Emirates Telecommunications Corporation Strategy Project

Emirates Telecommunications Corporation, popularly known as Etisalat, is an international telecommunication service provider company based in United Arab Emirates. It is currently rated among the largest mobile network operators in the world and the most powerful company in the United Arab Emirates. It offers a number of services under Telecommunication field in various countries. The company majorly draws its success from proper and apt implementation of organizational policies and culture. Etisalat is a multinational company, thus it is paused with a challenge of managing each of the various affiliate companies within varied geographical locations and subsequently managing policy implementation in each of the companies to meet the overall vision and mission of Etisalat.

Etisalat has successfully managed to incorporate Matrix organizational structure within its managerial arms which is a merge of divisional and functional structures. The matrix organizational structure allows for monitoring and supervision of each division of the large company at the same time keeping watch on each functional portion within the various divisions. This project singles out the several strategies employed by the company to ensure achievement of its core policies, as well as issues emanating from the same. It touches on the ethical aspects accruing from the same implementation process. The project also explains the stakeholders of Etisalat Company and gives incidences of ethical involvements of the company.

As mentioned earlier, Etisalat Company applies divisional organizational structure and being a multinational company, Etisalat has many affiliate branches spread over various countries, both in Africa and the Middle East. The company offers a wide variety of services including voice carrier services and data services. Besides, the company also offers telecommunication training and consultancy services, manufacture of smart cards and SIM cards as well as laying of submarine cables only to mention but a few. As such, the company is comprised of separate organizations within its umbrella that specifically deals with each of the separate products within the companys line of production. The location of these divisions is majorly influenced by the demand of the offered commodity. Each of this divisions employees is answerable to the central management (Pugh 1990).

Although in different geographic locations, all the employees work towards the common goal. In this case, the central management has the responsibility of monitoring all these divisions. The divisional organizational structure is employed here for effective management. Under this structure, the larger umbrella company sets up other various divisions in varied geographical location to produce and supply services under its line of production. Each division has its own managerial command that super sees the actual production and distribution of the services. The divisional management then will give its submissions to the central management in this case situated in the United Arab Emirates.

The divisional management is involved in policy making at the central management organ and is then in charge of implementing the same at the divisional level. In divisional structure of organizational management, the divisional managers are more of supervisors and policy implementers. They ensure that organizational policies made at the top organ of management are implemented at the lower levels of operation. However, division structures alone cannot effectively ensure the smooth running of the company. In this regard, another strategy has to be incorporated (Baligh 2006).

The separate divisions under Etisalat Company have different departments within their structure. For instance, there are departments dealing with market research, service delivery, client relations department and managerial department. Each of the divisions in the various countries is broken down into such departments. All these departments are interlinked to ensure efficient and quality service delivery. Necessary structures should thus be put in place to ensure a cohesive operation of all these departments. As such, functional organizational structure is the best strategy for managing these. The functional structure organization encourages specialization of employees as well as team work through proper supervision and coordination; this is the best structure for managing amalgamated divisions which link up into a big firm.

Under this structure, each department carries out the assigned tasks within its jurisdiction and reports to the divisional management. It is more of a delegation strategy where each department is only concerned with a special stipulated task. For instance, Etisalat- Nigeria will have its tasks broken down into discrete sub-tasks. Each task will then under supervision of functional management go on its own way to accomplish its assigned task. The various functional managements will then report back to the divisional management in Nigeria is the one charged with the responsibility of reporting to the central management of the company in United Arab Emirates. This if well followed and adhered to gives the best managerial flow of command as well as policy implementation and should be the reasons as to why the company might have opted to embrace it.

Overall, matrix organization structure is used in the management of the various divisions that make up Etisalat Company. Since the company offers a variety of services which are distributed worldwide depending on the market trends and demand, the divisional organization structure is employed to link all of them to the central management. Consequently, each division is split into smaller functional departments that co-ordinately link up to give the desired service yielding functional organization structure. Therefore, both functional and divisional organizations are used in the management of Etisalat Company. Merging the functional and divisional organizational structures creates the matrix organizational structure. Since the two structures are employed here, then it is evident that Etisalat Company uses matrix organizational structure in its management (Pugh 1990).

In this case, the hierarchy runs from the functional management to the divisional management and finally to the top most level which is the central management in the United Arab Emirates. Clear strategies are in place to avoid overlap of hierarchy and protocol in order to avoid collisions within the management. Methodologies are devised to also encourage teamwork and coordination amongst the employees since they work from different places but towards a common goal. It can be noted that indeed matrix is the best organizational structure that can be used to manage a large multinational company like Etisalat. It offers distinct levels of involvement from each of the various organizational management levels as well as giving each level total mandate and authority at its involvement in management. It then finally merges all these management levels to yield a compact structure effective in policy implementation and collective goal achievement.

Arising from matrix organization structure, Etisalat Company faces a number of problems in its managerial system. Matrix organization structure is complex in terms of operational units, and thus poses a leadership problem. Due to the improper conception of its functionality by a section of management staff within Etisalat, there have been certain shortcomings being experienced in its implementation. There is unnecessary competition within the divisions due to its dual management nature. Some individuals tend to miss the interpretation of hierarchy while others fee looked down upon or despised by fellow staff. Matrix organizational structure entails divisional management in charge of the overall divisional management and the functional management in charge of respective functional groups under the divisions (Pugh 1990).

A concrete example is the case of Etisalat-Afghanistan. There was a serious crisis facing the companys affiliate division in Afghan regarding which among the two managerial departments was answerable to the central management of the company. At a given point in time, the management in charge of sales and market research took over the responsibility of advising the central management on the market trends and population tastes and preferences directly without involving the divisional management in Afghanistan.

