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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).

References

Carter, C., &Rogers, D., (2008), “A framework of sustainable supply chain management: moving toward new theory”, International Journal of Physical Distribution & Logistics Management, Vol. 38, Iss (5): pp.360 – 387.

Chopra, S., &Meindl, P., (2012), Supply Chain Management, 5th edition, NJ: Prentice Hall.

Cohen, S., Roussel, J., (2013), Strategic Supply Chain Management: The Five Core Disciplines for Top Performance, Second Edition, NY: McGraw Hill Education.

Faze, F., (1997), “A comparative analysis of Inventory costs of JIT and EOQ purchasing”, International Journal of Physical Distribution & Logistics Management, Vol. 27, Iss (8): pp. 496 – 504.

Ghorban, M., (2011), “How Technology Can Ease Supply Chain Management and Mitigate Risk”, Available at: http://www.supplychainbrain.com/content/general-scm/sc-analysis-consulting/single-article-page/article/how-technology-can-ease-supply-chain-management-and-mitigate-risk/(accessed May 27, 2015).

Halldorsson, A., Kotzab, H., Mikkola, J. H., Skjoett-Larsen, T., (2007), “Complementary theories to supply chain management”, Supply Chain Management: An International Journal, Vol.12, Issue 4, 284-296.

Intermec Technologies Corporation, (2007), “Top 10 Supply Chain Technology Trends”, Available at: http://www.mirnah.com/images/White_Papers/Trends_SupplyChain/Top10Tech_wp.pdf

Kremian, Z., (2013), “X Does it Right: Apple’s Supply Chain Management Secrets”, Available at: http://www.supplytimes.com/inventory-management/x-does-it-right-apples-supply-chain-management-secrets/?mode=featured

Poirier, C., & Quinn, F., (2006), “Solid Gains”, Supply Chain Management Review, Vol. 10, Iss (1): pp. 35-41.

Pujawan, I. N., (2004), “Assessing supply chain flexibility: a conceptual framework and case study”, International Journal of Integrated Supply Management, Vol. 1, Iss (1): pp. 79-97.

Reinertsen, D., (2009), The Principles of Product Development Flow: Second Generation Lean Product Development, UK: Celeritas Publishing.

Sharma, S., (2010), Supply Chain Management- Concepts, Practices and Implementation, Oxford: Oxford University Press.

Simchi-Levi, D., Kaminsky, P., &Simchi-Levi, E., (2007), Designing and managing the supply chain, New York: McGraw Hill.

Vella, D., (2012), “Using technology to improve supply chain management”, Available at: http://globalpurchasing.com/supply-chain/using-technology-improve-supply-chain-management

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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.

Works Cited

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Slagter, F., 2009. HR practices as predictors for knowledge sharing and innovative behavior: a focus on age. International Journal of Human Resources Development and Management, 9(2/3), pp. 223-249.

Sparrow, P., Scullion, H. & Tarique, I. eds., 2014. Strategic Talent Management: Contemporary Issues in International Context. s.l.:Cambridge University Press.

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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.

References

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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

Armstrong, M. (2006), A Handbook of Human Resource Management Practice, 10th Edition, London, Koran Page Limited, p 867,868.

Anderson, T. Metcalf, H. (2003) Diversity: Stacking up the Evidence, London, CIPD, p 26.

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Harrison, R. (2005) Learning and Development, 4th Edition, London, CIPD, p 183.

Hughes, P. Ferrett, S. (2009) Introduction to Health and Safety at Work, 4th Edition, Oxford, Butterworth-Heinemann, p 9.

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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

Berkun, S. (2008) Making Things Happen: Mastering Project Management (Theory in Practice. Great Britain. O Reilly Media.
Cox, D. (2010) Project Management for Instructional Designers. iUniverse. Bloomington, USA.
Field, Keller, (1998) Project Management. Open University. London.
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.
Maylor, H (2010) Project Management. Great Britain. Prentice Hall
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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This section will consider an analysis of the global LCD industry and the factors within the strategic environment which will have an impact upon the industry. In order to analyse the environment, this section will make use of a PESTLE analysis which considers the relevant political, economic, social, technological, legal and environmental factors. Having conducted the analysis, the paper will then present an action plan as to how Phillips may maintain its market share in the industry.

