The real estate market is currently quite well-developed. However, buying real estate from a legal point of view is a very complex procedure and requires careful preparation before its implementation. In the event of an error when checking a home, the excitement of buying a home can turn into drama with endless litigation, property disputes, and loss of money. Mettling and Cusic (2019) note that most buyers do not pay enough attention to such an important factor as considering the risks of such transactions. Thus, purchasing a home entails many risks, the successful management of which can avoid problems and bring satisfaction with the buying. In this regard, such types of risk mitigation as risk avoidance, risk sharing, risk reduction, and risk transfer acquire special significance.
Avoidance is the best loss control tool. It is because, as the name suggests, the buyer avoids risk entirely. If the loss prevention efforts were successful, then the probability that a loss will be incurred is zero. Thus, it is a means of completely eliminating the threat. For example, a person wants to buy a house, but real estate prices have been unstable lately. There is a financial risk that the buyer may spend a large amount of money on the purchase of housing. Having assessed the risks, a person may decide to avoid buying and wait for prices to stabilize. Therefore, in this case, risk avoidance involves the refusal to purchase a house. In turn, Adams (2019) affirms that avoiding a well-defined risk is one of the best ways to mitigate it. For example, it is worth refusing to buy a property with a pool or hot tub to avoid unintentional drowning lawsuits. Thus, in some cases, risk avoidance is a good way to eliminate it.
One of the risk-sharing methods is to contact a competent real estate agent. According to Adams (2019), real estate transactions are delicate and require a lot of effort and knowledge, so it is necessary to turn to real estate professionals for help. Thus, it is recommended to purchase a house with the help of specialists. An agreement concluded with an agent that regulates the companys obligations in providing intermediary services will help share the risks. It is noteworthy that it is worth contacting trusted, competent real estate specialists since the consequences of a rash choice fall on the shoulders of the client himself. Thus, buying a house with the help of a real estate agent is a good way to risks mitigation. In turn, risk reduction involves adopting measures to reduce the likelihood of damage or the severity of its manifestation. For example, high debt can backfire when a house is purchased through borrowing. According to Mettling and Cusic (2019), a down payment increase may be applied to mitigate this risk. While this will require more cash up front, it will reduce the funding amount and lower payments.
It is often impossible to foresee certain circumstances in advance and fully study the propertys legal history. Adams (2019) asserts that the most common risks covered by insurance include errors in processing the necessary documents for the transaction and fraud on the part of the seller. Transferring certain risks is another way to protect yourself and is often used in addition to other mitigation strategies. Risk transfer involves the transfer of influence and risk management to another entity. In this case, insurance is a good example. Home buyers insurance provides coverage against loss of ownership or other real rights to real estate if the transaction is found to be illegal due to events that were not known to the buyer at the time of purchase of the home.
Despite the impressive list of risks that can arise while purchasing a home, there are common ways to mitigate them. Firstly, when purchasing an object, it is imperative to calculate and analyze all possible risks in advance, and only based on this make a decision. Secondly, it is necessary to familiarize yourself thoroughly with all title documents since, in such situations, there are no trifles. Thirdly, it is recommended to exercise full control of the process both during the conclusion of the transaction and in the management of the object itself after the acquisition. The contract must be concluded directly by the buyer personally or by his authorized representative. Mettling and Cusic (2019) note that managing a facility remotely carries more risks than in-person control. Fourth, insurance is one of the classic methods of risk management. If there are any doubts, or if the buyer does not have the necessary knowledge, it is recommended to resort to the help of a professional real estate agent so that the transaction is as safe as possible.
Therefore, the buyer is the most vulnerable party when buying a house since this person faces many risks. In this regard, such types of risk mitigation as risk avoidance, risk sharing, risk reduction, and risk transfer are of particular importance. In the case of buying a house, risk avoidance involves avoiding a purchase, which may be appropriate in a situation of price volatility or the purchase of a home that is characterized by a certain risk, for example, the likelihood of flooding. In turn, risk sharing involves contacting a competent real estate agent, who, together with the buyer, shares the responsibility for managing any risk. Risk reduction reduces the likelihood and consequences of risks. Risk transfer is associated with the transfer of responsibility for risk management and can be presented in transaction insurance.
References
Adams, A. (2019). Tips, tricks, foreclosures, and flips of a millionaire real estate investor. Wiley.
Mettling, S., & Cusic, D. (2019). Principles of real estate practice. Performance Programs Company.
It should be noted that contemporary quality management evaluation systems regard self-assessment of companies as one of the most important tools for a systematic improvement of organizational performance. Enterprises apply this technique to ensure that they remain productive. Importantly, the evaluation of instruments and frameworks have been refined due to the introduction of certain quality standards (Evans & Lindsay, 2016).
Overall, company self-assessment has broad enough tasks. It involves such goals as identification of opportunities for improvement and analysis of such factors as leadership engagement, strategic planning, client and workforce content, and other factors. Evaluation of these criteria allows an understanding of how effectively a company achieves its goals (Brown, 2013). Therefore, it is necessary to review both strengths and weaknesses of operation and bring them to the attention of all employees.
One of the complex tools and methodologies used for improving operations quality is the system developed by Malcolm Baldrige. It is a comprehensive framework, which drives organizations towards excellence. The purpose of this paper is to interpret the Baldrige standard and propose guidelines for achieving operations quality through an analysis of current viewpoints regarding this approach.
Literature Summary
The standard or Baldrige criteria have been developed to improve quality management systems in American companies and increase their competitive abilities (National Institute of Standards and Technology, 2017). Baldridge Award was introduced several decades ago, and it was given to those companies that met all the criteria to the fullest degree (Brown, 2013). This standard reveals the requirements for quality improvements in management and promotes the dissemination of information on the most successful strategies.
According to the National Institute of Standards and Technology (2016), the Baldrige standard covers such criteria categories as leadership, strategy, customers, measurement, analysis, and knowledge management, workforce, operations, and results (para. 2). These criteria emphasize the importance of such factors as company management and human resources, business results, and knowledge management.
Researchers believe that with the emergence of this methodology, a new approach to total quality management has been introduced to evaluate the effectiveness of activities of organizations (Evans & Lindsay, 2016). Companies relying on the principles put forward by the Baldrige standard can be characterized by such attributes as attractiveness for shareholders and reliability for partners, high social responsibility, increased competitiveness, and customer satisfaction orientation.
Insights into Categories
In general, the proposed criteria allow companies to increase the value of their product or service; however, the items of the framework have formulated in such a way as not to give companies clear instructions on how to operate but to direct them in a comprehensive manner (Brown, 2013). Therefore, it is assumed that each organization can improve the criteria of the standard based on its parameters and needs. Moreover, each enterprise can develop an individual approach to the implementation of these directions.
According to experts in the industry, the main aspect of the Baldrige standard is the company profile (Foma, 2012). It is a broad and comprehensive category; nonetheless, all the companies, which have received the Baldridge award (therefore, they meet all the criteria of the standard to the fullest degree) have a strong organizational profile (OReilly, Dziurman, Sprague, & Witt, 2013).
This aspect covers the scope of the organization and its practice, its business environment, and the way the company interacts with its key stakeholders. The organizational profile also implies an understanding of the competitive environment and strategic development goals (Evans & Lindsay, 2016). Experts in the field advise focusing on this criterion of the standard when initiating company self-assessment since it allows identifying the potential inconsistencies in the business process. Moreover, the company profile reflects the direction in which the company wishes to develop.
Also, the Baldrige standard can be regarded as a philosophy. It can be used to improve management systems through the development of the seven categories mentioned above. As it comes from the framework description, the first category is leadership. The criterion assumes that company management targets the development of corporate social responsibility through the implementation of regulatory requirements. The second category is strategic planning.
This analysis of this criterion should be used to ensure that organizations develop a plan to achieve corporate goals through the development and implementation of a comprehensive strategy (Evans & Lindsay, 2016). The third category is consumer orientation. This aspect also encompasses the market in which a company operates. To meet this criterion, it is necessary to study consumer behavior constantly and track changes in their needs. Such practice will provide the organization with an opportunity to increase customer loyalty and retain them.
The fourth category is the measurement, analysis, and knowledge management (National Institute of Standards and Technology, 2016). A company that aspires to quality in operations should collect data and manage this information correctly to measure the activities of the organization (Evans & Lindsay, 2016). Because the business environment of an organization is almost always unstable, companies need to set tasks correctly for managing their business processes efficiently.
The fifth criterion is an orientation toward human resources. In dynamically developing organizations that strive for quality in management, personnel development system should be aimed at staff education and motivation (Kendall & Bodinson, 2016). Also, creating a favorable climate in the company should be viewed as a condition for employee satisfaction.
The sixth criterion that organizations should follow to achieve quality in operations is an orientation toward processes (operations). In a successful company, business processes should be aimed at creating and delivering value to customers and stakeholders by reducing and eliminating redundant operations and achieving efficiency (Kendall & Bodinson, 2016). The seventh factor is the results. This criterion assumes that to improve performance in the future, a company needs to reflect on its previous results regarding the six factors discussed above. Therefore, enterprises should reflect on their accumulated knowledge to ensure that they can proceed further.
Criticism and Recent Alterations
It is important to note that the Baldridge prize, as well as the provisions of this framework, have been criticized rather often. Even though over the past 10 years, the criteria have been analyzed and improved to incorporate the insights of established management practices, many researchers believe that this approach is not completely universal. Moreover, experts in the field have emphasized that the attention in this framework was focused on the quality of products or services (Schulingkamp & Latham, 2015).
In this regard, the concept has been revised to focus on improving organizational activities and operations (National Institute of Standards and Technology, 2016). Consequently, the criteria have been refined to stress the importance of the philosophical aspects of quality management.
Also, the Baldrige criteria cannot always be applied successfully to professional service firms that collaborate with diverse clients. Educational institutions as suppliers of labor resources also cannot be guided by the principles propagated by this concept (Asif, Raouf, & Searcy, 2013). It is because their activities are not oriented at production. Nevertheless, despite the criticism of this methodological system, many companies have successfully applied the framework to achieve quality in management (Ballard, 2013).
Notably, this model is quite flexible; therefore, it will be subjected to change in the future to reflect the realities and requirements of a rapidly changing world to the fullest degree. At present, any company can utilize this framework to conduct self-assessment or analyze its categories to comprehend which aspects of management should be refined.
Reflecting Academic Research
It is important to highlight that the Baldrige model continues to improve. The development of the leading criteria for this approach helps companies to concentrate their strategies on customers, partners, investors, and other key stakeholders ( Courtney Thomas named Baldrige Fellow, 2017). Also, the assessment of operations based on the Baldriges categories helps organizations to introduce new methods of operation and seek new approaches to management (National Institute of Standards and Technology, 2015).
Due to the latest reformation of the model, it began to reflect the growing importance of such a factor as the social component of the business. Due to this understanding, companies can create value for the consumer and harmonize their managerial processes. Based on the criteria proposed by the Baldrige approach, companies can focus on organizational learning and the importance of clients in improving their business.
Analysis and Discussion of the Topic
Based on the insights obtained from the information synthesis, it can be suggested that companies need to compare their current performance with the outcomes of previous periods to determine whether progress has been made. The key to continuous improvement as advocated by the Baldrige criteria is the systematic observation of organizational development (Griffith, 2015). Despite the opinions of critics that the criteria make the greatest emphasis on quality results, it can be argued that a company cannot improve its operations if it does not conduct a systematic assessment of its performance indicators (Griffith, 2015).
To determine the correct direction of development, management can compare the progress made with the operations of leading companies through benchmarking (by the seven criteria). Therefore, for a company to achieve quality in operations, it should rely on the Baldrige criteria for assessing the state of structures and conduct a self-assessment using this framework as a theoretical platform. Depending on the companys profile, the organization will be able to adjust its objectives and strategies for achieving quality in operations.
Important Issues
Based on the analysis of the collected evidence, it can be assumed that companies should be guided by the criteria developed by Malcolm Baldrige to improve the specific aspects of their operation. The first and most significant facet on which companies should concentrate is the formulation of a vision of quality and company profile (Nelson, 2016). After all stakeholders and employees have a clear understanding of the vision, leadership can start developing the initiatives to achieve a new level of quality.
