Category: Business

Global companies managers have been in a sleepless moments as they are bombarded by turbulent forces of increasing competition and market uncertainties. As they try to come up with strategies to solve their internal problems affecting their companies, such as logistical and high running cost of their business and at the same time outsmart their competitors in the world market, it is no hyperbole to state that radical re-examination of their mission to reflect the uncontrollable forces as to be done.

This has forced the organizational managers to come up with innovative measures to deal with their internal problems and at the same time counter their competitors products in terms of high volume sales and customer satisfaction through offering quality products and services.

Hence, to strategically plan well in this uncertain environment, Organizational business management leaders ought to be capable to foresee any impact on their organization any new decision made will have to affect them. In line with this, I am going to look at Samsung electronic company as a growing global company case study which is well represented globally.

At the same time, I will look on what strategic measures and opportunities they applied in solving their internal problems and at the same time counter their competitors influence in the world market which has contributed to uncertainty of their products in the world market at while satisfying their customer increasing expectations. I choose Samsung Company because it is an up coming global company which operates under uncertain environment of information technology.

The Samsung Company has greatly invested in information technology to manufacture information technology related devices and equipments. This being a volatile venture, and technology keep on changing very fast and its product having a short product life cycle, hence its is good to know which innovative planning strategy they have employed to remain as company of choice in the manufacturing of electronic products with this very uncertain environment for this kind of products it is manufacturing.

Samsung is a Korean based electronics company with more than eight regional manufacturing branches in various parts of the world. It deals with the manufacture of telecommunication devises such as mobile phones, digital televisions, memory chips and the liquid crystal displays (LCDs) and now it is venturing into automobiles.

Originally, it focused on producing low cost products as compared to his competitors and the moment they were able to produce efficiently and the production cost was manageable, it now changed its focus from low end products to more advanced products such as information technology equipments.

Its venture in manufacture of a variety of information technology products has made Samsung a superior company to its competitors in the production of not only information technology equipments but also home appliances such as fridges and gas stoves (LinkedIn, 2010, Para. 1-3).

In the recent past, Samsung Company has had a tremendous growth having regional representation of about 90 offices in more than 50 counties and annual revenue of $100 billion dollars in the year ending 2008. At this moment of growth, Samsung started experiencing some problems related to its rapid expansion globally.

It become under pressure to look for ways of minimizing its logistic cost such as the flow of their products from the manufacturing point to the consumer which required some means of handling, transportation and storage in the ware houses. Secondly they had to deal with market uncertainties due to higher customer expectations and increasing competition from the rival companies such as Sony and LG companies which produces same products as theirs (Young-ho, 2008, Para. 2- 12).

Samsung situation before turn around

By the time Samsung had established a net worth of $100 billion in revenue, it was incurring high cost in the flow of their products to the market and insecure supply of raw materials, and it had to be very mindful about inherent risks and a need for regular innovation and market predictability to avoid over purchase of raw materials or over production of its products in the market.

In their quest to meet customer demand and check on their competitors, Samsung employed the use of information technology as an innovative business strategy to advancing its capabilities of increasing its efficiency and reduces its logistic cost, hence upgraded its existing supply chain management to match its products supply and respond to the customer demands.

With the company implementation of the supply chain management, it was able to achieve high efficiency and in general, there was reduced business cost due to the implementation of this information technology supply chain management system. It also reduced its inventory and doubled its inventory material goods distribution rates as compared to the previous years before the implementation of this system.

However, with the implementation of the supply chain management system, and the good result which came from it were able to be recognized, the Samsung Company still experienced a strong market competition from its rival companies and the consumer expectations were on an increase, resulting to market uncertainty.

Hence, it needed to improve its strategy planning to come up as a world leader in the manufacture of electronic goods so as to gain consumer confidence on its products. To achieve this, it established a scenario approach to come up with a management system which can recognize signs of market change and act accordingly to these changes (Microsoft Case Studies, 2009, Para. 1- 3).

To hold up this new strategic transformation, it advanced its information technology system to solve and present insights into the already existing supply chain management system. This supply chain management had already worked well as it was able to integrate its competitors data within and even project the global demand for their electronics goods, but the problem was still that it was not able to detect quickly global market changes and adapt to the necessary changes as first as possible.

The new system placed more emphasis on management as a survival approach to a manufacturing company with unpredictable future. So it adopted the market based supply chain management to respond rapidly to global market environment with the help of Microsoft Business intelligence (BI) solution that developed the soft ware part.

However, its benefits have not yet fully seen as the company has only implemented this system in the video display business sector and it is expecting to increase its projection accuracy for its product demand in the market by about 25% (Microsoft: Case Studies, 2009, Para. 2-9).

It can be seen that Samsung Company was experiencing market uncertainty and competition prompting it to look for ways to monitor and control these variables, hence, the implementation of the market based supply chain management.

Critical Analysis

I order to effectively deal with the market uncertainty and counter their competitors; Samsung Company had to plan in this uncertainty to accurately and continuously monitor its external environment changes.

In his case, the Samsung Company was not more concerned with the future of their market share or companys future development plans that might occur, rather they were concerned with external environment which predict market forces and trends of the consumers and to evaluate internal factors to see in what situation they were in as compared to its competitors.

Hence, in analysis of the strategy to come up with this market based supply chain management system to monitor the market trends, gain a competitive edge against its competitors and at the same time meet the customer demand; Samsung Company had to use a scenario strategy to make decision process and logic to come up with this new management system which was able to give the required information promptly (Byars, 1991, P. 65- 70).

The scenario building concept must have been a suitable tool to use for decision making process given the external uncertainty environment they were facing and the need for long term perspectives that can identify the likely future they need and action in unknown period. Hence, it had to follow certain decision and logic process as part of their scenario strategy to solve the underlying issue of monitoring market trends and the uncertainty due to competition and demand.

To start with, the Samsung Company started its scenario strategy development by identify its decision basing to its internal organizational objective of future growth of the company, hence to effectively lay a basis for scenario planning and make decisions a long term strategy was a means of identifying its decision focus and sustain its continuous growth.

This was to ensure that it does not digress from their process focus of the company growth prospects in the uncertain future to aimless speculation (Myatt, 2010, Para. 2- 16).

Having analyzed its decision focus, it had to explicitly spell out the key decision factors that affect or influence its successful growth or failure. The key factors it considered were both internal and external which included products cost, world economic status, the quality of their products, and marketing strategies put in place and the external factors were market demand and competition growth from its rivals in the future so that it can make any decision on which to base its growth strategies.

After analyzing its decision focus of market demand and completion growth, the next step was to single out the environmental forces that were to determine the course and value of their major decision factors to develop and implement market based supply chain management system. This was to help them make a good theoretical mock-up of the external environment forces and how they were to be incorporated in the system.

These forces were first economic in nature such as the level of consumer spending on electronic equipment and the world economy since the Samsung Company was global. Secondly, these forces were associated to Samsung market change in demand trends of its products and competition by its rivals. And lastly, their capability to impact the market, industry and macro environment at the same time shape its future were influential forces (Nuefewld, 1985, P. 39- 52).

The next step was to logically narrow down the environmental factors and establish the importance or success of their decision on customer demand and competition trend environmental factors and the extent of uncertainty, overall company strength, global economic and demand for its products.

The Samsung Company must have narrowed them to uncertainty, demand for electronic products and the world economy which were more important and each explaining fundamentally different result. This market demand chain supply chain management system had to incorporate these factors in order to meet the company strategic mission (Wack, 1998, P. 139-150).

Select alternatives scenarios and elaborate on the scenarios to reflect the future. In Samsung case, they had to weigh between high demands of electronics product against high global economic for it to expand its market globally.

This happened to be a fine situation in which the increase in economy is interjioned with soaring demand for its products, hence enabling the company to really turn into global electronic manufacturing company. Competitive rivalry due to low demand and high economy scenario must have employed by the Samsung Company to out smart their competitors this is because more recent technology is more appealing to customers (Morrison, & Ian., 2000, Para. 3- 6).

