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Introduction

There have been many different definitions of supply chain risk, but it can be broadly defined as “the variation in the distribution of possible supply chain outcomes, their likelihood, and their subjective values” (March & Shapira, 1987, p. 1404). However, this definition has since been expanded upon to account for all the different departments and functions that operate within a supply chain. This leads to an overall definition of supply chain risk as “any risks for the information, material and product flows from original supplier to the delivery of the final product for the end user” (Juttner, et al., 2003, p. 202). Simply put, supply chain risk refers to the probability of a risk event occurring the supply line and when the product goes on sale. Furthermore, risk sources are the predominant causes of risk events, which are “the environmental, organisational or supply-chain variables which cannot be predicted with certainty and which impact on the supply chain outcome variables” (Juttner, et al., 2003).

Identifying Supply Chain Risk

There are a variety different approaches that a company can take in order to identify risk in their supply chain. Steele and Court (1996) proposed a conceptual framework for identifying the potential risk in an organisations supply chain. This process was comprised of three key steps:

The probability of a risk event occurring in an organisations supply chain must be determined.
Next, the organisation should attempt to estimate the likely duration the risk event will last for, including when it may occur. This can usually be achieved through the analysis of past experiences.
Lastly, an analysis should be conducted on the probable impact the risk event could have on a certain facet of the organisation, such as market or financial performance.

If a company goes through these stages every time they believe a risk event may be imminent, then it will allow them to successfully identify the severity of the risk event, and put in motion any plans to prevent the risk.

Furthermore, an organisation should constantly be monitoring and attempting to identify risk events, as the earlier a risk is identified, the more likely it will be that an organisation that limit or completely negate the effects. If a company is conducting a new project to improve the supply chain, then risk identification should occur during the planning and preparation stage. This means that the organisation will have to identify risk indices, which aim to give a quantitative analysis of the potential risks associated with a project (Turney, 1996).

After the risk has been successfully identified, it can be categorised into a variety of different supply chain risk categories. This report will aim at identifying three supply chain risk categories, and suggest ways in which risk can be mitigated or managed within these categories. The three supply chain risk categories that will be explore are; exogenous, data integrity and internal resource risks.

Exogenous or External Threat

The supply chain must deal with external forces, such as natural disasters (flooding, hurricanes, or earthquakes) or human-centred issues (fraud or terrorism). Gupta & Maranas (2003) classify exogenous risk into two main sections. The first is long-term uncertainties, which can be in the form of seasonal demand variations or raw material unit price fluctuations. On the other hand, risk could cause short-term uncertainties, such as cancelled/rushed orders or equipment failure.

There are a plethora of issues present when trying to manage exogenous risk. This is mainly in the form of company’s unwillingness to plan for large-scale disruptions. Although organisations generally aim to protect themselves from small, recurrent exogenous risks, they ignore the high-impact, low probability ones (Chopra & Sodhi, 2004; Faisal, et al., 2006).

One of the most prominent strategies for mitigating the impact of exogenous risk events, is through the use of ‘hedging’. Hedging is a “supply side risk management strategy. In a global supply-chain context, hedging is undertaken by having a globally dispersed portfolio of suppliers and facilities such that a single event” (Manuj & Mentzer, 2008, p. 208). This is a particularly strong strategy at mitigating exogenous risk, especially high-impact ones, because it reduces the amount of operations that a potential natural disaster will hit. Furthermore, there are a variety of ways in which an organisation can ‘hedge’ against exogenous risk. One of the most prominent ways is through the use of dual sourcing, which protects the quality, quantity, price and performance of products by sourcing from more than one supplier. Furthermore, these suppliers must be far enough apart to ensure that a natural disaster wouldn’t affect both of them. Although a strong strategy, it is incredibly expensive for a company to do, as dual-sourcing is much more costly then single-sourcing (Berger, et al., 2004). Hedging is the best technique to use if a company has the available investment resources, faces high levels of exogenous risk, and produces goods where strong quality and process controls are in place.

Furthermore, an organisation can use the Supply Chain Operations Reference (SCOR) framework. This model comprised of four factors; source, make, deliver and plan. The SCOR framework can be used to “improve alignment between marketplace and the strategic response of a supply chain, on the premise that the better the alignment, the better the bottom line performance” (Huan, et al., 2004, pp. 24-25). Although it doesn’t identity risks, it acts as model to increase the performance of the supply chain and make it more resilient against potential risk events. A resilient supply chain has the ability to return to its original or desired state after being disturbed by a risk event (Peck, et al., 2003). It also allows firms to conduct thorough, fact based analysis of their supply chain, thus providing them with informed knowledge to make strategic decisions involving the supply chain.

Data Integrity/ Information Security Threats

Data and information security risks can largely be managed by the organisation by implemented thorough security checks throughout their data management software. However, in 2001, Ernst & Young (2001) conducted a survey to investigate how many companies had suffered data loss of failure. From interviewing over 250 chief information officers, over 70% of them stated that they had suffered some form of disruption to a critical IT service. This highlights the issues that data integration is causing many companies across the UK.

To prevent these issues, all organisations should be implementing a variety of security checks and protection systems on their IT systems. Finch (2004) outlines four key systems that all organisations should implement in order to ensure their IT and data integrity. These are;

Virus detection: All companies should have virus detection software to stop incoming threats from effecting critical IT systems. Furthermore, if this is coupled with a strong firewall, it can block the majority of malicious threats.
Firewall: A firewall is fundamental to a networks security. Although many companies install a solid firewall on their network systems, they forget that it needs to be managed. This is because the firewall must be updated with security policies, and log files regularly scanned for potential threats.
Backups: The majority of larger companies will have various backup systems in place to maintain the integrity of data even if a threat occurs. Furthermore, these backups should usually be stored off-site to increase protection. On the other hand, many smaller companies did not recognise the value that back-ups provide.
User accounts/passwords: Although user accounts and passwords are prominent across the majority of organisations, they must also be constantly managed. This means updated employees access rights, and deleted ex-employees from the system.

Although these systems seem like common knowledge for an organisation to install and implement, it is the careful monitoring and management of the systems that is imperative. Letting a security system become outdated will render it useless, as modern threats will be able to effect critical IT systems. Although risk sources related to data integrity cannot be mitigated entirely, they can be successfully managed through the thorough implementation of numerous security checks (Stoneburner, et al., 2002).

Internal Resource Risks

Internal resource risks has some similarities to data integrity risks, as it involves protecting all the internal resources that are connected within the supply chain. This can include things such as; labour strikes, production failure, IT system failure or insufficient interaction between organisations within the supply chain. Furthermore, similar to the other two risk categories, an organisation must conduct careful planning and preparation to help completely mitigate internal resource risks from occurring. There are a variety of methods in which a company can do, including probability reduction, transferring or sharing risks.

educing the probability of a risk event is often preferred by many organisations, and could be reduced by “by improving risky operational processes, both internally and in cooperation with suppliers, and to improve related processes, e.g. supplier selection” (Norrman & Jansson, 2004, p. 439). Fundamentally, if a company wishes to reduce the probability of a risk event occurring then they will attempt to integrate all processes with the supply chain. However, although this reduces the probability of a risk event occurring, it is still likely that one will eventually occur, and with full impact.

Another method of reducing internal resource risks is by transferring risk to insurance companies, or supply chain partners. This could be in the form of changing delivery times or suppliers (just-in-time deliveries) or customers (made-to-order manufacturing), or by outsourcing activities (Norrman & Jansson, 2004). Although this is a beneficial method for one company, it could be extremely damaging to the organisation or customer who ends up dealing with the potential risk event. This could fracture supplier and customer relationships, relating in short-term and long-term financial losses for a company.

The final method of reducing internal resource risk is through sharing them. This is usually through the use of contracts, as commercial risks can be shared via these. Furthermore, the internal resource risk could also be minimised through more collaboration throughout the supply chain, as many different departments of the supply chain could absorb the risk effect, thus mitigating it substantially if it were to just impact one process (Cachon, 2002; Tsay, et al., 1998).

On top of these methods, organisations should also be conducting successful supplier relationship management (SRM). SRM can be defined as “a process involved in managing preferred suppliers and finding new ones whilst reducing costs, making procurement predictable and repeatable, pooling buyer experience and extracting the benefits of supplier partnerships” (Choy, et al., 2002, p. 282). Although this isn’t specifically targeted at managing risk, it has a natural impact to reduce the probability and mitigate the impact of risk. It is similar to the sharing strategy, as it focuses on integrating and collaborating all aspects of the supply chain, to protect internal resource from potential threats. Furthermore, SRM can reap even greater benefits for an organisation if it is coupled with Customer Relationship Management (CRM). Choy, et al., (2002) studied the effects that integrating SRM and CRM had on Honeywell, a company based in Hong Kong. They found that the collaboration of SRM and CRM had many benefits, as suppliers were more aware of what customers had ordered, and could tailor and increase the quality of products accordingly.

Conclusion

There are many different methods for managing risk, and even though risk events can come in many forms, they all follow similar patterns. An organisation should attempt to mitigate all risk events of occurring by driving the probability of the risk event down to zero, or as close to zero as possible. This can be done through the use of a variety of systems, such as the SCOR framework, which aims to increase the resilience of an organisations supply chain. Furthermore, collaborating and integrating the supply chain has many benefits at mitigating exogenous risk and internal resource risk. This is because it spreads the risk over many different processes, thus reducing the impact on one single function.

As risks can cause significant distress to an organisation and its operations, they must ensure that all the relevant frameworks and theories are being utilised. The type of risk that is going to affect the company is completely dependent on the geographical location of the company and the industry they operate in. This means that one risk management strategy does not work for everyone, and an organisation must ensure they are implementing the correct risk management strategy to ensure the risk event is mitigated and its effects negated as much as possible.

Bibliography

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Introduction

Strategic management involves the construction and implementation of major aims and objectives taken by an organisations managers to represent the views of the owners. It is usually based on the consideration of resources, and on an assessment of the internal and external factors affecting the organisation (Nag, et al., 2007). It is an incredibly important factor for company owners to take into consideration as it is directly related to the success of an organisation.

This report will explore the three theoretical approach to strategic management; resource based view, market based view and I/O view. Furthermore, it will also investigate three type of strategy, which are corporate strategy, business strategy and operational strategy.

Resource Based View

The resource based view to strategic management “provides an explanation of competitive heterogeneity based on the premise that close competitors differ in their resources and capabilities in important and durable ways” (Helfat & Peteraf, 2003, p. 997). Furthermore, the resourced based view has become one of the most prominent and influential theories in management. This is because it aspires to explain the internal resources that an organisation can utilise to gain a competitive advantage (Kraaijenbrink, et al., 2009). The central theme of a resource based view to strategic management is that for a firm to achieve sustained competitive advantage it must acquire and control a wide range of resources and capabilities (Barney, 2002). Although the resource based view appears to be an incredibly appealing technique to use, it has been extensively criticised.

The various criticisms of the resource based view can broadly fall under six main categories. These are (Kraaijenbrink, et al., 2009);

No managerial implications: The resource based view tells managers that certain resources, valuable, rare, inimitable and non-sustainable (VRIN), should be obtained. However, it doesn’t give feedback on how managers should go about obtaining these resources (Conner, 2002).
Implies infinite regress: Many theorists critique the resource based view because it will lead firms into an infinite loop of endlessly searching for the best resources. Collis (1994, p. 148) states “a firm that has the superior capability to develop structures that better innovate products will, in due course, surpass the firm that has the best product innovation capability today…”.
Applicability is too limited: Conner (2002) believes that the resource based view can only be adopted by large firms who have a lot of market power. This alienates many, smaller firms, from being able to benefit from the success that a resources based view can hold.
Sustained competitive advantage is not achievable: The resource based view is focused on sustaining competitive advantage. However, competitive advantage cannot really be sustained because “Both the skills/resources, and the way organizations use them, must constantly change, leading to the creation of continuously changing temporary advantages” (Fiol, 2002, p. 692).
Not a theory of the firm: Most academics agree that the resource based view is not a theory of the firm, but with some turning it into a critique. As the resource based view does not take into account operational boundaries, values, internal structure or asset ownerships, it cannot be a theory of the firm (Dosi, et al., 2008).
Definition of resource is unworkable: Many definitions of resources are extremely broad, and if all were taken account than anything of substance to a company would be considered a resource. As the resource based view does not take into account the different definitions and types of resource, it is hard to apply to specific situations (Kraaijenbrink, et al., 2009).
Market Based View

This perspective focuses on factors “outside the firm on the markets in which it competes”. Furthermore, the market based view states that “the sources of value for the firm are embedded in the competitive situation characterizing its external product markets” (Makhija, 2003, p. 437). This basically means that a firms sources of market power is a contributing factor to the organisations performance. Most academics highlight three main sources of market power, these are (Grant, 1991);

Monopoly: If a firm has market power in the form of a monopoly then they should expect exceptional business performance. This is because they will be the only company operating within a market, and can dictate the pricing of their products at free will. However, they will also be susceptible to new companies penetrating the market.
Barriers to entry: For a company operating as a monopoly they will want to impose strict barriers of entry to try and maintain control of the market for as long as possible Furthermore, this approach should be taken by most companies in a dominant market position, as they do not want other companies to penetrate the market and steal market share.
Bargaining Power: The more bargaining power a company has, in regards to both consumers and suppliers, the higher the expected performance would be. This is because if the firm has a low of power over their suppliers and consumers, then the chances are that there are not many substitutes for the suppliers or consumers to choose between. Once again, this allows the company to have dominant impact on the pricing within the market.

Furthermore, because many academics suggest that business markets evolve very slowly (Geroski & Masson, 1987; Mueller, 1986), it means that market power does not erode rapidly, and a company can maintain it for a reasonably long time. However, even if the market were to dramatically change, a company can utilise their current market power to cushion the effects of any detrimental actions that may occur.

Industrial/Organisation View

The organisation view on strategic management focuses on how an organisation chooses which industries to operate. It suggests that if an industry is performing exceptionally well, then a business can enter that market and reap substantial financial benefits (Chin, et al., 2003). It is centred on Porters Five Forces (1980), as it analyses the different modes and restrictions of entry into a market.

Makhija (2003) takes the view that the I/O view is about manipulating power asymmetries and trying to develop market power. It does this by attempting to minimise the impact of Porters Five Forces, such as industry rivals and threat of new entrants. Furthermore, an I/O view would view market power as a substantial defence against new entrants, and that the industry can have significant impacts on competitive advantage, not so much the market or the organisation. It is a relatively outdated view of competitive advantage, with the resource based view and market based view being preferred by most academics and corporations.