For all activities to be fully implemented, leadership supervision is essential. Thus, the second important condition is the participation of senior management in all internal and external processes. Senior management engagement is a factor, which will allow organizing activities to improve quality at all levels (Foma, 2012). According to the Baldrige criteria, top management should monitor all processes within the organization.
Moreover, all the companies that have received the Baldrige Award showed that achieving quality in operations was not only the task of the organization, but this goal was also intertwined with all the processes taking place in the company. Therefore, the third factor, which is essential for making improvements in operations, is the quality factor that should permeate and unite all corporate processes.
Based on the analysis, it can be stated that organizations striving for quality in operations should conduct a continuous evaluation of their effectiveness. To ensure that all employees support internal changes, leadership can use the experience of leading companies in the industry and adopt similar practices, which have proved effective (Ahmad, Svalestuen, Andersen, & Torp, 2016). For instance, some of the organizations, which have received The Malcolm Baldrige National Quality Award have introduced new wage incentive plans. This strategy allowed them to set new targets for the refined level of quality (Latham, 2013).
At the staff level, this method has made it possible to improve the recruitment strategy, allow employees to upgrade their skills, and develop a new approach to the distribution of liabilities to achieve a new level of quality in all processes.
However, these results would not be reached if the new level of quality was not a part of the companys vision that was supported by all the employees (Latham, 2013). Because the top management understood the importance of this aspect, the quality of the workforce was improved barrier-free. Therefore, apart from improving performance indicators (such as production cycle, quality assurance, and so on), companies should work on the development of the labor force.
Current Viewpoints and Observations
It should be noted that there are different strategies for meeting the quality criteria of the Baldrige standard. Experts in the industry have stressed that this framework should not be regarded as a guide to action since these criteria are rather generalized. Thus, each company should adopt this system to its conditions (Shields & Jennings, 2013). Nevertheless, universal postulates that will guide the company to achieve quality can be developed based on the Baldrige categories.
One of the main mistakes that should be avoided by all enterprises is the creation of a bureaucratic network, which will adversely affect the climate and morale of the workforce (Foma, 2012). Therefore, one of the main aspects is to avert quantitative changes when implementing activities to improve operations quality. To meet the Baldrige criteria, management should comprehend the nature of qualitative improvements (Shields & Jennings, 2013). Based on the synthesis of information and the conducted analysis, the following guidelines for improving operations have been developed:
The criteria of Baldrige should not be perceived as a universal program for change but as a direction in which it is necessary to proceed (organizations can also utilize the experience of leading companies) (Krueger & Wrolstad, 2013).
When assessing company performance, managers should not rely on short-term results since they are not indicative of long-term quality improvements.
The process of achieving quality in operations should focus on the needs of consumers, the strategic objectives of the company, and the vision promoted by management.
Structural elements of an organization should not interfere with alterations. For instance, factors such as remuneration of employees or their specialization should not become barriers to qualitative transformations (Draghici, Popescu, & Gogan, 2014).
The organizational culture of the company and its employees are the most important assets of the company. Consequently, corporate culture should also be a dynamic system, and it should reflect changes that occur in internal processes.
Employees should be allowed to receive additional training when necessary.
For the companys employees to improve their performance, the management should expand the scope of workers practice and give them more opportunities to meet these liabilities.
Companies should conduct benchmarking to ensure their goals can be achieved (Schlafke, Silvi, & Moller, 2013).
The focus of the company should be made on the quality of operations and not on the quality of products or services.
Participation of senior management in meeting quality criteria is an indispensable condition for success since leadership should serve as an example of the way company vision is implemented (Nelson, 2016).
According to the Baldrige standard, the companys workforce is one of the indicators of quality; therefore, management should value the efforts of employees aimed at local changes. It can be achieved through two-way feedback.
Companies should avoid concentrating on large amounts of data as they can lead to excessive bureaucratization in operations (Schulingkamp & Latham, 2015).
In general, quality improvements should be the principle, which guides all participants in the process (who function at different levels of the organization).
The company is a unity of interrelated processes that make up a single organism. Therefore, each of the elements of the system should comprehend its importance in achieving quality.
Conclusion and Recommendations
Thus, it can be concluded that the Baldrige standard can serve as a foundation for the companys self-assessment. This framework has seven basic criteria that companies can apply to their operations to improve their quality. The degree to which a company meets the criteria reflects the effectiveness of the enterprise. Nevertheless, this framework should not be considered a tool for achieving quality but as a platform based on which any organization will be able to build its development program.
Based on the conducted analysis, it can be recommended for companies to introduce the Baldrige philosophy through the creation of interpersonal relationships and the strengthening of employees competence. Senior management is the embodiment of the company vision; therefore, their task is to promote openness to change and create an environment in which employees can progress along with process improvements.
The establishment of two-way communication is the key to a correct delegation of authority and continuity in refining performance. Moreover, interaction with employees will help maintain an inspiring atmosphere and establish constructive communication. Thus, the main goal of applying the Baldrige criteria is to create a new culture of relationships in the company. Due to the formation of sustainable values and a productive organizational culture based on common vision and responsibility, the company will be able to achieve high quality in operations.
References
Ahmad, S. B. S., Svalestuen, F., Andersen, B., & Torp, O. (2016). A review of performance measurement for successful concurrent construction. Procedia Social and Behavioral Sciences, 226, 447-454.
Asif, M., Raouf, A., & Searcy, C. (2013). Developing measures for performance excellence: Is the Baldrige criteria sufcient for performance excellence in higher education? Quality & Quantity, 47(6), 3095-3111.
Ballard, P. J. (2013). Measuring performance excellence: Key performance indicators for institutions accepted into the academic quality improvement program (AQIP). Web.
Brown, M. G. (2013). Baldrige award winning quality: How to interpret the Baldrige criteria for performance excellence (18th ed.). Boca Raton, FL: CRC Press.
Courtney Thomas named Baldrige Fellow. (2017). Cumberland Times-News. Web.
Draghici, A., Popescu, A. D., & Gogan, L. M. (2014). A proposed model for monitoring organizational performance. Procedia Social and Behavioral Sciences, 124, 544-551.
Evans, J. R., & Lindsay, W. M. (2016). Managing for quality and performance excellence (10th ed.). Boston, MA: Cengage.
Foma, E. (2012). Talking of Malcolm Baldrige national quality award. Review of Integrated Business & Economics Research, 1(1), 223-233.
Griffith, J. R. (2015). Understanding high-reliability organizations: Are Baldrige recipients models? Journal of Healthcare Management, 60(1), 44-61.
Kendall, K., & Bodinson, G. (2016). Leading the Malcolm Baldrige way: How world-class leaders align their organizations to deliver exceptional results. New York, NY: McGraw Hill Professional.
Krueger, T. M., & Wrolstad, M. A. (2013). Is it a good investment strategy to invest in Malcolm Baldrige award winners?: An update. Journal of Finance Issues, 12, 1-15.
Latham, J. R. (2013). A framework for leading the transformation to performance excellence part I: CEO perspectives on forces, facilitators, and strategic leadership systems. Quality Management Journal, 20(2), 12-33.
National Institute of Standards and Technology. (2015). The metrology of organizational performance: How Baldrige standards have become the common language for organizational excellence around the world. Web.
National Institute of Standards and Technology. (2017). History. Baldrige performance excellence program. Web.
Nelson, J. L. (2016). Award-winning hospitals. New Jersey Business. Web.
OReilly, G., Dziurman, B., Sprague, J., & Witt, M. D. (2013). Winning the Baldrige Award: How the Henry Ford health system undertook a five-year improvement process. Nonprofit Management and Leadership, 24(2), 249-257.
Schlafke, M., Silvi, R., & Moller, K. (2013). A framework for business analytics in performance management. International Journal of Productivity and Performance Management, 62(1), 110-122.
Schulingkamp, R. C., & Latham, J. R. (2015). Healthcare performance excellence: A comparison of Baldrige award recipients and competitors. Quality Management Journal, 22(3), 6-22.
Shields, J. A., & Jennings, J. L. (2013). Using the Malcolm Baldrige Are We Making Progress survey for organizational self-assessment and performance improvement. Journal for Healthcare Quality, 35(4), 5-15.
Choosing what position to take in the market in which a business function is an extremely important part of a companys strategy. Michael Porter identified three basic strategies which cover the range of positions that a business can take to compete in the market.
These three strategies are
Cost Leadership
According to this strategy, a business competes by applying cost-cutting measures to all levels of its value chains. A low-cost producer will be hitting the highest profits in a market that is selling standardized goods at relatively standardized rates. In such a situation low cost of production is not reflected in lower prices, but the company then has a bigger margin of profit which it can reinvest back into the business. In other situations however a low-cost producers edge in the market might be that the producer is offering the good at the cheapest rates.
Differentiation
This strategy implies that a business is offering a unique addition to the product that is being sold in the market and in such a way that it adds value to the product from the customers perspective. This value addition can be in any form, providing better services, adding a new feature to the product, or maybe even giving more variety to the customer. If the value addition is perceived as valuable by the customer then the producer will be able to transfer the costs to the customer or maybe even get a higher margin of profit.
Focus Strategy
The focus strategy involves identifying various market segments and then choosing a narrow segment and modifying the product to suit that particular segment. This strategy might work for smaller businesses that are struggling to compete with larger businesses in terms of efficiency or even variety. Identifying a narrow segment means that businesses can understand that segment thoroughly and be able to serve it better than a larger more broad-based competitor.
Each strategy carries with it its own culture and therefore t might be hard and risky to implement more than one strategy in the same business, however, narrowing ones focus to just one strategy might also end up hurting the business.
The model below serves to summarize the model:
If we look at where Du stands when considering Porters strategies we realize that the actual implementation of the model is slightly more complex. Looking at it from one perspective we can see that Du is focusing on differentiating its product from those in the market. It seeks to tailor its products according to the needs of the various customers and to value add o the product to make it more appealing to the customer. However, on the other Du has been increasing shareholder value through profit maximization by keeping costs low. It has even partnered with Nokia to keep its costs as low as possible. This implies a cost focus. This would imply two diverging strategies which are not recommended by Porter. However, in the case of Du, we can see that it has certain advantages which permit it to follow both paths. Du has a significant edge because it receives a significant government subsidy. In addition to this government regulations have created tough entry barriers for competition in the market giving Du a significant edge.
Ansoff Matrix
Ansoff Matrix was introduced by Igor Ansoff to categorize a businesss growth strategy by taking a combination of options involving existing and new products and markets.
Market Penetration- This is the least risky option for growth since the business is sticking to the products and the markets that it knows. The business is seeking to increase its market share. This strategy cannot be applied indefinitely and eventually continued growth will require other strategies.
Market Development- This means that the business is selling the same product but looking at new market segments to which to sell. This strategy will work best if the core competency of the business is products and not customer segments.
Product Development- Product Development is when a company sticks to the same market but explores new products. Unlike the Market, the Development strategy will work if the businesss core competency is its customers and not its product.
Diversification-This is the riskiest of all strategies since a business is making new products to sell to new customers. Its a completely unfamiliar area
If we look at Du then basically we can place them in two of these categories. The first one is to increase penetration in the market. As referred to earlier in the paper, Du plans to increase its penetration in the UAE market from the present 2.498 million active customers to 4 million subscribers in the next three years. This indicates a clear strategy of market penetration, which simply involves increasing market share (which Du intends to increase from 25.5% to 50 % in the coming years). However, in addition to this Du intends to pursue a strategy of product development. Du realizes that because of the variety of the products in the market and the fact that customers are becoming increasingly demanding, means that new products need to be evolved. This implies a strategy of product development, which means selling new products to the same market segment.
Government and non-governmental organizations (NGOs) are doing a lot more than some might give them credit for, yet the humanity is still far away from reaching any of its sustainability objectives. Over the past decades, the global community started to recognize the role the private sector could potentially play in solving some of the worlds most prominent issues. As a result, companies were pressured to articulate their core values and implement practices, which would be of environmental or societal benefit. In light of the growing popularity of addressing critical issues the world faces in business operations, the concept of corporate social responsibility (CSR) started to gain prominence. However, enterprises integrating CSR into their practices and strategies is not as durable and sustainable as necessary for creating long-term solutions to global problems. As such, businesses should leverage their capabilities and construct long-term strategies using a special lens. This lens should take into account the novel concept of total societal impact (TSI). The following paper underlines the main differences between TSI and CSR and provides an example of a company successfully adopting TSI as a core element of its strategy.
