Reporting financial information requires not only accuracy but also attention to possible qualitative issues that will affect decisions made in the future. To understand how various issues influence the opinion and choices analysts make, it is important to explore the difference between the quality of reported results and financial reporting quality. Also, it is imperative to identify warning signs associated with the analysis of financial statements and evaluate the extent to which the presentation of financial statements influences analysts decisions.
Financial statement analysis
Financial reporting quality and the quality of reported results differ in several ways. On the one hand, the former implies the information that institutions use for making financial decisions, the real representation of an economic position in which a company finds itself, and the compliance with standards. On the other hand, the latter represents the quality of earnings that imply sustainable activities, adequate results, and increases in the value of an organization. It is notable that financial reporting quality and earnings quality are interrelated and can influence analysts opinions. For instance, the high quality of financial reporting plays a role in enabling the assessment while the high quality of earnings increases the value of a company. However, low financial reporting limits the assessment of earnings quality while the low quality of earnings decreases the value that a company has.
When it comes to different problems associated with financial statements, there are several aspects to consider. First, in revenue recognition, it is essential to implement such analytical procedures as examining the policies of accounting to make conclusions about how a company approaches its policies. Also, an analyst can look at revenue relationships and assess the turnover of assets. Second, when dealing with inventory, analysts should look at turnover, problems in inventory management, overstated net profits, and so on. Third, detecting long-lived assets is possible by comparing policies with industries practices, cross-checking asset turnover, and evaluating policies for long-term assets.
Apart from issues that appear in financial statements and differences in the financial quality and the quality of reported results, the presentation of financial statements also has an impact on analysts decisions. When choosing a presentation method, a company has to decide what information should be included and how to present it, for example, should the positive aspects of performance be emphasized or whether irrelevant details or boilerplate can be overlooked to preserve the cohesiveness of reports (EY, 2014, p. 3). In general, analysts will value reports that include all of the required disclosures and some mentions of positive and negative aspects of performance while overlooking the disclosure overload, which may be confusing.
Conclusion
Thus, when a financial report is of high quality, the assessment that analysts conduct will be successful in measuring all necessary variables such as profitability, liquidity, cash flow, company-wide efficiency, and others ( Financial statement analysis, 2017). If the information presented in statements is skewed or is over-abundant, analysts may find it hard to complete the required measurements and will experience difficulties in filtering through the unnecessary data that adds no value. To improve the quality of disclosed information, organizations should work on flexibility, relevance, streamlining, and filtering what they present in financial statements (Center for Audit Quality, 2012). Establishing a benchmark for applying judgment on which data will be relevant and which will not is the desired method for reaching the high quality of financial statements and allow analysts to make decisions that have not been hindered by unnecessary information.
References
Center for Audit Quality. (2012). Financial statement disclosure effectiveness: Forum observations summary. Web.
There exists a lot of differences and ambiguity regarding the marketing of services essentially due to the intangible nature of services. Product marketing is easier as there is a tangible item that may be shown to the customer or make them feel it literally. But in the case of services, it is not possible. So the whole paradigm of marketing literature changes with services. There have to be different methods and targets that have to be set to ensure that the intangibles of the services can be reduced to a minimum by providing customers a feel of the service. In this essay, we demonstrate that customer is the key focus of services and all the elements that are used to market service are ultimately customer-centric. To do this we have used support from a lot of scholarly works. In this essay, we first understand what is meant by my services and what their key characteristics are. Then we go ahead to describe the different problems of services marketing with examples and then we derive a relationship between service encounter and customer orientation.
Introduction
Service marketing has been a paradox for marketers due to the very unique and obscure qualities it posses. There are a lot of dimensions of service marketing that are important to be understood and are required for marketing the services. The first and the foremost important element of service marketing are customers. So it becomes imperative for marketers to understand the customers, how customer loyalty can be created in a service marketing scenario, and how loyalty and satisfaction can enhance service quality and/or vice versa.
In this essay, we try to evaluate the definition of services and their characteristics so that we may understand the scope of services marketing. To do so we undertook a literature review of services marketing in order to ascertain what we can learn from the experience of service providers and the techniques we may derive from the strategies they implemented. The scope of this study is huge but the problem that we foresee is that there exists such a huge collection of literature that it is beyond the scope of this paper to assimilate all of it. But in a comprehensive and precise manner, we have tried to demonstrate the different effects and scopes of service marketing. We have undertaken a study of articles from the scholarly journal which has helped us to get a practical perspective of marketing of services and how it can be managed.
Service Description
Services refer to the intangible benefits that customers receive from an organization that are extremely valuable to them. Some of these service sector industries are restaurants, health, banking, airlines, etc. in these kinds of industries customers assume a major role as well as importance due to the unavailability of a tangible product. Hence, customer expectations are a prerequisite for delivering superior service. The range of customer expectations may be displayed in five dimensions of the services, namely, reliability, tangibles, responsiveness, assurance, and empathy. There exists a lot of differences between product and service marketing. According to Soshtack, the intangibility of services creates myopia in the marketing of the services.
He further he says that the first step to product marketing is to know the product, but knowing services is very difficult due to the intangible element attached to it (1977 p.76). So in defining any service one has to take the prevalent consensus regarding the service know-how. An element of service marketing is managing and differentiating the evidence that reality poses for the service and customers (Soshtack 1977, p. 78). Hence one must not overlook the tangible elements like customer feedback or letters to customers, as they become the evidence with which the marketers are supposed to work. so effective representation of the intangibles in intangible forms can reduce the vagueness in services marketing.
Customers service expectations have two levels: desired and adequate. The desired service level is the service the customer hopes to receive. The adequate service level is that which the customer finds acceptable. It is in part based on the customers assessment of what the service will be , that is, the customers predicted service . Separating the desired service level from the adequate service level is a zone of tolerance. Customers adequate service expectations seems to be influenced more by specific circumstances and are therefore more challengeable than their desired service expectations. The most important factors susceptible to influence customers adequate service expectations are the number of service alternatives customers perceived and emergency and service failure situations (Parasumaran, Berry, Zeithamel, 1991, p. 43). If customers perceive that they have alternative suppliers from which to choose, their zone of tolerance is likely to be smaller than if they dont feel they have this flexibility. Emergency and service failure situations tend to raise customers adequate service level temporally thereby narrowing the zone of tolerance.
Service Characteristics
The different characteristics of service as named in the earlier section are discussed in depth in this section. These characteristics of services make the marketing of these intangible products easier as well as tougher, but it provides a clear understanding of the concepts. So the different characteristics of service are as follows: Reliability implies that customers expect the services providers to have the ability to perform the desired service dependably, accurately, and consistently. This involves keeping the service promise and the reputation. Tangibles are the way the physical facilities, like equipment appearance of personnel and the communication materials, are used by customers to judge the service. Tangibles influence service quality perceptions by offering indirect clues about the nature and quality of the service itself, and indirectly, by the usage of physical aspects in the production of service. The customers expect all these to be like they are promised and have the quality they appreciate.
Responsiveness, meaning that customers appreciate the willingness of services providers to provide the service promptly and efficiently. To be responsive to customers means help them keeping informed, buying and post buying, too. Assurance is caused by the employees, knowledge, courtesy, competence and ability to convey trust and confidence in customers. Every customer believes the ability must be doubled by trust. Empathy implies the customers desire to be very well understood by services providers because of which they expect the provision of caring, individualized attention, speak to them in the language they can understand and listen to them. Thus, they expect the provision of caring, individualized attention, speak to them in the language they can understand and listen to them (Buttle 1996 p.9). The service sector faces problems of service failures, problems with customer service, customer satisfaction, customer management, complaint handling, complaint resolution, feedback, customer relationship management, service recovery, and service quality. Since customers become very demanding of service providers the onus comes on the staff of the organization to deliver it.
The problem that is usually encountered by a service provider is standardized and personalized services and a third problem is managing a large number of services provided in a specific organization. These are common problems that are encountered in the hospitality industry. Singapore Airlines faces such problems. Known for its excellent services in the airline industry it often faces the above problems mainly due to very high customer expectations that are believed to change their expectations on the basis of the brand and due to comparison with not only other airlines but other industries too. One of the problems that the service sector as a whole has is consistency. So Singapore Airlines tries to master the above-mentioned problems by creating a wow effect and anticipating customer needs. In order to understand the customers better, Singapore Airlines maintains a very elaborate feedback mechanism, right from the front-line staff so that they can understand the pulse of the customer needs. Complaints are taken seriously and continuous training of the staff, eye for details, motivating the ground staff, etc. ensures a consistent service delivery (Wirtz & Johnston 2003, pp. 10-16).
The service quality has a particular meaning for the buyers decision. Thus, the service provider must identify and understand what quality means for the service customer. As was identified by Mayo Clinic in Arizona that service quality is an inevitable ingredient to achieve business excellence in the health industry, especially when the service provided is so critical to the customers. And in doing so the first thing that needs to be kept in mind in the doctor-customer relationship for health service, to a large extent, depends on the trust that customers have in the service provider (Frey, Leighton, and Cecala, 2005 pp. 40-41).
Service Encounter
Service organizations have to carefully monitor and manage their customer satisfaction. The service encounter, in particular, can play a prominent role in determining customer satisfaction (Gremler & Bitner 1993, p.34) Service encounter satisfaction is transaction-specific. Service encounter satisfaction is related to overall customer satisfaction: overall satisfaction is driven by satisfaction from a series of service encounters. Figure 1 illustrates our conception of the service encounter as a core task surrounded by the customers psychological experience during the transaction (Chase & Dasu 2001).
