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Introduction

It is not unusual for employees to approach organisational change with the mentality they inherited from their social-cultural environment. The impetus for instant change is not obvious at all. Behavioural change does not happen because it is suggested, recommended, or enforced by a manager (or anyone else). Change happens because one sees value and personal benefit in making the change. As a result, it is imperative that change agents understand the power they exert in attempting to implement organisational change initiatives. Change agents are catalysts for workplace behavior modification. They devise motivational plans that trigger the inspiration for employees to follow agent directives. Hence, it is not enough for management teams to think of change in terms of organizational requirements. Managers who seek the expertise of change agents are wise in so doing. Expert change agents are knowledgeable in understanding potential road blocks that inhibit employees from making the necessary adaptations to new initiatives. Social and cultural environments contribute towards the complexity of behavior modification. This paper presents a transformation initiative whereby the change agents utilise effective communication as a tool to create a vision and the credibility necessary to inspire voluntary participation in behavioural change.

Creating Vision and Credibility Through Effective Communication

Effective communication is instrumental to the success of organisation change initiatives. When done intentionally well the emotional rewards are satisfactory. But, when it fails to impart the messages necessary to complete projects the results can be catastrophic (Hunt, 2014). Misunderstandings, antipathy, and a host of other negative emotions could seriously damage business relationships. Good communication contributes towards operational and process efficiencies (Hunt, 2014). Therefore, it follows that the value of using effective communication as a tool can never be over-emphasised or underrated for the impact it makes on successful outcomes.

This paper presents the communication process undertaken by a primary change agent with a twenty manager team. The goal is to develop a change management plan that transitions the organisation from a traditional work-group to a team-based culture. Discussions include the channels of communication, traditional work-groups versus team based organisations, the role of the primary change agent, the communication team, assumptions made, the transition process, change initiative communication, team credibility, faith creation, and answering tough questions. The paper concludes with a recapitulation of the content.

Traditional Working Groups Versus Team Based Organisations

This section distinguishes working groups from team-based organisations. They do not function in the same capacity, hence, the necessity to differentiate them here. Traditional working groups (WG) within organisations function independently. Examples of traditional WGs are accounting and human resource departments or new product divisions. These departments work independent of each other. Work is individualised (Zaharia, Dogaru, & Boaja, 2014).

In contrast, team-based organisations focus on different skills and competencies that come together to meet a common goal. Teams are not limited to functional requirements. Teams use a cross-functional composition to work in a common goal scenario. Individuals do not function independent of the group goals. Everyone working together achieve the goal (Zaharia, Dogaru, & Boaja, 2014).

Primary Change Agent Leadership Role

Buono and Subbiah (2014) suggest that primary change agents (PCA) are effective to the extent that they understand the cultural environment, are able to identify influential key players, and possess the ability to provide mentorship, as well as, positive role modeling. Buono and Subbiah (2014) suggest further that PCAS are influencers. They motivate and inspire change in others. Additionally, PCAS have internal systems knowledge and can troubleshoot problems as they arise.

Buono and Subbiah (2014) propose an example of PCA as someone who is able to identify subtle disturbances that could potentially interfere with change processes. A manager who is perceptive, tactful, and diplomatic is considered an effective PCA. Another example is a manager who understands the business and how it acquires revenue from beginning to end. Still another example is a manager who can create partnerships and alliances throughout the organisation (Tan & Kaufman, 2015).

The Communication Team

Lira, Ripoll, Peiro, and Zornoza (2013) suggest that team popularity has increased within the past decade. They assert further that teams are effective only to the extent that they can complete project related tasks on time using various modern day technologies, such as, social networks, and computerised mediums. Teams must become efficient in developing effective interpersonal relationships. Lira et al. (2013) recommend that Human Resources facilitate ongoing leadership development training to increase group efficacy and competency.

The communication team serves to facilitate the interactions between management and the workforce. Their plans will include educatory processes that will help the workforce make sense of the transition process. Bolman and Deal (2008) advise on the complexity of organisation change and the ambiguities that are ever present in the communicative process. They recommend that the managers reflect upon their images to become aware of potential erroneous perspectives. They encourage managers to be intuitive and consider that failure is one component of success.

Context Assumptions

Presented here are the assumptions made concerning the PCA. The PCA is experienced in matters of effective organisational change. The PCA understands the communication process. The PCA is competent in leadership roles. Finally, the PCA is very well versed in team dynamics and organisation political processes.

The following assumptions are made within the context of the subject matter contained herein: the Organisation Change Team (OCT; twenty managers) assigned to this project is positive and enthusiastic about this change initiative. They exude a spirit of participation with proactive attitudes. They view this project from a servant leadership perspective. They expect challenges and understand that every project has unforeseen circumstances that must be addressed ad-hoc (Kotter & Cohen, 2002).

Transitioning To A Team-Based Environment

Transitioning the cultural environment from that of a working group to a team-based one requires the acknowledgement and acceptance that the external environment has forever changed the way organisations learn new skills (Katzenbach & Smith, 2003). Empirical research on team transition from traditional work groups to teams is lacking. The general consensus is that change is necessary, but implementing a change initiative is challenging. Gardner (2009) suggests that employee resistance and lack of management support top the list of reasons for project failures.

Bolman and Deal (2008) discuss the importance of providing opportunities to learn about emotional intelligence. Emotional intelligence as it has been presented by Goleman (1995) indicates the importance of empathy and acknowledging the emotions of others. Goleman posits that emotional intelligence has greater significance than does intellectual abilities. Showing compassion and empathy is instrumental in employee engagement processes (Goleman, 1995).

Idris, Dollard, and Tuckey (2015) propose that organisations can do much in terms of contributing towards employee well-being. They suggest that employers create environments conducive to learning opportunities. Idris et al. (2015) found a strong correlation between safe psychosocial environments and job satisfaction. Idris et al. (2015) suggest that employees who feel intellectually stimulated are more likely to exude stronger intrinsic motivation stimulus. Such stimulus becomes the driving force that creates inspiration to participate in the change initiative.

Change Initiative Communication Plan
Presentation Style

Nawar (2012) recommends the use of symbols as a form of “visual education” (p. 61) with the goal to communicate a message in the absence of language. However, the visual elements (photos, videos, and symbols) cannot replace (and should not be used to replace) the verbal component of the communication process. Visuals used in conjunction with language enhance the comprehension process.

Nawar (2012) proposes that audio-visual presentations increase understanding of the subject content. As a result, the leadership team will add video content to their presentations. The suggested theme for the videos will be called “Excite Your Senses – Go Ahead and Make the Change!” using the Monarch Butterfly as a symbol of transformation. According to the USDA Forest Services, Monarch butterflies are the only butterflies to survive the challenges of migration twice per year (Migration, nd). The objective of this approach is to help set the stage for understanding the challenges that come with change (Kotter & Cohen, 2002).

Channels Of Communication

Berger and Iyengar (2013) suggest that communication in modern day society is multidimensional because of the multiple modalities used to transmit messages. There are social network mediums (Facebook, Twitter, Instagram and others). There are many email exchanges (Hotmail, Gmail, Yahoo, and others). There are interactive networks, such as, Tango and Skype. Finally, there is face-to-face interactions.

Berger and Iyengar (2013) studied the various ways in which one message can be constructed using different platforms. They found that written messages provided greater opportunity to improve the communication process because more time is required to write than it is to talk. The studies also showed that conversations contributed to the acceptance of referrals and recommendations. Given the results of the aforementioned research, it follows that the potential of employees voluntarily engaging in behavioural changes increase when managers engage them in conversations as opposed to sending out memos via emails.