As a result, the divisional management perceived this as undermine and disowned the information given by the department. This consequently led to discard of vital information regarding the demand of the voice data carriage in Afghan. This is a major problem facing this type of this structure especially where coordination and cohesion is not adequately embraced. This greatly affects the flow of information and idea adoption which in turn affects final decision and policy making within the company (Pugh 1990).

Another serious problem is the cost of implementing the organization structure. The matrix organization structure was adopted by default due to the nature of the company. Implementing the structure has proofed such a costly undertaking given the nature of the different economies of the countries within which the company operates. The initial implementation of the structure led to subsequent drops in revenue. Maintaining the operating costs for the company in the various companies, the domestic tax returns subjected to the company in the respective companies together with the wage cost of sustaining the companys employees is expensive.

A lot of costs are incurred in managerial harmonization of the various divisions. Some costs are also met as a way of incentives to the employees and this varies from country to country and the nature of the employment. This turns out to be expensive compared to a situation where the company could settle on either pure functional organization structure or divisional organizational structure (Mile & Snow 2003).

The company has experienced more operational costs of its investments in African countries than in Middle East countries since the Middle East countries are in a close proximity to the central management in the UAE than Africa. A pure functional organizational structure could constrain the company in operation in a single state thus cutting down on most of its operational costs. Huge expenditures could limit the ability of the company to make more investments as well as limits the available capital available to expand the existing investments. Etisalat Company- China has a well-developed market and a subsequent strong link to the local market. Although the company has all these existing structures, it is unable to expand its holdings in the country due to inadequate surplus capital.

The major stakeholder of Etisalat Company is the United Arab Emirates. It owns up to 60% of the companys shares while the rest 40% is owned by corporate individuals and some foreign investors. United Arab Emirates is one of the richest economies in the Middle East. It draws most of its revenue from the sale of oil imports since it is one of the owners of the largest oil reservoirs in the world. This makes much capital available for investment. Telecommunication industry for a long time was not among the most ventured investment. It thus had a monopoly of operation in the region before other countries started making advancements in the same field. Some local subsidiaries also own some shares in the company. These are rich individuals who control most of the oil exports from the region. Their investment in the telecommunication sector is purely business oriented. Their passion for investing in Etisalat is drawn from the initial huge profits made by the company during its monopolistic period (Mile & Snow 2003).

In other cases, like Etisalat Misr in Egypt, the majority of the shares are owned by the company itself, while some few individuals corporately own shares in the company. The large share ownership of the company can be attributed to the many related service providers available in Egypt. Market and stock analysts argue that it is more advantageous when much of the shares are owned by the company itself since this implies that much of the profits are directed towards the company. This is the scenario at hand in Egypt. The company has set aside a 40% of its total shareholding for the local citizens in which its divisions are situated.

This is meant to encourage ownership by the locals hence involvement in the stakeholder decision making, which are vital to the overall performance of the company in its early stages. For instance, the company faced several oppositions during its establishment in Nigeria due to poor international relations between Nigeria and United Arab Emirates. However, due to share ownership in the company by Nigerian tycoons, the company finally established lest they risked losing their investment (Mile & Snow 2003).

Etisalat Company is so much concerned with the ethical practices of whatever country it operates in. This has been made to be a culture within the management of the company. For instance, the company only owns up to a maximum of up to 60% of the shares and leaves the rest for the locals. The company also discourages any foreign skill importation and exportation, a scenario where certain individuals with certain special skills are moved from country to country to offer the required services. The company fully apprehends and encourages local participation of the citizens of whatever country where it establishes its division (Baligh 2006).

As a policy, this company takes all the employees of a given division are from the host country. This has been done through the training and consultancy scheme where the locals are trained to take both expertise and managerial roles within the company. It opens up employment opportunities hence helping improve the livelihoods of the citizens as well as a source of revenue. This also ensures that people with the relevant skills in both telecommunication and management are absorbed to work in the company. Through encouraging local participation, the company has found ready acceptance in whatever country it seeks to establish an affiliate division.

Local citizen participation also helps cut down the operational cost of the company since it is cheaper to hire labour within a country compared to that hired from outside the country. The culture also restores community confidence in the company thus winning the local support from within the country of operation. Every organization that scores highly on local support is bound to bound to experience minimal opposition thus a smooth operation. Such like companies enjoy economy of scales other privileges as may be offered by the local population (Baligh 2006).

Etisalat Company is a service company whose major revenue is obtained from the levies charged for the services offered. It is quite clear that all the services offered are essential hence required worldwide. Due to various factors put into consideration before establishing an affiliate division, the various divisions are scattered worldwide. This subsequently implies that the levy charged for the offered services differ from the country of production to other countries where the same service is exported. To be more considerate of the host country, the rate of levy application is slightly lower within the host country. Citizens of the host country are able to access the respective services at a lower fee than other places where the same service is imported. This creates a large local market for the product as well as a good rapport with the company.

Etisalat has managed to use this as a strategy to beat other competitors offering the same type of product. An example is the internet service offered in United Arab Emirates. The company faces major competition from Huawei, a Chinese company offering the same services. Etisalat has successfully beaten this competitor due to its imposition of low internet rates on local consumers unlike the Huawei, new in the market, has to make maximum revenue. Hence, the great concern in ethics has seen the company thrive well in United Arab Emirates. The company also offers most of the incentives to the local citizens thus encouraging local consumption (Ron et al 2002).

