Category: Case study

Case Study of Uber As a Private Transportation Company

Case Study

Uber in 2016: Can it remain the dominant leader of the world’s fast-emerging ridesharing industry?

Abstract

Uber is a private transportation company which evolving the way world moves. It connects riders to drivers through company’s app which called uber app which make cities and places more accessible. This case study includes history of uber company and industry information, porter’s five force analysis, PESTEL analysis and SWOT analysis. Its mission is to remain the dominant leader of the world’s fast-emerging ridesharing industry. In this case study author tried to focus on analysis of problems and solutions for the same. Author also mentioned financial data of the uber in terms of its income statements, financial statements and cash flows in last three years. To overcome problems and issues, author mentioned different strategies and recommendations in this case study.

Case Study

Uber in 2016: the dominant leader of the world’s fast-emerging ridesharing industry

Uber is an American transportation start-up company founded in San Francisco, California in 2009 by Travis Kalanick and Garrett Camp who created an innovative app for cab service putting together the technology. This service is now available in 70 countries around the world. Users can request a ride using a mobile phone and closest available participating driver is dispatched through the location. Users are also able to track the location of the driver while in route. As the user’s credit card information is already on file with uber app, riders are charged automatically which includes tip and receive a receipt by email. In addition to a licensed taxi, Uber users can request a “black” car, the default option as well as an SUV or lower priced “UberX” car. In Paris, France uber users can also request a motorcycle. A prototype of the Ubercab software was tested in New York City in January 2010. Uber cab went live in San Francisco on May 31, 2010. Even though, a ride using ubercab cost about 50 percent more than a taxi, the service provided a higher quality car.

The convenience and reliability of the service appealed to a significant number of San Francisco residents. Chris Sacca, one of the Uber cab’s users was an investor whose firm Lowercase capital invested $1.25 million in an initial round of fundraising in October 2010 that was led by first-round capital. Interest in Uber cab app grew among android device users, so Uber cab introduced an android app in November 2010. In February 2011, the company completed a round of series A funding that raised $11 million. Benchmark Capital led the round with further participation from Uber’s previous investors. Late in 2011, Uber conducted a Series B round of fundraising. Menlo Ventures contributed $39 million in fundraising. Uber used its cash to expand its service to additional cities. In each city it served, Uber hired a manager who create a network of drivers. Moreover, Uber created a surge pricing model which raised the price of fares at peak times. In this way cars are always available for users who willing to pay the prevailing price.

According to Law (2009), PESTEL is an analysis of the external environment of the firm and it stands for political, economic, social, technological, legal and environmental issues that could significantly affect the strategic development of a firm. Since Uber is a global online ridesharing company, this macro-environmental analysis focuses on many issues and problems from many countries in the world where Uber is present.

Economic: The concept of ‘sharing economy’ is mentioned by PwC (2015) to facilitate reduction of waste arising from the ownership of a product and technological innovation reduce the gap between supply and demand of this concept. Also utilization of ideal resources can result in more efficient markets, where the community can have more income-earning opportunities.

Analysis of Diversity Strategies in Companies: Case Study of H&M, Papa John’s, and Starbucks

Diversity in H&M

In January 2018, H&M photographed a young black boy by the name of Liam Mango wearing a green sweatshirt with the words “coolest money in the jungle” written across the front in their ad. When this ad was published to their website to be sold, many individuals were outraged and took to social media for the picture to be removed as it was viewed as racist. When this controversial ad hit the internet, some people could not understand how or why the image was viewed as racist. European cultures have compared black or dark humans to apes and monkey for centuries and it is degrading as they are not an animal. H&M began trending on twitter for being racist and celebrities such as the Lebron James, Diddy, The Weekend and G-Eazy cut ties with the company for even publishing the photo.

The parent of the young black boy shown in the ad received a call from a representative (Justine) at H&M apologizing and informed Liam’s mother (Terry) there was an upsetting image of Liam circulating the internet. Justine told Terry, if they needed anything whether it be somewhere to go, someone to talk to, etc. to just let them know how H&M could be of assistance. The parents of Liam stated they didn’t believe the ad was racist. Terry, went on to comment “Am the mum and this is one of hundreds of outfits my son has modeled…….stop crying Wolf all the time, unnecessary issue here……..get over it, I’m just looking at Liam, a Black, young boy, modeling a T-shirt that has a monkey on it.” (Wang,Connie, 2019).

Although H&M apologized, petitions were started like wildfires for global boycotts. H&M’s newly opened store in South Africa was broken into and vandalized by protestors. Millions of people all around the world were shocked that such an ad was even published. People felt white companies still viewed Black consumers as an ugly stereotype and degrading. H&M quickly removed the ad from its online page and instantly went to social media to apologize. The sweatshirt sold in stores were also removed off the floor. H&M has since hired a diversity leader and we have not seen controversial photographs, ads, or posting from the company which is great.

It is detrimental for a company to have a better representation of all racial groups sitting at the table making decisions together. Insight can be given as to how the audience may perceive their product whether in a positive or negative light. For us to move past discrimination, we must understand one another’s viewpoint. In this case, H&M has lost several customers but has also gained customers because they showed they took the situation at hand seriously. They apologized to the family involved, apologized publicly to the customers, took down the ad and hired on a diversity leader to prevent any future incidents.

I believe it is important that CEO and executives take on partial responsibility of the problem and immediately find ways to fix the problem or issue. In this scenario, H&M apologized for the misunderstanding behind the ad and immediately removed the ad. They assigned their a representative to reach out to the model (Liam) mother (Terry) to apologize for the controversial image and offered their assistance in any way possible. H&M also went on to hire a diversity leader that way they avoid incidents as such to occur again.

Papa John’s founder in hot water

Papa John’s is an American pizza restaurant franchise founded in 1984 by “Papa” John Schnatter whom started in his father broom closet tavern in Jeffersonville, IN. Papa John’s has over 5,199 establishments, about 4,456 franchised restaurants operating domestically in all 50 states and in 44 countries. Papa John’s is the brand most associated with the NFL. They were awarded Business of the Year by Business First in 2013. In 2017, they were ranked number one in customer satisfaction among QSR-pizza brands American Customer Satisfaction Indec (ACSI) for the 16th time in the last 18 years. Their catch phrase is known for “Better Ingredients + Better People= Better Pizza.”

In May of 2018, founder and chairman “Papa” John Schnatter stepped down after he apologized for using racial slur about African Americans. A conference call took place between Papa John’s executives and the marketing agency Laundry Service. During the call, John Schnatter the founder of Papa John’s is said to have stated, “Colonel Sanders called blacks n******,” regarding the NFL protests, led by African American players by taking a knee to draw attention to police brutality. (Neuman, Scott 2018). On Wednesday, John Schnatter resigned as chairman of the company’s board and also resigned from the University of Louisville’s Board of Trustees after the local branch of the NAACP called on him to be removed.

John Schnatter went on to apologize stating “Regardless of the context, I apologize. Simply stated, racism has no place in our society.” Unfortunately, Papa John’s shares fell about 5 percent. Major League Baseball went on to suspend a leaguewide promotion that it had with the company to allow fans to get discounts on pizzas after players hit grand slams. (Rosenberg, Eli 2018). Some teams, such as the Florida Marlins, suspended individual partnerships they had with the brand. Just like H&M, Papa John’s went on to hire a public relations agency to help Papa John’s from the fall out.

Starbucks CEO takes the high road

Starbucks is an American coffee company and coffeehouse chain, founded by three partners Jerry Baldwin, Zev Siegl, and Gordon Bowker in Seattle, Washington in 1971. The founders came up with the name Starbucks from the chief mate in the book Moby-Dick. Today, the CEO of Starbucks is Kevin Johnson. The company operates over 30,000 locations worldwide and employs about 291,000 employees worldwide. (Retrieved from Starbucks website, https://www.starbucks.com/about-us/company-information). The brand is so well-known that the company does not put its name on the cups. Their logo does all the work for them. Starbucks is also known to believe in diversity in their company. CEO Kevin Johnson stated, “Our Mission and Values at Starbucks reflect the fundamental principle that everyone is welcome. We aspire to be a place of inclusion, diversity, equity, and accessibility. Diversity makes us stronger, and the creation of a deeply inclusive culture allows us to succeed and grow together.” (Retrieved from Starbucks website, https://www.starbucks.com/responsibility/community/diversity-and-inclusion).

Well, if Starbucks is so diverse, why I am bringing up this popular coffee shop? On April 12th, 2018, two young black African Americans, Donte Robinson and Rashon Nelson, were waiting for a friend to begin their business meeting at a Philadelphia Starbucks when a manager at Starbucks called the police on them after not ordering anything. These two young men were arrested and taken out in handcuffs. Consumers around took out their phones and recorded what was happening and that video went viral throughout different social media platforms. It had become the latest example of people of color being arrested in America.

So, what did Starbucks do after the arrest? CEO Kevin Johnson personally delivered a video hat was posted on the official Starbucks website apologizing for the arrest. Mr. Johnson stated he is accountable for the incident and the two gentlemen did not deserve what happened. He goes on to say he will do everything he can to ensure it is fixed and never happens again. Whether it is making changes to the policy, in the practice, additional store manager training, including training around unconscious bias, and they will address all. He did not believe that the store manager who made the call to the police should be fired. Mr. Johnson felt the blame was misplaced and should focus on fixing the issue. He stated it is a management issue, and he is accountable to ensure they address the policy and the practice and the training that led to that outcome.

On Tuesday, May 29, 2018, Starbucks closed all its stores for employees to undergo a racial-bias training. The racial-bias training consisted of employees gathering to watch dozen of videos featuring the rapper Common, Stanley Nelson documentary filmmaker of “the different things people of color go through just by leaving the house day by day,” and Starbucks executives. (Calfas, Jennifer, 2018). The employees also participated in a wide-range or discussions regarding race and identity with their colleagues. Starbucks encouraged some employees to write their feelings in journals that were provided to them. (Rose, Joel 2018).

Starbucks executives made a great attempt at apologizing for the incident that occurred and took the initiative to bring the discussion to the table. However, the root of the problem will not end just because some videos and journals were provided to the employees. Starbucks CEO Kevin Johnson did go onto say they will continue to implement the change and bring awareness with videos being a part of training for employees. It is very well shown to the public that Starbucks took the matter seriously and made sure to take steps to move into the right direction. When going onto Starbucks website there is a page dedicated to their diversity acceptance within their organization which is beautiful to see.

I believe thus far; Starbucks has proven they believe in truly being diverse within their organization. Many companies out there have gone under scrutiny for not being diverse or discriminating towards certain races, disabilities, gender, etc. and have not lifted a finger to change their ways nor gone out their way to change the culture in their workplace. But I feel Starbucks is on the right track to improving and accepting diversity and rejecting discrimination. It says a lot about their company that they took steps to avoid situations from happening in the future and bring awareness to all of their employees.

Starbucks has reached their goal in achieving 100% pay equity for women and men and people of all races performing similar work in the United states. 46% of their U.S. partners are people of color. 33% of their vice presidents are people of color and of their senior leader, 15% are people of color. 68% of their U.S. partners (employees) are women. Of those vice presidents, 50% are women. Starbucks aspires to bring awareness and change to their company. (Retrieved from https://www.starbucks.com/responsibility/community/diversity-and-inclusion/aspirations)

After reading these cases, I sit here asking myself, how do we reduce or end all discrimination in the workplace? How can we make a workplace more inviting to all regardless of skin color, disability, or even gender? There are many ways. Beginning at home. Evaluate ourselves and correct our flaws. Then evaluate and correct how you are raising your kids because one day they will grow up to be adults going into the workforce carrying on what they have been taught. We as a society have to stand up against discrimination in the workplace and make it known when it happens. We can no longer be afraid to speak up when these incidents happen. As the late Michael Jackson stated in his Man in the mirror song, “If you want to make the world a better place, take a look at yourself, and then make a change.” (Jackson, Michael 1987).

In order for us as a society to move past discrimination we must first work to reduce it in the workplace. An average person spends about eight hours a day at work five days a week. Their workplace should be a safe environment. In order to get there, the company must implement certain criteria. In the journal “How to reduce Discrimination in the workplace: The case of Austria and Taiwan (R.O.C.),” it states a qualitative study was conducted and showed that education, active positioning of companies, leadership and diligent selection of employees, discussion and analysis, psychological support, governmental policies, and aspects of language and talking gender-wise are important steps to reducing or eliminating discrimination in the workplace. (Maček Anita, Horvat Tatjana, Bradler Sarah, Bobek Vito 2018).

It is important that we are not naïve to the fact that people must be educated about discrimination. Employers should implicate this a part of the onboarding process when hiring an employee for the new job. This course should also be made available to employees of the company every year as a refresher. Encourage their employee’s discrimination will not be tolerated and be realistic that employees will not always agree with each other, but they should always respect each other’s differences. Employees should take responsibility to be proactive and report incidents of harassing behavior or discriminatory or inappropriate behavior and those issues should be handed accordingly.

Supervisors and managers should also be in on the training and should know how to respond to discrimination in the workplace. They should be able to be discreet when an incident happens and take the situation at hand serious. They should also be taught properly how to deal with complaints of discrimination promptly. Supervisors and manager should know if they emphasize higher-order goals and values in their leadership style are more effective in managing diverse teams. There are many steps supervisors and managers can take to ensure they are being fair across the board.

Understanding their organization antidiscrimination policies thoroughly is one and sharing them with their employees. Full evaluate what accommodations a person with disability will need and fine-tune the job to that person’s abilities. They should also seek to understand and respect the unique biographical characteristics of each individual to get the best performance out of that employee. Also, always challenge and asses their own stereotype beliefs to increase their objectivity. (Robbins Stephen P., Judge, Timothy A., 2018). These are only a few examples, but they would lead to a better work environment for the team.