Medlin and Green (2014) support the concept that effective management increases the prospect that employees will voluntarily commit their time and intellectual resources for the benefit of the organisation. They conducted a study to propose that positive management interaction with employees resulted in improved performance. They found that employees who felt valued and appreciated were both effective and efficient. One principle that Medlin and Green (2014) found that contributed to increased production was “unity of clarity” (p.27). This principle aligns with the channels of communication to ensure that effective communication between the management team and employees produce results.

Team Credibility

Vigliotti and Gregory (2013) propose that managers establish credibility by aspiring to become active, show competence, and demonstrate respect towards others. Managers must create safe environments by maintaining open communication processes. They should be approachable, honest, and of high integrity. They must demonstrate superior active listening skills.

Clarity and simplicity are synonymous (Kotter & Cohen, 2002). Additionally, creativity, authenticity, and credibility precede message crafting (Hatfield, 2012). Hatfield (2012) suggests further that messages must arouse emotional energy if they are to have any effect on the intended audience. Hence, it is imperative that managers dedicate significant time towards drafting their vision statement. The articulated vision must inspire intrinsic motivation in the employees or the risk of failure to engage the workforce becomes imminent (Kotter & Cohen, 2002; Hatfield, 2012).

Creating Faith in The Change Effort

LaFasto and Larson (2001) assert that faith in the change effort is created when management practices demonstrate clarity, confidence, and commitment. Empowering teams to make decisions that implement changes faster also creates faith. Management shows faith when they believe that the teams are equipped to handle challenges that arise. Finally, establishing a culture of constant accountability and excellence conation sends a strong message of trust and belief throughout the organisation (LaFasto & Larson, 2001; Kotter & Cohen, 2002; Hatfield, 2012).

Answering Tough Questions

Kotter and Cohen (2003) suggest that all change efforts engender questions intended to alleviate anxiety. Management can and should prepare answers for the tough questions. However, the best practice in answering questions comes from being sincere and honest.

Fusco, O’Riordan and Palmer (2015) encourage leaders to remain authentic. Managers can do this by expressing a strong sense of self-awareness and confidence by way of their actions. Open communication, information sharing, and honesty in one’s interpersonal relations increase the possibility that the tough questions will be perceived as inquisitive and welcomed.. Jones (2013) advises managers to refrain from distorting or manipulating the facts of impending changes if they intend to gain the trust and respect of their employees.

Conclusion

This paper introduced an organisation change initiative that involved the transitioning from a traditional work-group to a modern day team-based culture. Discussions involved the transition process, the role of the primary change agent, the communication team, change initiative communication plan, team credibility, creating faith in the change effort, and answering tough questions. Context assumptions were made to provide the understanding that major change initiatives cannot be undertaken by inexperienced managers.

References

Berger, J., & Iyengar, R. (2013). Communication channels and word of mouth: How the medium shapes the message. Journal Of Consumer Research, 40(3), 567-579. doi:10.1086/671345.

Bolman, L. G. & Deal, T. E. (2008). Reframing organizations… Fourth edition. Jossey-Bass, San Francisco, CA.

Buono, A. F., & Subbiah, K. (2014). Internal Consultants as Change Agents: Roles, Responsibilities and Organizational Change Capacity. Organization Development Journal, 32(2), 35-53.

Fusco, T., O’Riordan, S., & Palmer, S. (2015). Authentic Leaders are… Conscious, Competent, Confident, and Congruent: A Grounded Theory of Group Coaching and Authentic Leadership Development. International Coaching Psychology Review, 10(2), 131-148.

Gardner, P. J. (2009). Organizational change: All we want is better projects—why so difficult? AACE International Transactions. 3.1-3.25.

Goleman, D. (2015). Emotional intelligence. Retrieved from http://www.danielgoleman.info/topics/emotional-intelligence/

Hatfield, C. (2012). Crafting your story using personal narrative. Training Journal, 45-47.

Hunt, K. (2014). Communicating with the practice team. Practice Nurse, 44(10), 36-40.

Idris, M. A., Dollard, M. F., & Tuckey, M. R. (2015). Psychosocial safety climate as a management tool for employee engagement and performance: A multilevel analysis. International Journal of Stress Management 22(2), 183-206. http://dx.doi.org/10.1037/a0038986

Jones, R. (2013). ‘Never stop learning and never stop asking tough questions’. Public Relations Tactics, 20(9), 17.

Katzenbach, J. R. & Smith, D. K. (2003). The wisdom of teams. New York, NY: Harper Collins Publishers.

Kotter, J. P. & Cohen, D. S. (2002). The heart of change: Real-life stories of how people change their organizations. Boston, MA: Harvard Business School Press.

LaFasto, F. & Larson, C. (2001). When teams work best. Sage Publications Inc., Thousand Oaks, CA.

Lira, E. M., Ripoll, P., Peiro, J. M., & Zornoza, A. M. (2013). The role of information and communication technologies in the relationship between group potency and group maintenance outcomes: a longitudinal study. Behaviour & Information Technology, 32(2), 147-155. doi:10.1080/0144929X.2011.630421.

Medlin, B. & Green, K. W. (2014). Impact of management basics on employee engagement. Academy of Strategic Management Journal, 13(2), 21-35.

Migration and overwintering (nd). USDA Forest Service. Retrieved from http://www.fs.fed.us/wildflowers/pollinators/Monarch_Butterfly/migration/index.shtml

Nawar, H. (2012). Multicultural transposition: From alphabets to pictographs, towards semantographic communication. Technoetic Arts: A Journal Of Speculative Research, 10(1), 59-68. doi:10.1386/tear.10.1.59_1.

Tan, A. & Kaufman, U. H. (2015). Making good change agents: Attitude, knowledge, skills. Retrieved from http://www.isixsigma.com/implementation/change-management-implementation/making-good-change-agents-attitude-knowledge-skills/

Vigliotti, D., & Gregory, J. L. (2013). Review of Credibility: How leaders gain and lose it, why people demand it (2nd ed.). Journal Of Leadership Studies, 7(2), 62-63. doi:10.1002/jls.21283.

Zaharia, V., Dogaru, M., & Boaja, D. (2014). Working group versus team work. Knowledge Horizons.Economics, 6(4), 146-149. Retrieved from http://search.proquest.com/docview/1669

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Critically discuss the various modes of entry for which an organisation can internationalise their operations. Is there one mode that is preferred above others?

Introduction to Foreign Market Entry Modes

An organisation has a number of different entry modes to choose from when it internationalizes its operations. This essay will focus on the different types of foreign entry modes organisations have to choose from. As well as what organisational circumstances, goals, and objectives are best suited to the types of different entry modes. Examples will also be given of organisations which have used these different entry modes when going international. There is no one entry mode that is superior to another, instead the organisations circumstances, goals, and objectives will be best suited to a certain entry mode. An organisation’s internal resources and capabilities, and the environment of the country of entry are other important considerations when choosing the foreign entry mode.

Changes Leading to Internationalization

Changes in the internal and external environment have meant that more and more firms are expanding their operations across country borders. External factors such as: the removal of trade barriers, free trade agreements between countries, and an emerging middle class has made the idea of going global more attractive to organisations across the world. Internal factors such as: increasing profits, increasing market share and becoming a global brand are more drivers for organisations to globalise. Whilst there are a lot of drivers of internationalisation, and hence potential advantages to internationalise, there is no one best entry mode.

All organisations will have different reasons for going global, which will have an influence on which entry mode is best suited to them. An organisation will need to determine their desired level of commitment, flexibility, control, presence and risk when going global, in order to choose the entry mode which best suits their situation. A number of foreign entry modes exist, including: exporting, licensing, franchising, joint venture and wholly owned subsidiary. The following section will analyse these foreign entry modes in greater detail.