Corporate Strategy

Michael E Porter (1987, p. 1) defines corporate strategy as the concern as business as on “how to create competitive advantage in each of the businesses in which a company competes”. In essence, corporate strategy concerns every facet of the business, to add up to more than the sum of its business unit parts. Furthermore, Porter (1987) outlines four generic strategies that exist at a corporate level. These are;

Portfolio Management: This is a corporate strategy that is in use by most organisations. It is primarily based on a diversification strategy through acquisition. Although acquisitions can be in a completely new market, corporate managers will often limit the differences to focus their own personal expertise. Furthermore, the acquired firms should run autonomous, with teams focusing on their own work and being reward based on unit results.
Restructuring: This is quite dissimilar to portfolio management, as it involves the complete restructuring of businesses. A corporate manager will usually acquire a company with “unrealised potential” and then seek to actively review and restructure the business operations. This strategy benefits from underperforming companies that are at threat of going into liquidation. When well implemented, the restructuring strategy offers many benefits, it is a cheap mode of acquisition and still leaves a lot of freedom for development.
Transferring Skills: The previous two strategies both rely on the acquisition or restructuring of companies and leaving them to operate autonomously. However, a transferring skills strategy seeks to build interconnected relationships between each business unit of the corporation. However, sometimes business units will not synergise well together and no matter how hard a corporation tries, the skills cannot be transferred. This can prove costly and timely for an organisation.
Sharing Activities: The final strategy developed by Porter (1987) is via a sharing activities strategy. This strategy is a blend of the three previous strategies, as it leaves business units to act autonomously, but will seek to share a portion of activities between them. This could be in the form of production, supply chain or distribution. Furthermore, this strategy is becoming more and more prominent as sharing often enhances competitive advantage for a business by lowering costs.

As all four strategies have a variety of benefits, a corporation must decide on what strategy is most beneficial to follow. In general, the sharing activities strategy will be very suitable, as it is a cheap strategic choice, potentially lowering costs, and maintains the autonomy between business units. However, if a company is looking for rapid strategic growth then they may just build up a large portfolio of acquisitions. Unfortunately, this does come with a substantial amount of risk and resource usage.

Business Strategy

A business strategy is fundamentally the way in which an organisation will set out to achieve any designated aims or objectives. Furthermore, a business strategy will typically cover a period of around 3-5 years and encompasses three generic strategies. These are; growth, globalisation and retrenchment. Growth and globalisation both look at how an organisation can expand their operations, either domestically or internationally. On the other hand, retrenchment is a defensive strategy, and looks into ways in which an organisation can reduce their operations to focus on what they do best (BCS, 2015).

As with the other strategies, business strategy is still meant to give an organisation competitive advantage. There are a variety of ways in which a business strategy can achieve this, including lowering prices or product differentiation. Business strategy is significantly different to corporate strategy in this regard, as it relates to the finer details of operation and gives individual employees a say on decision making.

Functional/Operational Strategy

Strategy in an operational context is “essentially about how the organization seeks to survive and prosper within its environment over the long-term” (Barnes, 2007, p. 24). Furthermore, Slack, et al., (2004) outline five key attributes that an operational strategy will try and achieve. These are;

Cost: The ability for an organisation to produce at a low cost.
Quality: The ability for an organisation to produce within specification and with minimal errors.
Speed: The ability for an organisation to produce quickly and meet consumer needs and demands, such as offering a short lead time between when a customer orders a product and when it gets delivered.
Dependability: The ability for an organisation to deliver their products in accordance with any promises made to the consumer.
Flexibility: The ability for an organisation to be able to change their operations at any given time. This can include changing volume of production or the time taken to produce.

If a company can perform exceptionally well in one or more of these factors, then it allows them to pursue a strategy that uses the factor as a competitive advantage. Barnes (2007) provides a table highlighting the different competitive strategies that a company can pursue dependent on where they are exercising efficient operations.

Excellent Operations Performance in…Gives the Ability to Compete on…
CostLow Price
QualityHigh Quality
SpeedFast Delivery
DependabilityReliable Delivery
Flexibility

Frequent new products/services

Wide range of products/services

Changing the volume of product/service deliveries

Changing the timing of product/service deliveries

Furthermore, it is highly unlikely that an organisation will be able to act proficiently at every one of the five factors mentioned above, so choosing one to excel it is a preferred method. If a company were to try and focus on all five factors they will likely cause confusion and actually lose their competitive edge. This concept was proposed by Skinner (1969) and is referred to as the ‘trade-off’ strategy. It basically means that a company can ‘trade-off’ performance in one facet of their operations to perform exceptionally well in another. Operations can play a fundamental role in strategic decision making, and a company must be clear on where they are performing well in order to market this as a competitive advantage.

Conclusion

There is not really an optimum strategy to pursue for an organisation, as it is dependent on a variety of external factors that could be specific to the organisation. Careful planning and preparation must be conducted before any organisation commits to following a certain strategy, otherwise they may risk losing substantial resources.

Furthermore, the resourced based view and market based view both have their merits, with a combination of the two probably being the most optimum method. An organisation should order their resources to establish a strong market power within an industry. Once this market power has been attained, corporate level members can begin filtering down aims and objectives that can be accomplished by business and operational strategies. Strategic choice involves heavy integration throughout all levels of the business, as strategies can be implement by a number of different departments, all of which offer their own benefits to the overall aims and objectives of the organisation.

Bibliography

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Introduction

This short paper aims to describe the role of technology in supply chains and assess its advantages and disadvantages.

Supply chain management comprises the active management of organisational procurement, logistics, production and distribution activities for the maximisation of customer value and achievement of competitive advantage (Carter & Rogers, 2008). It concerns the effective and optimal management of goods from the procurement of raw materials from basic suppliers to the delivery of products to ultimate consumers, and even beyond in terms of the return or the consumption or disposal of such goods (Carter & Rogers, 2008).

Several developments in recent years have however resulted in significant changes in organisational attitudes towards supply chains, sharply enhanced focus upon the area, and efforts for increasing the effectiveness of the SCM function (Chopra &Meindl, 2012). Various geopolitical and socioeconomic developments like the growth of a unipolar global order, the dominance of market-oriented economic activity, globalisation, economic liberalisation, and tremendous advances in transportation and communication technology, have resulted in enormous expansion of markets and the dispersal of production and manufacturing centres (Chopra &Meindl, 2012)

With organisations engaging in sourcing of raw materials, production, research and development and sales and marketing in geographically distant locations, modern firms are placing great stress upon optimising the efficiencies and cost effectiveness of their SCM functions (Ghorban, 2011). Such organisational focus on enhancement of SCM effectiveness has also led to constant efforts for technological up-gradation and introduction of new technologies for optimisation of supply chain and enhancement of organisational competitiveness (Kremian, 2013).

This paper describes and discusses some of these modern SCM technologies, the reasons for their induction and their merits and demerits. It attempts to detail the advantages and disadvantages of new technological introductions in SCM, making use of theory as well as several practical applications, especially in the area of warehouse management.

Introduction of New Technologies in SCM Activities and Processes

Ghorban (2011) stated that technology has crept into SCM in a gradual and progressive manner, commencing with actions like electronic invoicing, computerised tracking and shipping and automated notifications and moving on to diverse and numerous other applications. Such incorporation of new technologies is being driven by diverse forces, like increasing customer expectations, intensification of competition, increasing fuel costs and greater demand for inventory control and Just in Time (JIT) management (Faze, 1997).

It is important to appreciate that contemporary technology has extensive capabilities, with regard to ensuring organisational production in line with schedules, the anticipation and correction of mistakes and the making of modifications for guaranteeing top quality products (Intermec Technologies Corporation, 2007). Each and every link in a supply chain can be simultaneously monitored and automated notification systems can be used for sending messages to diverse players through different channels (Intermec Technologies Corporation, 2007). Some of the top trends and technologies impacting supply chain operations, spanning production, distribution, retailing and remote servicing include (1) comprehensive connectivity, (2) voice and GPS communication integrated to rugged computers, (3) speech recognition, (4) digital imaging, (5) portable printing, (6) bar-coding advances, (7) remote management and (8) wireless and device security (Cohen & Roussel, 2013). Taking up the case of voice and GPS communication, leading cellular carriers have certified the utility of rugged hand held computers, which facilitate voice communication, data connection and cell phone functionality through one device (Cohen & Roussel, 2013). Stanley Steemer, a carpet cleaning franchisee made use of GPS and real time two-way communication to improve efficiencies, which resulted in the elimination of a fulltime despatch official at each of its branches and greatly reduced the time required for completion of process paper work (Chopra &Meindl, 2012).

Software programme and cloud computing have significantly improved material and product tracking, with real time updates of status now available without difficulty (Vella, 2012). These programmes furthermore allow business firms to adjust production schedules and inventory levels on a real time basis (Vella, 2012). With companies appreciating the advantages of technology incorporation in SCM, several multinational corporations have taken the lead and stand out as pioneers in the area(Intermec Technologies Corporation, 2007).

The John Deere Company made use of sophisticated logistics management software to enhance its onetime shipments to dealers from 60 to 92 percent, even as it reduced its inventory by 1 billion USD(Intermec Technologies Corporation, 2007). Nike worked with DHL Supply Chain to implement radio based product monitoring for warehouse and distribution purposes and real time delivery notifications, thereby reducing costs and increasing efficiencies(Ghorban, 2011). Walmart, the largest global retailer, has long been known for its SCM processes(Ghorban, 2011). The company is constantly engaged in using modern technology and network systems for predicting demand, tracking inventory levels and planning efficient transport routes(Ghorban, 2011).

It is important, in this context to appreciate that the introduction of new technologies has resulted in significant alterations in the conduct of specific SCM functions, like warehouse management (Halldorsson et al., 2007)). Searching for enhancements in efficiency and profitability, modern organisations have adopted various new technologies that have resulted in significant transformations in the management of warehousing functions(Carter &Rogers, 2008). The introduction of wireless technology and mobility has resulted in the development of a range of new products for enhancement of organisational productivity and profitability(Carter &Rogers, 2008). Some of these technological innovations are detailed below:

Warehouse Management Systems

Developments in warehouse management systems are being used to assist business firms in controlling the movement and storage of materials within warehouses (Simchi-Levi et al., 2007). Such systems are being used for diverse warehouse management functions like inventory management, including transactions like receiving, picking, packing and shipping, real-time monitoring of stocks, progression of products through warehouses and ensuring the elimination of obsolescence(Intermec Technologies Corporation, 2007).

Barcode Labels and Scanners

Barcode scanners, which were developed soon after the introduction of wireless technology, have become a common element of warehouse equipment (Vella, 2012). Barcode scanners are hardware devices that enable users to read barcodes, printout labels or product information and log products into the database of the warehouse management system (Vella, 2012). They are available in various types and come with different utilities (Poirier & Quinn, 2006). Barcode label printers are used by warehouse managers for printing product labels, shipping labels and bin labels(Reinertsen, 2009). Easy to use and cost effective, these devices help business firms to enhance the accessibility of management and data and augment productivity(Reinertsen, 2009).

Voice Hardware

Voice technology has recently been introduced in the area of warehouse management (Poirier & Quinn, 2006). These devices are now being used by firms to determine and finalise the amount of goods to be picked up (Vella, 2012). Voice hardware devices are fastened to wireless computers, with the data being transmitted to the device at the time of picking an order to ensure that the picker knows the product and the amount of items to be picked (Simchi-Levi et al., 2007). Several companies have started incorporating voice hardware, despite its costs, in order to save time(Ghorban, 2011).

Mobile Computers

Mobile computers are basically barcode scanners with their own display screens and operating systems(Reinertsen, 2009). The hardware for these products has been designed to ensure that they can function like portable PCs with barcode scanning capabilities(Ghorban, 2011). With mobility becoming increasingly desirable, organisations are adopting mobile warehouse management solutions(Ghorban, 2011). Such devices are proving to be extremely beneficial for organisations wishing to enhance accessibility to real time data and employee productivity (Poirier & Quinn, 2006).

Advantages and Disadvantages of Introduction of New Technology in Supply Chain Management

There is little doubt of the various advantages that can arise for companies from the adoption of new technology (Poirier & Quinn, 2006). Several firms have been able to achieve significant reductions in costs through the use of barcodes, advanced picking and other technologies in order to leverage their warehouse and transportation management systems (Poirier & Quinn, 2006). Several organisations have made use of advanced planning and scheduling systems for bringing about dramatic reductions in inventory levels and improving customer service (Poirier & Quinn, 2006). Pujawan (2004) stated that the introduction of new technology was likely to result in enhanced costs, disruption of work and the need to learn new things and eliminate old practices. He furthermore stated that modern businesses have, despite these challenges, been able to apply technology to convert their supply chain into profit generators through the reduction of costs and inventory levels and the enhancement of customer service (Pujawan, 2004). Coke, for example, upgraded its demand planning and collaboration capabilities into 2005 through the introduction of new inventory management processes, supported by software(Ghorban, 2011). This enabled the firm to improve fill rates by 15% and reduce inventory levels by 50%(Ghorban, 2011). The organisation was able to simultaneously absorb a 300% increase in product offerings, which resulted in a surge in profits through the reduction of assets and the support in enhancement of revenues through greater product availability(Ghorban, 2011).

The introduction of new technologies in SCM must however be carried out with great care and thought and in accordance with organisational requirements (Pujawan, 2004). New devices and system are expensive to purchase and install (Pujawan, 2004). Their utilisation furthermore calls for significant training and haphazard and unplanned implementation can result in a number of organisational problems(Carter &Rogers, 2008).

Investigation into the problems and disadvantages of introduction of new technology into SCM revealed that several organisations have faced different types of problems on this account(Carter &Rogers, 2008). A retailer specialising in children’s toys, for example, exceeded both the time schedule and the budget in the implementation of a new fulfilment system(Carter &Rogers, 2008). The occurrence of the Christmas demand spike before the completion of the fulfilment system led to severe challenges in the processing of orders (Sharma, 2010). Whilst organisational employees worked for 50 days at a stretch without holidays to satisfy customers, the firm was forced to delay deliveries till after Christmas to thousands of their buyers(Carter &Rogers, 2008).