The Etisalat Telecommunications Company has derived much of its market success and growth due to proper organization structures and organizational set up. A multi-national company as it is, it has managed to clearly outline the managerial and administrative hierarchy to minimize cases of leadership conflicts. The company also has put measures in place to encourage interdependence between the various operating units, encouraging collective participation to foster common-goal oriented employee environment (Ron et al 2002).

The company enjoyed a monopolistic market structure in its initial stages of establishment, especially in the Middle East. As time goes by, more companies in the same field have come thus prompting Etisalat to adopt the best strategy that could it survival in the competitive market. Through the involvement of the local population in labour and share buyout, the company managed to win the local support hence thriving well in the competitive market. Any organizational structure employed in any setting has consequences and as such, the matrix structure employed by Etisalat was the major cause of leadership clashes (Ron et al 2002).

The company has strategies in place to help counter this hence running the structure with minimal hitches. This has made the company to earn its place among the most prominent and successful companies not only in the Middle east, but in the whole world. This is a good example of a company which has incorporated the best organizational structures, taken into consideration the societal ethical concerns and emerged successful in a very competitive economy. Etisalat offers the best research company in terms of organizational management structures and their effects on any organizational setting.

Works Cited

Baligh, Henry. Organization structures: Theory and design Analysis and prescription. London: Springler Publishers, 2006. Print.

Mile, Raymond and Charles Snow. Strategy, structure and process. Stanford, California: Stanford University press, 2003. Print.

Pugh, Derrick. Organization Theory: Selected Readings. Harmondsworth, London: Penguin, 1990. Print.

Ron, Ashkens, Dave Ulrich, Todd Jack and Steve Kerr. The boundary less organization. New York: Jossey-Bass publishers, 2002. Print.

McDonald Corporation Service Blueprinting

Introduction

Service blue printing is a technique that management uses to innovate and improve services in a company. Its aim is to improve customer service in a company. It can be used for any company. The essence of this technique is to come up with several models of a line of activity in a company. These lines need to be customer centric. From the several models, the company needs to choose what will work best. Service blue printing divides a process in four parts. These parts are line of interaction with customer, line of internal interaction, line of visibility and support processes. This paper attempts to come up with a service blueprinting for McDonald Corporation.

About McDonald Corporation

McDonald Corporation is incorporated in the United States. It is a world leader in provision of a variety of fast food services. It services over 58 million customers daily. McDonald Company owns restaurants across the world. These restaurants are either as corporations or partners. Key success factors that propels growth of the company are quality and affordable products served quickly.

Service blueprint for customers orders in a drive through restaurant

Service blueprint for customers orders in a drive through restaurant
Service blueprint for customers orders in a drive through restaurant

Theory based analysis of the service firm

The diagram drawn above shows the four stages of a service blue printing for McDonalds drive through restaurant. These stages are the line of interaction with the customers, line of visibility, line of internal interactions, and support processes. All these stages are vital for any business. Emphasis should be put on line of interaction with customers. This is because it helps to attract and retain customers. In addition, all internal processes and interactions should be efficient. This is because they either directly or indirectly support line of interaction with customers.

Opportunity for service innovation and improvement

From the above diagram, there are various opportunities for innovation and improvement for the company. For instance, at the point of customer interaction, the company can increase the number of ways it interacts with the customers. For example, it can introduce online ordering. This allows customers to put orders online in advance and pick the orders while driving through. Secondly, the company needs to continuously adjust the menu. This attracts more customers to the restaurants. At the line of visibility, the Company needs to increase the number of staff members that handle online orders received from customers.

This makes service delivery faster. At the line of internal interaction, the company needs to continuously motivate employees in the organization. This enhances team spirit and in turn improves quality customer service. Finally, in support processes, the company should come up with service level agreements within the organization. For instance, the duration for processing orders in the back office, duration for processing customer complaints and getting back to them, and duration of processing internal systems down times or machine failures. This enhances efficiency in the organization.

Conclusion

Companies should come up with service blueprints for customer facing services in the organization. This should be done on a periodic basis since it enables a company to improve their processes from time to time. In addition, when launching a new product, it is also necessary to come up service blueprints. This ensures that products are launched after putting in place proper structures.

Target Corporation External and Internal Analysis

Executive Summary

Target Corporation is one of the leading retailers in the United States. It is ranked third-largest retail store after Walmart and Kroger. This firm has experienced a long period of prosperity, especially when it expanded its operations to Canada. One of the main strengths that have enabled this firm achieve its current success is its flexible management approach. The firm has been very sensitive to changes taking place in the external environment. However, its inability to retain its employees has affected it negatively. To address this issue, the management should develop a new system focused on employees satisfaction. This model should address issues such as the working environment, compensation, assigning of tasks, and the relationship between employees and the management. The focus should be on improving employees experience. If done properly, this firm will improve its competitive advantage over its market rivals.

Introduction

Target Corporation is one of the largest retailing companies in North America. The firm has been keen to ensure that its operations are in line with the companys mission statement. As Aaker (68) notes, the mission statement of this firm states, Our mission is to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and an exceptional guest experience by consistently fulfilling our brand promise. George Dayton started Target Corporation in 1902, and currently the firms headquarter is in Minneapolis, Minnesota, in the United States. Market competition was not very stiff when this firm started its operations, but there were well-established firms operating in the same industry.

Over the years, Target has grown to become one of the giant retailers in the world. Target is currently the third largest retailer in the world, with most of its stores located in the United States and Canada. The management of this firm has been consistent when it comes to implementation of the emerging technologies. Target Corporation is one of the retailers that have been keen on using the emerging technologies to improve their service delivery methods. The following pie chart shows some of the competitors of this firm, and their market coverage percentage.