Types of Foreign Entry Modes
Exporting

Exporting is a cross border sale of domestically grown or produced goods Cavusgil, 2004). There are three types of exporting: indirect exporting, direct exporting and cooperative exporting. Indirect exporting is the most low risk entry mode as there is effectively no exposure to the foreign market and its associated risks (Kotler & Armstrong, 2012). The organisation is merely selling their product to an agent in the foreign market who then sells the product on to an intermediary. Exporting is a common method used by organisations when they first enter a new market. Organisations choose this options as it’s low risk, it requires less commitment, and gets their brand exposure to the new market. A number of organisations choose indirect export as an entry mode to see if the foreign market is receptive of their brand. In situations where the foreign market is receptive, an organisation may choose to further ingrain their presence in the foreign market with higher commitment, higher presence, and higher risk foreign entry mode strategies (Cavusgil, 2004). Exporting has become more prevalent across the globe due to the removal of trade barriers, and transport becoming cheaper and more efficient (Shaver, 2011).

A direct export is the same as an indirect export except that it doesn’t involve an agent who sells the good to the intermediary. Direct exporting is a very common entry mode used by organisations who want exposure to a foreign market, but want to limit the risks associated with other types of entry modes. The Austrian energy drink Red Bull entered Australia using direct export as its entry mode. Red Bull is the leading energy drink brand in the Australian market, holding a 36% market share (Speedy, 2011). This case of Red Bull supports that exporting can be a very successful foreign entry mode strategy.

Cooperative exporting is another exporting option that organisations can use as a foreign market entry strategy. Organisations use this entry mode by entering an agreement with another foreign or local organisation to use its distribution network (Kotler & Armstrong 2012). This entry mode allows organisations reach to the foreign market without the associated risks that come with other entry modes. Cooperative exporting is generally mutually beneficial, provided the goods being exported don’t impede the sale of other products being sold (Kotler & Armstrong, 2012). For cooperative exporting to be successful the exported product should complement, as oppose to compete against other products being sold. US chewing gum company Wrigley successfully entered the Indian market using cooperative export as their foreign entry mode. Wrigley entered a cooperative export agreement with Parrys, a local confectionery company, by doing so Wrigley gained access to 250,000 retail outlets (Kotler & Armstrong, 2012).

Licensing

International licensing is a cross border agreement that permits organisations in the target country the rights to use the property of the licensor (Kotler & Armstrong, 2012). This property is generally intangible and includes: trademarks, patents, and production techniques. The licensee is required to pay a fee in exchange for the rights specified in the contract between the parties. Licensing is commonly chosen because it’s low risk, has low exposure to economic and political conditions, has high return on investment and is preferred by local governments (Agrawal & Ramaswami, 1992). Microsoft Corp and Walt Disney Co are two examples of large multinationals that have had success in foreign markets using licensing as their entry mode. Whilst licensing in these examples have been very successful and undoubtedly the right foreign market entry mode, licensing does have its limitations. Licensing can reduce the potential profit of outright ownership, affect the image of the brand due to lack of control over licensee, and nurture a potential future competitor (Brouthers, 2013).

Franchising

Franchising is a foreign market entry strategy where a semi-independent business owner (the franchisee) pays fees and royalties to the franchiser to use a company’s trademark and sell its products and/or services (Kotler & Armstrong, 2012). The terms and conditions of a franchise package vary depending on the contract, however it generally includes: equipment, operations and management manual, staff training, and location approval (Alon, 2014). Franchising is commonly used and a largely successful method of cross border market entry, however organisations pursuing this entry mode need to consider both the positive and negative aspects of franchising.

The most common advantages of franchising are that it capitalises on an already successful strategy, the franchisee generally has local knowledge, it’s less risky than equity based foreign entry modes, and the franchisor isn’t exposed to risks associated with the foreign market (Alon, 2014). Subway, 7-Eleven, Pizza Hut, and McDonalds are just a few examples of organisations that have been successful using franchising as their foreign market entry mode. Subway was founded in 1965 in the United States; using franchising as a foreign market entry strategy it has grown to have over 42,000 stores in 107 countries. Subway is now the world’s largest franchise and highlights how successful franchising can be (Subway, 2014). Just like in the case of Subway, franchising allows for rapid expansion that would be unlikely using other foreign entry modes.

Whilst in general, franchising is a popular and successful mode for foreign market entry, there are a few potential shortcomings. These shortcomings include: decreased brand quality due to not having full control over franchises, not maximising profit as franchisor only receives a royalty fee and not the full profit made, and the possibility of nurturing a future competitor. Whilst these potential shortcomings could be detrimental to an organisation, franchising is continually chosen as a foreign market entry mode as franchisors believe that the rewards outweigh the risks.

Joint Venture

An organisation may choose a joint venture as their foreign market entry mode for a number of different reasons, for example: to divide the risk with other parties, to leverage of each other’s strengths etc. However if a joint venture is to be successful the two or more organisations that form the joint venture must/should have common objectives in regards to: the market of entry, acceptable levels of risk/reward of the market entered, the sharing of technology, joint product development and the following of local government laws (Kotler & Armstrong, 2012). Joint ventures often thrive if the following conditions are present between the partners: converging goals, small market share compared to the market leader, and are able to learn from one another without surrendering their competitive advantage or intellectual property (Chang, Chung & Moon, 2012).

Under the right circumstances, a joint venture can allow an organisation to gain access to a new market which it previously wouldn’t have been able to do so by itself. The main restriction in this situation is generally the local government. A local government may choose to impose restrictions on wholly owned foreign investment for a number of reasons, such as: threat to local players, threat to the environment, threat to the long term prosperity of the industry etc. A real life example of this is Singapore Airlines entering the Indian market. The Indian government imposes restrictions on foreign airlines entering the local airline industry as a wholly owned subsidiary (The Indian Express, 2014). However Singapore Airlines entered a joint venture with the Tata group, and owns a 49% stake in the SIA/Tata alliance (The Indian Express, 2014). Whilst SIA wanted to enter the Indian domestic airline market with maximum presence, entering as a wholly owned subsidiary was not possible. Entering as a joint venture in this situation was the best entry mode for SIA as it allowed maximum exposure, maximum commitment, maximum flexibility and maximum potential rewards.

Wholly Owned Subsidiary

A wholly owned subsidiaries is the process where by an organisation enters a foreign market with 100% ownership of the foreign entity (Yiu & Makino, 2002). The two ways that wholly owned subsidiaries come about is through either acquisition or greenfield operations. Acquisition is the purchase of a foreign organisation as a way to enter a new market. A greenfield operation is the creation of a new organisation and legal entity in the foreign market. A number of organisations that want to limit their risk, while maximising their exposure to the foreign market will choose acquisition as their entry mode. This is because an acquisition uses an already established brand name and customer base. However neither acquisition or greenfield are seen as superior to one another, the entry mode which is more beneficial is dependent upon the organisations circumstances, goals and objectives.

Wholly owned subsidiaries incur more risks than all the entry modes previously mentioned, however if implemented correctly and in the right circumstances, it generally results in high rewards (profits). An organisation that enters a market as a wholly owned subsidiary has: high control, high commitment, high presence and high risk/reward. A wholly owned subsidiary allows an organisation to reach diverse geographic regions, markets and different industries. Through entering the correct markets and with good management a wholly owned subsidiary is a good hedge against market changes, such as political changes, legal changes and declines in different sectors (Yiu & Makino, 2002).

Conclusion

No one entry mode is considered to be superior to one another. When an organisation is choosing to internationalise their operations, they will first need to decide what its optimal levels of: commitment, flexibility, control, presence and risk are in order to select the most appropriate entry mode. An organisation’s internal resources and capabilities are another important consideration when choosing the foreign entry mode. The market of entry is also another important consideration for the organisation planning to internationalize their operations. A PESTLE analysis of the foreign market will help the firm to gain a better understanding of the market environment. The process for an organisation to internationalize their operations is often quite difficult, and so is the process of choosing the foreign market entry mode. It’s for this reason that there is no superior foreign market entry mode. From the examples given it’s clear that each entry mode can be successful if implemented in the right circumstances.