According to Chase and Dasu, some aspects which were important to understand and handle customer encounters were understanding emotions, sequence effects, duration effects, and shaping attributions. (2001). Emotions are both an input and an output of an encounter. Creating a good experience requires understanding what triggers different types of positive and negative emotions. This allows managers at an aggregate level to develop an emotional platform and at a tactical or process level to identify stages of the systems that are likely to engender strong emotions and to proactively manage them.
Most service experiences consist of a series of events that occur over time. The lay tendency is to focus on a strong start and assume things will take care of themselves as the service encounter unfolds. A big question is how do service marketers make positive events seem longer and negative events shorter in retrospect? There is some evidence that the greater the number of discrete segments that are perceived to the customer, the longer the process appears. Thus for an amusement park visit, several shorter rides make the day seem longer and more enjoyable than a few longer rides, even though the time spent actually riding was the same. In a call center, more steps and options create the perception of the interaction being longer than it actually is. Every service outcome contains the potential for placing blame or claiming credit. Attribution theory provides insights into how people make these judgments. For service encounter design, it is important to find ways of conveying upfront what is the customers responsibility without damaging their self-esteem.
Customer behavior and service setting
The servicescape is an important part of service marketing. Though services are intangible, there are certain elements that make the service tangible and these tangible elements impact the customers decision and satisfaction to a large extent. For instance, in a restaurant, the first thing that we look at as a customer is the ambiance of the place. This helps a lot to shape our perception as customers about the place. Again in a salon, we look at cleanliness or atmosphere or the décor that influences or decision to make a purchase of the services that is provided. For example, Disney found out that visitors at the park are more concerned with the cleanliness of the park, which again is a part of the service setting. This will help in shaping the customers behavior in the service setting (Ford, Heaton & Brown 2001).
Customer Service / Service Quality
Service quality is often conceptualized as the comparison of service expectations with actual performance perceptions. Service loyalty, perceived service quality is often viewed as a key antecedent (Dick and Basu, 1994). Service loyalty is more dependent on the development of interpersonal relationships as opposed to loyalty with tangible products (Macintosh and Lockshin, 1998), for person to- person interactions form an essential element in the marketing of services (Surprenant and Solomon, 1987; Crosby et al., 1990). Little empirical research has focused explicitly on the relationship between service quality perceptions and customer loyalty. With regards to behavioral intentions in a services setting, Zeithaml et al. (1996) proposed a comprehensive, multi-dimensional framework of customer behavioral intentions in services. This framework was initially comprised of the following four main dimensions:
Word-of-mouth communications;
Purchase intention;
Price sensitivity; and
Complaining behavior.
According to Bloemer, Ruyter, and Wetzels managers of service firms to nuance the intuitive relationship between service quality and service loyalty and have a richer diagnostic value because both service quality and loyalty are measured at a detailed and specific level. In addition, information on the service quality-customer loyalty link may provide actionable benchmarks that individual firms may use to guide their service policies aimed at securing customer loyalty (1998 p.1099).
Handling complaints and managing service
Handling customer complaints is an integral part of service marketing (Wirtz & Johnston 2003). A proper feedback channel can reduce the tangible element in service s marketing and increasing customer satisfaction. For instance companies like Disney, Marriott, and Southwest Airlines have spent considerable effort discovering the price they pay when a customer leaves unhappy. They do whatever they can to make sure that each customers expectations are met or exceeded. They survey their customers constantly, use mystery shoppers to evaluate the quality of the customer experience, and train their employees to solicit both verbal and nonverbal feedback regarding customer satisfaction levels and assessment of quality. These organizations know that happy customer spread their satisfaction through word of mouth which increases the credentials of the service industry (Ford, Heaton & Brown 2001). They also know that with the proliferation of consumer websites, truly unhappy customers can and will share their unhappiness with countless potential customers all over the world. Organizations must work hard to identify problems and find satisfactory solutions for them quickly.
Managing customer relationship
In understanding a relationship between customer service and service quality it is imperative to understand the services marketing triangle which illustrates the relationships between a company, its employees, and its customers. The triangle suggests three types of marketing activities, each considered essential to the success of a service firm. The first type, external marketing, is concerned with many of the traditional marketing activities that occur between a firm and its customers (e.g. promotion, distribution, pricing). The second type of marketing, interactive marketing, is described by Grönroos (1990) to be concerned with the interactions between employees and the firms customers in services marketing organizations. These interactions termed service encounters, can occur at a hotel checkout counter, at the desk of the receptionist in a dentists office, or over the telephone when making airline ticket reservations. Most of the work on service encounters has been confined to the interactive marketing domain. That is, service encounter research has focused mainly on how customer-contact employees take care of or interact with, customers (Bitner et al. 1990, Suprenant and Solomon, 1987). The third type of marketing in the services marketing triangle is internal marketing. Internal marketing is concerned with the relationship between the company and its employees.
Nagel and Cilliers (1990) maintain that customer satisfaction is the new standard by which customers are measuring business performance (p. 4). Several business practitioners maintain that the needs of internal customers must be fulfilled before the needs of external customers can be met. Bill Marriott, Jr, chairman of Marriott Hotels, argues that employees must be satisfied before external customers will be satisfied. His reasoning is that if these internal customers are satisfied, they will love their jobs and feel a sense of pride in the hotel. This, in turn, will lead to external customers being well served (Dwayne & Bitner 1993).
Conclusion
In conclusion, we may say that service marketing, unlike product marketing, has a lot of problems. But as many scholars have argued that product marketing creates marketing myopia among marketers, service being intangible, has to be more alert and focused to provide consistent services. This essay has shown how service marketing has shaped the world of new-age marketing to provide customer satisfaction and loyalty through consistency, feedback orientation, and focus on customers has helped to shape the services industry and has even made product based companies adopt tools and methods of customer relationship management from these companies. Clearly, services marketing research is not complete and comprehensive and there exists a lot of discrepancies in the theories put forward by scholars, but it is clear that this form of marketing is unique and requires a lot more alertness and vigilance than product marketing.
Reference
Frey, Keith A, Leighton, Jonathan A, and Cecala, Katherine K. Building a Culture of Service Excellence . The Physician Executive December 2005: pp. 40-44.
Parasumaran, A., Berry, L., Zeithamel, V., Understanding Customer Expectations of Service , Sloan Management Review, 1991, Spring.
Buttle, Francis. SERVQUAL: review, critique, research agenda European Journal of Marketing, Vol. 30 No. 1, 1996, pp. 8-32.
Wirtz, Jochen and Johnston, Robert. Singapore Airlines: what it takes to sustain service excellence a senior management perspective , Managing Service Quality, Vol. 3 No. 1, 2003, pp. 10-19.
Shostack, C. Lynn. Breaking Free from Product Marketing , Journal of Marketing 1977.
Dwayne D. Gremler, Mary Jo Bitner The Internal Service Encounter International Journal of Service Industry Management, Vol. 5 No. 2, 1994, pp. 34-56.
Chase, Richard B. and Sriram Dasu, Want to Perfect Your Companys Service? Use Behavioral Science, Harvard Business Review, vol. 79, no. 6, 2001, pp 78-85.
Nagel, P. and Cilliers, W. (1990), Customer Satisfaction: A Comprehensive Approach , International Journal of Physical Distribution and Logistics, Vol. 20 No. 6, pp. 2-46.
Bitner, M. (1990), Evaluating Service Encounters: The Effects of Physical Surroundings and Employee Responses , Journal of Marketing, Vol. 54, pp. 69-82.
Suprenant, C. and Solomon, M. (1987), Predictability and Personalization in the Service Encounter , Journal of Marketing, Vol. 51, pp. 86-96.
Grönroos, C. (1990), Relationship Approach to Marketing in Service Contexts: The Marketing and Organizational Behavior Interface , Journal of Business Research, Vol. 20, pp. 3-11.
Bloemer, Josee, Ruyter, Ko de and Wetzels, Martin Linking perceived service quality and service loyalty: a multi-dimensional perspective European Journal of Marketing, Vol. 33 No. 11/12, 1999, pp. 1082-1106.
Dick, A.S. and Basu, K. (1994), Customer loyalty: toward an integrated conceptual framework , Journal of the Academy of Marketing Science, Vol. 22, pp. 99-113.
Macintosh, G. and Lockshin, L.S. (1998), Retail relationships and store loyalty; a multilevel perspective , International Journal of Research in Marketing, Vol. 14, pp. 487-98.
Crosby, L.A., Evans, K. and Cowles, D. (1990), Relationship quality in services selling: an interpersonal influence perspective , Journal of Marketing, Vol. 54, pp. 68-81.
Zeithaml, V.A., Berry, L.L. and Parasuraman, A. (1996), The behavioral consequences of service quality , Journal of Marketing, Vol. 60, pp. 31-46.
Ford, Robert C, Heaton, Cherrill P, and Brown, Stephen W. Delivering Excellent Service: Lessons from the best firms , California Management Review Vol. 44, No. 1 2001.
In his TED talk, Bob Langert (2019) discloses the stories from his time working in McDonalds management team about how he, together with environmental activists, implemented changes to make the company more sustainable. Nowadays, environmental initiatives are a global trend that is rapidly gaining momentum and changing the work of international corporations. However, in the late 80s, large companies rarely concerned themselves with the protection of animal rights or switching from plastic to paper. Langert (2019) shares how confused he felt in the beginning when he was tasked first with the goal to bring McDonalds from the garbage crisis the corporation brought itself into with non-ecological packaging. It is understandable even now: despite the fact that the topic of environmental protection has been on the rise lately, it is still rather difficult to imagine how such a large company would change.