In the current competitive market, firms have come to realize the importance of strategic alliances. In its international corporative strategy, this firm has emphasized on developing strategic partnership with its suppliers such as Samsung, Sony, and many others. This alliance creates a partnership where destiny of this firm is tied with the destiny of its suppliers. This way, the suppliers will make any effort to create a positive working environment so that this firm can succeed for the benefit of all.According to Stevenson (113), understanding a firms business level makes it possible to determine its potential in the market. Roberts (78) says, Business-level strategy is concerned with a firms position in an industry, relative to competitors and to the five forces of competition. As mentioned previously, Target is the third largest retailer in the world. This means that its competitive capacity is relatively high as compared to most of its rivals in the market. In its strategy, the firm has focused on aligning its strategies with that of the prevailing market forces. All its subsidiary branches are always operated based on the strategy developed at the headquarters.

The strategic alliance strategy with the suppliers is very appropriate for this firm. Target Corporation is facing stiff competition from Walmart and many other large retailers in this region. Unlike Walmart that currently has a global market coverage, this firm only operates regionally. This strategic alliance with suppliers who have dominated the world market will help it discover other markets around the world.

External Analysis

The external business environment plays an important role in determining success of a firm in the market. The chart below shows six core business environmental elements that have direct impact on the operations of this firm.

External Environmental Factors

As shown in the above chart, these external environmental factors affect Targets operations to different levels. The United States and Canada have very stable political environment, and therefore, it has the least impact as shown in the table. Economic and technological elements have the highest impact. The following chart shows the industrys five forces based on Porters theory.

Industry Rivalry

As demonstrated in the above diagram, this firm must know how to deal with threats of potential entrants, the power of suppliers, the power of buyers, the threat of substitutes, and finally the industry rivalry. As indicated in the diagram, industry rivalry poses the most serious threat to this firm. For instance, Walmart and Kroger have the largest market share. Their market growth has also been stable in the last decade, a sign that they are determined to maintain their market lead. Unless Target Corporation comes up with a brilliant strategy, it may be difficult to dislodge the two firms from their lead. They will continue posing threats to Target Corporation.

It would be important to understand competitors strengths and weaknesses in order to determine the best approach of managing their threat. The table below shows competitors threats and weaknesses.

Competitors Strengths Competitors Weaknesses
Wide market coverage Limited dynamism
Large financial base Slow to adopt to the emerging technologies
Consistent market research Over-emphasis on pricing strategy
Dedicated employees
Trust from the customers

It is clear that managing competition in the market is the most important factor that this firm should consider. The charts shown above indicate that Walmart has been very prosperous in the market, and has increased its market share over the years. If the management of Target Corporation does not find a way of dealing with this threat, it may be forced out of the market.

Internal Analysis

Internal analysis is always important in enhancing understanding of a firms current capacity. Target should consider enhancing its value chain management strategies in order to gain competitive edge over its customers. As Roberts (91) notes, firms must ensure that they offer maximum value to the customers in order maintain high levels of satisfaction. Value chain management focuses on all the activities carried out within a firm at all categories. The figure below captures the stages and resources involved in value chain management.

The Value Chain

Inbound logistics, operations, outbound logistics, marketing, and customer service are some of the core activities in value chain management.

Understanding the financial rations of this firm will also help in understanding its financial capacity to address various issues in the market. Liquidity ratios are important in understanding a firms capacity to meet its short-term financial obligations. Current ratio, quick ration, and cash ratio can be used. Other important ratios that can be used to Analyze Target Corporations financial capacity include profitability indicators ratios, debt ratios, performance ratios, and investment ratios. The tables below show income statement and cash flow of Target Corporation for the year 2011, 2012, and 2013.

Income Statement
View: Annual Data All numbers in thousands
Period Ending Feb 2, 2013 Jan 28, 2012 Jan 29, 2011
Total Revenue 73,301,000 69,865,000 67,390,000
Cost of Revenue 50,568,000 47,860,000 45,725,000
Gross Profit 22,733,000 22,005,000 21,665,000
Operating Expenses
Research Development   
Selling General and Administrative 15,220,000 14,552,000 14,329,000
Non Recurring   
Others 2,142,000 2,131,000 2,084,000
Total Operating Expenses   
Operating Income or Loss 5,371,000 5,322,000 5,252,000
Income from Continuing Operations
Total Other Income/Expenses Net   
Earnings Before Interest And Taxes 5,371,000 5,322,000 5,252,000
Interest Expense 762,000 866,000 757,000
Income Before Tax 4,609,000 4,456,000 4,495,000
Income Tax Expense 1,610,000 1,527,000 1,575,000
Minority Interest   
Net Income From Continuing Ops 2,999,000 2,929,000 2,920,000
Non-recurring Events
Discontinued Operations   
Extraordinary Items   
Effect Of Accounting Changes   
Other Items   
Net Income 2,999,000 2,929,000 2,920,000
Preferred Stock And Other Adjustments   
Net Income Applicable To Common Shares 2,999,000 2,929,000 2,920,000
Cash Flow
View: Annual Data All numbers in thousands
Period Ending Feb 2, 2013 Jan 28, 2012 Jan 29, 2011
Net Income 2,999,000 2,929,000 2,920,000
Operating Activities, Cash Flows Provided By or Used In
Depreciation 2,142,000 2,131,000 2,084,000
Adjustments To Net Income 150,000 637,000 937,000
Changes In Accounts Receivables (217,000) (187,000) (78,000)
Changes In Liabilities 457,000 353,000 161,000
Changes In Inventories 15,000 (322,000) (417,000)
Changes In Other Operating Activities (221,000) (107,000) (336,000)
Total Cash Flow From Operating Activities 5,325,000 5,434,000 5,271,000
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures (3,277,000) (4,368,000) (2,129,000)
Investments 356,000 151,000 316,000
Other Cash flows from Investing Activities 66,000 37,000 69,000
Total Cash Flows From Investing Activities (2,855,000) (4,180,000) (1,744,000)
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid (869,000) (750,000) (609,000)
Sale Purchase of Stock (1,515,000) (1,753,000) (2,158,000)
Net Borrowings (88,000) 369,000 (1,248,000)
Other Cash Flows from Financing Activities (16,000) (6,000) 
Total Cash Flows From Financing Activities (2,488,000) (2,140,000) (4,015,000)
Effect Of Exchange Rate Changes 8,000 (32,000) 
Change In Cash and Cash Equivalents (10,000) (918,000) (488,000)