References

Agrawal, S., Ramaswami, S. (1992). Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors. Journal of International Business Studies. Volume 23, No. 1. pp. 1- 27.

Alon, I. (2014). Global Franchising Operations Management: Cases in Franchise, International, and Emerging Markets Operations. Australia. Angus & Robertson.

Brouthers, K. (2013). Institutional, cultural, and transaction cost influences on entry mode choice and performance. International Business Studies. Volume 44. pp 203-221

Cavusgil, S. (2004). Differences among exporting firms based on their degree of internationalization. Journal of Business Research. Volume 12, Issue 2. pp. 195-208

Chang, S., Chung, J., Moon, J. (2012). When do wholly owned subsidiaries perform better than joint ventures? . Strategic Management Journal. Volume 34, Issue 3. pp. 317- 337.

Kotler, P., Armstrong, G. (2012). Principles of Marketing. Australia: Pearson.

Shaver, J. (2011). The benefits of geographic sales diversification: How exporting facilitates capital investment. Strategic Management Journal. Volume 32, Issue 10. pp. 1046- 1060.

Speedy, B. (2011). Popular energy drinks have the majors buzzing. The Australian. [Online] Available on http://www.theaustralian.com.au/business/popular-energy-drinks-have-the-majors-buzzing/story-e6frg8zx-1225985880656 [accessed 3rd July 2014].

Subway. (2014). Facts and History. [Online] Available from http://www.subway.co.uk/business/franchise/facts_and_history.aspx [Accessed 3rd July 2014].

The Indian Express. (2014). Tata-Singapore Airlines JV expects operator permit next month, ops in Sept. Available from: http://indianexpress.com/article/business/companies/tata-singapore-airlines-jv-expects-operator-permit-next-month-ops-in-sept/. [Accessed 4^th July 2014].

Yiu, D., Makino, S. (2002). The Choice Between Joint Venture and Wholly Owned Subsidiary: An Institutional Perspective. Organization Science. Volume 13, Issue 6. pp. 667-683

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1) “It is said that life without chocolate is like a beach without water” (Christou, 2009). The UK Chocolate market is the largest within the European Union (30 percent of the EU market) with British citizens consuming more chocolate than any other EU nation (Barnett, 2006). Within the UK adults are the primary consumers eating ?3.5 billion a year compared to children who consume ?390 million a year, with the over 55’s the highest consumers of all adults (Scott-Thomas, 2009) Twenty-one per cent of the total chocolate and confectionery sold in Britain is consumed by people above the age of 55, who spend on average ?700 yearly (Datamonitor, 2005).

Within the UK the main manufacturers are as follows:

Chocolate manufacturers by sales and share (Mintel, 2009)

2009

2007

2005

% change

?m

%

?m

%

?m

%

2005-07

1

Cadbury Trebor Basset

1189

35.3

1101

34.9

1146

34

3.8

2

Masterfoods (Mars)

1010

30

953

30.2

914

27

10.5

3

Nestle

494

14.7

470

14.9

672

20

-26.6

4

Ferrero

134

4

126

4

118

4

13.2

5

Kraft Foods

61

1.8

63

2

141

4

-56.7

Own-label

217

6.5

189

6

124

4

75.3

Others

260

7.7

252

8

245

7

6.2

Total

3365

100

3154

100

3360

100

0.1

The current market can be broken down into the following segments:
Boxed; chocolate assortment composing of a selection of high-added-value individual units
(Booth, 1990)
Countlines; chocolate-covered bars with an individual centre which can be eaten with one hand, so called named because these items are sold by number rather than weight.
Moulded Bars ; regular bars of chocolate with or without inclusions i.e. nuts or filled centres i.e. soft caramels
Seasonal Chocolate : chocolate confectionary produced for Easter through ‘eggs’ and Christmas in ‘gift boxes’ and ‘miniatures’
Straightlines ; small items which are identical and eaten as casual snacks on the move i.e. Cadbury’s chocolate buttons
Other Chocolate Confectionary/ Assortments; other
The below table suggests that the most revenue generating segment using recent data is ‘countlines’ @ 2244.44 ˆmillions.

UK Chocolate Market Value (Euro m), 2004- 2008

Segment20042005200620072008

Boxed

1332.6

1350.2

1367.6

1385

1400

Countlines

2152.3

2176.4

2200.6

2224.6

2244.4

Moulded Bars

982.3

996.3

1010.3

1024.2

1036.3

Other Choc Confectionary

18.1

18.1

18

17.9

17.7

Seasonal chocolate

885.2

899.5

913.8

928.1

940.8

Straightlines

732.9

743

753.1

763.4

772.1

Total

6103.46183.56263.46343.26411.3

(Source: Business Insights; Chocolate Confectionery Industry Insights, 2008)

Additionally within these segments the following brands are present:

Chocolate confectionery brands by sales and share (Mintel, 2009)

2009

2007

2005

% change

?m

%

?m

%

?m

%

2005-07

Cadbury Dairy Milk

345

10.3

318

10.1

275

8.2

25.4

Galaxy

146

4.3

138

4.4

129

3.8

13.3

Mars

99

2.9

97

3.1

104

3.1

-4.7

Kit Kat

80

2.4

70

2.2

83

2.5

-3.3

Flake

77

2.3

70

2.2

49

1.5

57.2

Aero

67

2

64

2

56

1.7

18.4

Snickers

52

1.6

51

1.6

57

1.7

-8.1

Milky Bar

52

1.6

50

1.6

60

1.8

-13.2

Others

2040

60.6

1921

61.1

2222

66.1

-8.2

Own-label

224

6.7

193

6.1

162

4.8

38.2

Total

3365

100

3154

100

3360

100

0.1

Market Trends:

Seasonality:
The chocolate industry is highly seasonal where peak seasons of Easter and Christmas observe a sharp increase in sales. Therefore if externalities affect these periods it can be assumed that performance will be severely curtailed. The recent recession over the Christmas period impaired consumer spending therefore to mitigate the loss of sales it is essential to maximise them over the Easter period 2010.

Failure of new products
Numerous new product launches have failed over the past few years where many companies have adapted the strategy of re-launching old favourites to leverage on their brand equity and consumer recognition.

Barriers to Entry
The chocolate industry is synonymous with a number of large firms (Mars, Nestle and Cadbury) dominating the market, enjoying a well established history and therefore high brand loyalty. Consequently barriers to entry are high for existing incumbents and new entrants.

Increasing Cost of Raw Products
As cost of raw products rise such as cocoa, chocolate manufacturers are shifting their attention away from marketing strategies and instead focusing on the input processes of chocolate making as opposed to the output.

Potential Partnerships
Given a saturated market and a continuous increase of raw material prices, to remain competitive and keep costs down, creation of partnerships are potential business propositions for manufacturers.

Growth of luxury segment of market
Luxury dark chocolate brands have entered the market in (Booth, 2000) due to the advocates of healthy eating and the anti-oxidant benefits of dark chocolate. Targeting the ‘grey pound’ with a larger disposable income the luxury segment is increasing in market share presently.

2. The highly competitive UK chocolate confectionary market has suffered a hit during the 2008/9 recession where volume sales have decreased by 2.6 percent (Nielsen, 2009) throughout all leading brands. However this fall in sales contradicts the trend which has emerged throughout the recession of an observed increase in comfort eating such as chocolate within the ‘affordable’ segment of the market. Currently the chocolate industry is saturated with increasing pressure from unfavourable economic conditions squeezing profit margins and manufacturers consequently looking for new growth areas.

