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Introduction

Talent management is gaining worldwide recognition. Those leadership groups who do not understand the impact that talent management could have in their organisations do not reap the rewards that come with a program that is highly effective. The term ‘talent management’ is fairly new (approximately fifteen years in use). Nonetheless, it is gaining momentum as social science continues to develop evidence based decision making tools. The results that materialize give leadership groups valuable information that contributes to effective decision making. Well informed decisions are those that lead to success and mitigate the time allocated in bringing them to fruition. It is not enough to want to implement a talent management program. The process must be guided and measured to ensure that the desired outcomes are on target. However, if success were to remain constant there would be no room to learn new methods or gain newfound ideas. Failure is imminent when processes are not monitored. In addition, failure has the potential to harm the organisation and in turn, the stakeholders as well.

The Failure and Success of Talent Management Systems

The Talent Management (TM) concept is fairly new by modern day standards. Thunnissena, Boselieb, and Fruytier (2013) posit that TM began to receive global recognition ten years prior to the publication of their article. As a result, TM appears to be moving from the developmental stages of “infancy” (p. 1744) to toddler stages. The newness of TM poses implementation challenges of various sorts. Hence, resulting in faulty application methodologies. Therefore, it follows that flawed TM methodologies hinder business processes, hence, creating negative domino effects within the social organisation environment.

This paper shows how poorly implemented or absent TM strategies impact organisation processes. It also shows how scientifically validated strategies prevent potential harms from happening or eliminate the threat altogether. It addresses reasons why TM initiatives fail. There is a discussion on environmental conditions that lead to failure and the negative impact on employees. It closes with a recapitulation of the content.

TM is a human resource concept that concerns the management of people for mutually beneficial competence exploitation. A few examples of organisations failing with regard to TM are Google, Amazon, Express Scripts, SEARS, and Dillards Inc, amongst many others. Lewis (2013) finds Google to be so decalescent that he cannot imagine why anyone would quit working there. Kantor and Streitfeld (2015) refer to Amazon’s workplace environment as “bruising” (Kantor & Streitfeld 2015, para. 1). Duggan (2015) posits that America’s list of terrible companies to work for is an extensive one.

This paper is structured in the following format. The content is divided into sections with subsections for discussion clarity. The failure or success of talent management topics are discussed as well. Thereafter, discussions address reasons for talent management failure, and negative affects on business. Preventive applications for the success of talent management discuss secondary subtopics that fall within the parameters of the bigger picture concept. The paper closes with concluding comments.

Reasons for Talent Management Failure

According to May (2015), employees leave organisations for many reasons. For example, a few of those reasons are unhappiness with their jobs, dissatisfaction with poor management strategies, and or ineffective leadership. Thunnissena, Boselieb, and Fruytier (2013) attribute potential failures to demographics, retiring baby boomers, mobile technology, and increasing globalization. Lockwood (2006) asserts that the lack of leadership commitment has a nullifying effect on the TM process

Allen, Bryant, and Vardaman (2010) discuss employee turnover, dissatisfaction with salaries, and application of a one-size-fits-all retention strategy. They assert the existence of an erroneous management assumption, that all exits from the organisation fit a standard pattern. Downs and Swailes’s (2013) discuss the lack of social and ethical applications to talent management that affect employees in various ways. McDonald, Dear and Backstrom (2008) contribute to the discussion of specific discriminatory management practices.

Negative Affects (NA) on Business

Negative affects occur for many reasons. The discussion herein refers to few negative affects that are detrimental to the profitability or production in organisations. According to Duan, Lam, Chen, & Zhong (2010), employees become emotional when confronted with affective situations. As a result, some negative behaviors elicit retaliatory behaviors that do not benefit the organisation at all.

Detailed Discussions: NA Related with Employee Groups

Unhappy Employees. Song and Ybarra (2008) posits that unhappiness maybe be the potential result of situational demands. Additionally, he argues that unhappiness comes from the absence of “positive influence” (Song and Ybarra 2008, p. 57). Unhappiness falls under the umbrella of psychological well-being. As a result, environmental situations influence how employees perceive the events happening in the social environment. Hence, the potential for increased employee unhappiness contribute to dysfunctional work relationships. Thereby, affecting the employee as well as business productivity (Song and Ybarra 2008).

Employee Turnover. De Mesquita-Ferreira and de Acquino-Almeida (2015) argue that employee turnover poses a serious threat to organisations. They assert that employees who leave the organisation are replaced by new employees who lack equivalent competence as the person who left. As a result, organisation productivity decreases all the while the new employee is adapting to the organisations’ culture. For example, profit organisations may experience lower revenues due to lower productivity. Another example is that non-profit organisations may experience interference with public programs or services due to understaffing situations.

Poor Management Strategies. Toterhi and Recardo (2013) affirm that recovering from business failure is challenging and time consuming. When managers decide to cut TM budgets, they cripple the TM process altogether. Thereby, making budget cutting a poor management strategy. For example, lost revenue is one result of budget cutting decisions because budgets buy sales training, sales training increase closing skills, the more closed sales are transacted, the greater profit potential for the organisation. Therefore, it is in the best interest of all stakeholders that revenues increase (Poor 2008).

Changing Demographics. Meier and Loewenbein (2003) found that an aging population create adversarial circumstances. Consider for example, that baby boomers are extending their retirement as a result of improved health. Suddenly, there are integrated age groups that engage in conflicting engagements, thereby complicating the coworker relationship. The age mix has become a cause for new social science research on workplace intergenerational conflict (O’Bannon 2001).

Weak Senior Management Commitment. Prabhu and Robson (2000) found that a lack of committed financial resources had a detrimental affect (NA) on talent management initiatives. For example, it is not unusual for TM programs to become the target of budget cuts as a management directive to reduce costs. Such reductions eliminate opportunities for workforce development. They also increase the probability of low employee retention rates. In addition, leadership influence on employee engagement decreases (Prabhu & Robson 2000).

Duan, Lam, Chen, & Zhong (2010) assert that the NA of weak commitment eventually creates unhappy employees who have the potential to interfere with business processes in retaliation. According to Duan, Lam, Chen, & Zhong (2010), retaliatory behaviors “… may hurt colleagues or organizations…” (p. 1288). The NA of weak commitments also trickle down to employees as they perceive that leadership executives have dysfunctional habits of making promises never kept. Negative affects create potential opportunities for unethical behaviors to take place.

Lack of Social And Ethical Applications. According to Hartman, DesJardins, and MacDonald (2014), and Rhodes (2006), Enron was an example of an organisation lacking social responsibility and ethical leadership. Using Enron as an example demonstrating an organisation that ignored its obligation of social responsibility has become the standard norm. The leaderships lack of moral responsibility harmed many stakeholders, namely, the public, private investors, institutional investors, as well as employees. As a result, millions of stakeholders lost life savings, investments, and 401-Ks’. Consequently, the organisation sealed its defunct fate by engaging in socially irresponsible and unethical business practices.

Discrimination. Perhaps the most obvious and probably the most detrimental discrimination to the workforce is that of sexual harassment (SH). Cheri-Gay (2015) says that fifty years of legal issues and law redefinitions concerning SH, that society is still making the attempt to redefine exactly what the word sexual means. Sexual harassment is one of many forms of discrimination prevalent in organisations. Discriminatory SH destroys families, emotionally scars workers, society loses trust and faith, and the organisations existence is threatened by lawsuits and other environmental repercussions (Cheri-Gay, 2015).

Preventive Applications for Successful TM

A look into the popularity of TM provided over twenty-three million websites. Therefore, one can consider that TM is a desirable way to achieve organisation success. Evidence based strategies promote validated alternatives for organisation success. In contrast, the attempt to reinvent the scientific evidence becomes a challenging feat. According to Allen, Bryant, and Vardaman (2010) social science promotes preventive TM application with scientifically validated strategies (SVS). SVS for TM promises a significant return on investment. Following, are a few SVS that encourage successful outcomes for the organisation.

Talent Assessment

According to Rothwell and Kazanas (2003), assessing employee talents begins a decision making process that becomes well informed and structured. Assessments are business tools that identify competency and skill weaknesses, as well as, strengths in the same area. The management team benefits from a decision making strategy that clarifies what competencies and skills they want to focus on. They will able to make decisions that create learning and development opportunities without second guessing themselves. Another benefit manifests itself as a time savings factor because of the SVS factor.

Social Responsibility and Ethical Decision Making

Social responsibility is on its way to becoming a driving force in society. The term social responsibility encourages ethical behaviors grounded in morality (Rhodes, 2006). Therefore, one can consider moral decision making as a strategy that supports the moral leadership model. Therefore, it follows that moral leadership discourages behaviors that benefit the minority, but harm the majority (Hartman, DesJardins, & MacDonald 2014; Rhodes 2006).

Socially responsible behavioral codes include instituting a decision making process that determines the facts, identifies all stakeholders, and considers multiple alternatives on the affective nature of the issue at hand. After the information collection process, decision makers have the power to do what is right for all stakeholders. This can only be accomplished if the decision maker lives by moral values (Hartman, DesJardins, & MacDonald 2014; Rhodes 2006).

Characteristics of morally focused decision makers are promoted by Rhodes (2006) as possessing the following, commitment to moral values, insightful transformation, courage, and positive communication skills. Leite, de Aguiar Rodrigues, and de Albuquerque (2014) posit that commitment is a behavior that engages motivation and a desire to do. Insightful transformation requires self knowledge. That knowledge comes from environmental stimulation that incorporates discernment and cognitive perception. Thereafter, social stimulation determines if one will do the right thing (Lewis, 2008).

Courage. koerner (2014) discusses courage as a social identity construct. The stated construct engages one’s ability to sort through environmental input and use it to make a decision on the actions to be taken. Courage is a form of oppositional behavior that seeks to relieve social stimulation pressures. Relief transpires into the action that is linked to moral values (Koerner 2014).

Positive Communication Skills. Smart and Featheringham (2006) discuss effective communication as a skill that employers seek because it is critical for business operations. Effective communication skills allow employees to enter the organisation. Ineffective communication skills lead to conflicting situations. As a result, such events deprive the organisation of productive time. Articulation, writing, and good listening skills facilitate cross-functional interaction. These skills touch everything from accounting, to computers, and finance (Smart & Featheringham 2006).

Establish Accountability

Establishing Accountability. Accountability contributes value to pre-established organisation processes. According to Kotter and Cohen (2005), accountability assignment is a leadership commitment to accept responsibility for all outcomes of business processes. Accountability requires a standard of method of operation that enhances business processes. As a result, the focal factor becomes the measurement of employee competency relative to business processes and not their skills set. Employees are in need of assistance in understanding how their jobs contribute to business functions. Kotter and Cohen (2005) suggest that employees who perceive their jobs as an asset to the organisation increase their productivity as a result of feeling important to the company.

Encourage Engagement and Partnership Collaboration

Encouraging Engagement. Engagement is about inspiring employees to become active volunteers of their job requirements. Establishing a two-way communication process contributes towards voluntary engagement. Establishing focus groups and feedback debriefs increase the potential for significant engagement. Listening to employee concerns adds value to their emotional well being. In return, they reciprocate by increasing their production (Kotter & Cohen 2005).

Partnership Collaboration. Implementing participatory leadership (PL) strategies increases productivity and engagement. Somech (2003) asserts that participatory leadership creates an employee bond that encourages their engagement further. As a result, morale is high. This application increases productivity and enhances services for the business (Somech 2003).

Conclusion

The purpose of this paper was to discuss how poor talent management strategies negatively impacts organisations and employees. Presented herein are discussions that show how ineffective leadership interferes with organisation success. There are discussions on employee unhappiness, dissatisfaction, discrimination, weak leadership commitments, employee turnover, and changing demographics written to show the negative impact on organisations. In similar fashion, there are discussions on ways that those negatives can be prevented or eliminated altogether by using scientifically validated strategies. Explicit scientifically validated strategies show ways that the negative outcomes could contribute to leadership effectiveness.

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Executive Summary

This essay presents an analysis and discussion of the strategic position of the Valentinos Personal Introductions Agency and the value/feasibility of an information systems update with regards to the competitive advantage of the business within the UK market. The findings of this essay highlight that the companies’ computer systems are an important contingent factor in the strength of their organizational culture, their levels of productivity and motivation, and most importantly the maintenance of their strong and valuable reputation. It is thus recommended that Valentinos update their current systems hastily before any inevitable issues occur that would threaten their competitive position and their ability to capitalize upon the positive growth trends of their operative market.

1.0 Introduction

The Valentinos Personal Introductions Agency is a well-established company that has been operating within the UK market since 1976 and with over 8 million single men and women in the UK between the ages of 18 and 64, and often living without the opportunity to meet potential partners, the company has been very successful. However the management of the organization have expressed a growing concern that is being felt regarding the 10 year old computer systems that are currently being relied upon and the negative affect that such outdated systems are having on the companies’ competitive advantage and market share within the UK. This essay will therefore seek to assess the value and importance of the computer system with regards to the competitive advantage of the company, the company culture, and the overall productivity of the organization. The essay will approach this question by firstly evaluating the strategic position of the company both internally, through the use of a SWOT analysis, and externally relative to its competitors and various other contingent factors to competitive advantage through the consideration of Porter’s 5 forces analysis model (Porter, 2008). The essay will then proceed to directly discuss the effects that the computer system has upon the Valuentinos organization culture and productivity levels before finally assessing if and how the computer system has provided the company with a competitive advantage such that some clear recommendations can be put forward to the company’s managing director regarding their future strategic outlook and potential options.

2.0 Strategic Evaluation

This part of the essay considers the strategic position of the Valentinos company by taking both an internal and external view and duly addressing the relative positions of the companies industry rivals, the consumers, the suppliers, and the general state of the industry and market in terms of threats and opportunities. Firstly, the essay will present a SWOT analysis of the Valentinos company before proceeding to analysis the external trends and factors affecting the company in order to gain a more holistic view of the general strategic position.

2.1 Valentino’s current position (SWOT analysis)

The SWOT analysis below highlights a number of salient factors that must be considered in evaluating the companies’ strategic position with regards to any possible threats or opportunities that may arise and its ability to take advantage or overcome these factors.

Strengths

The Valentinos company and brand has been long established, and has exhibited consistent reputable integrity in its operations which is a highly salient factor in the decision making processes of potential consumers

There long established presence in the market also means that they have strong links with various suppliers such as with advertisements on public transport or in newspapers

The company also inhabit the market position of the price leader which makes them well positioned to take advantage of the growing number of price savvy and/or price conscious UK consumers (Telegraph, 2010) and trends within the UK population whereby more people are spending more time at home and are unable to find the time to go out and socialize (Euromonity, 2010a)

Valentinos unique combination of high technology and personal touch through the direct contact phone support services, has been critical in making the Valentinos Personal Introductions Agency a global industry leader

Valentinos also holds the largest database of members which means that any potential client would have the greatest likelihood of meeting somebody when choosing Valentinos over other industry rivals

Weaknesses

The company database used an old version of oracle and an old matching program that is poorly documented and is poorly understood by the companies’ current IT staff that are struggling to maintain it.

If this is left to continue then this will most likely lead to performance problems in the near future, which will no doubt be observable to the client base and result in a decrease in market share.

Perhaps the biggest concern would be the accidental loss or release of private information and the subsequent sullying of the companies valuable reputation

Opportunities

The growing UK population proportions of university graduates indicates that a growing number of people in the UK will find themselves in busy careers, as is similarly described of the companies’ common clientele demographics (BBC News, 2007, Euromonitor, 2010b).