McDonalds is very well-known for its fast food; the lines of produce, logistics, recipes, and policies have long been established, and implementing changes into them might seem to bring only problems. However, Langert (2019) proposes a rather logical, though not so obvious, decision: to cooperate with the exact same people who contradict the company in the environmental field and see what solutions they might have. While corporate managers understand business and how it works, ecology activists understand what steps need to be taken toward a better world. Langert (2019) provides some specific examples that show how important it is to collaborate on such matters, as they lie on the overlap between business and sustainability. Neither of the sides has the full knowledge of both, but each are experts in their own respective fields, so by coming together, they are able to create a solution that would actually work. I think this approach can be applied to many situations, especially in business; one needs to see the issue from a different perspective to determine the best course of action.
However, I also must note that during my first watch, I was rather confused by the way Langert (2019) seemed to approach the issue. Perhaps this confusion stemmed from the fact that I did not believe that corporations in the late XX and the beginning of the XXI century would be willing to actually collaborate with environmental activists. It would be more plausible to me if Langert (2019) said McDonalds first created a great strategy all on its own. I would believe if he said that critics were pleased with the companys effort enough to be more cooperative in the future, and that is how the friendship between them and the corporation began. Thus, it was actually rather astounding to hear that a McDonalds corporative manager made the effort of actually reaching out to the environmental protection organizations and was supported in all his actions.
I think I could say it gives me hope: if a giant like McDonalds was willing to make a real effort to help various causes in the 80s and 90s, then perhaps other corporations would too? It is clear from Langerts (2019) various experiences that this approach works while they were not able to totally reduce plastic waste or refuse to use meat, their collaborative strategies provided a lot of positive effects. By working together, I believe we can overcome every crisis, and McDonalds example is a piece of real evidence to support that claim. It would be great to see more corporations, both big and small, engaging with environmental protection organizations to develop effective working solutions today and in the future.
Reference
Langert, B. (2019). The business case for working with your toughest critics. TED Talk. Web.
Sephora is international cosmetic products retail store that has its roots in France that was started as a perfume store in 1993. Sephora has experienced rapid growth in the past decade in terms of the number of retail outlets it has on the back of innovative marketing practices that are unique and original.
Identify marketing services components of the situation
With regards to the marketing services components at Sephora, the firm has faced various gaps that are discussed as follows:
Gaps1: The Listening Gap
The fact that Sephora has innovative design layouts and the fact that products are arranged alphabetically for the ease of their consumers, the company has done no research to prove that these indeed are the needs of todays cosmetic products buyers.
Evidence can be drawn from some of the comments to the case study on Sephora, where customers and employees alike are not very happy with the concepts being followed at Sephora. This indicates that while fancy layouts and housing a plethora of brands might be a perceived requirement of their consumers, Sephora really is trying to put its ideals of retailing into good use without paying any heed to what the actual consumers want.
Therefore they really dont know what is going inside the polished consumers head, someone who has tried all the brands and is comfortable and wants to buy only one. Therefore for the experienced cosmetics shopper who just wants to fetch a particular lipstick or nail color, the arrangement and accessibility are of no use as they can merely ask for the required product at the counter. Moreover, ladies want the opinion of others when they are buying make-up to gauge how they look to others rather than to themselves. In that, they require the need of salespersons who are available at normal stores at the drop of a hat.
Additionally, many women shoppers who are there to buy make-up or toiletries for themselves have a special bond with a particular salesperson, whom they look up to for fashion advice and the latest trends. Also because the women would like to know how to use some of the new offerings, or how to best use a product to highlight some of their facial features, they want the salesperson who is regular for them to be around.
With regards to upward communication, as one ex-employee put it, the company has not been having much upward communication and that is why its lowest level employees are being taxed for something that they did not have any control over -absence because of the hurricane. This indicates a lack of understanding by the higher management regarding the conditions of all its employees and this is where the gap burgeons still.
They also have insufficient relationship focus as Sephora doesnt have salespeople that customers can feel a bonding with, and come over because of. Each customer, even if regular has an impersonal experience of shopping with no one knowing the difference between a regular and a new customer.
Gaps 2: The Service Design and Standards Gap
With regards to the service and design standards gap, there indeed is a mismatch between what the customers driven standards are and what the company has on offer. While there is no gap where the service design is carefully thought out and balanced, there indeed exists a gap where the opinions of the customers are not taken into account. How can they be, given that shopping at Sephora is an impersonal experience in the minimal amount of human contact?
Gaps 3: The Service Performance Gap
While there exist a minimal number of salespeople called cast members the focus is on providing free makeovers and theatrics by the sales staff that are there to create drama and this is not what experienced shoppers appreciate. While there are no seemingly big issues with the HR policies and the channel members there indeed are problems where the store runs out of stock, as mentioned by two customers in the opinions to the article. Therefore there is a supply/demand gap as Sephora is trying to house as many brands as it can without stocking on the various extensions of the products and the hues that are so important in the make-up industry.
Gaps 4: The Communication Gap
There seem to be no communication gaps between departments, there is a mismatch between what the store promises and what it delivers. While it does focus on giving consumers the best possible shopping experience with freedom, they are not even taking the customers views into account.
Critique
The situation, insofar as the layout and design are concerned has been well-handled, but in the times to come, Sephora must be careful to take into account what the customers actually want in a cosmetic store. The fact that it is a novel concept and the attractive store interiors bring in customers, the speed of expansion might give a wrong signal of the companys success. This is because people might be going to the store for the novelty and uniqueness of the shopping experience, and once this wears off, Sephora could be in trouble to gain traffic back to its stores.
According to Porter (1998, p.2), Competitive advantage is the ability of the firm to maintain its strong position against its competitors and continue making profits. Competitive advantage is gained by a firm that can beat its rivals in profitability. According to Porter (1998, p.2), cost advantage and product differentiation advantage are the main types of competitive advantage of the firm. Cost advantage exists when the firm can offer the same quality as competitors but at a relatively lower cost. Differentiation advantage on the other hand is possessed when the firm is able to deliver quality services to the customers that exceed that of the competitors. Competitive advantage therefore enables the firm to deliver superior value to its customers and make superior profit for itself in a market where there is fair competition (Porter 1998, p. 3). The two terms can be referred to as positional advantage describing the position of the firm in its industry in delivering value at lower cost. A firm uses its resources and capabilities to build up competitive advantage in its industry.
In this assignment, competitive advantage is discussed in the context of aero engine and global retailing markets. The assignment seeks to compare and contrast the competitive advantage in aero engine and global retailing markets. The aero-engine market deals with aero engines that provide impetus for aircraft or enables the aircraft to propel. Global retailing market refers to the market dealing in the sale of products on retail basis. This is currently dominated by supermarkets with Wal-Mart supermarkets in US taking the lead.
Global retailing markets according to the Office of Fair Trading (2006, chap.2), the global retailing markets are basically dominated by supermarkets. Wal-Mart supermarket in the United States is the market leader in the retail market worldwide. There has been stiff competition that has compelled the retail market participants to look for means of increasing their competitive advantage. According to Open2.net. (2005, p.1), retail markets strategy for competitive advantage aims at building sustainable competitive advantage. These strategies may build more or less sustainable competitive advantage.
Sources of more sustainable competitive advantage
Location of the retail companies according to Competition Commission (2000, p12), this is one of the most important sources of competitive advantages in retail markets. Where the firm has a high density of stores, it is able to create awareness to the people about their products. It dominates a place by installing many stores thus making it impossible for competitors to enter the market because they cannot find a good place to locate themselves. People around will only know the company that has many stores in their area. The other rivals will find it hard to venture into the market because there is no space left for them.
The other source is customer loyalty according to Frontier Economics (2000, p. 9), customer loyalty goes beyond liking one retailer to another to include customers being reluctant to support and shop from the competitors. Customer loyalty in the retail market is built through creating a strong store brand that will win the confidence of the people. It can also be built by coming up with a clear and concise positioning strategy that will help cover the market fully. Customer loyalty programs are also used to build customer loyalty. These programs create emotional attachments with the customers and make them have more confidence in the company. The main approaches to achieving customer loyalty are location, unique positioning, excellent customer service, unique merchandise and having a database with information about customers like what they buy, when they buy, how much they spend and how much they spend and so on.
The other source of competitive advantage is the ability of the company to offer excellent service to the customers. As stated by Chandler & Paalzow 2006, p.5), delivering high-quality customer service helps build competitive advantage. The customer service executives need to be qualified and highly trained in order to deliver quality service to the customers. They should not be overworked. Giving them high wages and training them does not guarantee the customers quality service. The working environment is made conducive in order to motivate them. They should not be expected to work like machines because they are not them. A company that treats its retail sales associates well gains competitive advantage because it will deliver quality service to the customers (Porter 1998, p.9). For retail businesses like supermarkets, their employees are also their customers. They should therefore be treated well as customers and employees.
Exclusive merchandise is the other source of competitive advantage for retail markets. The products of the company should de of good quality and apt to the customers. When the customers are satisfied with the commodities of one retailer, they always buy from that retailer and not from the competitors. Customers will believe that the retailers commodities are the best. This is a competitive advantage that the retailer will enjoy continually if they maintain excellent merchandise.
The other more sustainable source of competitive advantage is the low-cost supply chain management of the retailer. If the supply chain management is consistent with low cost, the retailer will be able to charge a relatively low price. This will create a sustainable competitive advantage over the retailers competitors. Customers will always buy where they are charged a low price for quality products.
A company that has a strong information system will have a more sustainable competitive advantage. A good information system ensures efficient flow of information from the vendors to the retailer stores. It enhances distribution of commodities from the vendors to the stores where customers can fetch them. A good information system is also cost-effective, ensures better services to the customers and will result in reduced cost of the product. Customers are also assured of getting commodities from the retailer any time they want them. A firm whose formation and distribution system outdoes that of the competitors will have a competitive edge over them. Customers will enjoy reduced prices and the retailer will make more profits because of the reduced cost of commodity distribution.