To finally close the loop of scenario strategy, signpost indicators of various scenarios and implication which had to be identified so as to come to terms with the decision focus of the first step. The Samsung management used this scenarios and brain storming to identify implications and build a mutual vision and a flexible plan for the company to be a world leader in the production of electronic products (Wilson, 1994, P. 12- 24).

Conclusion

In conclusion, environmental examination is an important step to identify the underlying issues and develop a management plan in organizations learning from uncertain environment. Samsung being a global manufacturing company mostly in information technology electronics products that have low product life cycle, it was able to develop a strong business management plans as a cause of its competitiveness.

By establishing a management plan that reveals the customer demand and economic environment, Samsung Company was able to institute the best possible market scenario that was to eventually increase it revenue and promote its products distribution in the market. Scenario planning has enhanced its decision making process, as it was able to establish best market scenario to regulate itself in this uncertain environmental changes hence, having one step ahead its competitors.

Recommendations

Frequent evaluation of the external environment in an organization is necessary and for any case which deals with uncertainty I will recommend the use of scenario approach which considers a blend of uncertainties in each situation to try to expose the planners to key interactions of variables.

Finally not only use of scenario planning as a decision making tool, but also other methods of planning such as PESTEL and SWOT analysis can be integrated in strategizing a company decisions according to the circumstances facing it.

Reference List

Byars, L. (1991). Strategic Management, Formulation and Implementation  Concepts And Cases, New York: HarperCollins.

LinkedIn. (2010). Samsung. Web.

Microsoft: Case Studies. (2009). Business Management Quality Innovation with Market-Based Global SCM System Implementation. Web.

Microsoft Case Studies. (2009). Samsung Electro Mechanics. Web.

Myatt, M. (2010). Blogging Innovation. Six Steps of CEO Decision Making. Web.

Morrison, J. L., & Ian, W. (2000). Analyzing Environments and Developing Scenarios in Uncertain Times. Web.

Nuefewld, W. P. (1985). Environmental Scanning: Its Use in Forecasting Emerging

Trends and Issues in Organizations. Futures Research Quarterly, 1(3), 39-52.

Porter, M. (1985). Competitive Advantage, New York: Free Press.

Schwartz, P. (1991). The Art of the Long View. New York: Doubleday.

Wack, P. (1998). Scenarios: Shooting the Rapids. Harvard Business Review, 1985b, 63(6), 139-150.

Wilson, I. (1994). Strategic Planning Isnt DeadIt Changed. Long Range Planning, 27(4), 12-24.

Young-ho, C. (2008). Samsungs Management Reform Plan. Web.

Foreign Market Entry Strategies

Foreign manufacturing

Under certain conditions, many organizations find it inappropriate to distribute their domestic products to foreign markets. Transporting large products is always expensive hence many companies produce their products close to the market.

Additionally, custom charges can also make the products to be less competitive. A countrys preference for their locally produced goods can prevent an organization from entering a foreign market (Benjamin, 2006). Other factors like availability of ready market, less production costs and financial motivation can make a business organization produce its products in the foreign market.

Assembling

This is the cooperation between exporting and foreign production. Organizations locally produce components of its products and transport them to foreign markets where they are assembled as a final product. This strategy is cost effective as companies will spend less money in transporting the components and paying for the custom tariffs. Moreover, local workers can be used to ease the amalgamation of companies in the foreign market.

Licensing

This is another appropriate strategy used by a number of companies when entering a foreign market. The strategy is not only considered to be less risky, but also involves larger tasks for domestic producers.

There is a slight difference between licensing and franchising. In franchising, companies tend to take part in the development and management of the marketing plan. A global licensing firm provides the licensee with patent rights on goods. Consequently, the licensee will be able to manufacture the licensors products and market them within a given boundary (Yenne, 2005).

Foreign public authorities prefer this type of agreement since it comes with a number of technological advancements into their country. Conversely, this strategy can only work for a short duration of time because many foreign companies tend to start their own production after obtaining the know-how.

Joint ventures

Foreign joint ventures are similar to licensing except that most of the international companies in joint ventures are involved in the management of foreign firms. When a foreign company forms partnership with the home-country firm, a new organization is always formed. Therefore, international companies are not only able to manage their operations, but also obtain important information on the local market. In addition, an international company will not be at risk of being taken.

Global Expansion Strategies Used by Different Companies

Intel Corporation

Intel is an international company with its headquarters in America. Besides, the company is considered to be one of the leading producers of motherboard chipset around the world. Intel Corporation used joint venture strategy to enter into various foreign markets. For instance, the company was able to form a joint business enterprise (IM Flash Technologies) with Micron Technology.

IM Flash Technologies produces flash memories which can be used as detachable storages (Alkhafaji, 2001). Consequently, this provided them with a wider market. They are also able to effectively compete in the local and international market with other companies producing similar products.

McDonalds Corporation

McDonalds majorly used franchising strategy to enter into foreign markets. Therefore, they have managed to expand their operations to approximately 120 countries globally. The company has set up policies which the franchisees are expected to obey in their restaurant management.

For instance, McDonalds expect their franchisees to follow their menu, cooking techniques and staffing rules respectively. Consequently, this forms a large section of McDonalds successful strategy. They have also reduced their operational costs while maximizing their profits.

Goya Foods, Inc.

Goya is a food producing company with branches in many countries including America and Spain. It uses foreign manufacturing strategy to enter into the competitive local and international markets. Therefore, they have been able to reduce their transportation costs thus making a lot of profit (Miltenburg, 2005). For instance, they had previously constructed a multimillion distribution center in Doral (Florida). From here, they are able to manufacture their products and distribute them locally to their customers.

The Boeing Company

Boeing is an international aerospace and defense company. This company used joint venture strategy to enter in various foreign markets. Together with Aviation Industries Corporation, they formed Tianjin Composites Company. Consequently, they have obtained important information regarding chinas local market.

The Coca-Cola Company

The Coca-Cola Company used assembling strategy during their global expansion. The company transports some of their unfinished products like syrup to foreign markets. Therefore, the rest of the work (manufacture of containers and addition of water) is done by local bottle companies (Tielmann, 2010).

Nokia Corporation

Nokia succeeded in venturing into foreign market through the application of assembling strategy. The company has assembly plants in various countries including Finland and Mexico. Nokia and Siemens also used a joint venture strategy to enter into foreign markets. For instance, they were able to form Nokia Siemens Networks (NSN) as their joint business enterprise.

Company Which Has Experienced an Evolution of Strategies

The Coca-Cola Company has experienced an advancement of strategies since it started its expansion into the foreign market. Due to high demand, the company decided to change from assembling strategy to foreign manufacturing strategy. Instead of transporting their unfinished products, Coca-Cola Company has set up firms in various countries where they are able to manufacture their own products. Consequently, this was done to reduce high transport costs.

References

Alkhafaji, A. F. (2001). Corporate transformation and restructuring: A strategic approach. Westport, Conn: Quorum Books.

Benjamin, L. K. (2006). Market entry strategies of foreign Telecom companies in India. Wiesbaden: Dt. Univ. Verl.

Miltenburg, J. (2005). Manufacturing strategy: How to formulate and implement a winning plan. New York: Productivity Press.

Tielmann, V. (2010). Market Entry Strategies: International Marketing Management. Munich: GRIN Verlag GmbH.

Yenne, B. (2005). The story of the Boeing company. St. Paul, MN: Zenith Press.

The firm has formed partnership with other big companies like Amazon.com in order to improve on its services to consumers. This has enabled them to deliver orders in time to the benefit of Borders.

The firm apart from operating bookstore also runs music store and coffee bars, these helps in increasing its overall sales. The firm uses modern computerized system to manage its inventory; this makes it record highest sales as compared to other competitors within the market. Borders have divided its products to serve as small business segments to the satisfaction of their clients.

They operate numerous book and music stores within the United States and additionally organize live performance events by artistes and books authors. The coming of the internet enabled multiple works to be performed by providing an efficient and cheaper means of communication between the stores and the clients (Gataric et al, 2002, pp 387-397).