Segmentation targeting and positioning
Segment of Chocolate Industry –’Countlines’
Analysis of the industry suggests that the most revenue generating segment belongs to the ‘countlines’ segment at 2244.44 ˆ million yearly, making this a potential area for diversification for JFL. Consumption of these modern snacks such as Snickers represent a growing sector of the confectionary market as they subscribe well into ‘on-the-go’ lifestyles which compliment modern society. Easily fitted into handbags, suit pockets and sportswear countlines are convenient snacks in a variety of choices which make them ideal for busy people everywhere. As per the above table and market research competitors brands within this segment are:
‘Mars’ 49 g @ 40p
‘Twix’ 58 g @ 45p
‘Mars Snickers’ 58 g @ 45p
‘Cadbury Dairy Milk’ 49 g @ 58p
‘Green and Blacks Organic’ 50g @ ?1.25

Positioning – ‘Pocket Money Segment to luxurious treats’
There is a decline in the ”pocket money’ segment of the confectionery market due to increasing health concerns over children’s increasing sugar intake. Market research evidences that it’s the 11-14 year old segment of children who spend the most on weekly pocket money with expenditures of ?10 – 15 (Youth TGI, 2009). Linking this to the entry strategy for JFL within the chocolate industry and the consumer’s propensity towards familiar brands and pricing structures; it is recommended that entry into the ‘countlines’ segment should be positioned within the ‘pocket- money’ segment. This should be at the lower end for ‘tweens‘ and the higher end for the ‘over 55’s’. Another suggestion is that JFL ‘partner’ with another manufacturer such as Nestle to leverage on brand credibility and reduce start-up costs into the market, especially with increasing raw material prices. The risk of cannibalisation will be mitigated due to product launch into different segments.

Consumer Segmentation – ‘Over 55’s’
Given that the over 55’s are the biggest consumers of chocolate with a larger disposable income it is recommended therefore that JFL position themselves at the premium end of the ‘pocket money’ ‘countlines’ segment. Building on the notion that the ‘health food’ chocolate market is growing due to its anti-oxidant benefits it is recommended that JFL target the ‘grey pound’ with a product which offers health benefits (increased anti- oxidants, reduced saturated fats) which is perceived to be of superior quality.

Consumer Segmentation – ‘Tweens 11-14’
Building upon the increasing disposable income of this segment and the reputable brand image that JFL has built within sugar confectionary it is recommended that JFL target this segment for entry into the market. Offering a product which is half the size of an average chocolate bar: at 25g within the ‘countlines’ segment this will enable JFL to remain competitive on cost whilst leveraging the Nestle brand.

3. Product description;
‘Over 55’s’ – An average sized premium chocolate bar (50g) specifically formulated to contain increased levels of anti-oxidant properties in the form of flavonoids, found in cocoa processed with minimal extraction and reduced milk content. Lines can be either solid chocolate classified as ‘premium milk with added cocoa’ or individual centres of nut or coconut covered with ‘premium milk with added cocoa’.
‘Tweens 11-14’ – A mini-bar of 25g formulated with milk chocolate where lines can be either solid milk chocolate or individual centres of toffee, caramel and nuts.

Brand image;
‘Over 55’s’ – The branding of ‘premium healthy chocolate’ to this segment should demonstrate one which will communicate the health benefits of eating chocolate rich in anti-oxidants. The differentiating factor with this brand is the fact that it is milk chocolate with added cocoa, for ‘a premium creamy milk chocolaty taste with all the anti-oxidants of dark chocolate’. The reason for this is the baby boomer generation (over 55s) has been evidenced as possessing an extremely ‘sweet tooth’, which create preferences towards sweeter milk chocolate rather than bitter dark chocolate. Therefore a bar which can be sold as milk with added benefits of dark will appeal to the psychology of this segment.
‘Tweens 11-14’ – The branding of the mini-bars, it is recommended will leverage Nestles brand and associated products such as breakfast cereal (Shredded Wheat, Cheerio’s, Golden Nuggets, Clusters) beverages (coffee, hot chocolate and Nesquik) and ice-cream. These are items which this segment of the market consume regularly, even on a daily basis, therefore creating this relationship between the new product of ‘mini-bar’ and household names will re-enforce brand identity.

Pricing objectives strategy;
‘Over 55’s’ – The price of this product should reflect its position within the ‘higher end’ of the ‘pocket money’ segment of ‘countlines’. The average weekly expenditure on chocolate confectionary for the ‘grey pound’ is ?13.50 per week (?700 per person annually) with buying behaviour of chocolate in the luxury end of the market a few times a week i.e. ‘Green and Blacks Organic’ 50g @ ?1.25. It is recommended that the price per bar of this product (50g) should be positioned just below the premium price but substantially above the lowest price of counterline competitors bars at 40p. Therefore the price for this product should be pitched at 80p per 50g bar.

‘Tweens 11-14? – The average weekly expenditure within the pocket money segment is at the lowest range ?10 min – ?15 maximum (?520 – 780 per person annually) with buying behaviour at the lowest end of the market with daily purchases of chocolate. It is recommended that the price per mini- bar of this product (50g) should be positioned just below the lowest price of counterline competitors bars at 40p. Therefore the price for this product should be pitched at 30p per 25g bar.

Retailing and distribution objectives and strategies;
‘Over 55’s’ – Distribution channels for chocolate are wide, with chocolate availability the highest it have ever been, from small retailers to mass-market outlets. To maximise product launch it is recommended leveraging on current trends such as increasing internet usage to distribute the product. The advantages of this distribution channel are that it is cost effective, can penetrate a wide market quickly and once set-up is easy to maintain. For this segment who are becoming more technology ‘savvy’ and have availability to the net this distribution channel will be successful.

‘Tweens 11-14? – Distribution for this segment follows the above, and builds on existing channels of all sizes of retailers to mass-market outlets. Given the proposed partnership with Nestle and their grocery products such as breakfast cereal and beverages, it is recommended that using coffee shops, supermarkets and ice-cream outlets will increase sales of the ‘mini-bar’. Additionally the internet for this segment is a must given the trend towards online purchases.

Integrated marketing communications’ objectives strategies;
‘Over 55’s’ – For this segment the IMC strategy will encompass promotional strategies which will use venues such as golf clubs, day centres, community leisure centres, gymnasiums and supermarkets to launch the product. The promotional aspect should encompass ‘EMarketing’ linked to offers, which when advertised at the above mentioned outlets customers will receive a specified discount if they print out a voucher online which is redeemable.

‘Tweens 11-14?- It is recommended using an IMC strategy which can be integrated into Nestles existing marketing plan so as to 1) drive down promotional costs 2) leverage existing expertise within Nestle and 3) build on existing marketing strategies. Extra consideration will be taken to ensure that cannibalisation does not occur through alignment of segmentation against current Nestle chocolate. ‘EMarketing’ will be used as above for promotion using the same redeemable voucher offer.

Evaluation and control;
To see whether your product launch has been successful it is recommended that JFL implement a metric which enables accurate measurement of sales within both lines. As the predominant form of distribution and promotion is online, converted sales can be measured through CTR (click through rates). Additionally measurement can be through response rates and online users to the JFL website. For control it is recommended allocating one employee per line who has expertise within EMarketing.

Bibliography

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Introduction

Modern day organisations are impacted by many factors which may include the external business environment, government regulations, and internal interpersonal interactions. However, none has the more significant cultural impact of the internal operations of the organization than organizational culture its self. Culture poses the greater challenge in organisation operations because it encompasses behavioral expectation which are more difficult to monitor. Overall organisational culture is best viewed as a collection of values, organisational principles, products presented, markets served, strategies applied, global cultures, languages, public assumptions, leadership styles, behavioral norms, symbolisms, habits, and belief systems that bring groups together for a common cause. It also includes a range of emotional interactions which result as a consequence of connection to the organisation. Every organisation is a culture with subcultures unto itself. They have ways of operating that differ in their approaches that bring products or services to market. Their social and psychological environments contribute to the emotional well being of society and the national groups that interact within the confines of the organisation existence. This paper presents a discussion on organisation culture.

