & Littlefield.

 

 


 

 Sample 3: INTERNATIONAL BUSINESS ENVIRONMENT & STRATEGY

Introduction

This essay is based on ABC Solar, a newly formed company pursuing internationalization in India. With the natural resources in the world depleting swiftly, countries must find ways to compensate this. This is the reason ABC Solar stands to succeed in its internationalization pursuit. The company offers solar energy solutions to its customers through the distribution of solar panels, solar heaters, and other solar products in addition to provision of key services in line with provision of affordable renewable energy to its customers. The rapidly growing sector of renewable energy across the globe and in India too presents a worthwhile opportunity for ABC Solar to explore through venturing into the Indian renewable energy market.  Besides being the second most populous country in the World after China, Saha (2013) and Gupta & Gupta (2010) notes that India’s economy is also considered to be the 10th largest globally in terms of nominal GDP. This essay seeks to research the business environment of India and devise strategies to enter into this market.

Entry Mode Choice

Direct exporting shall be the most appropriate entry mode for ABC Solar to use in its internationalization pursuit to India. This will involve selling the Solar products in India directly through distribution arrangements that shall be established in the country. According to Katzman (2011) and Neelamegham (2000), direct exports are likely to work best in the first few years because based on the fact that the company is newly formed and hence volumes will not be as huge as those expected from a well established company. However, as the volumes grow, it is anticipated that this may trigger protectionism and hence, other entry modes shall be utilized and these will include foreign direct investments and joint ventures. Nonetheless, within the first one to two years, ABC Solar shall rely on direct exports. In this regard, based on the fact that this entry model will not involve any intermediaries, the company will rely on sales representatives and importing distributors too.

The sales representatives shall be Indians who will partner with ABC Solar to represent the company in the local Indian market for some established commissions on every sale they make. The sale representatives are also expected to play a huge role in regard to provision of support services to ABC Solar regarding local sales presentation, local advertising, legal requirements in India, and customs clearance formalities among others.

Importing distributors too will play a considerable role in assisting ABC Solar to offer direct exports of their products and services to the Indian market. Here the company will partner with the well established Indian entrepreneurs who will purchase the company’s products through their own means or in their own rights so as to resell them in the Indian market to either wholesalers or retailers (Dholakia, 2012).

A Critical Discussion on the Key Strategic Issues the Company May Face in the Chosen Market based on the Porter’s Diamond Framework

Based on the fact that this is a completely new market for ABC Solar and in a new country, the company is likely to face a wide range of strategic issues in the Indian market. A perfect way of critically discuss these strategic issues is through drawing upon the Porter’s Diamond Framework. According to Porter (2011), Porter’s Diamond Framework is a theoretical model or concept that is based on four broad factors, and has been largely used in the analysis or evaluation of competitiveness. The factors include; factor conditions, demand conditions, related/supporting industries, firm strategy, and structure and rivalry. Other factors that have also been associated with the framework though related to the others include government and chance. An evaluation of each of these factors in regard to the Indian market will reveal the key strategic issues that ABC Solar is likely to face in the Indian market. The individual are discussed here below.

Factor Conditions

Wickham (2005) notes that the factor conditions include such things as the physical resources, human resources, capital resources, infrastructure, and knowledge resources among others. Before the entry of ABC Solar into the new Indian market, strategic competitiveness is anticipated. The export of the ABC Solar products to India through direct export will certainly rely on most of these conditions and hence, different strategic issues may arise in relation to these (Saha, 2013).

Physical resources in business can be best described as the factors of production. Buildings for instance will be required to provide distribution centers from where the sales representatives shall be operating from. Human resource is another key element of factor conditions. This is the skills, quantity, as well as cost of the personnel or the workforce, putting into consideration the standard working hours as well as work ethics. There are a wide range of legislative laws or policies that international businesses operating in India have to comply with in order to be allowed to operate in India. Furthermore, just like any other business, ABC Solar is also required to comply with the labor laws and environmental laws among other requirements in India. Examples of such laws as exemplified by Swamy (2000) include; Wages Act, Factory Act, workmen’s compensation Act-1923, Employees PF & MF Act, and payment of Bonus Act among others. It is also important to note that while the competitors of ABC Solar within the Indian market may have a wide range of sources for financing, this company may be limited to such benefits by the virtue of being an international company operating in India.  Each of these may have an impact on the internationalization plan of the company in India (Saha, 2013).

Demand Conditions

As noted by Beugelsdijk (2013), demand conditions in a market not only ensures improved economic growth but also high innovativeness within the market as competitors try to make a more superior product or service to win the customers in the highly competitive market. In this regard, the key strategic issues that will be facing ABC Solar in this regard will involve such things as the composition of the Indian market demand and the size as well as patterns of growth in relation to the Indian market demand for solar energy products and services. Basically, it is important to note that India is among the fastest growing nations in the world in regard to energy consumption. Actually, as exemplified by Venkataraman (2013), the country is ranked 5th globally in terms of energy consumption and is expected to be 3rd by 2030. As a result of the increased energy consumption India is slowly shifting its main focus from non-renewable sources of energy to renewable energy sources like solar energy. This clearly shows that the demand of solar energy in the Indian market is considerably high. However, based on this high demand, this market has attracted a wide range of energy companies, both local and international, to operate within the market. In fact, as exemplified by Venkataraman (2013) and Kang (2009), currently there is a huge number of solar panel manufacturers that are based in India and these include such companies as; Access Solar Limited, Aditi Solar, and Akshaya Solar Power among others.