The firms superstores engage in sponsoring community functions like story telling occasions as well as group discussions amongst others. Borders also engaged in sponsoring online magazines one of them being Salon which offers customers with opportunity to read variety of books and keep updated with current affairs.

The firm launched the use of Borders Universe which provides online inventory data connecting all the retail outlets, this makes it easier for customers to find books from other related retail stores. Borders deliver books and other products to consumers doorsteps and operate telephone support twenty four hours a day throughout the week (Gataric et al, 2002, pp 387-397).

Customer value

The firms superstores provide consumers with various selections of music and videos at affordable prices. These selections comprises of music that are rarely found but sought after by the majority, these include jazz and opera type of music. They offer the same trend within their video stores which makes available a number of title movies. The firms use of the internet in retailing provides the consumers with easier means of selecting variety of what they require online.

This meant that customers are now able to save on time that could have been consumed looking for items in the stores and undergoing all other required services. The merger with Amazon.com enabled Borders to provide customers with unique services that included complete information on store locations and the several events that take place at the in-stores (Feng, et al, 2001, PP 467-503).

Capabilities

The firm launched a site that had the capability of handling the largest multimedia database on the internet. It was also the only firm with the largest in-stock of multimedia selection for most of the retailers using the internet, besides they offer ready shipping services for the millions of their products purchased online.

Borders.com offers beautiful sites and choices to the consumers, on top of this they are also time conscious in the way they deliver their services. This makes the firm to be one of the most trusted internet brands. In order to build close relationship with consumers and win more of their trust, the firm created private database that serves customers at individual levels taking care of confidentiality (Gataric et al, 2002, pp 387-397).

The company needed to improve on its commercial capabilities whereby the consumers will be served in a more organized way. The firm launched internet in-store kiosks which provide customers with easy time when locating the products availability and prices online.

The costs of operating the online services seem to be high calling for further strategies. The firm increased the level of their sales through partnership with top leaders in online sales; this has helped in shifting of costs responsibility for internet sales (Gataric et al, 2002, pp 387-397).

References

Feng, et al.(2001). A New Business Model? The Capital Market and the New Economy. Economy and Society, Vol. 30, No. 4, pp 467-503. Gataric, I., Gilbert, J., Green, J., Kennedy, I. Lewallen, W., and Sumita, Y. (2002).

Borders: Responding to Change. International Directory of Company Histories Vol. 43, pp 387-397.

This article gives a point of view of American Apparel from the perspective of a fairly new company in a hotly competitive market. Lipke, the author, focuses on cutting down costs by the company to pay off the companys debts, however after years of financial success, production problems have brought up costs in their LA facilities and lowered profitability.

American Apparel applies product costing in tracking and assessing the expenses involved in the manufacturing process and selling costs, from raw materials purchases to costs incurred in transiting the finished products to retail stores (Lipke, 1).

The article stresses that the main focus is on interdependent of the decision making process needed in apparel product development. Due to the kind of competitive environment American Apparel is operating in, product costing is essential for its survival in the market.

American Apparel has established an elaborate inquiry that provides accurate information of a products real cost and benefit. American Apparel has recognized that its competitiveness is improved by purchasing, processing, logistics, and product design affiliates implement total lifecycle costing.

American Apparel is trying to strengthen their management ranks with new talent and reduce inventory. Furthermore, the company mentions that they are a new company that has not worked out all the kinks yet and they are working hard to become more stable in the economy.

Empirically, the article states, (earnings before interest, taxes, depreciation and amortization) ratio was increased to 2 (from 1.75) in the first quarter of 2010, and to 1.9 (from 1.65) in the second quarter, and adds that, The changes will enable American Apparel to access a larger amount of its $75 million credit facility with Bank of America (Lipke, 2)

Seidler, Ben. Fur Takes Center Stage Again. The New York Times. September 9^th Sept. 2010. Web.

This article focuses on fashion material sourcing and selection as seen during the autumn/winter 2010 runway; fur has been a fashionable preference for fashion artisans, not only in the traditional Milan and Paris, but also in New York and London. Material sourcing is not only meant to maintain a theme in a collection, but also is cost efficient on the consumers.

It also shows the ability of designers and the creativity of artisans in working with different materials; in the apparel industry designers and merchandisers find different and creative ways in using fabrics and materials, such as trim, for different products other than the original designed garment.

Not only was fur used for the typical, fur coat, but designers used fur as a source for many other uses as well. Observed in this autumn/winter 2010 runway were fur skirts, hats, and bags. Seidler (3) states that fur could be feathered, shredded, unlined, or knitted. This is mainly due to the elevated amount of fur on the runway this year.

Although with the emphasis was on real fur this season, some designers decided to opt for the faux fur as well. Along with fur and many other fabrics in our wardrobe, there are many new and creative ways of using fur items for other resources. In addition, with the given todays technology there will continue to be other ways in using our materials productively. Even artificial fur is been used by designers to explore the aesthetic and textured nature of artificial fur (Seidler, 5).

Works Cited

Lipke, David. American Apparel Focuses on Fundamentals. WWD Issue. 1^st April 2010. Web.

Seidler, Ben. Fur Takes Center Stage Again. The New York Times. September 9^th Sept. 2010. Web.

The success of a business depends on the ability of the management to analyze the market trends, the culture of a country, its political climate and other external factor. This issue is particularly important when this company operates at an international level. The case of MyGym shows how an organization can increase its presence in various countries.

While evaluating the market of a country, the management of MyGym considered such factors as benefits, cost and risk factors. At the initial stage, the management of this organization focused on those countries where the English language was spoken. This policy was adopted in order to reduce the cost of translating slogans or commercial.

Moreover, English proficiency was critical for hiring new employees. Therefore, in this way, they attempted to avoid extra expenses. Additionally, they paid attention to the culture, especially the way in which parents approached the education of their children. This factor was also critical for the success of the company.

Additionally, the company also made some considerations of the benefits that they would get from entering a new market. For instance, they strived to enter those countries in which customers could be familiar with their products and services. This strategy can be best illustrated by the companys move to Mexico. This step was beneficial since the Mexicans already knew about MyGym. This is one of the details that can be identified.

Risk factors were also taken into account by the company during the scanning stage. The management focused on those internal and external factors that could undermine the work of the company. These risks can be related to the political climate of the country and vulnerability to economic hardships.

The strategies adopted by MyGym indicate that a company, which is planning to enter a foreign market, has to consider the risks during the scanning stage. In turn, the failure to do it can result into serious difficulties such as inability to capitalize its investment. The successful expansion of MyGym can be partly explained by the fact that the management developed an effective method of evaluating different countries.

MyGym used the multi-domestic generic strategy when venturing into the markets of other countries, especially when entering Mexico. The main peculiarity of this approach is that an organization attempts to adjust its products to the needs of particular clients, language, or culture. For instance, one can mention that the company translated its marketing materials into Spanish while working with Mexican clients.

Additionally, they established separate headquarters in this country. This branch of MyGym establishes the policies and gives directions that are relevant to the market of this country. This strategy helped the company to integrate into the new market since the local employees knew more about the peculiarities of consumers behavior. This is one of the issues that should be considered because it was vital for the success of MyGym.

At the very beginning, this organization did try to act as a transnational company. For instance, at the beginning, they thought that Mexican clients have no difficulty in using the English language. Nevertheless, the management understood that this strategy was not suitable because their services had to be adjusted to a particular market. This is the main argument that can put forward.

MyGym encountered many challenges when expanding into Mexico. In most cases, these difficulties were related to the culture of this country.

Their experience demonstrated that the elements of culture such as language, technology and education can hinder the growth of a company. As it has been said before, the first challenge was the language barrier. They had to translate their programs into Spanish in order to improve the experiences of local clients. Additionally, they also encountered challenges related to the education system in Mexico.

For instance, children had to stay in schools for longer periods and they could not attend the programs developed by MyGum. As a result, this company had to target the children who were still in school. This difficulty is one of the reasons why this organization had to adopt a multi-domestic strategy. However, this company was able to adapt to a new environment. This is one of their major achievements.

