Recovery audit contractors (RACs) are professionals who work at the state level to identify payments that do not comply with Medicare and Medicaid regulations. Improper payments pose a risk to providers, so the goal of RACs is to track and correct them (Harrington, 2019b). Currently, rules are in place regarding the behavior of RACs, and providers can contact RACs coordinators for misconduct (Recovery Auditors / RACs, n.d.). Harrington notes that RACs allow for standardized payment processes because they operate according to clinical standards and Medicare coding and billing rules (Harrington, 2019b). It allows RACs to act as examiners for payment verification, maintaining financial stability within the organization. Consequently, RACs are tools for additional control of insurance program payments and regulation of improper payments.
Electronic health records (EHR) is a system that allows online tracking and collection of patient data. EHRs are IT products that simplify the processes of handling confidential information within an organization. EHRs provide quick access to information, access information remotely, and improve the accuracy of information (Harrington, 2019a). In addition, EHRs improve the quality of information and make care safer. The effectiveness of EHRs is determined by the ability to structure data (Blumenthal & Tavenner, 2010) and visualize data (Harrington, 2019a). EHRs provide systems for transferring information between employees to clarify diagnoses (for example, after laboratory tests) and up to the patient. Existing systems for patient access to information make it easier to provide a diagnosis and to convince treatment or hospitalization (Blumenthal & Tavenner, 2010). EHRs simplify motivational channels for staff: treatment data becomes visible, and staff can evaluate outcomes. EHRs are needed to visualize information and improve provider performance characteristics.
Harrington, M. K. (2019a). Electronic health records and meaningful use. In Health Care Finance and the Mechanics of Insurance and Reimbursement (2nd ed.) (pp. 205-220). Jones & Bartlett Learning.
Harrington, M. K. (2019b). Recovery audit contractors. In Health Care Finance and the Mechanics of Insurance and Reimbursement (2nd ed.) (pp. 241-251). Jones & Bartlett Learning.
Indoor air quality (IAQ) implies the condition of air within building structures, especially within places of residence. According to Brown (2019), the quality of IAQ tends to affect the health, contentment, and well-being of residents. The issue on poor indoor IAQ has been the main subject of study/research among real estate developers and public health officials. Since the beginning of the 19th century, there have been thousands of real estate agencies building residential apartments in the United States accommodating millions of occupants. These amenities have since been experiencing acute indoor environmental hazards due to substandard external conditions within and around the residential centers. The extent of this problem was realized in the late 90s after researchers proved that most residential premised in the United States gives an account of poor indoor air quality and insufficient ventilation.
This report indicates that tenants, based on the pre-existing poor IAQ and insufficient ventilation, are highly susceptible to health symptoms and illnesses. Furthermore, the Centers for Disease Control (CDC) reports respiratory health concerns to be the core contributor to the tenants illness (Tham, 2016). The CDC also points out the causal factors of health symptoms are related to pollutant vulnerabilities in connection to molds, allergens, bacteria, and volatile organic compounds (VOCs). From this perspective, the research and literature evidence demonstrates that poor IAQ and insufficient ventilation can affect the health of tenants in residential environments. The objectives of this paper, therefore, are to:
To determine residential environmental vulnerabilities pertaining to IAQ and ventilation.
To identify and assess the causal elements leading to health symptoms through evaluation of the existing data on Carbon (IV) oxide (CO2), volatile organic compounds (VOCs), humidity, temperature, dust and molds, and ventilation.
Identify possible solutions and recommendations on how property owners can improve IAQ.
Background
Most people are believed to spend a better part of their day indoors; hence indoor air is a significant environmental factor for most people. Deteriorating IAQ is one of the most critical contributors to poor health concerns, such as respiratory problems and allergies. Exposure to indoor pollution, therefore, needs to be minimized to reduce deaths related to poor indoor air quality. Certain elements, including material, human, and natural factors, have a negative impact on IAQ (Brown, 2019). According to brown, IAQ can be improved if property owners avoid using materials that are believed to be emitting pollutants. With the improvement in technology and change in lifestyle, most residences have introduced modern air conditioners to help improve air quality in the living rooms.
CO2 is among the most common pollutants of IAQ in places of residence and efforts to address this issue can improve air quality. Accordingly, optimized ventilation systems would save energy while at the same time, reduce CO2 in rooms. The high concentration of the gas can cause drowsiness and exhaustion, especially in poorly ventilated rooms. To resolve issues regarding IAQ, researchers have conducted studies on the effectiveness of the HVAC systems in maintaining good indoor air quality. For instance, Chang et al. (2018) described how the HVAC systems interact with both indoor and outdoor environments helping reduce indoor pollution. Proper maintenance of the HVAC systems can help minimize indoor air pollution. Efficient ventilation is considered to lead to good indoor air quality in rooms. Improper ventilation is believed to point to the accumulation of hazardous pollutants. Chang et al. (2018), in their experiment, to examine the relationship between particle movement and ventilation effectiveness established that high ventilation effectiveness results in better removal of fine particles than coarse ones.
Reports and scientific data continue to emerge, pointing out that IAQ directly affects an individuals health. Indoor air quality typically depends on poor dusting/cleaning and insufficient ventilation that impacts on someones health within the surrounding residential environment. For example, in our residential environment, the occupants are exposed to substandard environmental conditions that make them more vulnerable to health symptoms and deterioration of their health standards. A considerable amount of evidence reveals there is a connection between poor IAQ and respiratory health concerns among residents, primarily due to poor cleaning and overuse of cleaning chemicals. Majorly noted health concerns include asthma, allergies, and acute irritant symptoms such as throat irritation, coughing, itching of the eyes, and wheezing.
Most residential apartments also have insufficient ventilation that brings about the growth of molds and bacteria, allergens, too-high or too-low temperatures, dampness, and heightened concentrations of CO2. As a result, the frequency of health symptoms and illness becomes so high within the premises. Improved IAQ in residential environments, on the other hand, is established to minimize health symptoms and respiratory illnesses among occupants. By learning about these details from peer-reviewed literature on IAQ, this paper generates a better understanding of the connection between poor indoor air quality (IAQ) in private residences and individual health. This aspect also includes some of the alleviative factors to be considered.
On several occasions, cases of poor indoor air quality (IAQ) have been reported to be the causal factors for severe health symptoms as well as inactivity among people in their places of residence. Reports have also suggested that poor IAQ lessens an individuals intellectual and psychological processes. However, the big question is how indoor air quality affects peoples health in residential centers. To determine the validity of this possibility, this paper will investigate if, indeed, low indoor air quality in the private premises compromises or directly affects an individuals health.
Method
Considering that no physical samples are allowed for assessment of IAQ at my place of residence, this report only utilized observations. On that note, the report relied on the first-hand audit comprised of observable deductions made at my residence. Moreover, further research on IAQ was made from inferences obtained based on observations made by immediate neighbors and visitors. Toward that end, an open-ended observation was conducted to help come up with this research. The survey aimed at finding the influencing factors affecting the residence IAQ and possible recommendations to help improve the condition of air. The common aspects to be observed include factors such as CO2 concentrations, dust and molds, humidity levels, temperature range, ventilation systems and air movement, HVAC problems, radon, and volatile organic compounds (VOCs).
The survey seeks to explore the property owners building standards in regards to IAQ within the residential house. The questions are to be randomly distributed through various online platforms such as WhatsApp, Facebook, and Twitter because the method is cheap and has the likelihood of reaching most visitors and neighbors. People who have visited my premises are to give their responses about the experience they had in the various living rooms concerning the quality of the indoor air. A rating strategy would be provided for each factor where the respondent is to choose an appropriate scale depending on available data regarding the contaminants. Respondents were, however, assured of privacy and confidentiality to enhance genuine responses. Once the observations are collected, the data would be carefully analyzed, noting down the main points highlighted by the visitors and neighbors concerning the significant factors affecting IAQ at the residence and possible recommendations for improvement.
Results and Discussions
CO2
Exposure to CO2 at places of residence is mainly through the consumption of carbonated drinks, the use of dry ice, or the burning of fossil fuels. High concentrations of CO2 in the indoor air reduce oxygen supply, which may lead to an individual becoming unconscious or even dying (Karnauskas et al., 2020). Property owners should use CO2 detectors in houses to monitor the levels of CO2 in the rooms to protect tenants from high levels of CO2 concentration (Ghaffarianhoseini et al., 2018). Rooms should also be well-ventilated to allow proper air exchange. Machines like the air conditioning system need to be maintained occasionally to avoid the emission of more CO2 in the rooms. Generally, when windows are open, the average indoor CO2 levels in the air-conditioned bedroom were lower compared to when the windows remain closed.
VOCs
The concentration of VOCs indoors is usually higher compared to outdoors, making the living room an easy target of the chemicals. Volatile organic compounds within the residence are commonly emitted by paints, building materials, and all furnishings done in the rooms. Since I often prepare meals, the overheated cooking oils do release acrolein, which also pollutes the indoor air in the rooms. Besides, many types of furniture and building materials used in the rooms have high counts of VOCs that are released to the indoor air over time, contaminating the air. Exposure to low levels of VOCs can lead to respiratory complications, dizziness, and memory impairment. Bad smells from chemicals may not be harmful by themselves but do cause symptoms like nausea and headache (Carrer & Wolkoff, 2018). House management should keep all the materials that emit VOCs far away from the guest rooms as well as ensuring plenty of air circulation in the rooms to reduce the level of exposure of customers to VOCs. Cleaning labels used in the houses should be zero VOC or low VOC.
Radon
Radon gas occurs naturally in some rocks or soils and is likely to diffuse through the soil into buildings. Considering that radon gas is common in America, it was imperative to consider it among the air contaminants in the living rooms. Radon is a leading cause of lung cancer in the mentioned countries, and as a heavy gas, it tends to concentrate at the lowest points of the house. Drinking water and bathroom water is one of the agents that introduce the gas into the rooms with building materials not being the primary source of the gas (Kukadia & Upton, 2019). Therefore, the management should consider testing for the presence of the gas in the rooms regularly to reduce exposure of the gas to occupants. Sealing of basement foundations and water drainage systems is critical in avoiding the leakage of radon gas into the rooms.
Temperature
The temperature in the rooms is very critical in determining the quality of indoor air. High temperatures in the rooms create a conducive environment for chemicals within the house to rapidly leak into the rooms. The chemicals lead to irritation, headache, or even cause serious health complications to the occupants of the room (ElSharkawy & Javed, (2018). Very low temperatures, on the other hand, lead to shivering and results in discomfort. Generally, very high or low temperatures in the rooms make the IAQ unpleasant to the occupant. Air conditioning units, together with ventilation in the house, should be used appropriately to enhance optimal temperatures.
Humidity
There should always be an optimal level of humidity in any indoor environment. High humidity levels in living rooms are caused by water leaks and moisture that condenses on cold surfaces (Mao et al., 2018). High humidity levels lead to poor IAQ as it facilitates the growth of molds. These plants, in turn, will release chemicals that, if one breathes them, can lead to respiratory distress and shortness of breath. The residence experiences poor IAQ during the winter season as it becomes a challenge to maintain humidity levels in the apartment. Despite the season, the management should strive to maintain an average indoor humidity level in the living rooms to avoid the growth of dust mites and molds.
Ventilation
Ventilation is one of the essential factors that determine the quality of indoor air. The residence has a moderate level of ventilation systems in every room. Low ventilation with a high concentration of various chemicals and toxic gases like CO2 are likely to lead to severe health conditions on the occupants of the room. Proper ventilation, even with high levels of CO2, is healthy and is said to contribute to safe indoor air cushioning occupants of a room from major health hazards (Ooi et al., 2016). Ventilation should, therefore, be a priority for house owners, and they should ensure effective ventilation of all rooms as a way of enhancing good IAQ.