There is also strong buying power with vendors or strong relationships with the vendors. According to Paglucia (2006, p.2), a good relation with vendors improves efficiency through proper coordination and low costs associated with it. It can be enhanced through Electronic Data Interchange and collaborative planning and forecasting to mitigate inventory and distribution costs by ensuring on-time delivery. This will translate in to company charging low prices thus defeating the competitors in market share. Proper coordination with the vendors will also ensure sale of desirable brands. It would offer the retailer special treatments like early delivery of new styles in order to satisfy customers.
The other source of competitive advantage possession of committed employees who are committed to serving the customers the best way they can. Employees play a major role in building up a sustainable competitive advantage. The human resources management should aim at recruiting and retaining talented employees who are capable of serving the customers better and handle their complaints professionally. Organizations develop organizational culture that ensures the best employees are inducted (Davis 2006, p.12). Firms with the best employees have a competitive edge over their competitors.
Less sustainable competitive advantage-main sources
These may include better computes, more merchandise, lower prices, more advertising, cleaner stores, more employees and more promotions among others (Paglucia 2006, p.1). Most of these sources are a result of sources of more sustainable competitive advantage. Price is the key in all these sources. Other factors may not build up competitive advantage if high prices are still charged. They complement low prices.
Sources of competitive advantage for aero-engine markets
According to Buxton and colleagues (2006, p.12), this market is quite different from the retail market in some respects. Retail markets mostly deal with manufactured products but the aero-engine markets have manufactured as the key players. The products in this market can be substituted for the other. So if one company raises the price of its products, consumers will buy from the competitors an alternative product that will serve the same purpose. Most of this industry is publicly owned as opposed to retail markets that are basically owned by private sectors. There is therefore government intervention in aero engine market. Managers in this industry form competitive strategies based on some factors. These factors guide the managers on the strategy to take in order to maintain the firms competitive position in the market (Bramham et al 2004, p. 2). These factors include close substitution of products, customers bargaining power, the vendors influence, and the threat of new companies joining the industry among others. These forces are the ones that assist in developing competitive strategies. The competitive strategies adopted by a company are the sources of competitive advantage (Open2.net 2005, p.1).
When a company in this industry possesses a strong base of loyal customers, it will have a competitive advantage over others. Customer loyalty is built by satisfying the customers needs and desires that make them comfortable in buying from that company. The company also has to strategize on how to deal with high bargaining customers so as to satisfy them without hurting the companys profitability. This is because these customers can cause the prices to go down because of their bargaining power. The company needs to have salespersons with high negotiation skills to deal with these customers.
The suppliers of some products in the industry can affect the companys competitive position in the market. This is because they can raise the price of materials and can also reduce the quality of products. The firm creates competitive advantage in this case by choosing suppliers that will charge a fair price and supply quality products.
Another source of competitive advantage where a company pursues exclusivity links to the distribution networks in order to shut out competitors products. Buxton and colleagues (2006, p.9) stated that this takes the form of the firm buying off the main distributor in the industry thus shutting out rival products in the industry. The rival companies will lack materials to manufacture some products.
The other source of competitive advantage is restricting new entrants from joining the industry. This is where a firm defends its competitive advantage by restricting proliferation of business entities in the industry. This is done by imposing large financial requirements, economies of scale and product differentiation all aimed at locking new firms out of the industry. The firm maintains its competitive advantage if no new companies join the market. New companies if allowed into the industry will increase competition and make old firms lose their strong position in the market.
According to Doganis (2005, p.11), Accumulation of experience by a firm is another source of competitive advantage. This is where a firm has vast experience in making a certain product. The firm is therefore able produce quality products faster than others in the industry. Customers will therefore prefer such an industry because they will be able to get what they want faster than in other companies. The firm is also able to produce at a low price than others because of efficiency. With this low cost of production, the firm will charge a relatively low price than others. This gives the firm a competitive advantage over others in that industry. Experience is therefore a source of competitive advantage.
Economies of scale are another source of competitive advantage. A firm that is able to produce in large quantities than others has a competitive edge over others in the industry. Producing in large quantities means that a firm is able to serve more customers than others depending on the size of the market. There is also the low cost associated with large volume production. Low cost of production will enable the firm to charge low prices in the market than other firms for the same product. This means the firm will fetch a bigger market than others. Economies of scale can make the firm become both market and price leader (Doganis 2005, p.10).
The other source is investing in intellectual property by a firm. This is done through use of patents and other legislative protection to protect the brand. Companies can tend to duplicate other companys products. Patents will serve at protecting the companys investment in a certain product. Companies will not duplicate a patented product. This gives a company a competitive advantage in that it is the only one that produces certain product or brand. Others can only produce a similar product but with a different name and some specifications that are covered under the patent.
Another source is where a firm dominates a niche market leaving no room for others. In this case, the firm captures the whole market in a certain region and makes it hard for others to venture. This strategy alone may not give the firm q competitive advantage over others. This is because other firms can come in, charge relatively low prices for the same product and win the market Liehr et al 2001, p.16). A firm applying this strategy to win the market must also be prepared to lead in other respects like price.
The other source of competitive advantage in aero engine markets is pursuing strong branding and brand maintenance. This calls for heavy investment in advertising in order to maintain brand strength. This strategy must be complemented with other factors because other firms can also advertise their products. The company must be more strategic to beat others in advertising; in terms of where to advertise and how to advertise.
According to Ibisworld.com (2010, p.1), superior technology can also cause the firm to have a competitive advantage over others. Technology enables the form to be more efficient in its operations both production and management. The firms level of technology employment stands it in good stead in a competitive environment. Efficient application of technology gives the firm a competitive edge over some other firms in the industry. Technology can also be used to lower to produce products at a lower cost than otherwise. Low cost of production will mean relatively lower price of the product in the market.
There is also customer focus as a source of competitive advantage. This entails recognizing customers with specific needs and serves them as appropriate (Kotelnikov 2001, p.18). Customers are the main target in every market because they are the core reason for the companys existence. They are the consumer of the companys products. According to David and colleagues (1991, p.13), companies have therefore to direct their focus to the customers who will buy their products and help them recover their cost of production. For instance, Aero-engine companies like UKs Rolls Royce spend large amounts of money in research and development and they have to look for means to recover them. This company and others like USs General Electric have to look for a big market for their engines. This is the only way for them to recoup the costs incurred. The purchasers of expensive aircraft and companies have to look for market internationally. A customer focussed firm will have a competitive advantage over others.
Conclusion
The two markets, the global retailing market and aero-engine market have most of sources of competitive advantage similar. The only big difference is that price reduction as a source of competitive advantage differs because the pricing strategy of aero-engine markets is influenced by macro factors like government intervention. In retail markets, there is no government intervention. Customer focus sources will also differ in that retail markets mostly have customers with similar needs and desires but aero-engine markets have some customers with specialized needs.
Reference
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Davis, P. 2006. Spatial competition in retail markets: movie theatres. Santa Monica: The RAND Corporation.
Doganis, R. 2005. The airline business, 2nd edition. New York, Routledge
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Liehr M, Grobler A, Klein M & Milling PM (2001), Cycles in the Sky: understanding and Managing business cycles in the airline market, Systems Dynamics Review, Vol 17, No 4, pp 311 332
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There are many different examples of entrepreneurship examples in the modern world that show excellent results in their activities. One such example is such a famous personality as Mark Zuckerberg. This paper investigates and analyses Mark Zuckerbergs entrepreneurial profile, the CEO and co-founder of Facebook and the youngest self-made billionaire. He attended Harvard University, majoring in computer science and psychology and in 2004 he developed Facebook and dropped out of the university to become fully dedicated to his invention. This paper discusses how Zuckerberg discovered and exploited his business opportunity that led to the colossal creation of Facebook. Studying this Facebook founder profile will help determine the qualities and features of effective and successful leadership and company management.
Discovery theory suggests that prior knowledge and expertise will enable individuals to find new ways to combine information and discover opportunities. Zuckerberg demonstrates characteristics of expert leadership and advanced knowledge of the related field of his business (Tobak, 2011). This characteristic is considered a critical asset in discovering entrepreneurial opportunities because it relies on the entrepreneurs prior knowledge about products and markets (Alvarez, 2007). At the age of 12 he created Zucknet , a messaging program for communication with his family (Hartmans, 2017; Borgogni, n.d.). As a student at Harvard, he created Facemash-a platform where students could vote on their attractiveness using his algorithmic creation. Researchers emphasized that beyond economic strategies, entrepreneurs also employ strategies such as social networking to recognize and exploit entrepreneurial opportunities (Companys & McMullen, 2007). Hence, Zuckerbergs expert leadership was manifested through his ability to combine his programming skills, creativity and utilize his understanding of social psychology. He shaped his environments needs and created products that were initially embraced first by his immediate environment, later viewed by the entire world through his future creation of the Facebook platform.
In the process of discovering this fantastic business opportunity time, he adopted an all-inclusive model of the entrepreneurial process that was framed by personal, sociological, organizational, and environmental factors (Bygrave & Zacharakis, 2007; Kirzner, 1997). His high sense of ambitiousness and ingenious innovativeness are two characteristics that merged successfully with his ability to determine social and technologies, which are considered as the Silicons Valley ideology of infectious optimism (Barbrook and Cameron, 1996). Openness to experience reflects a persons risk-taking, learning, and creativity.