Technology was also a challenge during the expansion MyGym in Mexico. The level of technology in Mexico is not as good as in the United States. This is why the head office had to procure the equipment for every MyGym that was opened in Mexico. The main problem is that there was no local manufacturer that could supply this equipment to the company. Therefore, this issue proved to be a challenge during the set-up of the gyms.

Apart from that, the culture of Mexico also created some barriers that could have slowed down their expansion process. For instance, one should look at the celebration of birthdays in this country. A normal birthday party in the United States takes approximately two hours; in contrast, in Mexico it can take at least four hours. This difference affected the way in which MyGym programs were run in Mexico. Therefore, the management of MyGym had to overcome various obstacles while working in this country.

One can say that the company used the non- equity entry mode in Mexico. Under this entry mode, MyGym proceeded to employ the indirect export process of their business activities to Mexico. This argument can be illustrated by the fact that they changed their strategy from a direct franchising to a domestic master franchise, which had to act as an intermediary.

Additionally, an office was set up in Mexico. Moreover, they employed local staff that would be responsible for translation and localization of the companys services. However, the main office in the United States was still responsible for issuing policies and information to the master franchise in Mexico.

Additionally, the company used this entry mode because the locals were better able to gain the loyalty of clients. For instance, the translation of programs into Spanish could be much easier if it was done by staff from the host country Mexico.

On the whole, MyGym experience in Mexico highlights the importance of trusting local master franchise as opposed to a direct franchise which does not provide a bond with the locals. Furthermore, the master franchise creates synergy with the locals and they are more likely to respond positively to the companys business activities. To a great extent, this strategy proved to be quite effective.

On the whole, MyGym CEO insists on the importance of examining a foreign market from different perspectives. One can say that this strategy was implemented because of the challenges that this company faced in Mexico. There were cultural, linguistic, and technological differences that forced them to change their operations.

The company was able to start smoothly in Mexico because they considered the needs of the local clients. This policy distinguished them from many other firms that attempted to apply the same strategy in various countries. Therefore, the issues discussed in this paper can be relevant to companies that operate in foreign countries.

Introduction

This research paper looks into human resource development in organizations. The paper discusses how human resource as a practice and managerial science has developed over time. Further, the paper looks into the importance of human resource development. It is established that a competitive advantage can not develop devoid of human resource input.

The resource based view of strategy indicates that building internal capacity of an organization is the only way of building a sustainable competitive advantage. This research paper further looks into obstacles to resource development in an organization and how organizations should approach human resource development. Strategic human resource development is largely dependent on manpower forecasting and planning efforts in an organization.

How Human Resource Evolved as a Managerial Science

Human resource management refers to the art and science of ensuring an organization has all relevant personnel to help meet organizational goals. The human resource of an organization is basically the total work force or personnel population in an organization.

In its current usage, human resource is often applied in reference to the department that handles personnel issues in an organization. The human resource department in an organization consists of personnel charged with the responsibility of looking into employee welfare and organizational skill needs.

Human resource management or personnel management as a function started to emerge with the adoption of scientific management. As work place and workforce complexities emerged, the approach to human resource management changed over time. Increasingly, quantitative and statistical methods were adopted in human resource management efforts.

Currently, like all functions in an organization, human resource officers employ strategic approaches to human resource management. Organizations have been forced to look into strategic approaches due to increasing competitiveness in the job markets i.e. jobs becoming more complex, specialized and changing very fast.

Human resource as a management science became specifically defined with the introduction of system theories of management (Bratton & Gold 12). The system theories of management look at the organization as a conglomeration of different parts coming together in a complementary way to form one unit.

After World War I, an acute sense of individual rights swept over nations. Workers in factories became more agitated than ever before. For the factory owners, it became imperative that they start looking into the welfare of their employees. This realization led to the creation of welfare officer posts in organizations.

The welfare officers focused on employee needs and how to respond to agitation. The World War I also led to acute work force shortages leading to women being recruited. The recruitment of women accentuated the need for welfare officers.

Apart from employee agitations leading to introduction of welfare officers, the birth of human resource as a management science sprung from the concern for efficiency in scientific management. This later translated into a concern for human comfort by the human relations management theorists. The humanistic theorists focused on conditions that would help the work force to use their capacity optimally. This change in focus led to more concern for individuals in an organization.

By the end of World War II, the strategic concerns of war were introduced into corporations. Managers viewed developing a buoyant organization as reminiscent of winning a war. Strategies employed in war situations to ensure optimal performance by soldiers found their way into organizations. A new concern for employee training and correct deployment led to need for specialized officers who could help design the employee development programs. Personnel departments comprising of highly skilled teams were put up.

As organizations created personnel management departments and employed specialists from universities and military to run the departments, different approaches of managing personnel emerged. Some of the personnel specialists advocated for soft ways of ensuring optimal performance in an organization while others advocated for hard tactics.

On one hand, personnel officers advocated for an empathic approach to employees. Such an approach called for concern with development of employee leadership skills, fostering harmony in organizations and a general concern for employee welfare. On the other hand, some personnel managers advocated for the application of statistical tools to forecast and determine performance requirements.

Once a performance standard has been set by use of statistical determination, all employees had to meet its specifications. The differences in approach led to concern for more systematic approach to personnel management.

In tandem with changing organizational characteristics, different theories have been proffered in relation to what can best work for an organization in terms of personnel management and development. The systematic appreciation, critic and improvement on the theoretical frameworks are what define the birth of human resource as a management science (Bratton & Gold 14).

Importance of Human Resource Management in Organizations

Human resource management as a function has grown in importance over time as organizations developed in complexity and purpose. In current situation, the human resource plays the critical role of optimizing the use of an organizations personnel. The function ensures that organizational investment in personnel bears fruits or positive returns. To fulfil this mandate, the human resource management department in organizations serves several purposes.

The primary role of HR is to recruit and select employees thus availing relevant skills to an organization (Armstrong 53). The second function is to design and plan for employee development i.e. optimize usage of employee potential. Thirdly, the HR department monitors and assures performance levels in the organization by instituting performance management measures.

Fourthly, the HR department ensures employees brought into the organization are retained through designing the total compensation for their service. Total compensation consists of elements such as basic pay, look and feel, and employee welfare benefits. Additionally, the human resource departments ensure good relations are maintaining among employees and between employees and management.

The final important role of human resource management is facilitating business transformation through guiding the change management processes in an organization (Armstrong 100). Such changes may include retirement of employees, changes in business focus, or employee turnover. Through HR planning, the department ensures the organization operates optimally at all times.

To properly manage personnel and perform the roles described, human resource management policies are of critical importance. Strategic management of human resource is the focus of human resource managers in todays organizations. Strategy is about long term planning and ways of guaranteeing the realization of those long term plans or goals.

Planning in human resource management starts with a human resource audit. A human resource audit looks into all aspects or function of HR to establish how optimal they are in facilitating organizational strategic objectives. Man power forecasts are done and the forecast aid in planning.

According to Schuler (22), human resource planning can be defined as an increased ability of managers to evaluate, select, and implement alternative approaches to the financing and delivery of the public services which the company requires.

It can positively influence the efficiency of the company, the improvement and simplification of selected service delivery functions, and the financial viability of individual agencies and jurisdictions. HRP enables an organization to efficiently manage its work force.

It ensures that only relevant number of employees with relevant skills is available in the now. Further, it also makes provisions or institutes mechanisms that ensure relevant skills are available in the organization in the future.

Human Resource Development

Human resource development, commonly abbreviated as HRD is a function of the human resource managers. This function aims at ensuring employees develop their capacity or are enabled to use their full potential towards realizing their life dreams while helping the organization meet its goals and objectives. Human resource development is one way of helping skills in the organization to be at par with actual skill requirements.

This is the best way of responding to change. Through human resource development, employees are able to evolve and meet with changing job demands. Human resource development is organization based or individual employee based. HRD can be organized and systematized in an organization; all employees benefit from this organization wide or organization based employee development.

On the other hand, there is individual employee based HRD. Individual employees with great potential are identified and given all the support they need to realize their full potential.