Dust and Molds
Molds are biological chemicals released to the atmosphere that are facilitated by moisture. The growth of the plants can only be inhibited by keeping humidity levels below 50 percent. The living rooms, if not well dried, are likely to develop molds that eventually lead to emission of the biological chemicals polluting the indoor air (Qi et al., 2017). Moisture levels in rooms often go up due to condensation occasioned by the moderate ventilation, eventually leading to the growth of molds that pollute the indoor air. The plants also flourish because of mattresses in the bedrooms getting exposed to moisture through humidity or even body sweat. Substantial quantities of dust lead to chest tightness, wheezing, and difficulty in sleeping due to respiratory complications. Routine cleaning of the rooms stirs up the dust trapped inside the room with other contaminants, making it suspended on-air. The management should regularly check for molds in the house and ensure that the environment remains dry to reduce their growth.
HVAC Problems
The quality of indoor air is also affected by problems associated with heating and cooling equipment in the rooms. Microbes easily build up in the HVAC system resulting in poor IAQ (Chang et al., 2018). Moreover, filthy air filters and leakages from refrigerants also result in poor indoor air. Routine maintenance of all HVAC systems in apartment and regular replacement of filters plays an essential role in creating clean indoor air.
Conclusions and Recommendations
The report reveals that the factors discussed affect the quality of indoor air, implying that the pollution of indoor air has a severe health problem in residential apartments. Besides, it is also clear that most people spend a significant part of their day indoors hence risk of the negative implications of poor IAQ. As Chan et al. (2017) note, there is an urgent need for property owners to develop practical measures that will assist in addressing the health concerns by reducing the contamination of IAQ. The real estate sector provides shelter for millions of Americans annually, thus increasing the need for implementing viable solutions to enhance a comfortable and secure environment for tenants. The residence where I stay will gain the trust of more clients through the assurance of improved IAQ because there will be an increased willingness to live within the residence. The following recommendations, if well adopted, will help the property owner to create good IAQ in the apartment by reducing air contamination.
Optimization of HVAC
The management should ensure they optimize on their heating, ventilation, and air-conditioning systems to enhance good IAQ. The HVAC systems must be regularly maintained and inspected as they are central in determining a rooms indoor air quality. Besides, the filtration systems must also be periodically inspected and replaced depending on whether the residence is in an environment with dirty outdoor air. Similarly, they need to install CO2 detectors in strategic places to help regulate levels of the gas in the living rooms. Since the residence receives different occupants every season, there is a need for the hotels to change air filters at least once every two months. Also, the management should ensure that the HVAC systems are maintained to operate as per the original specifications (Afroz et al., 2018). Furthermore, the managers must ensure that the HVAC systems are in operation at all shifts.
Training of House Maintenance Employees
The management should ensure that all its staff is well trained on how to perform their day-to-day activities as well as better ways of minimizing indoor air pollution. Employees involved in the maintenance of the residence need to undergo training on how to maintain adequate ventilation of air contaminants generated during cleaning or maintenance (Quansah et al., 2017). Besides the employees need to know how to minimize adverse effects of IAQ in the process of using and disposing of chemicals and other agents. Employee training should include informing all employees of the contents of the IAQ compliance plan as well as the signs and symptoms associated with building-related illness.
Monitor Possible Sources of Pollution
Most indoor air pollutants within the residence usually arise from various activities in the house. For example, CO2 arise from combustion activities during the preparation of meals using fossil fuels. Besides, materials used in residences during renovations and painting also leads to indoor air pollution. It is, therefore, imperative for the management to ensure that during renovations, they only use low-VOC paints, flooring, and furniture to minimize harmful emissions. Besides, the HVAC systems need regular cleaning and maintenance to ensure it does not keep dust particles. Sources of molds like water-stained ceiling tiles should be monitored and addressed once noted to avoid the effects of the plant. Besides, the management should use environmentally friendly building materials and cleaning products as a way of reducing VOC emissions in the hotel rooms (Afroz et al., 2018). Additionally, the kitchen should be located far away from the guest room to keep the rooms safe from indoor air pollution.
References
Afroz, Z., Shafiullah, G. M., Urmee, T., & Higgins, G. (2018). Modeling techniques used in building HVAC control systems: A review. Renewable and sustainable energy reviews, 83, 64-84. Web.
Brown, N. J. (2019). Indoor air quality [Electronic version]. Ithaca, NY: Cornell University.
Carrer, P., & Wolkoff, P. (2018). Assessment of indoor air quality problems in office-like environments: Role of occupational health services. International journal of environmental research and public health, 15 (4), 741. Web.
Chan, W., Lee, S. C., Li, D., & Chen, X. K. (2017). Cigarette induced PM2.5 in hotel rooms: An assessment of the effectiveness of managements mitigating measures. International Journal of Hospitality Management, 60, 42-47. Web.
Chang, D. Q., Liu, J. X., & Chen, S. C. (2018). Factors affecting particle depositions on electret filters used in residential HVAC systems and indoor air cleaners. Aerosol and Air Quality Research, 18, 3211-3219. Web.
Ghaffarianhoseini, A., AlWaer, H., Omrany, H., Ghaffarianhoseini, A., Alalouch, C., Clements- Croome, D., & Tookey, J. (2018). Sick building syndrome: Are we doing enough? Architectural Science Review, 61(3), 99-121. Web.
Karnauskas, K. B., Miller, S. L., & Schapiro, A. C. (2020). Fossil fuel combustion is driving indoor CO2 toward levels harmful to human cognition. GeoHealth, 4(5), Web.
Kukadia, V., & Upton, S. (2019). Ensuring good indoor air quality in buildings. BRE Group.
Tham, K. W. (2016). Indoor air quality and its effects on humans: A review of challenges and developments in the last 30 years. Energy and Buildings, 130, 637-650. Web.
Mao, Z., Yang, Y., & Wang, M. (2018). Sleepless nights in hotels? Understanding factors that influence hotel sleep quality. International Journal of Hospitality Management, 74, 189- 201. Web.
Ooi, S. S., Mak, J. W., Chen, D. K., & Ambu, S. (2016). The correlation of Acanthamoeba from the ventilation system with other environmental parameters in commercial buildings as possible indicator for indoor air quality. Industrial health, 5, 2015-0218. Web.
Qi, M., Li, X., Zhu, E., & Shi, Y. (2017). Evaluation of perceived indoor environmental quality of five-star hotels in China: An application of online review analysis. Building and Environment, 111, 1-9. Web.
Quansah, R., Semple, S., Ochieng, C. A., Juvekar, S., Armah, F. A., Luginaah, I., & Emina, J. (2017). Effectiveness of interventions to reduce household air pollution and/or improve health in homes using solid fuel in low-and-middle income countries: A systematic review and meta-analysis. Environment International, 103, 73-90. Web.
State Audit Institute (SAI) is an independent organisation which is aimed at conducting research in the financial sector of different companies to check their performance. The main purpose of this organisation is to make sure that the company functions according to the current legislation and the financial situation in the company is safe. Being the central organisation in the country which has the specialists of the highest range, SAI has an opportunity to conduct an audit of different kind with various goals and in different organisations.
According to the company mission, it aims to safeguard public funds and assist the Federal Government in improving public sector governance and performance standards and to grow Emirati professional capabilities (State Audition Institute, 2011). The company attempts to fulfil the duties it has before the legislation and tries to achieve its objectives via performing its obligations. It should be noted that the fundamental priorities of the company make it play a crucial oversight role when it comes to federal and local government operations in UAE (Ibrahim, 2010, p. 464).
The wide range of objectives and the opportunities SAI has, allows it to provide the following work, regularity audit, performance audit, investigation and information system audit. Regularity audit is a kind of control which is provided annually in the specific companies, obligatory for all Federal Government Organisations. Performance audit is aimed at tasting the performance and efficiency of the part or all activities of the company. Investigation takes place when the case of financial violation is identified, where one of the main goals is to detect wasted money or illegally spent funds. Information system audit is considered to be the central kind of audit for the company as it helps to implement control of performance and financial audit (Profile, 2011).
Being an independent organisation, SAI has an opportunity to audit such organisations as Ministers and Departments of Federal Government, Federal Nation Council, different public organisations accounted to the government, other companies where the government share comprises at least 25%, the organisations which are subsidised by the country, or any organisation which needs independent opinion about its financial situation (Profile, 2011).
To achieve the goals the company sets, it is important to employ highly professional staff. Apart from auditors, the company offers jobs in administration sphere, finance, human resources, IT, etc. (State Audition Institute, 2011). One of the main priorities for SAI is the training opportunities it offers. The organisation cares greatly of graduates and tries to give those as many opportunities for employment as it can (Profile, 2011). A lot of graduates in accounting and financing can find jobs in SAI if their qualities and professional skills and knowledge satisfy the company demand. Moreover, the professional development programs give employees an opportunity to study abroad, for example, for Master of Science in accounting offered by UK University or for Graduate Certificate in Performance Audit in Australia, etc (State Audition Institute, 2011).
Thus, it may be concluded that SAI is an independent company which is aimed at providing different kinds of audit in the country. Functioning for the sake of the country, it offers great possibilities for the graduates and provides training programs for its employees all over the world. Being considered as one of the best audit institutions in the world, the company always improves its performance by means to employing the best professionals in the sphere.
Reference List
Ibrahim, M. (2010). State Audit Institution in United Arab Emirates. International Journal of Law and Management, 52(6), 464-468.
Profile. (2011). United Arab Emirates State Audition Institute. Web.
Many organizations like to measure their compliance level against certain standards even without any legal obligation. This process is known as pre-assessment audit, which is used by many organizations as a tool for evaluation and learning to help in the improvement of the management systems. Through this process, the management will identify all the areas that need improvement. Organizations are also required to carry out pre-assessment audit before they can receive the credential of certification.
Pre-assessment audit is part of internal audit where organizations are required to evaluate their management systems as a way of ensuring that there is good corporate governance. This paper will analyze procedures for pre-assessment audit and internal audit using the case of National Bank of Abu Dhabi (NBAD). The bank is ranked the best financial institution in the Middle East and it was awarded standards for quality management ISO 9001-2008.
Procedures for pre-assessment audit
Pre-assessment audit involves a number of steps which organization ought to follow for a successful process and certification by the registrar. These steps include
Commitment of the top management
The success of the entire process starts with the commitment of the top managers who play the critical role in the audit. Top managers need to be convinced that pre-assessment audit is necessary and successful certification and registration will benefit the organization by showing its commitment to quality for its customers. The management needs to be in the forefront for successful pre-assessment audit; nevertheless, this will only happen if the managers realize that good management systems will improve the efficiency of the business by minimizing duplication of the management systems that are wasteful. In the case of NBAD, the top management of the bank is committed to improve the quality of its services and systems to meet the needs of its customers. This commitment drove the managers in 2008 to carry a successful pre-assessment test required before ISO certification.
Establishing a team for implementation
Pre-assessment audit needs a committed team of staff for its successful implementation. After having a committed top management team, the plan must be made known to all the employees of the organization for them to own and support it. The quality assurance department ought to select a capable team that will spearhead the implementation process. As Asare, Davidson, and Gramling argue, an audit committee may be established to help in this process of auditing (181).