The data from the two tables can be used to compute some of the important ratios of this firm to help in understanding its internal capacity. Targets non-financial internal factors have also played a big role in ensuring that it is successful. The management has been conscious of the changing environmental factors. This has made this firm flexible to changes in the environment. Its organizational culture and frequent engagement in corporate social responsibilities has also given in a competitive advantage in the market. In order to analyze the competitive advantage of this firm, VRIN analysis would be important. The firm has been focused on generating value out of its current operations. Its approach in managing its online stores has not only been considered as rare, but also not easy to imitate by competitors. This is so because of the improved software it has uses in its information management (Stevenson 93). As demonstrated above, value chain management is the best way through which this firm can manage market competition.

SWOT Chart

SWOT Chart

The diagram above shows a SWOT analysis chart for Target Corporation. From the chart above and discussion from other sections of this paper, the major strength of this firm is the management strategy that has been employed in the recent past. The strategy has emphasized on the firms need for flexibility in its operations. This has enhanced dynamism in its operations. The firm has been sensitive to the changing environmental factors. This has enable it benefit from the stable economic growth experienced in the United States. It has also helped it deal with the threat posed by its market rivals. However, high employee turnover has been considered as a weakness that has reduced its capacity to increase the market share in areas where its main rivals like Sears are failing. This increases the cost of training the employees.

Critical Strategic Issue

Target Corporation is a successful retailer that has managed to expand its operations in the market over the years. However, one critical strategic issue that it has to deal with is the rate of employees turnover. According to Aaker (80), Target Corporation has not been rated as one of the best employers in the recent surveys. In the recent past, the national dailies made reports that some of the employees were complaining of the rigid schedules. Others have complained of forced-overtimes. The firm has witnessed cases where its employees reassign after being trained on the best practice in their areas of operation. When they leave the firm, they are hired at rival firms transferring all the knowledge they had learnt and the experience to these competitors. This has affected the firms capacity to excel in the market, giving its competitors an edge over it.

Strategy Recommendation

According to the above analysis, it is clear that the biggest weakness that Target Corporation has is its ability to retain its well-trained employees. Employees are the most important asset in any organization (Stevenson 23). The SWOT analysis conducted above shows that this firm has not performed well in the market because of this issue. To address it, the firm should develop an appropriate employee satisfaction strategy that would help in maintaining employees within the firm. The management should focus on employee satisfaction. The proposed model that this firm should use focuses on all the issues that relate to employees well-being in the firm. The following chart shows some of the components of this employee satisfaction model.

Employee Job Satisfaction

This strategy is tailored not to interfere with the activities of Target Corporations competitors. This internal change management would be focused on improving the working experience of the firms employees. To ensure that there is efficiency in implementing this new strategy, the management will use McKinsey 7S model to ensure that all aspects of the organization work harmoniously when this new model is implemented. The chart below shows McKinsey 7S model.

McKinsey 7S Model

McKinsey 7S Model

As demonstrated in the model above, the focus will be to ensure that the strategy is based on the shared values. This means that the new strategy should not jeopardize other areas of the firm negatively. It should bring a positive change in the entire management system. The focus will shift from productivity-focused management approach that has been practiced in this firm, to a comprehensive approach that looks at all areas of operation, including concern for employees. When implemented effectively, the firm will be able to retain its employees, and this will improve its efficiency in the market.

Works Cited

Aaker, David. Developing Business Strategies. New York: Wiley, 2001. Print.

Roberts, Bryan. Walmart: Key Insights and Practical Lessons from the Worlds Largest Retailer. London: Kogan Page, 2012. Print.

Stevenson, Lawrence. Power Retail: Winning Strategies from Chapters and Other Leading Retailers in Canada. Toronto: McGraw-Hill Ryerson, 1999. Print.

Starbuck Corporation: Competing in a Global Market

Companys Overview and Background Information

Starbucks Corporation is an American based company that was founded in 1971 with the headquarters being situated in Washington DC. Fundamentally, the company deals with coffee products. It thus undertakes to purchase, roast and sell whole beans mainly coffee beans and a wide range of high quality coffee beverages both in America and international markets such as Japan, China and Brazil through a well established local and international retail outlets1.

Since its inception in 1971, Starbucks Corporation was known as a seller of packaged premium specialty coffee. However, the company has emerged as a leading and most popular destination of coffeehouses, where customers can obtain a wide range of high quality coffee products that includes and not limited to beverages and food items as well as packaged whole beans and ground coffee2.

