Category: Business 11471

Introduction

An individuals attitude towards risk might be associated with endogenous variations for many motives. First, possession of financial assets infers hostility with risky verdicts new to the person. Second, creating risky decisions denotes ambiguity and might contribute to learning in a group framework. In regards to portfolio selection, this may encompass the accumulation of finance-oriented human capital as well as increasing sureness in their skills. Third, modifications in readiness to assume risks in financial related transactions could be motivated by transformations in the discernments of the risky preferences and results that persons encountered during previous financial market involvement. In a real scenario, ones investment choice does not continuously rely on lucid thoughts, but can occasionally be illogical (Ainia & Lutfi, 2019, p. 401). Therefore, people should also not eliminate that asset holding singularly impacts attitude towards risk.

Various studies about the connections between investment and risk attitudes are anchored in common sense and spontaneous observations of behavioral variances between risk-seeking persons and risk-averse. In such a scenario, there is a need to substantiate the nature of the behavior between risk attitude and investment. When faced with an investment resolution, all investors encounter tradeoffs between risks and return (Ainia & Lutfi, 2019, p. 402). Hence, a financiers view on risk can impact his venture decisions. Market commentators regularly cite fluctuations in investors toward threat as a probable elucidation for swings in asset values. Therefore, instances of financial turmoil correspond to anecdotal evidentiary materials of abrupt changes in market sentiments from risk tolerance to avoidance. While these moves might drive by the deviations in the basic disposition of specific investors approach towards risk, they appear more persuaded to reflect effective threat perceptions manifested by current investors conduct. Specifically, attitudes identical to that encouraged by swipes in the fundamental penchants of investors over return and risk can also mirror variations in the structure of lively market players or even tactical trading trends.

Tools for tracking the vibrant investors attitude to assume risk can result in an enhanced comprehension of the working of financial markets. Explicitly, they play not only in realizing effective risk management from an individual perspective, but also in the enhanced evaluation of bazaar circumstances by the policymakers. The drivers of risk attitudes are understood in various ways. For instance, by comparing the statistical probabilities of future investment returns in historical trends of spot prices with the analysis of similar prospects filtered through market contributors effective risk choices derived from decision values. Moreover, it is arguable that the comparative scope of downside threat, as analyzed from the arithmetical vantage and preference-weighted points, moves together with the existing operative attitude of market contributors towards risk. A brash investor can undervalue risk, resulting in sub-optimal decisions (Ainia & Lutfi, 2019, p. 402). It has been established that drivers of risk attitudes sourced from diverse equity markets contain substantial joint components, signifying that investors perceptions can surpass national borders.

Definition of Attitude towards Risk

The notion of risk is largely a modern issue as it carried less connotation. People face numerous risks in the course of their lifespan (Emilien, Weitkunat, & Lüdicke, 2017, p. 23). In medieval and ancient societies, the concept of risk management could never have appeared since fortune was predominantly linked to the act of God, fate, or luck. Over time, it has become apparent that the idea of risk is currently central to the societal discourse. First coined by Portuguese explorers who labeled uncharted zones of the sea as being risky, the term has progressed from carrying a spatial implication to having a present temporal connotation whereby it recounts to future occurrences.

Attitude towards risk can be described as the selected state of mind regarding those reservations that could create negative or positive impacts on the core objectives. Attitude towards risk is generally executed subliminally and without careful authentication, but like any other feeling, risk outlooks are a preference for a group or an individual. Investors need to launch consistent criteria for assessing and reacting to risk across the businesses. Explicitly, the risk version remains a leading pillar within the models employed by economists (Díaz & Esparcia, 2019, p. 1). A challenge with risk is that individuals logically have idiosyncratic attitudes towards it, which tend to vary with circumstance.

Different types of attitudes towards risk exist and include risk aversion, risk-seeking, and risk-neutral. First, risk aversion is the kind of attitude where an investor is inclined towards certain rather than uncertain occurrences. Risk penchants rely on various determinants, but to make their execution simpler, the established literature recapitulates them in a widely acceptable manner (Díaz & Esparcia, 2019, p. 1). Typically, most people tend to depict this kind of risk approach. Managers need to appreciate that performing institutions regularly score highly when they become belligerent. Nonetheless, certain situations allow payment of fines to elude threat. In many scenarios, project managers tend not to be risk-averse due to the possibility of intentional forfeiture of viable chances. Consequently, their risk-aversion trend can create a better prospect of enhanced gains. Second, risk-taking is the kind of conduct or attitude in which an individual inclines more towards uncertain events than certain activities. An investor can manifest a risk-seeking demeanor when preparing to settle a fine for them to incur a possibility. Predominantly, the rich can be described to be risk-averse while the poor are more risk-seeking.

Another dominantly depicted threat behavior is risk-neutral exhibited in people who possess an indifferent feeling towards possibility. The persons frequently parade the oddity, especially when choices are anchored wholly in anticipated fiscal price. It is significant for a project manager tasked with handling risks to read the kind of attitude since exhibited feeling might reflect a role of alleged affluence of the task. The program manager will depict risk-seeking behavior when the apportioned financial plan is sufficient. However, they could be risk-averse if the budget is insufficient. The investor preference model examines the attitude of persons when challenged with making venture choices (Díaz & Esparcia, 2019, p. 1). Therefore, investors should remain watchful of the robust influence of risk behaviors on selections. Moreover, a risk-averse investor massively stresses the ramifications of the adverse incident while those risk-seeking ones emphasize the possibility of a lost prospect. Two possibilities of dealing with risk have largely been discussed which encompass; transferring and controlling risk. Nonetheless, from the beginning, it is notable that risk can be avoided or accepted.

How is Risk Attitude Measured?

Measuring risk attitude reliably and validly is an essential aspect of prosperous financial advisory in the realms of customer satisfaction. It is increasingly becoming vital for investment advisors and economic planners. The commonly used measures of risk attitude are questionnaires, which are extensively accepted by practitioners, supervisors, and scientists (Metzger & Fehr, 2018, p. 1). The supposition is that responses of the investor proxy the persons risk attitude. Events of risk attitude have embraced regulatory criteria to meet the suitability needs.

Measuring risk attitude through the scientific perspective has drawn considerable amounts of research yet there exists substantial disagreements on the extent of possibility an investor is willing to assume. Popular scientific methods of gauging risk attitude encompass questionnaires, choice experiments, or investigations using risk relating tasks. Furthermore, indirect attitude measures comprising the Implicit Association Test are progressively being incorporated since they permit analyzing embedded cognitions, which are pertinent to the framework of sound decision making. Modern investment theories regard the market to be effective while investors remain rational (Zahera & Bansal, 2018, p. 211). While the use of questionnaires in calculating risk attitudes has been widely accepted in financial advisory due to their simplicity in practical applications, they also carry some limitations.

First, individuals need to openly pronounce their preparedness to start risk. The core motive is easily identified by the investors, making replies to be prone to intentional control. The scenario implies when persons are not motivated to say the truth or just attempt to amaze their interlocutor. It is sensible for various investors to make diverse risky investment portfolios (Institute Research Foundation, 2018, p. 11). Second, responding to attitude interrogations needs some ability for individualized reflection and observation. Not everybody fulfills this need to the same extent as required. Therefore, the use of questionnaires to quantify risk attitudes from a scientific perspective needs to ensure domain specificity, validity, and reliability.

Attitudes need to be gauged in a domain-specific manner since a risk behavior was originally regarded as a domain undefined trait but recent studies show that a common risk element cannot be eliminated definitely. However, it is broadly recognized that domain-specific assessments are significant when predicting and explaining behavior. Moreover, risk-taking largely remains a diverse concept rather than dependable as witnesses across financial, moral, recreational, social, and safety issues. Current studies demonstrate that evaluating domain-specific attitudes towards risk through questionnaires can be more prosperous in gauging risky behaviors than adopting utility concepts (Zahera & Bansal, 2018, p. 217). Behaviors concluded from perilous selections are a replica of the domain-oriented conduct instead of thinking of a steady trait.

Measuring risk attitude through scientific means also needs to ensure reliability since this aspect maintains the quality of assessment as well as the overall uniformity of the experiment. Various factors such as the number of pieces and item difficulty can limit the reliability of using questionnaires. Regarding the item quantity, the received score of any experiment constitutes both a correct tally and a random inaccuracy. Therefore, the process is extremely consistent when unplanned mistakes are minimal (Zahera & Bansal, 2018, p. 213). For an item difficulty, if the survey aims at the populace, then the dependability roots in the intricacy of the documented questions. Based on the emotional works, interrogations should be understandable enough without unambiguous expansion and should not require a statistical or mathematical background.

Moreover, tools integrating numbers, such as variance and probabilities can result in cogency apprehensions since they intensely emphasize reasoning aspects while neglecting emotional components. For instance, the prospect theory-based questionnaire typically concentrates on choices between losses or sure gains and lottery tasks, gambles, or other financial measures (Metzger & Fehr, 2018, p. 3). Questions also need not be too precise to an understanding of investment, such as selecting the required risk-gaining profile from a choice since investors might lack the comprehension of probable consequences. Therefore, items need to be simple for the enhanced understanding by everyone. Finally, a risk attitude measure must incorporate validity since a test is effective when the tool evaluates what is meant to do. When ensuring validity, two main points should be considered: the use of a suitable validity principle and the application of an appropriate sample.

How an Event Alters Investors Attitude toward Risk

Theoretical and Empirical Analysis

To make appropriate investment choices, investors require information and need to be conversant with existing activities in the area of interest. Awareness can be attained through social learning as well as collecting pertinent information from diverse sources. The extent of awareness of various events can impact an investors attitude by enhancing the level of knowledge and forecasting ability. According to Metzger and Fehr (2018, p. 6), awareness by an investor can be improved through learning from investment opportunities from peers, distributors, and issuers of the information who remain consistently informed by financial expert intermediaries. Alternatively, cognizance can be increased by sensitizing key stakeholders on investment matters, which is largely determined by venture capitalists resources, educational background, and age. Such information when possessed by a person can help determine their risk insight. When information is availed, investors handle it decidedly risky and vice-versa. However, when certain events come into play, they can alter an investors attitude towards risk.

Firstly, investor awareness, which can have two events, unaware and aware play a significant role in altering risk attitude. For instance, an aware investor might understand the presence and features of a risky asset such as stock and hence spend on bonds. In stock markets, it is common for information to trickle from the source to investors through many channels. These include voluntary disclosure, obligatory public disclosure, and other ways that comprise buying study reports from stock analysts and consulting firms. Some companies also conceal useful information through window dressing and other accounting loopholes. Risk repugnance is essential in life-phase prototypes as individuals encounter risks regarding income, investment, asset returns, employment, and health (ODonoghue & Somerville, 2018, p. 91). However, professionals can mine data by using different statistical tools, mathematical models, and other techniques.

Secondly, social interaction can change an investors attitude and make a different choice. Through social learning, an individual can receive crucial information that alters a decision. For instance, people interested in stock investment can seek the necessary information from a peer who had ventured into such a deal. Depending on the nature of advice, the outcome of such an interaction can make or break the decision of an individual to capitalize on a particular area of interest. A selection that encompasses risk is better exemplified by a lottery since it has a record of likely results coupled with the likelihood linked to every outcome (ODonoghue & Somerville, 2018, p. 91). Therefore, the peer effect can increase or decrease an investors attitude towards risk. Many studies record that peer effects are a powerful determinant of portfolio selection. The level of education sometimes does not matter, especially in stock ownership. The highly educated can invest in stocks since they can master the requirements through their knowledge and experience. Newspaper readership also influences raising awareness since increased circulation raises the possibility of investment opportunities such as corporate bonds, mutual funds, and stock.

Thirdly, cognition aspects can impact an investors attitude towards taking a risk. According to Institute Research Foundation (2018, p. 30), cognition is the individuals conviction towards an object, which the belief can either be negative or positive based on aspects such as dishonesty, inspiration, intelligence, morals, and knowledge. The evaluation of cognitive elements of a financial perception is upsetting and might be deceptive. Emotional responses or assessments happen at an early phase and can be more fundamental than cognitive appraisals. It is acknowledged that cognition and emotion are symbiotic and not competing.

Moreover, emotions emanating from core beliefs can make a financier regrets an investment choice since they consider that a bad outcome can be averted. For example, in a stock market, an investor is keener on the opportunity and financial risks than other possibilities (Moreland, 2018, p. 7). When an investor settles on a deal resolution, the discernment of these two perils tends to be a deciding element. When the venture capitalist is risk-averse, then he will initiate appropriate actions to lower the possibilities, for instance, by diversifying the investment. If the investor is risk-seeking, he will not expand the venture portfolio and continue with the undertaking with the hope of receiving high returns.

From an empirical perspective, scientific aspects play a role in determining an investors attitude towards risk. Outcomes from practical methods such as using questionnaires fulfill regulatory and scientific standards as demonstrated in a real-life portfolio. Empirical research conducted by Metzger & Fehr (2018, p. 3) to investigate current practical events that can alter an investors attitude towards risk showed significant results. Due to regulatory needs, evaluating an investors attitude toward risk is essential to every stakeholder (Zhang & Li, 2021, p. 5). In the study, the authors sought to establish a risk behavior survey, anchored in present tools for fulfilling scientific as well as regulatory standards. The investigators assessed factual investors and associated the examination statistics with real investment figures to evaluate the rationality of the strategy.

Significantly, the risk behavior catalog utilizes just six simple-to-understand items, which are reliable and explain considerable ways in influencing an investors attitude towards risk. Therefore, the obtained results fulfill the empirical aspect that drives attitude towards risk. Scientific approaches such as the use of questionnaires practically explain the measure of risk attitudes. The method provides a general perspective of an investors mind towards starting or circumventing a risk, as well as how to progress in circumstances with uncertain results. It also offers all-encompassing aspects in enterprise risk management, business continuity planning, and project risk management with a broad range of risks an individual or organization can face (Hopkin, 2017, p. 5). These characteristics, coupled with the anticipation of profits, assist investment portfolio construction and decision-making.