The number of people using the internet, particularly within the age demographics commonly served by the Valentinos agency, nearly doubled over the period 2000- 2007. (Euromonitor, 2010c)

New avenues for advertisements and promotions such as internet sites that receive a high amount of traffic or mutually beneficial links with other web-based businesses such as online clothes retailers.

Threats

The companies position as a price leader is a highly vulnerable one as existing competitors/ industry rivals or perhaps substitutes may choose to challenge this price dominance which can either result in a price war or the competitive obsolescence of the Valentinos Personal Introductions Agency

The companies’ position as a leader in terms of technology may also be placed under threat by any highly resourced rivals or new industry entrants, and such an instance could result in a devastating loss in market share

The companies’ highly valuable and hard earned reputation for safety, ethics, privacy and integrity could be threatened by poor control over their computer systems and data bases.

As the table (above) illustrates, there are a number of salient opportunities and threats facing the Valentinos company and there is also a number of highly impingent strengths and weaknesses held by the company that play an important role in determining its ability to manoeuvre and navigate through the various external trends and factors that are presented in the Porter’s 5 forces analysis. Firstly, with regards to Valentino’s industry presence, it can be noted that the company and brand has been very long established within the market and that over the years Valentinos has proven its high standards of ethics, integrity, and accountability in terms of the safety of its clientele and the controlled protection of their personal information. This is a highly advantageous and beneficial factor for the company as it appeals to the client’s and potential clients most highly regarded concerns (safety, privacy and control). However, the threat of sullying this reputation through some kind of error in the computer systems could be hugely damaging for the company in terms of competitive advantage.

The companies’ long-established position within the industry has also allowed it to attain strong links with networks of clients and suppliers of advertising spaces such as on public transport and in Newspapers. With regards to the companies’ network of clients, it can be noted that it has the largest database of people out of all industry rivals and therefore offers clients the greatest likelihood of achieving a positive result. Moreover, although the companies competitive position as an market price leader is a highly vulnerable one, generally speaking, it is also highly competitive in terms of its service which has been exhibited as being highly personal while also being very comprehensive, flexible, and efficient.

With regards to the future outlook of the company, from an internal perspective, Valentinos is well poised to take advantage of the growing young professional demographics and the growing number of Internet users. However, its position as a market leader could be threatened either by the event of a lapse in their computer systems that would compromise their integrity and reputation, or by a new market entrant or highly resourced rival that supersedes Valentinos in terms of technological resources. Nevertheless, new avenues for promotion and advertisement on the internet (e.g. online retail sites and other such high traffic addresses) could be utilized by the Valentinos company in order to further expand upon their market dominance or simply seek more effective and price efficient means of promotion.

2.2 Porters five forces model (An external view of Valentinos’ competitive position)
Existing Rivalry Between Firms

The Personal Introduction industry is one that is highly populated with market competitors of different sizes some operating country wide while others differentiate and focus on specific geographical areas or demographic groups such as over 40’s. Rivalry within this industry however, appears to rest upon the visible integrity of industry rivals which can be attained through membership to official standards associations and through the strength of promotional campaigns:

Barriers to Entry & The Threat of New Entrants

Due to a growing number of illegitimate companies and a growing concern regarding privacy and integrity (Select, 2010), an official third party association (the Association of British Introduction Agencies) has been created at the instigation of the office of fair trading to the industry as a regulator such that legitimate organizations can gain membership and subsequently accreditation and evidence of its integrity and high standards, as they must follow a set code of practice in order to be accepted for membership (ABIA, 2010). This is therefore a point of rivalry within the industry. This is also in existence to offset the threat of the media and social representation of the industry in general, with common perceptions that it is wholly illegitimate and unethical or that it does not help people (Marsden, 2010). Nevertheless, such associations create a barrier for entry to new industry entrants and this is making the market less dense and more clustered, with companies such as Valentinos occupying increasingly secure and defensible positions within the market and exerting greater dominance with their public familiarity and visibility through the strength of their promotional campaigns. The industry is performing well and experiencing steady market growth, thus, the market will grow more attractive to new entrants and as such the threat increases (IBISWorld, 2010).

The Threat of Substitutes

Specialised Personal Introduction Agencies such as Valentinos are under threat from a number of substitutes as the market continues to grow and become increasingly attractive as a financial investment. Firstly, Newspapers and other business with the means of reaching large quantities of people are beginning to seek entry into the online dating market, most notably the Guardian has diversified so as to include an online dating section ‘Soulmates’ within its website so as to offer a more select data base of clients (Guardian, 2010). Social networking sites could also be considered as a more indirect threat as they are becoming massively popular and also have all of the prerequisite resources and capabilities for online dating operations and have already began to introduce applications through which online dating is possible (Lee, 2009).

Power of Buyers

Although there is a growing interest in online dating and personal introduction forums and the market is showing encouraging growth, there is a large number of industry rivals competing fiercely for market share currently and as such the power of buyers is very strong. Nevertheless, this is offset somewhat by the great amount of differentiation of industry rivals.

Power of Suppliers

The power of suppliers is also very great due, again, to the quantity of competitors present within the industry and more so due to the generally applicable nature of the supplier businesses such as web-designers and companies renting advertising space and promotional opportunities who are open to bids from businesses in practically any industry.

3.0 The Impact of the new IT/IS System

This section of the essay assesses and discusses the effects of Valentinos’ computer systems on the organizational culture and its general levels of productivity before finally addressing the question of whether the computer system has provided Valentino with a competitive advantage.

3.1 How has the system impacted the organizational culture/productivity?

It has been noted in the case study that due to the IT staff’s inability to properly manage the (10 year old) matching program has resulted in substantial delays within the clients processes such as the amount of time taken to update a member’s details on the website which can be several days which may lead to low levels of consumer satisfaction and perhaps even an exodus to a rival company in the near or distant future. In essence, this significantly reduces the productivity of the organization as substantial amounts of time, effort, and manpower is being wasted on the challenge and confusion of understanding the greatly dated (C++ designed) matching system.

With regards to the organizational culture, it can be observed that the lax and untidy processes that result from the dated computer systems directly contradict the cultural identity of the company, which could be most accurately described as premium standard, trustworthy, safe, and efficient. A confusion regarding the organizational culture and the various messages, meanings and symbols throughout the organization can lead to lulls in motivation and thus productivity, with organizational members not having a familiar and well understood framework within which to operate comfortably and regularly (Huczynski & Buchanan, 2007). This can be a serious problem or an area of potential unrealized as a strong organizational culture has been recognized as a reason for improved levels of company performance (Thompson & McHugh, 2002).

3.2 Has the computerized system provided the firm with a competitive advantage?

The computerized system controlled by Valentinos, as highlighted in the case study, provides the company with the capability to provide their client members with high levels of flexibility and control over their own par-takings within the various incumbent processes with regards to the number of introduction requests that they wish to make, the degree of information confidentiality, their personalized details describing themselves and what they are seeking. The computer systems also allow the company to properly manage their exceedingly large membership base and the associated database of complex information. Thus, in it’s function for sustaining, properly maintaining, and utilizing a large database of clients the client is deriving a competitive advantage as a large database of clients, when utilized effectively, can provide any incumbent or potential client members with the greatest possible chance of experiencing a successful match.

The computer system also allows them to maintain control over the vast body of personal and confidential information such as the that gained from the comprehensive questionnaire, which is important from an ethical standpoint and as such is contingent to the up keeping of their reputation as a highly legitimate service with strong business integrity and strong methods of accountability with regards to recordings of what information has been released to whom.

With regards to the organizational culture and how this can bring competitive advantage, it can certainly be supposed that the Valentinos company can strengthen and consolidate their organizational culture that promotes high standards and integrity above all other features. However, many scholars studying the subject of organization culture that claim that strong cultures are linked to improved performance also highlight various caveats (Ogbonna & Harris, 2002) such as that the link between strong culture and competitive advantage is dependent upon whether the culture is better than the cultures of competitors and that it cannot be imitated (Barney, 1991). This may not be the case with Valentinos, however, as noted above, the strength of the company’s computer system along with its large database of clients and excellent reputation does provide a strong competitive advantage that cannot be replicated with any degree of ease.

4.0 Conclusions

In conclusion, the slight shortcomings in terms of the companies’ computer systems and their staff’s inability to properly understand and operate them, can potentially have rather significant detrimental effects to the companies culture, productivity, the motivation levels of its staff, and also its reputation among consumer for integrity and high standards of practice. The damaging of the company’s reputation should be avoided by any necessary means and therefore it would be recommendable for the company to update its computer systems such that its looming threats are overcome and such that it can fully capitalize on its strong position within a growing and lucrative market.

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This essay contains a brief introduction which will contextualise and define and the term “social media marketing strategy”. It will then analyse the UK supermarket chain Sainsbury’s social media marketing strategy with particular attention paid to their strengths and weaknesses. The conclusion will provide a concise set of recommendations for improvement which will be underpinned by academic theory.

Introduction

Use of the internet has shifted since its begging where individuals created and published content, to what is currently known as web 2.0, whereby content is continuously changed and updated by other users, essentially creating collaborative content (O’reilly, 2007). Web 2.0 can be seen as holding the ideological and technological enabler of social media (Kaplan and Heliean, 2010). Social media is defined as “Websites and applications that enable users to create and share content or to participate in social networking” (Oxford Dictionary, 2015). As such a social media marketing strategy can be understood to be how a firm tries to use social media for promotion with the aim of achieving their business objectives. Most firms use social media to communicate with external third parties, commonly adopting a multipronged strategy operating across numerous social platforms (Piskorski, 2011). The other key way in which firms use social media is for internal communication known as enterprise social media (ESM). Leonardi, Huysman, and Steinfield (2013) define ESM as “Web-based platforms that allow workers to (1) communicate messages with specific co-workers or broadcast messages to everyone in the organization; (2) explicitly indicate or implicitly reveal particular co-workers as communication partners; (3) post, edit, and sort text and files linked to themselves or others; and (4) view the messages, connections, text, and files communicated, posted, edited and sorted by anyone else in the organization at any time of their choosing.”. In line with Kaplan and Haenlein (2010) the four types of social media this essay focuses on are, collaborative projects, content communities, blogs and social networking sites.

Sainsbury’s is one of the leading retailers in the UK with a current market share of 16.8%, and has diversified into services namely the finance and energy solutions sectors (Marketline advantage, 2015). Currently listed on Sainsbury’s social media page they have 4 twitter accounts, a Facebook page, a YouTube channel and a Flikr profile (Sainsburys, 2015a), they also have created their own content community online called TrolleyTalk (Trolley Talk. 2015) which facilitates discussion among stakeholders on any issue regarding supermarket trade, as well as an ESM platform Yammer (Brooks, 2015).

Currently Sainsbury’s external social media strategy incorporates three main elements, Customer service, Crisis control and sales. Sales appears to be the most prevalent across all platforms with their main twitter account, Facebook page and YouTube channel primarily attempting to stimulate sales through promoting recipes and competitions. The profile for Sainsbury’s main twitter account reads “delicious recipes, food inspiration, competitions and customer service. Got a question? Our team is here to help!” (Twitter, 2015a). The secondary aim appears to be raising brand awareness by promoting their Corporate Social Responsibility (CSR) activity, brand values and press releases, seen on their twitter account @sainsburysnews (Twitter, 2015b). While their ESM objectives appear to be improving internal connectivity, sharing ideas and celebrating success (Brooks, 2015). An analysis of the strengths of this social media strategy will follow.

Strengths of Sainsbury’s social media marketing strategy

Klout – a social media tool which is used to measure brand influence, has found Sainsbury’s to have the most influence on social media of any UK retailer (Briggs, 2014). This suggests that the way in which Sainsbury’s are using social media is extremely successful (Boyd, 2014) and the following section looks at three of the determining key factors of this.

Firstly Sainsbury’s have partnered with a social media crisis management specialist Conversocial (Joeseph, 2013) in order to rapidly identify consumer issues on social media. This software is extremely useful to provide overviews during wide-scale crisis such as the “horsegate scandal” – when horse meat was found in products in UK supermarkets including Sainsbury’s (BBC, 2013), but also for providing excellent customer service to dissatisfied customers. Due to the dynamic and public nature of social media dissatisfied customers now have the tools to be heard by millions and seriously damage a brands reputation (Gillian, 2007), but this also presents an opportunity for a firm to publically showcase their excellent customer service and improve their brand. Tax, Brown, and Chandrashekaran (1998) found that customer service which left a dissatisfied customer feeling satisfied actually improved a brand image further than if they had been satisfied with the original service they received. Conversocials software allows Sainsbury’s to pull all social media activity regarding them into one stream, theoretically giving the ability to respond to any comment within 45 minutes. This not only gives them the ability to respond to large issues (such as the horsegate scandal) but also listen to individual customers issues and respond to them efficiently in the public domain, not only improving their brand with that individual customer, but with the wider audience. An example of a customer response by Sainsbury’s which went viral was a humorous response to a letter from a 3 year old girl regarding the name of one of their products. The exchange received more than 14,000 shares on social media sites, and resulted in Sainsbury’s renaming their product due to popular demand (Sheriff, 2013), resultantly receiving positive nationwide brand exposure due to coverage by the BBC (BBC 2013).

Secondly Sainsbury’s have not merely adopted usage of existing social media channels, but have been proactive about creating two of their own – TrolleyTalk and Yammer. TrolleyTalk allows Sainsbury’s the opportunity to not only dictate the marketing message they wish to portray, but also to shape the conversation happening between consumers (Mangold and Faulds, 2009), allowing Sainsbury’s to positively influence consumer brand perception. On their website Sainsbury’s claim this platform gives them the opportunity to reach approximately 4,000 people per week and gain rich insight on issues which concern customers and take immediate and effective action. The example they give is that during the recent UK supermarket price war on milk, consumers were becoming increasingly concerned with the negative effect on dairy farmers. Resultant of identifying this issue on the platform TrolleyTalk, Sainsbury’s took the initiative to advertise that they pay their dairy farmers a higher rate than their competitors (Sainsbury’s, 2015b). A study by Millward Brown digital cited in Sarner et al, (2011) found that brands which have online communities drove up to 12 times the traffic and made double the amount of online sales conversion than brands which solely used existing social channels.

The final key strength of Sainsbury’s social media marketing is the high level of cross platform cohesiveness in the message they deliver. Their YouTube, Facebook and Twitter accounts all primarily generate food and recipe based content, and appear to be used for customer service. This cohesiveness avoids any confusion which can be caused by conflicting messages across different platforms (Mangold and Faulds, 2009).

Weaknesses of Sainsbury’s social media strategy

Bull (2012) argues the case for brand journalism, and states that all communication by a firm must be consistent with their core values. While Sainsbury’s social media marketing strategy has a high level of cross platform congruency, it does not fully match up with their overall business strategy written on their website – “Our strategy: We know our customers better than anyone else. We will be there whenever and wherever they need us, offering great products and services at fair prices. Our colleagues make the difference, our values make us different.” (Sainsbury’s, 2015c). While TrolleyTalk arguably provides them with a great opportunity to get to know their customers better, and Conversocial allows Sainsbury’s to efficiently engage with customers who require attention, Sainsbury’s social media has very little emphasis on promoting the values which they claim differentiate them. Sainsbury’s main twitter account very rarely – if at all mentions the distinguishing corporate values upon which their strategy is based. They have a twitter account @sainsburysnews (twitter, 2015b) which provides updates on these sorts of issues, and despite having 10 times less followers, the posts on this account have a similar level of engagement to that of the main account @sainsburys. This points towards this content being far more engaging for consumers than what is currently being promoted on the main page.