There are cases where an employee has brought up a situation to higher management and was dismissed because higher management did not believe it deserved the time of day. Human resources in many companies has made it clear to their employees they could voice their concerns without being reprimanded. Unfortunately, there are cases out there that will never be brought to light because the victim is afraid. Employers need to make it clear to everyone in their company they will respect cultural and racial differences in the workplace. All employees should familiarize themselves with the company’s policies in place towards discrimination.

Discrimination in the workplace can and most of the time leads to a high turnover rate for the company. So, employers should implement policies to avoid discrimination that way it does not cost them in the end. An individual from a minority group is less likely to leave an organization if they feel included which is known as positive diversity climate. In our book, “Essentials of Organization Behavior,” it states one method of enhancing workforce diversity is to target recruitment messages to specific demographic groups that are underrepresented in the workforce. People are generally in favor of diversity-oriented programs, to increase the representation of minority groups and ensure everyone a fair opportunity to show their skills and abilities.

I strongly believe we are on the right path to ending discrimination in the workplace. I do not agree with how Papa John’s handled their discrimination incident. Yes, the CEO of the company resigned from his position and gave a public apology. The company also hired a public relations agent to clean up the mess, but nothing was really done for the employees to have more insight on how to change their mind frames and bring light to the topic at hand. I love the way Starbucks handed their incident. The CEO gave a public apology, the manager willingly left the position, a whole training was given to all employees and a discussion was allowed to be had. Do I believe there is more that could have been done? Yes. But it is a step in the right direction, and they should be an example to all companies out there.

Case Study of Kellogg: Analysis of Micro and Macro Environment, Strategic Management Plan

Strategic Management Plan

Introduction

Every business has some strategies. These strategies influenced by the internal and external environment of the business. Business strategy means the course of action that assists the manager to achieve the goal. (Businessjargons, 2018). This strategy calls the master plan of the business. By this plan, the business is conducted and manage their competitive position in the business area. This is the long term plan of the company. But this plan affected by the internal and external environment of the business. The management faces those challenges and achieves the goal of the company. In this assignment, we discuss the Kellogg’s company which is an American manufacturing company. This company strategy has four pillars and these are the Win in breakfast, global snacks powerhouse, emerging market and win where the shopper’s shop (MOHANTY, 2019).

LO1

P1 Applying appropriate frameworks analyses the impact and influence of the macro-environment on a given organization and its strategies.

The environment is a very complex thing. Environment influence almost every company in the world. No one has any control over the external environment. They have to adopt the external environment. For analyzing the impact of the external environment on the Kellogg’s company we have to discuss the macro environment elements. By this analysis, we can understand the impact and influence the macro environment on the Kellogg’s company.

• The political factor that impacts Kellogg’s company: political factor has a great impact on the business organization. The political stability, diplomatic relation with the other country, business relation with union those things influence the business. Government action, public policy affect the organization. As the Kellogg’s doing their business in different countries. Before starting a business in the new country they focus on the publication factor of that country. Those are the risk of military invasion, level of corruption, intellectual property protection, taxation system, industrial safety regulations and so on (fernfortuniversity, 2018). If these factors are in favor of the Kellogg company than they start their business in that country. So if the company decides to increase its sell to the other countries and make new outlets over their this environment create problems to attain the goal.
• The economic factors that impact Kellogg’s company: Economic factors such as the inflation rate, saving rate, interest rate, foreign exchange rate, etc. This rate has a great impact on the business. If the business economic condition is very weak no multinational company wants to go, there. We know Zimbabwe in the highest inflation rate country in the world (Aljazeera, 2019). so n company wants to establish their outlet over there. So this is the impact of the economic factor in the business. The main aim of the Kellogg’s is to grow the sale of the business. So the low economic country cannot afford the high price product in that case they have fixed the price low. The profit will untimely low for setting the price low.
• Social Factors that Impact Kellogg Company: share, belief, attitude affect the business. Class, the structure of society influence the business. The educational quality of the people in society affects it most. Illiterate society will not receive everything positively. As the morning’s corn flakes for the baby is very healthy. But if society is illiterate they will not purchase this because they haven’t enough knowledge about health.
• Technological Factors that Impact Kellogg Company: In recent day technology is a vital factor for the business world. Technology change lots of things in the business area. Technology changes the transportation, communication and so on. For advance, transportation business organizations increase their area and selling more products. Technology changes the packaging sector most. So technology gives fuel to the business and runs so fast.
• An environmental factor that Impacts Kellogg company: Environment is a burning issue for the world. different countries have different laws regarding the environment. The business operates its business in the environment. They harm the environment. Like in Europe give tax-free for the organization that uses renewable energy. So for the company, it is must notice the environmental law where they conduct their business. Kellogg work for the environment. They produce their raw materials. They use less water and less energy in the land. Try to reduce the greenhouse gas emission (www.kelloggs.com, 2019)DZ. So the environmental factor has a great influence on the business factor. They have saved the environment and less pollute the environment.
• The demographic factor that impact Kellogg company: the population is one of the major factors. The age, gender, family, etc. affect the sale of the Kellogg.

So these are the macro-environment that impacts on the Kellogg company. Every element of the macro-environment influences the company. The company set a goal. They have objectives they attain it in every year. Business strategy means we know the set of actions to achieve the goal. Sometimes those activities were not possible to do due to the macro environment. The company set the objective to achieve 10% more profit this year. Due to the inflation rate and environmental law, they have to withdraw their business from one country. For that reason, they can’t achieve their goals. They can’t do anything as they haven’t any control over those factors.

LO2

P2 Analyses the internal environment and capabilities of a given organization using appropriate frameworks.

Internal analysis

The internal analysis relates to the internal environment of an organization. The factors that have a direct impact on an organization and can be controlled by the management are called the internal environment. The internal environment determines the position of the organization in the marketplace. Supplies, customers, employees, shareholders, etc. are some of the main factors of the internal environment. The internal analysis of the organization’s environment helps to acknowledge the strengths and weaknesses of the organization and to consider objectives and resources to make better plans towards organizational goals. Analyzing the internal environment of an organization determines its capability to use its resources effectively and efficiently which helps the organization to give better service and products to its customers than the competitors. The internal analysis provides important information about the organization. It gives insights to an organization’s internal environment which are considered very useful and important in directing the organization towards the achievement of its goals and targets. The internal analysis helps to understand where and organization can improve itself and where it cannot. It determines the strengths and weaknesses of an organization with the help of correct and efficient internal information.

Value chain

the value chain is a model that analyzes the set of activities that are needed to create a product or service. A value chain analysis is conducted by evaluating all the procedures in every step of the organization’s business in detail. Business activities regarding the value chain can be decided into two categories- a) primary and b) support.

Primary activities have five essential components as below:

• Inbound logistics: concerned with warehousing, receiving and managing inventory.
• Operations: converts raw material into a finished product.
• Outbound logistics: concerned with distributing the final products to the consumers.
• Marketing and sales: concerned with increase sales by promoting the product or service through advertising, pricing, etc.
• Service: concerned with enhancing customer relationships by giving maintenance, repair services, etc.

Support activities consist of four components. These are as follows:

• Procurement: concerned with getting supplies of raw materials.
• Technological development: concerned with the organization’s research and development stage.
• Human resources (HR) management: concerned with hiring, retaining and training the organization’s employees.
• Infrastructure: concerned with planning, accounting, finance, and quality control.

BCG MATRIX

BCG matrix or growth/share matrix is a business tool that is used to evaluate the position of an organization’s brand portfolio by using relative market share and growth rate factors. The analysis helps to understand where the organization should invest in and where it should not. It helps an organization consider growth opportunities by designing long-term strategic planning. The BCG matrix of the Kellogg Company is given below:

• Dogs: Dogs show a low market position and generate low cash returns. Asia Pacific segment market call called the Dogs of Kellogg company.
• Cash cows: This segment indicates the low sale growth rate high market share embraced of the stars. Kellogg should introduce new products to the market and increase its sales. The US in the low growth market but highly profitable market.
• Stars: These operate in industries of high growth and can later become cash cows. US market can call the stars for the Kellogg company. They generate the highest income from the US market. Europe market also is the stars market (BCG, 2018).
• Question marks: These hold low market shares, incurs losses and need closer consideration. In the US the Kellogg sells high morning foods but they cannot gain market share in the morning food.

SWOT Analysis

SWOT analysis is a technique that helps to acknowledge the strengths and weaknesses of an organization, identify the opportunities open for it and the threats it faces in the process of operation. It helps to evaluate an organization’s competitive position in the marketplace and develop its planning. The SWOT analysis can guide businesses towards successful strategies with correct and efficient internal and external information.

SWOT analysis of the Kellogg Company is given below:

Strength:

• Kellogg product produces almost 18 countries and sells its product more than 118 counties.
• The largest acquisition was made by Kellogg’s.
• Kellogg is the world’s best cereals maker (Bhasin, 2019).
• Kellogg spent 1 billion dollars annually for creating awareness.

Weakness:

• Some of Kellogg’s marketing campaigns and methods have been questioned by the customers.
• Being unable to capture the developing market made Kellogg’s slow in innovation.

Opportunity:

• There are lots of developing the market in different counties they can easily target those markets.
• They can make their contract with a new growing agent like food restaurants.

Threats:

• Lots of cereal makes created in recent years. This is one of the big threats for Kellogg.

LO3

P3 Applying Porter’s Five Forces model evaluates the competitive forces of a given market sector for an organization.

Porter’s five forces are a powerful tool for evaluating the competitive forces of an organization. when an organization understands the forces that can affect the organization strategy than the organization able to adjust with the environment. This porter’s five forces help the organization to avoid wrong steps in the future.

This model was created by the Harvard business school professor Michael porter. (mindtools, 2018). After the invention of this model, it is recognized as a popular business strategy tool. Porters told to look to the competitor more closely and also told to look more closely to look beyond the actions of their competitions. He told about the five factors that make up the competitive environment. Let’s look over the five factors.

• The threat of new entrants: This means the new company enters the market. The level of entry relies highly on the market entry cost. Entry cost means a new company launches their product to the market buys a switch to the new product with a new price. This new entry can create a problem for the business. If the organization does not create its position strong than the new company can make it’s market easily. this will reduce the sale of the organization. As Kellogg has a great market position and brand name-new entrants have a very little thread for the company. Kellogg company invests a huge amount of money into the advertising this could not be afforded by the new entrants.
• Competitive rivalry: This factor indicates how powerful the competitors are. How many competitions in the industry? The strength of the competitors. How well they control the market. For the Kellogg in the UK market, there have Weetabix and general mills are great competitors in the same market. (paper, 2018) So these are the competitive rivalry for the Kellogg. Kellogg has to face this competition and maintain the intense price war.
• Supplier power: The supplier power depends on the number of the supplier in the market. If there are so many suppliers in the market than the supplier cannot increase the price of the commodity. This thing depends on the type of product also. If the product is rare than the supplier uses this issue. If there are many suppliers than the organization, choose the cheap one. Kellogg is a large company. Their main suppliers are the sugar, food grain and flour. In the market for this kind of material, there are lots of suppliers. Kellogg has great control over their supplier.
• Availability of substitute: This product substitute creates a problem for the organization. The price of the substitute product, the taste of the product and the cost of changing the product are the determinates of the substitute product. Some substitute for the Kellogg company is the cereal bars and pop tarts. Which interning to the market of Kellogg. Consumer changes their taste from the cereals. Kellogg reluctant to change its price to compete with competitors.
• Buyer bargaining power: Kellogg tries to control the buyer power by adopting a good marketing strategy. Kellogg involves lots of physical education and health maintenance activities to create product awareness. Kellogg sells its product to the big super shop. But the thread is that that super shop has their product. Kellogg told their super shop to make the shelves full by the product of Kellogg. This look so attracting to the customer. The company is very large so the power of buyers is low.

LO4

P4 Applying a range of theories, concepts, and models, interpret and devise strategic planning for a given organization.

Business strategic planning influenced by the business environment. The micro and macro environment create problems to accomplished the business objectives. Kellogg company doing its business with few products. They are reluctant to introduce new products to the market. So they want their business with their existing market. By pestle analysis, we can easily understand the impact that has on the planning of the Kellogg company. The internal environment analysis indicates the strategic planning of the Kellogg company.

Integrity: They have integrity in every aspect. Their employee is so optimistic. Employees are skilled and their speaking quality is very good. So the company wants to make a very skilled team operate their business.

Accountable: All employees are accountable for their responsibilities. They focus on finding a solution to the problem. They support all the employees and keeping commitment and promise.

Simplicity: They control all the things very imply. They break down all the barriers and go forward. The things that make the process slow they just break it. They do their business with the product they have. They are reluctant to introduce new products.

Result: They achieve a result and celebrate them. People give value to other people.

By the porter’s generic strategic analysis, we can easily interpret and device the Kellogg strategic planning. Let’s see the porter’s genetic analysis.

• Cost leadership.
• Market segmentation.
• Product differentiation.

For the healthy strategic business one of the upper generic strategies must be employed. Then the company should call a healthy company. For the Kellogg company, they earn the best marketing strategy for their product. Better product differentiation and brand management added more value to the company. The Kellogg ensures the cost reduction in every aspect. This makes them more successful. According to porter’s generic strategic analysis, Kellogg is the best-case scenario.

Conclusion

By this report, we can learn about the micro and macro environment effect. The company can’t have any control over the macro environment. But they can control the internal environment. We can see the SWOT analysis of the Kellogg company. The business environment influences business strategy. Businesses face lots of challenges but they have to overcome it and accomplished the objective. Porters 5 factors help the student to know about the challenges of the organization.