SCM experts have stated that the width and scope of common SCM processes, like, for example, warehousing or transportation, are so extensive that the introduction of new technology was likely to involve significant costs, time and challenges associated with organisational change(Simchi-Levi et al., 2007). The majority of new technologies comprisedboth hardware and software and are expensive to purchase and install (Simchi-Levi et al., 2007). Organisations with limited operations and funds may thus not be able to obtain commensurate benefits from the implementation of such technologies by way of cost reduction or enhanced business (Sharma, 2010).

Many of these new systems are furthermore complex in nature and take time to install and operate(Carter &Rogers, 2008). With such installation likely to disrupt existing organisational operations, the managers of firms introducing new technologies have to plan their strategies in this regard with great care to ensure minimisation of operational disruption and customer dissatisfaction(Carter &Rogers, 2008). It is also important to keep in mind that the introduction of new technologies is bound to result in significant changes in operational activities and possibly to redundancy of labour, both of which could result in change resistance amongst employees and to opposition to organisational plans in this regard (Simchi-Levi et al., 2007).

Conclusions

The study reveals that whilst the introduction of new technologies in organisational SCM processes can result in several types of organisational benefits by way of (a) reduction of costs, (b) lowering of time, (c) reduction in inventory, (d) elimination of people and (e) enhancement of volumes amongst others, such introduction was likely to be expensive, complex and demanding in nature(Carter &Rogers, 2008). Organisational managements should, in such circumstances, introduce new technologies only after ascertaining the benefits from such actions for their organisations (Poirier & Quinn, 2006).

Great care should also be taken in the planning, implementation and installation of these technologies, with particular regard to operational disruption and organisational change (Poirier & Quinn, 2006). It has for example been explained earlier that the introduction of new technologies could help in reduction of costs through elimination of people. Such redundancies could however result in employee dissatisfaction and organisational strife. Organisational managements must, when introducing new technologies, take care to consider the various aspects and consequences of such actions and take appropriate actions. Lack of thought and care in these areas could result in inadequate and inappropriate implementation and extremely adverse organisational consequences (Poirier & Quinn, 2006).

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Introduction

A variety of academics have provided numerous definitions of risk, with some being centred around a specific business environment and others being a more generic definition of risk. A comprehensive risk definition that is tailored around the business environment can be defined as an event that will likely lead to substantial losses for an organisation, which could also be made more dangerous by the likelihood of the risk event occurring (Harland, et al., 2003). Furthermore, The English Oxford Dictionary defines risk as “A situation involving exposure to danger” or “The possibility that something unpleasant or unwelcome will happen”. (Oxford Dictionary, 2015)

Kaplan and Garrick (1981, p. 12) provide a simple equation for risk, which is “risk = uncertainty + damage”. They believe that it is irrelevant as to what context risk exists in, and that the same equation can always be used to identify and manage risk. However, risk can still be categorised differently depending on what facet of the organisation it is affecting. For example, supply chain risk can be defined as “”the variation in the distribution of possible supply chain outcomes, their likelihood, and their subjective values” (March & Shapira, 1987, p. 1404). This is quite different to other, more generalised definitions of risk.

Risk Management

Before a risk management strategy can be decided upon, the risk event must first be identified. An organisation should conduct three steps before deciding on the best risk management strategy to use. As risk management can use a substantial amount of resources, clarification and direction should be decided upon before conducting risk management. The three factors are (Stanleigh, 2015);

Identification of the risk: The organisation should first review all of the possible risk sources. Furthermore, they could use a risk assessment tool to identify the risk event that may occur.
Assessment of the possible risk event: Once the organisation has identified the risk, they must assess the potential damage that the risk even could case. As previously stated, the severity of the risk is an extremely important factor for an organisation to consider, as it will help shape and design any relevant risk management strategies.
Develop an educated response to the risk event: After the risk has been successfully identified and assessed, the organisation can begin to decide what resources may be needed to limit or completely negate the potential risk event.

Once an organisation has identified any unexpected risk events that may occur, they must focus all their resources of deciding which risk event should be tackled first. Most organisations will have a limited amount of resources, and will only be able to tackle one of two risk events at a time. If a plethora of risk events are likely to occur, this means prioritising which ones to minimise. This means that companies have to assess the impact that a risk event can have on an organisations financial and market performance, and focus all their resources to eliminate the most dangerous risks first.

Risk management is imperative, and executing it unsuccessfully can have severe impact on an organisation. The extent of the consequence for not managing risk will be dependent on the risk event, but can have impacts such as; financial loss, employee injury, business interruption, damaged reputation or failing to achieve corporate objectives (SCU, 2015). There are a plethora of other potential consequences for not managing risk, all unique to the particular risk event, but none will other anything positive to business performance. This highlights the significance for an organisation to conduct risk management successfully.

There are a few different frameworks and ideas that exist to help an organisation prioritise which risk event they should focus on minimising. One of the most comprehensive frameworks for prioritising risk is the probability and impact framework. This framework depicts independent, variability and ambiguity risks, and measures the probability that these risk events may occur and the severity they may have for the organisation if they were to ever occur. These findings can be summarised in a probability-impact matrix which is where “the probability and impacts of each risk are assessed against defined scales, and plotted on a two dimensional grid” (Hillson, 2001, p. 237).

Furthermore, there are a few other methods for prioritising which risk event to tackle. Risk events can also be ranked using multi-attribute techniques. For companies that want to adopt a more adaptable risk priority technique, the multi-attribute method would be preferred. This is because the attributes of interest can be selected based on the interests and prioritisation of the organisation and any relevant stakeholders. This has many similarities to a probability impact matrix, but offers a more creative and free way to define variables that will be used to prioritise risk. There are variations of this technique, including a bubble chart, risk prioritisation chart, uncertainty-importance matrix and high level risk model (Hopkinson, et al., 2008).

The final technique that will be covered for prioritising risk is the use of quantitative models and techniques. These methods are not as rigorous as the previous methods, however they do still offer a few benefits for a company. The main reason a company will use a quantitative risk priority method is because it is an incredibly cheap method, that requires little, to no, preparation and planning. (Hopkinson, et al., 2008). This means that a quantitative risk priority method will be preferred for companies that want to prioritise risks efficiently, at a cheap cost, and using the least amount of resources as possible.

Once the risk has been successfully prioritised, it must also be thoroughly assessed. There exist a few different methods of assessing risks, with two prominent methods of risk assessment being quantitative risk assessment and comparative risk assessment. Quantitative risk assessment “relates to an activity or substance and attempts to quantify the probability of adverse effects due to exposure”. In contrast, comparative risk assessment “is a procedure used for ranking risk issues by their severity in order to prioritize and justify resource allocation” (Hester & Harrison, 1998, p. 2).

Furthermore, comparative risk assessment is becoming the preferred method of risk assessment for many companies across the world. This is because a comparative risk assessment has been found to be more thorough and rigorous and pinpointing the details and severity of a risk event. Furthermore, a comparative risk assessment aims to identify the more serious risk event, before moving onto tackling any other risk events. (Finkel, 1994, p. 337).

There is also one other method for assessing risk events. This is through the use of the comprehensive outsource risk evaluation (CORE) system. This is a tool developed by Microsoft and Arthur Anderson to aid a company in identifying, assessing and preventing any risk events. (Michalski, 2000). The tool identifies a total of 19 risk factors and categorises them into four different sub-categories; infrastructure, business controls, business values and relationships. This gives organisations a lot of freedom, as each individual company can decide on the importance of each factor, dependent on the significant it has towards the day-to-day activities of the organisations operations. Furthermore, after the risk has been successfully assessed through the use of CORE, it is analysed objectively through the organisations financial data and subjectively through the measurement of relationships and integration within the firm.

It becomes quickly apparent that the majority risk assessment methods and techniques share a common theme, predominantly the measurement of the probability and impact of potential risk events that could occur and effect an organisations daily operations (Yates & Stone, 1992; Hallikas, et al., 2002). This highlights the importance of risk assessment, and why it is an imperative skill that a risk manager should become adept at utilising.

There is also one other factor that may be taken into consideration when deciding on a risk management strategy, that is the character and personality of the manager. Certain managers will follow traditional methods and not take advice from others, which also means they will not be willing to adapt to a risk management strategy they are unaware of, even if it proves to be more successful.

After a company successfully completes the three steps mentioned above, identification, assessment and development of a response, they will be able to proceed with the fourth step. The final stage is deciding and implementing the preferred risk strategy, which has been decided through the aforementioned three steps, to best limit or negate the potential risk event.

A risk management strategy is “focused on identifying and assessing the probabilities and consequences of risks, and selecting appropriate risk strategies to reduce the probability of, or losses associated with, adverse events. Risk mitigation focuses on reducing the consequences if an adverse event is realised” (Manuj & Mentzer, 2008, p. 141). Although there exist a plethora of risk management strategies, with some being more beneficial dependent on the situation, three key risk management strategies are (Norman & Jansson, 2004; Juttner, et al., 2003)

The Avoidance Strategy: There are two main types of avoidance strategy. The first type is where an organisation will attempt to drive the probability of a risk event occuring down to zero, or as close to zero as possible. Furthermore, the second type of avoidance strategy is where an organisation is attempting to predict the risk event. This will allow them to set in place any contigency plans to try and limit the impact to zero or as close to zero as possible. Both of these strategies have a considerable amount of uncertainty about them, as it can be very hard for an organisation to predict the details of a risk event, or the implications that one might hold for the company.
The Security Strategy: A risk management security strategy seeks to minimise the risk of any event occuring. This is very similar to the avoidance strategy, however it acknowledges the fact that a risk event is going to occur, and merely tries to protect the organisation as much as possible from any effects the risk event may cause. Implementing a security strategy can be achieved via number of ways, including working closely with any local governments, proactively complying with regulations or ensuring internal security over the organisation and its resources.
Control/share/transfer: This strategy can take the form of vertical intergration. This furthers the ability of a manager within an organisation to control more processes, systems methods and decision. Having greater control of the day-to-day operations of a company can help minimise the probability and impact of risk. This is because it can help spread the risk over many operations, and thus reducing the severity of the risk event. However, the need for greater control can also cause the need for greater side intergration (Anderson & Gatignon, 1986), which can be difficult for companies to achieve.

If the risk event will cause significant issues for an organisation, and is considered a ‘high risk’, then a company should aim to utilise an avoidance strategy. This would be best because it would minimise or completely deplete the probability of that risk event occurring. However, this can come at a huge expense to the organisation, and consumer a substantial amount of resources. On the other hand, if the risk event will have a limited impact on a company’s performance, and is considered a ‘low risk’ event, then a security strategy may be more suitable as it will protect the company’s operations and resources from the risk event.

Deciding on the most optimum risk management strategy to use can be an incredibly difficult job for any manager to accomplish. If the manager chooses the wrong risk management strategy then the risk event could cause substantial problems towards the organisations financial and market performance. One of the most significant factors that can affect the decision of which risk strategy to pursue is the severity of the risk (OSBIE, 2015).

Conclusion

There are a variety of steps that a risk manager should go through in order to successfully implement a risk management strategy. One of the most importance stages of this process is to spend ample time identifying and assessing the risk, so that a clear and concise strategy can be decided upon. If the risk manager acts without knowledge, then they could implement the wrong risk manager strategy, thus wasting resources and still allowing the risk event occur.

Furthermore, the risk manager should attempt to utilise an avoidance strategy in most instances, by predicting any likely risk events that may occur and putting in place any relevant contingency plans to handle these events. However, due to a number of factors including limited resources, it is not always possible for a company to do this, in which case they should focus on a risk management strategy that limits the effects of the risk event, instead of avoiding it completely. The majority of risk events can be spotted with careful planning and analysis, and some sort of action can be put in motion to at least limit the effects of the risk event that will occur.

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1. Introduction

The word talent represents, in particular in this essay, expertise or the knowledge gained through experience – expert skills or experience/knowledge in a particular field. By the term talent management, the author refers to managing the four stages of the following process. First, selecting and employing skilled individuals according to the organisation’s need for skills, second, providing them with an environment in which they can apply their skills in practice with respect to improving the employers’ business performance, third, developing their talent in order to further support organisation’s business plan, and fourth, retaining those individual, or retaining their knowledge. The next part of the essay presents the investigation of these processes and interdependence between, in detail.

In this essay, the author illustrates the great interdependence between the continuous improvement of the four stages and success of talent management. The two key objectives of this essay are, first, to investigate the concept of talent management, in detail, and second, to present insights into the relationship between talent management and leadership/management development.

2. The concept of talent management

Talent Management has been the cornerstone of Human Resource Management (HRM) strategy in many organisations for over a decade. Sparrow et al. (2014) affirm that although, over a decade, talent management has been considered an important factor in advancing business performance, the concept of talent management has not been precisely defined, nor it received a theoretical development. For that reason, success of applied talent management has not been agreed upon. Barlow (2006) explains that most of organisations focus on the leadership roles or employees who have the potential for such roles and do not have a certain clarification of what they consider talent. She adds that the talent management practices and Human Resource activity, in these organisations, become alike and interchangeable terms.

Lewis and Heckman (2006) remark that this uncertainty and confusion exists for the reason that various terms are used interchangeably with regards to different elements of talent management (such as, Human Resource Planning or Succession Planning), although each has specific practices mostly different than the other ones. Davis (2007) describe that talent management is strategic corporate approach which comprises interdependent processes of first, employing individuals who have talent(s) required for a particular employ, second, retaining those employees and third, further developing their talent to achieve preferable business performance, consistently. He explains that achieving optimum business performance through these three processes of talent management would be feasible, only if the management itself is talented.

Davenport, et al. (2010) explains that analysing, for example supply chain management or customer relationships is very similar to analysing talent, for the reason that they have comparable analysing process from the start to the end. They explain that analysing talent begins with clarification of identity – individuals’ professional background – and ends with aligning changing needs of the organisation with real-time deployment of talent.

3. Four stages of talent management strategy
3.1. Sourcing talent

The two methods of sourcing talent are internally – selecting current employees within the organisation who have the required talent and can shift position or department or employees who , for example, can participate in more than one project – and externally – looking for talent outside the organisation. Sourcing talent internally has significant priority. One of the first criteria that each corporate assigns to sourcing talents, as Davis (2007) suggests, should be assuring that the needed talent does not exist or is not available within the corporate, for the reason that, current employees have a better understanding of the business through experience and also the corporate has a clear understanding of its employees’ profiles. Knowing that, either sourcing internally or externally requires adopting an appropriate sourcing talent technique. He remarks that one of the most important elements of a reliable technique is to clarify the skills or personal qualities the source needs to have to deliver what is required, rather than focusing on the job description. In other words, how individuals accomplish specific tasks should receive more attention than the number of tasks they can maintain.