The team may consist one of the member from the top management who will oversee and plan the implementation process together with the other people who are appointed from all the departments of the organization. These departments may include planning, marketing, quality control, and production among others. The representative of the management will motivate and direct all the other managers towards the implementation of the pre-assessment audit. In the NBAD, the quality assurance department, led by its manager, spearheaded the 2008 pre-assessment audit.
Start awareness program
The purpose of the awareness program is to inform all the stakeholders of the intended audit to incorporate them in the process. Awareness program may involve sensitizing the customers and employees on the benefits of the process. NBAD carried out several awareness programs to sensitize its employees and customers on the benefits they will gain from improved quality systems of the bank before its certification in 2008.
Provide training
Internal quality audit will affect all the personnel and departments in the organization. It is therefore important to come up with training programs to prepare all the staffs for any change that may come with quality assurance certification. Many procedures and systems of the organization are affected hence the need to train staff for these changes.
Conduct a survey for initial status
This will involve carrying out a simple survey in the whole organization just to give an idea of what is expected during the audit process. It may require visiting several units or departments, a process that NBAD accomplished.
Steps for internal auditing
Internal quality auditing involves a number of steps, which are necessary for a successful process. The steps include scheduling, planning, conducting, recording, and reporting.
Scheduling
Scheduling involves the process of coming with an annual schedule that will be used for quality audit. Quality assurance department has a duty to come up with the said schedule that will run for a whole year. This schedule ensures that there is proper timing of the activities involved in the process. After preparing the schedule, it is forwarded to the management team for any amendment and approval. As Dacey indicates, an audit manual provided by the Government System Control Department may be used when planning for the audit (1).
Planning
Planning process involves preparation of the documents necessary for the audit taking into consideration the specific procedures that will be used in each unit or division. Quality assurance team also informs all the department of the audit schedule to enable them to prepare in advance.
Conduct
The audit is carried out using a checklist where auditors compare what is in the list with what is already happening in the organization. At this step, the auditor will note the findings on the checklist, which will then be used to assess the position of the organization.
Recording
In this step, the findings of the audit are recorded in preparation for reporting and implementation. The recording shows what has been observed during the auditing process and what is expected to be happening. It shows where there is variation with laid down requirements. If necessary, a follow up audit may be planned at this stage before giving the final report.
Reporting
At this step, the findings of the internal quality audit are reported to the top management for action. The findings will show the present position of the organization in relation to the laid down requirements and the expected position in accordance with these rules. Many governments have laid down all the audit requirements that should be followed by all organization (Franzel 1). From this report, the management may now come up with an action plan to implement the recommendations if they are not satisfied with current position of the organization.
Conclusion
Pre-assessment audit and internal audit are important processes for assessing quality compliance of any organization. All the organizations are required to undertake audit process before quality certification by the registrar. NBAD carried a successful audit before its certification in 2008 as a way of improving quality of its services and systems. Pre-assessment audit will involve initial preparations before the actual quality audit is conducted. Actual audit may involve scheduling, planning, conducting, recording, and reporting.
Works cited
Asare, Stephen, Davidson, Ronald, and Gramling, Audrey. Internal Auditors Evaluation of Fraud Factors in Planning an Audit: The Importance of Audit Committee Quality and Management Incentives. International Journal of Auditing 12.3 (2008): 181-203.
Dacey, Robert. Federal Information System Controls Audit Manual (FISCAM): Exposure Draft. GAO Reports, 2008: 1-611.
Franzel, Jeanette. To audit officials and others interested in: government auditing standards. GAO Reports, 2010: 1-192.
The clients knowledge of the materiality thresholds that the auditor may apply when auditing the firm is very risky. The client may subvert the intention of the auditing procedures or may as well sabotage the integrity of the whole audit engagement.
Since auditors may acquire the client personnel documents so as to save costs as they perform other audit-related activities and prepare schedules for conducting the audit, the client may interfere with the entire process. The client may conceal some critical information from the auditor thereby decreasing the sample size for the audit, thus lowering the auditors materiality decisions.
The client is likely to present misstatements in organizations financial statements. The client may also interfere with the evidence by manipulating the items of the financial statements leading to insufficient or misleading evidence during auditing. This is likely to interfere with the auditors judgment of the business risks that the client is engaged in (Strayer University, 2010).
In North Face Company, Crawford was the companys chief financial officer that concealed fraud from North Face Inc. independent auditors in 1997 by not informing them of the oral side agreements made between him and the barter company.
Crawfords knowledge of the materiality thresholds which Deloitte auditors would apply in auditing the companys financial statement items and the adjustments that they would propose regarding the $1.64 million trade credits made him include the transaction, but did not inform the auditors of the $2.65 until after the completion of the 1997 audit.
Katz who was the companys sales vice president also arranged for the signing of fake purchase orders by the two customers who owned substantial amounts of North Face Inc.s merchandise to deceive the auditors that the two customers actually owned the merchandise (Knapp, n.d).
Guidelines for Revenue Recognition
The guidelines that determine when a company is to record revenue are that the exchange transaction should be complete and again the production earning process should also be complete. This means that the goods must be manufactured and delivered to the client and payment must be received either in cash or receivables at the point of sale.
According to Turner (2001), revenue should only be recognized after they have been realized and recognized by the company. For the revenue to be considered as realized and earned, there should be evidence that the arrangements exists; delivery should have taken place; the sellers and the buyers prices should be determinable; and finally, collectability should be reasonably assured (Turner, 2001).
In the North Face Company, Crawford structured the $7.8 million transaction to recognize trade credits which are barter transactions as profit. Crawford instructed North Faces accountants to record the trade credits of $1.64 million and $2.65 million as profit even though the oral agreements involved payments in phases.
Besides the payments involved, barter transactions cannot be recognized as revenues, meaning that the exchange transaction was not complete by the time the North Face recognized the revenues as profit. The company later reacquired the inventory in 1999 (Knapp, n.d).
Objectives of Work Papers
Its primary objective is to document all the audit procedures performed by the auditor or the auditing team. The procedures documented in the work paper should connect the flow of the information as well as the conclusions in the concluding audit report. Accurate and credible work paper provides the foundation for audit and the subsequent reporting.
It must contain the specific tasks performed as well as the observations and information acquired through inquiry. It has to contain the specific individuals consulted as well as the supporting documents and detailed narratives to support the information contained in the corresponding audit report (Strayer University, 2010).
The revision of the work papers that was done by Deloitte personnel in 1997 to replace the original work papers made new summary memorandum as well as adjustments schedule without documenting revisions in the work papers. Thus the revised 1997 work papers could not show that the revising team reached a different conclusion from the original team concerning North Faces 1997 barter transactions (Knapp, n.d).
The Auditors Responsibility
The auditors role is to detect and prevent fraud in an organizations business processes. They therefore have to evaluate the financial projects as well as the anticipated financial projects that the organization is about to enter and as such, provide reliable and timely feedback on the feasibility and the risks involved in the project.
The external and internal auditors measure the effectiveness of the executives decisions as well as the internal controls put in place by the executives. The auditors assess the quality of the decisions of the executives on the financial activities of the company and therefore determine their competence (Knapp, n.d).
They assess the financial reporting of the company and provide guidance for improving the internal control system to ensure that the company achieves operational as well as strategic objectives. Both the internal and external auditors focus on enabling the organization to provide reliable financial reporting.
The internal auditors are therefore involved in continuous control monitoring as well as in continuous auditing of the organizations business processes (Zabihollah, 2002).
Reference List
Knapp, M. C. (n.d). The North Face, Inc.: An instruction case focusing on ethical issues involving financial accountants and independent auditors. Oklahoma: University of Oklahoma.
Turner, L. E. (2001). Speech by SEC staff: Revenue recognition. US Securities and Exchange Commission: USC SEC and Financial Reporting Institute. Retrieved from https://www.sec.gov/news/speech/spch495.htm
Zabihollah, R. (2002). Financial statement fraud: Prevention and detection. New York: Wiley & Sons.
Conducting an audit on a companys financial statements is not an entirely popular idea. Many managers still hold the belief that conducting external financial audit is too intrusive. Thus, there are those managers who believe that conducting an audit, despite the assured benefits is counter productive. For instance, the cost of hiring auditors is too prohibitive to most companies. Thus doing annual external audit requires extra funds which have to be accounted for in the companys annual budget.
This is likely to lower the companys profit margins. Additionally, as mentioned earlier, some managers feel that auditing can be too intrusive. According to the Center for Audit Quality, audit involves examining available evidence in support of a companys financial statements (CAQ 2011).
Thus, access, by external auditors, to companys sensitive financial information is risky since such information is likely to be leaked to competitors, who are likely to use such information against the company. These assumptions seem to be precipitated by the fact that external auditors overarching aim is to provide a reasonable assessment of a companys financials performance. External audit reports fail to indicate absolute truths about a companys financial position.
The assertions made above are likely to be perceived as demonizing external audit. However, external audit involves a number of practices beneficial to a company. According to Bragg (2011), one of the preliminary stages of financial auditing involves establishing the terms of engagement.
During this process an audit firm conducts its own evaluation of the reputation of the company to be audited. Audit firms normally desist from engaging with companys whose reputation is questionable. Thus, shareholders in a publicly listed company are likely to establish the companys reputation from the caliber of the companys auditors.
Besides establishing the terms of engagement, auditing also involves establishing standards for quality control. In doing this, audit firms largely depend on the willingness of the auditees top management to collaborate with the external auditor in setting the tone for quality assurance.
As such, external audits are stern tests on willingness of the companys top management to establish high standards of quality control. Additionally, establishing standards for quality control involves a number of activities. These include establishing policies within which professional auditing is to be conducted.
Thus, by conducting audits, external auditors help a company improve its internal quality control systems. This implies that by engaging external auditors, firms are able to enhance quality management. This enhances accuracy in financial reporting which translates to improved performance by the company.
According to Center for Audit Quality, no two companies are the same. Each company is unique, in terms of financial reporting. Each company also has its own unique auditing challenges which require customized auditing standards (CAQ 2011). Nevertheless, this does not imply that external auditors develop completely new sets of auditing standards for each firm. According to Craswell (1990) internal auditors rely in international accounting standards.
Thus, CAQs (2011) assertion that external auditors customize auditing standards depending on the uniqueness of the companys auditing challenges ought to be taken in light of the fact that customization of auditing standards is based on the international financial reporting standards.
It is imperative to note that the international financial reporting standards form the core of globally recognized financial reporting standards. Thus, by engaging external auditors, publicly listed companies in Australian test their financial reporting against internationally accepted standards. This gives shareholders an idea of how the company is likely to perform in the global market.
According to Nicoll (2005) conducting external audits amounts to opening a companys financial records to public scrutiny. Based on assertions made by CAQ (2011), this seems to be unpopular with managers. However, external audit reports are valuable tools with which shareholders establish the authenticity of a companys financial position.
Additionally, by opening the financial books to public scrutiny, external audits assist companys management as well as shareholders in comparing the company performance against other companies whose accounts are also open to public scrutiny. This helps to identify a companys position with regards to competition. Thus, external audit of a companys financial record helps in identifying its market position.
This also assists the companys management in making accurate decisions for the future. Additionally, despite CAQ (2011) assertions that external audit reports are unlikely to portray the absolute truth about a companys financial position, these reports are nevertheless very reliable in portraying a companys financial position. Thus, shareholders are likely to use these reports in making decisions their investment.
Conducting external audit on a companys financial performance has it merits and demerits. For instance, engaging reputable external auditors is very costly. Thus for a company struggling to meet profit targets, such cost seems unnecessary. Nevertheless, external audits are beneficial than they are disadvantageous.