Political

Political factors may be seen as having a large impact upon the global LCD sector and have had an impact upon both the market and manufacturing aspects of the industry. On the whole, recent decades have seen political moves to essentially open up world markets allowing producers such as Phillips to both retail and manufacture its products in a wider range of countries than previously (Griffin and Pustay, 2010, Krugman et al, 2012). Such political changes often relate to emerging markets such as China, Russia, India and Brazil all of which have taken significant political steps in recent years to attract investment from producers such as Phillips. Despite such reforms, manufacture such as Phillips also need to be aware that reversals of policy are still a possibility, this may be seen as all the more of a risk in these economically turbulent times when there may be sudden appetite on the behalf of political leaders for protectionist measures which favour domestic producers and protection of the jobs of voters.

Economic

Since 2007 it may be seen that the world economy has overall suffered from slow levels of economic growth referred to as the global economic downturn. In addition, the future outlook, especially within Western Europe and the UK would seem to remain bleak with the prospect of a double dip recession forecast by many (BBC News, 2012). For the global LCD sector this may mean that producers have had to focus upon a strategy of cost leadership and providing customers with a value for money based proposition rather than looking to develop value added differentiation based strategies. However, despite the global economic downturn which has affected many countries badly, the results have not all been negative. One consideration is that while countries such as the UK and US have been heavily hit, others such as China and the emerging economies have still seen rising levels of wealth and growing middle class (Ravillion, 2010). As such, this would seem to suggest that strategic planners must focus on investing in markets which have been least effected by recent economic events.

Social

One key issue which many countries have come to see is an ageing population, a trend seen in both the UK and Western Europe (Parliament UK 2012) but also in the emerging economy of China as a result of the long term effects of the one child policy (Hutchings, 2001). However, one interpretation of such social trends is that this could benefit the global LCD business as aging populations come to look for higher quality home entertainments and other sources of diversion which do not require mobility. Other social changes however have seen changing consumer attitudes towards issues of CSR and the environmental impact of products and consumerism in general (Parsons and Maclaran, 2009). In this case, the consumer electronics sector may be seen as facing both challenges relating to current manufacturing practises in Far East locations (Duhigg and Baboza, 2012) but also an opportunity to create additional products and services linked to developments in green technologies and manufacturing practises.

Technological

The global LCD market itself may be seen as the product of an innovation in technology and replacing earlier technologies based around the cathode ray tube. However, investment in the technology on the behalf of television and consumer electronics producers represents a risk for companies such as Phillips. On the one hand, while direct investment may reduce supply risks, equally there is a consideration that there is a wide level of uncertainty as to how long LCD technology will be the dominant force in the market (Di Serio et al, 2011). Other issues relate to technological developments of complimentary products, or products which make use of LCD technology besides the core television product such as computer monitors and other consumer electronics. One consideration is that LCD producers and users may choose to invest in the development of technologies not associated with LCD production directly but in order to develop a new generation of complimentary products which make use of existing LCD technologies.

Legal

In order to develop and improve LCD technologies, there is a requirement for significant investment on the behalf of producers such as Samsung, Phillips, Sony and others in the market. However, one issue in the innovation process is that if such investments are to continue then investors must have their intellectual property protected (Tidd and Bessant, 2009). However, at present, it would appear that such legal protection is applied in an inconsistent way on a global basis. While producers enjoy rather comprehensive protection in developed economies such as the UK, Western Europe and the United States, protection in key emerging markets such as China and the Far East can often be somewhat lacking in substance, this is despite efforts on the behalf of the WTO and other bodies to improve legislation (Griffin and Pustay, 2010, Panitchpakdi and Clifford, 2002).

Other legal issues relate to those of the HR perspective, in this case global manufacturing can often see that legal regulations a much lower in emerging economies such as the Far East and Latin America. However, a key question remains so to whether producers should necessarily take advantage of the lower legal regulations of these emerging economies. In some cases, doing so has in the past resulted in negative publicity for those in the consumer electronics sector, with Ravillion’s (2010) analysis of Apple proving the point.