In order to specify the skills required for a certain job in the organisation, the author suggests applying cross-functional decision making concerning talent. Cross-functional collaboration literature (e.g. Levy, 2011; Hislop, 2005; Slagter, 2009)suggest that the main advantage of bridging HRM and the function within the department, which requires the talent, gives the experts in both departments to set the most feasible talent selection criteria. Davenport, et al. (2010) describe that analytical HR consist of collaboration between HR and other functions or departments. This collaboration will result in optimum talent management through which the organisation would benefit the most from its intellectual capital. They explain that Analytical HR integrates individuals’ performance data with organisational objectives which be followed by better understanding the areas which need talent development. This shows the great interdependence between this element of talent management and talent development.

3.2. Work environment

In this part of the essay, the author investigates the relationship between work environment/climate and successful talent management from two parallel perspectives. Firstly, the impact of work environment on employee satisfaction and productivity is non-negotiable and its influence on success of talent management, in term of retention, is considerable (Botha, et al., 2011). In order to maximise the performance of talents, providing motivational features embedded in the design of work environment followed by satisfying talents need – where they can elicit their skills fully – is as critical as a competitive salary is for attracting and retaining talents. For example, as Yeh (2007) expresses, HR especial practices for highly mobile talents has positive impact on minimising turnover and maximising employee satisfaction. On the other hand, HR acculturation practices prepare a work environment, especially for entry level employees, in which employees will have the opportunity to better understand organisational beliefs and work towards its goals.

The second perspective is the impact of work environment on knowledge elicitation and transfer between experts and other employees or functions within one organisation (Botha, et al., 2011; Hislop, 2005; Hofer-Alfeis, 2008). There is another great interdependence between two stages of talent management, motivational work environment and retaining expert’s knowledge. The author investigates this element in detail, in section 3.4.

3.3. Talent development
Education and training

In the process of talent management, continuous talent development plays an important role. Davis (2007) affirms that one of the fundamental talents required in advancing talent management is learning ability of candidates. Moreover, education element of this process is not limited to academic degrees. It includes professional workshops, certain courses and so on. Skilled workers will have the opportunity to further develop their knowledge and learn about the current works in their area of profession.

Communities of practice

Hislop (2005) defines that community of practice represents a group of people who, to some extent, have shared identity, common knowledge and overlapping values which results in creating social conditions conductive to knowledge sharing. Motivating communities of practice, and in particular the ones including skilled workers, to actively participate in sharing, creating and utilizing knowledge will be followed by individuals’ talent development. Significant advantage of this element is increase in the transfer of experts’ knowledge to other employees followed by reducing the impacts of leaving experts and its risk for the organisation. . Fisher and White (2000) emphasise that supporting effective communities of practice networks have significant motivational role in retaining experts and as a result, reducing knowledge loss.

Cross-functional practices

As mentioned in section 3.1, talent management advances through collaboration between functions from the start point of the process. Promoting cross-functional experts’ collaboration will also create an opportunity to better identify the areas that needs further talent development. The author suggests shifting from centralized to cross-functional (decentralized), for example in HR practices, assist the performance of talent management, and illustrated the details associated with this method in Figure 1.

Figure 1: Cross-functional communication chain

3.4. Retaining talent/knowledge

One of the most influential HRM practices for retaining talents or at least their knowledge, suggested in Human Resource (HR) literature, is motivation. Motivation is foundation of almost all other strategies required for talent retention, for example reward systems (Menon & Pfeffer, 2003). Reward systems are, in fact, a major factor motivating employees to collaborate efficiently and effectively (Droege & Hoobler, 2003). Winkelen and McDermott (2008) report that not many organisations employ proactive strategic approaches to prevent talent loss, instead most of them seek ad hoc and reactive approaches.

After investing time and money in addition to sharing corporate strategies with talents, the main concern for any organisation would be retaining talent as long as possible. Although the organisation does benefit from this investment in terms of overall performance improvement, every organisation wants continuous profit from this investment. If the talents leave the organisation then not only the whole process needs to be repeated resulting in extra investment but also, particularly in the cases that talents shift to competitors as they take their knowledge of the corporate with them which is higher in risk than any other expenses the organisation might face. Hofer-Alfeis (2008) characterises leaving experts/talents a significant challenge for HRM more than any other function within an organisation. He explains that retiring, shifting positions within an organisation or shifting to another organisation raises the need for approaches through which the organisation, at least, retain the experts’ knowledge when retaining the experts themselves is not possible.

De Long and Davenport (2003), Levy (2011) and Winkelen and McDermott (2008) affirm that the fundamental step in any talent retention strategy should, first, include identifying talents critical to business performance and, second, using tools and techniques assuring transfer of their tacit/undocumented knowledge to other employees within the organisation. Among the HR practices, Hofer-Alfeis (2008) suggests, job rotation is one of the most reliable ones in terms of spreading the knowledge and making the organisation less dependent on talents. Slagter (2009) adds that network building and conducting seminars facilitates knowledge elicitation and transfer between experts and other employees. Hislop (2005) affirms the interdependence between recruitment and selection process and retaining knowledge. He explains that selecting and recruiting talented individuals with compatible values to those of existing culture of the firm, and the ones who are willing to engage in knowledge transfer practices, will further facilitate the process of talent management.

3.5. Summary

The four stages of talent management strategy investigated in section 3.1, 3.2, 3.3 and 3.4 is summarised in Table 1.

Talent management stagesMethodElements
Sourcing talentInternally/externallyCandidate identity
Experience
Expertise
Qualifications
Organisational critical needs

Work enviromentN/AWork culture
Work performance review
HR and employees communication ways
Addressing employees’ concerns
Employee welfare
Salaries
Risk of job loss

Talent developmentInternally/externallyEducation
Training
Communities of practice
Cross-functional collaboration

Retaining talent/knowledgeN/AOpportunites for employee career development
Competitive employee support
Knowledge elicitation and transfer

Table 1: Four stages of talent management

4. Concluding marks

The qualitative analysis in this essay highlighted that talent management is not limited to HR practices. It showed that to succeed in talent management, a strategic approach, involving many functions within a firm, is a necessity and it will benefit from covering all the four stages of strategic process of talent management proposed, in parallel. Moreover, findings of detailed investigation of elements of each stage revealed that there is a strong interdependence between all the stages of talent management strategic processes and there is a great need for continuous improvement of the process to achieve advanced business performance. The author concludes that talent motivation – such as providing great place to work at, opportunities for developing career and so on – has the greatest effect on success of talent management and especially retaining experts or expert knowledge. Furthermore, talent management strategy that aims at improving business competitive performance needs professional leadership and management talents.

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Introduction

The success of a company is strongly influenced by its ability to identify and implement strategies which will help it in maintaining or enhancing its competitive position. The objective of this essay is two folds: to review the use of environment analysis in generating strategic options, and to measure the performance of a strategy. The business environment is changing rapidly, and companies need to change their strategies to adapt to changes in environment to prosper or just to survive (Wu, 2010). With external environment, and to some extent internal environment, of a firm changing quickly, it is important for a firm to review them when formulating and evaluating strategic options. The BCG matrix, Porter’s generic strategies and the Suitability, Feasibility and Acceptability framework are useful in generating strategies. The application of an environment analysis in generating strategies by using these three strategic management tools is reviewed in this essay.

The success of a strategy in achieving its objectives is also dependent upon the ability of a business to measure its performance so that corrective actions can be taken to improve performance. The two tools analysed in this essay for measuring the performance of a strategy are the benchmarking and the Balanced Scorecard.

Generating strategic options

“A strategy of a corporation forms a comprehensive master plan that states how the corporation will achieve its mission and objectives” (Wheelen and Hunger, 2006, p. 14). Strategies are developed to maintain or enhance the competitive advantage of a firm. According to Saloner et al. (2001), the two main groups of competitive advantage are based on the firm’s position and the firm’s capabilities. The firm’s position reflects its place in an external environment, and the firm’s capabilities corresponds to its internal environment. This implies that external and internal environmental analyses has a vital place in generating strategic options.

An analysis of external and internal environments helps in identifying the strategy that fits the firm most. Porter’s Five Forces and SWOT analysis show the information which can be collected from the external and internal environment analysis to be used for developing a strategy. The tools reviewed in this essay for generating strategic options after conducting an environment analysis are BCG matrix, Porter’s generic strategies and the Suitability, Feasibility and Acceptability framework.

Porter’s Five Forces

The external environment analysis is useful in understanding the factors which are influencing a firm, but are beyond its control. External environment analysis can be done with strategic tools, such as PESTEL (political, economic, social, technological, environmental and legal) and Porter’s Five Forces. The Porter’s Five Forces framework helps in understanding the position of a firm relative to customers, suppliers, competitors, new entrants and substitute products, and these are useful in generating strategic options.

SWOT

The SWOT (strengths, weaknesses, opportunities and threats) analysis is useful to a firm wishing to follow the cost leadership strategy to understand whether it has the desired set of resources to do that. A review of resources and capabilities can show whether the firm has the cost leadership abilities, and which can be maintained in the future. The internal resources of a firm play a significant role in deciding the strategic option that a firm can use to grow its business (Becerra, 2009). The SWOT analysis can also help in identifying the internal weaknesses and external threats which should be factored in deciding which one of the Porter’s generic strategies should be adopted by a firm. The selection of generic strategies would be less effective if the firm does not know whether it has the desired set of resources to defend the strategy. The SWOT analysis is useful in deciding the strategic option to choose by making the best match of the abilities of a company with market opportunities (Spulber, 2004).

BCG Matrix

The BCG matrix is a useful tool for evaluating the relative performance of markets in which an organisation operates. The BCG matrix analyses each business segment in terms of a company’s market share and market growth (Figure 1) (Grant, 2013). The four categories are Star, Cow, Question mark and Dog. The BCG matrix can be used to identify the markets that the firm should focus on to improve its performance. This is based on the results of the external environment analysis which shows growth and relative positions of competitors in different market segments.

Figure 1: BCG matrix

Porter’s generic strategies

Competitive advantage, and thus higher profits, can be achieved by producing products at lowest cost or establishing a brand in a niche market for which the customer is willing to pay a premium that exceeds the marginal cost of the differentiation. Michael Porter’s three generic strategies – cost leadership, differentiation and focus – are based on a firm’s choice of scope (broad versus narrow market segment) (Grant, 2013). A firm will find it extremely difficult to be a leader simultaneously in all three generic strategies.

A firm can decide whether it wants to operate in niche markets or exit the market altogether by understanding customers’ bargaining power. Understanding the power of suppliers can be used to determine whether a firm can leverage it to become a producer of goods with lowest costs, and thus achieve competitive advantage (Spulber, 2004).

Grant (2013) argues that the industry structure analysis is useful in understanding factors which determine industry profitability, and thus can be utilised in developing strategic options to maintain/increase competitive advantage of the firm. If the external analysis reveals that competition is fierce, it indicates that the cost leadership strategy would be useful as it would allow the firm to compete on price. Whether or not a company is able to adopt the cost leadership position depends upon the results of the internal environment analysis as the firm would require constant efforts to keep its costs lower than those of competitors, which may significantly reduce profit margins. If a firm is unable to compete on the lowest cost strategy, it would have to find a niche market for its products where it can command premium price. Depending on the outcome of review of threats from new entrants, strategies can be developed to create barriers to safeguard competitive advantage of the firm.

Suitability, Feasibility and Acceptability

It is possible that a number of strategic options are possible to achieve the desired objective, which makes it difficult for the management to select the optimal option. The Johnson and Scholes framework of Suitability, Feasibility and Acceptability (SAF) is useful as a selection criteria to select the optimal strategic option (Wu, 2010). When evaluating strategic options, the suitability criterion suggests that the first step should be to determine if the strategic choices are suitable and compatible with within the current and expected external environment (Wu, 2010). One way to do this is to check if the strategic option can help a firm to exploit an opportunity or avoid a threat. The strategy should also be based on strengths of the firm and congruent with its culture (Wu, 2010), as otherwise it would be difficult to implement the strategy. This implies that the external and internal environment analyses are useful in checking the suitability of a strategic option.

Feasibility reviews whether the firm has resources to pursue a strategic option. Feasibility analysis focuses on the evaluation of the internal capabilities of the firm to see if it has adequate resources to follow a strategic option. If the firm does not have the adequate resources, the issue it would face is whether those resources can be acquired externally. If the firm either does not have the resources or it cannot acquire the desired resources from third parties, the corresponding strategic option is not feasible and should be dropped.

Acceptability looks at two other aspects of the strategic options: the financial aspect and the stakeholder aspect (Wu, 2010). The financial aspect focuses on the return to risk profile of each strategic option. In order for a firm to adopt a strategic option, it is important that the choice should increase the wealth of shareholders. The risks of each strategic option should be evaluated using tools such as sensitivity analysis. If potential changes in the external environment can result in substantial negative impact on the firm’s value if it adopts a strategic option, the acceptability of such an option would be low. Though profit generation for shareholders is one of the main objectives of a firm, concerns about the social and environmental impacts of a firm imply that a firm should take into consideration impacts of each strategic option on a wide range of stakeholders. The stakeholder aspect evaluates how each strategic option will affect the stakeholders and their likely reactions. Ignoring potential reactions of a stakeholder can sometimes result in disastrous impacts for a firm. BP has suffered huge losses because of the explosion in the Gulf of Mexico in 2010 (Crooks, 2014). The firm opted for a technology which had lower cost, but it failed to protect an explosion. The cost of cleaning the pollution and reimbursing businesses has cost BP billions. If BP had given more weightage to government as a stakeholder, it may not have suffered the adverse impact of the explosion by rejecting the low-cost, but technically weaker strategic option.

The above review shows that the strategic position of a company is driven by its external environment and internal environment analyses. Strategic options are based on the strategic position analysis (Wu, 2010), which imply that environment analysis helps in generating strategic options.

Measuring performance of a strategy

Successful implementation of a strategy depends upon the ability of a firm to measure its performance so that timely and corrective actions can be taken to achieve the objectives of the strategy. A number of tools for measuring performance of a strategy have been suggested, such as Balanced Scorecard and benchmarking.