In order to compare and contrast CSR and TSI, it is important to examine both concepts in more detail. CSR refers to a business responsibility to craft its strategy, while taking into consideration various societal, environmental, and cultural issues. In the hopes of keeping up their image and communicating better with the customers, companies worldwide proclaim their own commitment to engage in CSR practices. As shareholders, including employees, customers, and the government, became more invested in the private sectors contribution to solutions of the worlds most prominent problems, the popularity of CSR skyrocketed. Yet, the buzz started to die down as shareholders acknowledged the inefficiency associated with CSR (Stolan & Gilman, 2019). CSR initiatives are usually one of the companys lowest priorities, always facing the threat of being cut. Moreover, they are often disconnected from the enterprises overall strategy.
TSI offers a new approach to ensure that the private sector positively affects communities worldwide. It refers to a set of measures and practices aimed at assessing and improving the impact a certain company has on the world. The main difference between CSR and TSI is that the latter one is scalable, and thus, can be effective in the long term. Furthermore, TSI can be successfully integrated into the business overall strategy. A corporation no longer has to invest in a frenzy of initiatives. The TSI approach allows enterprise to take advantage of their capabilities to make an impact, while generating profit. A successful example of TSI integration is the case of Lyft. The companys vision is to uplift communities through transportation, while minimizing the impact of car ownership on cities and the environment (Lyft, 2020). Lyft continuously evaluates its practices and perfects its strategy. Rather than spending many resources in disconnected CSR initiatives, Lyft focuses on the opportunities for direct positive impact it has. As a result, apart from advocating and committing to green transportation, the company invests in compensating its drivers fairly, assisting people in need with transportation to access medical care, and partnering with NGOs to ensure road safety.
In conclusion, it is evident that companies benefit greatly from adopting a TSI approach. While CSR only encourages to invest in initiatives that would benefit the society, TSI allows to integrate an approach beneficial to communities and businesses into corporate strategies. Although it might appear challenging, implementing strategies powered by TSI is possible and exceptionally beneficial. A great example is Lyft, which focuses on its capabilities and pioneers the future of transportation.
Mission and vision are important aspects of the companys corporate image. However, their role is not limited to communicating the companys intentions. When accompanied by sound planning, mission and vision improve the performance of the organization on several levels and increase the effectiveness of managerial practices.
Fundamentals of Planning
Mission and vision statements serve as articulations of the companys goals and objectives and identify the approaches it chooses to achieve them. Also, it is used to communicate the values and intended purpose of the business and its areas of commitment to its stakeholders. A properly constructed mission and vision statement have a direct impact on different levels of organizational performance as well as the efficiency of the managerial practices.
Most notably, a formulated vision improves the employees understanding of the companys goals. Individual workers will have a better idea of what the organization intends to do and can decide whether they are willing to participate in the corporate effort. Such clarity has a direct impact on individual performance since it allows for a better focus on specific tasks and improves a sense of direction (Kirkpatrick, 2016). Besides, it has a positive impact on the success of HR management, as it assists in finding the most fitting applicant and decreases the chances of inconsistencies and conflicts later in the course of action. Most notably, vision and mission provide a sense of direction on all levels of organizational hierarchy, thus enabling the management to maintain consistency in leadership practices. Finally, it assists the lower-level managers in team management activities by translating the overall goals into doable tasks and milestones.
A good example of an effective vision and mission is one from IKEA. Their vision is to create a better everyday life for the many people (Grant, 2016, p. 37). Their mission, on the other hand, provides a detailed description of strategies they use to achieve their vision and includes the desired qualities and characteristics of their products, such as functionality, superior design, and affordable price (Grant, 2016). In this way, it communicates its intentions to both customers and employees and streamlines the companys internal operations, thus improving the performance.
To ensure that the mission of the organization is fulfilled, it is necessary to plan the company activities. The most common types of planning are strategic, tactical, and operational planning. Strategic plans are the closest to the vision and mission and are intended for the top managerial levels. Their goals usually target an entire organization and focus on the long-term effect (Wilson, Hill, & Glazer, 2013). These plans are then used to guide the planning process on the lower levels of the organizational hierarchy.
Tactical plans are intended to support the strategic plan by providing specific strategies and setting measurable goals. Tactical plans are usually developed for specific departments and require a higher degree of specialization. They also outline the areas of responsibility for meeting certain goals (Wilson et al., 2013). Overall, tactical plans align with the scope of operation of middle-level management.
Finally, operational plans contain specific instructions and guidelines for teams and individual workers. These plans are the most detailed and focused of the three and have used specific outputs and routine task results as goals. Operational planning is important to ensure the procedural performance of teams and individuals and determine the performance on the level of individual employees and lower-level managers (e.g. team leaders).
As can be seen from the information above, each type of planning is oriented at a certain organizational level, which reflects its impact on performance.
References
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition (9th. ed.). West Sussex, England: John Wiley & Sons.
Kirkpatrick, S. A. (2016). Build a better vision statement: Extending research with practical advice. New York, NY: Rowman & Littlefield.
Wilson, R., Hill, A., & Glazer, H. (2013). Tools and tactics for operations managers (collection). Upper Saddle River, NJ: Pearson Education.
Beak & Johnston is a family-owned business, and has been operating in Australia since 1986. The company produces and supplies pre-packed meat portions, roasts, soups and seasoned meat products to both domestic and export customers. Servicing some of Australias largest supermarket chains and countries such as Japan and Korea means that quality is the most important ingredient in every product B&J makes on site.
As a progressive and innovative employer, Beak & Johnston welcomes suggestions for improvements from the shop floor, and encourages both permanent and casual staff to share any good ideas or suggestions with their coach or team leader to improve the plant or procedures. Beak and Johnston is also committed to maintaining a safe workplace.
Nature of Job
Beak & Johnston is an organization which is facing rapid growth in the last two years because of high competition and demand for quality service. Because of this, there is a need to change the organization structure to help the organization to grow and achieve its goals of becoming the number one supplier of case ready meat in Australia and the Asia Pacific.
The position required by Beak & Johnston is of a production manager. The production manager will be mostly responsible for handling the manufacturing of products in the company. There is a need to fill this position because Beak & Johnston is receiving a high amount of orders from its customers lately and there needs to be someone who can manage the service delivery. The production manager must be filled by someone energetic and experienced enough to be able to handle large amount of orders. The applicant must be highly skilled when it comes to communication, work delegation and motivation.
Contribution to Strategic Goals
The production manager will help the organization strategically by helping the organization move forward and achieve its goals most efficiently and effectively. This will ensure B&Js survival in this highly competitive market and ultimately, it will help in achieving its goal of becoming one of the best suppliers of case ready meat in Australia.
Central Idea of the Job
The production manager at Beak & Johnston will be responsible for managing the production of Retail Case Ready products. He will have to ensure that customer service levels, quality and safety standards are either maintained or exceed the budgeted levels. This job is very important to achieve the companys strategic goal because the production manager will improve the customer service and standards. This will ensure its position in the market as strong and hence it will be able to become the best meat supplier in the industry.
Strengths of the Job Description
Essentially, a job description has the basic information regarding the vacancy that is being advertised. This includes the pay grade, job functions, job title, job specifications, primary accountabilities, duties, and responsibilities that are expected to be fulfilled
If all this is kept in mind and the job description of Beak & Johnston is then analysed, we will see that the job description has everything included in it. Therefore we can say that one of the strengths of Break & Johnstons job description for its production manager is that it is very comprehensive and detailed. It has covered all aspects in detail therefore leaving no need for further elaboration.
Weaknesses of the Job Description
Despite its strengths, certain aspects of the job description need improvement. At first glance, the job description appears to be very complicated. Production manager is an important position but this does not mean that the template of the job description must also seem complicated. There is a lot of clutter information on the job description. The same amount of information can be put in by making it less confusing. Beak & Johnston will have a hard time attracting applicants with this job description because of its presentation. Also, if the job description is too detailed, the more important aspects of the job description get mixed up with the less important parts because of which the reader does not focus on the important aspects of the job description
The first step in the recruitment procedure is filling up the recruitment form by the Case Ready Value Stream Manager (see Appendix B) and submitting it to the HR team to recruit the required person. This form is like a checklist that summarizes the requirements and details of the position as a whole. Only when this is then, the vacancy will be advertised.
In Beak & Johnston, this job vacancy will be advertised both internally and externally. There are many reasons why both internal and external advertisement before recruitment is important.
Importance of Internal Recruitment
According to Rebekah Howard, the HR officer of Beak & Johnson, it is important to advertise internally for several reasons. First of all, this practise is like a reward the colleague for his/her service loyalty. The current employees also know about the values and culture of the organization therefore they do not have a difficult time meshing in with the organization. If this position is filled internally, the applicant will have prior knowledge about production which will improve the efficiency level. Also, there will be less need for training and development programs. It is important to advertise internally to show the employees that they believe in them. This will also allow them to take on more responsibilities and try to develop and grow from within Beak & Johnston. Advertising internally is also very important because if this is not done and when a new production manager is hired, he will find it very difficult to achieve what has been required of him as he is going to face resilience from the existing staff (Schuler, R. S. & Susan E, Jackson, 1987). This is practice is done by many firms especially when a high level position is vacant (Dumaine, B).
Importance of External Recruitment
External advertisement and recruitment is also very important. According to Rebekah Howard external recruitment is vital because this brings in fresh new ideas in the organization. This is because the existing employees have preconceived notions which inhibit creativity and thinking out of the box. Another situation where external recruitment is important is when the vacancy has to be filled by someone with a qualification that the existing staff do not already have. This means that someone from outside the organization will have to be hired. External advertisement will be done on www.seek.com.au.
What Selection Processes are to be followed?
The demand from customers is increasing more than ever hence, the production coordinators need to focus on developing their departments at this time. Because of this heavy job load and pressure on the production coordinators, the Case Ready Value Stream Manager has raised his concern of the need of a production manager.
When the need for a production manager was explained to the Chief Operation Officer, the COO accepted the request and asked the CRVS manager to put a recruitment request approved by the COO.
Once the vacancy is advertised, applicants will apply for the position. This will mark the beginning of the selection process. Firstly, the HR department will assess the resume which an applicant sends
Next Telephone screening will take place where general interview questions will be asked (See Appendix D). In this process the HR person will call the applicant and asks questions related to his/her resume.
If the answers given by the applicant from the telephone screening process were reasonable then the HR team will call the applicant for a one on one interview in person.
The fourth step is conducting a test that has three phase
Phase1: Literacy test
Phase2: Numeracy test
Phase3: Problem solving test
Fifth the HR person will contact the references which the applicant has written in the application and inquire about his or her performance on the previous job. After all these steps, the most suitable candidate will be selected.
What Criteria to be used for rejection?
The applicant will be rejected it he does not possess the following:
Good verbal and written communication skills
Good time management and organizational skills
Excellent attention to detail
Flexible attitude
Ability to work under pressure
Results focused
Strong commercial acumen
Product knowledge ability to identify retail meat cuts and cooked products and their correct specifications, knowledge of raw meat aging process
Advanced numeracy and literacy
Legislation knowledge knowledge of food manufacturing legislation and quality requirements, including customer specifications.
Financial knowledge ability to interpret results figures.
Interviewing committee
For the position of production manager the interviewing committee is going to include three people:
HR manager (Eleanor Clifford)
Case Ready Value Stream Manager (Kevin Baker)
Chief Operation Officer (Larry Kalvanigh)
This committee will ask questions, assess the candidates, make them comfortable and look for the right person.
Check list for selection including sample interview questions:
The COO and the CRVS manager will be informed about the ideal answers before the interview. This will assist in assessment of the interviewees. There are three types of questions the HR person will ask:
Hypothetical Questions
Behavioural Questions
Specific Questions
The reason asking three different types of questions is to cross check. For instance, the applicant can sometimes lie and talk a lot when he or she is answering a hypothetical questions but it will be very difficult for them to lie when they start answer behavioural questions.
Hypothetical Questions sample Questions:
Why did you apply for this job?