Environmental

Recent years would seem to suggest that the supply chains of those operating in the global LCD sector have become more international in nature with greater outsourcing of operations and the marketing of products in a wider range of international markets (Di Serio et al, 2011). While this may benefit the sector allowing firms to reduce costs through taking advantage of the comparative advantage of nations (Porter, 1998), a spate of recent incidents have shown that environmental factors have recently had a negative impact upon the international supply chains of many companies both within and out with the sector. Such examples include the devastation caused by Hurricane Katrina in the Southern USA, earthquakes and tsunamis in Japan which had shock waves in the supply chain of Toyota as far afield as the UK and flooding in Thailand and Pakistan (Kollewe, 2011). All in all, recent decades would seem to suggest that environmental factors present significant challenges for industries such as the LCD sector which have become increasingly internationalised in recent years.

Action Plan

Based upon the above analysis it would appear that the global LCD industry faces an uncertain environment with both significant opportunities and threats. As such, the report recommends the following action plan for a producer such as Phillips in order to maintain market share.

Cost Strategy: Given the current economic climate and the general attitude of consumers it is recommended that Phillips should focus upon a low cost based strategy. In order to achieve thus the company will need to ensure that costs are reduced at every opportunity so as to see that not only is the company able to offer consumers the lowest priced product, but also so that such a strategy may be maintained in the long term (Johnson et al, 2008).

Market Selection: A key to maintaining market share for Phillips may be to consider the amount of effort put into individual markets. In this case, the company may choose to target geographic markets which have shown a greater level of resilience in the context of the current global financial downturn (World Bank, 2012). For example, Phillips may choose to develop an emerging markets strategy targeting key high growth markets such as China, India, Russia and Brazil in order to compensate for poor performance in the US and Western Europe.

The classical approach or approaches of strategic development may be best summarised by Whittington (2001) who brings together a number theories and theorists who take a ‘top down’ rational approach towards strategic development. In other words, business level strategies are devised by those at the strategic apex of an organisation and are then implemented throughout the organisation. As Whittington (2001) points out, such approaches towards strategy are often suited to larger companies in mature and stable markets as opposed to emerging industries with a dynamic set of competitors. Having considered the classical perspective, the paper will now make the following business level strategic recommendations on behalf of Phillips in relation to the future direction of the company.

In selection an overall business level strategy, firms such as Phillips are presented with a plethora of prescriptive options, many of which are based upon a price v quality based assessment of strategy. Porter (2004) for instance offers three generic strategies based around cost leadership, differentiation and market focus. On the other hand, Bowman (1995) offers eight possible strategies based around differing levels of price and product quality based propositions. In this case, given the nature of the external strategic environment and the current position of Phillips and its strategic resources, the report recommends that Phillips should make uses of an overall cost leadership strategy attempting to offer consumers LCD televisions in the market which represent the lowest possible price. From the perspective of Bowman’s (1995) strategic clock this could result in one of three possible strategies including a no frills, low price or hybrid strategy. Considering these options, it may be the low price strategy which is of most relevant with a low price coming to meet average product quality and perceived benefits on the behalf of the consumer (Johnson et al, 2008). However, if such a strategy is to be enacted successfully, then Phillips must become the cost leader within the segment.

Having identified an overall business level strategy in the form of cost leadership, the next question is what steps must be taken to implement the strategy on the behalf of Phillips. In the first case, classical perspectives on strategy such as those put forward by Chandler (1962) advocated the expansion of businesses and the increasing of the levels of vertical integration. In this case, from a strategic perspective, classical theorists argued that larger vertically integrated companies were able to benefit from larger economies of scale and economies of scope than there smaller counterparts (Johnson et al, 2008). For this reason, the first recommendation of the report is that from a strategic perspective, Phillips should consider expanding the business not through a program of market based expansions but through a process of backwards vertical integration. In this case, Phillips may choose to acquire key suppliers of related components such as LCD panel producers, alternatively the company may choose to expand in such a direction through a process of organic investment in such in house production. Such a strategy would also seem to be consistent with the desire to reduce the power of the buyer and increase barriers to entry within the industry, key parts of Porter’s (2004) five forces analysis, a model associated with the classical school of thought on strategic management. This would seem to be desirable for Phillips at the moment given the high level of reliance which the company has on key input material providers such as Samsung (Di Serio et al, 2011).