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18. Available at: https://www.kelloggs.com/en_US/who-we-are/environmental-initatives.html

Crisis of Carmaker Number One: Toyota Case Study

According to the study purpose and the research questions placed, this research is conducted from two perspectives: Toyota itself and the vehicle consumers in specific market. In order to elaborate on the Toyota crisis, secondary data associated with Toyota crisis on global level is examined and collected initially through different sources, such as media coverage, official releases from government regulatory bodies and Toyota’s official websites. This will provide an overview of what exactly happened in Toyota which lead to this crisis.

Toyota Annual Revenue (Millions of US $)

2019 $272,031

2018 $264,416

2017 $256,654

2016 $235,746

2015 $247,834

2014 $256,919

2013 $234,601

2012 $226,106

2011 $228,427

2010 $203,687

2009 $208,995

2008 $262,394

2007 $202,864

2006 $173,083

One of the main reasons of Toyota crisis is massive recall of sold vehicles. Almost 9 million Toyota vehicles around the world had to be recalled within a few months. And the main reason to recall such a massive amount was potentially defective quality which focused on unintended acceleration problems, which were closely related to the most important thing for customers – safety driving. The massive recalls were indeed a disaster for Toyota, which means not only they had to suffer extensive financial losses involving repairing, market and stocks dropping down, production suspension, civil penalty and other relevant expenses for dealing with the troublesome issues; but it also heavily hit Toyota’s intangible assets- its brand image and reputation of quality, which have been shaped over time. The headline-hungry media rumoured negative news about Toyota which made a direct impact on company’s brand image. Not only the external factors, the internal system of Toyota was a major reason why Toyota went on such a crisis. In Global market Toyota’s after sale team was not that stable to handle premium cars they made. The spare parts were not available in many service stations which made them costly. Many dealers charged extra money from customers to give service to their vehicles which made customers dissatisfied. To retrieve their reputation, Toyota has to take effective and appropriate action to the deal. It is more important to recognize what are the issues generating the reputational threats and figure out who is/are involved and how to respond to the crisis. When recalls happen, it is always embarrassing for auto makers because it reveals shortcomings in the vehicles for getting potential risks at hand. Toyota has built their reputation on quality and reliability for years, as a result, any quality problems with its cars were threatening for them. However, Toyota’s denial of the problems and less than reassuring response made things worse. The most effective crisis management takes place before the problem escalates out of control.

Timeline of Events:

Aug. 28th, 2009

A fatal crash of a Lexus car in USA due to the gas pedal was stuck was highly publicized that brought “unintended acceleration” problems of Toyota cars to the light with increasing investigations by NHTSA in USA

Late of Sep. 2009

Toyota attributed the problem in the Lexus to the incompatible floor mat, but their explanation couldn’t convince NHTSA and public in USA

Sep. 29th, 2009

Toyota issued a public safety advisory suggesting owners of specific model about the ill-fitting floor mat issues in North America.

Nov. 25th, 2009

1st large Recall for potential accelerator pedal entrapment problems (ill-fitting floor mat), U.S. market, 4.2 million vehicles.

Jan. 21st, 2010

2nd large Recall for sticking accelerator pedal problems, U.S. market, 2.3 million vehicles covering 8 models.

Jan. 26th, 2010

Toyota Temporarily suspends production and sales of selected vehicles in the U.S. market.

Jan. 29th, 2010

3rd large Recall for potential accelerator pedal issues, European markets; 1.8 million vehicles

Late Jan. 2010

Toyota began issuing apologies and breaking silence with response to the crisis under the tense pressures from public media and governments in America

Feb. 5th, 2010

Toyota’s CEO Akio Toyoda made public apology for the recalls and announced global quality task force for focus on quality issues.

Feb. 9th, 2010

4th Recall for antilock brake system (ABS) software problems on 2010 model-year Toyota Prius and Lexus HS 250, Japan and U.S. markets.

Feb 12th, 2010

5th Recall for inspecting the front drive shaft on 2010 model year Tacoma 4WD trucks, U.S. market.

Late Feb. to Mar. 2010

Three times testimonies to the Congressional Hearing in USA.

Apr. 19th, 2010

Toyota agree to pay $16.4 million civil penalty imposed by NHTSA in USA related to Toyota’s recall for slow-to-return and sticky accelerator pedals, but Toyota denies NHTSA’s allegation that it violated the Safety Act or its implementing regulations

1. Source: Toyota Website (2010)

Brand Image and Reputation

A strong brand is considered to have high brand awareness and good brand images. To gain customer-based brand equity the consumers must be aware of, and familiar with, the offering and hold brand associations that are strong, favourable and unique in comparison with other brands offered in the same category. “Economical”, “Fuel-efficient” and “Innovative” are the most frequent words used by any consumers to express their overall impression about Toyota brand. This is consistent with the value offering that Toyota has attempted to deliver through its brand image built over the years. While in more specific ways, consumers’ preferences are various, depending on their different backgrounds, self-interests, acquired information, and past experiences with brand. In the first consumer group-Toyota customers, consists of Toyota owners who have Toyota cars, and new customers who visit Toyota dealership with buying intention. As observed, the Toyota customers are seldom those businessmen or freeway drivers; instead, a majority of Toyota customers are middle-aged and elderly people, who tend to care more about economical and practicality characteristics with cars and most likely drive their cars at relatively lower speeds running within the cities. Most Toyota owners actually have good experiences with Toyota. In their mind, Toyota brand is considered to be, for example, “reliable”, “my favourite”, “very good quality”, and “good service”. These customers’ experience-based beliefs are powerful, it reinforces and strengthens the brand meaning with existing customers, generate positive word-of-mouth and stimulate new customer trials. Most customers have acknowledged Toyota’s favourable prior reputation in building quality cars in the industry. Their prior attitudes and expectations towards Toyota would definitely influence their assessment of the crisis. The evaluation of a crisis of a situation and its reputational threat to a company is largely a function of stakeholders’ attributions of crisis responsibility, which implies how much stakeholders believe organizational actions caused the crisis, and whether the crisis was accidental or intentional actions by the organization. With the increased bad news around Toyota being exposed and framed, such as quality complaints, violating industrial regulations, long-delayed and less-than reassuring response, American people had blamed Toyota with greater attributed responsibility for its errors happening before and during the crisis. There were few reports relating to similar acceleration problems involved in Toyota cars. Accordingly, in the eyes of Toyota customers as well as other brand’s drivers, the Toyota crisis is more like accidental events that are unintentional or uncontrollable by the company. Even comment from a car engineer reveals something tricky and uncontrollable that is puzzling most automakers not only Toyota when encountering consumers’ complaints about acceleration problems: “ It is always customer complaining accelerate pedal get stuck, but they[actually] press the accelerator pedal as the brake pedal,…So it’s hard to handle those issues, and no one trusts the technical specialist from the car manufacturer.” When a crisis emerges at a familiar brand, consumers’ direct or indirect experiences with the brand will allow them to easily retrieve the pro-attitudinal information, which in turn reduces the influence of the crisis information. Toyota’s favourable prior reputation has been perceived by consumers through their direct or indirect experiences with Toyota. For Toyota owners, even though they are the affected parties getting involved in the recalls, most of them actually have directly good experiences with the brand before. So, it generates good on positive aspects and ignores the recent negative information created by the crisis. Toyota’s good prior reputation perceived by consumers in these ways acts as Halo effect that has the potential to reduce its attributed crisis responsibility and dismiss the impact of the crisis on the brand. Crisis responsibility requires the company to effectively deal with the crisis problems with accountability. Due to assigning lower responsibility to Toyota, little attention is paid to Toyota’s crisis handling from some satisfied and loyal customers whose Toyota cars are not involved in recalls, as well as some of the other brands’ consumers who are not concerned about the whole issues. Being different from those loyal customers, some affected Toyota owners who care more about self-benefits, do blamed Toyota’s ineffective crisis management at the beginning. These different attitudes about the crisis handling between those satisfied customers and confused consumers imply that customers differentially weight aspects of the crisis information, such as the dangers of the product and the firm’s responsiveness, depending on their prior expectations and benefit associations. In Toyota, effective crisis communication from the company with timely, reliable and open information is critical when customers are facing unexpected problems related to affected products. Toyota is expected to cope with the crisis in an even better way to reassure customers from uncertainty and psychological threat from the crisis.

Regaining Trust: Still a long way to go

Based on consumer attitudes toward the Toyota brand derived from GfK MRI’s Starch Advertising Research Brand Disposition, Toyota has many miles to travel before it can regain its pre-recall popularity.

Prior to Toyota’s historic recall in November 2009, Starch found that over three-quarters (83%) of U.S. adults surveyed were positive about the brand while fewer than 1 in 5 (17%) were negative. These data clearly show the majority of consumers had tremendous confidence in the Toyota brand.

On November 2 of 2009, Toyota recalled 3.8 million vehicles because of floor mats that trapped accelerator pedals, followed by an additional 400,000-vehicle recall four weeks later. These recalls were triggered by a car collision in August 2009 that took the lives of four people. Subsequently, consumer attitudes toward Toyota began to change. Positive brand disposition fell five points to 78%. Negative brand disposition rose five points to 22%.

On January 21, 2010, after receiving customer complaints, Toyota recalled millions more vehicles (followed by another million or so three weeks later) for problems with accelerator pedals sticking in cars without floor mats. Then, from February through April 2010, Toyota recalled other car models for an array of problems, among them: Camrys for potential brake problems; Tacoma trucks for defective front propeller shafts; and Sienna minivans for corrosion of spare-tire carriers.

Following this second major recall in January 2010 and subsequent recalls through April 2010, Starch data showed that consumers’ positive feelings toward the Toyota brand dropped even farther—19 points to 59%. Consumers’ negative feelings rose 19 points to 41%.

Since these painful recalls, Toyota’s new motto is “Moving Forward!”—an attempt to communicate to consumers the company’s desire to start afresh and look toward a better future. But are consumers buying it? Starch data show they are…but gradually. From May 2010-December 2011, consumers’ positive disposition toward Toyota recovered 11 points (to 70%) from the second and subsequent recalls. Those consumers negatively disposed fell 11 points to 30%. Good news indeed! But the percent of consumers who are positively disposed to the Toyota brand is still lower than pre-recall scores. Stats show that only after 2018, has Toyota been able to match its pre-crisis revenue in 2008.

Conclusion/ result:

Andrew Gilman, an award-winning journalist and a lawyer said – “ The secret of crisis management is not good versus bad, it’s preventing the bad from getting worse ”.

Since the late 2009, Toyota has suffered a severe crisis due to unintended quality problems in its cars, resulting in Toyota’s largest official recalls of nearly 9 million vehicles all over the world. This crisis has threatened the company’s earlier reputation of building good quality and reliable cars as well as damaging its brand image built up over time. The decisions taken by the executives of Toyota to deal with the crisis is considered as a key issue in retrieving it’s lost reputation and to recover the trust and image held by it’s existing as well as potential customers. This study aims to elaborate on the Toyota crisis in order to understand why Toyota faced this crisis and how it aimed to rectify the situation at hand.

As discussed in the paper, this crisis was a perfect example of shift of focus from delivering the best quality product to increasing profits via large scale production. Although Toyota themselves acknowledged the crisis under immense pressure from mass media and the US Government, initially, they tried to separate themselves from the issue and blamed non-responsible factors for the accident that triggered the crisis. With accumulative troubles, Toyota then later on took to active crisis communication strategies to control the situation and tried to rebuild its reputation and enhance consumer trust, with increased emphasis on the customer and quality assured parts and products. However, this long-delay and a merely acceptable response initially took a heavy toll on the company’s reputation. The late response infused a sense of ignorance and denial of the problem on Toyota’s part among the public and made it look as if the company was forced to take action under pressure from various avenues. This public perception further damaged Toyota’s reputation and sales, especially in North America, aggravating the crisis situation.

Also, an interesting aspect to note was the difference in response to this crisis situation in different parts of the world although the situation affected all stakeholders equally. Outside America, the public opinion was not as serious regarding the impact of the crisis. It was perceived as just an accidental event that was unintentional and uncontrollable on the part of Toyota. Here, consumers have remained loyal and satisfied by Toyota and its products and have not been swayed by the massive negative publicity that Toyota received. This has helped Toyota in its post-crisis recovery period. Most consumers outside America have readily forgiven Toyota’s flaws as long as Toyota remediates its mistakes. This implies that a favourable prior reputation can serve as a mediator when an organization is suffering a crisis.

Whether the Toyota corporate leaders have successfully addressed the crisis will not be known for some time. But what is now obvious is that crisis management was not a part of Toyota’s strategy. Unfortunately such corporate responses, as that of Toyota in the initial period of the crisis are very familiar. A slow initial pre-crisis response, minimizing the acute crisis through foot-dragging on product recall, poor public communication about the problem in the chronic crisis stage and little or no compassion for the consumer adversely affected by the product during crisis resolutional is a very typical case.

Presently, Toyota is working on processes to engage the consumer world-wide to inform corporate leaders about any problem directly and in a timely manner with sales regions being given more authority. The corporate leadership has created an Automotive Center of Quality Excellence (ACQE) and a new corporate structure and position for product safety. However, the 2 billion dollars lost during this recall crisis would not have been a burden on Toyota had such measures been adopted well in time and by maintaining a certain standard and quality of products rather than trying to sell more products in the ever competitive era of globalisation.