Conclusion

An individual eagerness to incur risks is momentous for any venture capitalist. Notably, financial assets can create significant revenues while carrying along diverse risks. It is possible to forecast minimally risk-averse investors and have their views on shares of precarious properties, such as stocks through portfolio theory. The above theoretical framework has been utilized in numerous empirical researches to build strategies of risk aversion from the individuals portfolio selections. Pragmatic measuring of this logical connection has been the principal goal of many past studies. The research employs survey data to gauge the risk outlooks of investors either through interviewing about individual attitudes and behaviors or even by hypothetical decision challenges relating to perceived threats and income. The research establishes a significant statistical correlation between portfolio choice and risk attitudes. Typical economic models adopt that people are endowed with steady risk attitudes. However, it is conceivable that venturing into chancy properties impacts risk attitudes.

Attitudes toward risk influence an individual perception of a broad range of events. The research has provided deepened analysis of drivers of risk attitude, the accepted definition, and ways of measuring risk while also expounding on events that alter risk behaviors through theoretical and empirical perspectives. Investors with a higher inclination towards taking risks can possibly want to hold company assets, stocks, and bonds. Specific risk aversion seems to be categorized by inexplicable heterogeneity. Moreover, it has been established that every investor is a risk-taker since all the decisions have an aspect of uncertainty about them. The frequency at which decision-makers relish assuming risk relies on their attitudes. For instance, the challenge of deciding whether to vend a service or product depends on possible events, probable actions, payoffs, and the likelihood that the incident will happen. Consequently, selecting the appropriate action necessitates constructing a verdict chart to abridge the appraisal of the above four elements.

Following the latest global financial crisis, the protection of investors has gained considerable priority by various authorities tasked with international financial business regulation. Suitability has become the prime model of new rules and procedural needs. For instance, the European Union uses the Markets in Financial Instruments Directive whereas the U.S. has adopted the Financial Industry Regulatory Authority Rule 2111. Explicitly, suitability integrates the mentors need by suggesting transaction approaches, which suit the state and needs of customers, thereby avoiding misselling. Under this scenario, an advisor requires proper and sensible information to evaluate suitability. For example, they will require the financial situation, time horizon, investment objectives, and clients readiness to admit risk attitude. Consequently, establishing appropriateness relies on the capability in analyzing an investors risk profile.

The values of an investment reflect a ventures preferences regarding the likelihood of prospective payoffs and their evaluation of such settlements. The incremental figures to a financier of future payments reduce with the extent of their wealth. Therefore, everything else is kept constant, and investments that incline to generate higher payouts in circumstances when wealth is lesser tend to be highly valued. Anchored in this premise, contemporary finance theory models value anticipations of the future settlements computed not based on objective statistical probability but instead based on the favorite-weighted possibility measure.

References

Ainia, N. S. N., & Lutfi, L. (2019). The influence of risk perception, risk tolerance, overconfidence, and loss aversion toward investment decision making. Journal of Economics, Business, & Accountancy Ventura, 21(3), 401-413. Web.

Díaz, A., & Esparcia, C. (2019). Assessing risk aversion from the investors point of view. Frontiers in Psychology, 10, 1490. Web.

Emilien, G., Weitkunat, R., & Lüdicke, F. (2017). Consumer perception of product risks and benefits (1^st ed.). New York, NY: Springer.

Hopkin, P. (2017). Fundamentals of risk management: Understanding, evaluating and implementing effective risk management (4^th ed.). London, England: Kogan Page.

Institute Research Foundation. (2018). Research Foundation Review 2018 (1^st ed.). Charlottesville, VA: CFA Institute Research Foundation.

Metzger, B. A., & Fehr, R. R. (2018). Measuring financial risk attitude: How to apply both regulatory and scientific criteria to ensure suitability. Journal of Behavioral Finance, 19(2), 221-234. Web.

Moreland, K. A. (2018). Seeking financial advice and other desirable financial behaviors. Journal of Financial Counseling and Planning, 29(2), 198-207. Web.

ODonoghue, T., & Somerville, J. (2018). Modeling risk aversion in economics. Journal of Economic Perspectives, 32(2), 91-114. Web.

Zahera, S. A., & Bansal, R. (2018). Do investors exhibit behavioral biases in investment decision-making? A systematic review. Qualitative Research in Financial Markets. Web.

Zhang, Q., & Li, Z. (2021). Time-varying risk attitude and the foreign exchange market behavior. Research in International Business and Finance, 57, 101394. Web.

Introduction

Background to the study

Lufthansa is one of the largest firms in the European airline industry. The firm operates from two main hubs which include Munich and Frankfurt. In its operation, the firm serves approximately 242 destinations which are located in 87 different countries (Lufthansa, 2008, ¶ 3). Apart from its passenger business, the firm operates other businesses which include aircraft maintenance, catering, devision of cargo and information technology. The firm has undergone via tough time in establishing itself as the most profitable firm in the global airline industry. In the 21^st century, there has been an increase in the rate of globalization which has affected almost all the economic sectors including the airline industry. In addition, there has been an increase in customers travelling demands in relation to quality of services. According to Hitt, Ireland, and Hoskisson (2009, p.236), increased globalization has resulted into an increase in the level of within the local airline industry. In addition, there has been emergence of electric trains which have resulted into increased intensity of competition to the airline industry. This is due to the fact that they deliver quality and fast services to the travelers. To remain competitive in the international market, firms in the airline industry have formulated various international competitive strategies. This paper is a report on the international global challenges facing Lufthansa Group.

Aim

The aim of the report is to identify the international strategies that Lufthansa has adopted in expanding into the international market. It also identifies the elements of Lufthansas cooperative strategy and the potential risks of the cooperative strategies. In addition, the report also analyzes the possible uncertainties that the firm faces by operating beyond the national boundaries. It is also the objective of the report to determine how the organization structure and other controls can be used to support Lufthansas strategy.

The report also analyzes the various strategic actions that can be incorporated by Lufthansa in developing human capital, promoting entrepreneurial mindset, developing an effective organization structure and reducing complexity at Lufthansa.

Scope

The paper entails analysis of the firms international strategy which entails the cooperative strategy. Other methods that the firm has incorporated in expanding into the international strategy are also considered. These include organic growth, consolidation and partnership. The elements and objectives of Lufthansas cooperative strategy are also analyzed. The report also considers the challenges of operating in the international market and the risks of cooperative strategy. Finally, a number of recommendations are made on how to improve the firms human capital and reduce organization complexity. However, the report does not include the various costs that the firm will incur in restructuring its organization structure.

What type of international strategy has the company chosen and what means has it used to expand internationally?

Cooperative strategy

It is the objective of Lufthansas management to ensure that the firm has strengthened its position as the leading premium carrier in the European airline industry with a global capacity. To achieve this, the management of the firm has to ensure that Lufthansa covers numerous traffic flows to, from and through Europe. As a result, the firm has developed an effective international growth strategy. The strategy involves formation of strategic alliance. Strategic alliance is an international business strategy in which a number of firms come together and develop a legally independent firm. The objective of strategic alliance is to enable the firms share some of the capabilities and resources that they have thus developing a higher competitive advantage. In its international strategic alliance strategy, Lufthansa has adopted a cooperative strategy form of strategic alliance which is non-equity in nature.

Through cooperative strategy, the parties involved are able to attain a synergistic effect through sharing of the resources, capabilities and core competences. Non-equity alliance form of cooperative strategy refers to a contractual agreement between a company to either produce or supply the firms products and services without any form of equity sharing. In its cooperative strategy, Lufthansa has entered into non-equity strategic alliance with Star Alliance. This is a global airline alliance network that was established in 1997 to ensure that passengers achieve a global reach and a superior travel experience to various international destinations (Lufthansa , 2008, ¶ 3).

Methods that Lufthansa has used to expand internationally

Organic growth strategy

In addition, the firm has also incorporated the concept of organic in expanding into the international market. Organic growth involves utilization of a firms internal resources in expanding into the international market. The management of the firm incorporated this business expansion strategy due to the firms level of profitability and effective management skills. Over the years, the management of the firm has ensured that the firm operates cost effectively. Increase in Lufthansas level of profit arises from the fact that the firm serves 87 countries through flights to 242 destinations. This enables the firm to serve a large number of flights. In addition, the management has ensured that Lufthansas flights are flexible. This has enabled the firm to adjust to the changes in the market and exploit the opportunities that arise in the individual markets.

Through the organic growth international expansion strategy, the management of Lufthansa Group is committed at ensuring that the firm continuously establishes new brands. For instance, the management established Lufthansa Italia in 2008 with flights commencing operations to Milan in by February 2009. Through Italia destination, the firm will be able to serve approximately 8 European destinations (Lufthansa, 2008, ¶ 3). To ensure that the new brands established through organic growth strategy are of high quality, the management of the firm ensures that they incorporate features that are tailored for that specific market. For instance, the management should ensure that the flight attendants are capable of speaking the native language of the new travel destination.

Consolidation and partnership strategy

To ensure that the firm expands it operations within Europe, the firm has incorporated the concept of consolidation that is currently dominant in European airline industry. In its consolidation plan, the management of Lufthansa Group initially conducts equity investment in various airlines which culminates into a takeover. This has been an effective way through which Lufthansa has been able to venture into the international market. In addition, the management of Lufthansa is continuously incorporating its partners into its group while maintaining its own market presence. This has enabled the firm to become both a multi-brand and multi-hub airline group. Consolidation has also enabled the firm to strengthen its market proximity and effectively link the European and global flow of traffic through its well established multi-hub systems. This has been achieved cost efficiently while ensuring that there is optimal utilization of its capacity (Lufthansa , 2008, ¶ 3).

Through consolidation, the firm has been able to attain synergistic effects. In line with its consolidation strategy, the management of Lufthansa entered into a contract with Brussels airline in which it would acquire 45% of the airline. In addition, there are forthcoming arrangements to acquire Australian Airline. Through these acquisitions, Lufthansa will be able to link Belgium, Brussels and Austria in its network. This will also enable the firm strengthen its network to African markets through Brussels Airline. This is due to the fact that Brussels Airlines has got flights to 10 additional destinations through its partnership with Australian Airlines (Lufthansa, 2008, ¶ 3).

Discuss the elements and objectives of Lufthansas cooperative strategy?

In adopting cooperative strategy as its international expansion plan, the management of Lufthansa intended to gain a higher market power. This is due to the fact that the firm would be able to effectively capture potential new markets. Through cooperative strategies, the firm will be able to increase its market positions in the various markets. This means that Lufthansa will be able to effectively incorporate the cooperative strategy element of opportunity maximization (Lufthansa , n.d. ¶ 5). For instance, by being a member of Star Alliance, the firm is able to increase its number of travel destination. According to Hitt et al (2009, p.237), it is estimated that the annual increase in Lufthansas profit through Star Alliance is 500 million pounds.This is due to the fact that Star Alliance serves approximately 1,042 destinations located in 168 countries.

It is also the objective of the management to overcome possible trade barriers through cooperative strategies. For instance, through strategic alliance, the firm would be able to overcome trade barriers that have been set by various governments in relation to the airline industry. Some of the requirements of venturing into a particular foreign market involve formation of strategic alliances with a local company in the foreign market.

Through cooperative strategy, the management of Lufthansa intended to access various complementary resources within the airline industry. These resources include equipments, spare parts, flight plans, landing rights and a global sharing of codes. This enables the firm to attain the element of opportunity maximization.

In its cooperative strategy, the management of the firm is committed at ensuring that the firm attains the element of cost minimization in its operation. This is achieved by ensuring that the contract between Lufthansa and its strategic partners are effectively monitored. Monitoring the contract ensures that the probability of opportunistic behavior occurring between the partners are minimized. This will enable Lufthansa to develop into an effective low cost carrier within the Airline industry thus attaining a higher competitive advantage.

Describe the uncertainties and challenges of operating beyond the companys national boundaries and potential risk of cooperative strategy

According to Hitt et al (2009, p.234), increase in the rate of globalization has resulted into abolition of social, political and economic boundaries. These boundaries are important in that they help in containing the various effects to a certain entity. Due to increase in the rate of internationalization, there are a number of challenges that Lufthansa is exposed to. For instance, globalization has affected the airline industry due to increase in political instability. This is evident from an increase in the rate of terrorism and the commitment of government in fighting terrorism. Increase in war on terror results into a reduction in the volume of air travel passengers. For instance, in 2001 and 2003, there was a global reduction in air passenger volume by a margin of 3.3% and 2.4% respectively. During the same period, Lufthansa suffered a reduction of traffic turnover with a margin of 4.6% (Hitt et al, 2009, p. 234).This is due to the fact that terrorists are increasingly targeting at airlines in conducting their terrorist activities.

In addition, by operating beyond the national industry, the airline industry faces the risk of currency fluctuations that affect various economies. For instance, the occurrence of Asian, Russian and Mexican financial crisis affected the air travel. This resulted into a reduction in turnover of airline firms that had travel destination in these countries (Hitt et al, 2009,.p 234). In addition, increased uncertainties in relation to currencies can result into inefficient operation of a firm. This is due to the fact that the firm will incur high operational costs.

A firm that ventures into the international market also faces intense competition from other multinational firms. This means that the firm is faced with intense price competition. This is due to the fact that there are other large firms which are already well established within the international market. Price competition is also intensified from the existence of a large number of low cost carriers within the international market. Price pressure also results from the existence of subsidies that are offered to the airline industry by various governments. For instance, there are consistent subsidies that are offered to the airline industry by various governments in Latin America, Southern Europe and Asia (Hitt et al, 2009, p.234).The subsidies enable these firms to reduce their prices hence attaining a high competitive edge.

Risks of cooperative strategies

Despite the benefits of cooperative strategies, there are a number of risks that a firm that has incorporated this strategy faces.