Sainsbury’s have four twitter accounts, which on average tweet 4 times per day each. Rowles (2014) suggests that the optimum amount of times for a brand to tweet is four per day, in order to prevent clogging up users feeds. While each individual Sainsbury’s account adheres to this basic principle, if a customer has subscribed to more than one of the accounts they will receive far more, up to four times the recommended amount of contact, which could prove invasive for consumers and make them unsubscribe from one or more accounts, regardless of whether they found the content engaging. If Sainsbury’s were to reduce the number of accounts they have on each platform it is possible Sainsbury’s would receive a higher level of social media engagement as well as reaching a larger audience (Singh, Veron-Jackson and Cullinane, 2008). This would give higher visibility to content regarding Sainsbury’s core values and the recent partnership with Argos digital which is being integrated into selected stores, maximising the impact of their competitive advantage on both fronts.

While Sainsbury’s has recently adopted the use of an ESM platform called Yammer, it only has 10,000 users (Brooks, 2015). Sainsbury’s currently has 160,500 employees (Marketline Advantage, 2015) which highlights the small extent to which ESM is being used by Sainsbury’s. ESM can improve internal communications between the workforce and be used to promote the brand internally, and be used as a tool to manage the psychological contract (Mazzei, 2010) and as such this represents a missed opportunity. This weakness ties in with the final one which will be discussed, which is the lack of visibility by the CEO on social media.

Currently the CEO of Sainsbury’s Mike Coupe has a distinct lack of personal visibility on social media. Dutta (2010) found there to be three main benefits of a firms CEO having a notable social media presence. Firstly social media both internal and external, aids an executive in engaging with important contacts. It allows them to strengthen relationships or personify the company’s support for a cause which adds credibility. Secondly the CEO can use social media to engage employees internally, enabling the CEO to increase his personal support through high internal visibility, which leads onto the third benefit which is learning. By having a higher profile within the company and being open to learn a CEO can gain feedback on any large scale changes from the workforce, which can lead to strategic changes having lower levels of opposition making them easier to implement and in turn reduce staff turnover, an opportunity Coupe is currently not exploiting.

Recommendations for improvement

The following recommendations are resultant of the above analysis.

It is recommended Sainsbury’s merge their @sainsburys and @sainsburysnews twitter accounts, providing half of the original content from each. This will allow them to promote their brand values to a much wider audience, and reduce the chance of excessive contact becoming invasive. In line with Rowles (2014) it is recommended they continue to tweet 4 times per day, only if they have content which they believe is worthwhile and will be of interest to their audience.
It is recommended that Sainsbury’s advance efforts to increase participation on the internal social media platform Yama. A SWOT analysis conducted by Marketline Advantage (2015) found that the major threat to Sainsbury’s is the rising labour costs in the UK. As a result it is recommended that internal marketing and branding can be used in order to improve the psychological contract and resultantly raise employee retention (Mazzei, 2010). This will help to address the threat caused by rising labour costs by reducing recruitment and training costs associated with taking on new staff.
It is recommended that the CEO of Sainsbury’s Mike Coupe starts to become an active user on both internal and external social media platforms. Internally high CEO visibility and approachability will go some way to improving the perception Sainsbury’s workforce has of its employer and will help to reduce staff turnover. It is recommended Coupe uses external social media to promote Sainsbury’s core brand values. If done strategically he can be used to personify the ethical values held by the company and strengthen the support the British public have of these values. This will not only make their campaigns further reaching, but it will also improve their credibility (Dutta, 2010).
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This essay will discuss the current social media strategy of EE (Everything Everywhere) and provide recommendations for how their strategy can be improved. EE is a British mobile network provider that was established in 2010 as part of a joint venture between T-Mobile and Orange (EE, 2015a). The company was the first digital communications provider to offer 4G services in the U.K., as well as the country’s first provider of contactless mobile payments (EE, 2015a). As of 2015, EE provides access to its network to over 29 mobile operators which services a total of 5.7 million customers (EE, 2015b). In addition to offering mobile services, the company operates over 700 retail outlets across the county. Within its retail operations EE sells mobile handsets, tablets and branded broadband which brought its revenue to over ?6 billion in 2014 (EE, 2015b).

Due to EE’s operational size they are able to competitively offer services that their competition do not have. In 2013 EE developed an exclusive partnership with BT to offer customers free access to BT Wi-Fi hotspots nationwide (Thomas, 2015). In 2015, EE plan to grow their strategy in mobile communications by being the first provider to offer 5G coverage (Thomas, 2015).

Part of EE’s current success is their strong focus on social media marketing as part of their marketing mix. The head of EE’s social marketing states that, “digital is at the heart of (EE’s) ethos” (Green, 2013) and with this they focus on using social media in new ways to communicate with customers. Saravanakumar et al (2012) argue that the role of traditional marketing is disappearing and new media marketing like social media enables a brand to communicate to a wider audience. Due to this trend EE has invested heavily in social media communications. As of 2015 EE has over 800 000 ‘likes’ on their Facebook page and over 100 000 followers through Twitter (TalkWalker, 2015).

Saravanakumar et al (2012) write about social media playing a hybrid role in the promotions mix. While it allows for companies to talk to their customer base, at the same time, it allows for customers to talk about the brand. Due to the power of word-of-mouth, EE have focused on shaping customers discussions to ensure they are aligned with the organisations goals. Part of this strategy was to launch a social media campaign in 2014 with the brand ambassador, Kevin Bacon (Ridley, 2014). To tie in with the World Cup Kevin Bacon was part of a humorous social media campaign demonstrating the power of EE’s 4G network. To enable a dialogue the public were encouraged to share the advert through social media for exclusive World Cup merchandise.

In 2015 in an effort increase brand presence EE invested heavily in online sponsorship. Part of this strategy was the sponsorship of the British Bafta awards, which allowed them to launch the social media hashtag “#EEBaftas” (EE, 2015c). From the live event over 16 000 tweets used the hashtag allowing the public to associate the awards with the brand and to further spread awareness of the brand through online word-of-mouth (Deering, 2015).

With customers no longer just being passive recipients, it is up to companies to engage and learn from customers (Hanna et al, 2011). Garretson (2008) argues that customers are now taking an active role in co-creating the promotional message and provide opinions on the role a company plays branding wise. As stated earlier, EE have social media as one of their current promotional strategies, which has ended up being a key competitive strength for them. With their business being in mobile communications, social media has allowed for active engagement from the initial purchase of the product (i.e. mobile phone) to the day-to-day usage. EE focuses on continual active engagement via a blend of traditional and social media to create experiences that involve the customers. Hanna et al (2011) argues that companies must focus their social media approach as an integrated strategy to bring the customer experience to the forefront.

These strengths are highlighted in EE’s current social media campaign of the EE Wembley Cup. Launched in 2015, the EE Wembley Cup is a ten week media campaign focusing on offering EE customers the opportunity to play in the iconic Wembley Stadium (EE, 2015d). Using all social media platforms EE is focused on creating daily communication with followers to create engagement and encourage feedback. The first strength with this is the active involvement with the public, by using the Wembley stadium as the key focal point to the campaign EE are able to target audiences with a recognisable brand. Initially, traditional media drove reach to create hype behind the campaign, while social media created intimacy as EE are actively using YouTube and Facebook to provide daily updates (EE, 2015d).

Karpinski (2005) argues that for a social media strategy to work, it must empower customers. Customers are more trusting of their own opinions and opinions of their peers (Hanna et al. 2011). EE have recognised this and have focused on only using their social media accounts to post the media content, relying on customers to spread the communications virally (EE, 2015d). To further develop intimacy, the campaign focuses on customers using their mobile phones to record their footballing skills and sending it to friends via the hashtag #EEWembleyCup. EE are enabling passive bystanders to be part of the campaign as active ‘hunters’ who seek out and take part with the internet-based campaign (Hanna et al, 2011).

With customers actively influencing the brand message, EE are also using the strength of the campaign to seek customer’s opinions on their phone services. To encourage fans to participate, EE are offering a free 4G service when using their newly launched Wembley smartphone app (EE, 2015d). Once downloaded, the app allows for EE to measure customer participation with the campaign and see who the social media influencers are. Schultz (2007) states that companies can use the social media ecosystem to view online ‘chatter’ – which serves as a crystal ball that helps companies determine future product of service strategies.

While EE are successful at creating a social media strategy that focuses on creating engagement with customers. Their current strategy primarily revolves around controlled events and branding opportunities. Neti (2011) argues that social media strategy can engage with customers on helping to promote a brand or product, however it can also help increase customer loyalty through customer support services. EE have demonstrated the ability to attract new customers, however their social media strategy is failing to help retain current customers.

As of 2015 EE has a one star rating with Trust Pilot, an online customer watchdog service, who rate the company poorly on their ability to solve customer issues and complaints (Trust Pilot, 2015). Due to poor communications via social media platforms, EE were accused of ignoring customer complaints and not providing accurate or adequate information. All of which accumulated in Ofcom issuing EE a ?1million fine over its handling of customer complaints (Paton, 2015). Neti (2011), states that a company must have a social media strategy that is flexible to deal with ever changing issues that can emerge from its viral nature. For EE, the fallout from the Ofcom fine led to a massive campaign over social media from unhappy customers who voiced their complaints. Rather than issue a statement addressing complaints, the social media strategy was to remain silent which led to angry opinion leaders creating viral groups openly criticizing the EE brand (‘EE Complaints’ and ‘I Hate EE’ Facebook Groups received over 5000 followers). Due to the backlash the EE head office finally issued a statement directly through Facebook apologising to customers. Berthon et al (2012) highlight that a company must have a social media strategy that monitors local news and situations across all social media platforms that concerns a company’s brand. What may start as a minor issue can spread through word-of-mouth via opinion leaders and must be addressed quickly to avoid a catastrophe for the brands media image (Berthon et al, 2012).

Assaad and Gomez (2011) also highlight another potential challenge with social media as a strategy is the issue of privacy and personal security. Within the social media sphere there is a niche element who are overly concerned with how their data is used. For EE a key component of their social media strategy is the interactions with customers via social media campaigns. However in 2015 EE was listed as the most-complained about provider to Ofcom due to the breach of data. Customers who had interacted with EE’s social media campaigns discovered that their data was being accessed by other advertisers to target them with further promotions (BBC, 2015). Gotta and O’Kelly (2006) argue that a social media strategy must be open to all audiences to avoid privacy concerns and potential bad publicity.

From analysing EE’s current social media strategy there is a pattern emerging on how EE use social media to communicate with customers. Currently EE’s social media strategy is still driven by old fashioned marketing ideas and focuses too heavily on short-term effects in sales. This incentive-induced behaviour relies on the use of recognisable brand ambassadors and controlled marketing events to drive sales rather than retention (Pradiptarini, 2011).

The recommendation of this essay is for EE to address the way they deal with customer complaints via social media. As demonstrated through their current issues with angry customers, EE need a viable solution in making sure that complaints do not spread virally. Firstly EE need to create an audience strategy (Evans, 2010) and discover who are the opinion leaders discussing the brand. Assaad and Gomez (2011) highlight, that using these highly opinionated customers can provide a benefit. If addressed correctly, their opinion can actually spread a positive message about the brand and EE could turn a negative into a positive. Other telecoms providers like Virgin Media use social media to search key compliant words and directly communicate with customers to solve issues before they spread into the public sphere (Brown, 2010).

Pradiptarini (2011) suggests that for a social media strategy to work, a company must communicate humbly and honestly with its audience. For EE, having a focus on dramatic campaign’s helps to capture new audiences’ attention. However, they also must continue to satisfy current customers’ needs for information (Pradiptarini, 2011). It is a further recommendation for EE to set up a social media strategy focused solely on current customers; which targets the need to provide information and solutions to current customer issues. A successful example of this was Ford Motor Company who split their Twitter account into @Ford who focused on brand promotion and @FordService who directly address customer queries (Ratcliff, 2014).

In conclusion EE are one of the primary examples of how to carry out a strong social media marketing strategy. EE’s operational size means that they have the resources to create marketing campaigns that use a mix of traditional and new media to interact with new audiences. Through brand ambassadors, sponsorship and viral-based events, EE have created a strong brand through word-of-mouth. However this focus on creating new customers through social media is also their weakness in their current strategy. As of 2015, EE have no viable way of addressing a complaint or question via their social media networks. Instead, when complaints or issues emerge, their social media accounts either ignore or hide any issues with the brand. This closed dialogue has led to opinion leaders turning on the brand and spreading negative messages via the same social media platforms that EE use to promote the company.

From studying examples of Virgin Media and Ford, it is the recommendation of this essay for EE to directly target these opinion leaders through a specialised social media strategy and focus on rebuilding trust and creating long-term relationships. As academics have demonstrated, trust is one of the key factors in social media strategy if the target audience is going to change buying behaviour, influence peers and remain loyal to a brand. It is vital for EE to recognise the characteristics of their entire target market and ensure that all groups are addressed via their social media strategy to ensure success.

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A critical discussion on social media marketing and what makes a successful social media strategy

Introduction

The term social media can be defined as “Many online tools that allow people with similar interests to share information, learn from others, or network in an open process. The information found on these sites is commonly referred to as ‘user-generated content’, which means anyone is able to post with minimal restrictions or oversight.” (Wilson, 2010)

There has been a huge explosion in business social media marketing, used to engage effectively with consumers and as such, there is a lot of research and literature on the impact of social media on organisations. This has been brought about by the remarkable increase in the progression and adaptation of technology, demanding that businesses rethink their digital marketing strategies. The aim of this essay is to critically review social media marketing and to analyse the reasons behind its success. The essay further aims to discuss the models and frameworks that support successful social media strategies for organisations, both large and small.

This essay offers a platform that would enable the reader to understand the need for this research and also provides a background about recent developments both in the industry and in research circles with respect to social media branding.

The rapid development of technology, and the reach of such technologies at affordable costs, have revolutionised the ways in which businesses operate today. The Internet is being used by millions of people at this very moment; therefore these technologies have led to a paradigm shift in the way that communication happens. Business reputation and presence in a market is more driven by ‘social media’. (Tuten, 2008)

It can also be noted that the shift and focus on social media has been drastic and many businesses have been caught off-guard. However, the use of social media has created opportunities for online marketers to engage with customers who they wouldn’t otherwise have been able to reach using traditional marketing methods. This reach though, has posed many challenges to businesses that have viewed social media like any other traditional media, such as magazine or television, thus causing wider gaps rather than bringing them closer to the customers (Qualman, 2012). On the contrary, it can be said that more and more retailers and business are becoming increasingly aware of social media and are waiting to exploit the potential that it offers (Olivas-Lujan, 2013).

Background

Social Media is a relatively new form of marketing that just about every business today is at least aware of, if not already utilising it in some form or another.

The global fixation with social media, or social networking as it’s often referred to, can be easily compared to the hysteria of the Internet revolution in the 1990’s. As reported by Mangold and Faulds (2009), this marketing medium differentiates from the traditional communication channels in terms of reach, frequency and immediacy, with the most obvious difference being user-generated content.

Business Investment

It is perhaps not surprising why businesses across the world are investing in this new form of communication to reach their consumers and stakeholders. Searching on the term ‘social media sites’ or ‘social networking’ on any Internet search engine brings up dozens of networks including the popular Facebook, Twitter, LinkedIn, Instagram, and YouTube – the list appears endless.