Toyota recall crisis has proved that failure to focus on quality would result in serious consequences in terms of economic losses and reputational risks. Also a favourable prior reputation can offset some negative impact of crises and can also help in the post-crisis recovery period. Consumers might be willing to forgive the company if it takes takes trustful measures to deal with the problem. Lastly, though crises are unexpected and sudden, one must always be prepared for their effective management. It is important for the company to effectively communicate with consumers and build a good relationship with them, especially when unexpected threats strikes their business. This helps to retain customer loyalty and in turn help reduce the impact of the crisis.

Bibliography:

1. Forbes: https://www.forbes.com/sites/annemariekelly/2012/03/05/has-toyotas-image-recovered-from-the-brands-recall-crisis/#2582208a324d
2. The curse of the #1 carmaker: Toyota’s crisis http://www.emeraldinsight.com/1742-2043.htm
3. Wikipedia page: 2009-11 Toyota vehicle recalls https://en.wikipedia.org/wiki/2009%E2%80%9311_Toyota_vehicle_recalls
4. Toyota Crisis: Management Ignorance? – A Swedish Case of Consumers Perceptions http://www.diva-portal.org/smash/get/diva2:349746/fulltext02
5. Toyota in crisis: denial and mismanagement Victor L. Heller and John R. Darling
6. The Toyota crisis: an economic, operational and strategic analysis of the massive recall http://www.emeraldinsight.com/2040-8269.htm
7. Toyota Website: https://www.toyota.com/
8. GfK MRI Starch Advertising Research
9. Preparation for Crisis Management: A Proposed Model and Empirical Evidence https://www.researchgate.net/publication/227779702_Preparation_for_Crisis_Management_A_Proposed_Model_and_Empirical_Evidence
10. Managing supply chains in times of crisis: A review of literature and insights https://www.researchgate.net/publication/235322383_Managing_supply_chains_in_times_of_crisis_A_review_of_literature_and_insights
11. Toyota Revenue 2006-19 https://www.macrotrends.net/stocks/charts/TM/toyota/revenue

Case Study of Pepsi Syringe Crisis of 1993

Introduction

PepsiCo is an American multinational food, snack and beverage company which is located at Purchase, New York, USA (The Editors of Encyclopaedia Britannica, 2019). In 1993, the company faced a crisis which is called the Pepsi Syringe crisis (Paul Holmes, 1993). It was started as a threatening local incident which turned into a multimillion-dollar disaster for the PepsiCo after some time (Newsweek Staff, 1993). A couple reported that they found a syringe in Diet Pepsi can and returned the can to the shop owner who contacted the Tacoma-Pierce County Health Department (Dr. Allan Bonnar, 2010).

After that, many other people reported finding syringes and other things in the Pepsi can such as needle, pins etc. (Paul Holmes, 1993). These stories went viral in the media and became a headline in the newspapers and the TV channels. But Pepsi handled this situation very well with the help of its crisis management team (Paul Holmes, 1993). The Company did a great job to save its reputation and it stayed strong and calm during a time of crisis and took good steps to prove that these allegations were false.

Background and Content

Pepsi is a carbonated soft drink manufactured by PepsiCo. It was created in 1893 by Caleb Bradham who introduced it as Brad’s Drink, it was renamed as Pepsi-Cola on August 28, 1898, and then as Pepsi in 1961 (The History of the Birthplace of Pepsi Cola, 2012). The core values of PepsiCo are honesty, fairness and integrity (PepsiCo Mission and Values). In 1993, the company

faced a big crisis related to one of its products named Diet Pepsi.

This case was started in Tacoma, Washington. An elderly couple complained on June 9, 1993, that they have found a needle inside the can of Diet Pepsi (Paul Holmes, 1993). They returned the can to shop owner and called their lawyer who directly made a call to the press and local health officials (Paul Holmes, 1993). The next day, the second case was reported by a woman in Federal Way, Washington which is just ten miles away from Tacoma (Paul Holmes, 1993). The third complaint came from New Orleans, Louisiana on June 13, 1993. Thereafter, this kind of news was received for all around the USA (Madison Hanna, 2012).

One woman in Portland said that she found two syringes in a single glass (Paul Holmes, 1993). In New York, a man claimed he accidentally swallowed two pins that were in a Pepsi bottle. A woman from Beach City said she found a sewing needle in one can (Paul Holmes, 1993). In Jack¬sonville, a man reported a loose screw in his soda. More than 50 reports of Diet Pepsi tampering had been reported across 23 states (Paul Holmes, 1993).

There were no reports of deaths or serious injuries and no indication that any kind of poison had been found in the cans of soda. So, the FDA (Food & Drug Administration) announced that syringes were not contaminated and issued a statement that con¬sumers in the Pacific Northwest should pour canned drinks into a glass before drinking for safety reasons (Paul Holmes, 1993). The FDA did not give any kind of product recall order to Pepsi. Pepsi was puzzled and made executives from its local bottler, Alpac Corporation, available to the media (Paul Holmes, 1993).

Challenges

During this crisis, the biggest challenge for PepsiCo was to prove that all these rumours about the Diet Pepsi can were false and maintain its reputation in the market and public. It was difficult to handle, but it was important for Pepsi to present all the facts to the public to maintain its good name. PepsiCo knew that this problem did not come from the company’s side and its beverages were safe to drink (Dr. Allan Bonnar, 2010).

Another Challenging part of the crisis was to fight back with the wrong media coverage against the company because the media was causing more panic than the syringes (Madison Hanna, 2012). This issue became very popular in the media and it was very tough for anyone to ignore it and not make an opinion about it (Valerie Zhuluri, 2016). So, it had become a challenge for Pepsi how to get the wrong media coverage in its favour.

Solution

PepsiCo put the public first. It showed to the public that they genuinely care about this crisis (Syringe in Pepsi Can, 2008). They wanted to gain back public trust and took full responsibility for solving this problem. By this, Pepsi had shown to their public that they listen to their customer’s complaints (Syringe in Pepsi Can, 2008).

PepsiCo took widespread media coverage as an advantage (Madison Hanna, 2012). The company’s crisis team decided to fight the media crisis with media in the form of news releases, press conferences and TV interviews for complete transparency. PepsiCo’s president Craig Weatherup became its spokesman because of his familiarity with the bottling system (Madison Hanna, 2012).

First, they released four videos showing a sequence of their canning process. After that, Craig Weatherup explained the mechanics of the production process and the impossibility of any kind of harmful objects like syringes, needles etc. during that process (Valerie Zhuluri, 2016). One day after Craig Weatherup’s first television appearance, crisis team members noticed that news reports were starting to use words such as “copycat” and “hoax” (Madison Hanna, 2012).

Pepsi also worked closely with the FDA because they know that the FDA’s credibility is high, and people will believe whatever that FDA recommends them to do (Syringe in Pepsi can, 2008). The FDA’s Commissioner David Kessler believed that all these rumours about Pepsi were false (Paul Holmes, 1993). Craig Weatherup and David Kessler had planned to appear together on ABC’s Nightline to explain that these all rumours are wrong (Paul Holmes, 1993). The FDA announced that filing a false report is a federal offence that is punishable by five years in prison and a $250,000 fine (Paul Holmes, 1993).

Pepsi also uploaded another video which proved to be helpful for them in this case. A sur¬veillance camera in a supermarket in Aurora, Colorado cap¬tured a woman shop¬per insert¬ing a syringe into a can of Diet Pepsi (Paul Holmes, 1993). The company copied the tape and included it in a video news release package that was sent to television stations around the country.

Communication Tactics

During the time of crisis, a company needs to have strong internal and external communication tactics. The PR team of Pepsi focused on both their internal and external public while dealing with the syringe crisis. First, PepsiCo worked on its internal communication as these internal public helps to convince the external public of the company (Organizational Communication in Diet Pepsi syringe Crisis, 2018). Pepsi faxed to all its local bottlers twice daily to keep them informed of any update and PepsiCo employees continued to respond to calls that made to the company’s toll-free line from consumers, bottlers and distributors (Paul Holmes, 1993). Pepsi then targeted the external public and chose to focus on its media tool like interviews on TV, VNRs (Video News Release), print communication tools such as daily newspapers etc. (Organizational Communication in Diet Pepsi syringe Crisis, 2018).

They also took a firm stand and said no to a product recall. Pepsi invited media to the production plant and made videos of¬¬ the process. These videotapes were sent out along with memos and surveillance footage that showed Pepsi’s innocence (Organizational Communication in Diet Pepsi syringe Crisis, 2018). Many other techniques used by the PR team of Pepsi like 24 hours hotlines for consumer’s queries and complaints, assigning a specialist to work with the FDA and the legal department were also involved during the communication process (Organizational Communication in Diet Pepsi syringe Crisis, 2018).

The PR department revealed all the information to everyone as it was needed. They also convinced the external public by their investigation on this case that the situation is under control. Finally, they uploaded a surveillance video of Colorado’s store in which Pepsi was freed from all the charges. PepsiCo’s crisis communication team worked for 15-20 hours a day to solve this problem (Organizational Communication in Diet Pepsi syringe Crisis, 2018).

Results

Initially, the sales of Diet Pepsi fallen by three percent but recovered within the next month because of the way crisis was handled by Pepsi company, made consumers more sympathetic towards the company and improved the sales (Valerie Zhuruli, 2016)

After a lot of effort and investigation, PepsiCo proved that they were innocent. The surveillance video of a woman putting syringe inside the can was not less than a blessing for the company. It turned PepsiCo into the victim. Some people were arrested for making false complaints and different other charges. The Pepsi Company saved its reputation and did not panic during the time of crisis (Dr. Allan Bonner, 2010).

After that Pepsi was proven not guilty, the company took advantage of the situation to launch a public relations campaign (Dr. Allan Bonner, 2010). The major purpose of the entire public relations campaign was to make people feel secure about the brand again (Valerie Zhuluri, 2016). Pepsi distributed millions of coupons with the slogan “Thanks America’. They also started to advertise on a full page of the newspapers stating, “Pepsi is pleased to announce…nothing” (Dr. Allan Bonner, 2010).

Pepsi lost a lot of money on the crisis. After the crisis, they gained huge media coverage and they became the headlines of the newspapers that they were victims of the public, they were innocent and thus they use the situation to their advantage (Dr. Allan Bonner, 2010).

The public relations industry was impressed by the way Pepsi managed the crisis (Paul Holmes, 1993).

Strengths and Weaknesses

First, I would like to talk about the strengths of PepsiCo during the time of this crisis.

• Pepsi acted very smartly in this case. The biggest strength of the company at that time was its communication within its team. PepsiCo gathered experts from the production and manufacturing, scientific and regulatory affairs, legal and public relations sections (John Schwartz, 1993). They worked extremely hard, even some people slept at the office (John Schwartz, 1993).
• They disclosed all-new daily updates to their office’s distribution centres and bottlers nationwide and ask them to reassure retailers that products were safe (Paul Holmes, 1993). They also knew that consumer want to ask questions from the company about product safety, so they also launched new toll-free number take consumers to call (Paul Holmes, 1993).
• The company decided to go directly to the media. They smartly grabbed the media coverage in their favour that was against them previously (Madison Hanna, 2012). They used different media tools like video news releases, tv interviews etc. They explained their canning process to convince the public that this problem was not from the company side because the canning process of the company is safe (Madison Hanna, 2012). They actively searched for the proof which helped them to prove they are right. They found the video of Colorado’s Supermarket which proved as a miracle because after this video complaints about the Pepsi dropped off. Suddenly, the media picked a side of Pepsi, then they started covering the issue from the viewpoint of Pepsi’s innocence (Paul Holmes, 1993).
• The FDA’s commissioner David Kessler also in the favour of PepsiCo. This became a strength for the company (Paul Holmes, 1993). He appeared with the PepsiCo’s president Craig Weatherup on a TV interview to inform the people that all these rumours about PepsiCo were wrong. He also announced the penalty for people who are making fake complaints of Pepsi which was also good for the company (Paul Holmes, 1993).

On the flip side, the company also showed some weaknesses as well which I am going to explain in subsequent paragraphs.

• In this case, Pepsi’s biggest mistake was that they took steps to solve this problem after the three cases were reported (Paul Holmes, 1993). Initially, they did not understand the seriousness of this issue and they thought it as a regional issue because first two incidents have happened in Washington only and they did not expect this case will spread all over the nation (Paul Holmes, 1993). If they upload the surveillance video of Colorado after the first incident, so maybe that this case could not be worse.
• The other weakness is that the first spokesman from the PepsiCo side was Alpac Bottling Company’s CEO. Alpac company was the local bottler of Pepsi in Washington. People did not know more about this company, so they pointed their finger to Pepsi because they were the owner of the bottling company. The words of the CEO of the PepsiCo at first then others would be more effective and compelling (Organizational Communication in Diet Pepsi syringe Crisis,2018).

Recommendations

My First recommendation for Pepsi, in this case, is that PepsiCo should have responded sooner. If the company had done this, perhaps this case would not have been as worse as it was. If it started looking for evidence only after the first case, so probably there were not more than 50 reports against the company.

The other thing is that is it important for every company how its image is in the customers because customers are the ones who make the company and make it fall. So, if there was a single case against PepsiCo, it should have taken that case as a serious issue. It is not good for the brand image of a big company like Pepsi to just leave that negative complaint considering it as a small regional issue until it becomes a national issue.

Thirdly, in this type of crisis, it is helpful if the parent company’s owner comes and gives an explanation to the public about the current situation rather than the owner of the subsidiary company because most of the people do not know about that subsidiary company. Like, Pepsi made its first spokesman to the media was CEO of its subsidiary Alpac Company, but people wanted an explanation from the Pepsi.

Conclusion

Thus, from the overall analysis, I would like to say that Pepsi did a great job to solve this problem. Although it responded late but its crisis management team made wonderful strategies to maintain the company’s prestigious image in the market as well as in the consumers. They provided convincing pieces of evidence in the form of videos and media interviews which helped to prove them innocent. In the beginning, the sales of the Diet Pepsi dropped but improved in the following month.