For instance, in the event that the contract between the partners is not well developed, one of the parties to the contract can become more opportunistic than the other. This means that there contract will not result into the expected mutual benefit. In addition, the parties to the cooperative strategy can fail to make available the complementary resources. The firm may also be held hostage by a number of specific investments that are made in association with the partners (Hitt, 1999, p.230).

Discuss the use of organizational structure and the controls necessary to Support Lufthansas strategy

By being a member of Star Alliance, Lufthansa experiences some degree of inefficiency in its operation due to the complex superstructure of Star Alliance. Lufthansa also has a complex corporate organization structure. The structure is constituted of 6 business lines (Hitt et al, 2009, p.238). The six divisions consist of passage, logistic, IT services, globe ground, catering and condor. All the 6 business divisions are decentralized with every business being responsible of its financial results. To be able to operate efficiently, the management of Lufthansa should be able to streamline its organization structure.

To attain its strategy, the management of the firm should restructure its organization structure by ensuring that there is open communication. This will enable the firm to effectively control its operations. There are a number of ways through which Lufthansa can restructure its organization structure. The management should establish smaller units which are easier to manage and which are closer to the firms product market. The management should also continuously benchmark its processes from external competition. Alternatively, the firm should segment its groups to become more market oriented.

What strategic leadership actions do you recommend for developing human capital, establishing an effective organization culture, promoting entrepreneurial mindset and reducing complexity at Lufthansa?

• To attain an effective human capital, the management of the firm should develop a continuous training program for both its executive management and the lower level employees. The training program will enable the firm to be proactive in incorporating the changes that in the airline industry. In addition, training will help in integrating the concept of innovation amongst the employees. This will result into development of an entrepreneurial mind-set.
• To reduce the complexity of the firms management, the management should restructure its organization structure.
• The management of the firm should also ensure that the firm incorporates corporate social responsibility in various fields. This will enable the firm develop a positive public image. This can be achieved by ensuring that it contributes to reduction of global warming by purchasing fleets that emit minimum amount of carbon dioxide.

Reference list

Hitt, M.A, Ireland, R.D & Hoskisson, R.E. (2009). Strategic management: competitiveness and globalization, concepts and cases. Mason, OH: South Western Cengage Learning.

Lufthansa.(2008). Annual report: business strategy. Web.

History of Sweets Bakery & More

Welcome to Sweets Bakery and Cafe, where we serve the best specialties. We have been a part of this incredible community since 1995, when we opened our doors to the public of Houston. Since then, we have been proving our allegiance to the community and its values. We take it as our greatest responsibility to maintain the quality of our products beloved by all visitors. Sweets Bakery is known for its exquisite specialty breads, breakfast sweets, and desserts. Here, we combine traditions and innovations, which is why we continue to search for new recipes that will please our customers. So, we welcome the creativity and vision you can bring to our team.

Organization

Let us get to know the Sweets Bakery & Café family! The company is run by Sam Taylor, who has been ensuring the quality of our products for years. Sam Taylor is the Chief Executive Officer of Sweets Bakery, overseeing all operations. Lucky Fellows is the companys CFO, who has made a great contribution to the lasting, sustained growth of the company. However, cooks and bakers remain at the heart of Sweets Bakery. Patricia Williams supervises all cooks as the executive chef. Nicole Silver is responsible for the sweeter side of our menu, being the current chief baker. Thanks to their expertise and exquisite taste, Sweets Bakery has established itself as the soul of this community.

Employee Benefits

Being a part of the Sweets Bakery carries its perks for all employees. We provide an insurance package for your health and your life. This way, Sweets Bakery contributes to your sense of security in the ever-changing world. Of course, we always aim at long-term cooperation, which is why we offer excellent retirement benefits for those who stay with us across their careers. In the meantime, you will enjoy paid vacations that we offer to all employees. At the same time, Sweets Bakery remains in the constant pursuit of new opportunities and avenues of development. We expect our employees to do the same, which is why we support all efforts of professional and personal development. Thus, you will benefit from our educational opportunities and pursue self-enhancement. Last but not least is our newest principle of shared profits. We want all workers to be a part of the Bakerys growth, which is 5% of all profits will be shared among employees.

How We Review Your Performance

Paperwork Involved

Strategic Positioning and Labour Market

OcMara Industries has established itself as a significant player in the oil and gas industry, producing over 2 billion barrels of crude oil per year. However, shifting the focus to sustainable energy sources will create significant challenges from the workforce perspective. OcMara would likely retain an advantage in the Japanese labor market, but staying competitive internationally would require a thorough analysis of the current talent pool and developing a workforce planning strategy. Otherwise, the company would not attract desired employees or ensure the retention of valuable specialists in the sustainable energy sector.

SAP Strategical Positioning in Competitive MarketPlace

SAP is a multinational IT company best-known for its enterprise software products in business management, resource planning, and customer relations. Whereas SAPs and OcMaras spheres of operation significantly differ, one can find certain similarities between the companies situations in the labor market. SAP has to attract and retain talented employees in strong competition with well-known brands, such as Microsoft and Facebook (Clark, 2019). The Germany-based IT company succeeded in this department  in 2019, SAP won a Grand Prix of the prestigious Employer Brand Management Awards (Wang, 2019). Therefore, OcMara would benefit from exploring the elements of SAPs strategic positioning in a highly competitive labor market.

Most importantly, SAP centered its employer characteristics around creating a positive employee image. Large-scale companies can routinely sway the candidates they want to recruit with big salaries; as such, it might be beneficial to focus on a humanitarian aspect to gain an advantage. For example, SAPs award-winning Bring everything you are  be everything you want campaign portrayed work as another element of a persons life (Clark, 2019). As a result, the potential employees became aware that the company would not treat them as a utilitarian resources, interesting for it only as useful professionals.

SAP also introduced several employee-centered values from the corporate branding and organizational image perspectives. According to Clark (2019), the company offered an opportunity  career development on employees terms, purpose  a perceived legacy of work, and growth  a chance to improve as a professional. In addition, SAPs campaign provided evidence of supporting women and people with disabilities in leadership (Clark, 2019). Overall, OcMara could utilize similar concepts for recruiting new specialists and retaining staff poached by the competitors. These stimuli will make a solid addition to usual financial motivation or if increasing salaries becomes not feasible at some point.

Changing Labour Market Conditions and its Impact on the UK

The labor market can be described as a volatile segment significantly affected by the situation in the global economy. According to Davies (2021a), the events occurring in macroeconomics ultimately determine how many staff members need to be recruited, retained, and developed. As such, a top-level HR specialist must analyze the current and future market trends to organize workforce planning. The balance of demand and supply in the labor market may drastically change due to concurrent economic circumstances. For example, if the demand for hiring is high relative to workforce supply, it becomes more difficult for a company to attract new employees (Davies, 2021a). In this regard, the COVID-19 pandemic made the labor market significantly looser as employers had to save funds by eliminating redundant jobs.

The UK energy sector faced significant problems in 2020, and some of the issues persisted in 2021. According to the Department for Business, Energy & Industrial Strategy (2021), energy generation from renewable suffered the most. On the contrary, the share of fossil fuels in UK energy generation rose to 43,4%, the highest share since the second quarter of 2019 (Department for Business, Energy & Industrial Strategy, 2021). Therefore, the labor market in sustainable energy may become looser in the short perspective, making it easier to recruit qualified staff.

However, a temporary increased demand and price of fossil fuel creates a window of opportunity for expansion in the sustainable energy sector. According to Higginbotham (2021), 46% of UK businesses planned to invest in a renewable generation  more than in other technologies in the industry. Therefore, the trend in the labor market of the energy sector may change to its tightening. The companies would actively seek professionals in renewable energy technologies. Increased salaries, promises of work importance for humanity, and perspectives of professional growth would likely be used to recruit and retain the desired candidates.

Role of the Government, Employers and Trade Unions

In conclusion, it should be mentioned that the UK government, employers, and trade unions hold responsibility for filling the labor market of the energy sector with a necessary number of skilled workers. The UK economy belongs to a market type with limited government regulation. Therefore, the government can incentivize certain areas of the energy sector by providing the companies operating in them with subsidies. Employers can contribute to the development of necessary skills by organizing professional training for the staff members or making certain skill sets popular by hiring professionals in particular areas. Lastly, trade unions can help the members to meet their skill needs by championing employees rights for lifelong professional development.

Workforce Planning and Recruitment Pack

The creation of the strategy for workforce planning and recruitment requires a thorough examination of several aspects. Firstly, it is necessary to understand the possible benefits associated with workforce planning. Secondly, the company needs to assess the current condition of the workforce to reveal problematic spots. Finally, it is crucial to realize the difference between particular techniques used in employee recruitment, selection, and retention processes and the nuances in their application. The lack of understanding may lead to undesirable consequences for the companys reputation and hinder attracting and retaining qualified personnel.

Impact of Workforce Planning in Terms of Forecasting Demand for Labour

Workforce planning is an essential process in forecasting an organizations demand for labor in particular segments and aligning recruitment with contemporary trends in the labor market. According to Zimpel (2021), workforce planning is divided into hard and soft aspects. The hard aspect is focused on the organizations internal needs, such as predicting how many people must be employed and what skills they should possess. Hard workforce planning deals with metrics and numbers, which are analyzed in order to make accurate estimations. The soft aspect concentrates on defining a strategy used for information assessment purposes (Zimpel, 2021). Overall, two aspects of workforce planning complement each other in acquiring labor market intelligence necessary for supporting longer-term business goals.

Evaluation of Techniques Used to Support the Process of Workforce Planning

Workplace planning can be supported through various techniques, such as analysis of promotion/demotion rates, turnover rates analysis, and critical incident analysis. Promotion rates analysis makes it possible to get an insight into the critical workforce parameters  average promotion time and career path ratio (CIPD, 2021a). This information is valuable since it allows to reveal how much time the employees have to spend in one position and examine the possibilities for alternative career development within the organization. Demotion rate analysis reveals the reasons behind demotions and lets one uncover the possible systematic problems in recruitment. Turnover rates analysis assists with answering the questions of why employees are leaving and what employee types are more likely to leave the organization (Maxwell, 2021). Lastly, critical incident analysis helps support the employees professional development since critical incidents provide a dramatic demonstration of the impact caused by specific behavior (Serrat, 2017). As such, this technique is valuable for establishing the difference between positive and negative professional habits and attitudes. Overall, these techniques should be applied during the initial workforce analysis because they provide information vital for making the next steps in planning.

Appraisal in Talent Pools Development

A professional appraisal is a necessary condition for workforce planning and talent pool development. According to Zimpel (2021), successful workforce planning requires workforce analysis, determining future workforce needs, and identifying gaps in workforce skills and knowledge. In the OcMara case, appraisal of employees skills, abilities, and talent would allow determining how many specialists must be hired to ensure a smooth shift of focus to the sustainable energy sector. Additionally, the appraisal would help identify the most effective employees and manage possible risks in the transition phase. For instance, scenario planning associated with determining future workforce needs facilitates the formulation of contingency and adaptation plans (Zimpel, 2021). Lastly, the professional appraisal may uncover underlying issues within OcMaras organizational structure and, consequently, address them. For example, if appraisal highlights a systematic lack of enthusiasm among the OcMara employees, it would become clear that members of the companys talent pool should be provided with engaging purpose and robust learning mechanisms.

Social Media, Advertising, Interviews and Job References in Recruitment and Selection

UK employers actively use social media, advertising, interviews, and job referencing during employee recruitment and selection. According to CIPD (2021b), 46% of employers attracted new candidates through professional networking sites, and 25% found candidates via social networks. In regard to advertising, 41% of surveyed employers succeeded in advertising to the internal talent pool, and 24% managed to attract candidates by offering flexible working arrangements (CIPD, 2021b). Overall, nearly all attraction strategies were less effective in 2020, except for employee referral schemes (CIPD, 2021b). The reduced job supply induced by the COVID-19 pandemic has left potential employees with limited options.

Candidate selection strategies were mainly based on various types of interviews. The most popular choice among the employers was competency-based interviews (60%), followed by CV content-based and strengths-based interviews used by 49% and 38% of companies, respectively (CIPD, 2021b). Overall, the two-staged recruitment and selection process via described methods allows evaluation of a significant number of candidates. However, such an advantage comes at a price of possible bias and inaccuracies. According to CIPD (2021b), only 68% of line HR managers in surveyed companies followed objective assessment criteria in recruitment. Furthermore, only 54% of line managers were provided with training in recruiting (CIPD, 2021b). Therefore, workforce planning should start with ensuring competency among the line HR managers. Otherwise, the company can miss on recruiting capable and talented candidates.

Use of Zero-Hour and Contractor Contracts

In regard to zero-hour contracts, one should realize that this form of employment is mainly used in the UK. As such, OcMara should not rely on zero-hour contracts in other countries of operation since they might be illegal. In the UK, zero-hour contracts are used when one party may ask another to perform work, but there is no minimum set amount of working hours (Davies, 2021b). Furthermore, the Small Business, Enterprise and Employment Act 2015 banned exclusivity clauses for zero-hour contracts (Davies, 2021b). Therefore, this type of contract allows the employer to save funds when there is no work available at the cost of total employee freedom. Overall, a large transnational company such as OcMara should not hire on zero-hour contracts, especially in positions related to developing a new strategic direction. The employees should be available and ready for work and training, whereas a zero-hour contract virtually contradicts those conditions.

Contractor or self-employment contracts impose significantly more mutual obligations on the parties. This type of employment still does not guarantee those self-employed workers will be available or do the required work (CIPD, 2021c). As such, new important positions in the organizational structure should be occupied by fully employed staff. However, unlike in the case of zero-hour contracts, the employer may still possess a significant degree of control over the employee (CIPD, 2021c). Therefore, OcMara may recruit new self-employed contractors to non-critical positions, but it is advised to include legally-appropriate sanctions in the contracts text.