Not only is the company able to measure its performance against competitions but also able to establish its market position locally and globally. Such reports indicate an almost near truth regarding a companys position. Thus, they are valuable tools with which shareholders measure the true status of the companys performance. From a shareholders point of view, external audit is necessary.
List of References
Bragg, S. 2011.The new CFO financial leadership manual. New Jersey: John Wiley and Sons.
CAQ. 2011. In-depth guide to public company auditing: The financial statement audit. [online] Web.
Craswell, A.1990. Who audits Australia? Sydney: University of Sydney Press.
Nicoll, P. 2005. Audit in a democracy: the Australian model of public sector audit. Ashgate Publishing, Ltd. Burlington, VT.
Responding to suspicious items in Accounting Records
As a professional accountant, I would apply the professional ethics of accounting that require professionalism, accountability as well as integrity in monitoring the daily operations of the organization so as to be able to report accurately the strengths and weaknesses of the organizations internal control system to the CEO.
Just the same way David Sokol did, it is important to scrutinize the companys accounting records and interview all those concerned with accounting operations of each division in the company as well as the companys Chief Financial Officer.
It is important to take responsibility and inform the CEO or the board of directors of the company about your findings on the companys accounting fraud and your opinion and, give direction of what should be done to correct the accounting abuses in the company (Gibson, Knapp, Mowen, Palepu, & Shank, 2010).
In situations where I have convincing reasons to believe that the auditing firm that had been contracted to audit the firms financial statements might have been influenced so as to ignore the suspected misrepresentations in the financial statement data, I would advice the board or the CEO to retain a different independent auditing firm to investigate the accounting the records.
Measures for enhancing Whistle Blowing in a company
In order to enhance the capacity of corporate employees to report suspected fraud scheme cases in the organization, the firm should increase the internal auditors influence by permitting them to report directly to the CEO or the board of directors on their findings as well as their views of what should be done to save the situation (Gibson, et al. 2010).
Their findings and opinions need to be treated with a lot of confidentiality and proper follow up be taken immediately. The function of the internal auditors should not just be to report to the companys CFO as in the case of Jamaica Water Properties.
The internal auditors need to be independent and not under the jurisdiction of the CFO, this way, they will be assured of their job security and therefore overcome bullying from the CFO or any other senior personnel in the organization.
The company should also put in place policy requiring the internal auditors to have unrestricted access to the audit results of the external auditors and the companys accounting records in order to effectively determine irregularities, manipulations and fraud risks that may occur in the companys financial statements and be able to report this to the CEO (Chhaochharia, & Yaniv, 2007).
Promoting ethical behavior among employees
It is the corporate responsibility of each employee in the organization to report suspected cases of misbehavior such as fraud to the relevant authorities as is provided in the business code of ethics. Besides, each organization has internal policies to guide the ethical conduct of workers. These policies should help employees report cases of unethical behavior by employees.
The company should therefore disseminate information to all employees of the standards of behavior expected of them and steps to take in case they observe or suspect unethical behavior and also implement internal control systems that could help eliminate financial fraud in the company (Boatright, 2003). According to Beaulier, Hall, & Kotkin (2009), rewards also help promote ethical behavior in employees.
However, rewarding ethical behavior may cause unnecessary divisions among employees and may also make employees be dependent on rewards to enhance ethical behavior.
Therefore, this should be done diligently since giving incentives especially monetary benefits to promote ethical behavior in employees may create a culture where employees are unable to differentiate bribe and reward. As Sokol says, employees in an organization should be guided by integrity and honesty.
Reducing Auditing Risks
The board of directors and companys CEO should first acknowledge that the personal relationship that had been created between the retained auditing firm and the personnel in charge of the companys accounting may have an impact on the results of the auditing. Therefore they should request that the auditing team present their results and opinions to the board of directors (Chhaochharia, & Yaniv, 2007).
They should present a critical analysis of their findings so as to enable the board make proper financial decisions. The board of directors should rely on the internal auditors to improve their knowledge on audit items and audit evidence.
This would enhance the board members capacity to analyze the strategic risks and potential fraud in the companys business processes. The company should not rely on one auditing firm to carry out consecutive auditing of the firms accounting records.
Retaining different audit firms would help identify misrepresentations if any that was ignored by the previous audit firm that had been retained to audit the firms financial records. Sokols decision to request the board of directors to contract a different firm other than Ernest & Young paid off as Deloitte & Touch were more independent in their presentations.
Accounting professionals responsibilities to shareholders
As an accounting professional, it is important to carry out comprehensive investigations into the manipulations that had been done in the accounting records of the company and report the findings to the board of directors and explain their impacts on the financial activities of the company as well as remedies for the for minimizing further losses.
The accounting professional should be able to determine the real figures of the fraud as well as the period for which the fraud had existed in the company. The accounting professional should also be able to determine what happened as well as the individuals in the organization responsible for the fraud (Gibson, et al. 2010).
This would help the board of directors provide accurate information to the shareholders which can therefore enable them make their decisions on how to respond to the companys financial statements.
Reference List
Beaulier, S, Hall, J, & Kotkin, R. (2009). The virtue of business: How markets encourage ethical behavior. New York: Nova Science Publishers.
Boatright, J. R. (2003). Ethics and the conduct of business, 4th Ed. Malden, MA: Blackwell Publishers.
Chhaochharia, V. & Yaniv, G. (2007). Corporate governance and firm value: The impact of the 2002 governance rules. New York: Nova Science Publishers.
Gibson, C. H., Knapp, M. C., Mowen, M. M., Palepu, K. G., & Shank, J. K. (2010). Graduate accounting capstone. Mason, OH: Cenage Learning
The concept of marketing is very pertinent to any business, especially when introducing a new product/version into the market. The process encompasses comprehending and meeting the needs of the target customers. The aim of this paper is to develop a marketing plan for the Nissan Patrol Desert Edition through a theoretical and analytical approach. The reason for choosing the Nissan Patrol Desert Edition is that it is a relatively new version that has been introduced into the market.
Thus, the company needs to develop a marketing strategy to entice its loyal customers while at the same time attracting a new wave of clientele.
The research will include an in-depth analysis of the context and environment where the company operates, product overview, social responsibility and marketing ethics issues, core target factors, critical success factors, and the companys position and intended market perception for its Nissan Patrol Desert Edition. The limitation of this assignment will be in identifying its strengths, weaknesses, opportunities, and threats during companys SWOT analysis.
Analysis of the Context and Environment in which Nissan Operates
Political Factors
The government of the UAE has managed to control and maintain low oil prices. As a result, it has positively influenced the buying trends for the Nissan Patrol Desert Edition and other brands. An increase in the profit margins for the new version will allow the company to reduce the pricing of the car, reduce its debts, and even scale up its operations as part of its corporate objectives (Tischler 2002).
The liberal trade policy of the UAE such as low tariffs and few non-tariff trade barriers allow the company to have almost unlimited access to the region. This situation has had a positive influence on the company by allowing it to price the Nissan Patrol Desert Edition at an affordable rate for customers (Hoekman 1995).
Economic Factors
An increase in interest rates will negatively affect the sales of the Nissan Patrol Desert Edition due to the corresponding increase in the cost of servicing loans. Moreover, the increase will discourage spending while at the same time encouraging a savings habit by people who wish to benefit from the high rates from banks. Ultimately, the decrease in spending will reduce sales of the Nissan Patrol Desert Edition (Macdonald 1999).
Unemployment will be another major concern for the company, as it implies a reduction in disposable income of the target, which in turn reflects a negative move in its product sales. Moreover, Macdonald (1999) believes that unemployment increases the amount the government will have to spend on social welfare. This increase in government spending is compensated through increasing taxation on companies and/or products.
Social Factors
An increase in disposable income will have a positive impact on the product sales since consumers will have an extra income to buy the vehicle, which is essentially considered a luxury. A large proportion of a young population will have a positive impact on the companys sales compared to the case of having a larger proportion of elderly people in the UAE. Luckily, statistical findings indicate that a majority of the regions population lies between the age of 15 and 64, which is the companys target market (Statistica 2016).
Technological
Pressure from the market continues to increase for the Nissan Company to come up with new products that have incorporated the aspect of improvement in terms of performance, reliability, and safety. This situation has prompted the company to formulate its power 88 strategy whose goal is to introduce a new product every six weeks for the next six years in an effort to stay ahead of the market.
For instance, the Nissan Patrol Desert Edition introduces a better Hydraulic Body Motion Control System that keeps the new version more stable when negotiating corners (Nissan 2012). With the increase in awareness on global warming, governments and individuals are beginning to demand the innovation of eco-friendly and/hybrid products. For instance, the Nissan Patrol Desert Edition has a reduced smoke emission in comparison with its predecessor.
Legal
The UAE government has laid out stringent laws and regulations on consumer protection. It requires the company to have a solid warranty plan to ensure that the Nissan Patrol Desert Edition is safe for use in the region. In addition, the company is expected to comply with all the taxes payable in accordance with the law.
Company and Product Overview
History, Products, and Mission/Vision Statement
Nissan Company was established in Yokohama City in 1993. Currently, it runs operations in 20 countries, including Japan. Among the companys product portfolio are brands such as Nissan, Infiniti, Datsun, Heritage, and Mortorsports. The company records an average annual production of 2 million units.
This figure represents 4.9% of the global car market. The companys mission/vision is to provide innovative and unique automotive products in line with supporting its vision of satisfying all its stakeholders through an alliance with Renault (Nissan Motor Co. 2015).
Performance from a Financial Perspective
Since 2010, the Nissan Company has had a steady increase in the global sales with the exception of drops in 2013 and 2015. The net sales dropped from 12.4 billion Yen in 2014 to 11.4 billion Yen. Nevertheless, despite the sales revenue drop, the company managed to maintain its net income at a level of 457 billion Yen (Nissan Motor Co. 2016).
Performance from a Marketing Perspective
In 2015, the company claimed 15.9 percent of the UAEs car market, 8.5 percent in the US, 8.5 percent in China, and 25.8 percent in Mexico. These results placed the automaker among the top ten in terms of market share. It attributed the success to its aggressive global marketing strategy (Emirates 2016).
Current Marketing Goals
The companys marketing goal is to remain focused on the consumer by ensuring that the current market needs are well understood and met. The goal includes understanding aspects such as affordability, comfort, and purchasing power. Moreover, the companys primary target remains the low-level consumer market, which constitutes a large portion of the global population (Nissan Motor Co. 2016).
The companys goal is to establish a strong position in the competitive automotive industry where it will continuously produce new products that are reliable, affordable, and appealing to customers (Nissan Motor Co. 2016).
Current Marketing Objectives
The company aims at boosting its share in the global market to 8 percent in the next six years. This goal will be achieved through the companys commitment to producing a new vehicle every 6 weeks in an effort to draw consumers by wooing them from its competitors (Reuters 2011).
Social Responsibility and Marketing Ethics Issues
Economic
The Nissan Companys commitment to reducing the cost of manufacturing its brands has allowed it to competitively price the Nissan Patrol Desert Edition at a lower price of $69,430 compared to its competitors to foster its profitability goal (Nair 2015).
Legal
The Nissan Patrol Desert Edition comes with a company warranty once the consumer buys the car directly from the company or through its authorized dealers. The car also comes with an installed safety system that protects the driver from fatal injury in compliance with the consumer protection laws of the UAE (Nissan 2012).