References

1. Bonner, A. (March 14, 2010). There’s a syringe in my Pepsi can crisis. Retrieved from http://worldsprtoday.blogspot.com/2010/03/theres-syringe-in-my-pepsi-can-crises.html
2. Essay about Syringe in Pepsi Can. (April 8, 2008). Retrieved from https://www.cram.com/essay/Syringe-Pepsi-Can/F3ASSF3XC.
3. Hanna, M. (February 2, 2012). Crisis Case Study: Pepsi Syringe Case of 1993. Retrieved from https://prezi.com/kjiskn4iy1h3/crisis-case-study-pepsi-syringe-case-of-1993/.
4. Holmes, P. (July 6, 1993). How the Pepsi Syringe Hoax Fizzled (1993). Retrieved from https://www.holmesreport.com/latest/article/how-the-pepsi-syringe-hoax-fizzled-(1993).
5. Newsweek Staff (June 27, 1993). The Great Pepsi Panic. Retrieved from https://www.newsweek.com/great-pepsi-panic-193794.
6. Organizational Communication in Crisis of Diet Pepsi Syringe Scare. (April 27,2018). Retrieved from https://phdessay.com/organizational-communication-in-crisis-of-diet-pepsi-syringe- scare/.
7. Schwartz, J. (June 19, 1993). PEPSI PUNCHES BACK WITH PR BLITZ. Retrieved from https://www.washingtonpost.com/archive/business/1993/06/19/pepsi-punches-back-with- pr-blitz/164c4895-43bc-4608-9159-5e568fc55c45/.
8. The History of the Birthplace of Pepsi Cola. (February 4, 2012). The Pepsi Store. Retrieved from http://www.pepsistore.com/history.asp
9. The Editors of Encyclopaedia Britannica. (November 8, 2019). PepsiCo Inc. Retrieved from https://www.britannica.com/topic/PepsiCo-Inc.
10. Who We Are? (n.d.). Retrieved from http://www.pepsico.rs/what-we-believe/our-mission-values.
11. Zhuluri, V. (November 14, 2016). Pepsi Syringe Crisis of 1993. Retrieved from https://zhuruli.wordpress.com/about/.

Ethical Dilemma: Case Study of Johnson and Johnson’s and Its Major Competitor

Introduction

Johnson and Johnson`s is one of the well-known companies in the world. It is developed in 1886 by three brothers, Robert wood Johnson, James Wood Johnson, and Edward Mead Johnson. It is a fortune 500 Pharmaceutical and consumers packaged goods manufactured multinational company. It has more than 265 operating companies in more than 60 countries approximately 126500 peoplesss. Moreover, company launched number of products among them Johnson baby powder was most prominent in market. Its success leads to the company’s heritage baby business. The corporation incudes 250 subsidiaries and products sold in over 175 countries. The company business is divided into three major segments.

J&J Family of Companies

• Pharmaceuticals Medical Devices Consumer Products
• Janssen Biosense Webster Skin and hair care
• Janssen Diagnostics Mentor Baby care
• Janssen Pharmaceuticals Janssen Diagnostic Oral care

Vision of the company

“To continue the path set forth by the founders of Johnson`s Enterprises, by committing ourselves to our clients and employees and also contributing to the community”.

Mission of the company

“To provide our clients with the best possible service and product. Which meet our demands in quality and safety regulations, by assuring that our employees have all the necessary tools, training and expertise to accomplish their given tasks?”

Objectives

1. To provide the high-quality services and products in cure disease.
2. To improve the quality of life.
3. To be the leaders in the customer satisfaction.
4. To encourage the peoples for using or attracting their products.

Major Competitor

Pfizer

Pfizer Inc. (Pfizer) is a multinational biopharmaceutical company. It is involved in the discovery, development and production of health products. It has vast portfolio such as medicines and vaccine. Corporation has three business segments e.g. pharmaceutical, Animal health, Corporate. Coselling its products over150 countries worldwide about 98000 employees are working in 115 countries. The main strength of this brand is that six of their products are among the top pharmaceutical’s brands in India. It has a superb R&D wing that constantly produces and modernize products. Because of their sturdy brand name, Pfizer is considered as one of the highest Johnsons & Johnson competitors.

Merck

One of the well-known companies in the world, and it is in the United States. It was established in the year 1891; it is a multinational healthcare company. The corporation gives diverse health solutions through their vaccines, medicines, and animal healthcare products. Organization has four main segments, Animal health, Pharmaceutical, Healthcare services, and Alliances. Moreover. The Company`s care Services offers services and solutions which will specialize in engagement, health analytics, and clinical services. The corporate incorporates a vast portfolio of products and has an outstanding R&D wing. Because of their sturdy brand with in the pharmacy sector, company is taken into account as one of the top Johnsons challenger.

Novartis

Novartis is the Swiss pharmaceutical company located in Basel, Switzerland. It considered largest companies in pharmacy sector by means of income and market placed capitalization. The organization is a member of diverse associations such as European Federation of Pharmaceutical Industries and Associations (EEPIA), an international Federation of Pharmaceutical Manufacturers and Associations (IFPMA) and others. The corporation produces drugs for respiratory and infectious illness, cardiovascular, dermatology, urinary complications, and animal health products. Their recognition is to investigate, broaden, and marketplace innovative merchandise associated with medication in an effort to assist to treatment sickness and to ease the struggling of human beings to help them live a excellent lifestyles. Due to their worldwide attain, Novartis is taken into consideration as one of the top Johnsons Johnson competition.

Alex Grosky

Alex Grosky is chairman, Board of director, as well as the Chief Executive of the company. He illustrates the transformational leadership style in action. Alex began his Johnson & Johnson career as a sale, marketing, management, culminating in being CEO and Chairmen in 2012. He said that “The world today requires the very best that Johnson & Johnson has to offer, and we are constantly striving to come up with ways we can innovate and lead”. During his tenure, Johnson & Johnson has become a leading global Pharmaceutical company as well as the industry’s number one investor in research and development.

Marketing of Baby Powder

The target audiences of Johnson and Johnson company is “mother and babies”. The product includes Johnson baby powder and shower-to-shower baby powder. In 1893, Johnson and Johnson had developed baby powder and promoted It to absorbed unwanted moistures and odors(smell) from babies and women. with the passage of time talcum powder became a top selling product of the company.

About Talcum Powder

Talcum powder is made from talc. Talc is a white grey and pale green stone, that is made from clay mineral composed of hydrated magnesium, silicon, and oxygen. Talc is most natural form, the objective of the talc is to make skin smooth, it contains asbestos, which is the cause of lungs cancer due to this disease all the products of U.S has been free from asbestos since 1970s.

Johnson baby powder lawsuits

Up to 2009-year, people was using products of Johnson and Johnson without any worry. The baby powder was so much prominent among women because of its hygienic nature and beautiful fragrance. They used to prefer Johnson and Johnson over any other product. The company was earning its profits on its product because of its well-known brand image among people but the product has a flaw-a deadly-flaw which has a potential to cause death of its customers. It would not be wrong to say that It was working as a slow poison as continuous use of it was causing cancer, but the company did not mention any such problem. They have kept this information secret from its customers. Johnson and Johnson`s product credibility was questioned for the first time when a lady named Diane Berg in 2006, Physician`s assistant by profession, claimed in a court that the use of Johnson and Johnson products have caused her cancer. Moreover, she said the product has elements which cause cancer by mutating the normal cells. Although, she died of cancer but later few more customers have sued the company for same reason. Still today, the company do not bother to inform its customers about the threat its product can pose on many lives. More than 30% girls in Pakistan keep using their baby products even when they grow up and most of them are unaware about its issue. Transparency is considered as a liability of a company and providing right information to its customers is the very first responsibility of a company (Specially, when it is a multinational firm) when It is causing such a severe damage to its customer. Still today, the company`s advertisements do not address this issue. Further, the very first question that arises here is ‘Is It ok to let these firms operate in market specially, in such markets where most of the people are already illiterate? Secondly, is imposing a fine to the company on death of people is fair? Because life is subjective and it worth more than any penny, pound or rupee. So, counting value of life in monetary terms is justifiable? Specially, when the company is not going to change its policy and keep on reporting its mistakes.

Challenge for Gorsky

On September 2016, J&J was facing 1800 cases against its talcum powder. In September 2016, another case filed in St. Louis by Deborah Giannecchini from Modesto, California. She stated that she had diagnosed with cancer in 2012 after using J&J talcum powder.

Conclusion

Johnson and Johnson is one of the most renowned company in the world. It provides number of products among them Johnson baby powder is top selling product. As it is talc-based powder so long usage of this powder causes cancer in consumers. In May 2016, jury in St. Louis, Missouri, awarded US $55million to a woman who was suffering from cancer after using talc-based Johnson`s baby powder for nearly 40 years.

Effective Leadership Report: Case Study of The City of Kelsey

[bookmark: _Hlk27179602]The City of Kelsey has experienced a great amount of growth in the population in the past 100 years. This growth has led to a need to create a sustainable water supply. In order to sustain the growth, prepare and plan for future growth, the city of Kelsey is working on a way to maintain the current water supply and expand it for the future growth of the city. To implement this plan there are several things that must be taken into consideration. The first is the potential organizational challenges. The next thing to consider is the current culture of the government, along with how the mayor would influence organizations in the government. The final point to consider is the role the mayor has in promoting the empowerment of employees. Each of these points will give an insight into how the mayor can use effective leadership considerations for the water sustainability plan.

Potential Organizational Challenges

When it comes to the challenges that will be faced within the municipal structure can be simple with all of the work that needs to be done in the city rebuilding certain objectives that need to be discussed and to be planned to have a successful outcome to the different challenges. The main challenge that is can be the primary objective is to make each city held accountable towards the citizens of that city under the terms of management models and decisions. ‘Over time, municipal roles and responsibilities have become more complex. The relationship between the Québec government and municipalities has been redefined and powers have been redistributed” (Fortin, 2018). Having the city management underway of rebuilding, many challenges are still faced due to the accountability that is being held by law under the “Bill 122”. Comment by Lyle Huffman: I apologize, but I am not sure about this entire section. There is no reference to the “City of Kelsey” or the issues at hand that were in the links for this particular paper. I am also not sure about the quote regarding Quebec and how it translates to Kelsey? There seems to be many issues being discussed in each sentence that do not align with our paper and how it affects the municipal structure of Kelsey. There is a reference to “Bill 122” but it was never introduced and I do not know what it is. The final quote of this section I believe fits perfectly. I would only ask that there be a page number or paragraph number added to the reference. I apologize for the bluntness, but we only have tomorrow to finalize. Please feel free to contact me with any questions.

Having proper economic prosperity, guaranteeing environmental responsibility, supporting social cohesion and ensuring efficient and effective management. Having the correct amount of economic health is extremely important you must be able to act on any debt services to refrain from the entire action plan being overrun by interest rates. The environment has always been a huge responsibility and the city must take notice of different ecological factors for different approaches. Switching up demographics is another great approach the citizens and tourists can have different interests and needs which makes it helpful for city management to adapt to change and have a plan to attract more citizens. ‘One governance challenge that all municipal organizations will face at some time is the need to align the vision of elected officials with the administration’s capacity to implement that vision” (Fortin, 2018).

Current Culture

Currently, the city of Kelsey has a great culture within its government system. The city operates using the Mayor-Council structure and using this structure has proven to be very beneficial for the city. It allows for the mayor and other leaders within the city to develop and implement the ideas agreed upon by the government. This form of leadership and teamwork is what keeps the city of Kelsey functioning so smoothly and contributes to the growth of the city. It is great that the mayor and council agree upon the water sustainability plan because now it is their job to get other stakeholders on board prior to implementation. When the government of Kelsey is on the same page with its plans for the future all that is needed is stakeholders that believe in the mission of the government.

Leadership Theories

The Mayor of Kelsey can be best served by utilizing the Life-Cycle Theory when dealing with the organizations within the city. A project of this magnitude that could take over ten years to complete will require a steadfast and true practice that can repeat itself after he/she is out of office. The idea of a successful implementation of a plan is the ability for the next group to pick it up and continue to run with it upon their involvement. The stakeholders are the most important tool for the Mayor to utilize during the project. There is an elected council that can be used to help find and garner support for new ideas and mitigate setbacks. The Planning Board is instrumental in the decision making to ensure the project has a seamless path to success. And the Conservation Commission helps pave the way with new ideas and legislation for consideration to help make the project a success.

All of these groups fit in the Life-Cycle Theory as they are made up of people who have the background and skills to make a difference. They are prominent people in the community that have a strong standing with their peers to effectively promote the ideas of new projects such as this one. “Mature groups have a higher capacity for accepting responsibility because they are well educated, experienced, and capable at accomplishing group tasks, and they have well-developed relationships with one another and with the leader” (Rainey, 2014, p. 342). In order for a project of this size that will surely result in increased user rates, it is imperative the Mayor develop relationships with the people in the groups that are tasked to help. Once there is mutual trust then the community can benefit as a whole.

Role of the Mayor

According to Rainey, (2014), the mayor serves as the figurehead for the city in which he is elected by the constituents, but the mayor serves all stakeholders including the public employees, most of whom are constituents. The constituents of the city look to the mayor as the person who is there to provide help and guidance for them in all aspects of municipal affairs. The mayor must work in collaboration with other public employees to be successful in the achievement of setting city goals. The mayor is responsible for communicating with all stakeholders in his city. The mayor shows how he views employees as a major factor in accomplishing what the city wants when he maintains an open line of communication between himself and the other public employees. This communication sends a message stating that the mayor and the employees will want to perform at higher levels and make decisions that benefit the organization when they feel they are a part of the organization and they are needed. Comment by Lyle Huffman: Is this a paraphrase or quote?