The Impact of Organisation Culture on Teams

Before one can consider the impact of organisation culture (OC) on teams, it is best to provide a definition to aid in its understanding. Organisation culture is a set of shared behavioral norms and values that influence interpersonal interactions, decision-making, and resource allocations (Kotter, 2012; Silber & Kearny, 2012). Kotter (2012) suggests that few individuals understand the dynamics of OC, or how to put in motion a plan to change it. As a result, many fail at the attempt to initiate OC change (Kotter, 2012).

Bolman and Deal (2008) discuss organisation culture as the adhesive substance that connects the organisation structure to the unification of people for the mutual accomplishment of goals. They assert that cultural values are linked to symbols, rituals, playful humor, and other specialised symbols that contribute to its existence. These researchers argue further that management practices are undeniably culture initiated. Additionally, emotional healing and conflict resolution is conducted within the confines of cultural norms.

Bolman and Deal (2008) present examples of organisations such as AT&T, Coca Cola, Delta Airlines, and others as demonstration of the cultural transactions which take place within them. They discuss the emotional consequences explained by one executive as one moment euphoric and at other times depressed. Coca Cola’s discussion is on the introduction of a new product concoction that impacted its revenues and how they were forced to revert to the original formulation. Delta experienced success as a privately held organisation only to experience failure as it was transformed into a public one.

Bolman and Deal (2008) speak of the emotional experiences that remained after Enron collapsed. The impact was felt throughout the organisation and trickled over into the public area. Where Enron succeeded as an independent entity, it failed in its acquisition prospects because its significant growth impaired its abilities to sustain an ethical culture. Enron ignored the cultural values that drove its success. The aforementioned examples serve to present the impact that culture imposes upon organisations as a social group form.

Differentiating Workgroups from Teams

Workgroups. Katzenbach and Smith (2003) believe it was important to distinguish workgroups from teams because they differ in operation and outcomes. Work-groups exist to follow the task-driven instructions of a single leader. All within the group operate as individuals who fulfill the requirements of assigned tasks. The individuals within the workgroup perform according to skills relevant to the task assigned. For example, an administrative assistant (individual) works in a department (workgroup), but is assigned to limited tasks, such as, typing documents or serving coffee or greeting corporate guests (Katzenbach & Smith, 2003).

Teams. In contrast, teams work together towards a common goal (Katzenbach & Smith, 2003). Teams do not operate from task relevant assignments. They use their skills and competencies to complete all tasks that complete the mission of their coming together. They can be dissolved after initiatives are completed and be reassigned to work on other projects relevant to individual competencies and skills. For example, an application systems designer has computer programming skills and knowledge of designing business applications; work assignments are not limited to computer programming alone (Katzenbach & Smith, 2003).

Additional Notes on Workgroups. Katzenbach and Smith (2003) make it clear that workgroups are prevalent within the organisation and function independent of common goals. Workgroups function best in top-down organisation structures. Focus remains on individual performance. Members in workgroups compete with other members in pursuit of personal accomplishments.

Leadership Affect on Organisation Culture

Leadership Behavior. Scholl (2003) posits that leaders model the behaviors and attitudes duplicated throughout the organisation. According to Morill (2008), OC is a modern day concept with roots in social movement theory and the sociology of culture. Kitts and Trowbridge (2007) posit that research concerning the logistics of OC emergence and maintenance is lacking. They assert further that Human Resource transactions, such as, recruitment and turnover, make any attempt at OC maintenance, a significant challenge.

Fear as Motivator. Grenny, Patterson, Maxfield, McMillan, and Switzler (2013) affirm from their research that fear becomes the norm when cultural behaviors are challenged. Open confrontation of unhealthy behaviors warrants retribution. One example in which challenges can and do arise is a hospital setting, which requires the washing of hands for sanitary reasons. Consider that a nurse aide is in a patient room when a surgeon enters the room and fails to follow the hand-washing norms. Given the surgeon’s esteemed status, the aide witnessing such becomes intimidated and fails to mention the hand-washing rules (Grenny, Patterson, Maxfield, McMillan, & Switzler, 2013).

OC Characteristics. According to Silber and Kearny (2010), OC comprises three characteristics which easily identify them, namely, artifacts, espoused values, and accepted norms. Artifacts are considered to be the more obvious culture differences, such as, nationality or dress codes. Espoused values are what management consider to be important, such as, a motto that says “the customer is always right”. Accepted norms are values and belief systems that are taken for granted, such as, the concept of innovation requiring creativity (Silber & Kearny, 2010).

Affect of Organisational Culture

Impact of OC on Teams. According to Rosenblatt (2011), work values come from the globalized concept of desired behaviors and relevant group beliefs. Rosenblatt (2011) believes that the values of the organisation are derived from the broader interfaces and environmental characteristics within a social system, such as, individual cultural values and collectivism (codified behavioral patters). Rosenblatt (2011) discusses the concept of codified behavioral patterns as a function of belief systems that are transferred from group to group in a globalized manner. As a result, they become embedded with the organisation rules and regulations.

Impact of Teams on OC. Lucas (2010) asserts that individual cognition influences team interactions. Every person processes information according to that which has been assimilated from the global environmental group. Additionally, individual learning styles influence how information is adopted. As a result, the belief patterns of individual members is transferred via the interpersonal relationships to the team as a group.

According to Lucas (2010), cognition affects the recollection of information and transmits it to thought processes. This transmission in turn affects the perceptions of individual members. How the members view the processed information is the direct result of past interpersonal interactions. As a result, the individual members respond to one another based upon the levels of confidence the information has provided.

Culture Alignment Issues

Behaviors. Silber and Kearny (2010) discuss behaviors within the context of cultural alignment as it relates to task completion. These researchers assert that how behaviors are manifested within the OC group identifies where the challenges lay. They use an example of how answering of the phone impacts the customer service provided. Silber and Kearny (2010) suggest that vocal intonation and attitude impacts how the customer perceives the organisation. As a result, the organisation leadership must determine if the resulting outcomes align with the intended goals and objectives.

Katzenbach and Smith (2003) assert that teams impact the organisational culture by engaging in the behaviors that drive performance to the next level. Teams can resist change by not adopting the same value or belief system that management embraces. The wrong attitudes affect performance which in turn affects the organisations goals and objectives (Katzenbach & Smith, 2003).

O’Donnell and Boyle (2008) assert that behaviors and attitudes are complex and not always clearly interpreted. Some issues associated with the difficult of aligning the culture for success include but are not limited to: presenting a compelling vision for change; understanding the leadership mission; influencing the beliefs and values of culturally diverse individuals; communication of conflicts and how to address them; incorporating a compensation and reward system; ensuring adequate training and development opportunities; technological tools for communication transmission; removal of non-compliant team players (O’Donnell & Boyle, 2008).

Role Considerations

Leadership Role. Bolman and Deal (2008) suggest that the role of a leader is to ignite the passion (intrinsic motivation) of the individual team members to participate in the organisation mission. Grenny, Patterson, Maxfield, McMillan, and Switzler (2013) posit that leadership calls for influencing team member behavioral changes to meet organisation goals and objectives. Mitchell and Boyle (2009) assert that leaders help connect the emotional attachment of team members to the vision, hence, inspiring the desire for aligning behaviors to the mission. Joshi, Lazarova and Liao (2009) draw upon the principles of social identity theory to explain the relationship between leaders and followers. These researchers assert that leaders are effective in direct proportion to their ability to influence and connect the perception of follower identity to their cause.

Team Role. Lucas (2010) asserts that individuals bring to the team their cognitive processing abilities and past influences. Additionally, team members are required to exert various levels of risk in direct proportion to the group obligations. Katzenbach and Smith (2003) declare that team members challenge and encourage each other. Team members share a common respect of the goals to be achieved as a group.