Related and Supporting Industries

In reference to Porter (2011), these are the industries that support, enhance, or closely impact on the operation of the solar energy industry. They are mainly the suppliers of  the raw materials that may be required in the production of the ABC Solar products. When the suppliers are innovative enough and are cost effective as well, this might have a positive impact on the company in terms of reduction of the cost of production. As a result, the company will easily compete with its competitors in terms of market prices and innovativeness too. Another very important factor that will certainly be a strategic issue in the Indian market is the related industries in terms of alternative sources of energy both renewable and non-renewable. According to Hiscock (2008), Suzion Group is considered to be the fifth largest supplier of wind turbine in the world and this company has a considerable market in India and as a result, some of its products may pose rivalry challenges to ABC Solar as substitutes. In addition, Pant (2008) and Kang (2009) note that one of the greatest hindrance towards the penetration of solar energy players into the Indian market is the availability of cheaper electricity generated from coal at about Rs. 2.80/Kwh and based on the fact that the cost of solar energy electricity generation may be slightly higher than that, this would certainly may a considerable challenge for ABC Solar.

Firm Strategy, Structure and Rivalry

As noted by Beugelsdijk (2013), this is also a very important determinant in the competitiveness of a given company. The strategy, structure, and rivalry in relation to ABC Solar will play a fundamental role in the performance of the company in the Indian market. The way the company is created/formed, its set goals and objectives, and its top management and strategic vision will certainly play a huge role in the internationalization undertaking. While home countries may have an influence on this, which may in turn give local companies an added advantage over international companies, India is one of the countries known to not discriminate international companies over local companies. In this regard, as pointed out by Ratanpal (2008), though the local or the Indian based competitors may have an upper hand in regard to some issues, the country will more likely offer a level playing ground for all companies operating within the economy. Furthermore, the fact that the firm was strategically established to provide cheap, innovative, and effective products and services within the renewable energy sources sector, may have a positive impact on the internationalization move into the Indian market.

Conclusion

This essay was based on an internationalization pursuit of ABC Solar, a newly formed company, into the Indian market. Based on the fact that the company is still in its early stages after formation, direct exporting was chosen as most appropriate entry mode for ABC Solar, at least within the first two years of operation. The fact that volumes the company may not be as high in the first few months makes this entry mode realistic and appropriate but as the volumes grow, it is anticipated that this may trigger protectionism and hence, other entry modes shall be utilized. These will include foreign direct investments and joint ventures. Nonetheless, within the first two years or so, the company will have to rely on sales representatives and importing distributors to facilitate the direct exporting of ABC products into the Indian market. Based on the Porter’s Diamond Framework, it is clear that the company is likely to face a wide range of strategic issues in terms of culture, demographic, political, legal, economic, government, physical infrastructure, communication infrastructure and technological factors among others.

References

Beugelsdijk, S., 2013. International economics and business: nations and firms in the global economy. Cambridge, Cambridge University Press.

Dholakia, RH 2012. Prospects for the Indian Economy. Vikalpa: The Journal For Decision Makers, 37 (4), pp. 1-9.

Gupta, K. R., & Gupta, J. R., 2010. Indian economy. New Delhi, Atlantic.

Hiscock, G., 2008. India’s global wealth club: the stunning rise of its billionaires and the secrets of their success. Hoboken, N.J., Wiley.

Kang, H 2009. Solar Energy Markets in China and India.  SERI Quarterly, 2 (4), pp. 104-107.

Katzman, J., 2011. A basic guide to exporting: the official government resource for small- and medium-sized businesses. New York, Skyhorse Pub.

Neelamegham, S., 2000. Marketing in India: cases and readings. New Delhi, Vikas Pub. House.

Pant, G., 2008. India, the emerging energy player. New Delhi, Pearson Longman.

Porter, M. E., 2011. Competitive Advantage of Nations: Creating and Sustaining Superior Performance. New York, Simon and Schuster.

Ratanpal, A 2008. Indian economy and Indian private equity. Thunderbird International Business Review, 50 (6), pp. 353-358.

Saha, S 2013. Total Factor Productivity and Trade Openness in Indian Economy. Journal Of International Economics (0976-0792), 4 (1), pp. 42-50.

Swamy, S. 2000. India’s labour standards and the WTO framework. Delhi, Konark Publishers.

Venkataraman, NS 2013. Energy options for India’, Chemical Business, 27 (10), pp. 9-13.

Wickham, M 2005. Reconceptualising Porter’s Diamond for the Australian Context. Journal Of New Business Ideas & Trends, 3 (2), pp. 40-48.


 

Sample 4: The Implications Social Identity in the Workplace has for Organizations

Introduction

In the early 1970s, Tropp (2012) notes, Henri Tajfel together with his colleagues, initiated the social identity approach within social psychology, particularly on inter-group processes. Among the key elements to this particular approach is the assertion that the manner in which psychological progressions happen is related to a general social context.  As exemplified by Haslam (2004), individuals identify with certain groups (in-groups) and evaluate others in relation to these groups. Such people are well inclined to changes initiated by the individuals that belong to a similar in-group with them or those that they have comparable in-group identities. On the other hand, these people are usually more resistant to the people who hold different group identities, particularly due to the fact that it is in conflict with their own identities (Tropp, 2012). The implications social identity in the workplace have for organizations can be understood clearly through the social identity theory. Burke & Stets (2009) notes that social identity theory is based on an assumption that people can have different ‘selves’ based on their surrounding social contexts as well as their inner feelings of belongingness and collectiveness to certain group acts, which act as powerful motivation sources. Based on the type of social context that an individual is operating from, he/she is influenced to act, feel, and think in a certain way. This essay seeks to find out what implications does social identity in the workplace has for organizations.

Discussion

Identity as noted by Burke & Stets, (2009), influences or controls individual behavior at the workplace. In an organizational setting, social identity has been used to explain a wide range of issues including; organizational commitment, satisfaction, employee interaction, motivation, workplace conflict, prejudice or discrimination of particular form among others. This compelled the establishment of the social identity theory to try and explain such things.  According to Tropp (2012), the theory was developed to aid in the understanding of the in-group bias and intergroup conflict, as it exactly happens in different situations within any given organization. The social identity theory makes a key assumption that people categorize themselves and define themselves on the basis of their perceived group memberships. As pointed out by Haslam (2004), following a self definition in regard to social categorization, people then seek to enhance what is their self-conception. This happens through a positive differentiation between their in-group and that of a relative out-group. This is what either leads to a positive impact or a negative impact on any given organization and this is what gives the top management the pride of success or the disgrace of failure.