Other possible sources of a strategic competitive advantage for Phillips may be to consider further ways of increasing the volume of sales within the business thus helping to create further economies of scale and scope and in doing so aiding the sustainability of the low cost strategy (Johnson et al, 2008). One issue to consider is that of the product range to be offered by the firm, in general terms, larger volumes of production often result in the development of a lower cost base through economies of scale and a reduction in the allocation of fixed costs (Arnold, 2008). However, not all increases in volume based production may be seen as equally as beneficial. For example, in expanding the breadth of the range of products offered by Phillips, those product additions which share common parts and components are likely to reduce the overall cost base of the company on a volume basis. However, introducing new product lines with few common components is likely to add complexity and hence cost to the business model (Slack et al, 2009, 2010). As such, the report recommends that in the future, Phillips should follow a strategy of increasing the width of its product range through related diversifications with the aim of increasing the volume of existing parts and components bought or manufactured within the company.

In summary, this section has presented a view in line with the classical planed approach towards business strategy in which Phillips should apply a low cost prescribed business strategy in order to best align the core recourses of the business with the needs of the external environment. In this case a number of recommendations have been made in order to facilitate such an approach including an increased level of vertical integration and in increasing of the breadth of the product range. From theoretical perspective, both of these strategies should help Phillips to reduce its cost base through the generation of further economies of scale and scope, thus supporting the business level strategy.

At its most basic level, the decision to outsource production is often considered in terms of a short to term cost analysis exercise with a considerable motivation coming from the prospect of being able to reduce costs and thus pass on the benefits to the end user or consumer. However, as Di Serio et al (2011) article considers, while this is true, the application of a number theoretical frameworks including the resource based view of the firm and transaction cost analysis may provide a more comprehensive framework for analysis. In the first instance, the resource based view of the firm considers that firms generate a competitive advantage by taking advantage of sets of unique and internal resources to develop a superior offering from either the cost based or product based perspective. As such, the decision to outsource of in house production is a key one for firms given that this will often be linked to the available strategic resources of the organisation, hence the decision is strategic as well as operational in nature.

Transaction cost theory on the other hand considers that there are costs associated with conducting transactions in a market context, in other words there are additional costs of outsourcing production which are not included in the delivered price of a product (Di Serio et al, 2011). Such costs include the risks involved in buying from a market context as well as more practical costs such as those of monitoring suppliers and planning the process of material acquisition. In other words, the application of transaction cost theory may act as a rebuttal to the instant attraction of manufacturers to an outsourcing strategy, highlighting a plethora of problems and costs which may not have been considered otherwise.

One key issue which is raised in specific relation to the LCD market but may be seen as applicable to any outsourcing decision is the opportunity for suppliers to behave in an opportunistic fashion (Di Serio et al, 2011). Such opportunistic behaviour can include making demands for excessive price increases or failure to supply altogether. Such a situation is more likely in markets where there is a limited number of suppliers and hence the power of the supplier is relatively high. In the case of the LCD market, this context would seem to exist with Samsung being almost the sole supplier of key components of the product. Exacerbating the problem is the fact that Samsung is not only a supplier of the product but also a competitor of Phillips in the consumer electronics sector (Di Serio et al, 2011). As such, one key issue for Phillips to consider in the outsourcing decision is to understand the significant risks being taken with regard to security of supply.

Other issue which relate to the outsourcing model consider the issue of flexibility, in this case the total impact of the decision upon a company from a strategic perspective is somewhat debatable. On the one hand, the outsourcing of production should see that firms such as Phillips have a greater level of flexibility of production output based upon the fact that capacity is increased and decreased through a market based procurement decision. In times of low demand, this is beneficial for the company in question given that it does not have to bear the cost of maintaining the fix costs associated with in housed manufacturing operations. On the other hand, in times of high demand, in theory firms such as Phillips should be able to simply buy in the additional capacity needed. However, while this is true in theory, the Di Serio et al (2011) case would seem to suggest that there can be a struggle to gain supplies from an outsourced provider during peak periods in the business or product lifecycle. Such a risk was materialised for Phillips during the course of the Football World Cup when the company struggled to obtain sufficient suppliers from outsourced operations.