What are you looking for in your next job?
What are you looking for in a company?
Behavioral Questions sample Questions:
Following instructions and procedures- Give me a specific example of a time when you had to follow specific instructions or conform to a particular policy.
Achieving personal work goals and objectives- Give me an example of a time when you set a goal and worked hard to meet or achieve it.
Delivering results and meeting customer expectations- Tell me about a time when you had to go above and beyond the call of duty to get a job done and meet customer expectations.
Adhering to principles and values- Give me an example of a situation in which you demonstrated your integrity.
Coping with pressure and setbacks- Describe a time when you had to work with someone that you didnt like or didnt like you. How did you handle this?
Give me an example of a time when you faced pressure at work and how you dealt with this.
Adapting and responding to change- Describe a time when you had to adopt to a change at work and how you dealt with this.
Specific Questions sample Questions:
Do you own your transport
Can you work Saturdays?
Can you work overtime? (Is there anything that will stop you from working overtime)
Are you Australian Citizen, permanent resident or are you on working visa?
The HR person will note down her comments about the applicant answers, presentation and physical appearance after the interview has been finished. This will be referred to later on when assessment takes place.
Examples of letters (Successful & Unsuccessful) applicants
For the unsuccessful applicant:
Thank you for your application for the position of production manager at Beak & Johnston.
Unfortunately, on this occasion your employment application was unsuccessful, however, we would like to keep your details on file should a more suitable position become available in the future. If you would rather have your file removed from our system, please let us know.
Thank you for your interest in joining us at Beak & Johnston and for taking the time to submit your employment application.
We wish you the very best in your future endeavours and encourage you to apply with us again in the future if a suitable position becomes available.
Kind Regards,
Careers Department
Once the applicant receives this letter, the HR team will be ready to answer questions from unsuccessful applicant. This is very important according to the HR Official at Beak & Johnston because of the following reasons:
Help the applicant understand where he/she went wrong what they were missing so they learn for their assistant in the future when they apply for a job next time. This is basic courtesy (Winstanley, D. et al, 1996).
For Public Relation (PR) issues, since Beak & Johnson does not want to their image to be bad in front of the unsuccessful candidates because the same applicants may be needed in future (Brice, T.S. & Marie Waung, 1995).
The applicants may sometimes get aggressive therefore the HR person must be ready to answer all sorts of questions while maintaining a high level of professionalism (Jackson, S.E. et al, 2008)
Draft Contract details
For the successful applicant the HR team will call the person to come on site to show them the contract (see Appendix E). The HR team must have what we call second option because the successful applicant might change his/her mind for some reason or maybe they do not agree on the contract (Kansas State University, 2009). In this case, the HR team will contact the next best applicant if there is a chance the accepted applicant would not show up.
Stated rationale for these choices/decisions
When the HR team is assessing the applicants, there will be a rationale on which he basis his decision about who to hire and who to not. The person who will be selected will be the one who is believed to meet the company expectations and mesh with the organizational culture. The rejection criteria mentioned above will also help in deciding who to hire and who to reject. The personality, the degree of job knowledge, experience, ability to work in a team, and the ability to handle pressure will be few of the reasons that will for the choice of selection. These rationales for decision have to be documented for later use and appraisal purposes.
First the HR will look at what the market offers for the position of a production manager. This will then be communicated to the COO and the VRVS manager. However the HR team also has to consider how much is the range that the company budget will allow to pay. In this case, it is between 85,000 to 90,000 Dollars. This information will be kept hidden from everyone. Since it will be expected that the applicant will negotiate, the successful applicant will first be offered the lowest pay in the range which is 85,000.
There will be a monthly bonus which is linked to performance. At Beak & Johnston, this is called the Great Performance Bonus (GPB). The successful applicant will be informed how much bonus he will make if the company meets its target. For this position the GPB is $1634 per month if the company achieved their targets.
There are four elements linked to the monthly GPB:
Safety = Zero Lost Time Injuries
Product Quality Failure; No product re-call or any product
Absenteeism days per week Target= 21.92 days per month
Colleague turnover, Target= 20%
If all the above elements were achieved then each colleague will take 100% of the bonus decided upon. If the companys profit exceeded their budget, the variance will be also shared with all staff at B&J.
The stated rationale for this decision is to make sure that the company operates as a family there is no boundaries between sections. They all need to look after each other and try to deliver a good result as collective members to achieve the companys targets. Linking rewards to performance also helps improve the efficiency of the work force. Also, this ties the organizations goals with the employees goals and therefore everyone is motivated to achieve them (Bosidy, L. & Ram Charan, 2002).
For the position of a production manager, there will be another incentive for him/her to get promoted to higher level to develop within the company according to the skills and interest generated by the employee.
Each year Beak and Johnston will evaluate what they call employee of the year. This will be a result of who achieved the target plus who came up with something that makes B&J a stronger organization in the market. The employee of the year will receive a full paid vacation with one partner at a place chosen by him or herself.
All these practices motivated the employees to work hard. When the employees are motivated, there is an internal force that pushes them to accomplish things. The efficiency level of the organization as a whole increases and the organization ultimately benefits.
As a generic term, performance management is considered to be the effective use of inter-related strategies and activities to improve the performance of individuals, teams and organizations. An effective performance management approach would integrate and align organizational, business and individual planning and performance. It would also provide a means to recognize and reward good performance and to manage underperformance of staff (Australian Public Website).
A key component of a performance management system is the performance appraisal. The performance appraisal is conducted for 2 main purposes to review performance (did the colleague achieve the targets and meet the objectives set for them) and discuss/set a development plan.
As this suggests, performance management is all about performance, rewarding the good and managing the bad. The strategic purpose for a performance management system is concerned with the continual improvement of staff and helping them reach their full potential, which in turn allows the business operate effectively and meet its objectives.
In regards to managing underperformance, the most importance underlying factor is setting clear expectations. You cannot punish someone for not doing their job correctly if clear expectations have not been given to them. This would generally be a job description which may detail the key performance indicators (KPIs) for that position. Equally important is training. It is unreasonable to expect somebody to perform in a role if they have not been adequately trained (Arthur, W. et al, 2003).
For the position being discussed in the paper, the Case Ready Value Stream Manager will have to give the production manager the results, the progress on things during the week, the achievements, the setbacks and what corrective action should be taken daily. The VRVS will monitor all the KPIs the production manager needs to achieve daily and keep a record of how the production manager achieves what the company required for this position.
Every 3 months the manager will have to send a performance appraisal (see appendix F) to the production manager to compare the actual results against the targets and comment on what went wrong and how it could be done better in future. In addition to this, if any targets were achieved, the CRVS manager will appraise the production manager on his achievement.
Job Description
The job description is very important. This must be developed with utmost care. It is one of the main human resource management functions because this is where the employees get to know what is expected of them. The profiling of job description contributes to good corporate governance because this ensures that the responsibilities and duties assigned to an employee are fair. It shows the employees what is expected of them and this increases the level of fairness.
Recruitment
Recruiting is defined as the characteristics of applicants to whom selection procedures are ultimately applied (Boudreau, J.W. & S.L Rynes). This step is very important and the organization must ensure that it carries this out with utmost care. The recruitment function of human resource management contributes to good corporate governance by ensuring that ethical and responsible decisions are made. Recruitment also ensures that the performance of the workforce increases.
Selection
Selection is very important when we talk about a human resource management function contributing to good corporate governance. The reason behind this is that selection is one stage where the department may make decisions that are unethical and unfair. The human resource department must make sure that the decisions are fair and the employees are selected based on strictly their competencies and skills. It must be ensured that no personal favours are given to the applicants and that all applicants are treated equally. If this is all done, then it will contribute to good corporate governance.
Remuneration
Remuneration is compensation for employee contribution in the organization. This is what the employee expects to get in return for the time and effort he or she puts in the organization. Considering this, one can only imagine the extent to which the decisions made in this context can be unethical or ethical. It leaves a great amount of pressure on the management to ensure that the employees are appropriately and fairly compensated. Each employee should be compensated on the basis on what he or she puts in the organization, not on any personally basis. Once all this is ensured, remuneration contributes good corporate governance.
Performance Management
Performance management is essentially keeping track of the performance of the employees. This includes performance appraisal. There are several ethical dilemmas attached with this human resource management function. The management must ensure that the employees performance is reasonably monitored. The extent to which the privacy of the employee is breached must also be considered. Once this is done, performance management will contribute to good corporate governance.
I learned a lot of new things by working with Rebekah Howard, the HR Officer at Beak & Johnston. I appreciate her for providing me with all the data I required.
By working on this project, I learned the degree to which selecting and recruiting the right applicant is complex and lengthy. I also realized the importance of this process by judging it by the use of time, money and resources involved. This assignment has also ensured that I am more prepared for the next job I might go for and understand as an individual what I will expect in terms of possible questions. I have also learned to never take rejection personally and get emotionally upset in such cases. I have learned to concentrate on what I did wrong and try and fix it rather than start arguing and complaining. I have also learned that to be respected, you need to be more professional in the way you handle things.
I would also like to reflect on the part where I learned that the interviewers first offer the lowest salary in the range and they expect the applicant to negotiate. I used to think that negotiating right at the beginning will be a bad start in an organization. I was very surprised when Rebekah Howard told that Beak and Johnston will be very disappointed if the applicant does not negotiate the salary. This is one of the many skills that Beak & Johnston looks for when they are selecting someone for a position.
This was just one of the many things I have learned. There are many important and insignificant things that I have discovered by applying the concepts of Human Resource Management in a real organizational setting.
References
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Arthur, W. et al, (2003) Effectiveness of Training in Organizations: A Meta-Analysis of Design and Evaluation Features. Journal of Applied Psychology. Vol. 88, No. 2, 234245
Bosidy, L. & Ram Charan, (2002). The Discipline of Getting Things Done. Audio-Tech Business Book Summaries Volume 11, No. 8
Boudreau, J.W. & S.L Rynes. (1985) Role of recruitment in staffing utility analysis. Journal of Applied Psychology. 354-366.
Brice, T.S. & Marie Waung (1995) Applicant rejection letters: are businesses sending the wrong message? Business Horizons. Volume 38, Issue 2. Pages 59-62
Daft, R.L. (1997) Management. The Dryden Press.
Dumaine, B. (1987) The new art of hiring smart. Fortune. 78-81.
Experience, Inc. (2008) Its Time for a Job Description Makeover.
Fisher, C.D. (1989) Current and recurrent challenges in HRM. Journal of Management, Pages 157-180
Jackson, S.E. et al, (2008) Managing Human Resources. Cengage Learning
Keys, B & Joseph Wolfe. (1988) Management education and development current issues and emerging trends. Journal of Management, Pages 205-229.
Rousseau, D.M. & Martin M. Greller, (2006) Human resource practices: Administrative contract makers. Human Resource Management. Volume 33 Issue 3, Pages 385 401
Schuler, R. S. & Susan E, Jackson, (1987) Linking Competitive Strategies with Human Resource Management Practices. The Academy of Management. Vol.1, No. 3, Pg. 207-219.
Winstanley, D. et al, (1996) Business ethics and human resource management: Themes and issues. Personnel Review, Volume 25. Issue 6, Page 5 12.
Choice Hotels International, Inc. (CHH) is a hospitality holding entity intent on acquiring variegated shares for its brands, including Comfort Suites, Quality Inn, and Sleep Inn (Fraser, 2012). This paper enumerates a detailed analysis of the CHH Inc. by way of outlining its size and growth, industry classification, vision, mission, profitability, price factors, and guiding principles, among other important aspects.
Company Profile
As Orr writes, the conglomerate inaugurated its operations in 1939 when seven motel proprietors in Florida established a joint association as grounds for the incorporation of the CHH hotel institution (2013). The core objective of the partnership aimed at assimilating elevated services and quality standards into the hotel industry by exploiting the benefits of business alliances and unions. Sloat-Spencer (2013) asserts that the result of this undertaking has proved lucrative and rewarding as the present-day CHH reaps huge revenues and global recognition.