Express and Implied Terms of Contracts

Express terms of contracts can be defined as the rights and obligations of the parties explicitly written in the text. According to the National Education Union (NEU, 2020), express terms normally include such information as job title, rates of pay, holidays, and work hours. On the other hand, implied terms remain silent due to their obviousness. For example, it is implied that the employer would not act arbitrarily, and the employee would obey reasonable and lawful work-related instructions (NEU, 2020). Those terms are considered implied in every employment contract; there is no need to express them in written form. In addition, a notion of custom and practice defines an unofficial practice universally accepted within an industry or organization (DavidsonMorris, 2020). Custom and practice act similarly to implied contract terms but differ from them by the smaller scope of application, which may be limited to a single company.

Role Information and Socialisation in Onboarding Programme

Onboarding or induction is crucial for corporate employee retention efforts. According to Green (2020), onboarding can be defined as employee adjustment to the new job and working environment. Therefore, onboarding quality is essential for ensuring solid job satisfaction levels and retention of young and talented but relatively inexperienced staff. Green (2020) recommends spending the first few weeks on spreading role information to new employees personally and through digital tools such as social media. Through this strategy, the company will be able to socialize with new employees and disperse important information regarding the brand values and organizational culture. Larger companies like OcMara may organize onboarding in the shape of an official learning course combining one-on-one and group learning sessions, especially if mass recruitment of new personnel is planned.

Conclusion

In summary, it should be stated that workforce planning and recruitment is a complex effort. The process requires attention in all stages  from the initial examination of line HR managers competence and work discipline to selecting the most beneficial contract types with future employees. Furthermore, larger organizations must invest in onboarding and employee appraisal techniques. Otherwise, employee performance would suffer, and the company would also lack the information necessary to make new steps in workforce planning and develop contingency strategies for solving potential problems.

Retention of Talent Proposal Presentation Pack

The company may be able to attract and eventually recruit talented employees. However, the inability to motivate staff members and provide them with development opportunities would create a danger of dysfunctional employee turnover. In this regard, recruitment strategy must be supplemented with talent retention efforts aimed at preventing the loss of the best-performing, most talented people to the competitors. Having an excellent recruitment process would be of little use if the company could not maintain the advantage.

Motivational Issues, Management Style, and Retention Rates

Flaws in the motivational part and management style may produce a direct negative impact on employee retention and turnover rates in OcMara. According to Maxwell (2021), poor relationship with line managers is one of the key reasons for resignation since they lead to growing employee disengagement. The lack of flexibility, fair treatment of personnel, and care for employee well-being may also contribute to lower retention and higher turnover rates. For instance, perceived unfairness in reward distribution on the managers behalf is one of the most potent reasons for resignation (Maxwell, 2021). Therefore, OcMara should consider developing means for motivating new employees and providing them with fair and flexible management.

One of the possible motivational tools lies in providing the personnel with opportunities for career and professional growth. Maxwell (2021) recommends maximizing skills and career development opportunities to maintain sufficient motivation levels. In this regard, OcMara can capitalize on the recent focus shift to sustainable energy sources since new employees will be placed at the center of the ambitious plan. As such, they will have no lack of engaging activities and opportunities for career growth.

Training, Development, and Workplace Characteristics

An organization should treat all employees with fairness, honesty, and dignity regardless of their talent level. As such, workplace characteristics should be equal both for the most and least talented employees. However, it would also be fair and efficient to reward staff members whose talent was evaluated through objective professional appraisal with additional training and development opportunities. Gamba Quilliam (2021) suggests involving such individuals in talent development activities  coaching, mentoring, networking, and secondments. Meeting and working with senior members of the organization provides talented employees with valuable professional insights and opens new learning opportunities. Secondments, or loans to another part of the organization, such as a branch in a different country, allowing talented employees to increase their network of contacts and gain important experience. In addition, secondments prepare talented employees for assuming leading positions in the organizational structure once they become available.

Overall, talent retention on the group level depends on favorable workplace characteristics, in particular  just and fair treatment for everyone. However, organizations should constantly conduct performance appraisals in order to identify exceptionally talented individuals. Once this goal is accomplished, those employees should be recognized and rewarded with extra training and career development opportunities. In the end, the retention of key individual talents ensures smooth succession of leadership and prepares the organization for various scenarios that may occur in the future.

Coaching, Mentoring, and Performance Reviews

Coaching and mentoring are two seemingly similar yet quite distinctive activities aimed at talent development within the organization. These two measures of talent pool support are based on one-on-one conversations (Hayden, 2021). The key difference lies in the nature of the relationship between the more and less experienced employees. Whereas coaching is an organized activity aimed specifically at producing optimal performance and improvement in work, mentoring can be defined as a less directive and more personal approach (Hayden, 2021). Therefore, coaching should be actively used in a broad talent pool since it would allow for improved performance on the organizational scope. On the contrary, mentoring by the senior employee seems to be more effective in developing individual talents who perform better than others, according to professional appraisal results.

In this regard, performance reviews based on objective criteria can be perceived as a key instrument for identifying the most talented staff members in a broad talent pool. An objective and clear performance evaluation are necessary for preventing unfairness and personal preference bias in talent selection and development. Performance reviews allow us to reliably track high-performing employees and reveal areas in which other staff may be struggling. As a result, it becomes possible to outline relevant themes for further coaching sessions.

Benefits of Diversity in Talent Pools

Diversity rates have become an essential metric in talent pool condition evaluation within modern organizations. According to Wahab and Green (2021), diversity is defined as recognizing differences and acknowledging the benefit of having different perspectives involved in the decision-making process. In addition, diversity in the workforce allows the company to better associate itself with its customer base (Wahab and Green, 2021). Therefore, diversity in the available talent pool would bring two significant benefits to a transnational company such OcMara.

Firstly, having a diverse workforce would underscore OcMaras commitment to proclaimed work characteristics of equal opportunities in career development. The employees would see that OcMaras senior management is sincere in its statements, which would likely improve their job satisfaction levels and trust in the corporate values. Secondly, a diverse workforce would be well-suited for working with customers in vastly different markets. Since OcMara operates in Europe, Asia, and America, employing staff familiar with regional market features and national cultures would benefit corporate effectiveness. Therefore, reaching and maintaining a solid diversity rate in workforce composition would be beneficial both from the business and reputational perspectives.

Costs Associated with Dysfunctional Employee Turnover

An inability to utilize appropriate talent retention measures may cause severe negative consequences for the organization. High turnover rates among the line personnel may be problematic but acceptable in certain areas of business. However, dysfunctional or high-performer employee turnover is a significant issue, which would inflict direct and indirect costs on the company. These costs may be high, even crippling for the smaller organization.

In regard to direct costs, the company would have to organize a quick search of candidates to replace the former employee. As a result, time and funds would be lost in the recruitment and selection process (Green, 2020). It would be necessary to proceed through such stages as job advertising, interviews, onboarding, and training. The more important the exiting employee was, the more time and cost it would take to find and prepare an adequate replacement.

However, the indirect costs are likely to be even more severe. Most importantly, the former employee would bring all their professional knowledge to the new employer. This information may get passed to the competitors, especially if the existing staff member was mistreated. In addition, a loss of productivity is likely to occur even if the replacement candidate is competent. Therefore, high-performing staff must be kept motivated and fairly rewarded for their impact.

Reference List

CIPD (2021a) Workforce planning practice. Web.

CIPD (2021b) Resourcing and talent planning survey 2021. Web.

CIPD (2021c) Self-employed contractors: Understanding the law. Web.

Clark, L. (2019) Personnel Today Awards 2019: SAP celebrates Employer Branding Award success. Web.

DavidsonMorris (2020) Custom and practice in employment contracts. Web.

Davies, G. (2021a) Understanding the economy and labor market. Web.

Davies, G. (2021b) Zero-hours contracts. Web.

Department for Business, Energy & Industrial Strategy (2021) Energy trends. Web.

Gamba Quilliam, G. (2021) Talent management. Web.

Green, M. (2020) Induction. Web.

Hayden, D. (2021) Coaching and mentoring. Web.

Higginbotham, D. (2021) Overview of the UKs energy and utility sector. Web.

Maxwell, G. (2021) Employee turnover and retention. Web.

National Education Union (2020) Express and implied contract terms. Web.

Serrat, O. (2017). The critical incident technique, in Serrat O. (ed.) Knowledge solutions. Springer, Singapore, pp. 10771083.

Wahab, A. and Green, M. (2021) Inclusion and diversity in the workplace. Web.

Wang, X. (2019) SAP winning at 2019 Employer Brand Management Awards (EBMA). Web.

Zimpel, B. (2021) Workforce planning. Web.

Analysis of the Macro-Environment

The macro-environment where the European brewery industry operates is analyzed via the PESTEL framework. PESTEL assists in the understanding of political, economic, social, technological, environmental, and legal peculiarities of the environment. Firstly, the governments are fighting drunken driving leading to a reduction in the consumption of beer. Secondly, sales shifted from the on-trade to the off-trade. From the social perspective, the concerns about the negative influence of alcohol on health and drunk driving are rising. However, technological development allows brewers to produce non-alcoholic beers. Simultaneously, one could witness an increased price for raw materials. From the legal perspective, the environment is characterized by acquisition, strategic alliances, and licensing that help the leading brewery companies control the market.

Analysis of the Sector

Porters five forces framework is used to analyze the sector. The newcomers face high initial costs for establishing a factory, purchasing raw materials, and packing. They are also pressed by the tendency towards consolidation that stems from the over-capacity in the brewing industry. The traditional breweries also have to modernize because of the growing popularity of non-alcoholic beers and beers with flavors. Thus, the producers should be concerned with how to attract new customers and retain old ones. Still, the power of suppliers is relatively low because producers could easily switch between them. Even though ten brewing companies occupy more than 60 percent of the market, there are numerous local ones that compete with each other.

Impact on Strategic Groups

The strategic group of the Western European brewing industry includes such companies as Anheuser-Busch InBev, SABMiller, Heineken, and Carlsberg. From 2000 to 2009, the share of the global volume of these companies increased approximately two times. Many companies have also undergone acquisitions. For example, Belgian Interbrew merged with Brazilian Am Bev and became InBev, the largest brewing company in the world. Additionally, the middle-sized foreign companies yielded to the local giants and withdrew from the European brewing market.

Opportunities and Threats

The first opportunity for the brewing companies that operate in the European market is to diversify produced beverages due to technological development and the rise of demand for non-alcoholic and flavored beer. Secondly, smaller companies have an opportunity to merge and acquire a larger market share. Besides, it would be easier to sustain the market competition. The third opportunity is derived from focusing on targeting the generation of baby boomers because they are known to prefer beer more than younger generations.

One of the most significant threats to the industry is the public concerns about the danger of alcohol and a fight with drunk driving. Secondly, local companies should be acting more actively to sustain the competition with foreign brewing companies, such as Chinese Tsingtao, that enter the European market. Thirdly, companies should be concerned about reducing waste and lowering the environmental costs of beer production because consumers tend to prefer green producers.

Evaluating the financial situation of the organization and its capabilities is an important task to establish an understanding of its development. Several economic and financial success indicators can provide a comprehensive overview of the companys past and current activities, examining the overall progress achieved over the years. This paper focuses on the core financial indicators of the hotel chain Marriott, presenting the variations among these aspects over the last ten years and comparing them with the alterations observed in the companies Intercontinental and Hilton.

Marriott International Incorporated is a well-recognized organization of the hotel industry, which established its presence in numerous countries worldwide. In terms of global income and property ownership, Marriott remains in the top position among other international hotel organizations (Harrington, 2017). However, to properly understand the financial characteristics of this firm and examine its historical development, it is essential to consider such financial indicators of its success as cash flow, liquidity, and efficiency.

A primary factor of a companys yearly growth is the cash flow statement released by the enterprise. First of all, a critical aspect is the cash flow from the operating activities. According to the statistics, between 2011 and 2018, the company manifested a positive trend of consistent cash flow growth, accumulating a slightly higher profit each year (Harrington, 2017). Nevertheless, from 2019, the cash flow from operating activities began to decline rapidly, resulting in a 0.67 billion difference between 2018 and 2019 (Netcials, 2021). In 2020, this trend continued, accounting for a -2.73% decrease in the operating cash flow growth (The Wall Street Journal, 2021a). Therefore, it could be concluded that the companys performance is progressively declining, even though it remained positive until 2019.

Considering the investing activities, another vital attribute of the cash flow evaluation, a less consistent tendency can be observed. A predominantly negative investing cash flow is evident in 2011 and 2014, where the invested finances decreased substantially. The most significant reduction occurred in 2016, where the investment losses contributed to 2.35 billion dollars (Netcials, 2021). After that, the negative trend continued, with the company suffering drops to -104.29% and -446.15% in the investing cash flow growth in 2018 and 2019, respectively (The Wall Street Journal, 2021a). Currently, a more positive movement is present, with the parameter steadily increasing, proposing that Marriott is slowly improving its performance.

Finally, cash flows from financing activities, namely debt, and equities should be evaluated. These aspects demonstrate a similar negative tendency towards loss, with the financing cash flow reducing steadily between 2012 and 2015. This year, Marriotts financing cash flow growth decreased -345.19%, and the enterprise has yet to overcome this depletion of resources (The Wall Street Journal, 2021a). As the net financing cash flow to sales ratio remained predominantly negative throughout 2011 to 2020, it appears that the firm performs poorly in this sector, necessitating an improvement.

Table 1. Changes in Marriotts cash flow between 2011 and 2020

Other essential financial indicators include liquidity and efficiency ratios. Concerning liquidity, specifically the current ratio, the firm has performed rather negatively between 2011 and 2020. During 2011, the current ratio significantly dropped from 1.24 to 0.52, remaining below 0.7 until 2020, demonstrating the companys continuous inability to pay its obligations within one year (Macrotrends, 2021a). Given this evidence, the enterprise may have a relatively low liquidity performance which tends to decrease each year.