Other strategic considerations for outsourcing operations come from the perception of risk of investing in technologies associated with every shortening product lifecycles. As the Di Serio et al (2011) case indicates, many in the LCD sector including Sony, LG and Phillips chose to outsource operations or create joint ventures in relation to component production simply due to a belief that investment in in-housed production represented a significant risk due to the short term nature of products in the consumer electronics sector. As such, the outsourcing decision may be seen as a mechanism for transferring such risks from manufacturer to supplier.

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Organisations are highly specialized systems and people working within the organisations are generally cynical to change in the work environment as they don’t want to get into uncharted territory. It is the natural tendency of human being to live in their comfort zone and no one likes to be comfortable being uncomfortable even for a short duration (during the change process).

But, for organisations to survive and succeed in the current environment change is no longer optional. Organisations have to learn to love change to stay ahead of competition.

An overview of change management

Definition – Change management is about moving from one state to another, specifically, from the problem state to the solved state (Jung, 2001).

But, the organisational terminology for change management can be varied and ‘change’ may be used under different terms. E.g. when a company talks about re-engineering, restructuring, promoting cultural transformation, or keeping pace with the industry, then it is talking about change. Lewin (1951) conceptualized that change can occur at three levels.

Change in the individuals who work in the organisation – that is their skills, values, attributes, and eventually behaviour. Leaders have to make sure that such individual behavioural change is always regarded as instrumental to organisational change.

Change in the organisational structures and systems – reward systems, reporting relationships, work design and so on.

A direct change in the organisation climate or interpersonal style – dealing with people relationships, conflict management and the process of decision making. (Leonard et al., 2003, cited in Mabey & Mayon-White (ed))

Change can be further classified as planned and emergent. When change is deliberate and is a product of conscious reasoning and actions is supposed to be planned. Emergent change is a direct contract to this and unfolds in an apparently spontaneous and unplanned way.

Drivers of change

Change is mostly driven by circumstances and always takes place with a particular goal in mind. Some of the common drivers of change are, to keep pace with the changing environment, to beat competition, technological changes to improve process efficiency etc.

No matter what the driver for change is, the goal of the whole process is to lead the organisation into a future state which is different from the current state under which the organisation operates. (Nicols, 2006) The scope and scale of change can vary. E.g. Change can be limited a particular department (operations, marketing etc.) or it might affect the whole organisation, it might relate to only a group of people or might affect every employee in the organisation.

Initiators of change

Irrespective of its nature, change has to be initiated, driven and implemented by someone. This is where leadership fits into the change management process. It has been found that organisations that have been successful in coping with change have strong leadership that guides the team through a series of initial steps that set the stage for success (Nadler, 2001). Leaders are responsible for bringing about change in a staged and planned manner.

Dirks (2000) points out that change has to be instigated and it is the leader who instigates the change by his vision and persuasion. Nadler, Thies and Nadler (2001) suggest that, for effective change to occur, and in particular cultural change, there is no substitute for the active engagement of the leadership and executive team.

Top leaders must assume the role of chief architect of the change process. Cartwright and Cooper (1993) take this one step further by suggesting that it is important that employees at all levels become involved in the change process. Jung (2001) also views managers as playing key roles in developing, transforming and institutionalizing organisational culture during the change process.

For managing an organisation wide change, the leadership has to possess an unusually broad and finely honed set of skills. It needs to have a clear sense of mission and delegate task effectively to build a whole team of ‘change agents’. The structure of the organisation needs to change to one with less internal bureaucracy.

Hatch (2000) suggests that the implementation of any change process often flounders because it is improperly framed by top management. The key to choosing the right approach to change is thus to keep in mind how organisations function. As social systems comprising work, people, formal and informal systems, organisations are inherently resistant to change and designed to neutralize the impact of attempts at change (Chemers, 2001). Leaders play a critical role in selecting and planning appropriate change

Reluctance to organisational change

Gofee and Jones (2001) point out that the reluctance to organisational change from employees and other staff is primarily due to the way change is implemented and the abilities of the leader in bringing about the change rather than the nature of change itself. Bridges (1991) believes that it isn’t the actual change that individuals resist, but rather the transition that must be made to accommodate the change.