Expenditure on social media by businesses is on the rise. A recent study by the IAB (Internet Advertising Bureau) shows that in the first half of 2014 in the UK alone, there has been a rise of 53% in the spend on social media by businesses, with a total contribution of ?242.5 million (Somerville, 2014). Another study by IAB on FMGC sector, consisting of more than 4500 survey responses and 800 interviews, showed that 90% of customers would use social media to refer the brands to peers, four in five customers would buy products that have good social media coverage and 83% would be willing to try products that are popular in social media (Anon, 2012).

Consumer Choice and Motivation

A research study conducted by Mass Relevance that provides a social media curation platform to clients found that 59% of consumers will more likely trust a brand that has presence in social media and 64% of the consumers interviewed have already made purchases based on social media presence and reviews (Chaney, 2012). Appendix 1 shows the social media advertising effects on consumers (Source: Neilsen Survey: Anon, 2012)

A study for Harvard Business Review by Edelman (2010) discusses how the Internet and social marketing has changed not only the way businesses operate but also how consumers choose their products. It takes the reader through the funnel metaphor that was previously being used by marketers to understand how consumers select their products and how this has moved to a more open-ended approach whereby consumers no longer follow a methodical approach of selecting products. It stresses how important it is for brands to connect with consumers and it also studied the consumers’ decisions across five different industries, namely automobile, skincare, insurance, mobile telecommunications and electronics, across three different continents. Based on the results of the study, it proposed a four-stage model that focuses on today’s consumers using social media for advocating products and also purchasing based on the reviews and backing received. The research takes the reader through the entire customer journey and informs businesses what they should not focus energy and resources on. Providing statistical information about various surveys enables organisations to identify the key areas they should concentrate on in order to build a solid brand image online.

From the above, it can be understood that social media has a profound impact on consumer choice in terms of brand and product selection and that it is key to engage effectively with customers. There is a lot of literature that discusses social media impact on consumers and why businesses should engage with customers, exploiting social media to provide value added etc. The main aim of this essay is to look into various key researches in this area and to provide an overview of effective social media marketing strategies for businesses.

2.1 Social Media Strategy

While social media has its benefits, it is important that businesses are acutely aware of their own social media strategies. One faux-pas might prove to be detrimental to brand image and performance. For example, an indepth study conducted by BusinessWeek (2009) discusses social media hype and the disadvantages it may have on a business. For instance, the potential risks social media marketing poses if employees waste their time on social networking sites instead of on productive tasks in the interests of the organisation. It also forewarns of blunders that could have a profound negative impact on the business itself. This statement is supported by providing evidence in the study that many social media campaigns fail and it sites the example of one such campaign by Saatchi & Saatchi’s campaign for Toyota Matrix, which led to a lawsuit of $10 million (Groth, 2011). If this happens with a small and medium enterprise, it may reap havoc on the business. The study by BusinessWeek (2009) also says that it is hard to quantify the outcomes that social media creates, such as trust and loyalty.

Hence it is important to have a good and well thought out social media strategy tailored to the organisation’s needs. For example, selecting which social networking sites to subscribe to and what kind of content should be posted, and how frequently, are a key areas of a social media strategy.

One global organisation that appears to have mastered its social media strategy is car manufacturer, Ford. In a recent case study the researcher explains how Ford has included the key success elements in its strategy including customised posts, user connectivity through tone of voice and perhaps most importantly, a social media team that reads and responds to every single comment made by followers (Ratcliff, 2014). However, it is worth noting that Ford has worked out what works for its own business, and this exact strategy may not necessarily drive the same achievement for different organisations.

Social media is not the responsibility of one single person within the organisation, rather a collective responsibility of all employees. Social media policies and ‘etiquette’ guidelines need to be developed and strictly adhered to, in order to prevent the risk of employees wasting time and also to clearly define who owns the communication/conversation, the level of transparency in communications, the tone and frequency of messages, building trusting and long-lasting customer relationships etc. The social media strategy should also specifically define the outcomes, the ways in which to measure these outcomes and the total spend on social media activities along with dedicated resources.

For a social media strategy to work, it is important that the communication is two-way and that customer opinion is valued. Similarly, it is pivotal to integrate social media marketing with the overall online marketing strategy and share contents with the users in a social media-friendly ‘pressroom’. Effective collaboration and providing value content plays a major role in determining the success of a social media marketing strategy (Evans, 2010).

A good social media marketing model should be adopted in order to target the right customers, engage with them, constantly work towards attracting more potential customers and building a good brand image. Figure 2 (Appendix) depicts a three-phased approach in the social media marketing model. Firstly, customers need to be understood – from what they perceive about the brand and also their networks. Secondly, the key influencers are analysed to assess what interests customers. The third and final phase is engagement and interaction with the customers. This model gives a broad overview of the social media engagement phases. There are various models in vogue today and each model can work well for a specific business or sector. Depending on the requirements of the business, it is essential to work on a model that would add value to the business and also act as a powerful tool to facilitate the achievement of social media goals for the business. Social media marketing model should be aligned to the social media strategy of the business.

Return on Investment

Drury (2008) discusses how marketers of various industries and businesses can effectively engage in social media marketing. The paper gives a fairly comprehensive view on what social media is and the role of marketing within it. It discusses how social media can be monetised by the marketers and the researcher talks about how marketing is no longer one-dimensional and it is therefore essential for businesses to engage with consumers to build stronger and lasting relationships. It also suggests that the key to a successful relationship would be to provide consumers with tailor-made promotions and messages that would bring various elements together to reach a larger percentage of the audience. The researcher does however state that it is essential for businesses to benchmark success and to effectively measure return on investment (ROI), otherwise it could become very challenging and difficult to drive growth.

Measuring ROI can however be challenging. A recent white paper by Adobe revealed that 88% of the marketers surveyed didn’t feel they could truly quantify the success of their social media efforts (Adobe Digital Index, 2012). Some logical starting points would be to use metric tools, measure interactions such as ‘likes’ and ‘shares’ and measure traffic to the sites (Burg, 2013).

3.0 Conclusion

There is a lot of literature on various aspects including, but not limited to, the effects of social media on small and medium scale enterprises, identification of skill gaps in social media with specific emphasis to certain industries, general studies on implementation challenges, perception of social media on businesses, and barriers to adaptation of social media by businesses etc. Each researcher, however, talks about the importance of measuring the success of the social media activities on the business to enable further growth. They also discuss the importance of being able to fully understand the paradigm shift and having to constantly engage in effective ways of using social media and how any mistakes might jeopardise the business, its image and the reputation that has been built.

References

Adobe Digital Index (2012) Why Marketers aren’t giving social the credit it deserves, [Online], Available: http://success.adobe.com/assets/en/downloads/whitepaper/13926_digital_index_social_report.pdf [15 May 2014].

Anon (2012) ‘State of the Media: The Social Media Report’, Neilsen, pp. 17-18.

Burg, N. (2013) How To Measure Your Social Media Return On Investment, [Online], Available: http://www.forbes.com/sites/capitalonespark/2013/04/25/how-to-measure-your-social-media-return-on-investment/ [10 May 2014].

BusinessWeek (2009) Beware Social Media Snake Oil, [Online], Available: http://scaledinnovation.com/innovation/publications/2009-12-busweek.pdf [10 May 2014].

Chaney, P. (2012) Brands should use social media to engage consumers, amplify messages and promote trust, Digital intelligence today, [Online], Available: http://digitalintelligencetoday.com/brands-should-use-social-media-to-engage-consumers-amplify-messages-and-promote-trust-survey-says/ [10 May 2014].

Drury, G. (2008) ‘Opinion Piece: Social Media: Should marketers engage and how can it be done effectively?’, Journal of Direct, Data and Digital Marketing Practice, Vol. 9, p. 274-277.

Edelman, D.C. (2010) Branding in the digital age: You’re spending your money in all the wrong places, Harvard Business Review, [Online], Available: http://hbr.org/2010/12/branding-in-the-digital-age-youre-spending-your-money-in-all-the-wrong-places/ar/1 [15 May 2014]

Evans, L. (2010): Social Media Marketing: Strategies for engaging in Facebook, Twitter and other Social Media, USA, Que, pp.129-187.

Groth, A. (2011) Business Insider: Toyota And Its Ad Agency Are Sued For $10 Million Over A Creepy Publicity Stunt, [Online], Available: http://www.businessinsider.com/toyota-saatchi-and-saatchi-10-million-sued-2011-9#ixzz31m6xt11x [15 May 2014].

IAB UK (2013) IAB Social Media Effectiveness Research, [Online], Available: http://www.iabuk.net/research/library/iab-social-media-effectiveness-research [10 May 2014].

Mangold, W.G., Faulds, D.J. (2009) ‘Social Media: The New Hybrid Element of the Promotion Mix’ Business Horizons, p.357.

Olivas-Lujan, M.R. (2013) ‘Social Media in Strategic Marketing’, Emerald Group Publishing Limited

Qualman, E. (2012) Socialnomics: How social media transforms the way we live and do business, 2^nd Edition, New Jersey: John Wiley & Sons.

Ratcliff, C. (2014) Why is Ford’s social media strategy so good?, [Online], Available: https://econsultancy.com/blog/64701-why-is-ford-s-social-media-strategy-so-good#i.1hg85cdq0eeios [10 May 2014].

Somerville, D. (2014): 18 Digital Marketing Trends you may not have heard about, [Online], Available: http://www.freshegg.co.uk/blog/18-digital-marketing-trends-for-2014 [10 May 2014].

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Wilson, S. (2010): Social Media and Small Business Marketing, USA: University Business Printing and Press

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I. Introduction

At the request of the Board of Directors, this presentation will examine the “social enterprise” organisation from several perspectives. First, the social enterprise form of organisation will be defined, with a focus on the social enterprise sector in the UK, and other data specific to social enterprise organisations operating in the UK. A description of the social enterprises currently operating in the UK will be presented. The presentation will then discuss the concept of “social firms” and how they fit in to the business environment of social enterprises previously examined. This will be followed by a discussion of several aspects of our social enterprise, the Day Chocolate Company (Divine Chocolate), beginning with its origins and mission, and concluding with recommendations on how our social enterprise can formulate an effective long-term strategy for success.

II. What is Social Enterprise?

A social enterprise can be defined as an organisation that is driven by motives that are not exclusive to earning a profit from its operations (Pepin, 2010). As of 2010 there were at least 62,000 organisations that could be defined, to some extent as social enterprises operating within the UK (Pepin, 2010). The aggregate turnover generated by these social enterprises exceeded ?32 billion per year (Pepin, 2010). The additional, non-profit measures that social enterprises are measured by include various social, cultural, environmental, and other measures (Fichtl, 2007). For social enterprises, these additional non-profit measures can be viewed as being of greater significance to the organisation than the profit motive, given that social enterprises are more likely to direct surpluses generated via operations to meet certain social objectives, as compared to utilising such surpluses to increase shareholder wealth through activities such as dividend payments (Berardi, 2013).

Social enterprises operate in several sectors of the economy, but are most numerous in the training, housing, education, and retail/wholesale sectors (Berardi, 2013). The main source of income for social enterprises is the general public, which accounts for 37% of income generated by social enterprises in the UK (Berardi, 2013). The public and private sectors contribute 18% and 13% respectively, and grants and donations contribute 14% to the income generated by social enterprises in the UK (Berardi, 2013).

III. What do Social Enterprises do?

Social enterprises are established in order to address certain environmental and/or social needs through the operation of their business (Berardi, 2013). The most frequent objective of social enterprises in the UK is to improve a particular community, with a quarter of all social enterprises falling in this category (Berardi, 2013). Another frequently occurring objective of social enterprises, accounting of 24% of social enterprises in the UK, is the goal of addressing social exclusion in society in general, a community in particular, and/or a sector of the economy specifically (Berardi, 2013). Additional goals common in many social enterprises are the goals of improving the health and wellbeing of a community, and helping protect the environment (Berardi, 2013). Social enterprises need not devote all of their resources to address one particular objective (Berardi, 2013). Some social enterprises attempt to achieve several goals, which in addition to those already described above, including goals such as promoting literacy, supporting vulnerable individuals in society, assisting in providing affordable housing, and helping to increase employment (Berardi, 2013).

IV. Are any Social Enterprises Successful?

There are many successful social enterprises operating in the UK (RBS, 2013). One such successful enterprise is the Green Machine organisation (RBS, 2013). Green Machine reuses paint supplies in an effort to address the estimated 56 million litres of paint wasted each year in the UK (The Green Machine, 2014). The Green Machine’s labour force consists of 40% of individuals who can be categorised as disabled or disadvantaged, thus demonstrating a social enterprise attempting to address more than one social and/or environmental goal (The Green Machine, 2014).

A social firm is a type of social enterprise that attempts to create quality jobs for individuals who are disadvantaged in the labour market (Social Firms UK, n.d.). The criteria required in order for an organisation to be considered a social firm is as follows: 1) “Social Firms are businesses that combine a market orientation and a social mission” ; 2) “More than 25% of employees will be disadvantaged people” ; and 3) “Social Firms are committed to the social and economic integration of disadvantaged people through employment” (Social Firms UK, n.d.). Thus, the Green Machine organisation, in addition to being a social enterprise, can also be considered a social firm, given its commitment to finding employment for disabled and disadvantaged individuals (The Green Machine, 2014).

V. What kind of Social Enterprise is Day Chocolate Company (Divine Chocolate)?

As discussed above, social enterprises do not necessarily conform to any one particular type. (Berardi, 2013). The Day Chocolate Company is partly owned by the farmers who supply the cocoa used in the production of Day Chocolate Company’s chocolate products (Social Enterprise Academy, n.d.). The cocoa farmers are located in Ghana, West Africa, and own 45% of Day Chocolate Company’s shares (Social Enterprise Academy, n.d.). The cocoa farmers are organised as a co-operative called Kuapa Kokoo, made up of 45,000 members across 1,000 villages in Ghana, West Africa (Doherty and Tranchell, 2005). The chocolate is purchased from the farmers on a fair trade basis, in order to achieve better trade conditions for the farmers and promote the sustainable farming of cocoa in Ghana, West Africa (Social Enterprise Academy, n.d.). Thus, Day Chocolate Company can be viewed as a social enterprise of the type that attempts to improve a particular community and by creating employment opportunities (Berardi, 2013). Secondary effects of these goals, such as promoting education and literacy are also achieved (Divine Chocolate, n.d.).

When establishing a social enterprise in the UK, the organisation must be established as one of the following business structures: limited company; charity; charitable incorporated organisation; co-operative; industrial and provident society; community interest company; sole trader; or business partnership (Gov.UK, 2013). There are benefits and drawbacks to each of the aforementioned business structures, and an organisation will choose which of the business structures is most appropriate in its particular circumstance.

VI. Motivations and Expectations of the Day Chocolate Company (Divine Chocolate)

In the early part of the 1990s the cocoa production in Ghana was privatised, and the government of Ghana controlled the export of cocoa out of the country (Social Enterprise Academy, n.d.). However, when state support of the cocoa industry in Ghana collapsed the livelihoods of thousands of cocoa farmers in Ghana were put at risk (Social Enterprise Academy, n.d.). It was at this time that the idea for the Day Chocolate Company was created (Social Enterprise Academy, n.d.). The mission of the Day Chocolate Company is to improve the livelihoods of cocoa farmers in West Africa by putting them higher up the value chain (Divine Chocolate, 2012). Day Chocolate Company attempts to achieve this objective by sourcing the cocoa necessary in the production of its chocolate goods from the farmers of Ghana, West Africa according to fair trade standards (Divine Chocolate, 2012). Rather than being motivated by a goal of increasing shareholder wealth, the Day Chocolate Company emphasises a significant return of its profits from the sales of chocolate, in markets where such products are in high demand, in particular the UK and America, back to the cocoa farmers in Ghana, West Africa (Divine Chocolate, 2012).