According to ‘Study.com’ (n.d.), “Employee empowerment is giving employees a certain degree of autonomy and responsibility for decision-making regarding their specific organizational tasks. It allows decisions to be made at the lower levels of an organization where employees have a unique view of the issues and problems facing the organization at a certain level” (Employee Empowerment: Definition, Advantages & Disadvantages). On a negative note, the performance of the employees can be affected when the mayor does not trust the employees to make the correct decisions or do the right thing. Employees need to be given the opportunity to show that they are a crucial aspect of providing high levels of service to the public they serve. However, according to Cohen, Eimicke, & Heikkila, (2013), the public as the main customer of the city government should be allowed to play a role in crafting and revising the city government’s performance standards according to this publication. This process connects “direction based accountability”, which is linking administrative goals with citizen goals, to “performance-based accountability.” The city’s customers help define the city’s criteria for success. Although government reform experts and proponents widely acknowledge the value of working with citizens in measuring and reporting performance, the practice is not that widespread (Heikkila and Isett, 2007). Comment by Lyle Huffman: Is this entire section a quote? If so, I feel like we will get dinged for a 200+ word quote as it will drive our plagiarism percentage way up on the overall paper. Also, I do not think it is cited properly and needs a page number or paragraph number added.

Conclusion

The City of Kelsey seeing the future of their water supply at risk has chosen to embark on a lengthy, and costly project. Over the course of the project, there will be many challenges the city will face. In order to face those challenges, they will need to ensure that all levels of the government and staff are working cohesively to promote each other and operate within a positive cultural setting. One of the many ways the mayor can help with this is to make sure that he/she is putting the proper pressures on the many groups and organizations within the city that are designed to help with the decision making processes. Finally, in order for the overall implementation to be successful, the mayor has to be at the forefront of championing the city’s employees and their continued dedication to the community. When all of these things come together then the city can and will have a sustainable water project plan and implementation.

Reference

1. Cohen, S., Eimicke, W., & Heikkila, T. (2013). The Effective Public Manager: Achieving Success in Government Organizations (5th ed.). San Francisco: Jossey-Bass
2. Study.com. (n.d.). Retrieved from http://study.com/academy/lesson/employee-empowerment-definition-advantages-disadvantages.html
3. Rainey, H. G. (2014). Understanding and Managing Public Organizations (5th ed.). San Francisco, CA: Jossey-Bass.

Lego Case Study: Marketing Audit and SWOT Analysis, Marketing Plan

Executive Summary

The LEGO group is a primarily a toy manufacturer which successfully trades globally. Established in 1932, the company’s continued innovation has not only provided a gateway for LEGO to enter into different market segments, it has also permitted LEGO to remain relevant and popular over the decades.

LEGO Education Solutions is a division of LEGO designed for primary schools to provide engaging, hands-on experiences.

LEGO Education Solutions can be used in education to support lesson plans for teachers, ignite student’s natural curiosity by helping them develop essential communication, creativity, collaboration, and critical thinking skills in a fun and exciting way (Education, 2019).

LEGO Forma are mechanical models that are cleverly designed but simple to assemble. Sturdy rods and parts combine with customisable skins to generate a creative challenge. Currently marketed towards Adults, the LEGO Forma models can be altered for children to aid learning.

The following report will consist of developing a marketing plan for altering the existing LEGO Forma product to be integrated within the LEGO Education Solutions department.

Identify Business Vision and Mission (Section 1)

The LEGO Education segment of the LEGO Group was launched to make the joy of discovery even more accessible to children.

Established in 1984, LEGO Education has been working with teachers and educational specialists to deliver playful learning experiences that bring subjects to life in the classroom and make learning fun and impactful.

LEGO Education resources are based on the LEGO ethos of playful learning combined with curriculum-relevant material.

LEGO believe that expanding knowledge and building academic and 21st century skills will create active, collaborative, lifelong learners. Together with teachers, LEGO aim to enable every pupil to succeed in education and be prepared for future life challenges (Education, 2019).

LEGO Education operates to the following mission statement “We see the world with our eyes; we change it with our hands. Hands-on LEGO Learning is for life” (LEGO, 2019).

Marketing Audit (Section 2)

A Marketing Audit is a systematic review and appraisal of the environment and the company’s operations (Donnelly, Harrison, and Megicks, 2009).

Both the micro and macro environments within LEGO must be explored to be able to complete a thorough Marketing Audit along with exploring the four Ps of Marketing (Product, Price, Place & Promotion) are also known as the ‘Product Mix’.

A business micro-environment comprises of factors that are close to the company and have a direct impact on the organization.

Stakeholders, suppliers, distributors, and employees make up the LEGO micro-environment.

The macro-environment is the state of the economy. One method of examining the macro-environment is using the PESTLE framework.

A PESTLE analysis explores the political, economical, technological, legal, and environmental factors can impact LEGO.

Kotler and Keller (2006) suggest an audit is “A comprehensive, systematic, independent and periodic examination of a company’s or business unit’s marketing environment, objectives, strategies, and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s performance.”

Exploring the strengths, weaknesses, opportunities, and threats of the LEGO company, (known as a SWOT analysis) gives an insight of the internal and external factors that can influence the LEGO Group.

Table One – SWOT analysis

The positive Micro Environments within LEGO include three of the Product Mix.

The LEGO Products have a strong brand name and reputation. They are globally recognised in the industry with good marketing, channelling and distribution channels (Place & Promotion)

The Pricing of LEGO products are higher than competitors. This falls in the weakness category within the SWOT analysis. Even though LEGO is more expensive than other products available, customer feedback and positive experience of the LEGO has led to repeated business and abetted in the strong reputation held globally.

LEGO has found the price equilibrium, “Where the supply and demand curves meet is the sweet spot where a producer’s willingness to offer a certain amount of product at a certain price matches the consumer’s desire to buy that amount at that price.” (Sheehan, 2011)

Macro-environment

For organizations to be able to adapt successfully to changing conditions, management needs to understand the many factors and forces influencing such changes. Firms should be able to adapt to changes as they occur, or better still, be able to adapt in advance of change by anticipating events. By identifying environmental trends early, management can better determine how they might affect the future of the business (Lancaster and Reynolds, 2005).

The macro-environment is the state of the economy. One method of examining the macro-environment is using the PESTLE framework.

A PESTLE analysis explores the political, economical, technological, legal and environmental factors can impact LEGO.

Table Two – PESTLE chart

Since 2015, the LEGO Group, the LEGO Foundation and UNICEF have been collaborating to improve children’s lives through the promotion of quality early learning through play and through leaving a positive impact on children via the Children’s Rights and Business Principles. Teaming the LEGO Foundation and LEGO Education Solutions, this shows the company takes its social responsibility seriously and puts LEGO in a good position integrate LEGO Forma in to the Education sector.

Marketing Objective (Section 3)

Utilizing the Ansoff Matrix combined with the SMART approach, clearly defined marketing objectives can be determined.

Ansoff Matrix – Table Three

The ‘SMART’ approach is always helpful; you are looking for success criteria which are Specific, Measurable, Achievable, Realistic, and Timely (Roberts, 2011).

Adapting the current LEGO Forma design to make it suitable for the LEGO Education Solutions team is a specific adjustment to a current product.

Success of the re-design product will be measured by customer forums and rigorous testing in line with toy standard regulations.

All toys supplied in the UK must meet a list of essential safety requirements which are set out in the Toy (Safety) Regulations 2011. To prove that these requirements are met, all toys should also carry a CE Marking (Toysadvice.co.uk, 2019).

Prototypes of the revised LEGO Form product will be designed. Prototypes are built to test the concept and design of the product. Prototypes will be given to focus groups to test multiple aspects of the product, including design and ease of use.

The construction time of the products will assist in providing realistic timescale on product deliverability.

Marketing Plan (Section 4)

Marketing planning is the structured process that leads to a coordinated set of marketing decisions and actions, for a specific organisation and over a specific period (Wood, 2017).

A marketing plan is a report that outlines your marketing strategy for the coming year, quarter or month. Typically, a marketing plan will include: An overview of the business’s marketing and advertising goals.

The market planning process helps a company target the right audience with the right content. A marketing plan aids the impact marketing projects have upon the growth of the LEGO Group.

A marketing plan also describes business activities involved in accomplishing set marketing objectives within an allocated time frame.

An outline marketing plan will now be set out to breakdown the organisation’s goals required to incorporate a variation of the LEGO Forma product into LEGO Education Solution division.

Marketing Plan – Goals/Objectives

The overall marketing objective at LEGO is to encourage customers to purchase LEGO products. This includes existing products, upcoming products yet to be released, and films associated with Lego.

The main segments of the long term marketing plan will be outlined below.

Customer Segments

Focussing on the LEGO Forma range, LEGO Forma is currently a premium LEGO experience designed for adults looking for a fun, engaging way to reconnect with their creative side.

The redesigned LEGO Forma products will be produced with children and education leaders in mind as these will be the consumers of the product.

It is important, however to keep in mind not only the end user/consumer (children) but also Educational purchasers and parents as these will be the customers.

Market Position

Two major features of modern markets are the extent to which they are capable of being segmented (because of growing differences between customers and their demands to be treated as individuals) and the existence of the vastly superior technologies of communication (Hooley, Nicoulaud, and Piercy, n.d.).

Market Penetration is the attempt to increase sales of current products in present markets (Plus, 2019). As LEGO has a prominent position in the Education industry due to the success and longevity of the LEGO Education Solutions division of the LEGO Group. This prominent positioning will compliment aggressive marketing to introduce LEGO Forma to the Education sector.

The introduction of LEGO Forma into the LEGO Education Solution products can also be viewed as a mix of Market Development and Product Development (a current product revised to enter a market that another division of the company currently serves).

There is also an element of diversification as LEGO Forma will be moving from a product designed for adults to a product designed for children.

Marketing Mix

The marketing mix of the amended LEGO Forma product will now be explored.

LEGO has successfully introduced a catalogue of products over the decades and branched into different sectors including the film and merchandise industries.

Even though LEGO Forma is a relatively new product, the strong reputation of the LEGO brand and the affiliations with the Education authorities should prove a positive asset in the launch of the revised LEGO Forma product.

LEGO currently trades globally in many locations including UK, Denmark, Mexico and Hungary. The LEGO Group also have an emerging presence in China and India. The places that the LEGO operate are vast and therefore provides a global platform to market the revised product.

LEGO has found its price equilibrium and has adopted a mid-premium pricing policy for its high-end products. Customer feedback rates the pricing of LEGO products as reasonable and affordable. The pricing of the LEGO products combined with the quality of the products has resulted in maintaining value-based pricing strategy which has assisted in creating further markets and increasing its customer base.

It is argued that the key to business success was simply to supply the right product at the right price in the right place using the right promotion (Hammond, 2011).

LEGO uses a variety of advertising methods to increase brand awareness from modern techniques such as social advertising to sponsoring events such as the Summer Olympics and Paralympics.

Working closely with UNICEF and the established LEGO Education Solutions connection/partnership will have a positive impact on the promotion of the revised LEGO Forma product.

Integrated Marketing Communication Plan

The Integrated Marketing Communications (IMC Plan) ensures that all forms of communications and messages are carefully linked together to promote the product and to also answer any feedback from customers and consumers.

LEGO uses the power of social media to its full advantage, ensuring that it is responsive to feedback. “LEGO runs social channels where it keeps a constant eye on the feeds and is super quick to engage and remain personal to its audience. It has also built a supportive and consistently imaginative community on its LEGO Ideas site” (Ratcliff, 2019).

LEGO has years of experience of successful brand awareness and promotional activity. Mike Zeederberg from Zuni describes the IMC of LEGO as “a master class of content marketing, customer engagement and monetisation, all built around a really good product.” (Zeederberg, 2019).

Zeederberg’s comment highlights the importance that the quality of the product is at the core of the success of the IMC plan.

Conclusion

Taking all the factors noted above into consideration with the correct marketing approach, pricing strategy and making the best use of the current relationships (UNICEF & Education Solutions) revising the LEGO Forma product for the Education sector is both viable and achievable.

It will be imperative that focus groups are used to gather information on consumer needs and expectations of the revised Pro Forma product.

The information received from the focus groups can then be used to create prototypes of the products. These prototypes can then be tested on the focus groups to gain further feedback which will assist in the final design of the product.

Prior to the product launch LEGO can build awareness and excitement through social media, in a similar way as they promote their current products including films.

Advantage of the LEGO Ideas division may also be beneficial to providing further traction with the reformed LEGO Forma Product.

LEGO Ideas is an online platform that was established in 2008 to create a space for LEGO Users to make suggestions on new or existing products of LEGO. If a suggestion gains more than 10,000 votes, will be forwarded to the heads of Lego for possible development. This could be used to encourage children to think of how LEGO Forma could be further innovated, therefore providing fun and empowering creative thinking – keeping in line with the overall mission statement of the LEGO Group.

The LEGO Ideas scheme was launched worldwide in 2011 and has so far been responsible for eight successful products, including this Ghostbusters set (Ratcliff, 2019).

With eight successful product launches through the LEGO Ideas scheme this not only provides motivation and a genuine opportunity for suggested ideas to be turned into products.