Van Knippenberg (2000) published results of a study that discovered that social identity is certainly related to motivation and performance at the workplace, and hence has a positive implication on organizations. Here, work motivation as well as performance was evaluated from the perception of the social identity theory plus self-categorization theory. As pointed out by Van Knippenberg (2000), a theoretical analysis plus an empirical studies review regarding association of organizational identification with performance and motivation led to the consultation that identification is positively connected to task performance, work motivation, as well as contextual performance to such an degree that; social identity is fundamental and outstanding plus there is a perception that high performance is in the organization’s/group’s interest. Nonetheless, Van Knippenberg (2000) also ensured to mention some key exceptions that may not result to a positive impact on the organization, in regard to performance and motivation.   For instance, there could be the development of counterproductive norms that may result from falling out with the senior administrative officials among other things that may result to lowered productivity. Furthermore, as Burke & Stets (2009) and  Tajfel (2010) notes, for the people who are not in line with the identification of the group/organization may develop some behaviors that are not in congruent with the behaviors of the other, hence implying that social identity in such a case would not necessarily mean a positive impact on the organization.

Different scholars have also pointed out to a positive association between social identities at the workplace with the nature of interaction of workers (Ashforth & Mael, 1989; Tajfel, 2010). Under team-based or piece-rate incentives, mutual monitoring, social pressure, as well as knowledge sharing could result to coworker effects or influences. According to Ashforth & Mael (1989), the theory of social identity fosters some group/social interactions plus collective identity at the workplace and this in turn creates a favorable workplace environment, hence a positive impact on the organization.  However, according to Tajfel (2010), it has been noted that these interactions usually happens subject to the categorization along the various in-groups, where individuals interact more with those people that belongs to their in-groups as opposed to those deemed to be from the perceived out-groups.

According to Tanis & Postmes (2005), in instances where there is shared social identity or a common identity at the workplace, the organizations tends to experience increased trust, loyalty, as well as cohesion from each of the team members. This is done to promote the common interest of the group, which basically brings them together. Through social identification, the teams or organizations are able to foster a sense of cohesion and togetherness, enabling them to respect each other, trusts each other, and deliver the organization to success as a team (Tanis & Postmes, 2005; Jasinski & Palgrave Connect, 2010). When people realize that their counterparts are essentially well-mannered, shares some level of comparable values, and do not seek out to take advantage of them, they tend to open up to them and develop some form of trust in them. This happens when such people are brought together and bonded by social identity or when they feel that they belong to a similar in-group. Consequently, social identity impacts positively on organizations by fostering trust and loyalty among the employees of any given company that embraces it.

In contrast, Madera, King and Hebl (2012) notes that restraining social identity or suppressing different forms of identities, whether its gender, age, race, or sexual orientation among others, at the workplace has been associated with job dissatisfaction, perceived discrimination, as well as turnover intentions. Therefore, these results give a suggestion that employees, due to their diversity, dynamically cope with their various identities that are not necessarily related to work when at the workplace and such identity management strategies result to some key consequences that can never be overlooked (Tanis & Postmes, 2005). This means that social identity if not handled well within an organization can jeopardize the success and prosperity of a given organization, particularly due to the fact that these are key issues that touch on the welfare and wellbeing of the employees, who play an important role in the success or failure of any organization.

Moreover, Shelton, Alegre & Son (2010) points out that social identity can also act as a source of workplace conflict within a given organization. This is due to the fact that it might result to the sprouting of different teams or groups within the organizations, each of which may be pursuing particular goals and objectives. Reiterating on that, workplace conflicts can easily happen since the beliefs, actions or the characteristics of one group may end up interfering or challenging the main intentions and aspirations of the other group.  Furthermore, one group may feel the threat of the other in regard to the utilization of the various resources needed to attain the goals and aspirations of the group within a given time period. These resources maybe financial support, knowledge, skills, and power among others. As such, social identity may result to some unnecessary conflicts and adversities for the organizations, hence possibly impacting then in a negative way.

Conclusion

In conclusion, the analysis has reviewed that the implication of social identity at the workplace can be evaluated and understood comprehensively through the social identity theory.  This essay had sought to find out what implications social identity in the workplace has for organizations. First, it was revealed that social identity has some positive relation with workplace performance and motivation. Social identity also plays a considerable role in the nature of interaction of workers within a given organization. Furthermore, in instances where there is shared social identity or a common identity at the workplace, trust and loyalty among the employees is highly promoted. However, there have been a good number of publications that associate social identity with a negative impact on the organization such in a case where there is restraining social identity or suppressing different forms of identities, whether its gender, age, race, or sexual orientation among others. This is because it may result to job dissatisfaction, perceived discrimination, as well as turnover intentions. Furthermore, it is also clear that social identity can also act as a source of workplace conflict in varying ways within a given organization.

References

Ashforth, B. E., & Mael, F. (1989). Social Identity Theory and the Organization. Academy Of Management Review, 14(1), 20-39.

Burke, P. J., & Stets, J. E. (2009). Identity theory. Oxford: Oxford University Press.

Haslam, S. A. (2004). Psychology in organizations: The social identity approach. London: Sage.

Jasinski, M. P., & Palgrave Connect (Online service). (2010). Social trust, anarchy, and international conflict. New York: Palgrave Macmillan.

Madera, J. M., King, E. B., & Hebl, M. R. (2012). Bringing Social Identity to Work: The Influence of Manifestation and Suppression on Perceived Discrimination, Job Satisfaction, and Turnover Intentions. Cultural Diversity & Ethnic Minority Psychology, 18(2), 165-170.

Shelton, J., Alegre, J., & Son, D. (2010). Social Stigma and Disadvantage: Current Themes and Future Prospects. Journal of Social Issues, 66(3), 618-633.

Tajfel, H. (2010). Social identity and intergroup relations. Cambridge: Cambridge University Press.