Need and Appropriate Role of Teams

Katzenbach and Smith (2003) declare that business opportunities and or threatening competition can create a need for teams at all levels of the organisation. External environmental changes, such as, government regulations, international and or local business competition, and or new technology contribute to organisation needs. Teams provide an element of social engagement that contributes to the commercial and managerial aspects of the work. Teams can engage in social functions that enhance and sustain organisation performance (Katzenbach & Smith, 2003).

Need and Appropriate Role of Leadership Teams

Keller and Aiken (nd) found in their research that seventy percent of change management teams failed and remain so by modern day standards. Their research also shows that teams everywhere are still struggling to become high performance teams. Only a very small group of teams have been able to succeed. Schyve (2009) declares that executive level oversight groups could be formed to strengthen weak work ethics or to help teams acquire the necessary skills to move them forward.

Culture Support of Teams

Executive Level Teams. Carillo (2015) declares that executive level teams are responsible for driving the logic of the organisation vision. They empower, encourage risk, allocate resources, and ensure that stakeholder assets are protected, and used appropriately. Grenny, Patterson, Maxfield, McMillan, and Switzler (2013) insists that these teams have a crystal clear vision of what is to be accomplished. Additionally, they are well versed in emotional intelligence and competent enough to help others feel their cause.

Change Management Oversight Teams. Naranjo-Gil (2015) posits that change management oversight teams execute and implement strategic organisation change initiatives. They mediate the negative and positive aspects of change on the psychological well being of the organisation. They measure the change results to those intended by the strategy. They politically navigate formal structures and informal to ensure that friction is minimized, hence, avoiding derailing of change initiatives (Naranjo-Gil, 2015; Katzebach & Smith, 2003; Silber & Kearny, 2008).

Executive Working Groups. McGuire, Palus, Pasmore, and Rhodes (2009) and Hambrick (1997), insist that the culture must be matched to the organisational purpose. Development of new belief systems must be cultivated; leaders must change themselves in the process; beyond the technology, cognitive abilities must be well developed; collaborative effects must be fostered and perfected; joint decision-making must be a public event.

Conclusion

The goal of this paper was to discuss the impact of organisation culture on teams. Hence, the intended goal has been achieved via the presentation of various topics that impact organisation culture in teams. The following topics were discussed a) the impact of organisation culture on teams; b) differentiating workgroups from teams; c) leadership affect on organisation culture; d) affect of organisational culture; e) culture alignment issues; f) role considerations; need and appropriate role of teams; g) need and appropriate role of leadership teams; h) culture support of teams. Additionally, a few examples of organisations which experienced success and failure was presented as a way to demonstrate the emotional power and affect of culture on the results achieved.

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The objective of this essay is to examine the current marketing strategy and marketing activities of one of the ‘big 4’ supermarkets in the United Kingdom with particular reference to the adverse effect produced by low cost competitors entering the market. For this purpose, Tesco has been selected. Tesco represents one of Britain’s largest and most profitable supermarket, which overtook ASDA in 1995 and continued to increase its market share through the years (Corporate Watch, 2004; Ruddick, 2015). In addition, Tesco was the first supermarket to (1) introduce ‘value’ lines and cost effective price range of its own-label products and (2) present the first company loyalty card on the market (Corporate Watch, 2004). Therefore, it becomes plausible to suggest that the company is an excellent choice for a marketing strategy analysis in the current declining grocery retail environment of British brands. The structure of this essay is as follows: (1) a brief overview of Tesco’s generic marketing strategy, (2) an in-depth evaluation of the supermarket’s existent marketing actions and tactics with the aid of the its marketing mix, (3) the impact of low cost competitors, (4) recommendations and suggestions for improvement, and (5) a summary of the main findings.

The supermarket’s broad market strategy can be categorised as market penetration and cost leadership. Firstly, market penetration has been defined by Ansoff (1957) to explain one of four business growth strategies. The strategy refers to involves attracting new customers, often achieved by gaining competitors’ customer base(s), in order to increase sales. Furthermore, Farris et al. (2010) identify two important metrics of market penetration – penetration rate and penetration share. On the one hand, the penetration rate refers to the proportion of the relevant study population that has purchased the examined product category. On the other hand, the comparison between the brand’s customer shares with the market’s overall customer population relates to penetration share. In relation to this, a key aspect in Tesco’s market strategy is attracting competitors’ customers (e.g. ASDA, Sainsbury, Morrison’s), which is evidenced by its increased market penetration rate and share from 7.2% in 1971 to its peak in 2007 when Tesco accounted for 31.1% of the total UK grocery market share (Economics Help, 2014). In addition, according to data from March the current market share of Tesco is 28.7%, which positions the company as a market share leader in the British groceries industry, however, this figure has decreased from the previous financial years (Kantar, 2015). Secondly, before the introduction of discount supermarkets, the company focused on cost leadership, which represents one of the three generic strategies devised by Porter (1980). Cost leadership relates to increasing one’s market share through attracting price sensitive customers and implementing an effective price strategy that enables the company to offer the lowest cost product offerings. Tesco successfully managed to maintain cost leadership through three actions before supermarkets like Aldi and Lidl entered the British grocery retail market. These actions were as follow: (1) high utilisation of assets, meaning that large outputs are produced and the fixed costs are spread over high quantities allowing the company to manufacture single units at lower costs; (2) minimal direct and indirect costs in the production and distribution stages; and (3) strict control over the supply chain to ensure low costs (Gamble et al., 2010). Thus, the cost leadership strategy was an appropriate approach for Tesco, because it represents a large company that is able to take advantage of the economies of scale in the market. Nevertheless, presently the company is unsuccessful in maintaining its cost leadership due to the strong presence of ‘budget’ supermarkets.

The following part of the essay will specifically focus on the Marketing mix of Tesco – product, place, price, promotion, which provides a better understanding of the company’s present marketing strategy.

Firstly, Tesco offers its target segments a wide range of high quality products at affordable prices. The balance between affordability and quality as well as Tesco’s Clubcard helped the company attain a relatively high level of competitive advantage (Winterman, 2013). Some of its various product categories consist of food, consumer electronics, financial services and clothing. This is in consistency with the findings from a study on customer perceived value, where four separate dimensions emerged explaining customer attitudes and behaviours – emotional, social, quality and value for money (Sweeney and Soutar, 2001). Similarly, FernA?ndez and Iniesta-Bonillo (2007) found that customers evaluate relevant benefits and costs involved in a purchase based on economic and cognitive reasoning.

Secondly, the ‘place’ element of the marketing mix refers to the distribution of products in locations where customers purchase products and services. In relation to this, Tesco emphasises product and service distribution in two main ‘locations’ – online and offline. On the one hand, the online sales channel is directly linked to Tesco’s website – Tesco Direct, which suits the specific needs of the online shoppers presenting them with various delivery options (Tesco Direct, 2015). On the other hand, the offline channel of distribution involves four different store formats – Tesco Express, Tesco Metro, Tesco Compact and Tesco Superstore (Tesco Official website, 2015).

Furthermore, Tesco’s initial pricing strategy can be characterised as price leadership, which represented an oligopolistic business behaviour, where there are a few companies that dominate the market and determine the price range (Kotler and Armstrong, 2010). The reason behind this price strategy adoption was the intense competition and other economic and behavioural factors in the British households i.e. cost conscious buyers (Business CafA©, 2009). Nonetheless, the company is no longer a price leader, but its pricing approach is still based on the marketing message ‘Every Little Helps’. In addition, Tesco is able to implement this strategy and remain to influence the retail market to a certain extent, because it evaluates and utilises the lowest cost materials for supply to achieve higher efficiency rates in the production processes.