Table 2. Changes in Marriotts efficiency ratio between 2011 and 2020

The financial indicator of efficiency depicts another trend of decreasing performance. Marriotts asset turnover was exceptionally high at the beginning of the decade, from 2011 to 2015. However, after encountering a tremendous drop from 2.38 to 0.63 in 2016, the asset turnover stayed considerably low, never overcoming the 1.0 threshold (Macrotrends, 2021a). This data exemplifies that the enterprise slowly became less efficient in deploying its assets to generate sales and revenue.

Table 3. Changes in Marriotts liquidity ratio between 2011 and 2020

The major hotel industry companies, Intercontinental and Hilton, present several similar trends considering the cash flow financial indicator. Intercontinental and Hilton were developing rather steadily between 2011 and 2017 (Hua, DeFranco, and Abbott, 2020). However, in contrast with Marriott, these firms suffered a cash flow reduction in 2017 instead of 2015 (Luo, 2011). In general, while staying positive until 2016, net operating cash flow growth remains negative for all three hotel chains, suggesting poor performance. Nevertheless, Marriott executed its investments more successfully during the decade than Intercontinental and Hilton, maintaining a partially positive net investing cash flow to sales ratio.

As for the financing activities, Hilton suffered the most significant growth reduction in 2017. In addition, Intercontinentals investing cash flow to sales ratio was steadily negative in the period between 2016 and 2020 (The Wall Street Journal, 2021b). Although all corporations performed correspondingly between 2011 and 2016, Marriotts performance advancements can still be considered exceptional (Wang and Chung, 2015). As for liquidity, Intercontinental and Hiltons current ratios did not change significantly during the decade, maintaining a 0.7-0.9 ratio (Macrotrends, 2021b; Macrotrends, 2021c). Alternatively, Marriotts liquidity achievements are substantially low (Seo and Soh, 2019). Finally, international and Hilton also performed better regarding their asset efficiency parameter, meaning that Marriotts current financial accomplishments are significantly nonproductive in comparison.

Table 4. Changes in Intercontinentals cash flow between 2011 and 2020

Table 5. Changes in Intercontinentals liquidity ratio between 2011 and 2020

Table 6. Changes in Intercontinentals efficiency ratio between 2011 and 2020

Table 7. Changes in Hiltons cash flow between 2011 and 2020

Table 8. Changes in Hiltons liquidity ratio between 2011 and 2020

Table 9. Changes in Hiltons efficiency ratio between 2011 and 2020

To conclude, it is evident that Marriotts development between 2011 and 2020 encountered various changes in cash flow, liquidity, and efficiency parameters, temporarily increasing or decreasing the companys speed of growth. Even though the periods between 2011 and 2015 were similarly beneficial for all three hotel chains, after 2015, dramatic contrasts can be observed. While operating cash flow demonstrates more corresponding positive patterns for the enterprises, Marriotts investment and financial gains were more advantageous. In the current environment, between 2017 and 2020, each corporation experienced substantial obstacles in performance improvement, necessitating future advancements in the liquidity and efficiency aspects.

Reference List

Harrington, D. (2017) Marriott Corporation, Darden Business Publishing Cases, pp. 129.

Hua, N., DeFranco, A. and Abbott, J. (2020) Management fees and hotel performance in the U.S., Tourism Management, 79.

Luo, Y. (2011) Designs of Companys Cash Flow Indicators amp; Case Analysis, in 2011 International Conference on Management and Service Science. 2011 International Conference on Management and Service Science, pp. 14.

Macrotrends. (2021a) Marriott Financial Ratios for Analysis 2005-2021. Web.

Macrotrends. (2021b) Intercontinental Hotels Group Financial Ratios for Analysis 2005-2021. Web.

Macrotrends. (2021c) Hilton Worldwide Holdings Financial Ratios for Analysis 2005-2021. Web.

Netcials. (2021) Marriott International Inc. (MAR) Cash Flow By Year. Web.

Seo, K. and Soh, J. (2019) Asset-light business model: An examination of investment-cash flow sensitivities and return on invested capital, International Journal of Hospitality Management, 78, pp. 169178. .

The World Street Journal. (2021a) Marriott International Inc. Annual Cash Flow. Web.

The World Street Journal. (2021b) Intercontinental Hotels Group PLC ADR Annual Cash Flow. Web.

The World Street Journal. (2021c) Hilton Worldwide Holdings Inc. Annual Cash Flow. Web.

Wang, Y.-C. and Chung, Y. (2015) Hotel brand portfolio strategy, International Journal of Contemporary Hospitality Management, 27(4), pp. 561584.

Introduction

Boasting a Gross Domestic Product (GDP) of more than $1.7 trillion, Canadas economy is ranked among the ten largest economies of the world (Toly & Segbers, 2016). A combination of different forms of transport is largely responsible for this performance. The health of the Canadian economy is linked to the presence of an efficient and functional transport sector (The Canadian Association of Railway Suppliers, 2017). The sector is responsible for facilitating the mobility of people and goods within the economy and even outside of it. Directly, it plays a vital role in supporting the economy by providing employment opportunities to Canadian residents, and through direct expenditures that complement other parts of the Canadian economy, such as the manufacturing and mining sectors (Railway Association of Canada, 2016). Indirectly, the transport sector supports the economy through derived demand for products or services, or through the demand for warehousing facilities.

The transport sector, being an important part of the Canadian economy, is instrumental to the economic prosperity of the nation. In fact, Canadians views about the railway sector mirror this fact because more than 93% of them say that the freight and passenger service sectors in the railway industry are important to the economic growth of the country (Dupuis, 2015). Based on this fact, it is pertinent to understand the effects of different facets of the transport industry on the countrys general performance. Although the transport industry is characterized by the operations of different companies, spanning across different subsectors, including air transport, marine transport, road transport, and rail transport, this paper will only describe the contribution of the railway sector to the countrys economy. Key facets of this study will show the contribution of the railway sector to Canadas GDP, employment sector, tax collection numbers, cost of doing business, green economy, and the balance of trade. Lastly, this paper will end with a conclusion summarizing the main points of the analysis.

Supports Hundreds of Thousands of Jobs

The Canadian railway sector contributes immensely to the economic growth and stability of the country through the hundreds of thousands of jobs it offers to Canadian citizens. According to Transport Canada (2012), more than 93,000 people work in the railway sector. Direct employment is 33,000 people, while people who are indirectly employed are 60,000 (Transport Canada, 2012). Collectively, the railway sector pays more than $9 billion in private-sector wages to this group of employees (Railway Association of Canada, 2016). Employees earn $3 billion of this amount each year, while suppliers get $6 billion of the same amount, annually (The Canadian Association of Railway Suppliers, 2017). Statistics from 2015 alone show that the railway sector employed 32,958 people (Railway Association of Canada, 2016). During the same year, the industry provided an annual wage per employee of $96,445 (Railway Association of Canada, 2016). Nonetheless, the Canadian railway sector continues to support thousands of jobs in the economy. Although there have been fluctuations in the numbers, the sector has been steadfast in being a significant job creator in the transport industry. The table below shows railway employment levels from 2001 to 2010.

Table 1: Employment Levels in the Canadian Railway Sector. (Source: Developed by Author).

Based on the above table, we find that the railway sector has not had much growth in the creation of new jobs. An analysis of class 1, regional, and short-line divisions of the industry reveals that between 2001 and 2010, the sector has shed off some jobs (from 39,530 to 32,006) (Transport Canada, 2012). This decline is largely attributed to tough economic times and increased competition from other forms of transport. However, the sector still accounts for a significant proportion of employment opportunities in the transport sector. By extension, this fact means that the railway industry supports a significant number of jobs in the countrys economy.

Tax Contribution

Albeit being among the most heavily taxed transport sectors in Canada, the railway industry pays more than $1.4 billion in taxes to the Canadian government, annually (Railway Association of Canada, 2016). Similarly, the industry pumps in more than $2 billion in new capital expenditures to the same economy annually. Statistics from the Railway Association of Canada (2016) reveal that the tax paid by the railway industry is often in terms of fuel, property, and sales taxes.

GDP Contribution

The economic impact of the Canadian railway sector on the countrys economy is perhaps best understood by examining the impact of the sector on the countrys GDP. GDP is the total value of goods and services in the economy (The Canadian Association of Railway Suppliers, 2017). Canadas railway transport system is a significant investment vehicle for thousands of Canadians because reports show that tens of thousands of investors own private railway companies (Railway Association of Canada, 2016). Directly, railway workers own some of the companies shares, but, indirectly, ordinary Canadians stake a claim to the countrys transport sector, mostly through investment and pension plans. According to Transport Canada (2012), the aggregate GDP contribution of the railway sector to the Canadian economy amounts to $12 billion. This figure combines the total tax contribution made by the sector to the government, as well as the number of money companies, pay in labor compensation claims.

Compared to other bulk shipping industries, we find that the railway sector contributes a significant proportion of money to the countrys economy. For example, we find that four key bulk shipping industries, including the mining sector, woods manufacturing sector, oilseed and grain sector, and the paper products manufacturing sector, contribute close to eight times what the railway sector contributes to the Canadian economy (Dungan & Murphy, 2012). The pie chart below depicts this comparison by showing that, bulk shippers add 87% of the transport sectors contribution to the countrys GDP, while the railway sector adds 13% of the transport sectors GDP contribution.

Enables Domestic and International Trade

Despite the economic uncertainty in the world, the export-oriented nature of the Canadian economy has helped it to stay afloat and maintain a robust economic performance. The railway sector has been at the center of this performance because most of Canadas exports are transported via rail. According to Transport Canada (2012), the Canadian railway sector has helped the government leverage trade agreements with other countries, thereby maintaining a high level of functionality in the economy. To support this fact, Dungan and Murphy (2012) say, We have effectively and efficiently worked with our partners  ports, terminals, shipping companies, and the trucking industry  to get products to external markets (p. 3).

The railway industry is at the forefront of boosting Canadas domestic and international trade through the movement of people and goods domestically and regionally. Annually, the railway sector moves more than 75 million people across vast transit points scattered along with the countrys rail networks (The Canadian Association of Railway Suppliers, 2017). Similarly, the sector moves more than $282 billion worth of goods across the same network (The Canadian Association of Railway Suppliers, 2017). According to the PPSC Task Force (2014) on Canadian transportation and economy, 70% of surface goods in Canada are transported by rail. The transportation of goods across Canadas railway lines has helped to reduce congestion on the roads and helped reduce the volume of pollutants and emissions produced by the road transport network. Albeit millions of people use rail transport to travel across Canada, a historic comparison of passenger numbers, throughout the years, shows that the railway sector has struggled to maintain a steady flow of passenger traffic throughout the years.

According to Dupuis (2015), passenger traffic in the railway sector has declined by more than 70%. This is largely because of the increased popularity of other forms of transport. Mainly, road transport has taken most of the share of passenger traffic in Canada because Canadians are driving more today than they did 70 years back (Dupuis, 2015). A comparison of passenger traffic during the late 1940s and early 1950s reveals that the railway sector carried about 55.4 million people annually (Dupuis, 2015). This passenger traffic accounted for about 20% of the revenues in the railway sector. In 1955, researchers pointed out that passenger traffic had declined to 27.2 million people annually. This figure accounted for a 50% revenue decline in the passenger revenue traffic alone (The Canadian Association of Railway Suppliers, 2017). The table below provides a summary of passenger numbers across the three major forms of transportation in Canada  Rail, Road, and Air.

Table 2: Canadian passenger transport via railway, road, and air (1986-2008). (Source: Developed by Author).

NB:

1. Figures are in billions of passenger kilometers
2. 1996 and 1998 figures for motor vehicle travel are unavailable

The table above shows a breakdown in the market share of the passenger travel business across the three major forms of transport in Canada. It also shows that the rail transport network has the least market share. Although there were efforts by the Canadian government to prevent a complete collapse of passenger business in the railway sector, few railway companies managed to stay afloat without government subsidies (Dupuis, 2015). Nonetheless, recent reports show that the rail service network is making a comeback in the passenger transport business because there are up to 75 million people in Canada using the railway system for travel today. However, this market is not expected to grow much because of the dominance of road transport. Nonetheless, 75 million people who still use the railway system is a significant share of the passenger travel business in Canada.

Unlike passenger transport, the Canadian railway sector has a significantly bigger impact on the cargo transport business in Canada because estimates by the Railway Association of Canada (2016) show that the Canadian railway system is the fourth largest transporter of goods in the world. In fact, reports show that 50% of Canadas exports are transported by rail (Transport Canada, 2012).

According to the Railway Association of Canada (2016), the value of goods transported via rail to other countries (international trade) in 2015 amounted to $127.4 billion. From this number, $83.6 billion of the cargo transported were exported, while $43.8 billion were imported (Railway Association of Canada, 2016). The main exports transported out of Canada were automotive parts, machinery, metals, and wood products (Bloskie, Clarke, & Gellatly, 2015). Comparatively, the main imports transported via rail were chemical products and automotive parts (Bloskie et al., 2015). The table below provides a summary of the exports transported via the railway system from 2002 to 2011 (all values are in thousands of tonnes).

Table 3: Exports transported via the Canadian railway system. (Source: Developed by Author).

The table above shows that the railway sector has helped support Canadian exports by allowing companies to transport bulky goods outside the country. Most of these goods are transported to the US through an existing railway network that stretches to the center of America.

Reduces the Cost of Doing Business

The railway sector has endeavored to maintain a strong level of competitiveness for its customers. This competitiveness has been supported by the fact that customers have an option to ship large quantities of goods to their customers in a timely manner. They have done so by gaining access to specific markets. The railway sector has allowed them to add value and raise prices in a way that increases their personal wealth and, by extension, the overall wealth of the economy. Coming from this background of success, the Canadian Association of Railway Suppliers (2017) says that Canada is at a point in history where a new supply chain needs to be established to spur the next wave of success in Canadas economy.