References

1. Ratcliff, C. (2019). Why is LEGO’s social media strategy so outstanding? – Econsultancy. [online] Econsultancy. Available at: https://econsultancy.com/why-is-lego-s-social-media-strategy-so-outstanding/ [Accessed 4 Jul. 2019]
2. Donnelly, R., Harrison, G. and Megicks, P. (2009). The Marketing Planning Process. Burlington: Elsevier, p.59.
3. Education, L. (2019). Primary School | LEGO Education. [online] https://education.lego.com. Available at: https://education.lego.com/en-gb/primary/intro [Accessed 29 Jun. 2019].
4. Hammond, J. (2011). Branding your business. London: Kogan Page, p.16.
5. Hooley, G., Nicoulaud, B., and Piercy, N. (n.d.). Marketing Strategy and Competitive Positioning. p.187.
6. Kotler, P. and Keller, K. (2006) Marketing Management. 12th Edition, Prentice-Hall, Upper Saddle River.
7. Lancaster, G. and Reynolds, P., 2005. Management of marketing. 3rd ed. Oxford: Burlington, MA : Elsevier/Butterworth-Heinemann.
8. Plus, G. (2019). Target Market Selection Segmentation and Positioning | Demand Metric Blog. [online] Blog.demandmetric.com. Available at: https://blog.demandmetric.com/2008/08/06/target-market-selection-segmentation-and-positioning [Accessed 3 Jul. 2019].
9. Roberts, P. (2011). Effective project management. London, UK: Kogan Page, p.84.
10. Sheehan, B. (2011). Marketing management. Lausanne, Switzerland: AVA Pub., p.15.
11. Toysadvice.co.uk. (2019). Toy Safety Standards in the UK. [online] Available at: http://www.toysadvice.co.uk/toy-safety-standards-uk.html [Accessed 25 Jun. 2019].
12. UNICEF. 2015. UNICEF Corporate and Philanthropic Partnerships. [ONLINE] Available at: https://www.unicef.org/corporate_partners/index_91213.html. [Accessed 26 May 2019]
13. Wood, M. (2011). Essential guide to marketing planning. p.4.

Kathryn Cavill 1809094

Recruitment and Selection Process in Karachi Port Trust: Case Study

About the company

Brief history:

KARACHI, because of its geographical location is known as the gateway of Asia. It is considered as the safest harbor since Karachi was the small village for fishing in early nineteenth century. The Port is administered by the Brand of Trustees including the Chairperson and 10 trustees.

At the time of independence in 1947, the Port capacity was about 1.5 million tons of dry cargo and 1.0 million tons of P.O.L. products per annum. Karachi Port is now handling over 11.74 million tons of liquid cargo and 25.45 million tons of dry cargo, including 1,213,744 TEUs which constitute about 60% of import/ export of the country.

Mission:

“In pursuance of the Landlord Port Strategy, to lease out port infrastructure, land, access and assets to private port operators on long term basis while retaining regularity functions”.

Vision:

“To transform the port into modern, competitive and user friendly port, which would also be a transshipment hub of the region.”

Executive summary

Karachi Port Trust which is known as the gateway to Asia because of its Geographic and Strategic location plays a vital role within the economy of the country and serving trade with its best loading handling system and economical berthing facilities of loading shipping. 1,200 kilometers is being shared by Pakistan long coast line with the Arabian Sea – amid sea which joins the strategic oil line of Persian Gulf with the Indian Ocean.

Karachi Port, the hub of the maritime activity where the majority of loading is received and transported to any or all round the world. Karachi Port Trust, a proud beneficiary of a hundred twenty five years of merit able performance, is ever mindful of the importance of this port.

The Karachi Port is administered by a Board of Trustees, Including chairman (Chairperson) and 10 Trustees. Federal Government is the one who select the Chairperson who is also the Chief Executive of Karachi Port Trust. The remaining 10 Trustees are equally distributed between the public and the private sector. The five public sector trustees are nominated by the Federal Government. The seats for private sector trustees are filled by elected representatives of various private sector organizations.

It has six divisions. All the divisions are assisting and controlling by a manager, follow by a deputy manager furthermore KPT generates its revenue through providing facilities for imports and exports. As KPT is the service providing company, its operations play a significant role in generating revenues and providing customer satisfaction. H.O.D operation who serve as the second most important person after chairperson. All the operations going inside the KPT are interlink through one another and have an excellent influence on one another.

More than 60 % trade of the country is handled by the Karachi Port apart from transit trade of Afghanistan and transshipment traffic. It has 11.5 km long channel with 30 dry cargo berths apart from three liquid cargo berths for handling POL & Non-POL products. The port provides round the clock safe navigation for vessels including container ships and tankers up to 75,000 DWT.

KPT have 2 instrumentation terminals specifically KICT (Karachi International instrumentation Terminal) and PICT (Pakistan International instrumentation Terminal) and one Silos terminal. PICT and KICT, the foremost advance instrumentation equipped with the state of the art gantries and facilities.

Karachi Port Trust has three multipurpose oil terminals; OP-1, OP-2 and OP-3.Crude oil, edible oil, chemicals, molasses etc. are handled by these terminal.

KPT has broad range of cargo and container solutions and value added services. KPT has thirty dry cargo berths which handle bulk, break bulk and containers.

Literature reviews

Article no. 1

Recruitment:

Recruitment means “Attracting the candidates for a job position”, it is the positive aspect of Human Resource practices. Due to entry of social media recruitment process is changing quickly, many organizations are preferring social media to attract candidates.

Selection:

Selection is the negative aspect of HR practice, it means to select a candidate whose knowledge, skills and ability matches job requirements. Selection procedure depends on the size and type of organization. According to some other research, recruitment and selection process is linked with employee satisfaction and organization performance.

According to the study of recruitment and selection process of SAIGLOBAL VARNTEX (INDIA) Private Limited, by Syamala Devi Bhoganadam (research scholar) and Dr. Dasaraju Srinivasan Rao (associative professor), human capital is the most valued and tresurous asset of any organization, therefore during recruiting and selecting, company should keep in mind the important of human resource and should modernize recruitment and selection procedure so that they can give tough competition to their competitors.

Article no. 2

In a research by Dr. V. Vijay Anand, Dr. M. Shanthan Lakshmi, Dr. G. Uppili Srinivasan, G. Icewarya, S. Nandhu, S. Morisa Kamatchi, on effectiveness of recruitment organizational support in ITes, the researcher have written that Recruitment is the process of attracting best qualified candidates, this could be within or outside the organization. Selection includes analyzing and screening. In effective recruitment, the organization focuses on both internal and external recruitment and not only on internal recruitment because they are an internal candidate. They will motivate the existing employees to bring more candidates. It is important to practice effective recruitment because the people who will be hired will be responsible for the production of the organization. No matter how good your other sources are, if your Human Resource is not effective your organization can not achieve its goals. The manager have to look for right person through right means. The source of attracting candidates depends on the position of the job.

Article no. 3

According to the Research of the analysis of Recruitment which was based on the practical fact. According to this research recruitment process in different companies varies, like for the small firms recruitment and selection is on the small scale as compare to large firms in which it is time consuming and a long process, also according to this research it’s important recruitment and selection policies should be well structured, line manager and executive should be aware of future problem which will going to be come in their way which is key to success of the organization, also according to this research large firms should select candidate internally which will going to help them to save time as well as cost and they can rely on them easily rather than selecting new candidate and train them which is time consuming as well as costly.

Article no. 4

Price (2007), in his work Human Resource Management in a Business Context, He states that the process of recruitment is not a simple selection process, while it needs management decision-making and broad planning in order to appoint the most appropriate manpower. According to the research data Most of the respondent were satisfied but changes are required according to the changing scenario as recruitment process has a great impact on the working of the company as a fresh blood, new idea enters. Also it have been found from the respondent that the selection process is good but it should also be modified according to the requirements and should job profile so that main objective of selecting the candidate could be achieved.

Article no. 5

The Research solely depends on the method on which the organization is hiring the employees. The Methods described by the HR department of that organization gives surety of the recruitment and selection of the best employee for that specific job. According to Research report, employee reference is one of the most reliable source of hiring the new employees. The data for research report collected by a well define questionnaire with sample size of 30. These questionnaires were analyzed by SPSS software. At all the main focus of research report is to help the HR department to use the key of talent acquisition for better hiring of employees.

Article no. 6

The Research report define the Way of selection and recruitment of best employees for the Company for the extraordinary performance. As Employees are the only way by which company can maximize its output. The Research report reflects that how talent acquisition can help the company to hire best employees fir Electronics Company. Sample size of 150 help the research report to define these factors and questionnaires were used as a methodology. The Research report came to the conclusion that company should focus on long term consistent performance rather than short term. The emphasis towards training and enhancing skills of recruiters needs to be more and also consistent.

Article no. 7

According to the study of IRACST on the recruitment and selection – a need of how for organizational success (2014) whenever a company uses false means of recruiting and selecting it leaves a negative impact on the applicants and existing employees feel neglected. The study concludes that placing right personnel for right job is possible by accessing individuals’ competencies and provides equal platform for performing job in right manner and this helps to manage the budget of the companies in right direction. The study further concludes that market image of company stabilizes when it stops recruit and select as employee raiding. The study proves that using power and status companies end up hiring incompetent people which results in distress of employees due to favoritism.

Article no. 8

According to the study of employee challenges towards recruitment and selection process conducted by Syngenta Ag. In 2014 the objectives of the research were to understand different types of selection procedure, analyze the performance of recruitment and selection procedure and to measure challenges faced by the organization related to recruitment and selection. The company concluded that 48% of respondents said that there were more stages in recruitment, 56% of respondents had undergone personal interview and 44% of respondents had gone psychometric test. It was further concluded that 36% of recruitment was done through recruitment agencies, 20% through internet and 24% internally. The different HR managers were included in recruitment and selection which concluded that 84% of the respondents agreed that present strategy were helpful for recruiting and selecting, 72% of respondents agreed that job vacancies are open for public, 56% of respondents undergo educational qualification and must increase internal recruiting for reduction of cost.

Article no. 9

According to the study of effectiveness of recruitment and selection practices in public sector Higher Education Ghana, they relies on recommendation of other employees from the existing employees and the identification of vacant seats and the recruitment and selection of employees should be done by using advertisements (print/media) to publicize the vacant positions. Since recruitment is the process of hiring skilled, knowledgeable and qualified employees for job. Armstrong and Castelo (2006) puts the fact that recruitment is the process used by the management to fill the vacant positions. Dessler (2002), Yassin (2015) and Jovanovich (2004) says that recruitment and selection is the procedure of attracting the pool of candidates for the job and hiring those that are fit for the job.

According to the research the organization should not hire friends and family in the vacant position. They should increase the campus and graduate recruitment since this will reduce favoritism in the organization and all the capable candidates will get the chance and in order to make the identity for number of vacant seats available the organization should use advertisements.

Article no. 10

According to the research the recruitment and selection criteria on organizational performance depends upon the quality of the performance of the workforce. Bo lander, Snell and Shaman (2001) says that it is important for the higher management to understand their policies and practices that they use for the selection process. As Robbins (2005) observed that the human resource policies that are practiced in the organization represents the behavior and the attitude of the employees working in the organization. The organization should not compromise on designing the recruitment and selection criteria. They should design the criteria that is beneficial for both; the employees and the organization.

Objectives

The main objectives for this project was:

• To know the existence recruitment process in Karachi Port Trust.
• To know the existence selection process in KPT.
• To know the HR policies and practices of Recruitment and Selection in KPT.
• To know what practices are uses for attracting the candidate for the job?
• To identify the challenges faces by the HR in Recruitment and Selection Process.

Human resource department

The human resource depart of KPT make sure that they fulfill the human need within the organization through job rotations, deputations, hiring and recruitment. Along with this HR Department of KPT have responsibility to keep the track of the employers from the start to the top until their retirement. And in fact even after retirement i.e. pension, pensioner and pension holders. All the promotion within the organization is process in HR depart. HR depart has a single manager and deputy manager, who is responsible and keep eye on all the activities and process in the organization.

Company findings

Recruitment policies:

KPT is a government organization so it has its own policies for recruitment, the criteria varies from post to post, it has employees and officers from grade 1-21. For employees KPT has recruitment and selection policies (2005), where experience, skills and qualification are defined. For officers recruitment, promotion and selection policies (2011), where requirements are mentioned.

Mediums for recruitment:

KPT uses only two mediums for recruitment, first is the print media and second is internet, advertisements are posted on PEPRA. Till now KPT used to do recruitment by itself, their latest advertisement was published last month but, now they have involved third party called PTS (Pakistan Testing Service) it’s similar to NTS. This is not because KPTs HR department is not efficient enough but it is due to political reasons but, the department is not efficient enough and requires a lot of improvements. The previous head of the department of HR had a very bad reputation, he was famous for misusing his authorities and it is common in any government organization.

Hiring and promotion:

In case of hiring and promotion internally and externally, KPT has a ratio of 40% and 60%. They do external recruitment through internet or print media, this is for transparency in hiring people. They also promote their existing employees to higher position but, it takes a lot of time (5-6 months) because of ineffectiveness of HR Department of KPT and political reasons. KPT prefer internal employment (40%) to motivate employees and for employee satisfaction. When we asked them if they do any psychometric test the answer was no but they said they are working on it because they do have some employees with some psychological problems and to fire them time period of 5-6 months is required.

Appointment:

KPT undergoes 3 types of appointment, first on permanent basis, second on contract and third is fixed stipend. All of them have their predefined criteria. In contract there are further two types first direct contract , where employees are hired directly by publishing ads, second is indirect contract, where they have family assistance package if any employee dies and if he or she have someone in their family who is eligible for the job then he is hired.