Ethical
The models safety system complies with the consumer protection regulations of the UAE. The company also ensures that it prices its product on a level that is affordable in its target market without compromising its product quality (Nissan 2012).
Philanthropic
The company has devised a sustainable approach to philanthropy through encouraging the spirit of voluntarism from its employees by contributing to charitable organizations and cooperating with regional NGOs (Nissan 2012).
Pyramid for Corporate Social Responsibility
Core Target Profile
Benefits package
The products innovation was motivated by the companys large market demand in the Middle East and the UAE, particularly for customers who were in need of an ultimate off-road SUV for driving in the rugged desert terrains. The company improved the performance of the vehicle through installing a powerful high performance engine.
For such customers who are concerned about their safety needs, the car comes installed with an automated safety system, including underbody protection and bead-lock wheels that allow the tyres to be usable at low pressures without the risk of coming off (Basit 2015).
Major Competitors
The Toyota Motor Corporation is an auto-company that is based in Japan operating under segments such as automotive operations and financial services among others. The company is considered one of the most valuable brands with a market capitalization of $239 billion.
The company has managed to establish a strong position in the global consumer market. Its brands, namely Toyota and Lexus, enjoy a large share in the market with 45.5% in Japan, 12.2% in the US, 13.4% in Asia, and a significant market share in Africa, South America, and the Middle East regions. Toyotas strong market position has allowed it to continue enjoying high sales and profitability. It continues to expand to untapped territories. Nevertheless, its established brand has empowered its marketing capabilities globally.
Besides, the Jaguar Land Rover Company is considered the largest auto company in Britain with investments in research, development, and engineering. The company is regarded as a global leader in the manufacture of SUVs. It poses intense competition to other SUV makers such as Nissan and Toyota. The company has continued to grow with sales growth of 19 percent in Europe, 18 percent in the UK, and 14 percent in North America (Jaguarlandrover 2015).
Critical Success Factors
Strengths
Nissan Patrol was among the first 4-wheel drive SUVs to enter the MENA/UAE region where it earned the name, King of the Desert . The strong position in the market is a reputation that has been attributed to the cars impressive performance. Moreover, its users describe the product as unbreakable, affordable, and reliable. Therefore, with the newly improved version, the company is optimistic that it will entice its loyal customers while attracting a new generation of consumers in the region (Nissan 2012).
Besides, Nissan Patrol Desert Edition has managed to maintain its loyal breed of customers over the years due to the companys dedication to continued improvement of the cars performance and luxury packages (Nissan 2012). Due to the UAE/MENA market demands for a SUV that can withstand the harsh conditions of the desert, the company has committed itself through its innovative team design, craft and test to fine-tune the new Nissan Patrol Desert Edition to suit its use for the region.
Weaknesses
In 2013, the company recalled 25,000 of the products in Australia after it identified an accelerator fault that it claimed would result in loss of power and hence pose danger to occupants and road users. Such recalls have affected its product image by resulting in reduced sales in the affected regions (Nicholson 2013).
Opportunities
After the reverse of the recession in 2010, the automobile industry has experienced a tremendous growth globally and in the Emirates region. The 6.6 percent growth in 2014 was attributed to the improvement of the UAEs economy, the increased vehicle financing, and the augmented spending by individual households. Through exploiting its strong market position, the company can utilize the increased vehicle loan financing to market its product to potential new owners (Emirates NBD 2015).
In an effort to encourage the importation of products, the UAE government has committed itself to eliminating most tariffs. This move has had a positive effect for the company by allowing it to price its product fairly to increase its sales. Part of the companys market position is the affordability of its products compared to its competitors. Therefore, the company can exploit this opportunity by reducing further its product price that would attract new customers (Hoekman 1995).
Threats
The company faces stiff competition from other market players such as Toyota and Land Rover that produce similar prototypes of the Nissan Patrol Desert Edition. The competitors have a negative effect on the companys market share. To stay ahead of its competitors, the company devised the ambitious Power 88 strategy, which aims at producing a new product everyone and half months to attain an 8% market share by 2017.
This strategy is unattainable, owing to the reduction in the companys sales in 2015 (Harner 2013). The increased cost of raw materials may potentially raise the price for the Nissan Patrol Desert Edition, thus threatening to cause a reduction in the car sales (Jurevicius 2013).
Increased demand for hybrid products poses a major challenge for the company in terms of marketing the Nissan Patrol Desert Edition to consumers who desire to purchase hybrid/eco-friendly vehicles. Therefore, the company should embark on an innovative strategy to develop a hybrid version of the Desert Edition to meet the needs of this market.
Critical Success Factors
Products Intended and Actual Position in the Market
Intended Position
The Nissan Patrol Desert Edition is perceived to raise the expectation of the companys loyal customers and entice a new breed of clients due its high performance, reliability, safety, un-breakability, affordability, and comfort (Nissan 2013).
Intended Position
Actual Position
The Nissan Patrol Desert Edition has been acknowledged by both its critics and supporters as a high performance SUV that is suitable for the desert terrain. The high performance has been attributed to its 5.6 liter V8 400 horsepower engine. As a result, the car has been regarded as suitable for use in the tarmac and sandy terrain (Warrior 2016). However, some critics have regarded the Nissan Patrol Desert Edition as a standard performance vehicle with no significant modifications from its predecessor.
Nevertheless, both critics agree that the product comes with a safety skid plates at the rear and back side to protect the driver from excessive injury in case of an accident (Smuts 2016). In terms of affordability, the Desert Edition is cheaper compared to Range Rover and Toyota Land Cruiser prices at 90,000 and 80,000 USD respectively.
Actual Position
Conclusion
The Nissan Patrol Desert Edition is a high-performance SUV produced by the Nissan Company. The car is specifically designed for the rugged desert terrain in the UAE/MENA region. The company is affected by political, economic, social, legal, and technological factors each of which has its unique trends that collectively affect its overall marketing strategy.
The company commands a large market share both globally and in the UAE/MENA region compared to its major competitors, including Land Rover and Toyota. The companys SWOT analysis reveals strengths such as strong market position while also revealing weaknesses such as product recalls. The company has managed to position its product as reliable, high-performance, safe, and affordable.
Hoekman, B. 1995, The World Trade Organization, the European Union, and the Arab World: Trade Policy Priorities and Pitfalls, World Bank Publications, London.
Jaguarlandrover 2015, Jaguar Land Rover Reports August Sales Performance | Jaguar Land Rover Corporate Website. Web.
Marlboro is one of the most recognizable brands in the tobacco industry due to its strong attributes which have managed to attract large numbers of consumers in different markets. As a result, this has enabled the Philip Morris Corporation to set up manufacturing operations in more than 50 countries. The popularity of the brand has made it a household name in more than 150 countries where it is sold and consumed by millions of people.
The product has managed to appeal to customers in different parts of the world by using cowboy characters in its adverts who serve as symbols of power, vitality, independence and masculine charm. However, strict laws that regulate cigarette advertising have compelled the firm to look for alternative forms of advertising to continue to serve its customers. Therefore, the firm has opted to use alternative promotional and pricing strategies to maintain its competitive edge in a market that experiences rapid changes.
Introduction
Marlboro is one of the most popular cigarette brands known for its brand qualities and loyal customers. The cigarette which is manufactured by Philip Morris Corporation has been sold in the market for close to 100 years and it is one of the most popular consumer goods. It serves as the Philip Morris flagship product in the market due to its longevity, strong customer base and its ability to reinvent itself to attract new consumers.
For a long time, the Marlboro cigarette has been known for its power, vitality, and adventurous attributes as shown by American cowboy characters in its adverts. This has encouraged customers to associate it with attributes of strength, power and vitality and this has helped it to register a lot of success in different markets where it is sold.
This report will serve as a market audit of Marlboro which will focus on its current performance and will also further recommendations that Philip Morris needs to implement to help the firm to maintain its competitive edge in the industry.
Environmental Context Analysis of U.A.E
The U.A.E. has a population of about 5.5 million people, a majority of whom are Arabs. However, the country hosts a large number of foreigners who live there for different purposes. It is estimated that foreigners make up more than 70% of people residing in the country. The country has favorable taxation policies which encourage many firms to establish their operations there. The main language spoken by a large majority of the population is Arabic and Islam is considered a way of life which permeates all important segments of the society.
In addition, Emiratis are deeply conservative even though they have embraced different aspects of modernity to help their country move forward. Cigarette smoking and consumption is not highly restricted but manufacturers are required to provide labels that show the real contents of their products. There are several multinationals and local firms which manufacture and sell different tobacco products in the market.
The UAE practices a federal system of governance consisting of seven emirates whose capital is Abu Dhabi. Abu Dhabi is the main oil-producing emirate while Dubai serves as the center of tourism, transport, banking and hospitality. However, the country is ruled by a president who heads the Supreme Council that adopts and implements policies after consultations with monarchs of other emirates.
The heads of the seven emirates elect one of their own to act as president after every five years.UAE has experienced rapid rates of modernization in the last three decades which has increased the rate at which technology is used by the countrys citizens.
Dubain, Mattoo, Asia King, and British American Tobacco products are some of the most common cigarette brands which are popular with local consumers. However popular international brands such as Winston, Camel, Marlboro and Mild Seven command a significant portion of the market share. Lastly, the cigars market has been experiencing positive growth and the largest firm that dominates this segment is Imperial Tobacco.
Competitor Analysis
The main competitors of the brand include: Winston cigarette brand manufactured by RJ Reynolds and Mild Seven which is manufactured by Japan Tobacco. However, the brand has a large share of the global cigarettes market which is estimated at more than 40%. In UAE, Marlboro has a large loyal clientele and this enables Philip Morris to attain good profits from its operations.
On the other hand, British American Tobacco has a significant portion of the cigars and cigarettes market share. It has a strong cross-generational and crossgender appeal which makes it attractive to people of all age groups in different markets where it is sold (Prahalad, & Ramaswamy, 2013, p. 61). Marlboros uses high-impact branding techniques which evoke positive emotional reactions from customers.
The firms competitive strategy focuses on unique packaging, strong brand themes and an effective market differentiation strategy that helps the firm to stay ahead of its competitors. The firms market plans are responsive to prevailing consumer needs in the market and this has helped it to reinforce its unique selling proposition to different customers. It has an elaborate distribution network that ensures most of its products are sold in various retail outlets in Dubai and Abu Dhabi making them easily accessible to consumers.
It appeals to middle-class and upper income clients in the UAE who identify with its brand message of freedom, individual expression and adventure (Prahalad, & Ramaswamy, 2013, p. 64). As a result, this approach has helped the Philip Morris to adopt more flexible pricing strategies for the product to satisfy consumers expectations in different markets where it is sold.
The brands ability to reinvent itself and to appeal to wider consumer segments has given it a higher competitive advantage in the industry. Since it has been in operation for about ninety years, Philip Morris has benefited a lot from its positioning strategy of Marlboro as a global brand. More importantly, the product is manufactured in more than 50 countries and this has allowed Philip Morris to establish joint ventures with other firms for easy market penetration.
Marlboro and other Philip Morris brands sold in UAE are manufactured in China and other Asian countries due to low labor and manufacturing costs (Prahalad, & Ramaswamy, 2013, p. 68). The firm has strong relationships with local suppliers who sell the product on its behalf in the local market. In addition, the firms use of standardized operations has helped it to maintain high levels of product quality and this has helped it to maintain the loyalty of customers in Marlboro.