Tanis, M., & Postmes, T. (2005). A social identity approach to trust: interpersonal perception, group membership and trusting behaviour. European Journal of Social Psychology, 35(3), 413-424.

Tropp, L. R. (2012). The Oxford handbook of intergroup conflict. Oxford: Oxford University Press.

Van Knippenberg, D. (2000). Work Motivation and Performance: A Social Identity Perspective. Applied Psychology: An International Review, 49(3), 357.

Sample 5: Evaluating Management Cultures in Fast Food Companies in the US and China: A case Study on KFC and Zheng Gongfu

Literature Review Section

Theoretical Overview

Counihan & Esterik (2012) notes that  China has become one of the most favorite countries for the multinational fast food industries, basically due to its large untapped market.  This explains why such companies as KFC that ventured into this market a few years ago have grown exponentially. While this is an industry that was not in existence in China in just a few decades ago, the fast food industry has grown immensely to the extent that it now impacts heavily on the daily lives of a considerable percentage of the Chinese population. For many years, as demonstrated by Koch-Weser (2012), the Western companies like KFC have greatly dominated the Chinese market and this dominance has been largely viewed as imperialism. However, after a long period of such dominance, Chinese fast food chains such as Zheng Gongfu started to emerge a few years back and these companies have managed to penetrate and to capture a considerable fraction of the Chinese market (Frommer’s Shortcuts, 2012). This chapter basically focuses on an extensive review of a wide range of literature on fast food companies in China and United States and their various management cultures, with a focus on a case study on KFC and Zheng Gongfu.

Theoretical and Empirical Overview

Hofstede’s Cultural Dimensions Theory

This is a theory, as noted by Manrai, L, & Manrai, A (2011), that basically represents a cross-cultural communication framework. The theory gives a description of the effects of the culture of a society on its members’ values. It also describes how such values link with the behaviour of these members of the society and through a factor analysis derived structure. This theory is very important in this particular study since it has been used international management besides other fields involving cross-cultural communication, and cross-cultural psychology. In addition to this, one of the five essential dimensions of national culture as defined by this theory is collectivism vs. individualism, which contrasts the Chinese society against that of the United States.

As exemplified by Dartey-Baah (2013), due to the increased globalisation and technological development, international business has become very common and its popularity increased too. As a result, people from different cultural backgrounds find themselves doing business and working together and as a result, they have to get along well and also to communicate effectively. Apart from building connections with different people across the globe, a company is also required to motivate its customers and to develop key strategies to get along well with these customers. This would require a clear understanding of the cultural differences that exist between the company’s home country and the country in which it wish to expand into. Luckily, these were the thoughts that struck Dr Geert Hofstede’s mind and this is how he came up with this particular theory. In this regard, for the American Fast Food to perform well as they are in Chinese market, the management must have understood the arguments behind this key theory (Manrai & Manrai, 2011).

Situational Leadership Theory

According to Sims, Faraj & Yun (2009), this theory was developed by Paul Hersey and its fundamental underpinning is that no single leadership style can be termed as the ‘best’. Ramkissoon (2013) adds that effectual leadership is task-driven, and leaders who effectively succeed are the ones whose leadership style adoption goes to the maturity of the group or individuals they are endeavoring to influence or lead. Effective leadership is dynamic with the people being led and is also dependent on the function, job, or task that requires to be accomplished. Graeff (1983) argued that the situational theory proposes that leaders decide on the best course of action on the basis of the situational variables. For instance, a democratic style of leadership may be appropriate where the people being led are a group of knowledgeable people and experts. However, in a case where just the leader is the only knowledgeable person and with the most experience, authoritarian style of leadership may be appropriate at times.

In the case of the American Food Chains versus the Chinese Food chains, American managers surely knows how to apply the situational theory in different situations experienced during their operations, particularly in the Chinese market (Ramkissoon, 2013). In this case the difference that can be noted between the effectiveness of the American Food Chains management and the ineffectiveness of the Chinese Food Chains are usually outdone in both the local and international market is basically the appropriateness of the behavior of their management teams in handling different situations. The management of KFC knew exactly what strategies to implement depending on the  different situations right from the time the company opened its first restaurant in China and up to today when there are so many of such restaurants across the mainland of China. However, as for Zheng Gongfu and other Chinese Food Chains, one of the possible reasons why they have not been able to compete effectively with KFC and other American Food Companies in their own country is the fact that their leadership styles while handling different situations and circumstances is wanting (Ramkissoon, 2013; Sims, Faraj & Yun, 2009).

Habbel (2002) notes that the kind of management cultures that a company or organization adopts has a big impact on its performance as well as on its different stakeholders such as the employees and customers. Basically, a clear understanding of the differences in these management cultures and the impact they can have on an organization, can greatly assist the management of a company to overcome different obstacles that limit the organization from reaching its maximum potential in terms of performance.  With both US and China becoming close trading partners over the last few decades, both the citizens from the two countries as well as companies have found it easier to conduct business between the two nations. Nonetheless, when it comes to the food industry, United States multinational corporations such as KFC have been performing much better as compared to the locally based industry in China such as the Zheng Gongfu (Counihan & Esterik, 2013; Koch-Weser, 2012).  One of the possible factors that contribute to this is the various management cultures adopting in the companies in both the United States and in China.

Collective and Individual Cultures

In the conventional setting, Yeung (2007) notes, Chinese society has always been seen as one that prioritizes the collective culture over an individual culture. However, this has considerably changed particularly due to the fact that China has basically opened up its market to multinational companies such as KFC. As a result of this opening up to companies from the west, Yeung (2007) finds that Chinese managers in such companies like Zheng Gongfu have adopted some traits and behaviors from their counterparts from the West. It has been shown through a wide range of research that some of these Chinese managers have actually internalized a number of values known to have come from the West.