Compared to other forms of transportation, the Canadian railway sector is perhaps the most efficient and cost-effective mode of transport for moving bulky goods. In fact, the Canadian Association of Railway Suppliers (2017) says, The rail transportation sector specializes in moving heavy, bulk commodities and containerized traffic over long distances (p. 19). The efficiency of the railway transport sector and the strides made in making it faster and safer have helped users of railway transport to reduce the cost of doing business (a benefit which they have passed on to their customers, thereby reducing inflation and the cost of living) (Railway Association of Canada, 2016). Relative to this assertion, the PPSC Task Force (2014) on transport and economy in Canada says, Increasing transport system efficiency provides productivity gains that filter through the economy in various ways. For example, reduced shipping costs may increase business profits, reduce retail prices, improve service quality, and allow tax increases, or a combination of these (p. 7). In 2015, experts estimated that more than 300.5 million tonnes of cargo would be transported via the railway network (Railway Association of Canada, 2016). Most of this cargo was transported as bulk commodities, which is an efficient way of transporting them.

The sectors contribution to the Canadian agricultural industry highlights the usefulness and contribution of the railway sector to the countrys economy because 573,000 carloads of grain were transported via the railway between 2014 and 2015 (Railway Association of Canada, 2016). This figure translates to a 2.3% rise in cargo volumes from the agricultural sector in the 2013/2014 financial year (The Canadian Association of Railway Suppliers, 2017). From 2015 to 2016, more than 600,000 carloads of cargo were transported via the same system (Railway Association of Canada, 2016). It was also used to transport 147,000 carloads of crude oil in 2015 (The Canadian Association of Railway Suppliers, 2017).

Spurring the Green Economy

Canada is among the worlds leading adopters and champions of a green economy. It assumes this position because of stringent regulations placed by the government to curb greenhouse gas emissions in different sectors of the economy (Transport Canada, 2012). As opposed to playing a defensive game where industries have to abide by existing regulations to minimize their greenhouse gases, the railway sector has adopted an offensive strategy where it deliberately supports a green economy by transporting bulky goods efficiently. It also adopts technologically advanced operations to reduce the reliance on fossil fuel by the transport industry (Railway Association of Canada, 2016). The latter has mainly been established through the manufacture and purchase of fuel-efficient wagons. Comparatively, the design of rail services, by virtue of its efficient nature of transporting many goods at once, is that of efficiency because the railway network can carry more goods than other forms of transport (notably air and road transport) could. As such, the railway sector is spurring the green economy in Canada. This fact is evidenced by the fact that the railway sector is among the least carbon-emitting transport sectors in the North American nation (Transport Canada, 2012). The pie chart below presents a holistic view of its rankings, compared with other sectors of transport.

As highlighted above, other types of transport are the main contributors to emissions in the Canadian economy because they contribute 37% of the countrys emissions (others are denoted by transport types that use off-road diesel and gasoline sources to power engines). This type of transport is closely followed by heavy-duty road transport, which accounts for 22% of emissions in Canada. The heavy-duty transport types include engines powered by heavy-duty diesel and heavy-duty gasoline engines. Comparatively, light-duty road transport includes light-duty gasoline and diesel vehicles, which contribute to 17% of emissions in Canada. Marine and rail transport both contribute 9% of emissions in Canada, which makes them only second to air transport, which is the lowest contributor to emissions in Canada, accounting for only 6% of pollutants in the country. Based on these statistics, we find that the railway sector is among the leading drivers of the green economy in Canada because of its low contribution to the countrys emissions. Based on this fact, we find that the railway sector greatly contributes to the growth of a sustainable economy in Canada. This advantage exemplifies the important role it plays in the economic prosperity of the nation. The table below provides a summary of the economic contributions of the railway sector to the Canadian economy, as we have described in this report.

Table 4: Summary of the economic contributions of the railway industry to Canada. (Source: Developed by Author).

Conclusion

This paper shows that railway transport is among the most significant and dominant forms of transportation in Canada. Based on the different types of economic contributions the sector makes to the Canadian economy, it is plausible to believe that the railway sector offers among the best returns on investment for decongesting Canadian roads and creating an environmentally friendly transport network in the country. Therefore, the understanding that Canada should continue to develop its economy as a railway-centered one reflects a common sense understanding of sustainable development in the North American nation. This approach is one that would benefit commuters, the environment and the economy. This fact largely explains why there is an almost unanimous support among Canadians that the government should make more investments in this transport sector. This view largely exemplifies the commitment of the railway sector to the countrys growth. It is indeed the true story of Canada, and it largely explains the countrys economic growth story as that of efficacy, safety, and sustainability, as opposed to that of rebellion. Therefore, the industry is placed to be one of the most iconic drivers of the countrys growth in the next decade.

References

Bloskie, C., Clarke, S., & Gellatly, G. (2015). Recent developments in the Canadian economy: Fall 2014. Web.

The Canadian Association of Railway Suppliers. (2017). Industry information. Web.

Dungan, P., & Murphy, S. (2012). A comparison of contributions to the Canadian economy of key bulk commodity shippers and rail freight Carriers. Web.

Dupuis, J. (2015). VIA Rail Canada Inc. and the future of passenger rail in Canada. Web.

PPSC Task Force. (2014). Transportation & the economy. Web.

Railway Association of Canada. (2016). Rail facts. Web.

Toly, N., & Segbers, K. (2016). Cities and global governance: New sites for international relations. London, UK: Routledge.

Transport Canada. (2012). Transportation in Canada 2011. Web.

Introduction

Background

Throughout the past decades, the priorities of the business management have undergone critical changes. Thus, it is now evident that one of the key determinants of a successful performance is the customers positive perception of a companys image or the so-called brand (OGuinn et al. 2014).

According to experts opinion, a brand is one of the most significant elements of a restaurants promotion campaign (Schulz 2012). One of the most efficacious tools of promoting a brand today is mass media that has a powerful influence on shaping peoples vision of the social realm. Therefore, the management must evaluate adequately the impact that social media has on customers perception of a restaurants brand. Numerous studies prove that a productive approach to this problem helps restaurants achieve their aims and improve their general performance (Needles & Thompson 2013). In other words, restaurants management can use mass media in order to promote their brand in case it understands the mechanisms of this interconnection.

Problem Statement

The report at hand is aimed at proposing research on the impact that mass media has on forming customers perception of a restaurant brand. It is assumed that as soon as the mechanisms of this interconnection are identified, restaurants management will receive a consistent guideline for an effective promotion strategy.

It is suggested that the problem should be examined evidence from one of the most successful players in the relevant market, Burger King. Thus, the advanced hypothesis might be posed as follows: the mass media has a strong impact on the customers perception of the restaurants image and, thus, on their willingness to use its services. It is critical to note that it is not only the positive impact (achieved mainly by the managements efforts in its rapport with the mass media) but the negative influence as well that will be examined in the framework of this report.

Research Objectives

The proposed research aims to evaluate the impact that mass media has on the customers perception of a restaurant image as exemplified by Burger Kings case.

As a result, the following objectives are set:

• perform a detailed examination of the research and studies related to the issue;
• develop an understanding of the key mechanisms of the interconnection between mass media and social perception of a restaurants brand and evaluate the specific issues related to this interconnection;
• conduct research involving Burger Kings customers to define the impact of the mass media;
• analyze the obtained results and develop a guideline that can help restaurants promote their brand efficiently through mass media.

It is assumed that the problem under discussion is particularly acute now that a restaurants image has a powerful impact on its general performance. Thus, the obtained findings, as well as the generated recommendations, are expected to assist restaurant managers to advance their brands more efficiently.

The following questions need to be addressed in order to accomplish the set objectives:

• How does mass media influence customers perception of a restaurants image?
• How does customers perception of a restaurants image impact the restaurants performance?
• What are the key mechanisms of this influence?
• How can a restaurants management use mass media to promote the restaurants brand?
• How does Burger King use mass media to create a positive perception of their image in customers?

Literature Review

Introduction

To carry out a valid and consistent research, it is essential to rely on a scientific base (Fink 2010). The quality of the sources selected for the researchs framework is likely to have a significant influence on the studies relevance and validity. Therefore, it is suggested to focus on the scientific literature and peer-reviewed articles and avoid using secondary sources in this analysis.

It is necessary to note that the problem of mass media influencing and shaping customers vision of a companys brand is widely discussed in modern literature. Therefore, the key aim of this literature review is to summarize the existing sources, evaluate the available data and its relevance to the core subject of the proposed research, indicate the main gaps that this study can fill and make the current research framework more concise.

As long as the scope of the literature is very large, it is suggested to analyze it in three dimensions: theoretical material, practical studies, and case studies.

General Marketing Theories

There is currently a wide scope of literature that elucidates the impact that mass media has over clients perception of a companys brand in general. Every marketing textbook has a chapter devoted to the product promotion or advertising. From this perspective, it is not problematic to study the basic principles of influence that mass media has in terms of shaping customers vision. The most common approach to addressing this problem is analyzing this impact as the one provoked by the effort of a companys management. In other words, it is most typical to treat mass media as the direct marketing media tool, along with mail, telemarketing and interactive media (Percy, Rosenbaum-Elliott & Elliott 2012). This interpretation might serve as a basic guideline for a better understanding of the proposed research questions.

Meanwhile, this approach has some critical drawbacks. First and foremost, it examines the impact of mass media on the brand promotion for every business without distinguishing the restaurant type. However, restaurant management has its own specificity that should be essentially taken into account while analyzing research findings and drawing the relevant conclusions.

Secondly, this approach mainly focuses on mass media as a promotion tool without studying its independent effect. Thus, for instance, a few years ago there was a large scandal around the ingredients that Burger King uses in its food (King & Buckley 2013). The scandal initially appeared in social media, though later on, mass media thought it necessary to elucidate it. In such a manner, the newspaper The Guardian hurt the customers perception of the restaurants image even though it did not try to accuse the company of the low-quality production but just retold the news from the social media. Therefore, it is critical to think about the types of effects that mass media produces.

A fine exception in this context is Hasans detailed work International Marketing Planning  An Analysis of Burger King. Even though the book also focuses on the promotional impact or the intentional influence of mass media on customers perception of a restaurants image, it is more close to the subject of the proposed research than other theoretical materials. Thus, the author analyzes Burger Kings efficient strategy of using mass media for shaping the vision of their brand (Hasan 2013). This information can be highly important while working out the researchs recommendations.

Related Studies

Another type of literature proposed for using in the framework of this research is scientific studies. Unlike utterly theoretical textbooks, this type of sources provide some statistical evidence and point out the most critical trends associated with the proposed problem. From this perspective, a problem arises concerning the interpretation of the mass media term. The point is that numerous studies examine the impact of social media on customers vision of a brand. Thus, for instance, Resti and Purwanegara (2012) offer innovative research that studies the psychological impact that clients experience while viewing the images of food on Facebook, Twitter, Instagram, etc.

In the meantime, the question arises whether these types of media refer to the mass media segment. On the one hand, some researchers do not stick to a strict distinction between social and mass media. Hennig-Thurau et al. (2010, p.311), for instance, classify social networks as the new type of mass media. It is essential to note that this approach is rather popular in new theoretical literature  many specialists assume that social media is an integral part of mass media (Galician 2013).

On the other hand, a more classic approach implies considering social media as a separate media unit (Hackley 2010). In order to provide a concise framework for the proposed research, it is considered reasonable to accept the second approach. In other words, the examination of the mass media impact would refer to such sources as press, radio, television, and websites but would not refer to the personal communication in social networks.

Moreover, apart from examining the studies of the impact that mass media have on consumers perception of a brand, it would be useful to examine the role of mass media in shaping consumers behavior. Hence, for instance, Kasmi (2012) offers an explicit examination of the factors that have the most significant impact on consumer behavior in terms of mass media. This data is critical for the proposed research as it helps to understand the principal mechanisms of the examined interconnections better and apply this knowledge to the improvement of the restaurants performance through mass media.

From this perspective, there are few discrepancies in scientific opinions regarding the power of mass medias impact on consumer behavior. The scientific community became interested in this question a long time ago, and most of the research that has been carried out since then show that TV and presss advertisement play an important role in shaping consumers desire to buy this or that product (Hirschman & Thompson 2013).

A more in-depth analysis shows that it is not only the advertisement that might impact consumers decision making but any food-related information that appears in mass media. Recent research, for instance, has proved that the mass medias apply to buy healthy food or to refuse to eat particular products might also impact consumer behavior (Freisling, Haas & Elmadfa 2009). Hence, in a broader sense, customers perception of a restaurants image might be, likewise, shaped by any food-related information provided by mass media.

The principal gap that currently exists in the scope of the scientific studies available is the lack of research that would examine the multi-faceted impact of the mass media on customers vision of a restaurants image. Otherwise stated, most of the studies, as well as the theoretical literature, put a particular emphasis on the promotional function of the mass medias impact on consumers attitudes. Those studies that address the problem more complexly do not distinguish the restaurant business but examine the medias impact on all types of companies. From this perspective, the proposed research is likely to fill the existing gap.

Case Studies

The last type of the sources that should be necessarily used in the proposed research is case studies. It is assumed reasonable to focus on the Burger Kings case studies in order to examine some particular approaches that the company implements in terms of using mass media as a promotional tool. Thus, for instance, Lacorte (2007) provides a detailed case study of the companys promotion strategy. The key benefit of this analysis resides in the elucidation of both the positive and negative sides of the mass medias impact. Meanwhile, as well as in the previous two cases, the study mainly focuses on the advertising character of mass media, whereas its other functions in shaping consumers perception of the brand are neglected.

The analysis of the available case studies has also opened new perspectives for the proposed research. Thence, Kissanes case study examines the customers perception of Burger Kings image in France. The author points out that the company took into account regional peculiarities while using mass media for brand promotion (Kissane 2015). Kissanes analysis is not the only one that addresses the problem in terms of regional peculiarities.