Balanced Scorecard

The Balanced Scorecard provides a comprehensive tool to translate a strategy into a set of performance measures (Kaplan and Norton, 1996), because it relies on a number of perspectives to measure performance as opposed to just financial measures in a traditional performance measurement tool. The traditional financial performance measures are restricted in terms of their usefulness to managers by being late and backward looking (Chow and Stede, 2006). This is overcome in the Balanced Scorecard by combining a wide range of performance measures to obtain a comprehensive view of performance of an organisation (Anderson and Fagerhaug, 2002). The Balanced Scorecard combines financial performance measures with other non-financial performance measures that represent the drivers of performance so as to assess the success or failure of a strategy (Anderson and Fagerhaug, 2002).

Kaplan and Norton (1996) suggest four perspectives in a Balanced Scorecard to be Financial, Customer, Internal Business Process and Learning and Growth. These four performance measurement perspectives can evaluate the success or failure of a strategy. Kaplan and Norton (2001) also argue that the four perspectives can be changed/increased to reflect the specifics of each firm.

The Financial perspective in a Balanced Scorecard measures financial performance on the basis of parameters, such as growth in revenue, returns on equity and assets, and profit margins (Jones, 2011). A cost leadership strategy can have financial measures of ratios of sales, general and administrative expenses to revenue. Comparing the pre and post-strategy ratios can show whether the strategy has yielded the desired outcomes.

The Customer perspective analyses the success of a business in terms of customers by using performance measures, such as market share and brand perception (Kaplan and Norton, 1996). The success of a differentiation strategy designed to increase profits of a firm depends on its ability to attract customers. Measuring changes in market share and/or growth in revenue can show whether a strategy has resulted in increase in customer numbers.

The third perspective is Internal Business Process perspective which focuses on internal operating processes important for achieving customer satisfaction (Niven, 2010). Revenue and profits will increase in the medium and long-term if customers are happy with the service and products. The Internal Business Process perspective can measures parameters, such as number of returns, to review the efficiency of operating processes.

The Learning and Growth perspective places emphasis on those aspects of a strategy that result in continuous innovation and growth in a business (Niven, 2010). The strategy of a firm may be to grow business in the long-term by investing in research and development. If only financial measures are used, then the initial lower profits due to research and development expenses will indicate that the strategy has failed. The Learning and Growth perspective can include measures such as the number of patents or new product launches to measure the success of the strategy.

The above-mentioned four perspectives suggest that the Balanced Scorecard is among the best-known strategy scorecards to help firms align with their strategy (Person, 2013). The four performance measure perspectives show that the Balanced Scorecard can be used in measuring comprehensive performance in both short and long-run. Therefore, the Balanced Scorecard is useful in translating a company’s strategy into a set of performance measures.

Benchmarking

Benchmarking is the process of comparing business processes and performance of a firm to industry best practices (Bhandari, 2013). Benchmarking is a comparative method of performance enhancement where a firm finds practices in an area and then tries to bring up its performance in that area (Bhandari, 2013).

Benchmarking is especially useful when analysing the performance of a cost-leadership strategy which relies on the ability of a company to lower costs less than its competitors. Benchmarking can be used to evaluate various aspects of a business in relation to best processes. This can be used to develop a strategy on how to make improvements or adapt best practices, usually with the aim of improving performance.

In addition to comparing performances with other firms in the sectors, a strategy of a business unit may be to compare its performance against units of the same company but located in different places. The internal benchmarking strategy allows easy access to information for comparison (Bhandari, 2013).

Benchmarking can be used to evaluate the performance of a strategy with regards to different aspects of performance, such as financial and operational (Cimasi et al., 2014). This is helpful in analysing the performance of a strategy in terms of both short and long-run objectives of an organisation.

Conclusion

The external and internal environment analyses helps in identifying factors which influence the performance of a firm. The ability of a business to maintain or enhance its competitive position depends upon it success in developing strategies which combine results of external analysis with internal resources and capabilities. Porter’s Five Forces and SWOT analysis are useful in the external and internal environment analyses. BCG matrix uses the external environment analyses to suggest markets in which a firm should focus on. Porter’s generic strategies use both the external and internal environment analyses to identify one of the three strategies – cost leadership, differentiation and focus. While a number of strategies can be generated to achieve corporate objectives, the suitability, feasibility and acceptability of a strategic option should be checked against the results of the external and internal environment analyses.

The Balance Scorecard is one of the performance measurement tools to measure the overall performance of a strategy. The Balanced Scorecard is a comprehensive framework to translate a company’s strategy into a set of performance measures by broadening the performance measurement perspectives. The four perspectives – Financial, Customer, Internal Business, and Learning and Growth – help in measuring the performance of a business in short and long-terms. Benchmarking is also a useful tool for measuring the success of a strategy by comparing the performance – financial and operational – against the best performance in the sector in which the firm operates.

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Introduction

This report is a discussion of the proposition that the strategic management of diversity leads to a wider range of ideas and abilities, offering greater scope for innovation and future competitive performance. The B&Q Company is critically analysed in order to test the validity of this proposition, and examples are drawn from the literature on diversity and performance to place the subject in context. Following the analysis, a diversity strategy outline is proposed for the B&Q Company.

Organisational profile

Currently B&Q is the largest do-it-yourself retail chain in the UK, selling materials and equipment for both the home and domestic garden market. The founders, Richard Block and David Quayle, started the business in 1969. Subsequent to a 20 years growth cycle, the company is now part of the Kingfisher Group, which also owns similar European companies providing market presence in France, Spain, Italy, Poland and Russia. B&Q presently has stores throughout the UK and Ireland, is headquartered at Chandlers Ford in Hampshire, and has expanded into the Far East with stores in Taiwan and China. In 2006 the company employed over 38, 000 people in more than 300 stores across the UK. In terms of diversity, during 1989 B&Q noted the demographic changes taking place in the UK, particularly the ageing population, coupled with the fact that it had at the time a young workforce with a high staff turnover. In the DIY business product knowledge is critical and the younger workforce was seen as lacking in the relevant experience. The company embarked on a policy of employing older workers, having first carried out a very successful pilot in a new store, staffed entirely by workers over 50. The evidence of success persuaded the bard of B&Q to adopt a positive approach to recruitment of an age-diverse workforce. The company viewed the move as making good business sense. The B&Q website displays its commitment and belief in diversity and a mix of talents, and their policies in this respect promote equal opportunity of employment regardless of gender, ethnic origin, nationality, culture, religion, age, disability, marital status, sexual orientation or political views. They have appointed a Diversity Manager, reporting to the Board, and their philosophy on diversity is reflected in its HR policies (Mullins 2008: 86). B&Q remains the UK’s largest retailer in its sector and noted profitability of the business in its most recent annual report (B&Q website).

Definition

Price (2007:385) quotes Cox et al (2001:31) as defining diversity as the variation of social and cultural identities among people in an employment situation. The reality is that people are different, varying in gender, culture, race, social, physical and psychological characteristics. These differences may cause either negative or positive reactions, depending on individual perspectives and prejudices. In the workplace this can cause positive influences as some believe diversity is a source of creativity and innovation. In other cases, diversity can be the source of misunderstanding, suspicion and workplace conflict affecting performance.

Dimensions

The dimensions of diversity may be broken down into primary and secondary characteristics, according to Daft (2006: 469). The primary dimensions are age, gender, ethnicity, sexual orientation, race, and physical ability. Secondary dimensions can either be acquired or changed in life, impacting less on the primary dimensions but affect an individual’s view of the world and how others view them. Examples are differences in housing status, with some individuals coming from affluent suburbs and others in run-down inner city environments. Likewise married people with children have a different set of attitudes and values than those who are single and childless. A person’s religion, native language, socio-economic status, educational and work background add dimensions of differentiation not only to the person but also to how others view them. These secondary dimensions are very relevant in a workplace setting, and for those managers who believe in the concept of value through diversity, the challenge is to recognise the individual’s values and strengths, as opposed to their diversity aspects. Bratton and Gold (2001: 94) echo this by stating that diversity in the workplace, changes in demographics and social values all make the management of people more complex and challenging.

Business case

The business case for diversity is articulated by Boddy (2008: 370) who quotes Anderson and Metcalfe (2003; 26) as arguing that business will benefit from promoting diversity as it will facilitate access to a broader range of individuals, their strengths, experiences and perspectives. It will offer a greater understanding of the diverse groups of both potential and existing customers represented within the workforce. Additionally, it will experience better communication with these diverse groups of potential and existing customers.

The increasing pace of competition requires companies to focus on companies internal assets in the shape of employees to drive performance improvement. However, according to Torrington et al (2004: 110) changing social trends and legislation have made the task of attracting and retaining the best employees more complex, leading organisations to become more minded of the strategic value of a more diverse workforce, in an effort remain competitive. The composition of the workforce is changing, with an increased number of women and members of ethnic minority groups entering, and the age profile of the working population is changing with an increase in the average age of employees (Redman and Wilkinson 2006: 307).

Daft (2006:466) outlines the case for diversity, noting that some top management believe that it offers a broader range or opinions and viewpoints, reflects an increasingly diverse customer base, demonstrates the company’s commitment to the “right thing” and helps attract the best talent.

Advocates

The Chartered Institute of Personnel and Development (CIPD) offer a positive view, stating that diversity is an inclusive term based on recognising all kinds of difference. It is about valuing everyone as an individual. It recognises that people, from different backgrounds can bring fresh ideas and perceptions, which can make the work done more efficient and the products and services better. Diversity is an inclusive concept that covers all kinds of difference that go beyond the traditional understanding of what equal opportunity is about (Armstrong (2006: 868).

Critics

Some question the long-term business case for diversity. As described by Kirton and Greene (2010: 201) some commentators believe that if the organisational benefits to be gained from diversity are too narrow or short term, the result might be partial rather than a comprehensive policy, i.e. in addressing only the most obvious and immediate business problems. For example skills and labour shortages vary over time and space. Women and older workers might become important sources of employees when the economy is booming and young people are in short supply. Employees might be compelled to develop policies to attract these groups, including flexible work arrangements. These policies might then be abandoned once the problem was overcome or during an economic downturn.

Cost

According to Anderson and Metcalf (2003: 26) a neglected area of research is the impact of diversity on costs. The need to manage diverse workforces is emphasised in the management literature to reduce the chances of negative conflict within the workplace and facilitate an environment that values different perspectives. This may involve training staff to make them aware of their prejudices and to encourage them to consider the perspectives of others. Internal communications may need to be tailored to suit different audiences. Decision-making processes may require more time to ensure that different perspectives are considered. All these factors have cost implications.

Policies

Price (2007: 396) relates that many organisations have adopted equal opportunities polices outlining commitment to equitable human resource management. However, they are extremely ineffective, and are often in response to political pressures or to sooth consciences, rarely disturbing vested interests. Organisational culture, particularly at top-level is an obstacle to the creation of a diversified workforce. According to Molander and Winterton (1994: 102) serious equal opportunity policy requires allocation of overall responsibility to a specific senior executive. There also needs to be agreement of the policy with employee representatives, and effective communication of the policy to all employees.

Examples

Boddy (2008: 370) relates that within the UK Civil Service there were diversity targets set in 2000 for the period 2004-5 that 35 percent of senior civil service jobs should be held by women, a rise from a level of 26 percent. The number of senior posts held by individuals for ethnic minorities should be increased from 2.8 percent to 3.2 percent and similar measure taken for disabled employees. The public sector has expended time, money and energy on training, in communication, leadership and effective networking, in pursuit of culture change. The aim of culture change is to make people feel valued and where talents are fully utilised.

BMW has formed a project to help reduce the demographic changes which have resulted in an ageing workforce. The changes within the project are the design of the working environment involving ergonomically designed workstations in office and manufacturing to help avoid physical strain. The introduction of health management and preventative health care with the provision of gyms and fitness courses at all plant locations. Flexible retirement packages that allow individuals to retire early of continue after 65 have been introduced, and there is stress on the importance of lifelong learning activities. In contrast, Torrington et al (2008: 574) relate a story from People Management regarding a case of disability. They reports that a skiing accident left a woman paralysed from the chest down, and was seeking employment. After being dismissed by her employer six months after the accident, and after rehabilitation, she began to look for work. She found little support to enable her to compete fairly, and found no help from HR professionals, feeling that on the many occasions she was interviewed it was a matter of procedure and a way of complying with a government initiative called the two tick symbol. The two ticks symbol can be used by employers to demonstrate their commitment to employing disabled people. Employers who use the symbol make commitments to action such as a guaranteed job interview for disabled applicants.

Price (2007: 394) relates that a survey of over 100 UK female directors indicated that many believe women may be their own worst enemies regarding success in the boardroom. The survey showed that, while 66 percent believed women enjoyed equal opportunities across the whole workplace, only 32 percent believed that their possibilities of attaining board level roles was identical to men. Women remain very much a minority in UK boardrooms.

Legislative Issues

The Commission for Racial Equality’s (CRE) guide on ethnic monitoring recommends that analyses of the workforce should be conducted in sufficient detail to show whether there is an under-representation in more skilled jobs and grades, as well as whether there are general concentrations of ethnic minority employees in certain job levels or departments in the organisation. The CIPD Equal Opportunities Code states that the most important processes to monitor are recruitment and selection since these are easily influenced by prejudice or indirect discrimination (Armstrong 2006: 867). It should be noted that the CRE recommends that if necessary, positive affirmative action should be taken with job adverts designed to each members of under-represented groups, the use of employment agencies and careers offices in areas where these groups area concentrated and other encouragements designed to reduce under representation for ethnic groups in the workplace.

Price (2007: 390) notes that the Equal Pay Act (1970) provides for equal pay for comparable workers. The Sex Discrimination Act (1975) makes illegal discrimination against women or men (including discrimination on the ground of marital status) in the work situation. The Race Relations Act (1976) with subsequent amendments is applicable, and the Disability Discrimination Act (1995) addresses people with physical disability impairments. Subsequent UK and European Union (EU) legislation has improved women’s rights in the area of pregnancy. The Health and Safety at Work Act 1974 also has implications for employees with physical limitations (Hughes and Ferret 2009:9).