The Day Chocolate Company was encouraged by the success of fair trade marked organisations such as the coffee company Cafedirect (Doherty and Tranchell, 2005). Cafedirect began in 1993, and by 2005 had succeeded in becoming the 6^th largest coffee company in the UK (Doherty and Tranchell, 2005). The success of Cafedirect had a direct impact on the livelihoods of coffee farmers in Latin America, Africa, and Asia (Doherty and Tranchell, 2005).

VII. The Day Chocolate Company (Divine Chocolate) Organisation

The Day Chocolate Company was established in the UK in 1998 as a private company limited by shares (Doherty and Tranchell, 2005; Usa, n.d.). When it was established in 1998, Day Chocolate Company’s shares were owned by the fair trade organisation Twin Trading (52%), the cosmetics company The Body Shop (12%), and the Ghana cocoa farmer co-operative Kuapa Kokoo (33%) (Social Enterprise Academy, n.d.). The cocoa farmers’ share was financed by a ?400,000 loan from the Department for International Trade & Development (Social Enterprise Academy, n.d.). In 2006 the Body Shop decided to donate its shares in the Day Chocolate Company to the Kuapa Kokoo co-operative (Divine Chocolate, 2011). In January 2007 Day Chocolate Company changed its name to Divine Chocolate Ltd in order to “more closely align the company with [its] flagship brand…” (Divine Chocolate, 2011, p. 1).

Day Chocolate Company has a significant presence in several countries, most notably in the UK, Canada, and the United States (Divine Chocolate, 2012). In the UK, supermarkets Waltrose and Sainsbury’s expanded their Day Chocolate Company offerings in 2012, and there is now a Day Chocolate Company 45 gram chocolate bar onboard Virgin Airlines flights (Divine Chocolate, 2012). As a result of the “demise” of the company’s Irish distributor, availability of the products in the Irish market decreased (Divine Chocolate, 2012). However, exports to Scandinavian countries, including Sweden and Norway increased, which served to partially offset the decline in the Irish market for the company’s products (Divine Chocolate, 2012).

VIII. Day Chocolate Company’s (Divine Chocolate’s) Business Activity

Between the years 1998 and 1999 the Day Chocolate Company recorded sales of ?103,500 (Doherty and Tranchell, 2005). By 2004 its annual sales had grown to ?5.5 million (Doherty and Tranchell, 2005). For the most recent year with available financial data, the year ended 30 September 2012, the company’s sales stood at ?7.5 million (Divine Chocolate, 2012). However, between the years 2011 and 2012 the Day Chocolate Company’s profit on ordinary activities after taxation declined significantly, from ?59,000 in 2011 down to ?27,000 in 2012 (Divine Chocolate, 2012). The decline in profit between 2011 and 2012 was attributed primarily to an increase in administrative expenses (Divine Chocolate, 2012).

The cocoa farmed by the Kuapa Kokoo co-operative is shipped to Germany, where an independent chocolate manufacturer combines the cocoa and other ingredients into an edible chocolate product (Social Enterprise Academy, n.d.). The German facility ships the chocolate to a warehouse in Hull, from where it is distributed to wholesalers and the retailers (Social Enterprise Academy, n.d.).

IX. Profits/Surpluses at Day Chocolate Company (Divine Chocolate)

The Day Chocolate Company has used profits from its operations to expand within the UK and beyond its core UK market, in particular the United States (Divine Chocolate, 2012). The Day Chocolate Company has also remained true to its core mission, in that it has continued to utilise profits from its operations to improve the lives of the cocoa farmers of the Kuapa Kokoo co-operative in Ghana (Divine Chocolate, 2012). However, the benefits derived from the profits generated by the Day Chocolate Company are not limited to the cocoa farmers (Doherty and Tranchell, 2005). According to Doherty and Tranchell (2005), over 100,000 Ghanaians living in communities with Kuapa Kokoo societies have benefited from necessities such as medical care and medications. Several schools have been constructed, and each school serves an area covering a 4 km radius (Doherty and Tranchell, 2005). The fair trade agreement premiums that accumulated through the year 2005 were sufficient to cover the schooling costs of an estimated 250,000 Ghanaians for an entire school year (Doherty and Tranchell, 2005). A leading cause of death in many parts of Africa, water borne disease, has been reduced significantly, in significant part due to the increased availability of clean water supplies (Doherty and Tranchell, 2005).

X. Strategy of Day Chocolate Company (Divine Chocolate)

An important aspect of the Day Chocolate Company’s strategy has been its concerted effort to convey to the chocolate consumer market the level of misfortune that has plagued the lives of many of the farmers responsible for the cocoa used in the manufacture of all varieties of chocolate products (Social Enterprise Academy, n.d.). Through its website, and through its direct encounters with supermarkets and other potential sellers of its products, the Day Chocolate Company has attempted to show that society can help change the lives of the Ghanaians for the better by purchasing their product (Golding, 2006; Social Enterprise Academy, n.d.). The Day Chocolate Company has also enlisted the help of organisations such as Christian Aid, in efforts to bring their products to the shelves of an increasing number of outlets (Turner, 2013). For instance, Christian Aid ran a campaign called, “Stock the Choc,” in an effort to have the Day Chocolate Company’s products carried at Tesco (Christian Aid, 2009). A similar campaign by Christian Aid succeeded in getting Sainsbury’ to carry the Day Chocolate Company’s products in its many stores across the UK (Lamb, 2008).

The Day Chocolate Company recognises that appealing to consumers based on its mission alone will not be sufficient so sustain its organisation (Social Enterprise Academy, n.d.). The emphasis on the quality of the product itself can also be seen at the level of the Ghanaian cocoa farmers (and co-owners) themselves, as demonstrated by one farmer’s statement in 2008, that “we [the Kuapa Kokoo co-operative] want people to feel good about our chocolate, not guilty about the poor farmer in the Third World” (Vidal, 1999).

XI. Challenges of the Day Chocolate Company (Divine Chocolate)

The most significant hurdle for a company such as Day Chocolate Company has been establishing itself in the market. When it first entered the market in the late 1990s, the UK chocolate market was dominated by the companies Cadbury, Nestle, Masterfoods, and Kraft Jacob Suchard (Johnson, Scholes, and Whittington, 2005). The “highly competitive” UK confectionary market did not experience any significant changes in the handful of years subsequent to the entry of the Day Chocolate Company either (Johnson, Scholes, and Whittington, 2005, p. 757). The difficulty in making an impact in the market can further be seen by comparing the sales teams at the UK confectionary leader, Cadbury, and the Day Chocolate Company (Social Enterprise Academy, n.d.). Whereas Cadbury has approximately 150 members on its sales team, the Day Chocolate Company has but three (Social Enterprise Academy, n.d.). The economies of scale of the larger firms are formidable (Doherty and Tranchell, 2005). For instance, in the late 1990s Nestle UK expended ?9 million on the promotion of a single product within its vast portfolio, the Kit Kat Chunky (Doherty and Tranchell, 2005).

Other challenges that the Day Chocolate Company must confront are not unique to the organisation. Most significantly, macroeconomic factors, such as a stagnant economy may impact demand, leading to another decline in sales, such as that experienced for the year ended 30 September 2012 (Divine Chocolate, 2012).

In addition, an increasing number of retailers are beginning to compete in the fair trade chocolate market, which may have an impact on the Day Chocolate Company’s market share of what is already a small segment of the total chocolate market (Reed, 2009; McGrath, 2012).

XII. Recommendations and Conclusion

The Day Chocolate Company has succeeded in carving out a niche for itself in the chocolate market. However, it must continue to expand into new markets, given that other organisations, including some of the large chocolate companies are beginning to compete in the fair trade chocolate market. The company should seek to leverage its experience in the fair trade chocolate market as best it can. The company may need to divert a greater amount of its profits to this growth strategy, and this may impact the amount that it uses in meeting its mission of improving the livelihood of the cocoa farmers in Ghana. Although the company may temporarily fall short of this mission, at least it will provide an opportunity to create a more stable and potentially long-lived social enterprise.

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Introduction

Since renowned economist Friedman (1970) expressed his strong convictions on the need for social responsibility in business, there has been much development in the theory and practical application of social responsible initiatives (McWilliams, Seigel & Wright, 2006). A whole movement has developed to cover a range of ethical practice which is now labelled under the umbrella of Corporate Social Responsibility (CSR). Many executives today face a dilemma between feeling compelled to invest in CSR initiatives whilst maintaining the cost controls so a necessary to maximise shareholder value. This essay first reviews the ideas of Freidman (1970), then the development of alternative theory is outlined, and the shareholder and stakeholder paradox is defined. The motives and actions of CSR policy at the international oil company British Petroleum (BP) are analysed and then related to the shareholder and stakeholder paradox.

The nature and context of Freidman’s views

Friedman (1970) wrote his infamous article in the New York Times Magazine as an explanation of what is known as the agency theory by scholars of CSR (McWilliams, Siegel & Wright, 2006). Agency Theory suggests that it’s not the role of executives in society to make decisions on social welfare of citizens. Since that time there has been a substantial growth in the definition and practical application of CSR policy and many have developed alternative views to Freidman (Crane and Matten, 2007). Freeman (1984) presented the concept of stakeholder theory that managers should consider the interests of all stakeholders other than the shareholders in a corporation. Importantly, Freeman’s ideas suggested that considering the needs of stakeholders is essential to a firm’s long-term success and not a benevolent additional ‘add-on. Stakeholder theory was developed further by Donaldson and Preston (1995) who stressed the ethical nature of CSR as well as the potential for increased financial performance that satisfies the interest of shareholders who invest in a business. Since then there has been a proliferation and transformation of CSR focus by scholars and businesspeople alike with an alignment between CSR practice and objectives in many corporations (Crane, 2013). In developed nations, large firms generally conduct CSR agendas or they feel they risk losing competitive advantage. Today in many markets, a strong CSR focus is a consumer expectation especially in cultures where the behaviour and role of corporations is closely monitored by media and pressure groups. Some businesses have even made the CSR theme central to their core mission, for example The Body Shop and Ben and Jerry’s. However many still have concerns about CSR initiatives in the corporate world and they would support Freidman’s view. Recently, Johnson (2015) suggested that CSR is an indulgence by executives in rich companies who complete to show who is most ethical and caring.

Friedman (1970) was dismissive of any attempts by executives to introduce initiatives that could be described as corporate social responsibility. He suggested that not only would CSR be harmful to shareholders who would suffer less returns on their investment, but there would be wider negative connotations for society has a whole as the executive would actually be administering a judgement that should be left to other agencies such as government. Friedman (1970) states “in his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation or establish the eleemosynary institution, and his primary responsibility is to them” (Friedman, 1970, p.32). The only part of the article which we might interpret as a reflection of a stakeholder approach is when Friedman (1970) mentions it might be in the interest of a corporation that is a major employer in a local community to provide resources to that area or help improve local government. By doing so the business might attract more desirable workers, it may reduce the wage bill or have more loyal workers which ultimately would reduce costs and aid financial performance. However generally Friedman (1970) does not provide any notion that consumers may product differentiate on the grounds of the presence of CSR activity in a business which is an essential common tenant underpinning justification by managers today for promoting social responsibility. Friedman (1970) presented one end of the spectrum concerning the balance of focus between shareholder and stakeholder issues. The paradox managers face is the amount of focus they should give to the interests of various stakeholders through CSR initiatives whilst still securing shareholder interest and value.

The shareholder and stakeholder paradox

Those who promote stakeholder theory suggest that there are a range of benefits for a business adopting a strong CSR agenda that ultimately lead to an increased financial performance (Orlitzky, 2006). A business has the opportunity to increase organisational reputation by exercising CSR Policy which can develop consumer preference and loyalty. Businesses with CSR initiatives may be able to charge higher prices as consumers are prepared to pay extra where they believe they are helping others in need (Auger et al, 2003). For example, clearly labelled ethically sourced Fairtrade products found in British supermarkets such as coffee are available with a premium price. CSR policy can provide advantages when a business needs to raise capital as some investors and institutions are more willing to lend to firms with a strong ethical stance and at lower rates of interest (Spicer, 1978). Another prominent idea is that corporations with a high CSR agenda will benefit from better performing employees who increase their commitment and productivity as they respond to being part of an ethical mission (Greening & Turban, 2000). By consistent adherence to legislation such as contract, employment and environmental law, a business can avoid negative media coverage to catastrophic loss of reputation or even criminal misconduct charges (Wood & Jones, 1995). Corporations today see CSR expenditure as a way of generating revenues which improve financial performance (McWilliams, Siegel & Wright, 2006).

Direct costs can be attributed to CSR practice which have the potential to reduce profits and therefore the dividends to available to shareholders in the short-term (Frynas, 2009). Improving employee remuneration to provide a living wage has been adopted by many firms as late in the UK as socially responsible action but clearly incurs a direct expense (Living Wage Foundation, 2015). Ethically sourced suppliers tend to be more costly especially for example when eco-friendly production techniques are introduced. Introducing a more proactive recycling policy or pollution abatement policy above minimum legal requirements needs more resources and capital expenditure. Furthermore, there could be opportunity costs incurred where resources devoted to CSR practice are diverted away from other potentially beneficial projects in a business such as research and development activity, operational expansion or marketing campaigns. Business can only really take advantage of product differentiation if advertising reveals to potential consumers their CSR policy and practice so further expenditure is required for this purpose (McWilliams, Siegel & Wright, 2006).

Businesses that invest in CSR practices will have higher costs than those firms in the same industry that do not; executives have to make strategic decisions of the level of inputs they will commit to such activities. The vast majority of large corporations such as Multinational Corporations (MNCs) have considerable investments in CSR agendas and have whole departments dedicated to such activity (Crane, 2013). MNCs in the international oil industry are particularly renowned for having substantial CSR initiatives. Executives at multinationals(MNCs) such as British Petroleum(BP) constantly have to address the shareholder and stakeholder paradox in terms of balancing the needs of cost control so as to compensate shareholders fully whilst upholding the company’s organisational reputation through supporting a range of costly CSR initiatives.

Corporate Social Responsibility at BP as a reflection of the paradox in the oil industry.

BP is recognised as a corporate leader in its commitment and innovation to CSR initiatives (Frynas, 2009). In BP’s annual report, the opening statement stresses its CSR focus “We aim to create long-term value for shareholders by helping to meet growing demand for energy in a safe and responsible way. We strive to be a world-class operator, a responsible corporate citizen and a good employer” (BP, 2014).The highly visible effects of operations in the oil industry and a series of historical catastrophic events such as oil spills and local community devastation have made the ethical behaviour of companies like BP subject to close scrutiny. The very nature of the oil exploration, refinery and consumption raises ethical concerns due to the significant environmental and social impacts they create within the many countries they operate. Governments have introduced substantial legislation to protect their citizens and the environment; however international oil companies often choose to invest beyond legal minimum requirements which incur extra direct costs (Spence, 2010). Private organisations such as the media and pressure groups like Greenpeace constantly monitor oil companies and can considerably affect consumer purchase decisions.

BP has historically allocated substantial resources to CSR initiatives to limit negative impacts on the environment, to address the social impact on local communities they operate within and to manage the difficulties that can be created from a sudden inflow of oil revenues into economies in the developing world (Frynas, 2009). BP is a public listed company on the London and New York Stock Exchanges that attracts investors who expect regular dividends with satisfaction yields and capital gains in shares in the long-term. BP’s annual report outlines its current CSR focus into three areas: operational safety, environment and society, and employee welfare (BP 2014). It estimates that its annual environmental expenditure alone for 2014 was $2.216 billion for activity such as oil spill and clean-up costs, pollution abatement and environment restoration. BP’s annual dividend per share in 2014 was $0.39 and totalled $6.1 billion for all investors. Clearly CSR expenditure is significant in relation to investor returns. However, much CSR expenditure is necessary to meet minimum legal requirements and therefore cannot be considered totally as a strategic planning choice.