Porters Five Forces Analysis of Marlboros Industry Environment
New Entrants
The UAE tobacco industry has a lot of barriers for new firms that seek to operate on a national and an international level. Manufacturing, distribution, marketing and product development costs are very high. Legal restrictions on cigarette advertising and strong customer loyalty to specific brands are additional barriers which new firms are likely to face.
Suppliers Bargaining Power
The power of suppliers in the UAE is low due to low tobacco prices. Since the firm can access cheap tobacco raw materials from different parts of the world, this has reduced the bargaining power of tobacco farmers in the industry.
Buyers Bargaining Power
The bargaining power of buyers is moderate and depends heavily on economic performance and personal incomes. In the early 1990s, Philip Morris was forced to reduce prices it charged on Marlboro cigarettes to protect its market share. However, in the last twenty years, industry trends have shown that many Marlboro buyers in UAE are not easily swayed by low prices charged on substitutes.
Power of Substitutes
The inelasticity of the market encourages consumers to opt for alternative lifestyle choices which may cause them to stop smoking. As a result, these alternative choices may impact on their purchasing decisions and this is likely to weaken Marlboros competitive position in the industry. Since consumers are easily tempted to try out other tobacco products, this affects the competitive position of major firms in the market.
Power of Competitors
The main competitors of the company do not pose a serious challenge on its market share due to Philip Morris strong brands that have a large market share. Many companies have clearly defined markets and they use economies of scale to maximize returns in their specific target markets.
Market Research
The firms market research techniques focus on demographic traits, lifestyle patterns, consumers purchasing behavior, and other important factors that contribute to performance. The firm uses data gathered from its marketing research studies to find out effective advertising methods it can use to attract more consumers in different markets where it operates (Prahalad, & Ramaswamy, 2013, p. 71).
Consequently, this allows the firm to come up with effective strategies that enable the product to penetrate different global markets easily to increase its long-term revenues. This has helped the firm to choose more effective distribution channels and promotional strategies which have given it more leverage as it competes with other firms in the industry.
In addition, the firm has also improved its relationships with retailers and this has helped it to find out what consumers look out for before purchasing a particular product. Consequently, this has helped the firm to understand specific profiles of consumers who purchase its products in the market.
The firm needs to use technological approaches to build and maintain good relationships with its customers located in different markets. This will help the firm to understand generational changes that are likely to affect how Marlboro is looked at by consumers in the market and the long-term implications of these changes. In addition, generational changes will help the firm to understand how it was perceived in the past and how it can build on that to improve its current image.
Since many customers in Dubai and Abu Dhabi are exposed to modern lifestyles, they are more interested in being associated with a product that is known for its strong appeal. Therefore, Philip Morris needs to use effective strategies to make such customers appreciate the value they are going to obtain by consuming its products (Prahalad, & Ramaswamy, 2013, p. 75).
Consequently, the firm will be in a better position to use information gathered from its external stakeholders to improve its internal operations to safeguard the quality of its products in the market.
The company needs to find out specific government policies that have a direct impact on its operations in various markets where it operates. This will enable it to set short and long-term advertising strategies that conform to legal conditions enforced in countries where its operations are based. More importantly, the firm needs to evaluate other strategies it can use to reach out to customers in markets where promotional activities by cigarette manufacturers are outlawed.
This will help it to maintain a strong relationship with some consumers who do not know where they can purchase its products (Sivulka, 2012, p. 40). In addition, the firm needs to find out specific standards which are enforced in different emirates, to come up with more effective strategies that respond to existing market conditions. This will help it to improve its product development processes to come up with appropriate products for different markets.
Customer Analysis
Consumers are more interested in fulfilling emotional, symbolic, and social needs whenever they consume Marlboro cigarettes. Some of the branding concepts used to market Marlboro appeal to male customers in UAE because they are interested in the masculine perceptions which are associated with its marketing messages. As a result, this allows Philip Morris to develop closer relationships with its customers to make them understand the unique value they are likely to obtain from Marlboro.
Therefore, customers are attracted to the brand because they want to increase their self-esteem to help them relate better with other people in societies where they live. As a result, this has motivated more customers to participate in different promotional activities such as the Marlboro country where lucky winners are allowed to tour the firms ranch in Montana. Consequently, this has reinforced positive long-term attitudes towards the product in UAE (Sivulka, 2012, p. 43).
The Sheth and Howards model can be used to address specific inputs that influence customers to make different decisions before they choose to purchase the product in the market. Strong packaging and branding designs which are used to market Marlboro encourage consumers to have positive feelings towards the brand and they serve as significative stimulus (Sivulka, 2012, p. 47).
Cowboy characters that are associated with Marlboro have helped to maintain a strong visual appeal and they increase consumers confidence towards the brand. Therefore, they are symbolic stimuli which enable customers to internalize important values that are related to Marlboro. The self-awareness that customers have whenever they consume the product makes them associate it with other powerful influences in their lives.
As a result, feelings of adventure, freedom, and inner vitality which encourage customers to purchase the brand influence the manner in which they view social systems around them. Therefore, this helps them to engage with their peers in different social gatherings more effectively.
Some of the variables that influence customers purchasing decisions include: purchase intentions, internalization of brand message and the extent to which the problem serves their peculiar needs. More importantly, the ability of consumers to interpret various messages released by Philip Morris regarding Marlboro helps them to understand the value they are likely to get from consuming the product (Sivulka, 2012, p. 47).
This shapes consumers understanding making them more prepared to accept improvements that are made on the product to improve their overall usage experiences. Therefore, this approach has influenced the long-term behavior of consumers towards Marlboro in different cities in UAE where the cigarette brand is sold. Consequently, this enables Philip Morris to forecast future patterns of consumer behavior that are likely to have a bearing on the long-term performance of Marlboro in the market.
Segmentation and Targeting
The firm mostly focuses on attributes such as gender, lifestyles, demographics, and spending patterns to guide its segmentation processes in the market. Since the tobacco market is highly homogenous, Philip Morris uses compelling branding concepts to give Marlboro a higher appeal in the market. Other factors like marketing restrictions, health warnings, and negative perceptions make it difficult for new cigarette manufacturers to enter and remain competitive in the industry.
Therefore, the firm relies on focus strategies to increase its growth in the UAE and to penetrate other underserved markets in the Middle East (Sivulka, 2012, p. 51). Consequently, this allows Marlboro to take advantage of its easily recognizable brand to increase the value attached to it by consumers in the market. Since its production processes are highly standardized, the firm constantly comes up with innovations that reinforce the value attached to the Marlboro cigarette brand in different global markets.
The main segments within the market are structured according to gender, lifestyle, social status, age, and demographics. The main segmentation dimensions which are used by Marlboro include product innovations that differentiate it between light and ultra light variants. The ultra-light variant serves customers who are sensitive to the health implications of smoking and it does not contain any tar.
On the other hand, light cigarettes have less tar than normal cigarettes and they target consumers who are not highly sensitive to the negative effects of smoking (Sivulka, 2012, p. 63).
Another dimension that influences the segmentation strategy adopted is cost. However, since many customers are attracted to particular brands, they are not easily dissuaded from purchasing their favorite brands due to a reduction in substitutes prices. Lastly, the product also appeals to different gender and lifestyle patterns in different countries where it is sold.
When Marlboro introduced filtered cigarettes in the 1950s, many male consumers felt that they were feminine and they were discouraged from purchasing them. However, it integrated a lifestyle aspect to the brand using powerful advertising that showed men who smoked filtered cigarettes were outgoing, respectable and ambitious.
This enabled the company to appeal to both male and female segments of the market. Later on, Marlboros advertising concepts that featured the cowboy as the main character helped to strengthen the products masculine appeal making it attractive to male smokers.
The flip-top packet helped to attract smokers of different ages and genders because it gave them a positive smoking experience whenever they used the product (Sivulka, 2012, p. 71). As a result, the products branding has been designed to appeal to customers who are conscious about their self-image. This approach helps Marlboro to attract both male and female consumers in the UAE who are ambitious and willing to try out new lifestyles.
The market also used its strong performance in the U.S. to help it to extend its operations into other countries in the world. This enabled the firm to use a geographic and cultural targeting strategy to increase its appeal in foreign markets. The firm took advantage of international customers preference towards American cowboy characters in movies to attract both male and female consumers in different parts of the world.
Similarly, the firm uses localized marketing strategies to attract cigarette consumers in the country by making them aware about how it conforms to their lifestyle patterns (Egan & Thomas, 2010, p. 31). Therefore, this has allowed the firm to make Marlboro attractive to consumers who prefer to socialize in closed circles in UAE where they can consume it as they discuss different issues.
Positioning Strategy
The positioning strategy which is used by Marlboro focuses on taking advantage of efficient processes in its value chain to give it the desired competitive edge over other substitute products in the market. Therefore, the product is mainly sold in retail stores, discount retail zones, bars and fuel stations. The products positioning strategy seeks to maximize revenues from consumers social perceptions towards smoking by making the product easily available in places where they hang out (Egan & Thomas, 2010, p. 36).
As a result, this approach has helped the firm to use its point of sale locations as advertising centers and this has helped it to increase its visibility in an industry with strict advertising policies. More importantly, the firm has strong partnerships with its retailers who inform it of changing consumption patterns that are likely to impact on its performance in the industry. This approach helps the firm to carry out constant improvements in its value chain processes to increase its appeal in the market.
The positioning strategy adopted by the firm is also closely related to consumption patterns which customers have in different markets. This has helped the firm to offer rewards to retailers to encourage them to give favorable displays of its products in various stores where they are sold. Therefore, the firm is able to gain more shelf space in specific retailing zones where its customers prefer to shop.
This approach has helped the firm to increase the demand for Marlboro cigarettes in different retail centers where they are sold (Egan & Thomas, 2010, p. 39). In addition, the strong promotional edge the firm has over its competitors has helped it to attract more retailers to establish viable partnerships. Since strict advertising laws have been enacted in different countries, Philip Morris relies on close relationships it has with distributors and retailers to maintain Marlboros good performance.
The perceptual map below will highlight different factors which firms in the tobacco industry must be aware about to strengthen their long-term business strategies. This will be used to describe the overall position Marlboro has in the market and how it has helped the firm to maintain a strong lead over other cigarette brands (Egan & Thomas, 2010, p. 41).
More importantly, the perceptual map will be used to describe factors that have helped Marlboro to maintain high levels of consumer loyalty in the market to give it a larger share of the market.
Strong Brands / Weak Brands
Ideal Mass appeal to diverse groups, strong customer loyalty, higher levels of product recognition
Price Sensitive Customers mostly attracted to low prices, low brand loyalty, little or no product differentiation
Moderate Appeals to only specific customer segments, loyalty likely to shift due to various market changes
Low competitive power- short product cycle, low revenues, customers easily attracted to substitutes.
Product Strategy
The cigarette industry is in a mature life cycle and Marlboro needs to use its leverage as the market leader to attract new consumers to help it reinforce its position in the global market. High levels of awareness in the market and health strategies used by the government to discourage young people from taking up the habit have affected the performance of many tobacco companies. The product targets consumers who are willing to pay premium prices to obtain higher levels of satisfaction after consuming it.
Philip Morris uses a standardized approach by maintaining specific attributes the product is known for in the market to maintain its performance. In addition, some product features are designed to suit customers expectations in specific markets where Marlboro is sold to increase consumer appeal (Egan & Thomas, 2010, p. 46). For instance, the firm has developed flavored products such as the ice mint and menthol variations to appeal more to Asian consumers.