Analysis of B&Q

There can be confusion between equal opportunities, the legislation concerning these issues, and the concept of competitive success through the strategic management of diversity (Armstrong 2006: 868). One is the deliberate maximising of employee resources from whatever source, without regard to gender, race, age or any other characteristic, in pursuit of business success. The other is concerned with ensuring that diversity of the human condition in all its manifestations is given equal opportunities for employment, a career and advancement to the limit of their capabilities. The two are distinct and a diversity strategy should recognise that. B&Q took the decision to embrace a policy of diversity for business reasons, backed by a pilot proving the concept could be successfully applied (Mullins 2008: 86). This indicates that B&Q understood the difference between equal opportunities legislation and a diversity strategy. Also taken into consideration was the perception that older workers were seen as more knowledgeable in DIY (Rollinson 2008:61). Earlier research also had shown that older customers viewed sales staff of the same age more positively than younger employees (Leopold and Harris 2009: 132). Beardwell et al (2004: 56) argued that competitive leverage was gained as B&Q’s human resources added value to the level of customer service provided.

Senior management must have a belief in the benefits accruing from a diversity strategy otherwise there is a risk that tick-box, token response to government initiatives and the image of doing the right thing, will be the only driving forces. B&Q was a well-known example of making a point of recruiting older employees before age discrimination regulations were in force (Foot and Hook 2008: 50).

To be successful, the diversity strategy process must be driven and supported internally, and not felt by the workforce or management to be externally imposed. Senior management support is necessary, and the strategy should not be identified as yet another HR initiative or it may be greeted with some cynicism as another management fad. B&Q’s management did believe that benefits would accrue from the policy of diversity, partly driven by a difficult trading environment.

B&Q’s approach was to appoint a senior individual with responsibility to the board for the diversity policy implementation, regarded as an essential prerequisite by Molander and Winterton (1994: 102), and Rankin (2003:506). However, the action was top-level driven, without any demonstrable workforce involvement, although initially it was confined primarily to age diversity. B&Q have expanded their initial age diversity approach and have become more culturally sensitive across a broader range of issues. This is illustrated by Burke and Cooper (2008: 268) noting the respect of religious diversity which is evident as B&Q stores in the UK have a calendar of significant religious dates and festivals, developed in association with the Interfaith Network, so that managers are aware of the need for special consideration on those dates for customers and employees. In terms of competitive performance, B&Q made a profit of ?195 million on the year ending January 2010 and remain the largest home improvement and garden centre retailer in the UK (B&Q website), although it is not obvious as to whether the strategy of diversity management had a direct impact on this result. However, Harrison (2005: 183) notes that being known as an inclusive place to work can lead to becoming an employer of choice, thus bringing reputational benefits also, as B&Q has shown.

Recommended strategy

The recommended strategy should be firmly based on B&Q’s existing approach, but to obtain the maximum benefit and gain greater competitive advantage from the management of diversity, some adjustments should be made.

The business case has been proven as far as the company is concerned, but this requires monitoring on an ongoing basis as there is a cost to a policy of diversity (Anderson and Metcalf 2003:26).

The policy is already driven by a direct board level report, which is a fundamental requirement for success. There is however, no demonstrable employee feedback with regard to the management of diversity within the company, so it would be wise to engage employee voice in the monitoring and feedback process, to avoid any feelings of discrimination or suspicions of tokenism regarding the employment of minorities.

The policies applied should meet or exceed all relevant legislation in place, and this should be part of a monitoring process carried out by the HR function on behalf of the B&Q board.

There should be no attempt to enforce quotas as this could potentially lead to a situation where recruitment was based on numbers as opposed to talent and potential contribution to the business, thus negating the entire concept of the value of diversity management.

Awareness training should be part of all management and supervisor level development, allied with the reasoning behind the value of promoting diversity in a business sense.
A degree of practicality should be employed in some circumstances. For example a disabled employee should be protected from the obvious dangers associated with a large warehouse workplace such as is the case in many B&Q facilities, with its attendant health and safety issues, and their employment confined to a position which avoids hazards. Exposure of disabled employees to such an environment may risk a conflict between diversity policy and the requirements Health and Safety legislation (Hughes and Ferrett 2009: 9).

The diversity strategy requires being all-embracing, and not confined to for example ethnic minority statistics, age, or disability. It is essential that the strategy embraced issues such as gender. This approach is partly successful at B&Q on the shop floor level, but boardroom representation while being strengthened by the appointment of a female HR appointee (DIYWeek.net 2009) remains heavily dominated by males, with a previous female director stepping down in 2008 (RetailWeek 2008). In addition to diversity management, here are business reasons for such a move as the Times (2010) reported increasing numbers of women adopting DIY with reasons such as the increase in female home ownership and the demographic changes of single women now accounting for more than one in five UK households. B&Q should therefore seek to develop potential female senior management, not only for the talents they may bring, but also for a better insight to the current rising trend of female DIY enthusiasts which has the potential for business growth if properly approached.

Communication is important and the strategy and accompanying policies should be continuously explained and communicated to all employees and managers (Rankin 2003: 505).

Monitoring of recruitment practices should take place to ensure that the strategic intent is being implemented by hiring procedures (Rankin 29003:505). There is a cost to the management of diversity (Anderson and Metcalf 2003: 26), and the cost of diversity practices, with their attendant training, awareness and other expenses should also be taken into account, and balanced against any possible benefits where possible, ensuring the interests of return on investment in addition to legal and moral issues.
There should be an open-door culture to respond to potential cases of unfair discrimination, and this should be subject to review at board level.

The B&Q website should continue to advertise the fact that the organisation is committed to a diversity policy, in an effort to reinforce the message that this demonstrates itself as good business sense, and to assist in the continued recruitment of a diverse workforce.

Conclusion

The analysis supports the view that the management of diversity can result in increased competitive advantage, and the B&Q Company have provided an example of that contention. However, despite significant levels of diversity strategy implementation there are a number of caveats which should be considered and a number of changes to the existing strategy are recommended.

References

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The survival and progression of businesses in the 21st century is highly dependent on the ability of firms to expand beyond their national borders, taking into account the cost effectiveness of expansion and the complexity and risks associated with the company’s chosen international business strategy (Peng, Wang, & Jiang, 2008). The resources and objectives of a firm, as well as the demand for their product outside their national borders are important in taking the decision to globalise a company’s products and/or services (Miller, 1992). Although three strategies are more common in the management literature, namely multi domestic, global and transnational approaches, the fourth strategy available to firms, according to Barlett and Ghoshal (1989) is the international approach to global expansion. This essay will analyse the two approaches that differ in local responsiveness and cost pressure for the business, with the international approach as the least responsive and expensive for the company and the transnational approach as the most costly and locally focused from the four options available to companies.

To start with, local responsiveness of multinational corporations is often a matter of mutual expectations of the company expanding into a region and the local customers’ demands and needs (Gomez-Mejia & Palich, 1997). For instance, food and beverage companies from the Western world (i.e. the US or the UK) expanding into Asian countries need to integrate certain products in their range that suit the demands of local consumers (Watson, 2006). As such, the role of the transnational approach is to enable companies from a culturally distinct country to penetrate a new market successfully (London & Hart, 2004). There are both positive and negative effects of the transnational approach. Developing a business model and manufacturing strategies is a costly process for any company and changing this for the purpose of integrating new products specific to a region is an additional financial pressure for multinational companies (Zaheer, 1995). Although the negative impact of local adaptation may deter some firms from adopting this strategy, the success of companies like McDonalds which take this approach proves that the additional costs can increase the chances of global success and the return on investment (ROI) for the company (Luo, 2001). The core advantage of the transnational approach is the potential of multinational firms to compete with local counterparts in a more effective manner through offering local products alongside their already established reputation (Dawar & Frost, 1999). High levels of local responsiveness also ensures that the reputation in the new region contributes to the ethical image and the overall CSR of a multinational company (Husted & Allen, 2006). Large corporations are often accused of unethical conduct due to the cost competitiveness with the local providers, as international firms often perfect their manufacturing techniques in order to reduce all the time and resource waste, therefore allowing them to compete with local firms (Meyer, 2004). An increasing number of countries have launched campaigns which promote local companies over the international competitors claiming that regional businesses understand the needs and desires of their customer base more, unlike the multinational firms (Kapferer, 2002). This underlines the importance of local responsiveness, as the resistance of local customers decreases when a multinational demonstrates a desire to first understand the locals’ behaviour and adjust their strategy accordingly when entering a new region (Prahalad & Doz, 1999).

In spite of the important role and effect of the transnational approach, there are multiple companies which have succeeded despite their disregard of the local customers’ specific needs and desires (Samiee & Roth, 1992). These companies opted for internationalisation as a strategy for global expansion, relying on the recognisability of their brand name, logo, specific products, packaging, etc. A successful company which took this approach in their international expansion is Starbucks, who launched their very specific coffee shops across the world aiming to take over the market share of local coffee shops through offering a very specific experience, rather than focusing exclusively on the beverages offered (Harrison, 2005). Although the local Starbucks coffee shops across the world offer some specific products, such as a variety of green tea products in Asian countries, the core product sold by Starbucks is the experience that customers enjoy alongside their chosen beverage (Gaudio, 2003). Whilst it was difficult at start for Starbucks to maintain a standardised approach to the design of their customer experience, taking over local coffee shop chains and their clientele has proven to be a successful tactic (Loeb, 2013). This international approach therefore reduces the initial cost pressure through taking over a large share of the customers of former cafes in the local region and the premises which were built and used for an identical purpose (Barkema & Vermeulen, 1998). Rebranding the coffee shops in order to maintain a standard image is less expensive than building coffee shops from scratch, in addition to the existing customer base that the American giant is able to take over (Gaviria, 2012). In consequence, the role of the international approach as an expansion tactic is to allow companies to expand quickly, cost effectively and effortlessly (Contractor, Kumar, & Kundu, 2007). The effect of the tactic is a positive one from a financial viewpoint and, more often than not, a negative one from a reputation point of view, as citizens perceive this approach to disregard any specific cultural aspect of the region that multinationals penetrate.

It is, therefore, obvious that each of these two approaches have their advantages and disadvantages for the company aiming to explore a new region, the local competition and the customer base in the country. However, companies must take into account the impact of the global mobility of the workforce and the extent to which social media influences the demands of customers and the reputation of a multinational firm (Okazaki & Taylor, 2013). The role and effect of both international business strategies are influenced by these elements, as consistency in a multinational’s approach is even more important in the light of individuals travelling on a regular basis for business and work purposes and the ability of people all over the world to share information via social media (Jin, Park, & Kim, 2008). In other words, a company must set their priorities from the onset of internationalisation in order to maximise their earning potential and the international reputation through their chosen tactic for global reach (Vrontis, Thrassou, & Lamprianou, 2009). As a result of this, both the role and the effect of the international business strategies are enhanced in the long run, as companies are less able to change their view on the approach to conquering new regions. Well established Western companies must ponder over the decision of investing capital in the transnational approach, as their lack of success of competing against local companies could mean that their financial loss may never be recuperated (Prahalad & Doz, 1999). On the other hand, without an adaptation to the locals’ needs and desires an international company’s ability to succeed may be compromised, but the financial impact of this failure will not be as great as that supported by companies who invest capital in adaptation (Solberg, 2002).

Companies must take into account all of the influencing factors, particularly those that stem from cultural elements of the destination country, when opting for an international business strategy (Drogendijk & Slangen, 2006). The gains of the company must be maximised through international expansion and the best solution is often dependent on the capital that the multinational is willing to invest in the their global strategy, as well as the market positioning of local competitors and the resistance of local consumers to new and international products or services. The emergence of social media also offers multinational companies an advantage, as the contact between individuals from distinct areas makes it possible for demand in one country for a particular brand to grow through online advertising of particular products (Kaplan & Haenlein, 2010). The international tactic is therefore made easy by the ability to promote a company through social media and export products, without any concern for local adaptation, through online shopping. On the other hand, the success of companies with brick and mortar shops in new region is significantly higher than that of companies that rely exclusively on online retail (Steinfield, Adelaar, & Liu, 2005). In addition to this, not all regions have the same level of trust towards online shopping, as the security concerns in some regions are significantly higher, particularly when no efforts of local adaptation are made by the international firm (Bart, Shankar, Sultan, & Urban, 2005).

In conclusion, the role and effect of international business strategies are crucial in the success of expanding a business beyond its national borders, but the potential of these can only be maximised when taking into account other elements that contribute to the internationalisation, such as local culture, the demands, needs and wants of customer base targeted, etc. The impact of the chosen strategy must be thoroughly analysed by a firm, as international strategies require consistency over time in the approach taken. In consequence, the advantages and disadvantages presented in this essay must be weighed against the multinational’s company mission and their future plans in order to opt for one of the two extremes, transnational or internationalisation approach, or the two other options in between, global or multinational approach.

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1.1 Introduction

This coursework will consider the topics of stakeholder expectations, project constraints, time, quality and cost, due diligence and the use of consultancy expertise in the wider context of analyzing how a project manager approaches the “define and design stages” of a major merger and acquisition process involving the sale of marketing assets.

1.1.2 Define and design stage

The define and design stage of project management will be where the project goals, objectives and operational targets will be set out and agreed (Loosemore and Uher 2003 p. 136). These need to be integrated as every stage of the project’s life cycle is anticipated (Harrison and Lock 2004 p. 201). The define and design stage requires discussion of factors that will determine key outcomes of the project’s development. Factors such as the role of the project manager, the duties, responsibilities and powers of the project manager, the duties, responsibilities, and powers of key internal and external stakeholders, budgetary matters, cost issues, and quality issues are all very important to the define and design stage (Loosemore and Uher 2003 p. 136). As Harrison and Lock (2004 p. 201) state, the define and design stage in the context of contracts would, for example require the project manager to give a brief to an architect. Harrison and Lock (2004 p. 201) contend that the definition stage can be evaluated successfully through the use and application of the “go, no go” test which will determine whether the project is on target at various stages of the define and design stage.

2.1 Stakeholder expectations in the define and design phase

At the beginning of the define and design stage, the most important stakeholder, aside from the project manager will be the client. As Loosemore and Uher (2003 p. 136) state, it is essential for the project manager, and the client to communicate effectively during this key initial stage. Later, more stakeholders will join the “mix” for example the design leader, and or various sub-contractors (Harrison and Lock 2004 p. 201), so it is essential that firm objectives, and expectations are set out as a result of the initial consultation between project manager and client (Loosemore and Uher 2003 p. 136).

Strategies that will assist the successful development of the expectations of the client and project manager during this key phase will include:

(a) devising a statement of key duties and responsibilities;
(b) agreeing the conditions of engagement of other stakeholders such as the design leader, if applicable, and the engagement of any external consultation;
(c) devising and agreeing a planned, staged set of objectives;
(d) devising and agreeing a project management plan;
(e) agreement on an initial budget;
(f) planning cost control, expenditures and contingencies.