CHH, a subservient of Manor Care, Inc. (Orr, 2013), constitutes the second-largest hotel franchisor overlooking 6,200 hotels as well as 499,000 lodging chambers. The multinational, situated at Rockville, Maryland, franchises its hotel brands, instituted in 34 states encompassing the United States, Columbia, and Puerto Rico, among others (Maltbie, 2009). CHH adds to the list of flourishing hotel chains in the contemporary hospitality sphere as it implements luxurious and economical modes of operation.
Among other clientele, Choice Hotels holds senior citizens, expatriates, dignitaries, and business travelers in high esteem as regards provisions of business-class services and quality. As explained by Freed (2013), the corporation furnishes its franchisees with exceptional reservation platforms, quality assurance, and marketing programs in exchange for a licensing fee (3%-8%).
Industry classification
Choice Hotels International, as described by Orr (2013), lists under the lodging and travel stratum. The incorporation is a service-entailed establishment that functions to dispense leisure facilities and products. The company executives accommodate business travelers and dignitaries in respect of travel and lodging particulars and developments. Its constituent brand hotels, including Comfort Inn, Sleep Inn, and Mainstay Suites, entail restaurant service catering and facilities, targeting consumers and developers (Sloat-Spencer, 2013). The CHH Inc. also doubles up as a hotel franchisor with multiple franchise units spread in numerous jurisdictions, dispensing economy hotel services ranging from lower scale to upper mid-scale properties.
Size and growth
Presently, Choice Hotels holds variegated franchise agreements and contracts, defining 6,372 operating hotels in conjunction with 516 restaurants under construction, outlines Freed (2013). Fraser (2012) attributes that the enterprises under construction are anticipating conversion or have received approval for erection as of 30 June 2014. The 6,372 subsidiary entities comprise 506,523 rooms, while the other 516 hotels consisting of 40,946 rooms established in the Columbia District, the USA, and in other 35 countries.
The brands encompass the Comfort Suites, Quality, Clarion, Comfort Inn, Ascend Hotel Collection, Econo Lodge, Rodeway Inn, Mainstay Suites, Sleep Inn, Cambria Suites, and the Suburban Extended Stay. CHH Inc. employs two strategic management skills for the efficient supervision and running of these products (Maltbie, 2009).
They include the direct and master franchising relationships integrated to recruit those partners equipped with professional asset handling capabilities, remarks Fraser (2012). The growth of the transnational company lies heavily on the forged master franchising affiliations to strengthen the financing capacity of funding and to build the brands into their pertinent markets.
Company Profitability
According to Orr (2013), company profitability embodies the financial metrics that gauge an entitys ability to generate higher revenues against its expenditures and other germane costs. The return on stocks, equity, as well as profit margin, constitute the core financial metrics and ratios used for dissecting a corporations financial analysis and profitability (Porter, 2008). As regards the CHH Inc., the fundamental ratios and stats regarding its financial metrics are as follows (see Table 1).
Table 1: Profitability Ratios for the Period Ended March 2014 (Q1).
Description
Count
Progress Over Previous Yr 2013
Count
Return on Capital
34.83%
Gross Revenue
5.06%
Operating Margin
28.31%
Receivables
1.86%
EBITDA Margin
22.92%
EBITDA
3.01%
Net Profit Margin
16.25%
Gross Profit
9.72%
Asset Turnover (Average)
1.28M
Cash from Ops
2.65%
Interest Coverage
5.19M
Free Cash Flow
715.34%
Gross Margin
45.56%
COGS
54.44%
Source: Choice Hotels International Inc.: Financials 2015, para. 2.
Over the years, ranging from 2011, 2012, 2013, and 2014, the multinational corporation has continuously increased its revenue integers from $640.6M, $692.7M, $724.7M, and $758.0M USD, respectively. The corporation has also downplayed its overheads as regards the cost of commodities sold from 45.18% to 42.90% (Choice Hotels, 2015). This impressive cut of fees has facilitated bottom line progress for the entity from $113.7M USD to $123.2M USD, asserts Orr (2013).
The gross profits corresponding to the years 2011, 2012, 2013, and 2014 are $362.5M, $382.8M, $401.7M, and $439.1M USD, respectively (Choice Hotels, 2015). A review of all these statistics clearly depicts that the transnational entity is significantly profitable regarding its expanding gross profits and revenues over the past four years. The aggregate assets held by the incorporation attribute to $661.1M USD as quoted at the end of the first quarterly period- March 2015 (Choice Hotels, 2015). The total number of workforce enlisted in the business is 1,331 persons.
Factors affecting profitability
The factors influencing CHH Incorporations profitability constitute the risk elements capable of triggering adverse financial impacts on the company and its subsidiaries if not regulated. Outlined below are the risk factors whose effects could engender results that differ from those expressed in specified forward-looking statements (Fraser, 2012).
The Subsidiaries financial conditions. Decreases in the fiscal conditions of ancillary travel firms and incorporated franchisees minimize the overall gross income of CHH Inc.
The rise in operating costs. The escalation of administration and selling expenses trigger lower operating (profit) margins.
Operating capital inaccessibility. The absence of operating funds inhibits the firms developers and hotel managers from supporting relevant investments or building new hotel establishments.
Fluctuation mannerisms of exchange rates. Unprecedented changes in exchange rates and prolonged economic weaknesses hinder domestic and international travel tendencies, thus affecting the hotels revenue.
Business relationships. Inadequacies encountered in maintaining positive associations and partnerships with the franchisees managers precipitate poor business positioning and reputation. Furthermore, misunderstandings and fall outs between the CHHs executive board and the suppliers affects the quality of the purchased raw materials.
Consumer unemployment. Small numbers of product purchases by clients translate into diminished gains and profits on commodities and services sold.
Diseases. The hasty conception of insect infestations and contagious diseases thought to be present in hotel rooms discourages travelers against booking into resorts.
Travel advisories. The imposition of travel restrictions into selected jurisdictions by federal governments and state authorities discourages travel. These limitations result in consumer unemployment in the hotel industry.
Rigorous legislations. Extremely rigid government regulations encompassing construction costs, maintenance & operating expenses, benefits, and wages suppress the smooth running of operations in hotels. The relevant authorities should thus Laxen the pertinent rules to facilitate smooth procedures and trade.
Demographic aspects. Factors affecting room occupancy, rates, geographic location desirability, and market conditions precipitate lower leisure and corporate travel. The result is a gradually reduced need for lodging and other accompanying services.
Product segmentation
Choice Hotels management board has implemented two strategic models as regards product segmentation, namely the hotel franchising model as well as the SkyTouch Technology design (Choice Hotels, 2015). The franchising model furnishes 11 subsidiary brand names that spawn huge revenues by way of levying royalty fees. As detailed by Porter (2008), these costs and billings entail the initial commissions and the rolling fee compensation in combination with specified reservation system & marketing charges.
CHHs production department allocates the various ticket and promotional charges depending on the franchisees aggregate room income (Choice, 2008). On the other hand, the SkyTouch Technology division configures and vendors cloud-based applications to hoteliers based on the choiceADVANTAGE platform attributes Freed (2013).
These capabilities embody mobile-native interfaces that facilitate mobile capabilities such as housekeeping, property management, occupancy, ADR, rate management, guest stays, and Availability for Tonight. Fraser (2012) adds that the SkyTouch OS model administers real-time support chats and onsite training that entails simulation-grounded eLearning components.
Degree of company concentration
According to Maltbie, the level of group concentration refers to the calculated technique employed to exploit a single commodity or market (2009). This tactic enables the involved enterprise to input more resources into the procreation and retailing of one product, waiving the perils of competition increments or demand cutback. Choice Hotels mainstay business concentration favors hotel franchising as opposed to direct ownership of the subunits (Fraser, 2012).
The franchising structure helps Choice Hotels to profit from the economies of scale arising from the germane franchising transactions (Freed, 2013). Choice Hotels brands outlay services aimed at the middle-income and upscale patrons. The multinationals moneymakers include the number and appropriate mix of franchised hotels, room rates & tenancy, and royalty fees write Sloat-Spencer (2013). Additionally, the subunit owners pay a 4%-6% of the yearly combined room revenue to account for the life of the engagement, details Orr (2013).
Price factors
Choice Hotels pricing strategies hinge on guest factors, the industry competition, and the demand & supply conception (Fraser, 2012). As regards demand and supply, analysts prompt hoteliers to manipulate the Property Management System and retract data that would help the executives know which market segment is most productive (Marketing, 2013).
Company vision
The stipulated vision is to beget the highest proceeds and yields on the investments incorporated for launching the varied franchise hotels (Choice Hotels, 2015).
Mission
Choice Hotels mission, as defined by Orr (2013), entails the delivery of a successful system and network of strong franchise brands that emphasize on ample consumer size and reach. The subsidiaries will comprise of commendable service quality, distribution, and scope that entices and gratifies guests while abating expenses for the hotel proprietors (Fraser, 2012).
Guiding principles
The corporations guidelines encompass appropriate values and cultures designed to equip the stakeholders with the conviction that projected accomplishment is attainable with considerable teamwork efforts. Regarding Sloat-Spencer (2013), the set principles and value-star standards reinforce the stakeholders to labor together in harmony to reach mutual goals and targets. People share articulated values, attitudes, and opinions intent on shaping and defining personalities, business operations, and ultimate prosperity (Choice, 2008).
External Environment Evaluation
The external environment evaluation of a business entity entails the contemplation of varied aspects such as competition, performance prospects, market positions, and the dominant economic constituents (Porter, Argyres, & McGahan, 2005). The external business environment comprises two paradigms, namely the general environment and the industry. As enumerated by Porter (2008), the general macro environment accommodates events and trends in the social, technological, economic, and demographics realms.
By contrast, the competitive industry environment takes into account the forces that drive firms in similar sectors to wrestle with each other by dispensing comparable goods and services (Porter, Argyres, & McGahan, 2005). Comprehending the external business environment helps to decipher the opportunities and threats encountered in the firms maneuvers and activities. This segment highlights the competitive industry environment of Choice Hotels Inc. by way of analyzing Porters Five Forces (see Figure 1).
Porters five forces analysis involves an outline structure that examines the intensity of competition within a trade as well as the business strategy advancement (Porter, 2008). The five forces constitute a microenvironment that influences an entitys ability to attend to its patronage as well as create profits. According to Porter, Argyres, and McGahan (2005), business analysts employ these forces to prescribe the attractiveness of the specified trade industry.
Figure 1: Graphical Illustration of Porters Five Forces.
The threat of new entrants
Porter (2008) articulates the New Entrants Threat as the menace facing high-yield trades when budding individuals come aboard the market. The market access by many new entrants dilutes the profits and revenue-generation capability of the involved business units. Porter, Argyres, and McGahan (2005) identify some factors that can hamper this threat, namely rights & patents, capital requirements, absolute cost, economies of scale, brand equity, and government policies.
As regards the external environment situation for Choice Hotels, Orr (2013) points out that the hotel (franchising) commerce has relished in a substantial market progression over the past income years. The travel and tourism opportunities that come along with this hotel industry have conceived tremendous earnings and returns, thus serving as an enticing tool for new entrants eyeing the market (Porter, 2008).
Maltbie remarks that despite the setback impacted by the financial catastrophe, the general expectations are that the hospitality trade will continue accelerating (2009). The new entrants threat manifests better in the Asia-Pacific locality as tourists voyage in high numbers and reveals new flight pathways (Marketing, 2013). The result is that numerous entrants sign up for the hotel industry in the form of small exclusive traders despite the uncertainty of their victory. In a corrective move, therefore, relevant authorities impose certain capital prerequisites, initial funds, product differentiation, and foreign investment restrictions to retain the escalated revenue gains (Marketing, 2013).
Threat of substitutes
The alternatives that compete against Choice Hotels comprise of camping sites, RVs, and visitations to friends and families (Marketing, 2013). The mere presence of these equivalents proffers significant hazards to Choice Hotels income-generating activities as consumers resort to the alternatives. The identified driving factors attributed to switching to equivalents encompass product differentiation, substitute accessibilities, ease of substitution, buyer propensity, customer switching expenses, quality depreciation, and substandard merchandise.
Regardless, CHHs threat of substitutes is quite small as its franchise hotels provide premium utilities and services as compared to outdoor camping and hiring of RVs (Sloat-Spencer, 2013). The subsidiary hotels assimilate extra benefits that ratify customer satisfaction, such as spas, conference rooms, restaurants, and entertainment scenarios, attests Freed (2013). Further, the multinationals trademark and brand equity nurtured in the past has grown so strong that it surpasses this threat.