Thus, in their case study, a group of Indian researchers Batra, Myers, and Aaker (2013) show how Burger King collaborated with the local channels in their country in order to create an attractive companys image. As a result, it might be proposed that further research can also put a particular emphasis on the examination of the mass medias impact on consumers vision in different countries. In the meantime, the key flaw of these two case studies is that they focus on the tools that the company used in terms of promotion and overlook the independent effect that mass media has over consumers perceptions in their countries.

The key themes of this study are the mechanisms of mass media influencing customers perception of a restaurant image; hence, the following conceptual framework has been designed.

Conclusion

Basing on the analysis of the relevant literature, a series of conclusions might be drawn out. First and foremost, it is essential to note that the literature proves that mass media has an impact on clients perception of a restaurants image. In the meantime, the problem of restaurant management is not widely elucidated in the scientific literature. There is currently little information regarding the brand promotion tools that would be described exclusively in the framework of restaurant management. Thus, the major part of the overviewed literature is devoted to either business management in general or the management of a group of business activities of a similar type: restaurants, hotels, etc.

In terms of the mass medias impact on customers perception of a restaurants image, a critical information gap can be pointed out. Hence, most of the sources elucidate this problem, from the standpoint of promotion activity only. In other words, they neglect the other side of the impact  the independent influence that mass media produces through providing particular information on a company, food in general and other related topics. The indicated gap provides evidence for the thematic justification as no identical study has been carried out so far. As a result, it is expected that the proposed research will fill the existing gap and contribute largely to the development of scientific knowledge about restaurant management.

Moreover, the literature review has also helped to point out some subjects for further examination. Hence, as long as the proposed research is carried out and the set objectives are accomplished, it is considered reasonable to perform another study examining the associated problems. For instance, potential researchers might try to use the obtained findings and continue the work to define the differences in the mass medias impact on consumers perceptions in different countries. The literature review showed that this problem has not been properly addressed so far which signifies there is another information gap in the relevant framework.

Research Methodology

Philosophical Approach

While selecting the philosophical approach, it is critical to take into account the examined subject and the field it relates to (Leavy 2014). According to experts opinion, a realistic approach is often used for conducting business-related studies and research. Thus, Saunders, Lewis, and Thornhill (2009, p.115) point out that the realistic approach is often employed while examining such factors as job satisfaction, motivation rate, etc.

Moreover, it is important to note that as long as the relevant approach implies two different types  direct and critical  the latter seems to be more appropriate in the framework of the proposed study. Therefore, based on the core principles of this type of approach, the proposed research will try to address the problem as an objective reality that can be impacted in a positive way. As a consequence, the key aim, in the framework of this approach, will reside in working out an effective strategy that can bring in some favorable changes to the existing set of things.

In addition, it is essential to note that choosing this approach makes it easier to decide on the methodology framework. Hence, according to specialists opinion, critical realists normally use qualitative methods in the course of carrying out their studies (Saunders, Lewis & Thornhill 2009).

Methods

First and foremost, it is critical to note that the proposed research is expected to be of an analytical type. As long as the proposed subject has already been studied to a certain extent, it is suggested that this research should focus on defining the principal mechanisms of the described phenomenon.

Also, as has been already mentioned above, it is proposed that the research has a qualitative design. In other words, it will mainly focus on the examination of the attitudes and perceptions rather than on the quantitative statistics. As well as the major part of the qualitative studies the proposed research is likely to be of the deductive character so that it bases on the initially foregrounded hypothesis that resides in the assumption that mass media has a powerful impact, both positive and negative, on consumers perception of a restaurants brand. However, this hypothesis is rather general, and it is expected that the research findings will help to formulate a more precise and detailed explanation of the examined phenomenon.

Lastly, as long as the analysis of the stated problem requires receiving accurate data, it is suggested that the research has a survey structure. It is expected that this type of structure will help to avoid potential ambiguity in the participants responses as the tools this structure uses imply less possibility for vague answers contrary to those in the exploratory type. Moreover, experts point out that a survey structure is particularly appropriate for examining business-related issues (Engel et al. 2014). In addition, it is expected that this method will be less time-consuming than an interview.

Data Collection and Analysis

In accordance with the selected research structure, it is suggested that a survey is employed as the principal data collection tool. From this perspective, the key concern is to define the size of the sampling group. Thus, to minimize the so-called margin of error, it is proposed to survey 200 Burger Kings customers. In this case, even if some of the participants fail to respond, 186 survey responses will be sufficient to assure valid and reliable data analysis (Emmel 2013).

The distribution of the surveys can be carried out via e-mail and social networks with the due agreement of potential respondents. As long as there is no strict framework for the type of customers, it is proposed to use the non-probability as the sampling population is not identified (Daniel 2011).

In terms of the data analysis, it is suggested to employ the summarizing method. Thus, the obtained results will be summarized with the help of the histogram that is highly convenient from the standpoint of the concise data presentation. It is also assumed that this type of data presentation will be convenient for interpreting by potential viewers.

Ethics

In order to research the framework of the relevant ethical standards, it is proposed that all the data analysis is performed independently on the personal attitude and subjective implications. Moreover, it is suggested that all the potential participants initially provide their official agreement to take part in the study and do not object to the fact that their responses will be used and interpreted by the researcher. It is likewise, critical that all the participants receive a guarantee assuring that their responses will not be handed over to the second parties and will be used for scientific purposes only (Paul 2010).

In order to ensure the security of the collected data, it is proposed that the researcher pays due attention to the storage of the collected materials. Otherwise stated, it is essential to see to the fact that the collected data cannot be freely accessed by other people.

Reliability and Validity

In order to maintain the consistent level of the researchs reliability and validity, it is proposed to avoid the most common mistakes and risk factors. First and foremost, it is assumed critical to consider the risk of the so-called subject error. Thus, it is important to assure that the respondents are placed in relatively equal conditions so that their answers are not significantly corrupted by the external causes.

Secondly, it is essential to take into account the fact that the respondents are likely to provide untruthful answers in case the question is posed misleadingly. Therefore, it is important to see to the fact that all the surveys questions are formulated in such a manner that the risk of the respondent bias is minimal. Furthermore, the information analysis must be performed as objectively as possible so that its results are maximally close to those that another researcher would receive under the same conditions.

Besides, it is essential to assure the relevant level of validity by avoiding potential ambiguity: unclearly posed research questions, ambiguous interpretation of the problems background, subjective attitude to different respondents, the shift to the examination of related problems in the course of carrying out the research, the wrong approach to determining the causal-effect relations, etc (Baumgarten 2013).

Lastly, it is vital to ensure that the research findings do not depend on the particular environmental settings. In other words, the researcher is supposed to guarantee equal findings in any context.

Time Plan

The following time chart represents a rough guideline for carrying out the proposed research.

Conclusion

The proposed research is aimed at examining the interconnection between mass media and customers perception of a restaurants image. The review of the relevant literature showed that there is currently a considerable information gap in the relevant field. Thus, no studies have yet been carried out that would elucidate the problem. As a result, it is expected that the proposed research will fill in the existing gap.

The proposed research design is a qualitative study, and the main tool for data collection is a survey. The approximate size of the targeted population is 200 people. The timeline of the proposed research is planned for a period of two months so that researchers might give every stage due consideration. The key aim of the proposed research resides in providing consistent recommendations for restaurant managers that will assist them in improving the general businesss performance.

Reference List

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Engel, U, Jann, B, Lynn, P, Scherpenzeel, A & Sturgis, P 2014, Improving Survey Methods: Lessons from Recent Research, Routledge, New York, New York.

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Hackley, C 2010, Advertising and Promotion: An Integrated Marketing Communications Approach, Sage Publications, Thousand Oaks, California.

Hasan, MR 2013, International Marketing Planning  An Analysis of Burger King, GRIN Verlag, Lincoln.

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Kasmi, SQ 2012, Consumer Perception and Buying Decisions(The Pasta Study), International Journal of Advancements in Research & Technology, vol. 1, no.6, pp. 1-10.

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Lacorte, VL 2007, Social Media and the Burger King Brand. Web.

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Needles, A & Thompson, GM 2013, Social media use in the restaurant industry: A work in progress, Cornell Hospitality Report, vol. 13, no.7, pp. 6-16.

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Percy, L, Rosenbaum-Elliott, R & Elliott, RH 2012, Strategic Advertising Management, Oxford University Press, Oxford.

Resti, ND & Purwanegara, MS 2012, The Psychological Effect of Uploading Food Picture on Social Media to Willingness to Dine Out, Journal of Social and Development Sciences, vol. 4, no.7, pp. 316-324.

Saunders, M, Lewis, P & Thornhill, A 2009, Research Methods for Business Students, Pearson Education, New York, New York.

Schulz, RN 2012, Effects of branding on restaurants image: a case of selected restaurants in Nairobi, Kenya, European Journal of Business and Social Sciences, vol. 1, no.8, pp. 56-66.

Executive Summary

The Chinese market is rapidly expanding, with the demand for various types of products, including food. Patchi is a manufacturer of premium chocolate operating in Canada and several North American, European, African, and Middle East markets. Premium chocolates are a unique product made from cocoa butter, with the addition of sugar and milk. Chocolates and premium chocolates are not essential food items in most markets; however, consumers have used these products as comfort foods and a source of indulgence, especially during the COVID-19 pandemic. Hence, premium chocolate products can be marketed as a portion of comfort food to support the consumers wellbeing during stressful times. In China, chocolate is not a traditional product consumed by many on a regular basis. Moreover, according to Mordor Intelligence (2022), the Chinese market of chocolate remains largely untapped, presenting many opportunities for manufacturers and suppliers.

The evaluation of the premium chocolate industry is estimated at 29 billion U.S. dollars (Mordor Intelligence, 2021). The market growth for the timeframe between 2022 and 2026 is estimated at 9.6%. The segmentation of the premium chocolate market is based on the chocolates properties, such as white, milk, or dark; distribution channels; and geography.

This report presents the findings regarding the Chinese premium chocolate market and aims to explain why Patchi should expand its sales to the Chinese market. Based on the findings of this report, Patchi can leverage the increasing demand for chocolate in China and the fact that this market is not occupied by many competitive forces.

The COVID-19 pandemic has affected all markets, with the stores being closed and employees had to follow safety precautions to ensure that the spread of the virus is contained. However, in 2022 and with the introduction of the vaccines, the consumers activity begins to renew, providing manufacturers with an opportunity to explore new markets and expand their sales. Moreover, the Government of Canada has voiced its support for the manufacturers that want to expand their business to the international markets. This report will present an overview of Patchis products. An assessment of the chocolate market in Chinas consumer trends in the selected market will contain recommendations for Patchi.

Background

Patchi is a premium manufacturer of chocolate from Canada. The brand positions itself in the following manner: an awakening of taste, sight, sound, smell, and touch that crescendos in an immersive experience and shareable moments (Patchi, n.d.). The Patchi corporation has existed for over 50 years, and over this time, the brand has opened online stores in several states, boutique stores, and Patchi cafes.

Patchi offers two types of products, either chocolate or gift boxes containing different variations of chocolates. The products are made from pure cacao mass without preservatives or coloring additives (Our creations, n.d.). Each product is created by a chef specifically for Patchi, which offers the consumers a unique experience and taste.

As a multinational corporation, Patchi has online stores in Canada, the U.S., Lebanon, the U.K., New Zealand, and KSA. Additionally, it has several boutique stores where the brands chocolate can be purchased across the world. Figure 1 displays the location of the existing Patchi boutiques. From this map, it is evident that Patchi has expanded its offline stores to markets in Europe, the Middle East, and Africa. However, the company has not had an expansion into the Asian market.

The premium chocolate market has suffered substantially during the COVID-19 pandemic. These issues are linked to the decrease in demand and supplier-side problems, such as certification and quality problems (Mordor Intelligence, 2022). Hence, the manufacturers are facing the issue of renegotiating their ties with cocoa butter suppliers and renewing the sales to the pre-pandemic levels. Still, the market is expected to grow globally, which presents Patchi an opportunity to explore new markets and extend its consumer base.

Research Objectives

The following research aims to explore the opportunities for a premium chocolate brand in the Chinese market. Additionally, this research will identify the potential competitors and their advantages when compared to Patchis products. Additionally, this research will identify the current market size and expected growth of the chocolate market in China. Finally, this report will present recommendations regarding the market entrance, pricing, and distribution of Patchis products in China, based on the findings.

Methodology

This research is based on the collection of primary and secondary data from Patchi, governmental reports, and reports by industry experts. The data that is of utmost importance is the size of the Chinese market, potential competitors, distribution strategies, and market growth reports. Next, the collected data will be analyzed to present Patchi the market entry plan. The data will be collected from reputable sources, such as Mordor Intelligence reports, The Economist articles, and other articles.

Market Intelligence

China is a politically stable country that was formed in 1949 and has continued to remain a one-party country (The Economist Intelligence, 2021). The Chinese Communist Party (CCP) governs this state, and little political competition exists. The main figure in Chinese politics is the CCPs leader, Xi Jinping, who has had his position since 2012 (The Economist Intelligence, 2021). Hence, in general, this is a politically stable state; however, Patchi should be cautious regarding the Chinese policies of protecting the products that were manufactured in China, as the CCP supports primarily local manufacturers.

One potential concern is Chinas trade wars with the United States, which have affected the stability of international relations between this state and the global community. Another concern is the relationship between China and Taiwan, the latter being a part of the Peoples Republic of China with some sovereignty. Therefore, Pachi should be aware of the political tensions between the United States and China and its potential effects on trade relationships between Canada and China. However, currently, the Canada-China trade relationships are stable. According to Choi (2021), Canadian exports to China rose by 23.2% in the first six months of 2021, as compared with the first six months of 2020 (para. 2). Moreover, this report indicates that the Canadian exports to China have outgrown the export rates before the pandemic, indicating a positive trade relationship. Therefore, China and Canada have a well-established trade partnership, which will make the entrance of Patchi into the Chinese market more easily. Figure 2 below presents the statistics about the Canadian exports to China, which help grasp the increasing trend for the exports.