People with an elevated level of openness can be described as creative, innovative, imaginative, reflective, and non-traditional, while those with low openness are often described as old-fashioned, narrow-minded, and lacking analytical skills (Zhao & Seibert, 2006). Zuckerberg famously quoted, In a world thats changing really quickly, the only strategy that is guaranteed to fail is not taking risks. ( Facebooks Mark Zuckerberg Insights for entrepreneurs , 2011). In line with the Internet trends, his innovative character and high aptitude for risk were critical factors that led to the groundbreaking discovery of Facebook.
One of the most pronounced successful steps that Mark Zuckerberg took was the adoption of new opportunities as a way to convey a commitment to the market. More specifically, his company Facebook has become a pioneer in the world of social networks. The source notes, in order to gain the greatest advantage and achieve long-term success, firms need to start operating with investments in full-scale operations (Choi & Shepherd, 2004). However, such activities may not always provide the organization with a specific place in the market (Dimov, 2012). An essential condition is maintaining motivation and confidence that the audience will like the product. Moreover, it is crucial to have faith in the high-quality use of the technologies used, the qualifications of the hired staff and to provide the company with support from interested parties.
Therefore, in addition to accepting the title of pioneer, Mark Zuckerberg can also be described as an excellent communicator and manager. Thus, he can make balanced and correct strategic decisions and at the same time listen to employees and all interested parties. The ability to ensure effective communication and the achievement of goals with its help also contributes to creating the best working conditions in various departments of the company. It is also noted that these valuable qualities help the creator of Facebook to increase the number of opportunities not only for his organization but also for its followers and the fulfilment of their goals.
Achieving the set goals and objectives is possible with certain leadership qualities. It is known that one of them is a sense of purpose (Gio and Yazdanifard, 2015, p. 2). This characteristic makes it possible to find many essential and necessary partners, investors, customers and employees. In addition, a leader with this aspect of personality can effectively shape the companys strategy, predict their outcome and lead to positive results. The sense of purpose is inherent in Zuckerberg and distinguishes him from other managers, as it helps him communicate with a large number of people from different parts of the world. This strategy of his globally popular Facebook makes it possible to provide a valuable and helpful product to more customers at once.
In conclusion, Mark Zuckerberg has been one of the worlds leading entrepreneurs for the past 20 years. His impressive start as a Harvard student, to business entrepreneur, then to the creation of Facebook has paved the way for many following his lead. His creativity, along with leadership, has shown the world the power of a modern-day entrepreneur. Changing the market by introducing the first social media platform has reshaped how other companies and organizations operate. The factor of risk-taking, innovation, and reshaping the internet landscape has led to a thriving new market. While many new social media platforms have been created since the start of Facebook, the expectation of entrepreneurship has been redefined.
Dimov, D. P. (2012). Entrepreneurial opportunities. Enterprise and Small Business: Principles, Practice, and Policy.
Hartmans, A. (2017). Mark Zuckerberg turns 37 on Friday. Heres a look into the life, career, and controversies surrounding the billionaire Facebook CEO. Business Insider. Web.
Kirzner, I. M. (1997). Entrepreneurial discovery and the competitive market process: an Austrian approach. Journal of Economic Literature, 35(1), 60-85.
Zhao, H., & Seibert, S. E. (2006). The big five personality dimensions and entrepreneurial status: A meta-analytical review. Journal of Applied Psychology, 91(2), 259.
Subway is a fast food franchise that has quickly conquered the world in the last 56 years. The goal set by Subway in every market it comes to is to become a leader in terms of the number of establishments and the preferences of local consumers. The concept of Subway restaurant chain is a franchise with local entrepreneurs who have received specific training in the franchise business management program. Thus, the company contributes to the development of the regional economies of many countries, because investments in real business allow entrepreneurs to securely place their income in their regions. Dominko (2021, pp. 1) even states that Subway is Americas largest fast-food chain by the number of locations, . Subway franchise is not exclusive a separate franchise agreement is concluded for each restaurant, so a new franchisee can open a restaurant even in the city where Subway restaurants are already open. Entrepreneurs are provided with information support based on more than fifty years of experience which gives them the ability to advertise their restaurant in all countries according to a single advertising and marketing plan.
However, such a strategy has proven to be challenging for franchisees throughout the years. The company exists on the franchise fees and royalties, and it has the legal right to set the rules by which the franchisees are expected to operate their shops. Recently, the company released a new version of their franchise contract agreement that many franchisees had called draconian . New contract provides Subway with the rights to control operation hours, places on the franchisees the requirement to participate in all promotions, and bans any and all negative feedback on the company. This contract lasts now 20 years, and if the franchisees do not want to accept it, they will be required to increase their royalty payments from 8% to 10% percent. In 2020, Subway closed 1882 of its stores, and the franchise opening cost has grown to $207,050 $476,900, states Luna (2021). These changes are related to the current state of Subway business after Fred DeLuca, the companys confounder and CEO of 50 years, died in 2015, the business has experienced significant management troubles.
The situation has angered the franchisees, as they are forced to operate their businesses now by much stricter rules. Ji and Yoon (2021) also suggest that organisational competitiveness comes from the utilization of strategic human resources nowadays, which the company seems to operate poorly. This poses a significant problem to Subway both in USA and other countries, as well, especially in regard to the companys steady decline in shop count and profits in the last 5 years.
Active SWOT Analysis
Environmental analysis serves as a tool for entrepreneurs to monitor external and internal factors of a business in order to anticipate potential threats and new opportunities. Specifically, analysis of the external environment allows an organization to timely predict the emergence of threats and opportunities, and develop situational plans in case of unforeseen circumstances. Simultaneously, the internal analysis helps the managing lead create a strategy that will allow the company to achieve goals and turn potential threats into profitable opportunities.
SWOT analysis remains one of the most effective tools in strategic management. The essence of the SWOT analysis is to assess the internal and external factors of the company, and evaluate the risks and competitiveness of the product in the industry. Gürel (2017, p. 994) claims that while external analysis focuses on the environmental threats and opportunities facing an organization, internal analysis helps an organization identify its organizational strengths and weaknesses . However, one needs to prioritize the most important analysis factors, giving them more focus in order to avoid the data dispersion. To determine the degree of dynamism of the external environment of the company, it is necessary to consider how it affects the activities of the Subway company.
The external environment can influence the company by both direct methods and indirect ones. The direct impact environment includes several factors such as suppliers, customers and competitors. In turn, the environment of indirect impact includes the general state of the economy, scientific and technological progress, socio-cultural changes and the political situation in the country. Despite the fact that there are several large players in the fast food market, the chances of new companies emerging are quite high. This risk is justified by several indicators. First of all, the barriers to entry into the industry are practically absent for new Subway restaurants, as the franchise strategy has lower requirements for opening a store. Also, the term of the initial investment is still not too high, as, for example, it costs up to 2 million dollars to open a McDonalds store (Olita 2020). Moreover, due to the openness of this service sector and Subways overwhelming influence, there is full accessibility to various distribution channels for new franchisees.
Subways Strengths
While facing an undeniable decline in the last several years, Subway still has a set of significant advantages that allow the business to stay among the leaders in the fast food market. Fist important strength of Subway is the franchising structure of its business, which provides a sustainable protection from such expenses as operational costs, and production- and labor-related risks. Moreover, this strategy also allowed Subway to quickly achieve a global level of operations: according to official Subway website (2021), there are 21,000 franchisees with 43,600 stores of Subway worldwide. In 2017, Subway was ranked by Forbes as 92nd in the Worlds Most Valuable Brands rating (Forbes 2021). This provides a steady and stable base for future development. The wide assortment of products offered by Subway is another advantage of the business, as it allows the franchise to operate simultaneously in different markets. Moreover, Subway branches tend to be significantly smaller than similar fast food chain branches and require significantly fewer staff and equipment. This makes them profitable in small towns or other places where opening of a McDonalds store does not pay off.
Lastly, Subway uses an advanced marketing strategy, maintaining a steady presence on every advertising channel: social media, TV, podcasts, and even radio. Horst and Murschetz (2019, p. 1) highlight that the convergence of strategy and entrepreneurship adds to organizational success through developing visions and facilitating strategic planning. An analytical approach is used to ensure the relevance and efficiency of every marketing move, and the company uses the whole variety of modern advertising tools to reach its customers.
Subways Weaknesses
The main current weakness of Subway is that its continuous expansion in the last 50 years led the business to an unpleasant situation. Due to the historically low initial investment costs for example, $139,550 to $342,400 last year (Luna 2021) the overwhelming amount of the shops have caused a collapse in sales. Many stores were too close to each other, generating a too strong competition inside the company. The sales continued to decline in the period from 2015 to 2021. Olito (2020, pp. 35) adds that in 2019, Subways sales dropped $210 million from the previous year to $10.2 billion, and the company closed another 1,000 stores. This was one of the outcomes of DeLucas death which prompted significant changes in the managing lead, many of which were unsuccessful in the end.
The recent changes in the contract rules also prompted many of the companys franchisees to sell their stores by a low price, as well as raised heated discussions in the media. Many of franchisees have spoken up about the situation, and discouraged other potential store owners from taking up Subways offer. Taylor and Luna (June 10, 2021, pp. 22) state that franchisees could have to pay three years worth of royalties and advertising fees if they leave the system prematurely . Some sources speculate that the new contract is an attempt to make Subway a more appealing buying target. The rumors claim that the current owners of the business, Elizabeth DeLuca and Peter Buck, want to sell the company due to its inner structure continuously crumbling after Fred DeLucas death. A constant stream of scandals and complaints associated with Subways proves to have an overall negative effect on the business.