There are many ways of developing employees. Whatsoever the means, the aim is to increase employee skills or abilities, expand on knowledge that employees have and improve on attitudes. Human resource development happens either through formal or informal training. Human resource development also can happen in the form of mentoring, career development related help, coaching, promotions and recognition plans.

As a motivational tool human resource development happens in the context of performance management (Robertson et al 54). Based on performance, employees are rewarded with development opportunities.

HRD is not for best performance only; poor performers are often also given development opportunities in the hope that they can up their game and perform optimally. It is often the case that individuals earmarked in a succession plan are given opportunities for further study (formal education). Alternatively, they are assigned duties that can enable them to learn.

For HRD to succeed managers in an organization have to embrace and have good will towards employees. Managers have to understand the important contribution that the employees make to the company. When managers get involved in employee welfare and show clearly that they value the employees; this elicits intrinsic motivation among employees (Robertson et al 32).

HRD helps in assuring employees of job security. Employees are more comfortable with a company that is investing in them. When a company is investing in an employee, the likelihood of letting him or her, unreasonably, is minimal. Investing in employees makes them feel a sense of belonging. When employees feel part of the company, they put in their best to grow the company.

On the contrast, a company that treats employees as merely laborers and excludes them from major decisions in the company de-motivates her employees. Decentralizing decision making is one way of developing employees. Employees can be involved in decision making in varied ways. One way is instituting a team approach or project approach to organizational tasks. Another way of getting employees involved thus assuring their participation is through delegation, putting them in assisting roles to their up lines etc.

Obstacles to Human Resource Development

Human resource development is often a costly affair. Organizational resources are spend with the hope that HRD improves or guarantees future gains by the organization (Mayo 162). Therefore, the first obstacle to HRD can be lack of top management support or belief in the benefits of HRD.

When top management are not sure about the benefits of HRD, they are likely not to support it. Human resource officers have the challenge of designing HRD programs that have guaranteed benefits or support organizational objectives. Once it is clear that HRD programs support organizational objectives, the top management support is easily won.

Secondly, the HRD costs can be prohibitive. Unless HRD has been developed or designed properly, the costs can exceed what an organizations budget can support. Therefore, unless HRD is designed in an effective and efficient way as per budgetary constraints, top management may vote against it due to costs.

The third obstacle to HRD efforts is organizational culture and structure. In a highly bureaucratic organization, HRD efforts are often frustrated by red tapism. If an organizational culture is not right, managers may tend towards favorism i.e. recommending friends and relatives for development packages and leaving out the deserving cases. Without a supportive organizational culture, on job learning is frustrated by bossy managers and supervisors.

Finally, employee attitude can greatly frustrate development efforts. An employee should not be forced into any development program. For instance, an employee who has potential for becoming the next top sales executive should not be assigned to a sales coach against his or her wishes.

Development happens best when the locus of control is the person being developed. Development has to be person centred. If employees come to imagine or think that development is being used to increase their responsibility with no corresponding rise in benefits, they resist HRD programs. If employees do not participate fully or whole heartedly in HRD programmes, failure of such programs is guaranteed.

Strategy and Human Resource Development

Strategy is generally understood as planning for success. Strategy in organization consists in making both midterm and long term plans and looking for ways of guaranteeing the same (Ireland et al 16). Therefore, the basic aim of strategy is ensuring an organization achieves desirable results both in the midterm and long term. Success in the future is largely dependent on decisions or choices made in the present.

Different approaches or theories on how to go about strategy have been formulated. As presented by Whittington (9), there are four major categories of strategy approaches. The four schools or theories of strategy, namely; classical, evolutional, process and system have different assumptions on which to base strategic decision.

Whichever the approach to strategy, the motivating end normally is that a company is able to fair favourably against competition; in delighting customers (Yergin & Stanislaw 13). The different approaches to strategy may proffer different outcomes; however the push for strategy is prosperity, stability, or general competitiveness of a company.

The different approaches to strategy are differentiated into two major categories depending on what they posit as strategy base. The two broad categories are the design school Models and the resource based view or approach to strategy. The design school model or approach to strategy formulation aims at creation of a perfect fit that would help navigate the throes in the external environment. This school aims at gearing organization towards having every appropriate response to the external environment.

Thinkers in the design school approach to strategic management advocate for close monitoring of the outside environment (Dess &Taylor 53). They apply such models as five forces by Porter, value chain analysis, SWOT analysis, competitor analysis, Key success Factor monitoring and statistical approaches to problem solving (Dess &Taylor 57).

The models and statistical tools help in analysis and proper forecasting. A key aspect to this approach to strategy, therefore, is environmental scanning. The environment is monitored to identify issues or trends that can define the strategy formulation process.

Basing on the characteristics identified from the external environment, the organization is supposed to align itself accordingly (Kotler 102). Changes in the external environment occur on many platforms. The changes can be political, economic, social, technological, environmental or legal.

Whatsoever the change, a response has to be envisaged that will ensure the organization continues to operate optimally. Some strategies used in response to environmental changes include strategic partnership, diversification, acquisitions, mergers, liquidation or internationalization (Porter 216). Whatsoever, the change, the strategy formulated has to give the organization a lead in the market.

Resource Based Viewers of competitive advantage posit that an organization only achieves a sustainable competitive advantage or edge it is able to do things and create value in a unique way that cannot be matched by competitor strategies or copied by competition. The source of competitive advantage therefore emanates from what the company has that competition does not have.

The resource based view of firms competitive advantage focuses on the internal capacity in an organization and the related advantages that can accrue the company in the market place owing the internal capability it has (Peteraf 185). From the resource based view, the whole organization is understood to be a pool of capacity or capabilities. The strategy process aims at in an interconnected way applying an organizations capacity towards desired market presence, profitability and level of operations.

The word resource generally refers to the inputs into operations that are transformed or facilitate transformation of other inputs into valuable outputs. Resources and capabilities may exist in an organization in the form of tangible good or intangible capacities.

Resources are best defined along the 5Ms of management i.e. man-hour, manpower, materials, methods, measurement and money. Resources and capacity is defined by an organization employees, capital base, unique skills, kind of methods and measurement procedures, technology (Sanchez & Heene 156).

More importantly, resource based strategist posit that capability out of a capacity is a gradual development. Therefore, the more a capacity is employed and reinforced, the more developed it becomes. The more a capacity is developed, the more it becomes elusive for competition to outwit the organization on the basis of that capacity.

The resource based view differs greatly from the Design school model of strategy. The design school approaches to competitive advantage building focus on external factors and how they affect the company. The external environment is an important aspect of a business. The external forces or players in the external environment impact on business processes. Unless the external environment is properly monitored and factored in the business strategies, success becomes elusive.

The major difference between a resource based view and a design school model is that the internal environment and external environment are the locus of control, respectively. The difference in focus leads to different responses to threats and opportunities. Strengthening internal capacity leads to a more sustainable competitive advantage than merely designing responses to the external environment (Teece et al 521).

The resource based view is more proactive while the design school model is more reactive. Although planning is a critical aspect in the design model, planning bases can make a plan more reactionary and proactive. If the plan is external environment oriented, it means that the external environment is controlling the organization. A more enviable position is where the organization controls the environment.

It is for the foregoing reasons that HRD is very important in sharpening the competitive advantage of an organization. Building internal capacity offers a more sustainable competitive edge (Wernerfelt 179). The capacity is there to meet with whatsoever changes in the external environment. Basing strategy or competitive advantage purely on models that respond to the external environmental factors is very temporal in its nature. It means that when changes occur, new designs have to be developed again.

Establishing Human Resource Development

Establishing & implementing human resource development follows an 8 step model that guarantees exhaustive and elaborate considerations for optimal results. Table 1 below shows the steps in establishing HRD in an organization.

Implementing Human Resource Development

The establishment of HRD in an organization culminates into the implementation of HRD programs. There are different HRD programs that can be implemented in an organization. Such programs include but are not limited to career planning, succession planning, employee training, performance appraisal and reward, counselling, coaching and mentoring programs (Mayo 86). The implementation of these programs has to be guided by organizational characteristics. For each program, response or execution strategies are implemented.