In April 2010 in the Gulf of Mexico a major oil spill incident took place around a BP ocean drilling operation subsequently called the “Deepwater Horizon accident” that significantly affected shareholder value and returns (BP, 2014). After an onsite explosion where 11 workers lost their lives, an estimated 200 million gallons of crude oil flowed into the ocean causing widespread onshore and offshore catastrophic environmental and social destruction. The U.S. Federal Government ruling in September 2014 finally held BP accountable for the incident imposing a fine of $18.5 billion which is still being appealed by BP. Also the incident caused many US consumers to boycott BP products and services which significantly decreased sales in the short-term. Other private litigations have been settled costing billions of dollars. As at 31 December 2015, BP has set aside $43.5 as a total pre-tax cost for the Deepwater Horizon accident (BP, 2014). The incident caused severe financial implications for BP shareholders; the share price dropped 55% immediately after the incident and still has not recovered to the pre-incidents levels. Dividends were suspended for the first 3 quarters of 2010. Incidents such as Deepwater Horizon damage organisation reputation and incur direct costs which deeply affect shareholder value. Part of the reasoning for substantial investment in CSR initiatives by multinationals is to mitigate such incidents and make sure they are minimalised by appropriate due care (Spence 2011). BP is dependent on the support of international financial markets and its international reputation for co-operation with its essential stakeholders and expansion of its operations (Frynas, 2009). Developing a strong corporate image is important for BP if it is to reach its long-term goals. BP executives have the paradoxical challenge of balancing the needs of shareholders with imperative CSR related expenditure.

Conclusion

Friedman (1970) expressed a view on Corporate Social Responsibility that still divides opinion and facilitates discussion today. However there have been considerable changes in the acceptance of CSR policy in recent years and many executives in corporations have embraced stakeholder theory with the need to understand and respond to the interests of various stakeholders such as consumers, employees and suppliers. The presence of CSR policy can provide benefits such as increasing an organisation’s reputation to encourage consumer loyalty, avoiding any unwarranted outside interference or improving employee commitment and productivity. Managers today explain their considerable CSR agendas leads to improving shareholder value through the variety of factors from which improve revenues which more than compensate for any costs incurred. Like many a major international oil companies, BP has embraced CSR culture at considerable expense as it understands it is vital to its long-term success. Like other public limited companies, BP is committed to shareholders through implementing a series of CSR practices to ensure the businesses reputation remains favourable with all its stakeholders and allows the company to generate sustainable returns.

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As industrialization advanced rapidly across the world at the turn of the twentieth century, it transformed working practices and prompted theorists to consider how best to conduct business under such changed circumstances. The theory of scientific management has its roots in the studies conducted by F. W. Taylor during this formative period (see Taylor, 1911). There is much debate in the secondary literature about the synonymy of Taylorism and scientific management, which this paper does not discuss (for further details see, Caldari, 2007; Nelson, 1992). Rather, this paper positions Taylor as the defining early influence in a continuum of scientific approaches to organizational management – all of which fall under the broader definition of scientific management and management science – that endures today. Section 1 of this paper undertakes a critical evaluation of scientific management theory before going on in Section 2 to discuss how and to what extent it is applied at the organisation, Microsoft.

Critical Evaluation of Scientific Management Theory

Taylor was one of the first theorists to consider management and process improvement as a scientific problem and, as such, is widely considered the father of scientific management. He proposed that a business’s economic efficiency could be improved by simplifying and optimising work processes, which would, in turn, increase productivity. Taylorism, as a philosophy, was the product of a series of experiments and observations, such as time-motion studies, designed to determine the most effective and efficient way to complete a task. Its fundamental and inter-related principles can be summarised as follows:

Using scientific method to challenge habitual working practices and to determine the most efficient way to perform specific work tasks;
Matching workers’ capability and motivation to the task requirements and supervising them according to the established rules and procedures;
Establishing fair performance levels and develop a pay system that rewards, and therefore encourages, over-achievement; and
Appropriate division of responsibilities to allow managers to apply scientific management principles to plan work and ensure workers are effective.

Taylor’s work influenced a number of other contemporaneous theorists, such as Frank and Lillian Gilbreth, and, later, Henry Gantt, who also favoured empirical methods to determine the most efficient procedures. Indeed, his new scientific system of organisation was met initially with widespread support in the USA and Great Britain amongst theorists, politicians and economists alike (Nelson, 1992). However, Taylor’s scientific management was not without its critics, both at the time and subsequently. By the 1930s and 40s it had broadly fallen out of favour. The following section undertakes a critical evaluation of scientific management. It discusses the arguments of Taylorism’s detractors and also explores its legacy in popular modes of management practice today.

One of the most popular criticisms levelled at Taylorism is its perceived lack of human appreciation (Caldari, 2007). In the drive to increase physical efficiency, it considers the worker a part of the production process on a level equal to the tools s/he uses and, as such, strips him or her of all capacity to reason and act autonomously. All thinking and planning is taken over by management, and the worker’s role is reduced to the simple repetition of standardised and simplified work flows in accordance with productivity targets. By assuming that fair payment will motivate employees to perform optimally, Taylorism overlooks the individual’s subjective motivation and their need to derive personal satisfaction from their work. On the one hand, standardised work instructions have been shown to improve quality, facilitate training and reduce waste. However, on the other hand, today’s low skilled and highly rationalised roles, such as call centre or fast food jobs, workers are often characterised by high absenteeism and high turnover due to low job satisfaction. Since these are drivers of increased cost, it can be argued that the strict doctrines of scientific management actually run the counterproductive risk of increasing costs and reducing productivity.

A further point of controversy for Taylorism’s critics is the theory that scientific process will eventually identify the ‘one best way’ of carrying out a specific process of work to maximum efficiency (see Ralston, 2014). They argue that the implementation of ‘one best way’ disregards individual talents and preferred working methods, thereby alienating workers and preventing them from developing an appreciation of their place or function in the entire industrial process. This, in turn, suppresses their initiative and the potential for discovering new and innovative ways of working. Instead, opponents of Taylorism advocate a plurality of methods for increasing productivity, which should be tailored to workers’ needs. Feedback should be encouraged and decision-making shared between workers and management to engender a greater sense of participation and ownership, greater engagement, and a stronger sense of collaboration between workers and management.

In the light of the above criticisms, it is perhaps unsurprising that employees’ views of Taylorism have tended to be unfavourable. In its pursuit of efficiency and productivity, Taylor’s scientific management principles divide labour undemocratically, in such a way as to empower managers, benefit employers and lower workers’ morale. Although Taylor advocated fair assessments of working hours, productivity and pay, his theory obliges the worker to depend upon the employer’s conception of fairness, and gives the worker no voice in hiring and setting the task, in negotiating the wage rate or determining the general conditions of employment. In reality, many employers implemented Taylor’s theories only partially, using strict control, punitive measures to drive maximal output. This not only caused significant additional mental and physical strain, but also increased the potential for accidents and work stoppage (Nelson, 1992). Furthermore, workers believed down-skilling and eventual automation were responsible for growing unemployment – even if ultimately it might lead to lower prices and increased demand. They also objected to the fact that the gains of higher productivity were not shared with the workers. Rather, the major proportion was taken away by the employer in the form of higher profits. Such an imbalance of power and resultant dissatisfaction has the potential to polarise industrial relations leading to increased risks of strike action and disruption.

Although there is much to criticise about Taylorism and its early implementation, it should also be acknowledged that its advent paved the way for many of the management theories and methodologies that are followed today. The division of labour into ‘doers’ and ‘thinkers’ is a dichotomy that continues to shape the separation of strategy and implementation in most organisations (Kanigel, 1997, Stoney, 2001)). Likewise, in most organisations management and labour continue to co-exist in an uneven relationship which privileges intellectual work over manual skills. Likewise, the rationalization of processes into discrete, unambiguous units with defined work instructions has laid the foundations for knowledge transfer, automation and eventual offshoring (Drucker, 1981) – strategies that continue to be implemented in many multinational corporations today as management theory, and management itself, evolves with changing times (Witzel and Warner, 2013). Incentive schemes are still widely recognized as an effective means to encourage higher performance and are a standard component of most sales compensation packages. Meanwhile, Taylorism’s simplification of skilled work and the elimination of unskilled work represents a central tenet of business process engineering techniques such as Six Sigma and lean manufacturing (Head, 2003). By the same token, modern quality assurance, operations management and total quality management methodologies arguably have their roots in scientific management. In this way, scientific management transcends the narrower confines of Taylorism by means of its direct and indirect influence on those subsequent evidence-based methodologies that also attempt to treat management and process improvement systematically as a measurable, scientific problem (Witzel and Warner, 2015).

Discussion of how Scientific Management Applies to Microsoft

Taylor’s original thinking was informed by the shop floor processes of heavy industry. As such, it would be easy to assume its principles would be largely irrelevant in an industry as complex, innovative and knowledge intensive as Information Technology. Indeed, Bill Gates’s professed values of entrepreneurship, ownership, creativity, honesty, frankness and open communication appear to stand in opposition to the standardised work processes and strict division of labour that Taylorism champions. However, on closer examination it becomes evident that scientific management still exerts a significant influence within Microsoft and on how it conducts its business.

As with all large multi-national corporations, specialisation and division of labour is very much in evidence at Microsoft. There is a clear division between functional specialists such as software developers, project managers, marketing, sales, HR, finance and legal. As Taylorism advocates, their roles have written job descriptions with clearly defined skills and competencies to ensure employees capabilities and motivations are carefully matched to their position. Furthermore, their performance is supervised and measured regularly using SMART criteria (Specific, Measureable, Achievable, Results-based, and Time-specific) in a way that echoes Taylor’s emphasis on monitoring and measuring.

There are a number of colourful stories that depict the results-orientated culture that Microsoft has relied on historically in its drive for success (see, for example, Shaw, 2004). Until recently, Microsoft employed a controversial management system called ‘stack ranking’ which measured performance using a standard distribution curve. Whilst those at the top received bonuses and promotions, those at the bottom were shown the door (for further details see B. R., 2012). Although this was intended to motivate performance, employees found it oppressive. Developers sought to avoid working with top performers, who threatened their own ranking, and as a result free thinking, innovation and collaboration stagnated. Microsoft abandoned stack ranking in 2013, but it is evident that performance reviews and systems such as these owe a debt to Taylor’s principle of performance incentivisation through pay and reward. Indeed, Bill Gates’s comment on workers and their value points towards a scientific management heritage: “A great lathe operator commands several times the wage of an average lathe operator”, Bill Gates points out, “but a great writer of software code is worth 10000 time the price of an average software writer” (Schumpeter, 2015, p. 1).

Microsoft’s business model relies on scientific management’s requirement to challenge received wisdom and to find new and better ways of doing things. This applies to Microsoft’s products and production processes in equal measure. Yet rather than pursue Taylor’s ‘one best way’ and control it by means of strict hierarchy and managerial supervision, Microsoft has, historically, sought to empower employees at all levels. Instead of allowing workers strict ‘need to know’ knowledge that relates only to their discrete part of a process, Microsoft runs an intensive induction programme for new recruits, which introduces them to the overall business model, and acquaints them with colleagues and support networks. This broader knowledge equips individuals with the context to make autonomous decisions that are nevertheless aligned with the organisation’s interests. This, in turn, lays the foundations for continuous improvement based on comparison, feedback and the identification of more effective and efficient work methods. Microsoft seeks to encourage improved performance not only by financial incentives, but also by considering more progressive drivers of employee motivation, participation and satisfaction. Thus, software programmers at Microsoft work long hours, but extra discretionary effort is encouraged by free food, relaxed dress code, comfortable offices, and playing games (for further details see Birkinshaw and Cramer, 2008). So, whereas Taylorism is criticised for its de-humanising tendencies, Microsoft arguably seeks to balance and blend the drive for enhanced productivity with a complementary appeal to the broader hierarchy of needs in its workforce.

Conclusion

This paper has offered a critique of Taylorism as the first and most influential theory that shaped a spectrum of subsequent management practices that fall under the wider umbrella philosophy of scientific management. The example of Microsoft shows how the principles of scientific management inform many practices that are still in use today. As a large, established, multinational organisation, Microsoft’s management practices are, almost inevitably, complex and contradictory and the brevity of this paper does not permit a more detailed investigation of how and to what extent scientific management principles inform the varied practices of different functions and divisions within the organisation. For example, the process of iterative product development owes a debt to scientific management as does project management and evaluation. Nevertheless, this paper has offered a broad overview of how Microsoft has appropriated, adapted and implemented elements of Taylor’s early scientific management theory, such as division of labour, employee selection, training and supervision, pay and reward, scientific evaluation, and process improvement, to improve Microsoft’s productivity, quality, and economic performance today’s fast-paced competitive environment.

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Introduction:

In conducting the research for this coursework a number of sources of data have been used. In the first instance, the bulk of the research conducted has been done making use of secondary sources of research, including books, journal articles, company annual reports and items from the business and trade press. Secondly, where relevant the researcher has also made use of a number of contacts within the retail sector which have facilitated primary research into a number of the companies which have been used as case study examples in the coursework. Primary research was conducted in the form of a number of informal style interviews with a relevant management level employee of the organisations in question.

P.1 The Structure of the Retail sector
Types of Retailers

At present the UK may be seen as having a wide variety of retailers all with a range of corporate and organisational objectives. In general terms, the UK retail sector may be divided and segmented on the basis of product type. Major retail groupings include the food retail segment, clothing segment and other non-food based segments which include electronics, DIY and other forms of specific fast moving consumer goods (FMCG). Those operating within such product segmented retail segments range in size from single one man operations with a sole trader legal status to large multi-national retail companies offering standardised products and services on an international basis.

In addition to these core segments, one should also consider the not for profits retail segment. This includes a wide range of retailers for whom the objective is the generation of a surplus rather than a profit. The surplus is then used to fund the underlying objectives of the not for profits organisation, usually associated with a charitable cause. Whilst the not for profits sector is often associated with low end cost leadership retail models this is not the only model used. Recent developments have seen not for profits organisations such as Oxfam embracing the premium end of the segment with the opening of the organisations flagship Bond Street store. In addition, other organisations such as the Co-operative bank offer a range of financial products and services within the retail banking sector which are of comparable quality to those of the for profits retail banking and financial services sector .

One bone of contention may be to consider the supermarket segment as a separate sub-segment of the retail sector altogether. Whilst the supermarket sector may be seen as having its origins in the food retail sector, the consideration is that such businesses have in recent years become diversified businesses which only retail food and food related products as a part of their total business. In actually fact the true success of many in the modern supermarket sector relies on the ability of such businesses to be able to market a wide range of diversified products from food to financial products and services.

Sales trends:

The UK retail sector is worth an estimated ?265bn annually which accounts for 8% of the entire countries GDP, this is estimated to grow to ?312bn by 2011. Of the total retail sector, a large part of the sales come from the food based sub segment, however the total retail segment is made up of a wide range of retailers marketing a variety of goods including food, clothing, electronics and other fast moving consumer goods.