Power of suppliers
The bargaining power of providers takes into consideration the characteristic traits and mannerisms of suppliers engaged in a market of varied businesses (Marketing, 2013). Suppliers include suppliers of labor, services, expertise, raw materials, and components. When plunged into congested markets, these suppliers may hoist the prices of their supplies or even refuse to associate with selected institutions (Porter, 2008).
Congested industries elevate the supplier power as they (providers) have a broad range of firms with whom to work. In the context of CHHs supplier power, the sellers privilege is somewhat temperate owing to the outlaid advantages, announces Freed (2013). CHHs suppliers entail developers, real estate agencies, marketing companies, architects, property owners, and food suppliers, among others (Orr, 2013). Since the hotel industry is labor-intensive, CHH has implemented competent strategies to bargain with the suppliers above.
Fraser states that the corporations managers utilize advanced technology systems to locate, probe, and manage exemplary property suppliers whose provisions will complement the hotels reputation (2012). The prospecting of property equipment sellers in the midst of developing new franchisees ensures that the incorporation attains a high degree of quality and success.
Power of consumers
Also referred to as the market of outputs (Marketing, 2013), the bargaining power of buyers embodies the external coercion and persistence placed upon business entities by buyers to condense product prices. The market of outputs convenes on the clientele sensitivity to price fluctuations and other factors such as bargaining advantage, information availability, substitute merchandise, and customer value.
According to Porter, Argyres, and McGahan (2005), the consumers bargaining power becomes high if the market consists of multiple alternatives, allowing the clients to be choosy. In the case of Choice Hotels, the buyer power is modest as the organization relentlessly integrates strategic techniques directed at abating the bargaining power (Marketing, 2013). The executives of the transnational have labored to build a steadfast trademark and brand recognition across the globe (Fraser, 2012). CHHs global credit and acknowledgment lure first-time patrons as well as repeat businesses that are out to deflect the trifling switching costs.
Additionally, the establishment works to achieve excellent innovations, including spas, gyms, and golf complexes, among other style designs to capture a vast consumer grouping despite the higher-priced services (Marketing, 2013). The emphasis on innovation creation lies in the valuation of the patrons needs, wants tastes, and preferences. Sloat-Spencer (2013) adds that the corporation strives to retain its current customer base and win over others through the implementation of new tactics such as loyalty programs to lessen buyer power.
Intensity of rivalry
The intensity of rivalry consists of the relentless efforts by the distinctive entities to surpass and outsmart each other (Marketing, 2013). Porter (2008) catalogs the agents of intense rivalry as rigid concentration ratio, advertising costs, robust competitive methodologies, the degree of transparency, innovation advantages, and the antagonism between online and offline platforms. Choice Hotels threat of rivalry constitutes a balanced and bearable ratio owing to the pertinent logistical and financial agents (Marketing, 2013).
Regardless of the existent competitors such as Country Inn and Best Western, Choice Hotels, in its capacity as a hotel franchisor, has diversified its interests. The organization fixates on mid-scale as well as economy service categories that fit travelers needs, looking for low tariff lodgings. Furthermore, the enterprise engages in international franchising of hotels in preference to outright property ownership.
According to Fraser (2012), this structure hatches numerous advantages for its employer as it incorporates a global footprint, among other elements. The global footprint agent capacitates diversification and increased earnings as the employees concentrate on returning the share repurchases and dividends to the stockholders. The proceeds acquired avail the prerequisite capital necessary for CHH to delve into other operations and acquisitions in conjunction with shielding the institution against volatile market circumstances (Marketing, 2013).
Identification of Differentiators
Differentiators encompass the distinctive features, aspects, and benefits accredited to an identified product or brand to help it outshine other commodities (Freed, 2013). Choice Hotels characteristic differentiators converge on a multipronged hotel technology space that comprises of mobile, big data, and cloud-based application trends (Sloat-Spencer, 2013). This revolution, which CHHs CEO (Steve Joyce) credits as a premier module, disburses scalable property management systems to its franchisees.
These functionalities ameliorate on-site connectivity, data, technology architecture, and the mobile platform by way of engaging a Smartphone app. Freed maintains that one million subscribers had already viewed and downloaded the app even before its constituent subsidiaries unveiled the package, thus proving its prosperity (2013). The apps objective is to empower room reservation and mobile booking, which it has triumphantly achieved, considering CHHs 13% gross online proceeds retrieved from the mobile booking transactions.
An additional technology differentiator implemented by CHH is the revenue management tool denoted as the Rate Center. The Rate Center functions to forward signals to the franchisees hotel executives when the resorts are not capitalizing on the projected pricing strategy and proffers suggestions on the manipulation of rates (Freed, 2013).
Analysis of Internal Environment
The internal environment refers to the intrinsic events, agents, and conditions of an entity that impel its choices and procedures (Orr, 2013). These agents include employee behavior, leadership styles, organizational cultures, and mission statements. This segment evaluates the internal environment of Choice Hotels concerning the SWOT (Strengths, Weaknesses, Opportunities, and Threats) matrix. The SWOT matrix is a calculated planning methodology enlisted in the investigation of threats, opportunities, weaknesses, and strengths inherent in a business venture (Choice, 2008).
Strengths
Fraser (2012) defines strengths as those properties and traits credited to a company that proffers it with certain supremacies and eminence. Outlined beneath are the Choice Hotels intrinsic advantages (Choice, 2008).
Diverse portfolio.
Acknowledged operations in the United States.
USAs premier hotel chain entity.
Inexpensive quality service that guarantees exemplary consumer experience.
Easier expansion owing to the franchise framework.
One of the greatest lodging franchisor.
Weaknesses
Weaknesses entail the instruments that present disadvantages to an enterprise compared to other businesses. CHHs weaknesses are as follows (Choice, 2008).
Credibility reduction due to overblown aggressiveness by the sales team.
Minimal international presence as it heavily leans on the Indian market.
Tricky to sustain control over all the subsidiaries (over 6,500 franchisees).
Opportunities
Opportunities highlight those aspects that the involved firms can manipulate to escalate their advantages. CHHs identified opportunities include the below essentials (Choice, 2008).
Service expansion.
Rising revenue gains.
Developing markets and extensions overseas.
Package disbursement to encourage loyalty and promotional programs.
Threats
Threats constitute the parameters capable of engendering trouble for the firm. CHHs threats encompass the following points (Choice, 2008).
New entrants and competitors invading the trade market.
Availability of equivalents including inns and local hotels.
Buyer predisposition to veer towards other brands such as Best Western.
Competitive Analysis
Porter, Argyres, and McGahan (2005) assert that a competitive analysis is a business plan subsection formulated for the sole purpose of examining and dissecting your current and potential competitors. The competitive study endows knowledge on the strengths and weaknesses of your rivals and challengers, writes Porter (2008). This section focuses on three analytical techniques, namely the value chain, rivalry, and financial elements.
Value chain analysis
The value chain analysis is a medium that works to recognize the viable ways and means that will help you spawn value and merit for your patronage (Porter, 2008). This tool necessitates a significant input of expertise, knowledge, and time to deliver outstanding services and products. The value chain activities assimilated in Choice Hotels include hotel membership, guest engagement, employee recruitment (KPI scheme), synchronized inbound & outbound logistics, operations, and marketing procedures (Marketing, 2013).
Rivalry analysis
Rivalry analysis involves the evaluation of the existent competition among various businesses within a given industry, which takes the form of jockeying for positions (Porter, Argyres, & McGahan, 2005). It is imperative for a firm to curb against industry antagonism to ensure its continuity. Choice Hotels efforts in value augmentation of their products and services include product differentiation, brand identity, high switching costs, industry commitment, and informational complexity (Marketing, 2013). The conglomerate has also invested in cloud-based hotel technology, worldwide economy franchising, price competition, ideal customer gratification, loyalty schedules, and promotional activities of their sales department (Freed, 2013).
Financial analysis
Financial analysts employ the economic analysis implement to scrutinize the liquidity, solvency, stability, and profitability of businesses before settling to invest in them (Sloat-Spencer, 2013).As of December 31, 2014, CHHs net profits, revenue, and dividends were $112.6M, $757.97M, and $0.75 USD- the highest recorded metrics (Choice Hotels, 2015). These performance integers reveal that the conglomerate is indeed productive and fertile for investment.
Conclusion
In conclusion, Choice Hotels International is a dominating champion in the sphere of hotel franchising. This success is evident as per the strengths and opportunities listed above, the value chain & financial analysis, the profitability fractions, its size and growth, and the international eminence. However, the management board can improve its prominence by way of conducting leadership orientation, live training webinars, online courses, strategic sourcing, and consultations (Orr, 2013).
A learning organization is an organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights. This means that organizations engage in systematic problem solving, experimenting, and continuously searching for new knowledge. There must also be a tolerance for failure because experiments may not always succeed. The aim is, of course, to learn from past failures, but the learning should not be restricted to ones own experience. One can learn a great deal from others, whether inside or outside the organization. Learning from other organizations is often achieved through benchmarking, which requires the search for the best practices not only within the same industry but also in other industries.
What is learned needs to be shared through, for instance, reports, plant tours, and education programs and training. Individuals or groups need to be encouraged to share their specialized knowledge and disseminate it throughout the organization. Knowledge is not enough; it has to be applied. Unless the behavior is changed, little is gained from the efforts of creating a learning organization. Therefore, progress and improvement need to be measured through questionnaires, surveys, interviews, and observation of behavior. Department stores may, for example, use shoppers to assess the service of their sales associates. The learning organization promotes communication and collaboration so that everyone is engaged in identifying and solving problems, enabling the organization to continuously experiment, improve, and increase its capability. This paper looks at the impact created by an organizational structure on organizational learning and learning organization.
Organization Structure
One of the importance of an organizational structure is that it helps managers and supervisors to coordinate the process of designing appropriate strategies as well as helping in their implementation. There are different types of organizations. Allocation of skills, responsibilities, and labor is determined by the form of an organization (Argyris & Schön 1978). This also influences the flow of information from the managers to the subordinate staff and affects the performance and efficiency of each individual employee. Traditionally, organizations are viewed as social structures with specified tasks, continued existence, and specialization. With the current organization theory, this view has been changed, and the focus is now directed on other important attributes, including social and cultural learning.
Today, practitioners are using both the traditional perspective and the current organizational theory to develop a constructive framework that will assist them in organizing people so as to comprehend strategies (DePree 1990). The importance of this kind of framework is that it helps practitioners to understand the structure that best fits the duties and the responsibilities that are to be performed. It also helps the management to design a model that should be adopted for organizational development. The learning of culture and social theories gives some insights to a practitioner, which helps him to manage change and the processes that should be adopted in order to accomplish the desired results that will ensure continuity of an organization.
In organization structure, people and job positions that are available within an organization are arranged appropriately in order for them to meet specific needs. It is the organizational structure that differentiates a hospital from a food restaurant or a bank from a manufacturing plant (Argyris & Schön 1996). The tasks involved in the different organizations, the technology to be adopted, and the knowledge of what is good or bad influencing the choice of an organization design. An organization structure specifies the number of personnel, required resources, outputs, and capacity that provide a measure to estimate the size of an organization. However, this is not constant, but changes as the organization grow. Having a clear understanding of the technology to be used in running the day to day activities in a learning organization affects how it is organized (Schultz 1999).
A Learning Organization
A learning organization is defined as the place where people meet with others for the purpose of expanding their knowledge and capabilities for better results in doing the things that they desire. It can also be defined as a place where patterns of thinking are cultivated, and aspirations set free. It is a place where people continue learning to enhance their creativity for more production (Senge 1999). The key rationale for learning organizations is that they are only able to excel in times of rapid changes if they are adaptive and flexible to new environments. For this to happen, they need a well-designed organizational structure that will help people to achieve their goals and objective in the learning organization (Drucker 1977).
Everyone has a capacity to learn but the structures put in place influence how this is achieved. For instance, if they are not conducive, people will not be able to engage in the day to day activities. Moreover, without a good organizational structure, people lack the means or the tools to overcome the challenges they may be faced with (Finger & Brand 1999). An organizational structure is particularly important for an organization that is growing in terms of capacity as it helps it to develop appropriate strategies.