Over the years, the company has gained unmatched popularity and credit in the heart of many American and world customers for its exceptional quality products that have transformed the way the latter view and use coffee products. Ideally the company is a corporate success a factor that has enabled it to gain massive attention in the global industry. Starbucks success can also be seen in the growth path that it has taken since its establishment.

Going by the fact that it started as a small firm, Starbucks is a management success story that is greatly attributed to the exceptional managerial environments that has continued to prevail in the company. In fact, it has been rated as one of the fastest growing companies in the United States of America. In the decade 1992 to 2002 for instance, the companys net profitability soared by a net compounded rate of 20% to reach $3.3 billions in 2002. Similarly, the net profits increased by a compounded rate of 30% in 2002 setting a record in the profitability of Starbucks history.

The companys merchandise including the four splits have grown in leaps and bounds over the ten years between 1992 and 2002 soaring by a record 2200% and greatly beat other world successful firms such as Wal-mart, general electrics, Pepsi-cola coca cola, Microsoft, and IBM in terms of returns3. Since 2003 to date, the excellent growth late has been to a greater extent maintained irrespective of the setbacks of the falling economic conditions especially from 2006.

The growth of the company has been greatly heightened by the company move to diversify into the international markets. The company has since extended its operation to the European, Middle East, Asian, Australia and New Zealand and Latin America although amid daunting challenges4. In addition, Starbucks continues to explore the South American markets a move that one can use to predict future growth in the company profitability.

The Company Mission, Principles and Goals

Starbucks operations are greatly entrenched in its clearly outlined mission statements that set the goals and principles which guide every aspect of the companys internal and external operations. The company mission statement (which is Starbucks mission) is to inspire and nurture the human spirits  one person, one cup, and one neighborhood at all times.5 It is this mission statement that guides all operations at Starbucks. The companys CEO Howard Schultz stresses greatly on the mission statement attributing much of the Starback on the mission statements and the associated guiding principles which are.

Quality

Starbucks has always aimed at and stressed on offering the highest quality coffee products, to achieve this objective the company greatly boast of its ability to source the best raw materials (coffee beans), its unmatched and well controlled, roasting and processing processes and strains on ethics with an ultimate aim of transforming the life of the raw materials suppliers or rather the coffee farmers. Concerning the coffee quality, the objective of the company aims at providing the best quality coffee products to the world wide markets via ethically sourcing the best quality coffee beans and roasting them with great care, while transforming the life of the people who are involved with their growth.

Employees

At Starbucks the employees are referred to as partners6. The company does not treat employees as mere workers but has taken its workforce as having an entrenched stake in the organization and a very vital constituent and contributor to the organizational success. The goal of the organization is to create a management environment where relationships between employees and management as well as all the constituents of human resources are optimally maintained and where employees are treated as equals all of which are guided by this principle here employees are partners because in Starbucks they are not just employees, it is their passion to work at Starbucks.

The company aims at embracing its human diversity to create an environment of freeness and where every individual is himself or herself and where every person is treated with ultimate respect and dignity and upholds each other to those standards7. As such, the industrial relations in the companies have been at the highest with the employees enjoying unmatched levels of satisfaction highly motivated workforce and exceptional commitment in achieving the firms goals and objectives.

Customers

Howard Shultz believes in the customers especially after recognizing that they form the pedestal on which the organizational success rests on. On the basis of this principle the company aims at offering the highest value to its customer not only through providing the highest quality coffee products but also enhancing close and passionate relations with the customer with the company aiming at transforming the lives of the customers.

When the company is fully engaged, it connects with the customers, laughs with them and uplifts their lives even if for a few minutes. This process starts with a promise to the customers of being provided with a perfectly processes beverages and extends to greater heights more fulfilling to the customers expectations. There are enhanced levels of human connections at Starbucks8. As such, Starbucks customers are maximally satisfied and passionate in using the companys products and experiences.

Stores

The company goal here is to make its stores to be the best place for the customers to be in. Having solicited customers pride and passion to belong and consume starbucks products, the company knows very well that by enhancing its store, its going to win customers loyalty to the company and its products, the guiding principle or aim here is to make the customers feel a sense of belonging and pride to associate with the company thus making Starbucks stores to be their haven and a break from the outside unpleasant experiences, a social place in which friends can meet and socialize while spending some great times9. Making the stores offer unmatched enjoyment to the customers and that which are always full of humanity.

Social Responsibility

Starbucks ensures that its business operations are greatly integrated into the community and always uphold good relationship with the community in which it is situated and who forms its reliable market. As a result the aim of the organization is to take its responsibility as a good and socially responsible firm to its immediate community. The company takes social responsibility seriously and thus is welcomed in all the places in which they do business. As a result, the company is able to force positive action from the community and bring together its partners, customers and the community to contribute to the organizational success. Starbuck recognizes this as the basic responsibility and realizes its potential to assure even greater success for the organization. As a result, Starbucks main objective concerning this has been to be the leader in social responsibility and integration with the immediate society.

Shareholders

Starbucks has all through its operation maintained at delivering the best value to its investors through maintenance of the highest profitability and returns to the investors. As management at Starbucks carries on with their daily activities at the organization they have the stakeholders in their mind to ensure that they enjoy the kind of success that rewards the companys investors in the best way possible. The aim here is to ensure that the firm remains accountable in streamlining the operations so that the organization and all its stakeholders can endure and thrive in the best way possible.

In order to support the achievement of the mission and goals, the actions and operations of all constituents at Starbucks are guided by a clearly stipulated business ethics and compliance program that helps the organization in its culture and organizational favorable reputation by providing employees with resources to help them make ethical decisions while at work10. Howard Shultz and the whole of the Starbucks believe that conducting its business ethically and ensuring that right things are done at all times are imperative to the companys success.