HRD implementation starts with identifying target beneficiaries in response to identified needs. The target beneficiary support fro the HRD program has to be solicited or assured. The Implementation also involves identifying implementation methods and partners. If it is training, the hows of the training, trainers and where the training is to happen from have to be identified.

Once issues to do with who, what, where and when are clear, budgetary considerations and venue preparations can be executed. The HRD officers have to maker sure participants get all the support they need for effective learning or development. Mechanisms for monitoring and evaluating the process have to be designed through dialogue between all participating parties.

Workplace Learning

Work place learning is a continuous process that aims at equipping employees with knowledge and skills (Senge 5). Work place learning happens in different forums. Work place learning largely depends on organizational needs or characteristics. Work place learning can be directed or self directed.

Directed learning is where learning has been formalized and employees are involved in given systematized learning endeavours. Supervisors and directors determine what, how, when and where the employees learn. Self directed learning is initiated by learners themselves and they determine what to learn, when to learn and how to learn. Self directed learning stems from an employees personal desire and own educational goals and objectives.

Self directed work place learning is critical in an organization. It is the most effective way by which employee can develop. The more systematically employees approach self directed work place learning, the better for them (Reed 61). Systemizing work place learning means that employees consciously look into their own development needs. Further, the employees design learning objectives, on their own, institute learning mechanisms and continually monitor and evaluate their own learning progress.

HRD officers have the challenge of encouraging participation in directed learning but most critically self directed learning (Bratton & Gold 274). There are a number of ways of encouraging work place learning. One ways is to encourage formation of communities of practice.

A community of practice is ideally an informal group of employees who have similar work place interest and are eager to learn from each other. Communities of practice in a work place take operations and employee development to higher levels very fast. The second way of encouraging work place learning is providing necessary resources. A company library can be a great resource for employees interested in any form of research.

Audio learning materials can be made accessible to employees. Finally, an atmosphere of openness and sharing about learning goals will help towards sharing of information in the organization. Sharing of leaning related information will lead to employees encouraging each other to learn certain aspects or issues related to their job or general welfare.

When it comes to directed learning, the first consideration is to do a needs training needs assessment. Once the training needs have been established, the different methods of training are considered and how to effectively execute them designed. Training can be done formally in classrooms, on the job; through self learning method e.g. computer based learning, or sponsorship to training institutions.

Knowledge management

Closely linked to work place learning is the concept of knowledge management in organizations. Knowledge management is basically efforts by an organization to generate, preserve and facilitate sharing of knowledge in an organization (Senge 34). Knowledge in an organization resides with individuals, in organizational procedures and in organizational process.

Knowledge goes beyond technical and soft skill tenets to encompass organizational culture embedded meanings as espoused in organization structure and processes. Knowledge management and dissemination is an integral aspect of employee development. Knowledge sharing happens in different forums.

It could be through informal discussions, apprenticeship arrangements, formal training sessions, company mentoring efforts, dissemination of employee reports or research reports on different operations in organization and intranet based sharing (Reed 62).

A knowledge sharing culture in an organization enhances employee cohesiveness and guarantees and employee based competitive advantage (Kay 125). Therefore, in designing an organizations HRD plan, it is important to factor how to manage knowledge into it. Knowledge management should take advantage of all the people, technology and processes in an organization.

As already discussed, encouraging community of practice is a sure way of managing knowledge effectively in an organization. Junior employees have to be encouraged to consult with senior employees. Forums that facilitate sharing by senior experts have to be encouraged in an organization (Reed 63).

Conclusion

HRD is critical to an organizations survival or sharpening of a competitive advantage. As discussed in this paper, an organizational strategy based on resource capacity is more sustainable than a strategy based on given statistical designs. Building internal capacity makes an organization ready for any external changes. HRD ensures that employees capability is sharpened. A sharp work force institutes processes that guarantee an organization a competitive edge.

It was further established that HRD is motivational. When an organization invests in its employees, they feel comfortable and secure. Furthermore, increasing employee capacity or capability helps them work with confidence. These measures translate into better performance and improved productivity.

Human resource development has to be planned carefully. It has to be undertaken with the understanding that specific outcomes beneficial to the organization are to be achieved. HRD costs the organization thus the need to plan and implement effective and efficient programs.

The HRD plans have to be harmonized with the organizations strategic goals and top management support guaranteed. Human resource officers have to formulate a clear HRD philosophy supported by clear HRD policies. The policy guide the human resource development concern in an organization and have to be clear on desired performance or outcomes.

Works Cited

Armstrong, Michael. A Handbook of Human Resource Management. 10^th Ed. London: Kogan Page, 2001.

Bratton, John, & Gold, Jeffrey. Human Resource Management: Theory and Practice. 2^nd Ed. New York: Routledge, 2001

Dess, G., G., &Taylor, M. L. Strategic Management: Creating Competitive Advantages, 2^nd Ed., London: Mcgraw Hill Book Co, 2004

Ireland, Duane, R., Hoskisson, Robert, E., & Hitt, Michael, E. Understanding Business Strategy: Concepts and Cases, London: Cengage Learning, 2008

Kay, John. Foundations of Corporate Success: How Business Strategies add Value. Oxford: Oxford University Press, 2003.

Kotler, Philip. Marketing Management: Analysis, Planning, Implementation, and Control, New York: Prentice-Hall, 1997

Mayo, Andrew. Creating a Learning and Development Strategy: The HR Business Partners Guide to Developing People. London: CIPD, 2004

Peteraf, Margaret, A., The cornerstones of competitive advantage: a resource-based view. Strategic Management Journal Vol. 14. 3 (1993): 179191

Porter, Michael, E., Competitive Strategy: Techniques for Analyzing Industries and Competitors, New York: Free Press, 1980

Reed, Alec. Innovation in Human Resource Management. London: Chartered Institute of Personnel and Development, 2001

Robertson, Ivan, T., Smith, Mike & Cooper, Dominic. Motivation Strategies: Theory and Practice. London: Institute of Personnel Management, 2002.

Robbins, Stephen, P. Organizational Behavior. 11^th Ed. New York: Prentice Hall, 2004

Sanchez, R., & Heene, A. The New Strategic Management: Organizations, Competition and Competence, New York: John Wiley & Sons, 2004

Schuler, Randall, S. Managing Human Resources. Cincinnati, Ohio: South-Western College Publishing, 1998.

Senge, Peter, M. The Fifth Discipline: The Art & Practice of the Learning Organization. New York: Currency Doubleday, 2000.

Teece, David, J., Pisano, Gary, & Shuen, Amy. Dynamic Capabilities and Strategic Management. Strategic Management Journal Vol. 18. 7 (1997): 509533

Wernerfelt, Birger. A Resource-Based View of the Firm. Strategic Management Journal Vol.5 (1984) 171180

Whittington, Richard. What Is Strategy, and Does It Matter? 2^nd Ed, London: Thompson Learning, 2001

Yergin, Daniel, & Stanislaw, Joseph. The Commanding Heights, New York: Simon and Schuster, 2002

There are many companies that provide consulting services to entrepreneurs. Among them, one can distinguish such organizations as Mind Tools Corporate, Contingency Planning Solutions , Inc., and Lloyds TSB. Each of them specializes in contingency planning.

These companies have been selected because they work with various businesses, including small manufacturing firms that hire no more than 100 employees. Furthermore, they offer various services to clients, for instance, the training of workers or the development of information technologies that can be used to mitigate the impacts of a calamity (Lloyds TSB, 2013, unpaged).

It should be taken into account that these organizations do not usually specify the exact amount of time that will be needed to develop a contingency plan because the length of their activities can depend on the specific production processes adopted by a manufacturing term.

Nevertheless, this task can require a consulting firm approximately thirty days. Secondly, each of these organizations is ready to organize training for the employees of a business that needs consulting services (Lloyds TSB, 2013; Contingency Planning Solutions, 2013; Mind Tools Corporate, 2013).

Overall, these consulting firms understand that manufacturers may need to communicate with experts who are knowledgeable in a specific area of production or risk management (Contingency Planning Solutions, 2013). This is why they hold many seminars that can be attended by many businesses.