Organizational Learning and Learning Organization
According to Senge et al. (1994), learning should be sensitive enough to consider the meaning of being human. That is, through it, people should learn how to re-create themselves. This applies to both the organizations and people. A learning organization is not only supposed to survive but also be adaptive to the changes taking place in the world (Senge et al. 1994). It should provide generative learning that boosts peoples capacity to be more creative. Todays learning organization differs from the traditional one in that the modern organization provides basic disciplines that are not available in the traditional organizations. Some of these basic disciplines including but not limited to personal mastery, team learning, and systems thinking. According to many researchers, people are seen as agents who are able to work according to the systems and structures put in place. Most of todays disciplines in learning organizations are based on how people can be influenced to stop acting as helpless agents to being active participants responsible for their lives.
Every learning institution requires changing its perception of leadership if it is to succeed in the ever-growing global economy. Traditional leaders were viewed as a special group of people who outlines the direction to be followed, make the major decisions, and manage the organization. This view is based on the assumption that people are powerless, they lack a clear vision, and are unable to withstand the forces of change, and this can only be solved by a specific and influential group of leaders (Probst & Romhardt 1999). Leaders are viewed as teachers and designers in every learning organization. They are the ones who are given the responsibility of developing the organization where people can expand their knowledge and capabilities, visualize their future, and become adaptive to any kind of situation.
A learning organization is one that can adapt to changes in the external environment through continuous renewal of its structure and practices. According to Senge et al. (1999), there are five technologies that help the organization to learn. These are systems thinking, personal mastery, mental models, a shared vision, and team learning (Kleiner 2000). The learning organization is generally associated with concepts such as sharing the vision of the enterprise, self-examination of the prevailing assumptions and practices, considering radically new organizational structures, creating learning teams, and establishing linkages with parties outside the enterprise for generating new ideas and perspectives (Peck 1990).
The Vertical Hierarchy Structure
Traditionally, the most common organizational structure has been one in which activities are grouped together by common work from the bottom to the top of the organization. Generally, little collaboration occurs across functional departments, and the whole organization is coordinated and controlled through the vertical hierarchy, with decision-making authority residing with upper-level managers. This structure can be quite effective. It promises efficient production and in-depth skill development, and the hierarchy of authority provides a sensible mechanism for supervision and control in large organizations. However, in a rapidly changing environment, the hierarchy becomes overloaded. Top executives are not able to respond rapidly enough to problems or opportunities.
In organizational learning, the vertical structure that creates distance between managers at the top of the organization and workers in the technical core is disbanded. The structure is created around horizontal flows or processes rather than departmental functions. The vertical hierarchy is dramatically flattened, with perhaps only a few senior executives in traditional support functions such as finance or human resources. Self-directed teams ate the fundamental work unit in organizational learning. Boundaries between functions are practically eliminated because teams include members from several functional areas (Casamayou & Mahler 2009).
A task is a narrowly defined piece of work assigned to a person. In a learning organization, tasks are broken down into specialized, separate parts, as in a machine. Knowledge and control of tasks are centralized at the top of the organization, and employees are expected to do as they are told. A role, on the other hand, is a part of a dynamic social system. A role has discretion and responsibility, allowing the person to sue his or her discretion and ability to achieve an outcome r meet a goal. In learning organizations, employees play a role in the team or department, and roles may be continually redefined or adjusted. There are few rules or procedures, and knowledge and control of tasks are located with workers rather than with supervisors or top executives (Bolman, & Deal 1997). Employees are encouraged to take care of problems by working with one another and with customers. In the learning organization, all employees look for problems, which means putting things together in unique ways to meet a customers needs.
Development of a Learning Capacity through an Organization Structure
Todays managers are quite aware that sustained competitive advantage can come only by developing the learning capacity of everyone in the organization. To develop a learning organization, managers make changes in all the subsystems of the organization. Three important adjustments to promote continuous learning are: shifting to a team-based structure, empowering employees, and sharing information (Edmondson & Moingeon 1999). A team-based structure is an important value in organizational learning. It involves collaboration and communication across departmental and hierarchical boundaries. Self-directed teams comprise the basic building block of the structure. These teams are made up of employees with different skills who share or rotate jobs to produce an entire product or service. Traditional management tasks are pushed down to lower levels of the organization, with teams often taking responsibility for training, safety, scheduling, and decisions about work methods, pay and reward systems, and coordination with other teams. Although team leadership is vital, in organizational learning, the traditional boss is nearly eliminated. People on the team are given the skills, information, tools, motivations, and authority to make decisions central to the teams performance and to respond creatively and flexibly to new challenges and opportunities that arise.
Employee empowerment means unleashing the power and creativity of employees by giving them the freedom, resources, information, and skills to make decisions and perform effectively. Empowerment may be reflected in self-directed work teams, quality circles, job enrichments, and employee-participation groups, as well as through decision-making authority, training, and information so people can perform jobs without close supervision (Schuck 1985). In learning organizations, people are a managers primary source of strength, not a cost to be minimized. Organizations that adopt this perspective believe in treating employees well by providing competitive wages and good working conditions, as well as by investing time and money in training programs and opportunities for personal and professional development.
A learning organization is flooded with information. To identity needs and solve problems, people have to be aware of whats going on. They must understand the whole organization as well as their part in it. Formal data about the budgets, profits, and departmental expenses are available to everyone. Managers know that providing too much information is better than providing too little. In addition, managers encourage people throughout the organization to share information.
Conclusion
The main goal of a learning institution is to improve the quality of the learners actions, or in other words, to develop behavior that is more effective in achieving the learners aims. What we are looking for in a learning organization is competence. What and how a person learns is evident in his behavior. Therefore the measure of the improvement in that behavior becomes a measure of the effectiveness of the learning process. Organization learning is thus enhanced by the change of the commonly shared values and suggestions or even cognitive maps. This means that fundamental hypotheses and guidelines change continuously.
A majority of organization members are involved therein, as this can only be achieved through the common establishment of team identities. Through the unification and consensus finding process conducted by the organization members, a fundamental change of the guidelines is implemented, eventually resulting in organizational learning. This can be done through an organizational structure. This structure stipulates the tasks and responsibilities of both managers and employees and ensures that there is no overlap of duties. With it, a learning organization is able to achieve its goals since available resources are put into proper use. It is through the organization structure that managers use to distinguish the employees to be enrolled in training programs so as to improve their efficiency for better learning of the organization.
Reference List
Argyris, C., & Schön, D. 1978. Organizational Learning: A Theory of Action Perspective. Reading, Mass, Addison Wesley.
Argyris, C., & Schön, D. 1996. Organizational Learning II: Theory, Method and Practice. Reading, Mass, Addison Wesley.
Bolman, L. G., & Deal, T. E. 1997. Reframing Organizations: Artistry, choice and leadership 2e. San Francisco, Jossey-Bass.
Casamayou, H. M., & Mahler, J. 2009. Organizational Learning At NASA: The Challenger and Columbia Accidents. New York, Georgetown University Press.
DePree, M. 1990. Leadership is an Art. New York, Dell.
Drucker, P. 1977. Management. London, Pan.
Edmondson, A., & Moingeon, B. 1999. Learning, Trust and Organizational Change in M. Easterby-Smith, L. Araujo and J. Burgoyne (Eds.) Organizational Learning And The Learning Organization. London, Sage.
Finger, M., & Brand, S. B. 1999. The Concept of the Learning Organization Applied To the Transformation of the Public Sector In M. Easterby-Smith, L. Araujo and J. Burgoyne (Eds.) Organizational Learning and the Learning Organization. London, Sage.
Kleiner, A. 2000. Schools That Learn: A Fifth Discipline Field book for Educators, Parents, and Everyone Who Cares about Education. New York, Doubleday/Currency.
Peck, M. S. 1990. The Road Less Travelled. London, Arrow.
Probst, G. S., & Romhardt K. 1999. Managing Knowledge. London, Wiley.
Schuck, G. 1985. Intelligent Workers: A New Predagogy for the High Tech Workplace. London, Prentice Hall.
Schultz, J. R. 1999. Peter Senge: Master of change Executive Update [Online]. Web.
Senge, P. et. al. 1994. The Fifth Discipline Field book: Strategies and Tools for Building a Learning Organization. London, Arrow.
Senge, P., et al 1999. The Dance of Change: The Challenges of Sustaining Momentum in Learning Organizations. New York, Doubleday/Currency.
The present paper conducts an external environment analysis for the Chinese telecommunications company Huawei Technologies. External environment analysis plays an important role in the strategy-making process because it helps predict possible risks and develop strategies to mitigate them. Although Huawei is a Chinese company, its products are sold in Asia and Europe. From the political and economic perspectives, the tense relations between the European Union (EU) and the PRC are the potential risk factor for Huaweis performance. Currently, the EU has increased exports from China, and Huawei easily sells its gadgets in foreign markets (Shamout and Elayan, 2020). However, in the case of sanctions, Huawei will lose a significant commodity market.
Social conditions are beneficial for Huawei because gadgets have become an indispensable part of peoples lives. From the point of view of technologies, Huawei is taking leading positions in producing devices using the 5th generation mobile communications technology (Tekir, 2020). Nonetheless, it is legally forbidden for Huawei to cooperate with American telecommunication corporations such as Google and Intel (Ciucan, 2020). Nevertheless, Huawei has managed to overcome this issue by reshaping supply chains and shifting to other producers of microchips. Since Huawei sells its products abroad, it is obliged to follow the ecological standards of the EU. It is not a critical problem because this company actively promotes the reduction of carbon emissions (Fei, 2020). Overall, from social, legal, technological, and ecological perspectives, the external environment could be considered as favorable for Huawei Technologies.
Political tensions with the West are the potential risk factors for Huaweis presence in the region. Huawei could not handle this problem because it is a Chinese company and is strongly affected by relations between China and other countries. Therefore, the major problem of Huawei is its link with the PRC. The strategic recommendation is to become a multinational corporation to stop incurring losses because of the complicated relations between the West and China.
The strategic implication of the analysis is that companies, especially large ones, strongly depend on their country of origin. That is because Huawei produces gadgets for ordinary people and develops telecommunication technologies that the Chinese government could use for wartime needs. This implication limits the strategic recommendation outlined above. Huawei receives subsidies and a significant share of income from the government. Consequently, Huawei cannot break its links with the government and will always be affected by the political conditions in the world.
Reference List
Ciucan, I. A. (2020) USA and Huawei, the creation of a technological iron curtain, Economic Sciences Series, 20(1), pp. 61-65.
Fei, L. (2020) Tech for a better planet: A corpus-based analysis of the environmental disclosure in CSR reports of Huawei, IOP Conference Series: Earth and Environmental Science, 615(1), pp. 1-8.
Shamout, M. D., & Elayan, M. B. (2020) A Comparative analysis of strategic planning practices in Gulf Cooperation Council Region: A case study of Huawei and Samsung companies, Journal of Talent Development and Excellence, 12(1), pp. 4891-4910.
Tekir, G. (2020) Huawei, 5G network and digital geopolitics, International Journal of Politics and Security, 2(4), pp. 113-135.
Organizations undertake project or programs development in order to meet certain needs of their businesses. These projects do not always become a success as they fail to meet the expected outcomes and in the expected quality. Projects and program failures have negative impacts on the reputation of an organization. There are several factors that lead to the failure of such projects, such as lack of a clear link between the project or program and the organizations key strategic priorities; lack of effective involvement with the right stakeholders who should be identified, and the rationale for doing this identified too; when attention was not given to breaking development and implementation into manageable steps among others. This may result in impacts on organizations such as failure to comply with legal or regulatory requirements, loss of trading licenses, public scrutiny through the media, and in public organizations, a lot of public criticism and inconveniences in service delivery. There is a need, therefore, to study the impacts of project failure on an organizations reputation, which was the objective of this study. The methodology used is a case study where documented information on this case was reviewed. The study found out that public outcry, criticism, and negative press; inconveniences in services delivery; loss of customer confidence and money are some of the impacts of project failure in organizations. It also recommends a number of measures such as the use of small and value delivering consultancy firms, clear vision, and involvement of top executives.