Analysis

Karachi port trust is a vast organization, which provide employment to 100’s of people. The procedure of recruitment and selection is very detailed in KPT and varies post to post. Firstly the concerning department send an official application to HR department for vacant position to be filled, then HR department publish advertisement and other source of recruitment for vacant position of concerning department, they previously used to do the recruitment process by themselves but now due to political reasons they have involved third party which is a plus point in recruitment process as they will have an open market of employees. After receiving hundreds of CV’s HR department select those candidates who meet their concerning criteria (recruitment and selection policy 2005 for employees and recruitment, promotion and selection policy 2011, both are under revision period). Further interviews are conducted on verification of references, background and medical test are done and candidates are shortlisted, posts for which technical skills are required the candidates are send to do field work and the post for which number aptitude skills are required the candidates’ aptitude test is takes, they do not do any psychometric test or stress level test, they said they do have some employees who are psycho to some extent and they can’t even fire them and should have tested this at the time of appointment, they have employee development department which helps the employees to cope with their stress and anxiety . After all this appointment letter is send to the selected candidate. This complete procedure of recruitment and selection is carried out in Karachi Port Trust in 5 to 6 months, which is very long duration. They do not have ERP system in their organization to integrate the need of employees to HR department.

KPT recruits internally in a ratio of 40%in a big ratio. They prefer external hiring (60%) this helps in bringing innovation and diversity in organization lack in hiring of employees or recruitment externally that is the main purpose of the organization lacks diversity and creativity. The person selected for recruitment and selection purpose shall be very well trained so that the non-deserving candidate are not entertained and that help in quick recruitment for this they have training department. KPT has a deviance committee which resolve the issues of internal promotion of people but internal promotion is not based on performances , there is biasness to some extent, in KPT they lack balance score card for performance evaluation of the employees so that appraisal and promotion is granted.

Organization structure

Hierarchy of Karachi port trust operations

The department of Human Resource management supports the KPT and its workers by providing the effective and economical human resource programs and services that attract, develop, retain high performance work force.

HRM establishes the strategies, policies and practices.

• Give the employees’ pension
• Deputation and Promotion
• Make the profile of the employees’
• Make the annual and confidential report
• Hire the right person for the right place

Functions of the human resource department

The human resource department of any business deals with every human resource aspect starting from recruiting the employees to their retirement. This department helps people with respect to the strategic need of organization.

Following is the function of the human resource department;

• Recruitment
• Transfer
• Pension
• Litigation
• Promotion
• Advances
• Government correspondence
• Establishment matters
• Enquiry cell

SWOT Analysis

• Water pollution.
• Economic factor.
• Employee’s turnover rate can be high.
• Lack of training faculty.
• Somewhere biasness exists.
• Selection and promotion process is quiet delayed
• Appropriate training selection for employees.
• Introduction of technology for convenient CV reading

Threat

Opportunity

• Satisfied employees.
• Well experienced/qualified skilled workers.

Recommendations

• They should give proper training to employees so that they could response to changes quickly
• Existing faculty should be trained to increase efficiency and productivity.
• They should make flexible policies so that employees feel like a family and work vice versa.
• They should have efficient balance scorecard technique for performance evaluation.
• They should hire employees externally to promote diversity and creativity

References

1. https://www.researchgate.net/publication/268210664_A_Study_On_Recruitment_Selection_Process_With_Reference
2. Syamala Devi Bhoganadam et. al International Journal of Management Research & Review.(ISSN: 2249-7196)
3. A Study of the Recruitment and Selection process: SMC Global (ISSN 2224-6096 (print) ISSN 2225-0581(online)).
4. Recruitment and Selection Process By Ms.G.KARTHIGA, Dr.R.Karthi, Ms.P.Bala Aishwarya(ISSN 2250-3153 ).
5. https://eujournal.org/index.php/esj/article/download/10828/10364
6. A STUDY ON EMPLOYEE CHALLENGES TOWARDS RECRUITMENT AND SELECTION PROCESS by Mr. A.Susairaj and Ms. A.Laura Jenifer (E- ISSN -2347-856X ISSN -2348-0653).
7. Recruitment & Selection: A need of the hour for organizational success BY Pooja Khanna (ISSN: 2249-9563).

Report on the Case Study of Costco: A Different Approach

Executive summary

This report examines the working, structure of the large wholesale company Costco. To get familiar with the topic, the report first states the background and history of the company which tells how the company has managed to expand its routes in the country.

After that, the report states and discusses that how the the multi giant company is different from other companies in the same industry. It basically attracts huge number of customers by selling on wholesale at discounted prices. One of the major attractions of the company is that it spends least on its advertisements and still manages to expand its customer base through the quality they provide to their customers.

At the end, the report concludes that the company is very smooth in its operations and instead of having so much of competition in the market, it has managed to grow, develop and provided services and products to their customers while earning good profits.

1.0 Introduction

1.1 Background

Traces of history says that, back in 1983 the first Costco was opened in Seattle. The founder of the company was known to be James D. Sinegal who introduced a new concept in the running race of the industry. In the mean time the company went across the number of changes I its names and its evolution and finally in 1999 the company got its name. Costco started to expand its roots worldwide from United States, Europe, Mexico, Far East and Australia. the Company gained a lot of name.

1.2 Aim

Costco basically deal with all the items which are of basic necessity if day to day lives. Costco makes itself different from other stores by having a certain restriction on the purchases as common store people cannot walking and buy A Costco store typically carries supermarket items and as an ever-changing selection of other merchandise, including some luxury goods. CEO Craig Jelinek, successor believes that the secret of Costco success lies in many ways the company overturns conventional wisdom. People they need to have a proper membership card to makes purchases. Costco stores are mainly expanded up to 14000 sq. meters with only 4000 Costco works as a warehouse retailer where common people buy products in bulk items in total to sale, this is not a half of the normal supermarket selling its. Costco mainly concepts of providing customers the best items at a cheaper an affordable amount. It is like the normal supermarket stores with self-service formula. People here buy products in large quantities. The proofs that they have spread their roots to various countries in meantime show their demand and willingness of producers and wholesalers to like their large scale retailing. Once the CEO said to a reporter of ABC channel United States that they don’t even spend a cent in advertising their company but still has a team of about 140000 employees working in their stores at different locations. Costco is also known for providing the best wage rates to their employees. Costco is always praised for being the most flexible company among giving authority to their employees and letting them make quick dessins which helps the employees to work effectively. The authority and responsibility and flexibility that is given in hands of the employees also helped Costco to gain its name in the society.

2.0 Discussion

2.1

Costco was introduced In Australia in 2009, but gained popularity and maintained its goodwill quite sooner than other organisation did. Costco is different from other supermarkets in any ways. Firstly, customers are restricted to directly walk-in in the store to buys products in order to get the benefits of the store customers need to have a valid membership card. Annual membership for a consumer cost $60 per year for “gold star”. The executive members pay up to $120. The company is thinking to increase the membership to about $5 per year. There are basically 3 types of membership cards personal (gold star), business, and executive. But the limitation of card is that only 2mmbers are allowed per card. Unlikely the other memberships cards unfortunately Costco does not deal with any sort of discounts for senior citizen. As compared to other organisations and companies Costco is proven to a lot cheaper and affordable than other supermarket stores. It makes itself different from Kmart, target and big w buy selling the products in bulk one cannot buy the goods in small quantities whereas it is a retail store which actually works as a wholesale store. For an instance if a consumer wants to buy one packet of juice but he is restricted to buy that so he will have to buy the certain. Consumers cannot buy products for weekly purchases rather they buy products in bulk for and make monthly shopping. Which saves a lot of their time and money.

2.2

Costco has been blessed to have an outstanding CEO. One who is devoted to the accomplishment of the organization and who adjusts himself and his Corporate staff on all levels with the employees. His activity and system of minimizing expenses by having a straightforward office is noteworthy. He likewise executes a solid and ground-breaking proclamation when he won’t reduce costs with regards to the pay rates of the employees; for example. his in itself makes a dedication from his workers who are very much compensated and in this way display a stunning excitement for their activity and their organization.

Most great of all is the way that he takes a cut in pay contrasted with the other CEO’s in his industry and still accomplishes better outcomes. while this is a one of a kind methodology and not one which is industry standard, having his employees all around compensated, he stays away from the costly promoting arrangement and enormous publicizing spending which makes Costco a great organization to work for and to turn into a normal customer.

It built synergy and delivered values because when employees are happy and energetic and they care as you come into their store, at that point the customer leaves glad and turns into a faithful client who will carry their recurrent business to the store which leads to the organization produces reliability and creates a profit because of the techniques to support the employees. whereas, Costco is considered among retail industry specialists the ‘counter Walmart’ in view of its procedure dependent on giving the most elevated quality items at the most sensible cost – which does not really mean least expensive, while treating workers like regarded individuals from the organization. By figuring an alternate technique for staffing its stores than its rivals and by giving more consideration to quality control issues, Costco is able to gain the interest of customers and make them happy. In this, it gives off an impression of being succeeding. Costco’s ‘impression’ is extensively littler than the other company, however its plan of action has been an advertising example of overcoming adversity, and its incomes and gainfulness stay amazing.

2.3

Costco’s composition and e-commerce has first as a logistical advantage, they have to open more warehouses in different location all around the globe. Having a stronger alliance with suppliers and manufacturers. Presently to go and see a long-time growth and market share they have a good distribution network. Most importantly evaluation of e-commerce increase sales activity in both domestic and foreign markets increase technological developments in e-commerce by creating opportunity to expand the online business operation. The competitive advantages, economic of scale Costco purchases large amount of items from the manufacturer or suppliers which allows them to sell the quantity to the discount members. Secondly lower consistent prices, caps of fourteen percent in brand items and fifteen percent for private level Kirkland signature items. It has lowered the marketing and advertisement costs. Then the reducing the products, which result in rapid stock, bargaining power with suppliers and lower the warehouse and distribution costs along with simplified the supply chain which are less prone to the bullwhip effect.

Costco is known for its always low price all wonder how they can sell at so cheap. cost leadership is straightforward you have to be able to produce products or provide services that are cheaper than the ones offered by competitor companies if a company adopts this strategy and sustains costs lower than its peers than it will succeed typically cost leaders will sell at prices lower than their competitors this way they will win price sensitive customers the ones looking for a bargain and given that price sensitive customers are the absolute majority cost leader firms can win a sizable market share.

So, a cost leadership strategy means more units sold and a lower margin per unit selling at prices lower than competitors is a valid idea, however companies must find a way to do that if you want to sell at a lower price then you have to do something differently than your peers. There are several ways to establish a competitive advantage related to lower cost and they all have something to do with the concept of efficiency a cost leader must be efficient. Let’s see how companies can do that one of the fundamental ways to push down unitary cost is to leverage economies of scale the more units of a product are sold the lower is its unitary cost the cost of one unit how come well there are several costs which are sustained only once these are the so-called fixed costs. There is an inverse relationship between the quantity of output and unitary costs meaning the higher the output level the lower the fixed cost per unit the reason behind this is that fixed costs are spread over a large number of products and services economies of scale are the main reason for the predominance of large corporations in most industries.

1.0 Conclusion

In the end we learned that how the Costco Company started and how they expand their work throughout the world in different countries and nations and become a famous company which is selling the products in low prices with different strategies. Furthermore, this company also always focus on the consumer satisfaction needs this company include some luxury goods in nutshell people can purchase the goods in bulks in cheaper rates without any interruption of agent. In the previous slides we learned that the success of this company happened because of the CEO of this company according to the research the CEO implemented various strategies and techniques I which company grow their business throughout the whole world and that person also didn’t break the morale of their employee’s in which they also feel happy for doing work with this company. Costco also establish throughout the world because of E-commerce due to changing of the technology people started purchasing the products online then this company also started to selling their products online which is definitely fruitful for the company and they started gain the profits due to these reason they can survive in competitive market for the long run and this company also gain profits in this in time as well because the company happily adapt the changes and those companies adapt the changes in the market that companies are able to survive in the international market for long run. In this whole study we figure it out that the Costco company faces lots of ups and downs the company also accept he challenging in which were coming on their path of long term success because that company always adapt he changeful environment so because of this reasons they are able to survive in this market for long time, various things are the root cause of this company success CEO and their strategies were one of them.

2.0 References

1. Derrick, J. (2017, Dec 18). Costco upgraded as analyst projects a widening competitive moat. Benzinga Newswires Retrieved from https://search.proquest.com/docview/1977874919?accountid=30552
2. MARKET TALK: Costco deal changes competitive dynamics in Mexico. (2012, Jun 14). Dow Jones Institutional News Retrieved from https://search.proquest.com/docview/2121123599?accountid=30552
3. Derrick, J. (2016, Dec 08). Costco’s competitive pricing moat widened in Benzinga Newswires Retrieved from https://search.proquest.com/docview/1846723270?accountid=30552
4. Www.companiesandmarkets.com: Costco wholesale – competitive intelligence. (2008, Aug 19). M2 Presswire Retrieved from https://search.proquest.com/docview/444398173?accountid=30552
5. By Emily Nelson and, Ann Zimmerman. (2000, Sep 07). Minding the store: Kimberly Clark keeps Costco in diapers, absorbing costs itself — under new system, supplier stocks retailer’s shelves and boosts bottom lines — averting a Huggies squeeze. Wall Street Journal Retrieved from https://search.proquest.com/docview/398786447?accountid=30552
6. Zimmerman, A. (2004, Mar 26). Costco’s dilemma: Be kind to its workers, or wall street? Wall Street Journal Retrieved from https://search.proquest.com/docview/398891964?accountid=30552
7. By, A. Z. (2001, Aug 09). Tres cheap: Taking aim at Costco, Sam’s club marshals diamonds and pearls — Walmart’s warehouse club, long the no. 2, invades its rival’s upscale turf — in this aisle, bronze sculpture. Wall Street Journal Retrieved from https://search.proquest.com/docview/398945560?accountid=30552