On top of the above mission, Starbucks has an environmental mission. The environmental mission statement of the company is we are committed to a role of the environmental leadership in all facets of our business. Based on this mission statement the company has set several related environment goals that aids in the achievement of the mission11. The companys environmental objectives are:

  • To closely understand the environmental issues and share the information with all the organizational employees or partners
  • To continuously develop innovative and highly flexible solutions to bring about changes in the environmental issues.
  • To always buy, sell and use environmentally friendly products and raw materials
  • To recognize that the fiscal responsibility is vital to the organizational environmental future
  • To closely measure and monitor the progress of each project to ensure that they are consistent with the environmental missions goals.
  • Come up with incentives and means of encouraging the employees to integrate as a unit in the achievement of the environmental mission.

In meeting the mission i.e. both the general corporate and the environmental mission, the company is geared toward the objective of establishing Starbucks as most recognized and respected brand in the globe.

The Internal Analyses

Organizational structure

The current Starbucks organizational structure is unnecessarily tall. The top management is made up of the chairmanship of Howard Schultz who is also the chief executive officer, chief vice president, the vice president and the chief financial officer, a host of line managers, supervisors and business development leaders in all the countries that Starbucks is represented. Apart from the top team management in Washington DC, the company has the countries branch managers to facilitate the companys operations in the overseas markets12.

The tall organizational structure that Starbuck has is both strength and weakness to the company. For instance, the structure greatly slows decision making and implementation costs as well as increasing the companys administration costs. However, it makes the companys administration and implementation of strategies easier. Also, it enhances, the rate of the companys expansion and business environment for instance in the overseas markets.

Products

Starbucks greatest pride and strength is greatly entrenched in the wide range and superior quality of the companys products13. Currently, the company is a market leader and is highly recognized for its high quality coffee products. The company purchases and roasts high quality whole coffee beans which it trades along fresh, rich brewed, Italian style espresso, beverages, a wide range of pastries and confections, coffee related accessories and equipment.

In addition, the company produces and sells bottled Frappuccino coffee drink and a line of premium ice cream and provides a line of innovative premium tea through its fully owned subsidiary Tazo Tea Company. In addition the company buys high quality coffee beans, carefully roasts them and sells them as whole coffee beans through the world-wide specialty sales groups and supermarkets. It is the superiority of its products that has given Starbucks a competitive edge over the other rivals in the industry as well as a favorable position in the market place that is sustainable in the long run as long as the firm maintains this suitable product quality levels.

The Suppliers

The high quality products that Starbucks continues to offer its customers originates from the effectiveness in the sourcing of raw materials and the reliability of the suppliers in offering a continuous and reliable supply of raw materials. The company purely uses Arabica coffee in the production of all coffee related products whether processed coffee beverages or whole bean14. For starbucks, its 100% Arabica unlike many competitors whose coffee products are made up of coffee blends.

In order to acquire a steady and reliable supply of Arabica coffee and other useful high quality raw materials therefore, the company has entered into strategic partnerships with suppliers especially farmers in Brazil and other coffee producing regions. Apart from the partnerships, the companys purchasing workforce is involved in the active and professional search of the finest quality raw materials especially in search of Arabica coffee.

In 2002 for instance, Dave Olsen, Starbucks then senior vice president and the chief coffee purchaser in the company navigated the highlands of Kenya, Indonesia, Guatemala and many other places looking for supply sources of the much needed Arabica coffee beans. The formation of strategic partnerships as well as the characteristic integrations with the suppliers of raw materials and other inputs ensures not only steady production of high quality products, but also enables just- in- time productions at Starbucks

The Marketing Systems

The company distributes its products via a wide network of well established and organized marketing channels which ensures that the products are not only efficiently transmitted to the world wide customers but also works best in presenting Starbucks as a leading and respected brand throughout the world markets. The marketing channels have so far worked in increasing the companys market presence not only in the United States of America but also in the other global markets in which it is continuously diversifying into15. In Starbucks the products are distributed mainly through the company owned stores, franchisees, or independent retail outlets such as supermarkets.

For instance, the company sells its roasted coffee beans together with fresh, rich-brewed, Italian style espresso beverages and a wide range of pastries and confections, coffee related accessories and equipment through company owned and operated stores, in addition the company sells whole coffee beans through a specialty sale group and supermarkets and produce and sells bottle packed Frappuccino coffee drink and a line of a premium ice creams through its franchised organizations. In addition Starbucks sell a line of highly innovative premium teas via a fully-owned producing and selling subsidiary known as Tazo Tea Company.

The employees

While the company continues to stress on exceptional quality of coffee products and services the organization has maintained an unequalled employees policy that is characteristically laid back and exceptionally supportive. In fact like it is mentioned earlier in the case analyses, employees at Starbucks are refereed to as partners. By referring to them as partners, Schultz aims at encouraging employees to think of and carry themselves as partners. In the organization the employees are treated exceptionally enjoying a host of highly attractive benefit schemes, recognition and respects with a lot of freedom to exercise what is right for the organizational success.

According to Howard Schultz, happy and committed partners are vital for the organizational competitiveness, growth and overall success. He says that the organization cannot achieve its strategic objectives without the employees who are as equally committed to the achievements as the organizational management. Starbucks sustainable competitive edge is also entrenched in its exceptionally high quality workforce.