Organisational change entails change in the work process, culture and the nature of an employee’s working conditions. Psychologists believe that resistance to change is because of people being afraid of the unknown. During times of change, it is important that the leaders of the organisation create an atmosphere of psychological safety for all individuals to engage in the new behaviours and test the waters of the new culture after the change has been implemented.

Approaches to change

Change can be classified in a number of ways. The categorization depends on the extent of the change and whether it is seen as organic (often characterized as bottom-up) or driven (top-down). Ackerman’s change classification segregates change into

Developmental change – may be either planned or emergent; it is first order, or incremental. It is change that enhances or corrects existing aspects of an organisation, often focusing on the improvement of a skill or process. (Ackermann, 1997)

Transitional change – seeks to achieve a known desired state that is different from the existing one. It is episodic, planned and second order, or radical. Transformational change is radical or second order in nature. It requires a shift in assumptions made by the organisation and its members. Transformation can result in an organisation that differs significantly in terms of structure, processes, culture and strategy. It may, therefore, result in the creation of an organisation that operates in developmental mode – one that continuously learns, adapts and improves. (Mabey & Mayon-White (ed), 2003)

Implementing change

It is widely believed that the way an organisation adapts to change is fundamental to its success. In an ever increasing competitive environment, change is ubiquitous and the way employees respond to change (resistance/acceptance) has been identified to play a vital role in the change management process. Managing organisational change requires more than reengineering and restructuring systems and processes. It requires managing the human responses that accompany any organisational change (Darwin et al., 2002).

For its smooth implementation, the change management process has to be carefully planned and the onus is on the leader to ensure a hassle free implementation through effective and sensible planning, confident and effective decision-making, and regular, complete and timely communication with the employees (Simon & Newell, 2006). Factors such as organisation culture, structure of the organisation, bureaucracy, employee attitudes, business model etc. also play their part in implementing change.

Skills needed for effective change implementation

Authors like Nadler and Thies (2001) have stressed on the importance of problem solving within the change management process and argue that change can only be effectively implemented by good problem solvers. Managing change is seen as a matter of moving from one state to another, specifically, from the problem state to the solved state therefore diagnosis of problems at each stage and coming out with a solution to those problems plays a big part in the change management process (Champy, 2005).

Implementation difficulties

Bringing about major change in a large and complex organisation is a difficult task. Policies, procedures and structures need to be altered. Individuals and groups have to be motivated to continue perform in the face of major turbulence. It is not surprising, therefore, that the process of effectively implementing organisational change has long been a topic that both managers and researchers have pondered (Nadler, cited in Mabey and Mayon-White, 2003).

Beer et al. (2003) believe that most change programs don’t work because they are guided by a theory of change that is fundamentally flawed. The problem with most company-wide change programs is that they address only one or two the crucial factors (coordination, teamwork, commitment, structure of the organisation, organisation culture)

Change Management Strategy

As a part of the strategy, a feasibility analysis needs to be done to assess whether the change the organisation is looking to bring about is feasible considering the present state of the organisation (Huy, 2002). Organisational configurations need to be assessed before deciding on the proper change management strategy.

Change management is a three pronged strategy: transform, reduce and apply. Before the change process is drafted, it is the responsibility of the change initiator / leader for assessing the difference between the current state of affairs and the state accomplished after the change process which Haslam & Platow (2001) terms as the transform state. This is an assessment stage which requires the leaders to assess the goals. After goal assessment, the strategy should be to try to determine ways to narrow the gap through the change process (reduce stage) and subsequently delegate responsibility to play operators (like divisional heads and other departmental leaders) to actually effect the elimination of these differences.

During the change implementation process, the leader should play a key role, firstly, in the identification of the changes necessary to produce the required outcomes and then to put an implementation process in place to bring about those changes.

Champy (2005) believes that the leader is the one responsible for the how, what and why of the change process. It is the leader who should be responsible for identifying how the changes can be effectively implemented with least resistance from employees by taking into consideration the organisation structure and culture. Communication should also form a part of the change management strategy. The change initiator and implementer have to play the role of an effective communicator to inform the employees of the reasons behind the changes.

It has to be remembered that organisations change is always brought about by team work and the change process requires frequent communication with all the members of the organisation. Leadership approach should be to address resistance through increased and sustained communications and education. As a part of the strategy, employees should be encouraged to express their ideas and concerns with regards to the change.