Initial communication between the project manager and the client will determine the success of these factors (Loosemore and Uher 2003 p. 136). It would be advisable to ensure that appropriate records are kept of communications, so for example email records, and records of informal discussions. What will be key will be a comprehensive record of what has been initially agreed in terms of what the expectations of the client are, and it is advisable that this is formally recorded in a written document.

A key factor in the early stages of the design and define stage will be the role of the project manager (Harrison and Lock 2004 p. 201), which will need to be discussed, and set out clearly from the beginning of the define and design stages. As many management experts would surmise, this is the area of the project that has the potential to lead to expensive litigation, and project delay (Loosemore and Uher 2003 p. 130, p. 131, p. 132, p. 133, p. 134 and p.135), so it is essential that the role of the project manager is clearly discussed, and agree from the beginning of the define and design stage.

As the project develops, factors like change control, teamwork and evaluation are likely to become important. Overall, the project manager will be expected to formulate an appropriate change control strategy as the define and design stage unfolds. Fundamental to the change control strategy are processes of organizational communication, teamwork, evaluation and operation management, and these must be aligned to the key strategic objectives of the company (Meredith and Mantel (2006) p8; Newton, R. (2005) p 103-118; Wysocki (2009) p 39-47, 109-120).

It may be useful to consider what the key stakeholder expectations will be in a newly formed corporate organization: employees will expect to be managed appropriately; managers will expect to be trained and supported in their roles; stakeholders will expect effective systems of communication and dissemination of information; investors may expect performance targets to be met or exceeded; shareholders will expect performance targets to be met or exceeded (Harold, K (2010) p 340 -346; Kelly, S. and Nokes, S. (2007) p 20- 25) and this is not an exhaustive list since it would be nearly impossible to extrapolate all of the stakeholder expectations that will emerge as the organization begins to form.

Stakeholders will have to be identified as a first step in the define and design stage. Stakeholders including employees (existing and new), investors (existing and new), management and consumers all need to be communicated with appropriately during the define and design stage (Berkun, S (2008) p. 42-46; Field, K. (1998) p 88-107, p163-170; Hobbs, P (2009) p 18-28). It is suggested that the best means of managing such a significant matrix of communication channels is to use some means of electronic communication to support it. To this end, it is suggested that an internal intranet and an external internet site, or sites are used to support the communication process between, and with different stakeholder groups within, and external to the organization as a merged entity. As Cox, D. notes (2010, p. 170) appropriate identification and management of stakeholder expectations through effective communication increases the probability of project success.

It is suggested that key processes such as procurement of contracts, recruitment, and appraisal will be much changed within the new entity that is required to be project managed. In light of these changes it is important to retain the efficacy of core functions within these processes (Meredith and Mantel (2006) p8; Newton, R. (2005) p 103-118; Wysocki (2009) p 39-47, 109-120). So, for example the procedure for conducting procurements, recruitment, selection and appraisal may need to be re-negotiated and or re-defined within different sectors of the newly formed business organization, so that it can be implemented consistently.

2.2 Project constraints in the define and design phase

Several project constraints are apparent in the early stages of this project.

Of key significance is the role of the team (Berkun, S (2008) p. 42-46; Field, K. (1998) p 88-107, p163-170; Hobbs, P (2009) p 18-28). In the aftermath of a merger, existing teams may be changed considerably, and or require integration with other teams. This can lead to performance, and leadership issues. Changes will need to be executed smoothly, with appropriate planning and communication with key stakeholders in order to ease these potential issues. Selection and recruitment strategies may need to be re-formulated across the newly merged organization, and new managerial staff will require extensive training in processes that may be new to them as this will be important to reinforce any new managerial authority (Lock, D (2007); Maylor, H (2010) p 224).

In the define and design stage, it is suggested that the most important thing a project manager can do initially is to consult with well-placed individuals, such as existing teams, and managers in order to establish what the important issues are and how they should be approached: “Taking a proactive approach means fighting the instinct to delay consultation because it is still early days and you don’t have all the answers yet or are worried about raising expectations. The reality, most likely, is that people’s expectations are already raised in some form or other, and that speculation about the project and the company is beginning to circulate. Early engagement provides a valuable opportunity to influence public perception and set a positive tone with stakeholders early on. Be clear upfront that there are still many uncertainties and unknowns, and use early interactions with stakeholders as a predictor of potential issues and risks, and to help generate ideas and alternative solutions on early design questions….…..(International Finance Corporation (2007) pp. 5)”.

One of the major risks that the project manager will have to consider will be the risk that a “them and us” culture might arise across the organization based on hostilities between existing and new stakeholders who are required to work together in the newly formed organization, causing disruption to the efficacy of the company as a whole (Harold, K (2010) p 340 -346; Kelly, S. and Nokes, S. (2007) p 20- 25). Additionally, such negative consequences of poorly managed change can impact on retention rates in the organization as a whole (Lock, D (2007); Maylor, H (2010) p225), and this might add additional problems to the transitional problems that might be anticipated already. Steps such as improved communication between employees and management will mitigate the risk of these types of employee motivation, and leadership problems (Lock, D (2007); Maylor, H (2010) p 232). Using electronic systems like an intranet, which communicates correct and up- to – date information will ensure that key messages are delivered effectively to employees and other relevant stakeholders (Meredith and Mantel (2006) p8; Newton, R. (2005) p 103-118; Wysocki (2009) p 39-47, 109-120).

Stakeholder engagement will also be key in the define and design stage: “Today, the term “stakeholder engagement” is emerging as a means of describing a broader, more inclusive, and continuous process between a company and those potentially impacted that encompasses a range of activities and approaches, and spans the entire life of a project. The change reflects broader changes in the business and financial worlds, which increasingly recognize the business and reputational risks that come from poor stakeholder relations, and place a growing emphasis on corporate social responsibility and transparency and reporting. In this context, good stakeholder relations are a prerequisite for good risk management…..(International Finance Corporation (2007) pp. 2)”.

Appropriate consultation strategies will ensure that problems are anticipated, rather than dealt with when they crop up (Lock, D (2007); Maylor, H (2010) p 236). This delivers an important “head- start” to the project manager, and indeed to the organization as a whole. It is important to emphasize the importance therefore of early stakeholder engagement, and the basis of this will be effective communication and consultation strategies (Lock, D (2007) p 29 -39; Maylor, H (2010) p 219-225).

As the define and design stage unfolds, the channels of communication that are required to be pursued are likely to become more and more complex as different stakeholders engage in the process. Loosemore and Uher (2003 p. 137) states that formal reporting strategies are helpful to control project constraints within the area of communication. This means that communication follows a more regimented mode, which places emphasis on formality, comprehensiveness and the importance of clarity as to the outcome of the communication process.

2.3 Time, quality and cost in the define and design phase

Factors, such as time, quality and cost are matters that will likely dominate the initial stages of the define and design stage of the management of the project (Harrison and Lock 2004 p. 201). What is important to recognize is the fact that these are often fluid concepts, and they will be subject to change as to define and design stage of the project develops, and contingency must be made for these changes to be managed appropriately. The project manager will be responsible for the monitoring of the budget, and the determination of whether any contingencies need to be implemented. As is important in the early stages of the define and design stages of the project, expectations relative to time, quality and cost issues will need to be clearly defined, and agreed as they change, and so further formal discussions with the client are often advisable to ensure the avoidance of delay and uncertainty as the project develops. Time, quality and cost are important aspects of the merger and acquisition process (Loosemore and Uher 2003 p. 130, p. 131, p. 132, p. 133, p. 134 and p.135). In several ways, these factors will underpin key objectives across the entire organization. As such it will be important to set time, quality and cost goals, and ensure that these are realistic, agreed in advance and based on consultation and consensus, where this is possible (Lock, D (2007) p 29; Maylor, H (2010)).

Cox, D. (2010) suggests that cost control and schedule control are key factors in the management of time, quality and cost. Realistic project budgets should be set in advance, based on realistic information and projections. Additionally, the project budget will need to be monitored as the stakeholders involved move out of the define and design stage, and so the define and design stage should incorporate an appropriate system to ensure that cost control, quality control and cost monitoring, and quality monitoring are possible.

The management of time, quality and cost in the define and design stage may also require a system of performance reporting to be devised. As Cox (2010, p. 171) notes this involves periodically collecting data and comparing it with “baseline”, and “actual” data, perhaps drawn from the wider industry, or notional data that original projections were based upon. Performance reporting will allow for time, quality and cost issues to be flagged up at an early stage to notify key stakeholders whether, and what type of intervention may be required.

2.4 Due diligence in the define and design phase

Due diligence is one of the most important issues facing management in the early stages of a merger and acquisition. It is one of the key risks that organizations can be exposed to during the process of merger and acquisition, since it exposes the new organization to a heightened risk of expensive litigation. In terms of a downstream oil company operation, one of the key challenges in this context will be communication with employees in the disparate structure of an oil company operation. Of course these risks can be mitigated by the project manager in the define and design stage. Accordingly, the project manager will need to gather key information on all existing employees so that risks can be evaluated in advance, and so that a plan of action can be set out, evaluated and implemented as the project moves out of the define and design stage (Lock, D (2007); Maylor, H (2010) p 219).

Managers will need to be trained, and key information about employees will need to be gathered and managed electronically to ensure that appropriate, and thorough processes of due diligence can be carried out effectively. This information may be gathered by the project manager in the define and design stage, and the project manager could assess what the best training, and communication strategies will be for the newly merged organization.

2.5 The use of consultancy expertise in the define and design phase

Consultancy expertise is expensive, particularly for an organization in transition as this one is. Additionally, the usefulness of consultancy expertise can be a very variable factor in terms of its contribution to the overall success of the company (Maylor, H (2010) p 222). In the define and design stage, the project manager can ensure that the use of consultancy expertise is well-planned and assessed in terms of its value to the organization as a whole. Consultancy input is something that is susceptible to evaluation, and thus the project manager in the define and design stage can devise an appropriate system of evaluation to ensure that cost expenditure on this type of external expertise is monitored, and that costs are justified (Lock, D (2007); Maylor, H (2010) p 227).

3.0 Coursework conclusion

This coursework has considered the topics of stakeholder expectations, project constraints, time, quality and cost control, due diligence and the use of consultancy expertise from the point of view of the project manager in the define and design stage of a major process of merger and acquisition.

The project manager, and the client are usually the key contenders at the beginning of the define and design stage. This is the point where communication is likely to be most critical, and clear, goals, boundaries, objectives, duties and responsibilities need to be set out. This is particularly key in the process of merger and acquisition which requires the management of numerous internal and external stakeholders engaged in the process in complex ways.

It is advisable to ensure that early communication is approached in a comprehensive and formal manner, since this is likely to minimize the risk of project delay as the define and design stage develops and enters more critical execution phases. It has been suggested that written communication is preferable in this phase, that formal reporting strategies should govern communication to a large degree, and that comprehensive records of discussions should be kept to ensure that what is agreed is explicit, and can be identified retrospectively.

As the project develops into more advanced stages of the define and design stage the project manager should adopt a consultative approach to ensure that problems are identified in advance, and particularly in the case of a merger and acquisition process consultation should engage internal and external stakeholders. Additionally, the project manager will need to adopt strategies that will allow for appropriate progress, and performance monitoring. Additionally, it has been suggested that the project manager will need to devise and implement strategies to ensure appropriate leadership, training, selection, recruitment, procurement, organizational communication and stakeholder engagement. As such the project manager in the “define and design” stage will primarily be concerned with planning effective strategy in these areas and the mitigation of risks that are associated with change, and organizational transition.

Bibliography

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Harrison, F. and Lock, D. (2004) Advanced Project Management: A Structured Approach. Aldershot and Burlington. Gower.
Hobbs, P (2009) Project Management (Essential Managers). London. Dorling Kindersley Limited.
Harold, Kerzner (2010) Project Management. New Jersey. John Wiley and Sons
International Finance Corporation (2007) Stakeholder Engagement. Available at: http://www.ifc.org/ifcext/enviro.nsf/attachmentsbytitle/p_stakeholderengagement_full/$file/ifc_stakeholderengagement.pdf
Kelly,S. and Nokes,S (2007) The Definitive Guide to Project Management. Great Britain and USA. Pearson Publishing.
Lock, D (2007) Project Management. Great Britain and USA. Gower Publishing
Loosemore, M. and Uher, T. (2003) Essentials of Construction Project Management. NSW. UNSW.
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Meredith and Mantel. ( 2006) Project Management: A Managerial Approach: A Managerial Approach. International Student Version. USA. John Wiley and Sons.
Newton, R. (2005) Project Manager: Mastering the Art of Delivery in Project Management. London. Pearson Education.
Wysocki. (2009) Effective Project Management: Traditional, Agile, Extreme. USA and Canada. Wiley Publishing

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Introduction

This essay will consider and evaluate the proposition “privacy is dead- get over it” by looking at organizational communication theory and practice. The essay will look at the role of the employee in the modern corporate environment, and compare and contrast this with the role and status enjoyed by the employee in more historical settings. The essay will look at the statutory framework for Data Protection in the UK, and privacy and will examine how this applies to the workplace, both in theory and in practice. The role of legislation designed to protect the interests of employees will be considered and the writer will comment on the efficacy of the legislation as well as considering the specific rights that it creates for employees and the specific responsibilities that it creates for employers. The wider sociological context for issues connected to surveillance in the workplace and employment rights will be examined also, and the writer will consider how technological advancement and the Information Age has affected the status of the modern employee in terms of their privacy. The ultimate aim of creating this context will be to inform a holistic evaluation of the proposition “privacy is dead- get over it”.

Privacy and surveillance in the workplace

In the modern workplace there are various tensions that exist between the privacy of employees and the level of surveillance that employers may employ in order to ensure that the organization functions optimally (Sprenger, P. (1999); Treacy, B. (2009); Wilkes, A. (2011)). Social networking sites are becoming more and more popular, and the internet is being used more and more to facilitate communication within organizations: “According to the Office for National Statistics’ 2010 data, 30.1 million adults in the UK (60% of the population) access the internet every day or almost everyday. This is nearly double the 2006 estimate of 16.5 million. Social networking was a popular internet activity in 2010, with 43% of internet users posting messages to social networking sites or chat sites, blogs etc. While social networking activities prove to be most popular amongst 16–24 year olds, 31% of internet users aged 45–54 have used the internet to post messages on social network sites, while 28% uploaded content. Many of the adults that use social networks do so not only for social networking purposes but also for business networking purposes. Of the individuals listed in LinkedIn this year, there are over 52,000 people, predominantly in the US, Canada, India, Italy, UK and the Netherlands (in that order) with ‘privacy’ mentioned in their profile. Within LinkedIn there are also a considerable number of privacy related LinkedIn groups which have substantial memberships. Many of the readers of this article will no doubt be in those groups for social as well as business purposes…(Bond, R. (2010) pp. 1)”, and this intensifies the debate as to how far employees’ privacy can be lawfully infringed by employers.