A present, due to the recent economic downturn, sales within the UK retail sector are seeing their slowest rate of growth since April 2006 at just 2.3% higher than a year ago. Despite this down turn in the rate of growth a more positive view would be that despite difficult trading conditions growth in the sector has been maintained, with the sector not suffering the consequences of a contraction in sales. In considering how the economic downturn has affected the retail sector there are multiple views. Some, such as Anagboso and McLaren indicate that non-food retailers have done better in the recession as a function of falling prices in the underlying input goods, which has led to a boost in profits. Others argue that it is the food retail sector which has been more resilient due to the necessity nature of the goods sold by incumbent suppliers.

Location and Size:

Considering the location and size of retail outlets, this is an area which has seen a large transformation in recent decades. In past eras, the high street was the focal point of the consumer retailing experience, with an emphasis placed upon the presence of many small to medium sized stores located within the centre of towns and cities.

However, over time the retail model as shifted with stores becoming every larger in physical size and the range of goods offered to consumers. As such, this has led to a pattern of retailers moving into out of town locations in which large scale stores are opened using a hypermarket or warehouse format. Whilst there has been much criticism of retailers for abandoning the high street in favour of more convenient and easy to service out of town locations. One consideration is that such larger establishments and shift in location mirrors the changing nature of society, which has seen an increase in car ownership and a preference for standardisation of goods and services offered on a national basis.

Trends in the Number of Retailers:

Overall sources would seem to indicate that the number of retailers within the UK retail segment has decreased in recent years through a pattern of industry consolidation and merger and acquisition activities.

One of the key drivers of the consolidation within the industry may be seen as the emergence of the modern form of the supermarket. Initially the supermarket was a part of the retail sector associated with the sale of primarily food and food related products. However, over time the supermarket sector has in itself diversified and now sells a variety of products which were all previously only obtainable from alternative retail establishments such as clothing, electronics and financial products and services. As such, consumers now have less of a need to make use of the services of retailers who have stuck to a core set of products, consumers instead showing a preference for the convenience of being able to buy a multitude of goods and services in a single retail out let. The result for the sector has been a reduction in the total number of players in the retail market in favour of a smaller number of diversified retail businesses.

However, consumer convenience is not the only driver of consolidation within the industry. Price is also another factor of importance, sources indicating that along with convenience price is one of the single most important factors in determining the spending habits of consumers. As such, a smaller number of larger players in the market are able to deliver ever lower prices through what Porter would have referred to as a cost leadership strategy. As such, consumers opting for low cost providers will naturally create a preference for a smaller number of large players, as opposed to a larger number of small retailers, who are unable to benefit from the larger economies of scale of larger establishments.

Employment:

At present the UK retail sector employs a high proportion of the total number of people in employment, it is estimated that currently 3 million people in the UK work within the retail sector. This accounts for around 11% of the total work force of the UK.

Despite the growth of the sector, the general trend in employment within the retail sector is one of a downward trend. Sources indicate that over the past five years the number of employees within the sector has declined by 76,000. Whilst some of the reduction may be attributable to the recent economic downturn, only a limited number of the past five years may be seen as falling into the recessionary period, as such one may consider that the overall growth of the sector against a backdrop of falling employment points to structural changes within the industry, rather than a problem with the growth of the sector.

Technologies such as the self-service check out may be seen as one of the key structural changes which has aided retailers to reduce the total number of employees needed within the business. Sources indicate that that the implementation of such technologies may in effect allow a single employee in the future to do the same amount of work as five employees in stores where not such technology is deployed. This points to a significant reduction in the number of grass roots level employees required in the future from the deployment of just one technological development within the retail segment.

P.2 Local Convenience Stores

For the purpose of this example two products have been selected, one a perishable food product and another a non-perishable item of FMCG. Here the example of a food product considers the logistics operation behind a microwave meal product, whilst the example of a non-perishable product will relate to a cleaning product in the form of washing powder. Both will be considered in the context of the distribution channel within the Spar retail business, one of the key players within the convenience retail sector. Spar has been selected as an appropriate retailer as not only does the business operate within the convenience retail sector, but the researcher has also been able to make use of a key contact within the organisation facilitating the input of primary as well as secondary research into the project.

Small and Large Retailers:

The size of a retailer will determine many factors in relation to both its operations, marketing strategy and its general business and corporate level strategies. On the one hand, large retailers such as the “big four” in the UK which include Tesco, ASDA, Sainsbury and Morrison’s are able to focus on a strategy of building large out of town stores, which are designed to maximise efficiencies by operating on the basis of economies of scale which are used to generate a cost leadership strategy . As such, the strategies of large retailers are based upon buying large volumes of product which lowers the unit cost of products. In addition, large retailers buying on such a large scale are often able to benefit from other cost savings which are associated with the distribution and logistics channel. Many large retailers buying in such a large volume will be able to receive full loads of product delivered directly into the store directly from the vendor. As such, this eliminates the need for additional costs which are associated with multiple handlings of stock delivered into a network of regional and national distribution centres, as is the case with many smaller scale retailers.

On the other hand, small retailers not being able to compete on the basis of a cost leadership strategy must focus on a form of differentiation or market focus. Despite the advantage of large out of town locations, the small retailer is able to set up a network of smaller stores within metropolitan and high population density areas, which larger retailers may not be able to operate their business models. In addition smaller retailers may be able to offer additional differentiated levels of services such as around the clock opening hours. This however, is a competitive advantage which has been eroded in recent years, with many main stream retailers beginning to offer 24 hour opening schedules. Given that small retailers are unable to compete on the basis of price with larger retailers within the sector, such differentiated levels of service must always be seen as having the ability to generate additional levels of value in the eyes of the consumer, which will ultimately lead to the ability of the small convenience based retailer to charge a premium in comparison to the larger cost leader based competitor.

Considering the two products in question the perceived strategy would seem to be the same in the context of both kinds of retailer. For the large retailer the consideration is that the company can offer both products at a lower price than that of the small convenience retailer. However, access to the product may require the purchaser to travel a significant distance to obtain a product and thus the element of convenience is traded off for a lower price.

On the other hand, the small convenience based retailer adopts an opposite competitive strategy to that of the larger retailer. In the case of both products, the small convenience based retailer offers a product which may be viewed as a necessity in both cases with instant access to the product. However, in allowing the consumer a more convenient level of access to the product, whether this be on the basis of a closer location or the fact that store opening hours are longer that those of a larger retailer, a premium will be charged against that of the low cost retailer. As such, the consumer is asked to make a trade off in which convenience in the form of instant access is prioritised over the consideration of a lower price as offered by the larger retailer.

Distribution Channels:

The distribution channel considers the various parties for whom a product or service will travel through from the time when the product is manufactured to the point at which the end user will consume the product. In considering such parties there are a number of considerations which include both internal and external parties such as a consideration of the various staging posts a product will pass through including, warehouses, distribution and consolidation centres before finally arriving in the store and ultimately reaching the consumer.

In the case of the products being considered it is important firstly to identify the elements present in the distribution channel of the specific organisation in question, in this case the case study is considering the distribution channel for the Spar brand of convenience stores. For many smaller scale independent convenience stores the distribution channel may be one of much greater complexity including movement of goods between manufacture to wholesaler and then a second movement of goods from wholesaler to the retailer in smaller quantities, each transaction adding an additional layer of cost to the product .

However in the case of the Spar operation much of the distribution channel is handled in house thus resulting in greater efficiencies in the distribution channel and a reduction in costs as volume discounts are still achievable from buying in bulk. In addition one of the contemporary issues in the distribution channel is to consider the impact of the internet however, in the case of the convenience store the distribution of the product largely takes the form of a traditional physical distribution.

In the first instance taking the example of a washing powder, the product is purchased directly from the manufacturer on a full load basis. The product is subsequently delivered directly from the vendor into one of Spar’s national distribution centres, this allows the company to buy in bulk and receive the benefits of discounted purchasing. However, at this level the amount of product bought directly from the vendor is too large to be received by stores operating within the chain, this may be seen as a key difference when comparing the ability of larger supermarkets to be able to handle large deliveries of stock directly from the manufacturer.

As such, the product remaining on full pallets is redistributed to a number of smaller regional distribution and consolidation centres, the product is shipped alongside other non-perishable items which allows the regional distribution and consolidation centres to stock a greater number of products in the appropriate quantities for regional stores to draw upon.

Once the product has arrived at the regional distribution centre, the consideration is that full pallets of a product are still too large to handle for the kind of stores operating within the Spar chain. As such, full pallets of washing powder a broken down and mixed with other products onto a range of devices such as cages which can then be used to distribute a large variety of products to a store in small quantities, thus facilitating a wide range of product availability in store, without incurring large levels of wastage due to the over stocking of products.

Considering the distribution channel of the microwave meal in the same chain of stores the overall distributional channel is quite a different one, this is largely the function of the nature of the product in its self. Here the primary concern is that the amount of time which the product spends in the distribution channel must be much lower than that of a non-perishable item such as a washing powder.

In the case of a microwave meal the goods is purchased on the behalf of Spar however, this time loads are delivered on the behalf of the manufacturer by a third party logistics company specialising in chilled distribution. The product is brought directly into one of Spar’s regional distribution centres with a chilled warehousing facility. As such this eliminates one layer from the distribution channel in which the washing powder was first taken to a national distribution centre.

Again at this stage, despite the smaller deliveries made into the regional distribution centre, the quantities of product purchased are still far to great for distribution directly into the stores operated by the Spar chain. Again the relatively large quantities of product delivered into the regional distribution centres are subsequently broken down and the microwave meals are load built with other products of a perishable nature requiring chilled distribution. Once a suitable load has been built, the company’s fleet of small chilled trucks will redistribute the products to the stores in the appropriate quantities. As such, the whole processes sees that the perishable food product spends the minimum amount of time in the distribution channel in comparison to products of a non-perishable nature, where the time of distribution is a less critical issue.

Transport Methods:

In both cases the products in consideration are usually produced within the UK and will be transported via road transport by one method or another. However, the difference between the transport of the perishable food item and an item of non-perishable FMCG such as washing powder is likely to be significantly different within the road transport network.

Taking for instance the perishable food item in the first case, the microwave meal. Here one of the prime considerations is that if the product is not handled and transported in the correct way, then there is a high risk that the product will be spoiled and thus have to be written off at a cost to the business. In addition to this commercial consideration, the is the concern that where a perishable food product is poorly treated in the transportation process there are health and legal issues as well as commercial interests at stake. Mistreatment of a perishable food product in the transportation process could lead to quality issues which include but are not limited to serious food poisoning and ultimately death as a causation, both of which would have an adverse impact upon the profitability of an organisation engaged in such activities.

Having considered the above factors, it is not surprising that the documentation and procedural considerations associated with the transport of perishable food stuffs are much higher than those of a non-perishable items of FMCG such as washing power. Such additional documentation may include the recording of transportation times between locations and the documentation of the temperature at which goods were transported between locations.

In addition to the regulations observed, another factor which may be considered in the transportation of perishable food items such as a microwave meal is the element of cost. Whilst a non-perishable item of FMCG may be transported using basic methods of road haulage, the transportation of perishable food items such as a microwave meal is likely to require the use of a specialist chilled distribution fleet between chilled warehouses, all of which implies an additional cost in the direct costs of transportation.

On the other hand, the distribution of a non-perishable product such as washing powder via the road network may be seen as much more simple and cost effective operation. Here, the sole consideration is that transport allows the product to arrive in its desired location in good condition and in accordance with the desired delivery schedule to facilitate greater on shelf availability.

As such, as long as the product is not mal-treated during the transportation process, a non-perishable product will not automatically deteriorate during the transportation process simply as a function of time. In addition, where a product is damaged in the transportation process, the consequences for the retailer are much lower than in comparison to that of a perishable food product. Where a product is damaged in transport which is non-food based, the cost is limited to the write off of the product and even here, the retailer may be able to recoup a certain percentage of the value of the product by offering a discount on the item.

Storage – Manufacture to Consumer:

One of the critical elements in the whole distribution process is to consider the storage of the products in question from initial production at the manufactures operation through to the final presentation before the consumer purchases the product. Effective storage of a product is one of the key way in which those operating within the distribution and logistics function are able to minimise additional costs associated with wastage and product damage.

In the case of the washing powder, the product is produced in its retail format, in that of a standardised box. The boxes are then palletised which facilitates a palletised approach to the further storage and distribution of the product. After initial manufacture, the product is stored in a large automated warehousing facility at the point of manufacture. The product can be stored in such a location for several months until a customer order is placed, given that the product is non-perishable in nature the sole concern is that the product is not damaged through multiple handlings or exposure to light.

Once a customer order is placed by Spar, the product is similarly stored in a large automated warehousing operation which largely mirrors that of the storage faculties of the initial manufacturer of the product. Again the primary concern of storage is to minimise the potential damage to the product through multiple stock handlings and other elements such as light. As such, once product arrives it is quickly placed into location within the warehouse and pallets are maintained in their current format so as to ensure minimal opportunity for damage. On receiving goods, pallets are labelled by the warehouse, a process which allows for an effective program of stock rotation seeing that the first product in is also the first product to be redistributed an inventory management technique referred to as “first in first out” or FIFO.

On reaching the regional distribution depots pallets of the washing powder are initially stored in their current format. However after an initial storage period, individual pallets are relocated into a “breakdown area”. Here pickers are able to access the product directly so as to enable small loads to be built to send out to stores. As such, the emphasis of the storage operation changes between the large national distributions centre in which the ability to hold a large amount of product in good condition is the primary focus. At the regional distribution centre, the primary consideration is the ability to effectively access the product for the purposes of redistribution to the stores in the appropriate format.

Finally, on reaching the store the washing powder has two further elements of storage. Initially the stock is held in a non-chilled part of the in store warehouse where the goods is stored for a short period of time before being brought into the store to replenish sales out. Once in the store the washing powder is stored on an ambient shelf facilitating ease of access for the consumer and thus sales out.

In considering the storage associated with the microwave meal, a perishable item of food one may see that both the emphasis of storage and the complexity involved is much greater than that of the non-perishable FMCG item. From initial manufacture of the microwave meal the product is stored in a blast chillier to ensure that the product reaches a suitable temperature for storage within the manufacturers own faculties. After an initial storage period, the product is tested to ensure that the correct temperature has been achieved and the product subsequently put into a chilled warehouse within the manufacturer own establishment. The manufacturer’s warehouse is designed to facilitate speed of distribution within the storage function, products frequently spending less than 24hours on the manufacturer’s site before leaving the plant for redistribution to customers.

Once reaching the regional distribution centres, products are labelled and checked into the chilled section of the warehouse. At this stage there is a high degree of emphasis placed upon documentation, each batch of goods requiring documentation that the product has previously been stored in the correct way, including during the transportation process. Once checked in inventories are managed by a computer system which sees that pickers again use a FIFO system to break down larger quantities of goods for further onward distribution into the stores within the Spar chain.

Once the goods arrive at the local convenience stores there are two further considerations for storage. Larger stores have a chilled section of an in store warehouse available, in such circumstances the product is stored initially in the chilled section of the warehouse, before being brought into the store to replenish sales. However, many smaller stores within the Spar chain lack chilled warehousing faculties in store due to a lack of space. In these cases the product must be stored directly in the chillers which are to be the point of sale. As such, this indicate the importance of correct inventory management and the ability to distribute small quantities of product to a given store. Failure to conduct such an efficient operation could lead to increasing levels of wastage and stock write offs.

As such, one can see that there is a large difference in the storage part of the distribution function when comparing the distribution of washing powder against that of the microwave meal. The emphasis of the storage of washing powder was simply the ability to handle large amounts of product in a safe way which protected the stock. The emphasis of the storage of the microwave meal included facilitating the speed of distribution and making use of systems, which enable a comprehensive audit trail of documentation in relation to the maintenance of the quality of the product from a temperature control perspective.