Change management should start with the change manager mobilizing commitment to change through joint diagnosis of business problems. A shared vision of how to organize and manage competitiveness needs to be developed. Consensus has to be fostered for the new vision. Once there is a consensus, leaders and change agents should have the competence to enact it and the cohesion to move it along. The change management process and the strategy have to revitalize all departments without pushing change from the top. As a part of the implementation strategy, the leader should monitor and adjust strategies in response to problems in the revitalization process.

Also, all too often change agents try to completely change the culture of the organisations within the change management process. The strategy should be to try to control the culture rather than influence it. Leaders don’t have to drive the change but supervise it. Change has to be implemented and driven by the people who get affected by the change. Mumford et al. (2002) point out that the reluctance to organisational change from employees and other staff is primarily due to the way change is implemented and the abilities of the leader in bringing about the change rather than the nature of change itself. Changing the culture of an organisation should be a gradual transformation process.

Change management strategy should ensure that much of the task is delegated to the departments and leadership is mainly concerned in coordinating between the departments. It has to be made sure that the departments understand the importance of change through their effective, timely and regular communication. Departmental heads should be made to realize the importance of establishing a sense of urgency and enthusiasm about the change. Change should never try to be rushed.

Communication between organisational members, at all levels, from management and among peers, should be a major priority in any change process. A feeling of ‘No Consultation’ occurs among employees is they are not properly communicated; therefore ‘consultative’ leadership should be followed during the change process. Transparency and trust also form a very important part of the change management process.

As a part of the change management strategy, leaders need to select carefully the method or approach to be used to manage the change process and develop a new culture following the change. They have to establish effective channels of communication which involve individuals at all levels of the organisation to inform individuals of the stages to be followed and to outline clearly outcomes for them.

Above all, they need to lead in a positive manner, recognizing that change is an emotive process and people need to be ‘changed’ with dignity by acknowledging contributions and justifying the reasons for them personally to move on.

Word of caution – Even though, bringing about a change is important for organisations to stay competitive in the global market environment, organisations have to bear in mind that they don’t thrust change on their employees. The infrastructure for implementation of change management has to be ready before the implementation. The change process has to be correctly configured and the need for change has to be clearly communicated to the employees who will be affected by it.

Conclusions

An organisation is a complex entity and bringing about a change is an equally complex ordeal. Orchestrating a companywide change process is a delicate balance which requires able leadership. Effective leader make the change process easy for themselves and the organisation. But, playing a leadership role within the change process is far from easy.

Not only do leaders have a responsibility to lead, but as an employee they have to deal with change themselves. Therefore, it is very important for leaders themselves to understand the benefits of the change process and how change is going to be implemented. They shouldn’t get wrapped up in bringing about the change just for the sake of changing.

Planned implementation of the change process is utmost important. Change should not be imposed on the employees without proper planning and consideration given to the organisation culture. Planning requires coordination and leaders need to coordinate between departments to successfully plan the change.

Organisations should not try to change too much too soon and need to take a staged approach to change. Change should be a well thought process and implemented in a planned and systematic manner.

Everyone in the organisation should be adequately informed and listened to before embarking on the cultural change process. Finkelstein & Hambrick (1996) point out that the task of change management is to bring order to a messy situation, not pretend that it’s already well organized and disciplined and leadership is hugely responsible for bringing that semblance of order.

Companies also need to have the right approach and mind step to deal with the change process. Successful organisations drive change rather than being driven by the change. Although, the strategic decision to change comes from the top management but the implementation should always be a bottom up process. HP’s didn’t get either of those decisions right; its decision to change came too late (when Dell had already gained ground and had the first over advantage) due to which it tried to impose the change from top down.

It is worth mentioning that change management strategy adopted is also reliant on the type of organisation. Different organisations may need to approach change differently and the type of change management approach adopted should be consistent with the objectives of the organisation and its situation. For example, an organisation whose future depended on improving customer service should, logically, adopt a change model focused on improving processes that have a direct bearing on that objective and removing obstacles that prevent its achievement. This is because; a disjunction between the objective and the mechanism would result in untoward or unwanted results.

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