Subways Opportunities
Subways current opportunities remain ambiguous in nature. Recently, the company has performed a brand refreshing Eat Fresh Refresh campaign to boost the sales. According to Subways press release (2021, p. 1), the top-performing quartile, representing over 5,000 restaurants, experienced a 33% increase in sales and the top three combined quartiles, about 16,000 restaurants, averaged an increase of nearly 14% . Thus, it is safe to say that the company still has potential for further market expansion: for example, with more vegan options and overall portfolio expansion. Additionally, the COVID-19 pandemics has showed the populations need worldwide for food delivery, therefore, another opportunity lies in establishing of a steady delivery service.
Subways Threats
The innovations of Suzanne Greco, who became the CEO of Subway after the death of her brother Fred DeLuca, did not provide much in terms of companys development. In 56 years of its existence, the companys menu almost never changed, and many consumers became tired of the same food over the time. The constant closing of shops and decline in sales Subway experiences nowadays are a result of many factors, the main of which were the business aggressive expansion and Fred DeLucas authoritarian method of leading the company. Today, the main competitors of Subway USA are McDonalds, KFC, and Dominos Pizza, each of which have proven to respond better to the changing needs of population. For example, McDonalds has more than 13,000 drive-thru restaurants against Subways only 600 (Olita 2020). Kentuckys Fried Chicken (KFC) has also began to introduce more healthy food choices, offering the customers vegan alternatives.
It can be concluded that the company needs a new strong strategy for further development, as it is clear that todays Subway way of operating franchise does not reflect the real market situation. Currently, Subway lacks significant advantages that would make its products more desirable to customers than the competitors. Moreover, companys flawed politics in regard to treating their franchisees also does not work in Subways favor.
Active Strategy
An active change strategy is now necessary for Subway. According to Taylor and Luna (April 10, 2021, pp. 7), corporate employees and Subway franchisees state that a lack of long-term vision has persisted, and that Chidseys Subways current CEO hired in 2019 clearest priority is cutting costs . The changes should begin within the company new products and offers should be introduced, seeing as the recent brand refreshing campaign was fairly successful. Well-designed marketing communication strategy established within the company could gently introduce the renewed menu that would provide a competitive advantage to the company. According to Williams et at. (2018, p. 43), the true benefit for a firm appears to lie not in any one particular action but in a conglomeration of strategic thinking approaches . Additionally, the regulations related to the franchise operation should be reassessed; currently, they harm the franchisees and repel new potential store owners.
Financial Performance
Although currently, Subway is rightfully considered one of the largest quick-service networks across the US, the revenue of the company remains not as beneficial. Hence, over the years 2015-2019, the companys sales have decreased by nearly $1 billion (Figure 1). As of now, the company has claimed a $10 billion annual revenue rate, demonstrating a steady drop. The company posts no public data online as far as financial performance is concerned, so it is impossible to create a real-life comparison of the revenue before and after the pandemic.
Figure 1. Subways sales across the US (in billions)
As far as the competition is concerned, the Restaurant Businesss Top 500 quick-service restaurants list placed Subway in the sixth position. The major marketing competitors in the field include McDonalds, Starbucks, Taco Bell, Wendys, Chick-Fil-A, and Burger King. While the latter companies generate very close sales outcomes over the year, varying between $10-11 billion, Starbuckss 2019 US sales were allegedly twice as high, whereas McDonalds sales constituted nearly $40 billion, with $98 billion of global sales (Top 500, 2020):
Figure 2. Annual sales across the market
One of the potential reasons for such a tendency is Subways chosen strategy of cost leadership in the segment. For example, when taking Starbucks, the price range for the products presented is relatively higher compared to the market. However, with the product differentiation and marketing tactics, the revenue of the network has increased significantly over the past two years, constituting nearly $29 billion in revenue:
Figure 3. Starbucks annual revenue rates
For this reason, it can be rightfully assumed that the competition on the market, financially speaking, is alarming for Subway, as there is a demand for rapid reconsideration of the companys revenue and marketing strategies. The issue is especially relevant in the context of the ongoing pandemic, as fast-food chains tend to lose money on delivery commissions paid to online food delivery services like Uber Eats and Door Dash. According to the average rates, Subway tends to pay from 15% to 30% of delivery commission per each order placed on the delivery app. Such an obstacle is only one of the few obstacles in terms of entering the quick-service market. Other market entry challenges include:
Procurement challenges. Cost efficiency is key in quick-service industry, and small services tend to have lower probability of cost-efficient raw goods procurement, creating a challenge of gaining revenue and establishing competitive prices;
Location. The proximity of the fast-food chain is one of the most evident competitive advantages of such companies as McDonalds, Subway, and Starbucks. The new entrants inability to afford locations with good customer passability creates an obstacle in sales and cheaper marketing;
Product differentiation. The decades of quick-services existence transformed the industry into a full-scale restaurant industry with various options and customer preferences. For this reason, the creation of a product competitive to an established brands is highly challenging and cost-demanding.
Despite these obstacles, the market of quick-service remains overwhelmed with new entrants, as opening a small business is relatively easy and convenient tax-wise. However, small restaurants are of no direct competition to large companies like Subway, and the major competition is tracked between large enterprises. One of the most evident economic features of a product in a fast-food industry is high price elasticity. Fundamentally, price elasticity of demand (PED) is a measurement that shows how a slight change in pricing may change customer behavior and consumption of a product. For example, the price of a standard Subway breakfast comprised of bacon, eggs, and cheese is nearly $4. A very similar McDonalds menu position costs nearly $3.5, given that the portion is much smaller. However, once Subways price increases by even 15%, the customers retention rate may be affected. The average customer of a fast-food chain is price sensitive yet not highly loyal. For this reason, having chosen the strategy of cost leadership in the market, Subway enforces the price elasticity for the segment, as they make it their distinct feature in the food industry.
Up to date, Subway has not been subject to the competition investigations. McDonalds, one of its primary rivals in the market, however, has a series of competition investigation inquiries worldwide on the matter of breaching antitrust laws (Chee, 2021). Fundamentally, antitrust laws are created to promote competition in the market and prevent the markets from monopolization. Subway has been exploiting competition rather than seeking illegal ways to infringe the industry. It remains rather challenging that Subway has no explicit data on annual revenue and long-term financial performance. However, based on the revenue and sales data over the past five years, it becomes evident that Subway has a negative revenue tendency followed by competition, pandemic context, and lack of marketing incentives. In order to change the pattern, the company needs to closely examine its opportunities.
Subways Perspectives
Currently, Subway still has a strong position on the market, maintaining its place among the leaders of the fast food industry. Olita (2020) states that in 2020, Subway had total of more than 22,000 restaurants, which is a significant number for a franchise that has been experiencing serious losses. However, this leadership is majorly based on the achievements and strategies from the past. The most important element of strategic management and planning in the company is the analysis of the external environment, as well as the monitoring of the industry market. Wandhwani et al. (2020) claim that historical assumptions play one of the crucial roles in entrepreneurship research. Currently, the US market is experiencing a steady uprise, and the number of competitors grows exponentially. Kolmars (2021) insights add that, with almost 200,000 fast food restaurants and the expected 2021-2027 CAGR rise of 5,1% in America, there is a lot of competition, both local and international, for Subway. Thus, to increase the brands influence and anchor Subways position on the market, steering the company away from further decline and sales loss, a new strategy should be implemented.
Fast food belongs to a few types of activity, the volumes of which are little subject to changes in the context of economic downturns. To increase its market share, as well as increase the flow of customers, Subway should take steps to develop a strong promotion campaign, similar to Eat Fresh Refresh. It is necessary to stand out against the plethora of competitors, thus, the company needs to create new offers which would attract the customers. The advertising should focus on the strengths of the company and develop them intensively in order to ensure a stable financial and material position of the restaurant. Within the framework of modern marketing, the relationship between the fast food restaurant and the client is changing. Earlier, restaurants and cafes offered customers a standard set of services. Now they are forced to constantly develop new types of products that are addressed to specific groups of customers mainly to certain categories of individuals.
As Subway already has a strong market presence, it would be wise to employ the market infiltration strategy setting a deliberately low price range for new products and analyzing the first reactions of the customers. As an example, Subway could offer an Indian vegan wrap and set the price for it lower that for existing vegan offers. The market infiltration strategy fits Subways business the best, because it generates market acceptance and ensures the required level of trial purchases. In perspective, the market infiltration also maximizes sales in the short term and achieves a high market share, which then would gently lead to increase in prices. A sustainable competitive advantage lies in the fact that Subway offers its customers more individualized fast food, more attuned to their needs and tastes. The competing fast food chains such as McDonalds do not provide such specific services, and their business models are not fit for this approach. This ensures that Subways new offers will not be copied by competitors in long-term perspective.
Conclusion
After 56 years of successful development, Subways concept and brand have a strong position in the fast food business. The company positions itself as a chain of restaurants promoting a healthy lifestyle and offering an alternative to traditional fast food. Subways concept promotes healthy, low-calorie nutrition based on fresh vegetables, quality meat products and freshly baked breads. Target audience perceives Subway as a fast-food chain where they can order a more individualized and healthy meal, as opposed to a more or less similar offers from McDonalds, Burger King, and Wendys. Subway is a strong brand that has maintained its leading position on the fast food market for decades. However, nowadays, the business experiences significant losses due to ineffective managing strategies and marketing failures. It can be concluded that Subway needs to adjust its marketing strategy to the current trends in food industry, and reevaluate its regulation choices. Changes should be made in the product offers that would provide the business with the much needed competitive advantages it currently lacks.
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Williams, R.I. et al. (2018) The relationship between a comprehensive strategic approach and small business performance Journal of Small Business Strategy. Web.