The company has also been forced to use alternative channels of distribution to overcome legal restrictions that are being enforced by various governments all over the world on cigarette consumption. As a result, this strategy has helped it to use other forms of marketing to appeal to its customers. In addition, the innovative packaging design and other accessories that are sold together with the product have helped the firm to improve perceptions which customers have towards its products (Egan & Thomas, 2010, p. 50).
For instance, the flip-top packet, attractive filter design, and different product variations have improved customers overall consumption experiences. Therefore, this has made more customers to be satisfied with the quality of products sold to them in different retail locations.
The firms product development requirements depend mainly on the needs of its clients in different markets. Philip Morris is also required to conform to FDA tobacco legislation to ensure all manufactured products satisfy health and safety precautions before they are sold to consumers. All internal quality procedures are strongly coordinated to ensure they conform to quality checks which are enforced by different market regulators in various countries where the firm operates.
The firm is also driven by technological trends in its product improvement processes to come up with innovative concepts that attract new consumers in different locations. The firms research and development teams are working on electronic cigarettes to determine its long-term viability.
This product will target customers who are put off by the smoke emitted from conventional cigarette products (Egan & Thomas, 2010, p. 53). As a result, Philip Morris seeks to create new demand for e-cigarettes in the market to help it maintain its competitive advantage.
The development of electronic product has been touted by the firm as a way of overcoming some legal barriers which it faces in the global tobacco industry. Electronic cigarettes allow users to inhale vapor which comes from liquid nicotine heated by battery-powered cigarette sticks. This shows that the firm has decided to take the health and safety of its manufacturing processes seriously to ensure it conforms to standards which have been established by tobacco industry regulators (Sheth, 2011, p. 103).
However, even though technological advances are likely to create a new shift in the manner in which cigarettes are smoked, the firm intends to identify new growth areas that can be exploited to increase its performance in the market. Therefore, the product development and innovation strategies that have been implemented by the firm are intended to help it overcome various challenges that have restricted its growth in the industry.
Pricing Strategy
Customers in developed countries have long-term attachments to specific brands and as a result, they are not sensitive to prices adopted by various firms that seek to gain new ground over their rivals in the market. However, some generic brands which have been introduced by other firms in the industry use price leadership strategies to appeal to consumers in low income markets.
These brands threatened Marlboros market share forcing the firm to adopt a competitive pricing approach to maintain its competitiveness in the industry, in the early 1990s.
Since then, the firm uses a flexible pricing structure for its products in both local and foreign markets to sustain long-term relationships it has built with its customers over the years (Sheth, 2011, p. 106). Marlboro cigarettes have a high demand in different market segments and this advantage enables the firm to set prices that enable the product to sustain its long-term growth projections.
The price-setting strategy is mainly influenced by taxation, consumers income, competitive environment, and the positioning strategy that is used to sell the product in the market. Marlboro has mainly used these factors to set prices that address the needs of its customers in different market environments.
Competition from other market players in the industry has made the firm to use its economies of scale to come up with market prices which maintain Marlboros value in the market. As a result, this strategy has helped the company to maintain high levels of satisfaction which its customers get after consuming its cigarettes (Sheth, 2011, p. 109). Consequently, the firm has managed to increase the value perceptions which customers have towards the product in the market.
Philip Morris uses a value based pricing strategy to maintain the overall brand qualities of Marlboro in various markets where it is sold. This enables the company to establish long term relationships with new customers that are interested in sampling the product in different markets. Therefore, the price structure is forward looking because it helps to maintain customers attention to the strengths of Marlboro and this encourages them to lose interest in other similar products that are sold in the market.
In addition, flexible pricing strategies used by the firm help it to deal with uncertain trends in the market which are likely to reduce sales volumes (Sheth, 2011, p. 112). Therefore, a reduction in prices helps Marlboro to attract demand from new customers who are willing to switch from other brands to try out the unique taste of the cigarette.
Since Marlboro is an easily recognizable global brand, it relies on flexible pricing to attract consumers in different market segments across the world. This approach helps the firm to adopt localized marketing and distribution solutions that conform to specific conditions which exist in the industry.
As a result, this approach has enabled the firm to reduce the pricing gap which exists between its products and other generic cigarette brands in the market (Sheth, 2011, p. 114). This has helped it to maintain the long-term positive performance of the brand to increase its growth in various target markets. Consequently, this allows the firm to come up with additional strategies to increase its market dominance.
Distribution Strategy
Phillip Morris relies on bars, supermarkets, small and medium retail stores, and fuel stations to sell Marlboro products to consumers in various markets. The firm has agreements with all other smaller firms to display its products openly as a means of making them more visible in specific points of sale locations. In some instances, the firm relies on specific distribution channels which are able to access high and middle-income consumers in high-end establishments.
Some establishments offer specific smoking zones for consumers who are interested in smoking in a more relaxed environment where they can interact freely with their peers (Sheth, 2011, p. 119). As a result, this allows bars and other business firms that are part of the firms distribution channels to offer additional services which increase customers satisfaction. This approach has allowed Marlboro to maintain the value associated with its products in the industry.
Since the main distribution channels are those that are closely linked to customers, the firm focuses on ways of increasing its sales volumes in the market. Retailers are encouraged to offer incentives to customers to make them purchase more packets of Marlboro. The firm also has a strong liaison team that monitors the existing demand in the market and makes recommendations on specific amounts of products to be supplied to different retailers.
Therefore, this allows it to anticipate different changes in consumer demand that are likely to affect the volumes of products sold within specific periods of time (Sheth, 2011, p. 121). Moreover, this approach allows the firm to develop effective communication strategies that resonate with the needs of customers in specific target markets where its products are sold.
Since it has manufacturing operations in different countries in the world, Marlboro has developed closer links with other firms that have attained strong performance in specific market segments. This has enabled the firm to integrate important marketing communications with its supply chain processes to increase efficiency in its operations (Stone & Desmond, 2007, p. 53).
As a result, all important sections of the value chain perform their responsibilities as single entities, thereby reducing the amount of time it takes before products are sold to target customers. This approach allows the firm to be in control of its operations to understand how its value chain processes impact on the performance of its products in the market.
Promotional Strategy
The main objectives that influence Marlboros promotional strategies include: customer loyalty, sales targets, competition, prices, overcoming legal barriers that restrict tobacco advertising and creating new demand for the product. Philip Morris has used different promotional tactics to ensure Marlboro sustains its positive performance in different markets (Stone & Desmond, 2007, p. 55). As a result, this has enabled the product to be promoted in a manner that encourages customers to make positive purchasing decisions.
More importantly, the firm uses specific strategies that make customers aware about the values that shape the product development process to increase their attachments to it. Therefore, this strategy enables the firm to take note of its competitors activities in the market and how they affect its long-term growth plans. Consequently, the firm uses alternative promotional channels to engage with its customers to make them more interested in consuming its products.
The product uses different types of messages and creative strategies to make an impact on its customers in different locations. One of its memorable creative strategies is the Marlboro Country which was started in the 1960s. This strategy attracts lucky consumers to go to the companys ranch based in Montana where they get to experience various attractions which are closely associated with the firms brand. For a long time, the firm used cowboys in their real life settings to display some of its powerful attributes to consumers.
This enabled it to develop close relationships with consumers in different markets to make them aware about its core values. More importantly, this has allowed customers to want to be associated with the firms strong heritage that reflects the lifestyles of middle-class Americans (Stone & Desmond, 2007, p. 58). Promotional messages for the product make consumers aware about self-confidence, freedom, a sense of adventure, and the attractive social status associated with consuming the product.
The legal environment in many countries places a lot of restrictions on cigarette advertising due to health problems associated with smoking. Therefore, the firm mainly uses personalized selling and point-of-sale promotions to market its products to consumers. The product also benefits from dominant display on shelves of various retail outlets to make it more visible to customers who are interested in consuming it.
As a result, this allows customers to make quick purchasing decisions after recognizing the product being displayed in a particular retail zone (Stone & Desmond, 2007, p. 61). Customers are offered additional incentives to make them see the value they are likely to obtain from consuming the brand compared to other competing brands in the market. As a result, coupons, temporary reductions and additional products are offered to encourage consumers to have more positive attitudes towards Marlboro as a product.
The firm is also involved in sponsorship campaigns but on a smaller scale compared to two decades ago. In the past, the firm was involved in the sponsorship of sports events such as motor racing, Ferrari Formula 1 Team and other entertainment events in different parts of the world. In addition, the firm is also famous for giving prizes to customers who participate in various competitions to encourage them to be more loyal towards its brands (Stone & Desmond, 2007, p. 65).
One of the most popular methods is annual sweepstakes that are done to increase the sales of Marlboro in different markets where lucky winners get to win free holiday tickets, land, and other monetary awards. This approach has helped the firm to increase the performance of the Marlboro brand in different markets. All these strategies are used to pull customers to be more loyal to the brand to increase its sales in different markets where it is sold.
Customer Service and Relationship Activities
Philip Morris uses strong branding concepts to make Marlboro maintain its competitive edge in the industry. This approach allows the firm to use integrated marketing communications strategies to stay in touch with its consumers in different locations across the world. The firm has established different variants of Marlboro to conform to specific cultural influences and lifestyles in different countries.
The company has a reliable sales team that works closely with retailers who are given rewards to encourage them to offer high-quality customer service (Stone & Desmond, 2007, p. 69). More importantly, retailers are encouraged to relay to the company any information that customers have regarding the quality of products sold to them to respond to key issues that arise. This approach allows the firm to address any concerns that customers have regarding its products quickly.
The main relationship activities which the firm organizes are visits to its ranch where lucky customers get to bond and share experiences they have regarding the product. Philip Morris organizes annual sweepstakes that allow lucky customers to get vacations, financial awards and a visit to Montana to help them find out more about Marlboros history and its corporate values. In addition, the firm also endears itself to customers and other stakeholders by sponsoring sports and other events which attract millions of people (Stone & Desmond, 2007, p. 72).
This helps it to improve its own reputation in public because it is able to show that it appreciates different events that have a lot of meaning to many people in different societies. Moreover, the firm also warns its customers about the dangers of smoking to allow them to make their own choices whenever they purchase and consume its products. Therefore, this allows the firm to participate in awareness programs that sensitize customers on the health risks they expose themselves to as a result of smoking.
All these customer service and relationship activities have been instrumental in the firms growth in the industry. They have helped it to sustain the value of its brand in the market thereby increasing its revenues.
More importantly, the firm has integrated modern lifestyles to become part of its main brand message allowing customers to have emotional connections with Marlboro in different locations where it is sold. In essence, this has allowed the firm to rely on its strong American roots and values to come up with a brand that conforms to middle-class lifestyles of its target customers across the globe.
Conclusion
Philip Morris needs to find ways of making the product more appealing to new customer segments. Since the global tobacco markets life cycle has reached the maturity stage, the firm needs to look at other ways to develop the product to create new demand in different locations where it is sold. In addition, the firm also needs to use the strong brand loyalty Marlboro commands in the market to attract new customers who are interested in electronic cigarettes.
The electronic cigarettes segment has the potential to offer the firm a lot of returns in future because many consumers are willing to try out alternative tobacco products. This will help the firm to increase the amount of revenues it earns in the industry in the long run.
One of the most critical challenges facing the tobacco industry is the restrictive legal environment. This has created a lot of problems for various firms that are interested in establishing strong relationships with their customers. As a result, the firm needs to invest in strong risk management procedures to help it overcome different types of risks it is likely to face in its operations.
More importantly, the firm needs to find out specific avenues through which it can be able to establish stronger collaborations with its stakeholders to help it attain good results in the long run. Consequently, this will make it easy for the firm to identify new opportunities it can exploit to increase the value of its operations in the industry.