Nonetheless, Feldman (2013) notes that despite the move by some Chinese managers to move away to the collective culture that was widespread during the communism days in China, the whole issue of a collective nature can never be ruled out. The management culture in China is still under a huge influence of the collectivist culture in the country and this also affects the fast food industry too. Nonetheless, this is not the case in the United States where the individualistic culture is the dormant one. In the US, individual performance, tasks, and goals are more emphasized than that of teams or groups. In the American management culture, class, social standing, or seniority does not matter most as success and achievements does (Feldman, 2013). The Americans normally differentiate themselves from the Chinese because they dare to go the extra mile and to use their creativity to tackle the various problems facing their companies unlike their Chinese counterparts.

This has also been described by other scholars and researchers as Individualism/Groupism (Forssell, 2004; Milicevic, Lovric & Aleksandar & Lee & Chen).This can be defined as the level to which different corporate activities that a particular organization carries out are oriented around, or directed towards individuals rather to groups. For instance, the compensation packages or the reward system in an organization may be either based on the individual performance of the employees or in accordance with a team performance of the overall performance of a given department or unit within the organization (Forssell, 2004).

A firm group orientation has been a trademark for most of the Chinese firms over the years and this is an issue that has even influenced the kind of management or leadership styles being implemented by these companies. As Child (2009) puts it, this is most likely so due to the fundamental Chinese culture that embraces collectivism. Milicevic, Lovric & Aleksandar (2012) also found out that historically, Chinese firms have found it important for them to establish and grow a corporate culture that cultivates and promotes cooperation and group values. In a study that was done of a long period of time, Lee & Chen, (2008) discovered that collective responsibility as well as accountability has been given higher preference in the Chinese firms as compared to other western corporations operating in China. Furthermore, unlike in the recent times when things are changing considerably, Chinese firms have always relied on consensus decision making based on their cultures that encouraged what can be term as a mentality of ‘groupthink’ (Rarick, 2009). On the other hand, the management styles in American multinationals such as KFC have always been influenced by a culture that gives more preference to individualism rather than collectivism (Apte and Reynolds, 1995).

Accountability and Responsibility

Williams, C., Hall, & Champion (2011) notes that one of the most important management cultures that have been used in different organizations across the globe is to ensure that all employees clearly understand what their responsibilities within the organizations are and to know that they can be held accountable on this. The delegation of different responsibilities within the organization and how these employees are managed to ensure that they fulfill these responsibilities has a big impact on how these employees perform within their organizations and also on the overall performance of their organizations.  The allocation of responsibilities within the organization or failure to do so also has a great impact on the overall accountability in these organizations. This greatly impacts on the different aspects of the employees, whether in the US or in China. There is a considerable difference in regard to accountability and responsibility within fast food companies in the United States and in China. Basically, in the US, most companies have adopted culture in which the responsibilities of each employee are clearly defined and these employees are made to clearly understand these responsibilities and that they are always accountable to them and to the company. In this case, the fast food industries such as KFC have clearly defined responsibilities for each of their employees and these employees are also usually held accountable in regard to their performance on the delegated tasks (Williams, Hall, & Champion, 2011). However, in most of the Chinese organizations and in China in general, the allocation of responsibilities to employees is rather group based rather than individual based (Zhang, 2008). Employees in these firms do not have as much individual responsibilities as compared to those working in the US based companies and this means that individual accountability to certain tasks or projects is not common in these organizations. This is because rather than individuals being judged or rated as individuals, in most cases, they are usually judged as teams or groups within the organization.

Efficacy in Management

Clearly, as Apte & Reynolds (1995) puts it, US multinational corporations such as KFC have adopted a very comprehensive management that has been effective for years. This is something that seems to be lacking in most of the Chinese fast food companies, hence the reason why these Western chains succeed in China and outdo the locally owned chains (China Daily, 2008). A very good example of this can be demonstrated by the immense competition that KFC faced from Ronghua Chicken, it’s the establishment of the latter back in the year 1991. As pointed out in the China Daily (2008), Ronghua Chicken was established in this year with an aim of competing with KFC and taking over the Chinese market. To even proof their mission, they adopted a slogan that stated that, “Wherever there is KFC, there is Ronghua” (China Daily, 2008). Ronghua marketed itself as a fast food chain that specialized in fried chicken. However, in an effort to fight KFC, they still offered a wide range of traditional Chinese foods that were offered by KFC but a relatively lower price as compared to KFC. This initially worked in Ronghua’s way because they managed to beat KFC in the first few years that saw them expand immensely to the whole country by the year 2000. However, this success was short-lived after the leadership of the company was compelled by poor sales to close down all the company’s restaurants in Beijing.

The above example clearly shows that the management of the Western Chains such as KFC is more effective in carrying out their business as compared to the Chinese fast-food chains that they are supposed to compete with. According to the leadership of Ronghua, their closing down of most of their branches was prompted by the losses that they were incurring as a result of reduced sales. The management of this company claimed that they were not able to sustain a competitive edge against KFC because they did not have some well-developed systems like those owned by KFC (China Daily, 2008).  The systems used by KFC were allegedly very developed such that they could manage the entire production and distribution chain, right from the production of the products to its being served as well as the issue of staff training plus management. In this regard, there is a considerable difference in the way fast food companies are managed in the Western Companies such as KFC that is based in the United States and how management is carried out in China, particularly by the locally based companies like Ronghua and Zheng Gongfu.

Pricing Tactics

The pricing tactics is one thing that can for years distinguished between the locally owned Chinese food chain restaurants and the Western Chains such as KFC. For instance, as exemplified by Zhang (2008), when KFC ventured into the Chinese market, their prices were higher than those of the Chinese food chains and as a result, their restaurants were seen as being too expensive for any average citizen from China to afford. However, this seems to have worked in KFC’s favor together with other Western fast food chains operating in China. This is because these restaurants turned to be luxurious for the locals and ones that belonged to the high class members of the society. As a result of this, the demand of the KFC restaurant went up and their popularity also rose and this is one of the things that contributed to the growth and development of the company in China (China Daily, 2008).  However, after the growth of the company, the prices of its product were adjusted such that they could be affordable to most of the citizens in China and also to assist the company the fierce competition that was now being experienced from the locally based organizations such as Ronghua and Zheng Gongfu.