Having been one of the pioneer companies in data processing, the DataClear Company was a real need in the world of software about ten years ago. The company experienced its ups and downs knowing exactly what the users wanted at the specific tie of the software product development. One of the short-term issues they faced when advertising their ClearCloud software product was conveying its significance to the users who needed it. So, the information was to reach its target audience. The company started as a very perspective business and by 1999 the sales reached $2.2 million. The long-term goal was to make the sales level up to $60 million in 2002.
The Advantage of DataClear
There is one clear advantage that distinguished the DtaaClear Company from all others within the market: the telecommunications industry and the financial service provider are their double focus. The double covering of the development branches makes it possible to attract and meet the demands of much more customers, hence make more profit. Another significant advantage is the ability of Greg McNally to lead fizzy teams. His team leaders wonderful potential was perfectly seen when there was an advanced data analysis package developed under his supervision.
SWOT Analysis
Providing services to the clients in the spheres mentioned above would make a company build specialized infrastructures which would involve employment increasing. This opportunity of enlarging the company will challenge and at the same time provide new opportunities to sell blockbuster products across the geographic spectrum. The strengths here are the professionals and the prolific minds of the employees taking important positions Tom Birmingham, for example. The main weakness and the threat are the competitive companies within the market. There is no way DataClear can control the quantity and quality of the entrepreneurs entering the market. And so, the visit was a major threat for DataClear after the testing of the beta version of their soft.
Business Strategy and Corporate Strategy
According to the business strategies of the company, they have to go global right now. Unless they direct all of their forces to make the companys products globally merchandized, they will face either loss of potential or complete dissolving. Hence, the corporate strategy should involve the consolidation of the current position of the company in the domestic market. This will largely give strength and resources to embark on global advancement in the future.
Using Porters Five Forces Model for analyzing DataClears position on the global market, it is possible to say that the current ability to enter the global mass production bargaining power of suppliers is not at the highest level of prearranging, although the position within the domestic market is pretty solid. The bargaining power of customers is a very important microenvironment and is strong within this sphere of investigation. And although there is an unpredictable threat of new entrances to the field and hence the threat of substitute products by newcomers into the industry, there still is a high possibility for DataClear to succeed because of their good results domestically and cohesively set work with talented professionals along.
Susans Team A
I would disagree to take Susans approach in globalizing the company due to several reasons. The first reason is that it is pretty hard to win the customers attention across Europe taking Britains office as the headquarters. First of all, there are other companies solidly based within the local market. And secondly, they would need a very good human resource management program to recruit and teach employees all over Europe with different foreign languages. This is additional time and expenses, whereas their primary goal is to survive and appear to be better economically and technologically than the main threatening company at home.
Team Bs Approach
Before taking action, it is important to understand what initial goals are and what the perspectives are. Therefore, forming alliances with other parties in Europe is more beneficial and not that risk. Moreover, Benro Company with its data-mining package should be a really good perspective as a complementary produce distributor. Creating a joint venture with them might not only be cheaper than starting invading Europe on their own, but also it can be mutually beneficial for both of the firms.
Greg McNallys Alternatives
The alternatives are never too good when it comes to choosing the best of the worst. So, after the two teams prepared nice presentations and there seemed to be a clear way out of the situation with competitiveness and globalizing, Greg faced another alternative: have much trouble and, most likely, lose or remain a domestic company and be happier. Sarah Pappas said that it was much easier than she had thought at first but then the emergence problems with the companies began to emerge.
Criteria to Determine Final Decision
It is essential to estimate the number of funds they have to use for the situations when risk ventures fail. There should be a substantial sum of money to put to action when there are unexpended expenses or the distribution doe sot go well. Another point to consider is the threat of new entrants on the European territory and already-established companies level of repute. The third thing to think of is the authenticity of the product they are going to distribute to the European market. If ClearCloud is unique enough not to get competitive newcomers in further two years a least then the risks are low.
Which Alternative Should Greg McNally Endorse?
Sometimes it is better to take risks rather than not do anything and then regret what you did not for your entire life. Besides, if look at the situation more profoundly, the possibility to be crashed by VisiDat is very high, and staying at the domestic market only would be a slow giving up of themselves to the opponent. However, the nature of the product and the opportunity to unite with the complementary company in Europe seems to be a good way out and Greg should take up this opportunity, especially if recruiting abroad is no problem.
My Choice Implementation
Since the company and its success largely depend on the people and managers working, I would rather put experienced workers there to the positions temporarily or permanently to teach others work. Recruiting good engineers from reputed companies is a choice that is never at a loss because those people can contribute greatly if they suit the companys requirements and are offered a good salary for what they do. Besides, allying with a small but reputed company abroad can is both beneficial for them and us since they have good relations with the firms locally. After all, it has to be started somewhere! Why not make it a small company in Britain or Tokyo?
Organizations apply a range of tools to analyzing their performance, measuring its current quality, and identifying the necessary improvements. Among those are the 7-S framework, the balanced scorecard (BSC), the SWOT paradigm, and its PESTLE equivalent. Using each of these separately enables resolving particular issues but leaves gaps, for which reason the analysis based on a single technique apparently is insufficient. The sphere of healthcare, meanwhile, changes quite rapidly, calling for permanent awareness and maximal flexibility. Therefore, firms that perform in it should utilize several techniques in parallel to extend and deepen the perspective on their own activity as well as market position. The paper examines the peculiarities of each tool and investigates their combinability.
Introduction
Analyzing the performance of a business requires various tools, each of which investigates a certain area or issue and serves to accomplish particular goals. Due to such specification, assessment outcomes inevitably are limited in demonstrativeness and precision. To smooth this, it is reasonable to combine several techniques in analysis, so that they compensate for the drawbacks of each other, which the paper seeks to exemplify.
Expanded 7-S
The 7-S framework, or the McKinsey model, analyzes the arrangement and performance of companies by measuring the alignment of their key elements. Those are structure, strategy, systems, style of management, shared values, or culture, staff, and skills, which seven actually form the acronym (Jurevicius, 2021). In addition, as Cox, Pinfield, and Rutter (2019) mention, the digital era modified the paradigm, having added information policies to it. In this expanded form, the 7-S remains helpful for analyzing organisational design of firms that perform in various spheres.
Healthcare management is not an exception; similar to any administrative field, it focuses on corporate hierarchy as well as the relations both among and within its levels. Furthermore, healthcare as an industry is quite dependent on economic perturbations and, therefore, needs integrity and adaptability to survive those (Krishna et al., 2019). The 7-S model, meanwhile, allows for monitoring these parameters on a permanent basis and the timely discovery of the existing gaps, which, in turn, enables compensating for them in a short time frame.
Merits
The wide room for alignment actually is in the list of the key advantages the model has. Notably, it analyzes the existing interconnections among the elements of organizational design, and the outcomes help identify the necessary steps for adopting an innovative policy or strategy (Kocao lu and Demir, 2019). Subsequently, it is possible to state that the use of the 7-S improves the companys performance. Furthermore, a structural evaluation enables anticipating the future directions of the firms activity, adding to the awareness of possible changes and readiness to them.
Demerits
Notwithstanding the above strengths, the 7-S framework does not involve all aspects of the environment that may influence business performance. Specifically, it focuses on internal factors, while external, such as political, economic, cultural, or other remain beyond its scope (McKinsey 7s framework example, 2022). Healthcare management, meanwhile, should consider those, as the industry it governs is to respond quickly to any processes that occur in the society. This determines the need for a more dynamic model in comparison with the 7-S, which is static by nature.
Balanced Scorecard
The balanced scorecard (BSC), another strategic tool, has a form of a performance metric, in other words, measures business functions as well as their outcomes. It is applicable, therefore, to assessing the implementation of a certain strategy or policy; in addition, its use presupposes providing feedback to the organization (Tarver, 2021). The latter nuance enables the BSC to close the gaps of the 7-S model. Notably, the paradigms state interconnectedness and insist on a multidimensional approach while focusing on the different but tightly intertwined sides, internal and external (Kaplan, 2005, p. 42). This favors their alignment, which, in turn, enables designing a maximally complex analytical framework.
In healthcare management, such tools are of special importance since the peculiarity of this industry is the large amount of stakeholders, each of which is interested in quality. This not only increases the firms responsibility, but also may cause cultural misalignment, or the conflict of values, where each participant pursues the own interest (Kaplan, 2020, p. 1). Meanwhile, such method as the BSC can enable and catalyze finding a middle course, which determines the need for them in healthcare. It is essential to consider, however, that regarding initially non-profit organizations, to which hospitals belong, through the lens of their financial performance means a closer connection to the commercial sector (Khiew et al., 2017). In case of not reaching the proper balance, this can transform the entire organizational philosophy. Therefore, medical institutions currently are quite meticulous about implementing the balanced scorecard.
Merits
Doubtlessly, the main advantage of the given tool is its ability to structure business, reviewing and systematizing both the design and the performance of a firm. The activity of medical institutions, as Amer et al. (2022) mention, may lack consistency, which reduces patient satisfaction, while adopting the BSC adds to it. In addition, this approach facilitates communication, especially among the levels of professional hierarchy, whose lack is known to be the frequent problem in hospitals that causes medical errors (Street et al., 2020). Finally, better awareness of organizational vision and goals, which the BSC provides, fosters unity and motivates.
Demerits
Since the balanced scorecard evaluates the performance of a particular organization, it has to be customized to the maximal possible degree to allow for adequate outcomes. This is another reason why hospitals adopt it very carefully (Khiew et al., 2017). Notably, the implementation requires much time and may be subjective, as neither the experience of other firms nor any tips or criteria are universally applicable.