Recommendations
Improvements in research and development programs will enable the firm to come up with innovative products which can allow it to increase its sales revenues in the long term.
The firm needs to find out other distribution and marketing channels it can use to reach other customers who rarely visit different retail outlets.
Philip Morris needs to come up with ways of marketing the electronic cigarette aggressively to deal with problems that are likely to arise due to maturity of the markets life cycle.
The firm also needs to use online distribution channels to cut on distribution to reach customers who are interested in consuming its products but cannot access various retail stores where its products are sold.
It also needs to find new ways of engaging with female consumers by introducing product variations that have sophisticated designs, tastes and attributes.
The use of technological processes will help the firm to streamline its manufacturing, product development and supply chain processes to improve its long term performance in the industry.
Lastly, Marlboro needs to avoid using price leadership strategies in various locations where it operates because this may have a negative impact on the quality of its brand in the long run.
References
Egan, C., & Thomas, M. (2010). CIM handbook of strategic marketing. New York, NY: Taylor and Francis.
Prahalad, C. K., & Ramaswamy, V. (2013).The future of competition: Co-creating unique value with customers. Boston, MA: Harvard Business Press.
Sheth, J. N. (2011). Winning back your market. New York, NY: Marketing Classics Press.
Sivulka, J. (2012). Soap, sex, and cigarettes: A cultural history of American advertising. Mason, OH: Cengage Learning.
Stone, M. A., & Desmond, J. (2007). Fundamentals of marketing. New York, NY: Routledge.
The Goldman Sachs is a leading brand in the financial services sector. It has the same marketing message throughout its global markets although the ingredients used and the price is determined by a countrys economic condition and culture. The brand management always considers the two before introducing it to the markets because of a strong relationship between the brand and culture though they are separate disciplines.
They have also tried to reflect the meaning of brand in terms of cross-cultural and cross-national perspectives and have hypothesized that the religion, culture and other socio-cultural factors have some direct influence on the brand strategic management.
In order to address modern challenges that the organizations like Goldman Sachs are facing today, various scholars and researchers have suggested some interventional strategies. Which mainly focuses on the interaction level between the employees and targeted customers in the context of their cultural affiliations because it can be enhanced through developing synchronization between their cultures (Ruffino,49).
Goldman Sachs Performance Analysis
During the fiscal year of 2010, Goldman Sachs faced a number challenges. Still, the company revived its trust among the consumers by adopting diversity and offering services. Goldman Sachs reduced absenteeism and increased performance through this approach.
In order to revive performance and win back customers, the company started a scheme of bonuses for all employees if they achieved the benchmark levels of performance set by management. This policy showed significant changes in behavior and returned the company to profitability. The second kind of behavior learning is through negative reinforcement.
Punctuality is a persistent issue at almost every firm in the world. In order to reinforce a desirable behavior by removing the negative reinforce, the likelihood of repeating the negative behavior is diminished. Not until employees were pressurized and threatened that unless their punch cards were punched with the times, the employees would not be paid.
After a few reminders, the employees were using the time clock. Here, the possibility and threat of not getting paid served as a negative reinforce to get a desirable outcome of getting punched cards. Punishment serves to reduce the occurrence of the undesirable behavior. In extinction, the undesirable behavior is completely eliminated from being repeated by the individual.
Effectively Managing Diversity at Goldman Sachs
Diversity plays a significant role when it comes to efficiency of management and workers throughout the organization. It helps companies retain employees by encouraging them to work together to identify, discuss, and solve a variety of issues and welcome constructive conflict to solve their problems.
This approach has helped Goldman Sachs helped to solve a variety of customer problems as well and increase customer satisfaction.
Every person has a different style of thinking and utilizing his or her cognitive abilities. Some people are more inclined towards arts and some towards sciences and mathematics. This is termed as right brain thinking or left brain thinking. In any typical organization the amount of brain power used is rarely above 50 per cent.
As the seniority of the management increases and they become more cynical, the brain power reduces to a maximum usage limit of 35 per cent. In this competitive business world when organizations are seeking a sustainable competitive advantage, corporations should look towards building a culture that raises benchmarks of mental performance.
Goldman Sachs is a renowned regional financial service and provides personal banking, investment, lending services and advice to members to improve their financial well-being. They have employed the Whole Brain Dominance method in their organization to improve the communication and efficiency within the management team to assist with a cultural change towards better relationships with members and employees.
The management team of the company is engaged in a one day training session run by regional training specialist. By the end of the session, each member of the management team was able to identify their strengths and how they could leverage their strengths and improve weakness to be able to support the team (Ruffino,2009).
All this information proved out to be pivotal for the organization and managers. The result was a success leading to the whole team operating more effectively and opening communication between team members.
The company makes use of affirmative action in order to balance the organization. Nevertheless, if affirmative action is coupled with valuing of the differences, to some extent it will work better, if developed within that particular organization.
They must organize programs, which are designed to foster the awareness of the differences and acceptance of cultural differences. The lack of understanding may worsen situations but if organizations bridge cultural differences by these programs, the employees would be able to work efficiently together (Goldman Sachs)
According to Lynch (26), corporate strategy reflects the arrangement of objectives and goals of a corporation and a devising plan to meet those objectives. They are usually narrated to describe the present status of any company or to predict the future scenarios of the company. Two important aspects of corporate strategy are the sustainable competitive advantage and the value added resources or developments.
The major sources of sustainable competitive advantage include differentiation, low costs, niche marketing, high performance technology, superior quality, superior service, vertical integration, synergy, culture, leadership, and structure of organization.
Sustainable competitive advantage is the utmost requirement of strategic management research and practice. It has been developed that the organizational identity may serve as the supplement of sustainable competitive advantage because it designates an organization with the distinctive advantages over its competitors that it holds.
Various schools of thoughts provoked diverse concepts of organization theory. As a result, a sharp contradiction whilst conceptualizing organization theory could not integrate thinking among organizations. The new ideas emerging in organization theory should encompass novelty, consistency, and reliability.
However, the facts revealed that an overwhelming contradiction could be viewed in the existing schools of thoughts due to diverse and uncorroborated ideas. In order to reduce this contradiction, the organizations should adopt adaptability while reframing their organizational structure in accordance with changing trends (University of the Pacific, 123).
The element of diversity has also become a critical factor for organizational management these days. To work through such critical challenges, the organization theory should also contemplate diversity during this current era. The inter-organizational systems approach necessitates the incorporation of diversity so that the changing objectives of organization can be achieved accordingly.
For this very purpose, the educationists needs to revise the prevalent concepts of organization theory on the basis of modern trends so that the prospective leadership should hold extensive knowledge and must be capable to adapt with diversity and environment (Johnson & Fauske, 25).
Goldman Sachs has already strived through various challenging periods since its inception. However, this company still needs to implement novel concepts of organization theory so that it can meet the consumers demands with every change in environment. Goldman Sachs, though, has faced many challenges but still its leadership was competent to go through.
Affirmative Action in the Goldman Sachs
The operations in human resource section of Goldman Sachs has been changed by Affirmative action. In fact, the CEO of Goldman Sachs realized that he must create an atmosphere of fairness in the process of admitting employees into the company in order achieve success (Dooley 129). Several laws that regulate the employment processes have been enacted to promote the diversity.
These laws take into consideration all sections of society during hiring as well as the humane behavior based on remunerations, employment conditions and dismissal of employees. Affirmative action is a result of the demand from numerous activists and trade unions, who demand for fairness in the processes of employment.
In compliance, the Goldman Sachs has steadily embraced the affirmative action (Johnson and Fauske 120). Goldman Sachs has established a number of frameworks through which affirmative action can be achieved whereby inclusive recruitment course is one of them.
Recommendations for Interventions
According to Barak and Levin (22), the diversity of workplaces has led us to various serious issues, such as exclusion and lack of interest in organizational information.
LeFevre, (127) has also devised the conflict management strategies based on cultural diversity because they believed that strong interaction between heterogeneous groups would develop more productive effects relating to job performance and overall organizational achievements (Snavely and Bianco 126).
As far as the impacts of stress upon diverse employees personal lives are concerned, they usually suffer from various mental and physiological problems, like aggressive behaviors, moodiness, irritation, headache, increased perspiration, increased heart rate, and ultimately, job burnouts.
There are also some social issues associated with stress, which include imbalance between professional life and personal life, improper attitudes towards organization and increased absenteeism rates (Johnson and Fauske, 45).
Thomas and Robin (229) have recommended that strong leadership skills should be in the workplace, which should manage stress through team building and diversity training programs.
Similarly, the coping strategies have also been given importance by them because they believe that the working environment must keep the balance between the demands of employees and the organizational strategies to fulfill their demands (Kecia, 26).
Teamwork is the key element in many technical and non-technical work places (Sachs n. p.). However, the leveraging of diversity and teamwork may have direct influences on the overall performance of the team through many mediating variables. That is why; it is widely considered that the work group characteristics, communication, and task are the major indicators of team performance in relation to cognitive diversity.
However, it has also been disclosed that the systems operated by human-machines receive less benefits of team diversity and management teams in such systems have been found more efficient and result-oriented towards organizational goals and objectives (Ruffino, 52).
Similarly, communication is another important segment of teamwork, which needs to be conveyed continuously without interruption to provide support and guidance to the team. The nature of responsibilities itself is very complex in its nature because mediates the relationship between team diversity and performance management (Thomas and Robin, 229; Thiederman, 132).
According to Johnson and Fauske (24), the leveraging diversity plays an important role in performance improvement if certain conditions to control diversity programs positively and meet organizational objectives are to be met.
It was deliberated that the major paradigm shifts in the U.S. labor markets developed diversity in the work places successfully when the Bureau of Labor Statistics indicated the diversity in the field of labor because the managers felt at that team diversity should be criterion to hire talented work force (Dooley 126).
Additionally, this criterion of team diversity also led to the inclusion of new labor markets, enlarging the client markets for recruitment of labor pool.
In other words, multiculturalism was promoted in the name of team diversity by the various labor markets of the United States in order to accommodate diverse people as corporate citizens. The major activities as initiatives of team diversity included recruitment, skill retention, leadership development, external partnership, communication, training, and staff management (Ruffino,49)
Conclusion
Goldman Sachs should develop comprehensive tools of human management. However, the company should explore opportunities in the area of diversity and competitive pressure because these are the very areas through which company can grow further if it comes up with sustainable plans.
Works Cited
Dooley, Kevin. Organizational complexity . in International Encyclopedia of Business and Management. London: Thompson Learning, 2002. Print.
Johnson, Bob. & Janice Fauske. Introduction: Organization theory, educational theory, and educational research . Journal of Educational Administration. 43.1 (2005): 5-8.
LeFevre, Joseph. The Value of Diversity: A Justification of Affirmative Action . Journal of Social Philosophy. 34 (2003): 125133.
Ruffino, Carr. Managing Diversity. New York: Pearson Learning Solutions, 2009.
Snavely, Kathryn and Peters Bianco. Cross-Cultural/ International Communication; Exporting; Globalization, 2010.
Thiederman, Sondra. Making Diversity Work: 7 Steps for Defeating Bias in the Workplace. New York: Kaplan Publishing, 2008. Print.
Thomas, David and Ely Robin. Cultural Diversity at Work: The Effects of Diversity Perspectives on Work Group Processes and Outcomes . Administrative Science Quarterly. 46.2 (2001): 229.
University of the Pacific. Cultural Diversity: Leadership Needed. 2006. Web.