P.3 Slide notes

This section provides a comprehensive set of notes to accompany the PowerPoint presentation discussing the challenges facing Sainsbury’s supermarkets. The challenges identified have largely been taken from the information provided in the company’s annual report, as well as considering items taken from the business and trade press.

Slide 1 – Overview

At present despite the challenges of the market Sainsbury’s has a market share of 16.1%, a market share which has grown by 0.2% in the last twelve months.

Currently Sainsbury’s is experiencing a rapid rate of growth in its non-food based segments, non-food sales have grown three times faster than the company’s food based sales in recent years.

One of the key areas for growth is that of the online distribution channel which has been a 20% rise in growth in the last year. Other key areas of growth may be seen as alternative format stores such as Sainsbury’s conveniences based stores.

In summary, Sainsbury’s is an organisation with growing sales and profitability driven by the development of non-food sales and alternative distribution channel. The challenge for Sainsbury’s will be to maintain growth in the increasingly competitive core market of the supermarket sector.

Slide 2 – Porters Five Forces Model

Introduce Porter’s five forces analysis as a standard industry analytical tool for the consideration of the competitive nature of a given industry or market.

Overall Level of Rivalry – The overall level of rivalry in the industry and segment may be seen as significant. Whilst the sector is dominated by just a few competitors which include Tesco, ASDA and Morrison’s each of these players are large companies with access to considerable levels of resources. As such, the industry represents an oligarchy style of industrial structure.

Power of Buyer – The power of buyers is relatively high, consumers are easily able to switch between providers with relatively little transactional costs incurred as a result. Whilst there are few major players in the market, there is a sufficient number for the consumer to still effectively change providers.

Power of Supplier – The power of suppliers within the supermarket sector is relatively low. Many suppliers are supplying generic goods for which there are a high number of producers available. In addition, the volume of products purchased by the supermarkets allow suppliers to be dominated with putative trading terms and conditions.

Threat of Entrants – The threat of entry into the market is relatively low. The oligarchy style industrial structure is often off putting to new incumbents and the requirement to invest a significant amount of capital in the required infrastructure and distribution network makes the supermarket sector less attractive than many markets with lower barriers to entry from a capital perspective.

Threat of Substitution – Given that many of the products a supermarket sells are related to food and the household, there is relatively little threat of substitution. The main threat of substitution may be seen as coming in the form of substitution to another provider of goods and services, rather than a switch in goods purchased.

There may be additional risks for Sainsbury’s operating a value added strategy in that consumers may as a result of the recent economic downturn choose to switch superior premium prices goods for less expensive standard quality offerings.

Slide 3 – Generic Strategy

Give a brief overview of Porter’s three generic strategies of cost leadership, differentiation and market focus. Then apply the model to the various competitors within the supermarket segment.

In addition to introducing the main strategies, make reference to the fact that Porter indicates that whilst the strategies are not mutually exclusive, very few companies managed to follow more than a single of the generic strategies with success. Those that opt not to follow one of the generic strategies or attempt to follow more than one strategy are referred to as “stuck in the middle”. The pursuit of more than a single generic strategy often results in a firm attempting to meet the needs of a wider group of consumers however, such firms usually deliver poor value to all segments.

Sainsbury’s – Sainsbury’s may be seen as following a differentiated generic strategy in trying to create a competitive advantage in the face of its competitors. As such, Sainsbury’s adapts its product range to incorporate a high number of value added products including, organic foods, freedom foods and speciality products. Sainsbury’s strategy may be seen one of attempting to beat the competition by offering an around

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Introduction

Perhaps it can be said that modern day organisation changes are the archenemy of complacency. Strategic transformation requires careful attention to detail and ongoing support. Long-term change however requires a commitment to make it happen. Many organisations have failed in the attempt to make change a successful event, however, there have been others that met the challenge of making it happen. Those organisations which have succeeded have done so with a step-by-step model intended to guide the intricacies of change processes. Leaders who understand the dynamics of humanism are better positioned to gain voluntary participation from their workforce. Engaging emotional support for the new vision of an organisation is but an art that is mastered over time. Behavior modeling and self-accountability are instrumental to transmitting desired results. Goals and objectives are intangible until the leadership team can guide the workforce through the difficulties that come from changing old habits. This paper discusses a merger between two organisations that conducted business as buyer and vendor. The buyer acquires the vendor and begins the process to change its culture using the eight steps at the heart of change.

This paper discusses the Hats-Galore Inc. acquisition of Gloves-n-More Inc., a company that historically was a major supplier to Hats-Galore. The change agent (CA) at Hats-Galore Inc. is responsible for changing the corporate policies of Gloves-n-More Inc. to match those of Hats-Galore Inc. The CA has determined that the policies of Gloves-n-More Inc. are very formal and rigid which matches the organisational culture often described as bureaucratic. The Hats-Galore Inc. corporate culture is more relaxed and more like a family.

The CA has decided to address the corporate culture change using a Bottom-Up strategy (Cohen & Kotter, 2002). The “See, Feel, Change” concept is used to summarize the eight stages of large scale organisational change (Cohen & Kotter, 2002). It is anticipated that the Gloves-n-More Inc. employees will resist the change. A brief discussion on addressing the resistance follows. The advantages and disadvantages of using the bottom-up strategy will be discussed. The paper closes with a recapitulation of its content.

See, Feel, Change Concept

Cohen and Kotter (2002) proposed the See, Feel, Change concept as a way to demonstrate for organisations the difficulty in changing employee behavior. Cohen and Kotter (2002) affirm that given the massive challenges on implementing corporate change, there are organisations succeeding at the practice. They assert further that management teams able to inspire change create a compelling vision that inspires action. Cohen and Kotter (2002) declare that those managers help employees visualize the problem (see), and “feel” (emotional engagement) the need to voluntarily participate in the mission (change).

Zaleski, Gold, Rotella and Andriani (2002) conducted a review of Cohen and Kotter’s (2002) See, Feel, Change methodology and found that Cohen and Kotter (2002) provided convincing evidence that demonstrates the simplicity of the approach, and complexities of behavioral change. Saunderson (2011) suggests that recognition is a tool to be used in establishing an emotional (feeling) connection with employees, influence their attitudes, and change their minds. Landry (2002) found that the emotional focal point suggests more art than it does a systematic process. Marshall (2002) suggests that of all emotions, feelings, are the most powerful and definitely a tool to be used in change initiatives.

Advantages of Bottom-Up Approach

Conway and Monks (2011) imply that the bottom-up approach engages employees in ways that encourage voluntary participation. Additionally, there is opportunity for midlevel managers to mediate and negotiate strategic connections in ways that create positive political interactions between the executives of both organisations. Employees assume ownership of responsibilities when they sense that the management team sincerely cares about them (Conway & Monks, 2011). Hill, Seo, Kang, and Taylor (2012) suggest that the interactive communication between high ranking managers and first level employees promote positive perceptions.

Disadvantages of Bottom-Up Approach

Conway and Monks (2011) identified the potential for fragmentation of networks and personal interactions that might interfere with work related processes. The bottom-up approach does not eliminate uncertainty, it merely reduces it. Additionally, the bottom-up process forces employees to unlearn traditional ways (Conway & Monks, 2011). The bottom-up strategy is not business process driven (IBM, nd).

Kezar (2012) conducted a study on bottom-up approaches and found that the focus remains on senior level leadership, such as, those found in the C-Suites (Chieftains). Kezar asserts further that the potential of efforts disintegrating remains high if the C-Suite support diminishes. Challenges remain in uniting the support of senior level executives with those of the front line supervisors. Kezar (2012) proposed that social theory applies to the collaboration processes of negotiation and leveraging activities, hence, creating differences in elitist and non-elitist perspectives.

Anticipated Resistance To Change

Conway and Monks (2011) suggest that resistance to change comes from inadequate communication with employees. They assert further that employees who perceive the imposition of change initiatives experience different levels of anxiety that lead to resistance. Conway and Monks (2011) observe that midlevel managers stall the change process by using procrastination as a resistance tool. Michela and Vena (2012) conducted a study on the psychological impact of mergers and acquisitions on employee emotional stability. They found that employees who feel threaten by the loss of their jobs to mergers and acquisitions tend to fall into a self-protective mode that interferes with the change initiatives.

Quinones-Gonzalez (2013) suggests that the employer-employee psychological contract is real and has the potential to affect the employer-employee relationship in positive or negative ways. Additionally says Quinones-Gonzalez (2013), employees are prone to perceive mergers and acquisitions as contract breaching. As a result, they may demonstrate adverse behaviors that interfere with the change process. Hinescu (2014) proposes that the duplication of departments result from mergers and acquisitions. As a result, there are two sets of employees who will potentially experience the symptoms of the stress and low morale that accompanies uncertainty.

Bottom-Up Approach Application

Kezar (2012) compares the bottom-up approach application as one based upon shared leadership and humanistic psychology. She discusses the interdependent variables which make the interactive process productive. Those variables were identified as empowerment, decision making responsibilities, and accountability. Kezar (2012) maintains that shared leadership facilitates the decision making process and contributes to the ongoing functions of the organisation.

The CA at Hats-Galore Inc. will use the bottom-up methodology to encourage autonomy. The CA will also empower employees with decision making responsibilities. Additionally, the CA will encourage open communication between the management team and first level employees. Managers will be encouraged to speak of the impending changes on a daily basis. Cohen and Kotter (2002) quote Jack Welch as saying, “you’ve got to talk about change every second of the day, that’s a bit of an extreme position, but maybe extreme is what wins” (p.14).

Eight Stages Of Large-Scale Change

Mento, Jones, and Dirndofer (2002) refer to the eight stages of change as one of three exemplary models. Kotter and Cohen (2002) promoted the stages as a model to be preferred over all others. The eight stage model has been designed for strategic level changes. Theoretically validated, the model has simple applicability for the merger between Hats-Galore Inc. and Gloves-n-More Inc (Kotter & Cohen, 2002). Though it is a simple and unambiguous model, its complexity unfolds during the various stages of engagement (Mento, Jones, & Dirndofer, 2002). The model complements the bottom-up approach undertaken by the CA of Hats-Galore Inc.

Stage 1: Establishing Urgency

Schippmann and Newton (2008) suggest that introducing change to an organisation requires the CA to instill value and meaning to the process. Establishing urgency provides ample opportunity for the CA to influence the masses with inspiration and motivation to move the process forward. Creating urgency can be done by eliminating the threat of overwhelming the audience with a vague message. Goals and objectives can be simplified into actionable directives (Akerley, 2012; Cohen & Kotter, 2002; Schippmann & Newton, 2008).

Stage 2: Building Guide Teams

Change initiatives require the support, intensity, and excitement of a team. Goals and objectives materialize when everyone is moving in the same direction. Jack and Welch (2011) assert that effective leaders get emotional with their star performers. They recommend tough love, meaning that this is not the time to promote incompetence. Building an effective team requires the CA to articulate where everyone stands (Jack & Welch, 2011; Cohen & Kotter, 2002).

Stage 3: Make the Vision a Reality

The vision articulates an attractive future of the organisation and the mutual benefits to be gained. It must be realistic and measures the effectiveness of a shared mission. It must be emotionally engaging. It must include values that resonate with the leaders, stakeholders, and employees (Cohen & Kotter, 2002; Create, 2011).

Cohen and Kotter (2002) posit that the vision drives the action aroused by urgency. The vision must be presented in living color. When employees can see a clear picture they develop an autonomous mode of working. As a result, they can work faster and with less input from their superiors (Cohen & Kotter, 2002; Mento, Jones, & Dirndofer, 2002).

Stage 4: Influence Via Effective Communication

Harvey (2015) recommends that the CA take time to walk around and talk to people one-on-one because it opens up the channel of understanding with empathy in place. He says that communication is an art as well as a science because it can be practiced on a step-by-step basis and mastered efficiently. Harvey (2015) asserts further that effective communicators are passionate and speak with clarity. A CA must drive up the emotional energy in ways that employees can feel their commitment (Harvey, 2015; Cohen & Kotter, 2002).

Stage 5: Empower For Action

Ghosh (2013) posits that employee empowerment is about transferring power from managers to front level subordinates. It is a strategic tool when used effectively. Ghosh (2013) proposes that people are socialized towards accepting responsibility for significant assignments. Therefore, managers can facilitate the process of empowerment by ensuring that opportunities of growth and personal development for their employees are abundantly available (Ghosh, 2013; Cohen & Kotter, 2002).

Stage 6: Celebrating Short-Term Wins

Cohen and Kotter (2002) encourage change agents to celebrate short-term victories. One organisation celebrated their employees and found the experience to be rewarding, both for, managers and their employees (Celebrating, 2010). Paterson (2014) recommends that all celebrations no matter how small are diverse and inclusive of all employees. A few ways to celebrate short-term wins could include posting thank you notes on employee desks, filling their desks with balloons, and extending lunch breaks (101, nd).

Stage 7: Implement and Sustain

Cater and Puto (2010) conducted a study concerning the strategy implementation competence of managers. They found that managers were better skilled at devising strategies than they were at implementing them. Thereby, rendering the strategy impractical. As a result, managers feel bewildered when the intended goals and objectives fail (Cohen & Kotter, 2002).

According to Cohen and Kotter (2002), the implementation stage of change is about leverage, alignment, and sustenance. Leverage concerns using the momentum gained in the latter stages to strengthen weaker areas and reinforce the strategic advantages. Alignment ensures that the ongoing activities are connected to relevant objectives. Sustenance requires that the sense of urgency is maintained throughout the duration of implementation (Cater & Puto, 2010; Cohen & Kotter, 2002).

Stage 8: Provide Ongoing Support

Cohen and Kotter (2002) assert that lack of ongoing support could derail the progress made. Hence, the eight stage promotes the increase of focus on the changes made. Managers must take time to show the before and after effects of the changes. Additionally, new leadership must be identified and developed to promote the cultural transformation (Cohen & Kotter, 2002).

Closing Comments

Self-efficacy and job satisfaction are instrumental to the success of any organisation. The ability for individuals to adapt to their social-cultural environments has an impact on their social-emotional well being. Organisation leadership must continuously look to new ways of engaging their employees in the vision of the organisation. Additionally, they must include opportunities for self-realization, self-efficacy, and personal development into daily work-related-tasks (Cooper, 2013).

The eight stages of change presents modern day management with a tool that incorporates humanistic theory, meaningful values, and self-realization for their workforce into work processes. As a result, CA have a versatile model that will facilitate the change process and provide opportunities at every stage to increase the job-satisfaction and self-efficacy needs of the workforce. Success for the organisation and employee is dependent upon the identity link created by employee perceptions. During the eight stage process, managers have the ability to influence employee perceptions in ways that help them feel safe and satisfied with the organisation (Perdue, Reardon, & Peterson, 2007).

Conclusion

This paper discussed the eight stages of change as a strategic approach for the merger of Hats-Galore Inc. and Gloves-n-More Inc. The CA of Hats-Galore Inc. was tasked with the responsibility of transforming the bureaucratic culture of Gloves-n-More Inc to the friendly and family oriented culture of Hats-Galore Inc. The See, Feel, Change concept discussed the challenges and viability of transformative change. The paper has met its intended goal.

References

101 Ways to celebrate people. (nd). John Hopkins University. Retrieved 1-Oct-15 from https://tmod.jhu.edu/talent_mgmt/resources/101WaystoCelebratePeople.pdf

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