SWOT Analysis
The acronym SWOT stands for strengths, weaknesses, opportunities, and threats, which parameters this tool actually measures. Its main specialty is diversification; notably, internal and external factors are equally considerable (Chapman, 2005). Therefore, this type of analysis focuses on both the specialties of the industry or market and the current position of a certain organization in it. This is relevant in healthcare management because, as said above, the performance of many medical institutions needs systematizing to improve patient satisfaction. In addition, SWOT helps reveal the challenges the company is facing, which can be quite numerous in such a competitive and rapidly developing sphere as medicine (Siddiqui, 2021). The latter nuances are among the main reasons why medical organizations utilize this tool.
Merits
The versatility of SWOT analysis is its most meaningful advantage; it allows for a multidimensional assessment of the existing situation. The scheme to follow, however, is quite simple as well as illustrative, which makes the outcomes extremely helpful in identifying the areas of improvement and further development (Gandolf, n.d., para. 5). In other words, the SWOT framework can serve as a reference point in strategic thinking, explaining the basic principles of it and setting the directions.
Demerits
Notwithstanding its multifacetedness, the scope of SWOT analysis remains quite limited. Thus, it does not consider the performance of other companies that can bear additional threats as well as opportunities for the given. In fact, this results naturally from attempting to cover a maximum of factors in parallel, which behavior often leads to excessive generalization and simplification. It is reasonable, therefore, to combine SWOT with similar but more specific tools that consider particular types of opportunities and threats separately.
PESTLE Analysis
The most influential determinants of business performance are political, economic, sociological, technological, legal, and environmental. These six form the acronym of PESTLE, the name of the tool that frequently is used in a collaboration with SWOT for additional precision. Considering the mentioned high dynamicity of the healthcare industry, the activity of medical institutions apparently depends on a range of factors, each of which requires attention.
Merits
Doubtlessly, the key benefit of PESTLE analysis is the deep insight into business environment it provides. The outcomes involve not only the examination of the existing situation, but also assumptions on its future development, enabling the firm to adjust its performance accordingly (PESTLE Analysis, 2021). It is possible to state, therefore, that SWOT creates the base PESTLE then expands and specifies, adding to the resulting visual clarity of performance analysis.
Demerits
Although PESTLE improves the quality of the data on which assessment rests, their quantity not necessarily is proper. Specifically, it is possible to apply insufficient or, contrariwise, unnecessarily rich and detailed information, which leads to so-called paralysis by analysis; in both cases, the outcomes are unrealistic (PESTLE Analysis, 2021, para. 17). Considering this, it may be necessary to repeat the assessment several times and conduct it regularly to minimize such mistakes.
Conclusion
The above shows that all of the analytical tools available for healthcare management companies have both strengths and limitations. As the latter may be quite serious, the most reasonable strategy lies in combining several techniques, whose advantages can complement each other, closing the gaps. Bright examples of such a solution are the integrations of the 7-S framework with a balanced scorecard and of SWOT with PESTLE.
Recommendations for Change
It has been mentioned that, although BSC can compensate for the drawbacks of the 7-S, medical institutions believe that implementing it bears the threat of commercialization. This calls for finding a balance between finance and ethics, which task is quite challenging. SWOT and PESTLE in a combination, however, can simplify it by exploring and describing the determinants of the companys performance, both at the current stage and in prospect. In fact, a possible key to successful healthcare management is integrating the most useful elements of the tools the paper describes into a single coherent system.
Reference List
Amer, F., Hammoud, S., Khatatbeh, H., Lohner, Sz., Boncz, I., and Endrei, D. (2022) The deployment of balanced scorecard in health care organizations: is it beneficial? A systematic review, BMC Health Services Research, 22, article 65. Web.
Chapman, A. (2005) SWOT analysis. Web.
Cox, A.M., Pinfield, S. and Rutter, S. (2019) Extending McKinseys 7S model to understand strategic alignment in academic libraries, Library Management, 40(5), pp. 313-326. Web.
Gandolf, S. (n.d.) SWOT: The high-level self exam that boosts your bottom line. Web.
Kaplan, R. S. (2020) Using the balanced scorecard for successful health care M&A integration, NEJM Catalysts Innovations in Healthcare Delivery. Web.
Khiew, K.-F., Chen, M.-Ch., Shia, B.-Ch., & Pan, Ch.-H. (2017) Adapting the balanced scorecard into the healthcare industry: A literature review, new insight and future directions, Open Journal of Business and Management, 5(4), pp. 611-623. Web.
Kocao lu, B., and Demir, E. (2019) The use of McKinsey s 7S framework as a strategic planning and economic assessment tool in the process of digital transformation, Pressacademia, 9(9), pp. 114-119. Web.
Krishna, A., Martin, C. P., Repasky, C., Singhal, Sh., and Zhao, S. (2019) Recession and resilience: Preparing for the next economic downturn, in McKinsey & Company, McKinsey on healthcare: Best of 2019. Detroit: McKinseys Healthcare Systems and Services Practice, pp. 83-87.
McKinsey 7s framework example: Advantages and disadvantages of McKinsey 7s (2022) Web.
To begin with, it should be stated that the approaches towards global staffing are generally identified by the allover HR management strategy, accepted by the company. HRM, in its turn, is based on the business aims and goals, which are defined by the external marketing circumstances. In the light of this fact, it should be emphasized that all these factors and aspects are interconnected; consequently, it is impossible to emphasize any approach as more or less important or beneficial.
Approaches of Global Staffing
Originally, there are four approaches differentiated: ethnocentric staffing, polycentric staffing, regiocentric staffing, and geocentric staffing. Previously to clarifying each concept, it is necessary to explain the basis of these approaches. These are based on the types of global staff members: these may be expatriates, host country nationals (HCN), and third-country nationals (TCN). Expatriates are the workers who are the citizens of the country, where the HQ of the company is located. HCN is the citizen of the county, where the regional department is located, and the TCN is the citizen of some other country. Thus, ethnocentric staffing presupposes the employment of expatriates in order to enforce the foreign positions of the company. This approach is generally resorted to when the home-office interests have a higher priority over the interests of the foreign department. Companies, in their turn, are concerned in selecting and training managers for the foreign assignments, presupposing essential compensation when managers return home. (Galbraith, 2000)
Polycentric staffing is resorted to when the host country nationals are employed through the allover structure of the company. The main goal of any managerial operation is to turn over control to local management. This approach helps organizations to create a working and thoroughly functioning human resource department in every foreign department of a company.
Regiocentric approach to staffing is very similar to polycentric with the only distinction that regional groups of subsidiaries reflect the organizations strategy and structure work as a unit. Regional groups have some degree of autonomy, and promotions are possible within the region.
Geocentric Staffing is the most universal approach, which is used by companies, which are resorting to a worldwide-integrated business strategy.
Corporate Culture of the International Company
The culture of a company is generally defined by the business and marketing goals of the company, consequently, basing on these goals, the company makes its choice of the staffing approach. This may be explained by the concepts of company interests and strategy. Thus, if the strategy presupposes the satisfaction of the home country department, the company will base its corporate culture on this strategy, and give preference to expatriate employees, resorting to ethnocentric staffing. Originally, the international companies make an emphasis on the promotion of the interests of their foreign departments chasing the goals of the broadest development of the business performance and marketing activity. In the light of this fact, it should be stated that such companies prefer the Geocentric Staffing Approach. (Galbraith, 2000)
The fact is that the culture itself can not define the staffing approach. It is explained by the notion that culture is based on the allover business principles of the organization and its goal in every particular factor and aspect of business activity. On the other hand, it should be stated that depending on the goals, the staffing approach of any organization is a factor of corporate culture creation, thus, the staffing approach is one of the defining aspects of the corporate culture. Tiner (2005, p. 52) states the following notion on this fact: A corporate culture based on the partnership can be particularly valuable in turning work into the design and organization of work. The traditional approach in staffing, in its turn, is frequently still geared to reducing the effectiveness of business performance . In light of this fact, it is necessary to emphasize that corporate culture should not be used as the defining factor for selecting the staffing approach.
Culture of the Host Country
This issue is even more simple than the previous one. The definite answer to this question is that the culture of the country can not influence the staffing approach of the company. It has been already emphasized that the staffing approach is defined mostly by the interests and aims of the company, thus, the culture of the country may presuppose the selection of any approach only defining and shaping the culture of the country. From this perspective, it should be stated that the staffing approach, which is generally defined by the aims and strategy of the company may be presupposed by the host country culture only if this culture entails strong business principles and interests of an international company. (Briscoe, 2004)
Influence in Making the Decision about Approaches
Originally, the corporate strategy and the business goals of the company have the strongest influence on the staffing approaches. The explanation of this concept is covered in the fact that the strategy defines the plan and the way of achieving the interests of the company, while staffing is just a tool for achieving these interests. However, it does not mean that the approach may be the only. Any company is free to incorporate several staffing approaches if its interests incorporate various directions of business development. From this point of view, it should be emphasized that the wish and strong determination for further business development may be regarded as the most powerful factor for determining the staffing approach.
Conclusion
In conclusion, it is necessary to mention that the staffing approach is generally based on the types of global staff membership principles. Expatriate workers, HCNs, or TCNs are regarded as the basis of four staffing approaches, which are defined by the interests of the company, its determination for further development, and in some measure by the corporate culture of the company. Ethnocentric, polycentric, regiocentric, and geocentric staffing approaches are defined by the character of the international performance of a company, consequently, these approaches presuppose the character of the HRM strategy and relations within the team, based on the factors of business performance and the goals of marketing activity.
References
Briscoe, Dennis R., and Randall S. Schuler. International Human Resource Management: Policies & Practices for the Global Enterprise. New York: Routledge, 2004.
Galbraith, Jay R. Designing the Global Corporation. San Francisco: Jossey-Bass, 2000.
Tziner, Aharon. Organization Staffing and Work Adjustment. New York: Praeger Publishers, 2005.