Such pricing strategies and tactics are something that are yet to be experienced when dealing with the local fast food chains such as Zheng Gongfu. This also explains why Ronghua could not beat KFC and to sustain a competitive edge for long. Despite establishing lots of restaurants alongside KFC, preparing similar products and menus and also reducing prices to go below that of KFC, Ronghua could not sustain itself to compete against KFC in China. Zheng Gongfu has also faced the same challenge despite even selling most of their products at relatively lower prices as compared to KFC. Clearly, KFC clearly knew how to set the prices and to adjust them, in regard to the various dynamics within the Chinese market and across the globe too (China Daily, 2008).

Approach to Change

According to Bell & Shelman (2011), though China has conventionally had a moderate tolerance to change, the intercultural adaptability of the country and most of the companies operating in the country are considerably improving this as a result of increased demands regarding the international market place. However, the approach to change in regard to the restaurants in the US and China is different and this also explains why American food chains such as KFC perform well even in the Chinese market as compared to the local food chain stores such as Zheng Gongfu.

The Differences between Chinese and American styles of Management and Leadership

Leadership and management styles are correlated to a large extent and in most cases, they can be referred to as management leadership styles. Forssell (2004) describes management leadership as a way of finding means to satisfy the needs of one’s organization and other stakeholders associated with the organization including the employees and the clients/customers. While there is no one management leadership style that is ideal to ensure the success of a given organization or company, the management styles that organizations adapt makes the difference, in terms of how a company performs both in the local and international market.  There are considerable differences in the management leadership styles used by Chinese and American firms and this could be one of the reasons why their performance both locally and internationally is different.

Basically, the management leadership style of the United States can be generally described as individualistic, particularly due to the fact that management officials are responsible and accountable to any decision that is made within their scope of responsibility (Elenkov, 1998; Berry, 1970; Yang, 1977 & Day, 2004). Despite the fact that key decisions may be openly discussed in forums and through constrictive discussions, the ultimate responsibility in case anything goes wrong lies with the top leadership or the boss. In the American leadership/management setting, there is a great distinction between management style and leadership style. While the former refers to issues to do with the organization and carrying out of the normal processes within the organization, the latter is more of strategic and inspirational leadership. According to Day (2004), in the American corporations, great leadership is more than expected at the helm of the organization rather than just a competent manager who only oversees the normal processes and organization of things within the company. The top leadership in these corporations ought to not only run the organization competently but also undertake strategic as well as inspirational leadership that will motivate all the stakeholders to move forward and boost the productivity and performance of the entire company.

On the other hand, The Chinese management styles are highly influenced by the Confucian approach. As exemplified by Liao (2009), Confucian philosophy deems relationships to be imbalanced or unequal. Consequently, ethical behavior demands such inequalities be respected. As a result, the elderly in the society ought to get respect from the younger persons and this should also be the case for the subordinates in organizations to their seniors. As a result, most of the Chinese managers have had a believe that Confucian approach ought to be the cornerstone of their management thinking and a basis for their management styles unlike the Western notions, that appears to be bizarre in the eyes of a considerable percentage of Chinese people. Actually, the vast majority of Chinese people believe in hierarchical values and this is the reason why most of the Chinese firms are based on this. In fact, as exemplified by Chen (2004), the Chinese people believe that lack of this in the Western Companies such as those from America is the cause of most of the challenges that they might be facing. This is the reason why management style is more affiliated to the directive, whereby senior management gives instructions to those reporting to them directly and these in turn pass the information down the command chain. Unlike in most of the American companies where a two-way dialogue is incorporated, the Chinese setting, subordinates are not expected to question the directives of the seniors. Apparently, that would be deemed as a sign of disrespect (Chen, 2004; Liao, 2009 & Alon, 2003).

According to Huang (2012), senior managers in accordance with the Confucian approach in the Chinese management styles should be viewed as father figures. They expect and receive loyalty as well as obedience from their subordinates. In return, these managers are expected to take holistic interests in regard to the welfare of the subordinates or junior employees within the organizations and hence a two-way relationship that is beneficial to all the parties involved (Lee & Chen, 2008). Apparently, lack of quality managers with enhanced experience is one of the biggest challenges that most of the Chinese firms face. Basically, Rarick (2009) and Huang (2012) exclaim that due to the scarcity of such leaders or managers, getting a good manager in Chinese are considerably expensive by all standards.

Key differences in the Management/Leadership Styles in Chinese and American Firms

Explicitness and Communication

Explicitness can be described as the level to which corporate policies, organizational activities, as well as decision-making criterion are succinctly communicated or stated in the entire organization (Forssell, 2004). In the Chinese setting, as pointed out by Alon (2003) and Chen (2004), companies are considered to be largely clan-like and informal and hence, policies as well as practices are not in most cases explicitly stated, despite that there is a clear understanding of each of them. As noted by Day (2004), while the control mechanisms in the American organizational setting is explicit to a large extent, the procedure of making decisions as well as other control mechanisms in the Chinese setting are rather implicit. In China, formal jobs with a clear and outlined

According to Day (2004) and Lim & Mills (2012), Communication Style is one thing that distinguishes Chinese people from the Americans because they use different styles. Basically, American people are usually very eloquent and outspoken and this influences the way they conduct their business transactions. On the other hand Chinese people are usually quite reserved and calm in the business setting. This is a nature that poses as a great challenge in the first few years for the U.S. Corporation being established in the Chinese market because it becomes hard for them to get feedback from the Chinese people, particularly before they develop some form of trust with the company. Nonetheless, this is an issue that the American managers in these corporations have managed to rise above because they even arrange a series of both formal as well as informal meetings in an effort to attain a particular objective or goal (Huang, 2008; Lee & Chen, 2008; Berry, 1970 & Elenkov, 1998).