Introduction
The purest treasure mortal times can afford is a spotless reputation, William Shakespeare wrote (Laszlo, (1999). Projects and program failures have a negative impact on the reputation of an organization. According to Bowenkamp & Kleiner (1987), a project is a distinct and compound set of harmonized activities undertaken with clear-cut starting and finishing points by an organization to meet specified objectives within a specific time. He continues to say that it has a defined lifespan, measurable outcomes, organizational structure, defined amount of resources, and a corresponding set of activities. A program, on the other hand, is a system of projects that are designed to meet a certain need in an organization. Project or program failure is when there was no actual realization of the expected outcomes and in the expected quality. A study by the Standish Group (US) in 2003 showed that 60% of IT projects undertaken either totally abandoned or fall against a measure of budget, scope, time, or quality (Barber & Warner, 2005). The same study also estimated that the cost of abandoned or failing IT projects in the United States of America alone run into hundreds of billions of dollars. Common causes of project or program failure include lack of a clear link between the project or program and the organizations key strategic priorities; lack of effective involvement with the right stakeholders who should be identified and the rationale for doing this identified too; when attention was not given to breaking development and implementation into manageable steps; Proposals driven by the initial price rather than the long-term value for money. Lack of effective bonding between clients, suppliers, and supply chain and the project team leading to failure to make a market evaluation also leads to project failure (Bowenkamp & Kleiner, 1987). One or a combination of these factors may lead to project failure.
Impacts of failure of projects and programs on the reputation of the company include the imposition of business fines, suspension, public admonishment and/or parliamentary inquiry, loss of trading licenses, inconvenience in service delivery, negative press, and even firing of involved staff.
Statement of the problem
In spite of all the negative effects of project failure on the reputation of organizations, the organizations discussed in this paper continued to face a number of issues such as criticism from the public, negative press, and inconveniences due to collapsed systems. This study, therefore, is designed to explore the impacts of Projects or program failure on the reputation and image of an organization, find out whether transformational and leadership in the management of organizations enhances handling its reputation in the event of failure.
Research questions
What causes project or program failure?
What are the Impacts of project failure on the reputation of an organization?
Does transformational and leadership in the management of organizations enhance to handle its reputation in the event of a failure?
What are the problems and/ or opportunities for enhancing reputation after project or program failure?
Objectives of the study
The study aims to:
To explore the impacts of Projects or program failure on the reputation and image of the company.
Find out whether transformational and leadership in the management of organizations enhance handling its reputation in the event of failure.
Find out problems and/ or opportunities within the study environment for enhancing reputation after project or program failure.
Research premises
The study assumes that:
Project or program failure affects the reputation and image of the company.
Transformational and leadership in the management of organizations can enhance it to handle its reputation in the event of project or program failure.
There exist problems and/ or opportunities for enhancing reputation after project or program failure.
Justification of the study
The study is necessary as project failure has a long history where companies big or small, public or private, profit-making or non-governmental, are affected. It is therefore important to study how this failure affects company reputation in order to be prepared on how to deal with them because the image is important.
The study will also add to the poll of knowledge on the subject of project failure and the organizations reputation.
Literature review
A project is a distinct and compound set of harmonized activities undertaken with clear-cut starting and finishing points by an organization to meet specified objectives within a specific time frame. It is characterized by a definite lifespan, measurable products, organizational arrangement, a set amount of resources, and a matching set of activities, according to Orwig & Brennan (2000).
Project management is a merging of the roles and responsibilities of individuals assigned to the project, the organizational structures put in place in the project, and the laid down processes to achieve the set objectives. This is important because it helps to guide the undertaking since the responsibilities and accountabilities of individuals are outlined and the process clearly documented and repeatable. The type of projects determines the approach of project management to use (Longman & Mullins, 2004). A program is a system of projects that are designed to meet a certain need in an organization.
Project or program failure is when there was no actual realization of the expected outcomes and in the expected quality. A study by the Standish Group (US) in 2003 showed that 60% of IT projects undertaken either totally abandoned or fall against a measure of budget, scope, time, or quality (Barber & Warner, 2005). The study also estimated that the cost of abandoned or failing IT projects in the United States of America alone run into hundreds of billions of dollars. In a study by Barbaro (2006), an IT project by the state of Washington License Application Mitigation Project (LAMP) was abandoned in March 1997, which was aimed at automating the states vehicle registration and license renewal processes. The project was initially budgeted at $16 million, which then went up to $41.8 million in 1992 and $51 million in 1993, and $67.5 million in 1997. It was clear that the project was a time-waster, and calculations estimated it would have cost $4.2 million to run annually more than the current one, which cost $800,000 per year. Moreover, it would have been much too big and obsolete to run by the time it was finished.
Common causes of project failure
According to Razgui (2007), the lack of a clear link between the project or program and the organizations key strategic priorities is a major cause of project failure. Those designing the project fail to define critical success factors (CSFs) for the project, which should be agreed upon by suppliers and stakeholders. They also fail to design a plan that covers the whole period of the planned delivery, changes required in the business, and the means of benefits realization. Lack of effective involvement with the right stakeholders who should be identified and the rationale for doing this identified too is another cause of project failure. Inadequate skills and experience in project and risk management by the project team. These are not exposed to areas of systems for measuring and tracking the realization of benefits and therefore fail to point out the major risks, weighed and planned for by the whole project team.
Projects or programs may fail in projects where attention was not given to breaking development and implementation into manageable steps (Seanor & Meaton, 2008). Details such as testing the approach; keeping delivery timescales short, and building review points in the project so as to stop If circumstances change to the effect that the desired benefits can no longer be achieved or do not represent the value for money; Proposals driven by the initial price rather than the long term value for money; and lack effective bonding between clients, supplier, and supply chain and the project team due to failure to make a market evaluation.
Impacts of project failure on organizations reputation
Project failure may lead to non-compliance with legal or regulatory requirements that may attract business fines, suspension, public admonishment and/or parliamentary inquiry, loss of trading licenses, for instance, Citigroup, Japan which lost trading license due to failure to comply with legal and regulatory requirements and caused inconveniences to clients (Yatim, Bredillet, & Ruiz, 2009); public scrutiny through the media especially, if the press coverage is negative.
In the case of public organizations, where universal acceptance of the projects is required, failure creates a lot of public criticism and loss of confidence, and citizens can force the organizations not to invest in such projects as they use their taxpayers money. For instance, In 1993, the Oregon Department of Motor Vehicle project to automate its operation, which resulted in the killing of the same in 1996 after being a total failure and consuming $123 million. The public outcry was great and led to the sacking of the project officials (Kutsch, 2008). Such cases will be published, documented, and quantified, which further damages the reputation of organizations.
Adverse effects on customer base as failed projects inconvenience service delivery. In 2008, a large British food business canceled a project which had cost US$ 526 million to automate its supply chain management system. This led to their commodities being jammed in their stores and warehouses and not being able to reach most of their stores. The company incurred extra costs as it had to hire 3000 more workers to stock their goods manually on the shelves (Greyser, 2009).
Transformational and leadership in the management of an organization can enhance it to handle its reputation in the event of failure. A case in the study on how leadership builds a businesss reputation is that of Haas Levi, then chairman of corporate social responsibility in Avon international. In 1982, the mysterious AIDS virus was seriously affecting the gay community in San Francisco, there were a lot of stigmas associated with the disease, and lower-level employees of Avon wanted to distribute fliers to create awareness on the disease in the company but were afraid of being stigmatized. Haas and other top executives run an information desk and distributed fliers. From there, the company foundation became involved in the AIDS campaign (Benn, (2007). Another example was that of Citigroup in Japan when it lost its private banking license due to legal and regulatory misdeeds where it faced public admonishment and loss of trust. To mend its reputation, Citigroups CEO apologized to the public and promised to take the necessary steps to conduct business properly (Greyser, 2009).
Discussion
In this study, attention is given to public failed information technology (IT) projects and programs.
ContactPoint was a 244 million pound online database project which was being developed by the Department for Children, Schools and Families (DCSF), United Kingdom, to hold details of 11 million children and teenagers. Ahmed (2009) reported that the program, which was intended to improve children protection, was canceled in March 2009 after major flaws in the security systems for shielding details of an estimated 55,000 vulnerable children victims of domestic violence, children of the rich and famous, children under witness protection program and those in difficult adoptions. The system was to include the age, sex, name of the children at risk from computer records obtainable to 400,000 childrens provision staff who had contact with the files. It did not always work as shielding disappeared every time the database was updated (Ross, 2009).
Causes of the problem
This was caused by a lack of qualified and experienced IT workers who could have detected unqualified consultants or obsolete technology as most of the department workers had gone to work for the private sector and especially the company engaged as consultants for this project.
The use of the methodologies that were passed by time was another problem. Moreover, the engineers did not prioritize the most important outcome of the project, which was security.
The result of this failure was a dented public confidence since it was associated with controversy since its inception in 2003. This brought a lot of attention to the governments other failed projects, further affecting confidence. Ross (2009) establishes that a report by Joseph Rowntree Reform Trust this year reported that most government databases have significant problems which may be unlawful and that ContactPoint failure was an indicator of a wider problem.
Public outrage was another impact of the project. Failure to shield the vulnerable children where citizens felt that trusting the 400,000 workers not to abuse this database was sheer recklessness on the side of the DSCF whilst it was clear that the system would have been of great benefit to combat children abuse by enabling the children services providers to communicate quickly in time of urgency to save children in dangerous situations.
In the United States of America, the Oregon Department of Motor Vehicles started a five-year $50 million project to computerize its procedures in 1993. This was to help the department save $7.5 million by cutting its labor force by one-fifth. By 1995, the project decommissioning date was pushed to 2001, and the budget was estimated to be $123 million. During the testing in 1996, it was discovered that the project was a complete failure. The public cried foul, and in response, the department of motor vehicle officers overseeing the project was fired. (Vidal & Marle, 2008).
Discussion of the selected issue in relation to case example
It is clear in the examples above the major issue in project failure is project management or lack of it. Projects are at risk of running out of time, budget, or expected outcomes, and therefore, good project management is required to eliminate the risk. It puts a structure where the chain of accountability is short, and individuals responsibilities are defined, and the processes of the project are put in writing to provide guidance and learning experiences. Such large public projects where millions of dollars are used should adopt management methodologies such as PRINCE2 (Ross, 2009).
Public organizations should also engage qualified consultants to develop their projects and also hire qualified personnel in order to deliver up-to-date technologies. In ContactPoint, the critical system of security should have been detected and resolved earlier during system design and test by the engineers.
Opportunities within the project environment
One of the major opportunities within the public project or program environment is that public projects are funded by the government, and therefore funds are not as limited as in the private sector.
Public projects also have a wider stakeholder base, and therefore knowledge pool is larger, which can be utilized to minimize chances of failure, and when projects go wrong, blame is also shared.
Recommendations
Public organizations should make sure that when hiring consultants, properly skilled people are hired who deliver quality projects. In this case, small firms that deliver the expected outcomes on time should be given an equal chance with big firms.
The public officials charged with project or program development should have the attention of the highest management level. This is because the changes desired will affect the whole organization.
Stakeholders management is important. They should be kept engaged throughout the project cycle through project boards where their input is considered and conflicting objectives resolved.
Roles and responsibilities should be clearly defined, such as decision-making roles, sponsorship, ownership, project management, and project team. This ensures that people concentrate on their roles for smooth running.
Project managers should have a clear line of reporting and decision-making. This way, he is able to build links between technologists and top management through communication.
The clear vision of what is to be achieved and well-defined scope and understood and agreed with outcomes of the project. It is also important to outline what not to do at the begriming of the project. The outcomes of public projects must be agreed upon with stakeholders or their representatives. These should be prioritized as one project can not meet all the expectations in order of functionality, technicality, and usability.
Conclusion
Project failure knows no boundaries; it can occur in any organization, big or small, public or private, and without regard to reputation or status. Companies should be bold enough to manage their projects well, and if they fail, they should take measures to protect their reputation. The silence when things go wrong should never be an option as this pushes the company out of the debate table and also is interpreted by the public as arrogance which is not good for the image. They should come up with an explanation good for the public and even apologize for inconveniences experienced by their customers, suppliers, and the general public.
References
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