This is one of the main aspects that can be identified. Furthermore, these consulting firms do not specify the price for their services. In order to learn more about these questions, one should contact the management of these firms. This is one of the details that should not be overlooked by entrepreneurs.

Apart from that, the consulting firms explain what kind of risks they can address. In particular, one can mention equipment failure, physical problems such as flooding or fire, the failures of suppliers, and suppliers (Lloyds TSB, 2013). In other words, they explain what kind of assistance they can offer. It seems that this information can be of great relevance to potential customers who want to learn more about the nature of consulting services that will be offered to them.

Additionally, some of these organizations enable customers to test the efficiency of the contingency plans (Lloyds TSB, 2013). In this way, manufacturers can gain better a better idea about the risks to which they can be exposed (Lloyds TSB, 2013). Therefore, these businesses provide a wide range of services to the potential clients.

Overall, it is possible to choose such a company as Lloyds TSB because this organization provides the most detailed explanation of how their services can benefit a business. Apart from that, this company explains how its representatives will interact with clients. This is one of the main aspects that can be identified.

These examples indicate that consulting firms provide a wide range of services to manufacturers. They usually place much emphasis on training of employees and development of specific steps that can address various types of problems. Nevertheless, they do not normally specify the timelines of their work.

Certainly, the companies discussed in this paper are not the only consulting firms. However, the selected organizations give detailed information about their services and explain how they can create value for clients. This is the main argument that can be put forward.

Reference List

Contingency Planning Solutions. (2013). Services. Web.

Lloyds TSB. (2013).Contingency planning. Web.

Mind Tools Corporate. (2013). Features. Web.

Tom Nagle presents the argument that there has been a shift in how prices are set, from using pricing policies to the customers setting Prices, a trend that started in the eighties and which he refers to as negotiated pricing. He says that on the part of managers, who were only interested in profit margins however minimal, this was a wrong move.

To determine the price for the customer, it is imperative to understand how much value the product is to the customer. With this value in mind, one can set a price with confidence that the customer who also appreciates the value of the product, will be willing to pay for it.

Nagle points out that a seller should not be cowed into negotiating large discounts that do not reflect the true value of the product because once this happens, a wise customer will keep pushing this advantage. The seller should state firmly that his/her pricing is fair and that it is worth paying for what he/she has to offer.

Another suggestion Nagle offers to deal with customers is unbundling. This is stripping the product of features that customers supposedly dismiss as not being important, and then offering the same product at a lower price. However, Naggle notes, there should be different pricing systems for different quality goods and different price valuing systems for different customers depending on size of purchase, commitment and service requirements.

Nagles last recommendation on dealing with pricing is being able to turn down a deal that asks for too large a discount or that simply does not reflect on the value of the product. Nagle further recommends that sale persons should be motivated by being given incentives.

Nagle outlines a couple mistakes that companies should avoid such as discounting the price increase by giving a smaller price increase to those who buy in bulk, discounting for buyers who purchase greater volumes, undermining the importance of value over volume, signing contracts which strongly favor one side and lastly determining price by looking at the performance of a product.

Nagle concludes that the fundamental principal remains understanding the true value of the product offered, and then ensuring that the customers appreciate this value as well so that they know what they are paying for and do not hesitate to pay for it. Price negotiations results in loss of sense of value of the product, argues Nagle, and that it also undermines the importance of pricing.

There are companies that have successfully used the approach of understanding the value of their product and setting their prices accordingly. Sears is one of the companies that opted to go down this road with very profitable results.

By raising their prices by just one per cent, there was a corresponding 100% increase in profits. Sears did this by streamlining their supply chains, cutting down on the number of warehouses, and moving them closer to manufacturers. There was also closer monitoring of the flow of goods. Sears competition is other large store chains such as Wal-Mart.

Since it has been shown that it is better to stick to pricing policies that reflect value, the best strategy that Sears could apply to ward off competition would be to ensure delivering quality products so that customers do not run to the next supplier with greater discounts, despite their seemingly higher prices.

Summary

Recent annulment of the Honda Accord hybrid is one of the greatest marketing failures to have ever occurred in the automobile industry for the last five years. Honda stopped selling its Accord hybrid arguing that the car had not been doing well in the market relative to hybrid cars manufactured by Toyota.

The Accord hybrid was the companys most powerful and efficient hybrid car. Numerous factors contributed to the failure. The engineers failed to consider customers needs when developing the vehicle. Besides, the company operated on assumptions, which made it hard to market the car. This made it hard for Honda to compete with Toyota in the industry.

Hondas marketing mistake

One of the greatest marketing mistakes that Honda committed when selling Honda Accord hybrid is failure to come up with a strong marketing mix. Customer analysis is critical in helping a company to come up with products that suit all customers needs.

A company may come up with a good product, but fail to attract customers due to the product not meeting one or some of the customers needs (Goldberg, 2003). The same case happened to Honda Company. The company manufactured Honda Accord hybrid based on assumptions. It did not take time to conduct market analysis to determine what its target customers preferred. Eventually, the company came up with a hybrid car that focused on fuel and power efficiency and ignored other critical aspects like environmental conservation.

Additionally, the company assumed that since the hybrid car recorded high showroom traffic, it could market itself. Hence, it did little to market the car. Being a new product, Honda required carrying out promotional campaign to make customers aware of the car and its advantages. This would have helped the company to increase its sales volume and customer share.

Customers can hardly purchase a product if they do not know about its benefits (Zou & Cavusgil, 2002). Honda made the mistake of not coming up with promotional campaign to help customers distinguish its car from those sold by Toyota, Ford, General Motors and other automobile companies. Hence, customers continued purchasing Toyotas hybrid cars since they could not understand the benefits of purchasing Accord hybrid.

Possible changes

Product

To attract customers, Honda ought to make numerous changes on the car as well as on its marketing strategy. One of the factors that made Accord hybrid fail to attract many customers is failure to consider environmental conservation when manufacturing it. Hence, rather than coming up with an energy efficient car, the company needs to develop a car that is environmental conscious. Majority of consumers now prefers driving environmentally friendly cars.

Therefore, the company ought to modify the Accord hybrid to be more environmental conscious. Toyota Prius has been doing well in the market for a long time. One of the factors that make this brand excel is that it is environmentally friendly. Many customers prefer buying Toyota Prius because it makes them feel to participate in conserving the environment. This indicates that customers prefer associating with brands that are environmental conscious.

Besides developing an environmentally friendly hybrid car, Honda requires positioning its product uniquely. The company ought to come up with a unique design for the car as well as a unique name. The uniqueness would attract many customers. Presently, Honda Accord hybrid is not unique, and many customers do not distinguish it from others cars in the market.

Developing a unique car and using a unique name for the hybrid car would lead to many customers purchasing the car (Goldberg, 2003). Many customers prefer trying new and unique products. The products make them appear exceptional and sophisticated. Therefore, using a unique name and design would help Honda to increase the sales volume of its hybrid car.

Marketing strategy

Apart from making changes on the product, Honda also needs to make changes on its marketing strategy. One of the factors that made the Honda Accord hybrid fail to attract many customers is lack of market research. The company ought to conduct a market analysis to identify customers needs.

Had the company conducted a market analysis, it would have made sure that it factored in environmental issues when manufacturing the hybrid car. Additionally, market analysis would help the company to identify the potential markets; therefore, target those particular markets (Zou & Cavusgil, 2002).

Another initiative that the company ought to take to enhance performance of Honda Accord hybrid in the market is coming up with strong public relations and promotional campaign. Public relations campaigns help to create a positive brand image in the mind of potential customers (Zou & Cavusgil, 2002). Failure to carry out public relations and promotional campaigns made it hard for customers to distinguish Accord hybrid from other brands.

Thus, for Honda to boost its sales volume, it needs to carry out promotional and advertising campaigns. This will go a long way towards assisting customers to distinguish Accord hybrid from Toyota Prius and other hybrid cars. Therefore, rather than assuming that the high showroom traffic that Accord hybrid records will translate into sales, Honda needs to come up with an aggressive advertising and promotional campaign.