Despite the positive trends in the trade relationships between China and Canada, the ease of doing business in the former state is a matter of potential concern. Economies that have a rank between 1 and 20 are considered friendly and easy to do business in, while those below are less suitable for business activity (Trading Economics, 2021). China is currently ranking at number 31, which means that there are some barriers that can obstruct manufacturers and distributors from succeeding in this economy. However, one should note that this state has improved its ranking in recent years; for example, in 2018, it was ranked at 46. As a result, there is an improvement trend in the ease of doing business domain in China, and therefore, potential businesses that want to enter this market can expect better conditions in the following years.

Currency risk is another potential concern when selecting a new market for entry. According to the recent Reuters (2021) report, the Chinese regulators have warned companies to work on protecting themselves against currency risk. This is due to the fact that the Chinese central bank has decided to loosen its control over the yuan. Hence, Patchi faces some potential currency risks if the company decides to enter the Chinese market. Also, it is important to note that the yuan, in general, is a heavily regulated currency, meaning that the government has had strong control over it for the past years. Therefore, it is unlikely that the yuan will be affected by some unexpected risks or market conditions that the regulator will not warn about, which provides some reassurance to businesses.

Customer Intelligence

Evidently, the customers and their preferences in the Asian market differ substantially from those in the Canadian market. For example, the Mordor Intelligence (2021) report states that chocolate is not a part of the traditional Chinese diet. However, this means that Patchi can market its products as something unusual from the Western culture, which is in line with the premium properties of this brand. The chocolate market in China is dominated by four international companies, Ferrero, Nestle, Mars, and Yildiz Holding (Mordor Intelligence, 2021). These are well-established companies; however, their distribution model differs from that of Patchi since they sell chocolate to consumers through convenience stores and supermarkets, while Patchi is available in boutiques, Patchi cafes, and the manufacturers online store. More detail on the differences between Patchi and its competitors will be presented in the next section and in Table 1 with SWOT analysis.

The main reason why Patchi should expand to the Chinese market is the compound annual growth projections (CAGP), which are estimated at 3.25% for the timeframe between 2021 and 2026. This statistic and the basic characteristics of the market are shown in Figure 2. As for the consumer patterns, the main reason why Patchi should expand to China is the market size and chocolate consumption trends. Currently, the Chinese consume 15% of the worlds chocolate, showing that this is a substantial market size for the business (Mordor Intelligence, 2021). However, the Chinese traditionally do not favor products that contain high levels of sugar, and traditional Chinese medicine does not recommend intake of sweet products in excess. According to Mordor Intelligence (2021), a significant chocolate market space remains untapped, owing to the countrys culinary history and consumers across China consider chocolate as an exotic delicacy, which is also brought as a luxury gift during Lunar New Year or an extravagant treat (para. 10; para. 25). This may be beneficial for Patchi, as it produces high-quality premium chocolate, which can be marketed as a gift for special occasions or celebrations.

Competitive Intelligence

The main competitors for Patchi are well-established multinational corporations, such as Ferrero, Mars, Mondelez, and a lesser-known Yildiz Holding. One luxury chocolate brand that is currently operating in the Chinese market is Godiva, a premium Belgian chocolate brand (Mordor Intelligence, 2021). This brand is so far the only direct competitor for Patchi, as other corporations, such as Ferrero, offer a set assortment of products and chocolate boxes, while Godiva and Patchi create special designs and recipes for holidays and special occasions.

Table 1. SWOT of competitors

Recommendations

The above report shows some of the important consumer trends, such as a prospect of the increasing demand for chocolate in the Chinese market, by at least 3,9% by 2026 (Mordor Intelligence, 2022). Moreover, considering that chocolate is comfort food, the markets purchasing trends are likely to be affected positively as the global community recovers from the COVID-19 pandemics consequences. Hence, Patchi should consider opening an online store in China and selling its premium chocolates in this market as the consumer purchasing trends indicate a potential for profits. As for price trends, Mordor Intelligence (2021) reports that the current luxury chocolate manufacturers in China sell their products for a range between CNY 150 and CNY 1800, depending on the size of the box. Hence, Patchi has an opportunity to offer the different variations of boxed premium chocolate that the brand already sells in other markets.

The main argument for the expansion into the Chinese market is the fact that the chocolate industry and premium chocolate, in particular, are untapped and show a promising trend for growth and development. The trade relationships between Canada and China have been stable over the years, showing potential for Patchis expansion. This report indicates some risks, for example, the yuans instability. However, the local regulator has made efforts to warn the companies about the potential currency risks. Additionally, the competitors analysis shows that the only direct competition is from the brand Godiva, while other multinational companies have a different distribution model and a limited product range. As a result, Patchi should select a joint venture with a local company. This will help protect Patchi from the potential political and financial risks. Additionally, a local partner will be able to guide Patchi into the Chinese markets specifics, as the culture and traditions of this state differ from those in Canada.

References

Boutiques. (n.d.). Web.

Choi, D. (2021). Canada-China trade: 2021 Q2. Web.

The Economist Intelligence, 2021. China. Web.

Mordor Intelligence. (2022). China chocolate market. Web.

Our creations. (n.d.). Web.

Patchi. (n.d.). Web.

Reuters. (2021). Chinas regulators struggle to sway companies on currency risk. Web.

Trading economics. (n.d.). Ease of doing business in China. Web.

Introduction

Process mapping refers to the technique of utilization of workflow diagram to illustrate process flow, generate ideas for improvement, and enhance understanding of organizations operation in achieving a specific goal. Formulation of process diagram requires initial identification of the process, the collection of information from the population, proper identification of process start and endpoints, and development of task points.

The most significant example of process mapping in the academic field is the library book-borrowing system. In academic institutions, book borrowing faces dynamic challenges including student card expiry, new technologies, online education, and privacy and data protection that require continuous system improvement to enhance service delivery and satisfaction. Improvement of library services in academic institutions significantly promotes dissemination of information within the academic network, student overall performance and career achievements. Library system is an essential component in the academic environment that requires continuous evaluation and improvement to enhance the availability of relevant and up-to-date sources and eases access to information.

In regards to technological advancement and industrialization, library services have undergone significant changes including the adoption of computerized processes to keep up with the requirements of service provision with the techno-savvy population who are a majority of the library users. Accurate updates of records, decentralized access, and cost-effective service delivery have necessitated continuous improvement of library process.

Given these requirements, the book-borrowing process in the academic institutions has undergone tremendous changes promoted by constant amendments and process improvements. In system improvement, process mapping is the main model instrumental in the identification of weak process points, adjustment of activity structure, reporting channels, information flow, and accurate update of records. In this view, book-borrowing process significantly depends on process mapping for evaluation and improvement of service delivery.

Process Scope and Description

The library is a fast and continuously growing section of the academic field. In the view of the current systems of libraries facing some challenges, dynamic and efficient methods are necessary for production and maintenance of good quality library services. The process of book borrowing requires quick retrieval and dissemination of information that demands the application of improved and automated service delivery channels. The automated online library system assists library staff, lecturers, and students in supervising and borrowing library resources. A library can overcome problematic areas in workflows to allow for highly optimized resource sharing through automatic data availability.

The scope of library system include student validation and addition processes, book issuance, check out policy-deletion procedure, fine system, and book reservation. Student validation and addition process involve creation of valid user login details that control unauthorized access to the library by unidentified users. In book issuance, the system captures and updates the details of the requested book including name, title, author name, published date, year, and edition.

Additionally, the system captures user details including name and contact details. In the checkout policy, the system is updated with the books available outside library setting and those that can only be accessed within the library space. This feature enhances system-user update of book information. Book deletion is a manual process done by library staffs to remove a book from the current records when the book resource is damaged, lost or loses its relevance.

Book reservation involves updating the system with information on reservation details such as duration of book reservation and associated penalties of reservation. The fine system includes detailed information on charges incurred in case a user loses, damages, and returns a book late to the library.

Moreover, the new system will provide additional features for card order, adding members, book reservation, and check out option. The process utilizes security features that allow access to library services through user verifier process. Additionally, the book-borrowing process entails development and update of books database, book conditions, availability, due date, overdue charges, and effective charge and discharge book circulation. Overall, the system will create users based on permission, user login details, update available books, reserve books, indicate book status, cancel a reservation, show page for the user due date, impute penalties, and reset the password.

Process Model

The existing model holds limited information on update of books, students, and dates. This system is semi-manual and manages all information under limited capacity within the same context of user and library database (Appendix A).

Student Addition and Validation

The process involves user login credentials that allow students to directly access library services after successful user verification. For new users, the system does not require authorization or involvement of the relevant library staff to add and validate new users. This security problem poses a challenge in data privacy and compromises on school and user information safety. The ease of creation and access of login details impairs the efficiency and reliability of data retrieval because of large data processing within the same database.

New Book Update

The student fills request form for new books to access books that are not available in the school library. If a large number of students demand a certain book, the library management uses this order as a lead strategy in decision making that guides in the acquisition and stocking new books. The library staff members are responsible for record keeping of the new book through maintenance of accurate records in a catalog. These staff members then communicate the availability of the new books to students through sticking of notice in the library notice board.

Book Issuance Procedure

Issuance of books to members requires login to the library system. If the student or teacher does not have the login details, they have the chance to create their user details immediately by filling the online system registration form. If the student uses another student or teacher details, the system will still approve as does not require library staff intervention. After the registration and successful login, the system stores all the information regarding the user and the book such as students name, contact details, issue date, and return date.

Deletion Procedure

The records of the book in the library system are manually deleted from the register after confirmation of loss or complete damage by the user. The library staff entirely depends on user information to update details of the register on or before book return due date.

Fine System

The current system does not have an automated process of penalty payment. The library staff keeps records of a penalty payment for late date book return and or damage. The library charges per day on failure to return, but in case the book is lost or damaged, the fine amount is reviewed upwards.

Book Reservation

In case of failed book check out due to earlier issuance, the current library system does not have a book reservation process but applies on-date book issuance protocol. After a book is returned to the library, the next on-time user accesses the book, as the system does not have records to recognize earlier book search and reservation.

Process Improvements

As a solution to the semi-manual system, the proposed system will be wholly web-based online system for supervising and management of the transactions in the library. The project will mainly concentrate on basic operations in the library that involve adding/updating members, books, borrowing/reserving books, and renewing books online.

Justifications/Benefits

The new system will help provide a solution to the various complications in the old system. The system will control the actions, requirements, and behavior of individual users. The new system categorizes users into three groups, namely, library staff, teachers, and students. The library staff members are responsible for controlling distribution and maintenance of books while teachers and students are active users of library resources. The new system will be easy to handle and feasible as it offers different platforms to respond to different user commands thus promoting quick and easy access to information. The availability of various information checkpoints for data management in the new system supports fast retrieval of data that enhance service delivery.

The full automation of the library system reduces error occurrences in record keeping and data management. The improved record control facilitates up-to-date and accurate data management promoting efficiency in library service delivery and easy access to information. Information retrieval due to direct point commands of specific data reduces data package, and movement in the system enhances rapid transaction processes. Additionally, full automation of the processes reduces labor requirement, library space, and record-keeping materials, resulting in the overall reduction of costs in the management of the school library.

To Be Process

The new system will provide user portal that prompts login to give access to the library facilities (Appendix B). In case a user has not acquired login details, the system prompts the user to find valid login credentials from the library management staff. If the user provides valid login information, the system calls the next action of validation. This decision making cycle eliminates unauthorized user access thus improving system efficiency.

After user validation process, the system redirects the next step that invokes search of book availability and updates on previous user information on book borrowing. On verification of book availability, the system notifies the user and proceeds to update search record details in the book database on the duration of availability, check out policy, book quality, and the available stock. In case, the book is damaged, the book database notifies management on the conditions of the book and advises on the need to procure a new order.

If the book is available and in proper condition, the system proceeds to the next phase of determining the maximum limit set for user resource access. If the user has surpassed the maximum limit required, the system rejects the request, notifies the user, and logs out the user from the portal. However, if the user has not surpassed the set limit, the system redirects the order to the next interface of library database. At this point, the system provides the user with an opportunity to reserve, check out immediately, notifies on the time limit for book reservation, penalty on failure to check out after reservation, and cancellation of reservation.

The penalty attached to book reservation is in the form of monetary charge or denied access to library resources for a given period. In case the user wants to check immediately, the system redirects the user to the final stage of book issuance. At this stage, the system outlines the penalty calculation on the failure of book delivery on the due date, updates all user details and book records, and validates book collection.

In reference to earlier book checkout policy limiting book access outside the library, the system invokes and redirects the user to two available access options for scanning and photocopying. These options redirect the user to seek advice and authority from library management on the recommended action. The system then finally checks out the preferred option and deactivates the user from the system.

Conclusion

Adequate academic resource provision has remained one of the most challenging activities in almost all academic institutions. Student book circulation and on-time access to the relevant information requires consistent monitoring and evaluation of the library resource system to ensure efficient and reliable availability of academic information for all. Consistent with the need to improve library experience, technological advancement has significantly boosted the insistent efforts by library management to improve the outlook and general book circulation amongst the students and teachers.

Automation of the library services is a fundamental aspect towards the achievement of the long-term need to enhance availability and quality management of academic resources while cutting on operational cost. However, the implementation of library automation requires a robust framework to ensure core processes are maintained and proper stipulation of feedback channels are provided for friendly user interface and ease of system access.

Thus, process mapping acts as the primary component of system improvement providing the platform under which the main steps of user-system and intersystem components relate and communicate to facilitate stepwise resolve of a user request. The scope of process improvement of library services involves the creation and proper maintenance of user-based login portal, book updates, and check out regulations. Overall, process mapping supports the identification of areas of improvement and adjustment of activities significant in the improvement of library service workflows to allow optimized resource sharing.

Appendices

Appendix A: Process Map of a Library before Improvement

Appendix B: Process Map of a Library after Improvement