As organizational communication takes place more and more via email and other forms of electronic communication the problem of privacy is further heightened as more extensive records of personal communication are created and retained (Johnson, D. and Turner, C. (2003) p. 43-47; Jordan, T. (1999) p. 17-19; Kitt, G. (1996) p. 14-18). What to do with data like this poses a complex problem relating to the privacy of the employee and the right of the employer to infringe privacy in order to ensure the integrity of their organization.

The statutory framework

In the UK the privacy of an employee’s data, and an employer’s lawful access to such information is defined through a number of routes (Lunney, M. and Oliphant, K. (2003); Mc Kendrick, E. (2003)). Firstly, there is an important statutory framework that employers must respect. This is created by the Data Protection Act 1998, and also by the ECHR which requires that an individual’s private and family life be respected (Article 8 of the ECHR). These rights are enforceable by an individual in a civil court in the UK, but also by public agencies in the UK like the Office of the Information Commissioner (Sprenger, P. (1999); Treacy, B. (2009); Wilkes, A. (2011)).

The Data Protection Act 1998 has created a number of principles of data protection, which must be respected. These are that information (i) must be fairly and lawfully processed; (ii) information may only be obtained for specified lawful purposes, (ii) may not be processed in any manner incompatible with such purposes; (iii) data must be adequate, relevant and not excessive for the purposes for which it is collected; (iv) information must be accurate and where necessary kept up to date, (v) information must not be kept longer than necessary, (vi) information must be processed in accordance with the rights of data subjects, (vii) security measures must be taken against unauthorized and unlawful processing of information against accidental destruction, or unauthorized or unlawful destruction, and (viii) information must not be transferred outside the European Economic Area within the consent of the data subject. In cases where these principles are not adhered to by employers, an employee may institute civil actions for breach of privacy, and or complaints to the ICO who may pursue criminal prosecutions against any party who has breached the Data Protection Principles (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005) p. 57). As such the Data Protection Act 1998 creates a range of rights in terms of privacy and security of personal information and these may be enforced directly by an individual or by a public body such as The Information Commissioner on behalf of an individual. Breach of the Data Protection Act 1998 is a criminal offence which is punishable with fines and or up to six months imprisonment. Recent changes to the powers of the Information Commissioner gives them powers to issue fines of up to ?500,000 for cases of serious breaches of the Data Protection Act 1998 (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005) p. 57).

On the other hand there is also a statutory framework that addresses how far an employer may go in terms of monitoring their employees in the course of employment. The Regulation of Investigatory Powers Act 2000 and the Telecommunications (Lawful Business Practice) (Interception of Communication) Regulations 2000. These provide that monitoring of employee data can only be authorized for specific, defined purposes such as where the employer has a legitimate overriding interest in the pursuit of monitoring activities (Schirato, T. and Yell, S. (2000) p. 42-45; Sime, S. (2007) p. 12; Smith, M. and Kollock, P. (1998) p. 32-35). Thus it may be argued that there is a balance to be struck between the information that employee’s disclose which may be lawfully evaluated by the employer (deemed for example in communication privacy management theory as “self-disclosed” information (see: Petronio, S. (2002) p. 3)) and information that is subject to inappropriate uses.

Clauses in the employment contract may also define the rights and responsibilities of the employer and the employee in terms of privacy, but it is important to note that employers may not, through the operation of a private contract exclude any of the rights and or responsibilities that are defined in The Data Protection Act 1998, or the ECHR (Blanpain, R. (2007); Elliott, C. and Quinn, F. (1999)). The wider legislative framework may be further defined according to the theory of privacy rule development. Privacy rule development theory argues that cultural, and sociological factors impact the boundaries of privacy rights (Petronio, S. (2002) p. 40) and it is clear that there is a balanced approach to the rights of the employee and the responsibilities of the employer under this framework and this reflects wider liberal sociological and cultural values prevalent in the UK.

Management Information Communication Systems and Monitoring Strategies

Different strategies may be adopted by organizations in terms of monitoring their employees. Historically, opportunities for monitoring were limited for example in relation to workers on shop floors or in a physical office environment (Freedman, J. (1994); Fletcher, I. (2001)). In modern times employees may be monitored in terms of the keystrokes that are used by them or their computers or at their work stations. Additionally, the use of smart cards and CCTV monitoring of employees may give employers extra information with which to monitor the activities of employees (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005) p. 57). There is also a valuable market for the use of computer products that allow employers to monitor employees, for example Spector Pro which uses the slogan “when you absolutely need to know everything they are doing online”. The use of products and services such as this is referred to as the embedded approach to workplace surveillance, where the employer “tracks” the activities of the employee mainly through the use of computer based products. Companies are undertaking proactive strategies like this to assess what is the most appropriate way to monitor employees, while striking a balance between effective monitoring and preserving staff morale, a case in point being Servisair which undertook a holistic risk assessment of the organizational monitoring practices in their company and concluded that methods of monitoring of employees needed to be improved across their organization. It is clear that in the Information Age, managers have much more information at their disposal that allows them to make more informed choices as to the vetting of possible future employees, and also the performance of current employees (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005)). All of these changes raise attendant privacy issues.

An organizational communication perspective – is privacy dead?

The question of whether privacy is dead is a complex issue. A simple example might be that an employee viewing pornography at their work station in circumstances where they are unaware that the employer may be able to access their computer also and view their electronic “history”, might be disciplined or dismissed by that employer. The employer who instituted disciplinary action against such an employee may be seen to have acted in a justified manner. However, there are also cases where the dividing line between the rights of privacy and the responsibility of the employer to respect that is less clear.

Several cases for example highlighted in the media recently have involved employees “off sick” who were disciplined or dismissed when it later transpired that they had been using social networking sites during their time off, casting doubt of the veracity of their claims to illness (Moult, J. (2009)).

What to do regarding data recovered as a result of a third party data breach represents another difficult issue for employers: “there was considerable media attention drawn to the fact that a security consultant, Ron Bowles, had used a piece of code to scan Facebook profiles collecting data not hidden by the user’s privacy settings. The scanned list of profiles was then shared as a downloadable file across the internet, and allegedly caused privacy fears for the 100 million users of Facebook whose personal data were compromised. The reaction by the media and regulators to the exposure of personal data in the new social media platforms of Facebook, Google and the like, tends to be focused on the intrusion on individuals’ privacy. When personal data are compromised in the realm of social media, the media reaction is to blame the SNS provider for, firstly, not having enough security in place and, secondly, for not having done enough to draw the attention of users to the need for them to manage their own privacy in terms of privacy settings and privacy parameters……(Bond, R. (2010) pp. 3)”.

Other cases have been highlighted where comments published by employees in reference to their employers on social networking sites have led to dismissals, and or disciplinary action where these have amounted to unauthorized disclosures of information, or unwelcome criticisms of the employer (Moult, J. (2009) and see also: Freedman, J. (1994); Fletcher, I. (2001)). In terms of the employee, it is also the case that records of email communication can be viewed by employers on a Master server computer, and so whereas an employee may be under the impression that their personal work email may be used for personal communication, they may not be aware that an employer could also have access to these records of communication (Sprenger, P. (1999); Treacy, B. (2009); Wilkes, A. (2011)). Kuschewsky, M. (2009) highlighted a case recently where an employer was prosecuted by the ICO for compiling a database of personal data on employees to include information about their personal lives, employment history, personal relationships, political affiliations and trade union membership. The database was seized by the ICO during the course of criminal proceedings relating to the Data Protection Act 1998, and it emerged that the database had been used by up to 40 construction companies for employment vetting without the knowledge of the employees. The consultant managing the database was prosecuted by the ICO for failing to inform the employees that their personal information was being used in this way, and the ICO considered taking legal action against the construction companies for using the information inappropriately (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005) p. 57).

Surveying all of this information about how the status of the employee has been affected by technological developments, it is easy to see why some scholars might argue that privacy is dead. The fact is that privacy is something that is a lot more difficult to preserve in a modern working environment. Social networking sites and activities on these provide a prime example of why. Whereas one hundred years ago an employee’s private communications between their friends about their work would be largely inaccessible to an employer (Johnson, D. and Turner, C. (2003) p. 43-47; Jordan, T. (1999) p. 17-19; Kitt, G. (1996) p. 14-18), this has changed considerably as real-time electronic communications create considerable amounts of data for employers to use to evaluate the employee and their performance at work (Freedman, J. (1994); Fletcher, I. (2001)). Commercial profiteering has also grown up around the vetting of employees, as the case of the ICO prosecution of a security vetting consultant discussed above highlights. Organizations for example have emerged that compile databases of individuals that may be searched to give employees extra information about the employee, and so it is becoming more and more difficult for an employee to “hide” a gap in their work-history, a dispute with a previous employer, a dismissal or even a poor credit history due to the risk that an employer may be made aware of it as a result of their vetting process (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005) p. 57).

In terms of the proposition it is however submitted that it must be rejected. Privacy in the workplace is not dead. If anything, the exact opposite is true in that employees have a range of rights that are specifically designed to protect their privacy in the workplace, the most notable being the prospect that the ICO would choose to pursue criminal prosecutions against an employer (Sprenger, P. (1999); Treacy, B. (2009); Wilkes, A. (2011)). In this respect it may be argued that the status of the employee subject to monitoring in their work is subject to growing protection by an ever-increasing range of rights that are being enacted by policy-makers. In this regard the influence of the EU is of particular significance, since the impetus for the enactment of the Data Protection Act 1998 in the UK lay in a 1995 EU Directive on data protection (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005) p. 57). An example that highlights this is the Data Protection Act 1998 and the growing powers that the ICO can apply to employers who abuse the personal information of employees. As Kuschewsky (2009, pp. 2) notes for example employees cannot be forced to submit to surveillance in the workplace in the absence of informed consent, and genuine choice as to their consent. Further employers are required to demonstrate that there is a specific need for the surveillance practice to be pursued. Thus, in a sense any surveillance practice employed by an employer is subject to another type of “surveillance”, and in cases where inappropriate practices are identified employers can incur significant financial penalties which can lead to significant civil liability to employees (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005) p. 57).

It may be argued that rather than privacy being dead, it is the case that more and more information is entering the public domain and this information may be used by employers to limit the rights of an employee. The distinction to be drawn is significant though. If privacy may be seen as something that employees enjoy less and less, this is not a function of privacy regulation, but rather a function of information and the amount of information that is available regarding employees in the workplace (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005) p. 57). The distinction between the relationship of privacy to privacy laws and regulation and the relationship of privacy to information and its availability is important, because it is the central tenet under which the proposition “privacy is dead” may be rejected. It must be remembered that just because information may be available, it is not the case that employers can simply do what they wish with it. As more and more information becomes available to employers, policy-makers are responding by imposing regulation as to what is an appropriate use of information, and setting out statutory powers that may be used to act against employers who have abused the trust of employees who have made their information available to them (Johnson, D. and Turner, C. (2003) p. 43-47; Jordan, T. (1999) p. 17-19; Kitt, G. (1996) p. 14-18).

Conclusion

This essay has argued that the Information age has changed the status of the employee significantly. The increased use of email and other forms of electronic communications in the workplace has meant that a modern employer typically holds a great deal more information about the employee than would have been the case one hundred or even fifty years ago. Additionally, the divide between a person’s personal life and a person’s status as an employee is lessening with the use of social networking sites (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005) p. 57). There has also been a commercialisation of employee monitoring and this can lead to the adoption of information systems and products to appraise the performance of employees in terms of “tracking” their activities online, and creating statistical profiles of their internet use. The case of Servisair was discussed to highlight this, and many other corporate organizations are attempting to reduce the risks that they are exposed to in employing employees by gathering information about their personal lives, financial interests and also their activities while they are at work (Johnson, D. and Turner, C. (2003) p. 43-47; Jordan, T. (1999) p. 17-19; Kitt, G. (1996) p. 14-18). The result is that employers have much more opportunity to review the performance of employees. It is not the case however that these changes have taken place in a vacuum. In the UK at least a strict statutory regime has grown up around issues of privacy, the most important being the Data Protection Act 1998 and the ECHR. These have created privacy rights in both the private and the public sphere (Johnson, D. and Turner, C. (2003) p. 43-47; Jordan, T. (1999) p. 17-19; Kitt, G. (1996) p. 14-18), as employers face the prospect of fines and criminal prosecutions in cases where it is found that they have abused or inappropriately used information regarding an employee (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005) p. 57).

It has been argued therefore that as more and more information has become available to employers, employers have been fixed with more and more responsibility to use this information appropriately. The development of the legislative framework in the UK highlights this, with the development of the Data Protection Act 1998 as well as the public law agencies such as the ICO who are empowered to enforce it. A case in point was the case highlighted by Kuschewsky, M. (2009) where a security consultant hired by 40 construction companies to provide vetting services regarding construction workers was prosecuting under the Data Protection Act 1998 for breaches of the data protection principles (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005)). It is clear therefore that whereas employers can reduce risk by carrying out dubious vetting practices, there are also many risks that corporations are exposed to in cases where they abuse personal information, or when they infringe the rights of employees to enjoy a reasonable level of privacy. The default position that is encouraged is one where an appropriate balance is struck between the rights of the employee to privacy and the responsibility of the employer to respect privacy.

On the whole the writer has rejected the proposition that privacy is dead, because there is clear evidence that privacy is something that employers need to respect if they are to avoid criminal prosecution and the risk of litigation by disgruntled employees (Kuschewsky, M. (2009); Hansson, S. and Palm, E. (2005)). It has instead been argued that, rather than privacy being dead, privacy is just harder for employees to maintain in the Information Age. This, it has been suggested is a function of the availability of information, and not a function of the status of privacy. If anything privacy has become something that employers need to be more and more aware of, albeit in circumstances where much more information is available to them as to the performance of an employee.

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