Scope

Scope is a term that is used to refer to the extensiveness of focus in the corporate aspirations and activities. It is the level at which these activities get directed to different goals or objectives, or get confined to particular projects or undertakings that the organization has planned to undertake (Ramkissoon, 2013).  According to Chen (2004) and Day (2004), while Chinese firms are known to have a good scope in terms of what they require to achieve, the American corporations’ scope can be termed to be a broader one as compared to that used by majority of the Chinese firms. While most of the Chinese firms are established to achieve the best success in China and to capture the biggest percentage of the local market, a considerable percentage of the big American companies normally incorporates an internationalization strategy since they usually have a very expansive scope that would enable them to venture into the international market and to gain a considerable percentage of the local share (Liu, 2008; Feldman, 2013; Day, 2004). This is a thing that is also evident in the manner in which employees working in these organizations get trained and how they are assigned to different tasks within these organizations. In the Chinese setting, employees are trained to be specialists and to be the best in whatever they do and this is the reason why most of the appraisals are usually based on departmental units or workplace teams rather than individual-based, which is the case with the American corporations. These employees are also trained to work as a group to achieve the goals and aspirations of the company. On the other hand, the American corporations teach their employees to operate as generalists. Due to their wide scope, the American management style becomes different and this is because of the fact that the market dynamics, particularly in the international market keeps of fluctuating. Furthermore, by training their employees to be generalists, it means that these employees can be able to multitask within the corporation hence increasing the performance as well as the productivity of these corporations (Yang, 1977; Berry, 1970 & ALon, 2003).

Justice

According to Habbel (2002), justice is also a key issue particularly when it comes to human resource management.  It is a HRM activity that deals with equity in the manner in which resources are distributed to the employees. This means that justice takes into account whether organizations consider the personal differences or they treat all their employees using some common criterion or standard. It is important to note that employees are valuable assets to any organization and they play a considerable role when it comes to the general performance of the corporation in the market.

Comparing the Chinese corporations with those from the United States, Day (2004), Alon (2003) and Huang (2012) finds that the Chinese corporations are widely known to pursue equality of their employees instead of equity. This means that these firms tends to reward all their employees on equal basis while the American companies put focus on the evaluation of their employees on fair basis. In most publications, Chinese firms have been associated with equality-based pay in relation to seniority instead of individual performance and this is as a result of their more emphasis on group performance and contributions as compared to individual performance (Feldman, 2013; Day, 2004). This is the reason why in most Chinese-based companies, one would find that salaries are usually decided in relation to equality and balancing for members of a particular team and hence a balanced payment package. In addition to this, rather than giving individual incentives like most of the American corporations do, most of the Chinese firms implement the group-based bonuses. Nonetheless, Lim & Mills (2012) notes that this is an issue that is increasingly changing particularly due to the Westernization of business in China and most of the Chinese firms are now adopting the American payment systems as a way of retaining their employees.  As a matter of fact, most of the recent publications have shown that contemporary firms in China are now basing their payment of salaries on performance rather equality (Child, 2009).

Participation

According to Rarick (2009), the level to which departments within organizations or employees participate in different HRM decisions is participation. When it comes to the participative approach during decision making process, a wide range of scholars and researchers have associated the Chinese style of management is very incorporative of this and one that distinguishes it from the American Style of management. While this is an issue that has attracted different views, particularly from Asian researchers and scholars, it is clear that when compared to the American corporations, the Chinese firms have a great deal of employee and other stakeholders’ participation by the top management when making particular decisions. This is not so common among the American corporations (Lee, Y, & Chen, 2008).

Time Horizon

Time horizon is the extent to which management activities lays focus on pressing concerns rather than focusing on the issues or concerns that may be considered to be future (Forssell, 2004). As exemplified by Berry (1970) and Huang (2008), majority of the Chinese firms, apart from just a few, have been known to have a long time horizon when compared to American Corporations. Among the things that have been long associated with the Chinese firms include things like employment of fresh graduates and retaining them for long enough, high emphasis on job training of employees, corporate objectives aimed at long-term market share, and other aspects that reflect long-term kind of time horizons. In the Chinese setting, long-term cohesion between employees and the company is a precious asset that no organization would wish to take for granted. Chinese firms are also known for their consistent and ongoing hiring that are usually meant to meet the future needs anticipations. Furthermore, compensation in these institutions is also determined in accordance with a principle of long-term employment. In fact, this is one of the major disadvantages in regard to these firms because they seem to discourage young professionals who may wish to start their careers in these firms. The salaries for starters are usually traditionally low as compared to the people who have been in these companies for long (Lee & Chen, 2008; Alon, 2003).

In the case of the American corporations, as noted by Yang (1977), the management style adopted is rather of a short-period time horizon. In most cases, things like compensation are not based on the issue of the length of time that the worker has been in that institution but rather on other premise such as qualification, experience, and productivity among others.

Formalness

Bird & Beechler (1992) defined this term as the degree to which business activities follow or are codified in accordance to some set procedures or a particular sequence. Formalness is another issue that can be used to distinguish the Chinese firms from the American ones. As compared to the American Chains, most of the Chinese companies can be easily described as those that have highly maintained informal communications and group consensus which making their decisions regarding key matters touching on them. This is a key Chinese management theory that is closely related to the Chinese culture that is based on collectivism rather than individualism. Other things that have been expansively mentioned in regard to the Chinese firms include things like decision making process that is highly decentralized, plus collective responsibility as well as minimal differentiation of status (Chen, 2004).

On the other hand, American firms or companies are known to subscribe to a formal procedure in all issues touching on corporate planning. In addition, American corporations are basically viewed as not laying so much emphasis on the promotion of a long-lasting loyalty to their organizations. Instead, these organizations are much interested in sustaining control in relation to a wide range of decisions being implemented. This means that in the Chinese setting, most of the organizations do not have a clear cut system or the necessary clarity in regard to such issues as training, hiring, compensation, planning, and appraisal among other human resource management issues (Berry, 1970; Day, 2004).