Fourthly, Tesco’s promotion comprises of a wide range of media advertisements, regular announcements of promotions and discounts, point-of-sale marketing tactics, and sponsorships. These marketing activities are aligned with the company’s generic strategy of cost leadership and support Tesco’s price advantage through profit maximisation in the long run as well as enhance the value of the brand. Hence, Tesco’s marketing communications are integrated to enable the company to better coordinate its mission, vision, objectives and interactivity with customers. With the aid of information technology advances (Zabkar et al., 2015). Integrated Marketing Communications were also found to generate a synergy effect through the integration of marketing activities, which also tremendously influences customers through different channels of communications reinforcing the same message (Ewing et al. 2015) Tesco has successfully managed to build loyalty in its customer segments through its most effective customer loyalty mechanism – the Tesco Clubcard (Tesco Clubcard, 2015). In relation to this, Hallowell (1996) found a direct correlation between customer satisfaction, loyalty and company profitability. Likewise, Lee-Kelley et al. (2003) suggest that customer retention tools not only aim to increase the company’s profitability, but also establish long term relationships between sellers and buyers, which are fundamental to customer loyalty and also result in decreased levels of price sensitivity.

Tesco’s marketing strategy, which comprises of cost leadership and market penetration, has been increasingly impacted by the presence of the foreign grocery store chains Aldi and Lidl as well as food commodity prices and the outcome of this has been continuous price cuts by Tesco to meet the customer demand for low cost product offerings (Butler and Wood, 2014). Furthermore, the authors suggest that further intensification of the market dynamics is caused by the growth of high street convenience stores and the rise of discounters (e.g. Poundland and B&M), which is directly correlated to the altered consumer behaviour habits during the recession. In addition, business analysis of the current grocery retail market conditions suggest that Aldi and Lidl’s combined market share will increase to 12%-15% by 2020 (Allison, 2015). Nevertheless, according to a press release by KPMG (2014), it will be difficult for discount brands to fully challenge and erode the market of the big four, because grocery retail chains like Tesco command the store network market penetration and their market shares have existed for nearly 10 years.

In relation to Tesco’s marketing mix and the intense price competition and dynamics in the market, two main recommendations can be made for Tesco to regain its lost market ground – increased customer retention and an optimisation of its supply chain management to successfully recover its price leadership status. Due to the current intense competitiveness in the retail and food industry and the emergence of competitively low cost foreign supermarket chains, Tesco should firstly focus on increased levels of customer retention through the incorporation of effective customer relationship management systems. Numerous studies have demonstrated the importance of customer satisfaction in relationship marketing and customer retention. Specifically, Hennig-Thurau and Klee (1998) conceptualise relationship quality which refers to the extent of appropriateness of a relationship to fulfil the needs and requirements of a customer with regards to the relationship. One way to do this is further integrate the Tesco Clubcard to present loyal customers with various financial product offerings besides current accounts, mortgages and home insurance (Tesco Clubcard Perks, 2015). This will form relationships based on two factors – quality and value-for-money, which will translate into loyalty and protect the company from switching customers. In order to adequately target and foster loyalty in the right customer base(s), Tesco should understand which customer satisfaction elements have the greatest impact, and the amount of investments required to improve particular customer satisfaction elements (Rust and Zahorik, 1993).

The second recommendation for marketing strategy enhancement is directly related to Tesco’s supply chain management, which will enable the company to regain its lost market share through becoming a cost leader. Fearne (2009) suggests that in the current business context, companies must pursue a value chain as opposed to a supply chain, which represents a chain of activities performed, in order to deliver valuable products and services to customers. There are two elements that are emphasised in value chains: (1) focus on demand pull, which places customers first and everything else subordinate to their needs and (2) concentration on the formation of collaborative relationships with suppliers. According to the author, these two actions enable corporations and large organisations to achieve competitive edge and sustain it over time. For Tesco this would mean careful selection of suppliers and establishment of collaboration opportunities with these suppliers and stakeholders to increase the value added to the processes and/or production. For example, in Wales the company can form relationships with local farms to purchase the highest quality meat and, once supplier loyalty takes place, discount prices can be demanded from the meat producers in exchange for continuous bulk buying. This will allow Tesco to present its customers with quality local meat at low prices, which will positively influence its lost cost leadership presence in the market.

To conclude, the present work established that Tesco’s generic marketing strategy is dual – regular market penetration to attract competition’s customers and cost leadership to retain price sensitive and cost conscious customers. In terms of its extended marketing mix, notable actions are: (1) offering a wide range of product categories, from which groceries remain the most popular category, tremendously contributing to the Tesco’s market leadership position, (2) alignment of marketing messages, communication and relative pricing, (3) various marketing and advertising activities, but the integral one remaining the loyalty card, and (4) simplicity and convenience with regards to shopping alternatives and store design. Following the discussion of Tesco’s extended marketing mix, two areas for improvement were recommended – an increased emphasis on customer retention and loyalty through novel customer relationship management mechanisms and the development of a supply chain that adds value to the manufacturing processes through collaborative relationships. It is important that Tesco understands its customers’ needs and suppliers’ requirements, because the competition in the grocery retail industry has never been more severe due to business environments being dictated by the customers and the suppliers. In other words, market orientation is no longer dominated by supply push exchanges and transactions, but by devising marketing strategies and promotions based on customer research and feedback.

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Introduction

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

The Failure and Success of Talent Management Systems

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

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

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

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

Reasons for Talent Management Failure

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

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

Negative Affects (NA) on Business

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

Detailed Discussions: NA Related with Employee Groups

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

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

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

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

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

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

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

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

Preventive Applications for Successful TM

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

Talent Assessment

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

Social Responsibility and Ethical Decision Making

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

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

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

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

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

Establish Accountability

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

Encourage Engagement and Partnership Collaboration

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

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

Conclusion

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

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Executive Summary

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

1.0 Introduction

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

2.0 Strategic Evaluation

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

2.1 Valentino’s current position (SWOT analysis)

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

Strengths

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

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

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

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

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

Weaknesses

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

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

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

Opportunities

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

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

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

Threats

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

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

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

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

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

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

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

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

Barriers to Entry & The Threat of New Entrants

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

The Threat of Substitutes

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

Power of Buyers

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

Power of Suppliers

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

3.0 The Impact of the new IT/IS System

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

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

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

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

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

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

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

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

4.0 Conclusions

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

Reference List

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Barney, J.B. (1991), ‘Firm Resources and Sustained Competitive Advantage’, Journal of Management, 17 (1), pp. 99 – 120.

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Huczynski, A.A. & Buchanan, D.A. (2007), Organizational Behavior, Prentice Hall: Essex.

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Marsden, R, (2010), ‘Would Like to Meet: The Truth About Internet Dating’, The Independent, [Online], Available from:-
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Ogbonna, E. & Harris, L.C. (2002). ‘Organizational Culture: A ten year, two-phase study of change in the UK food retailing sector’. Journal of Management Studies, 39 (5), pp. 673 – 706.

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Thompson, P. & McHugh, D. (2002). Work Organization: A Critical Introduction (3rd Edn). Basingstoke: Palgrave.

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

Introduction

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

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

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

Strengths of Sainsbury’s social media marketing strategy

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

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

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

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

Weaknesses of Sainsbury’s social media strategy

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

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

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

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

Recommendations for improvement

The following recommendations are resultant of the above analysis.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

References

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Berthon, P.R., Pitt, L.F., Plangger, K., & Shapiro, D. (2012) Marketing meets Web 2.0, social media, and creative consumers: Implications for international marketing strategy, Journal of Business Horizons. 55 (1), pp. 261-271. [Online] Available at: http://www.sciencedirect.com/science/article/pii/S0007681312000080

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

Introduction

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

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

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

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

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

Background

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

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

Business Investment

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

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

Consumer Choice and Motivation

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

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

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

2.1 Social Media Strategy

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

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

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

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

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

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

Return on Investment

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

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

3.0 Conclusion

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

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