References

Goldberg, P. (2003). Product differentiation and oligopoly in international markets: the case of the U.S. automobile industry. Pinelopi Koujianou Goldberg Econometrica, 63(4), 891-951.

Zou, S. & Cavusgil, T. (2002). The GMS: a broad conceptualization of global marketing strategy and its effect on firm performance. Journal of Marketing, 66(4), 40-56.

Introduction

With the continued use of internet, the future of e-marketing no doubt looks like a bright one. Over the years, this prediction has sparked a series of debates about the prospects of e-marketing in the future. Some future happenings are pretty easy to predict. Such include the use of search engines and the consequent search engine optimization techniques.

Others however are not as straightforward; For example, with reduced marketing efficiency of email marketing and banner advertisement, just what else will the e-marketers do in order to market their products and services efficiently to their target markets? Other marketing strategies like pay-per-click advertising may be in wide use today, but the future of such is not clear especially considering the possibility of click fraud.

Though no one can correctly predict what the future really holds, this study seeks to identify the most prominent marketing strategies that will most likely form the future of e-marketing. Specifically, the study will look at search engine optimization, pay-per-click (PPC) advertising and content articles as the three prominent platforms that will most likely characterize e-marketing in future.

Approach

This is a literature review based study. The researcher will collect qualitative data from different published sources. Mostly, the study will use statistics and evidence published in reliable internet sources as well as scholarly journals. From the evidence gathered during the research, an analysis will be made on the most probable future characteristics of e-marketing.

Since the future can be anything from now to eternity, this research paper recognizes that making predictions for such a length of time would be futile. As such, the term future in this study is used to refer to 10 years from now.

The researcher acknowledges that 10 years in the electronic age is still too much of a time to make predictions especially in view of the ever changing use of technology. However, the researcher also acknowledges that for any new e-marketing to take effect in the current market, it would have to take quite sometime for all marketers to adopt it like most have done search engine optimization or PPC advertisements.

Literature review

Search engine optimization

In 2003, iProspects CEO Fredrick Marckini said that the future of marketing lay on Search engine optimization (Thurow 3). Eight years down the line, it is clear that his predictions were right. Not only is search engine the most revered tool by e-marketers, but also the single most e-marketing tool with the highest percentage of conversions.

Did this mean that the prediction could well extend to several more years? All indications suggest that search engine optimization will remain an important tool in e-marketings future. However, Thurow suggests that the future will involve marketers researching more on how consumers search for specific items on the e-market (5). By finding out how clients search for items, the marketers will then know the intent of queries used by the clients.

The future of search engine optimization could also lay more emphasis on conversion rates rather than keywords as is the case today (Thurow 5). Through additional of the rate of switch of a website, individuals are capable of improving the outcomes that may come from other related marketing sources that may comprise; direct email, banner ads and search engines.

The problem of search optimization is identified by Thurow as the lack of search verticalization (6). However in recent years, the consolidation of online search space has remedied this problem and prominent search engines have improved search ranking to factor in relevancy. This means that consumers are now able to obtain specific results when they conduct specific searches on the mass-market place presented by the World Wide Web.

Challenges in e-marketing by SEO still arise. For example, SEO designs reports that 30 percent of queries used on search engines are unique and hence even the search engines encounter them the first time when a web user types them. This challenge is however countered by the fact that most e-customers know the specific thing they are looking for and hence they make sure to include at least the name of the product in the search keywords.

What therefore is the future of search engine optimization, and are we likely to see a replacement of the same any time soon? Well, according to evidence gathered in the course of this study, search engine will and must change in order to meet the increased e-marketing needs and challenges.

However, this study also holds the opinion that search engine optimization will remain as part of e-marketing in the foreseeable future. For it to stand the test of time it must remain relevant and the information provided by search engine queries must meet the consumers expectations on quality.

The above argument is supported by information provided by web users in a 2004 conference on e-marketing, where it was established that users want information to be accessible in large quantities. The information must be relevant and fast (Turcotte 2).

Pay per click

Pay per click is an e-marketing strategy, where marketers buy sponsored advertisements placed on Search Engine Result Pages. The adverts are usually placed on the right hand corner of the SERPs pages or above the normal webpage listings in order to maximize the viewership by web visitors.

In this form of marketing, the product owner pays for the ad space according to the amount of times that people click on the advertisement. Notably, this process requires close monitoring and management in order to ensure that maximum conversions are attained. The use of keywords is also an ideal strategy that e-marketers use in order to make the clicks more targeted (quirk e-marketing101 2)

Expected results

This study expects to establish that e-marketing will provide a platform where marketers can engage in cutthroat competition and this is especially so because the most effective e-marketing tools will be used by all marketers. This may bring forth creativity, where innovation especially in underhanded marketing strategies may be used in order to beat off competition.

This study also anticipates that underhanded marketing strategies may raise the need for government involvement in e-marketing. This could especially happen in terms of policy formulation whereby the government will pass laws that require e-marketers to uphold specific ethical standards for purposes of reducing fraudulent e-marketing practices. Already, signs of this happening can be observed through the increased calls urging governments to enhance their oversight role in order to curb electronic fraud.

E-marketers will also concentrate on building trusting relationships with the consumer in order to use brands as the competition tools as opposed to prices. This paper predicts that e-marketers and brand owners will strive to build trust for their brands through increasing brand exposure. Signs that this will happen sooner than later are already evident as affiliate programs continue increasing. More to this, prominent websites host links to other less popular websites as a strategy to refer users to the specific websites.

Unlike what happens in traditional marketing however, this will involve brand owners creating relationships and marketing alliances with online institutions which have already established reputable brands and institutions to the electronic targeted audience. Although the smaller websites would no doubt benefit from associating with the big players, the benefits for the bigger websites would have to be on mutually agreed terms.

This study also expects that basic marketing principles will be valuable in e-marketing just as was and is still the case with traditional media marketing. This means that the e-marketers will need to formulate quality sale pitches for presentation to their target audience. Just like pitching for the traditional media audience, the e-market sales pitch will need to be: surprising and new; essential or useful; or touching on the audiences emotions.

Conclusion

Based on the studys identification of search engine optimization and pay per click as the most promising tools for use for e-marketing in the foreseeable future, it is evident that e-marketers will need to work hard in order to maintain prominent marketing lists based on relevance to queries posed by users and their ability to pay for the traffic generated by PPC.

Between search engine optimization and PPC, it seems that the former will dominate e-marketing, and if Googles Craig Silverstein is anything to go by, search engines will be more like yeast based search pets that understand our emotions and inferences. (Cited by Turcotte 6).

Silversteins predicted that this would happen in 300 years. Going by recent trends where search engines can return customized results to a query (e.g. pizza query returns results about pizza outlets within a persons locality); his prediction does not look like a wild dream at all.

In fact, it may come as a surprise if such a prediction becomes true in less than 50 years. This may raise privacy concerns, but most users will appreciate the convenience and timeliness of such searches. On the other hand, the search engines can do what Yahoo does currently; extending the search to include the web users intent, while giving them more control on the results that are returned by the search engine (Turcotte 7).

Overall, this study has established that the future of e-marketing very much depends on the demands placed to the e-marketers by the consumer. This largely occurs because web users are not just complacent with good results.

Every time a new development in e-marketing occurs, the users want an improvement of the same. Todays search results will not appeal to most consumers in future; they want more direct way of engaging in e-commerce. This often prompts a swift reaction from e-marketers who are driven by the sole need of improving their online presence.

In a bid to gain as much online presence, it is also likely that underhand marketing strategies will develop in equal measure. As noted elsewhere in this proposal however, the study expects to identify more policy development from respective governments in an attempt to streamline e-marketing and protect consumers from e-marketing fraudsters.

Works Cited

Quirk e-Marketing 101. The arrows in the E-marketers quiver. n.d. Web.

Thurow, Shari. The future of Search Engine Marketing. Search Engine Watch. June 2003. Web.

Turcotte, Stephen. What is the future of Search? Backbone media. n.d. 12 April 2010. Web.