Entertainment

According to Child (2009), Huang (2012) and Chen (2004), entertainment is usually incorporated in business by the Chinese, something that is not so common with the Americans. To the Chinese people, hosting or entertaining is an important part of their business culture and something that managers do on routine basis. Mostly, this involves inviting employees or potential business partners to some form of dinner, something that is usually treated as an informal meeting. This plays a major role not only in building trust but also in deepening business relationships or relationships between employees and their bosses. Furthermore, business managers use this form of entertainment to solicit feedback from their employees, particularly on these that cannot be freely discussed in the workplace setting. Furthermore, during these outings or dinners, business players or company representatives are able to make follow ups to certain business deals.

Kentucky Fried Chicken (KFC)

History and Background

KFC’s official website (http://www.kfc.com/) states that Harland Sanders is the mind behind the establishment of Kentucky Fried Chicken and this all started as he was serving food to travelers from a roadside restaurant that was located in Corbin Kentucky. Sanders worked out a recipe for a fried chicken with the use of a secret blend of several spices and herbs. After a number of years in operation in his own state, this entrepreneur established the KFC Company as a franchising business dealing with chicken.

According to LIU (2008), during the 1950s, the business grew considerably and this was mainly as a result of his sales strategy of personal promotion. Sanders travelled from one part of the country to the other, checking into different restaurants, cooking chicken to the owners and the employees in these hotels too. After owners’ approval, this individual would provide the restaurants with chicken on regular basis and this is what led to the growth of KFC to become one of the largest and internationally recognized restaurant chains (Mellor, 2011).

KFC in its official website exemplifies that in the 1960s, KFC begun its strategy to grow an international business, and this has resulted to the company having more than 30000 restaurants across the globe that helps the company to serve its customers with delicious chicken mills as well as snacks. Though KFC was the initiator of the friend chicken general formula, the business has been duplicated by other restaurants across the globe. Yum Brand Inc. which also owns Taco Bell, Pizza Hut, as well as Long John Silver is the parent company of KFC. Yum is the biggest restaurant chain across the globe (KFC, 2013).

The Marketing Strategies of KFC

KFC’s main products are chicken with different home style side dishes, salads, wraps, as well as burgers. Though the main focus of the company is friend chicken, side dishes as well as desserts are also offered including roasted chicken (Moskowitz, 1995). KFC also offers such things as kebabs, burgers, and other beef related products. It also offers pork related products like ribs.

As exemplified by Apte & Reynolds (1995), a strategic alliance between KFC and Pepsi-Cola has played a major role in marketing its products in different regions across the globe. Majority of KFC restaurants offer carbonated drinks from Pepsi. However, this is not the case in some countries like South Korea and Japan which sell Coca-cola instead of Pepsi’s products. Nonetheless, KFC has a wide range of products in the market that are usually sold out in its different outlets across the globe. As Bell & Shelman (2011) puts it, the company faces stiff competition, particularly in the fast food industry. However, based on its experience for years, the company has managed to grow over the years to perform exemplary well as compared to most of its competitors. One of the most sticking slogans that surely define what KFC is, ‘We Do Chicken Right’.

KFC in China

LIU (2008) argued that KFC ventured into the Chinese market back in the year 1987, when the first KFC restaurant was opened in the Beijing. In less than 10 years, KFC was doing very well in the country and as noted by AC Nielsen in the year 1999, KFC had risen to the top among the foreign companies that were operating in China (KFC, 2008). By the year 2005, KFC had been establishing over 100 restaurants in China every year and by this time, over 2500 restaurants belonging to KFC had already been established in the country. As LIU (2008) puts it, KFC success in China has been as a result of a wide range of strategies and according to a senior marketing manager in the company, one such serving a wide range of products, including Chinese recipes. Bell & Shelman (2011) states that it would not be easy for KFC to succeed across the globe by only supplying American tastes and this is the reason why it had to adopt even the local tastes such as different Chinese recipes.

Zheng Gongfu

In the past few years, as Frommer’s Shortcuts (2012) explains, the Chinese government has shown an increased growth in nationalism and this is also evident among a considerable number of the Chinese population. As a result of this, local companies particularly in the fast food industry have began to grow considerably in an effort to fight the fierce competition posed by the international brands such as KFC among others (FRENCH & CRABBE, 2010). Among the locally based fast food chains that are recently doing well is the Zheng Gongfu (Kung Fu Chain). Zheng Gongfu was established in 1994 when its first restaurant was opened. However, up to today the chain has effectively grew to become one of the largest locally owned fast food in China. In Guangdong alone, Zheng Gongfu has opened nearly a hundred restaurants and nearly 300 of them in other regions of China.

Actually, Frommer’s Shortcuts (2012) notes, Zheng Gongfu hope that very soon it shall be the topmost Chinese fast food chain in the entire country. Zheng Gongfu has an attractive menu that is composed of steamed meals with simple seasoning and fresh ingredients. These are composed of things like chicken with mushroom, soybean sauce, pork ribs, minced meat of Taiwan-style and beef soaked with vegetables.  In addition to this, one of the most appealing things that have resulted to many companies going for Zheng Gongfu is the fact that their meals are relatively affordable since they are usually in the range of ¥22 to ¥29 (Frommer’s Shortcuts, 2012).

Conceptual Framework

The successful entrance of American fast food chains to the Chinese market while no Chinese company has been able to franchise abroad can be basically associated with key management cultures adopted by these companies. One of the contributing factors to the success of such American chains as KFC is an individual culture against a collective culture at the work place, where individual performance, tasks, and goals are more emphasized than that of teams or groups. High accountability and responsibility of employees within their organizations has also contributed to the success of these firms as compared to the Chinese firms that mainly emphasize teamwork and rarely are employees held accountable. High efficacy management in American companies such KFC has enabled it to establish a competitive edge even in the Chinese market, beating the local companies.  Remarkable pricing tactics is also a key management culture associated with the Western companies like KFC as compared to the local companies that are not that experienced in this. Lastly, appropriate approach to change is also another factor that has distinguished KFC and other American companies operating in China and though key changes are being noted, China has not been very tactful in managing change (China Daily, 2008; Bell & Shelman, 2011; Frommer’s Shortcuts, 2012 & KFC, 2013).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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