The company has also established a national retail company through creation of unmatched pride and stake in the outcome of the companys workforce. In addition, the partners (employees) at Starbucks are taken through rigorous and high quality development and training programs. For instance, a new employee of the company must go through a week long quality training programs. In addition, the old partners are often taken via day long training and complimented by occasional seminars and workshops aimed at upping up their skills.

The External Analyses

Competition

Starbucks Corporation has managed to a greater extent to position itself favorably in the market place through its exceptionally high quality products and coffee services that gives its loyal customers a differentiated experience all together. Ideally the company has succeeded in attaining near market leadership with a commanding market share especially in the US16. However, the competition in the coffee industry market especially in the United States continues to soar every other day a factor that presents a daunting threat and a challenge in maintaining its current favorable market position.

One of the organizations that continue to pose a threatening competitive challenge to Starbucks is the Green Mountain Coffee Roasters which nears the company in term of market share. As a result of the ever-increasing competition threat therefore, the company has to adopt a kaizen and kaiban strategy or rather continuous improvement of the products and services quality through enhanced research and development.

Technological Environment

Starbucks operates in a technological environment that is dynamic and that requires the organization to change with it. The ability to adopt and effectively incorporate the state-of- the art technology into the companys strategy and operations is key to the organizational competitiveness and operational success17. Technology can be a strategic source of competitive edge for the company. Up to and until 2002 starbucks had not incorporated sophisticated and highly efficient technological processes in its operation especially in the production process. However, traces indicate the company as having launched the Starbucks purchases card and online sales outlets recently.

With the rivals moving fast to adopt such technology, Starbucks cannot afford to sit back and watch otherwise it would be risking being competed out within no time. Technology also shapes the companys research and development, ideally therefore, the dynamisms of the technological environment presents Starbucks with challenges in terms of additional capital expenditure, threat due to the rapid changes and competitors match as well as opportunity in terms of its potential to creating a distinctive edge for the company.

The Economic Environment

The dynamisms of the economic environment in which Starbucks Corporation operates present a great threat to the company. The economic environment fluctuates through the economic cycle i.e. the boom, recession, depression and the recovery which may affect the operations of an organization either positively or negatively. A boom enhances the business performance while recessionary and depression situations have adverse effects on the company performance. To and until the onset of the global economic crises in 2006 Starbucks returns were on the increase with the company experiencing steady growth18. The falling economy however has since halted this trend making the company to face stunted growth in the fiscal years between 2006 to date (2009)

The Social Cultural Factors

Starbucks Corporation has not been spared by the challenges of the social cultural aspects especially where it is involved in the diversification to the new markets19. When moving to new markets especially in the international scenes the companys main challenge is to solicit products acceptance in the same rate as in the United States which is hindered greatly by the social-cultural barriers.

The political- legal variables

Political  legal factors has also posed a challenge to the companys expansion into the overseas markets especially in the European, afro  Asian countries middles east and North America. The company has been faced by the rigid anti-globalization laws, restrictions as posed by the various political alliances and trading umbrellas among others20. The politics behind globalization have particularly set a daunting challenge to the Starbucks expansion/ growth strategy especially outside the United States of America. In addition, the country law that governs foreign direct investment may hinder Starbucks from venturing into another countries market.

Recommendations

It is recommended that the company takes it technological advancements a notch higher so as to be a leader as far as technology is concerned. This is vital if at all Starbucks is to be competitive and market leaders (that they currently are) with future sustainability.

It is important for the company to realize that technology is the lee way to effective and efficient research and development and which is crucial for the company seeking to continuously improve its products for distinct competence, favorable market positioning, socially responsible and highly responsive to the environmental concerns with the raw materials, production processes. In addition, technology is vital for the company to conduct frequent market research, market intelligence and also on establishing information communication systems in the company for effective management decision making and implementation of strategies.

Starbucks should use local natives as the business development leaders in the new markets especially the cross-border market ventures. This is because the locals have an upper hand as far as the local cultural variables are concerned. Consequently the natives are in a better position to evade the barriers presented by the cultural variable hence moving into such markets will be easier. For instance, the company should use Indian management in case it wishes to establish a subsidiary or a branch in India because such understands more of the Indian culture.

The organization should consider shortening its organizational structure by abolishing some of the unnecessary managerial hierarchies that increases bureaucracy in the company and which is a major hindrance to a speedy decision making process at Starbucks Corporation. For instance, it is not of any importance to have the president and the chief executive office, chief vice president and the vice president among other unnecessary posts characteristic in the Starbuck organizational structure.

References

Gordon Bowker et al. (2004) Starbucks Corporation: Competing in a Global Market. Web.

Starbucks Coffee: Companys Fact Sheet (2008). Web.

Starbucks coffee: Companys timeline. Web.

Starbucks Coffee (2008): Companys Profile. Web.

Starbucks Coffee (2008): Companys Recognition. Web.

Stewart Allen (2004), Starbucks, monoculture, and American Imperialism idea. Web.

The official company website (2009). Web.

UW business school (2003) Starbucks Corporation: Competing in Global market- Case. Web.

Footnotes

  1. Gordon Bowker et al. (2004) Starbucks Corporation: Competing in a Global Market. Web.
  2. UW business school (2003) Starbucks Corporation: Competing in Global market- Case. Web.
  3. UW business school (2003) Starbucks Corporation: Competing in Global market- Case. Web.
  4. Starbucks coffee: Companys timeline. Web.
  5. The official company website (2009). Web.
  6. Gordon Bowker et al. (2004) Starbucks Corporation: Competing in a Global Market. Web.
  7. The official company website (2009). Web.
  8. Starbucks Coffee: Companys Fact Sheet (February 2008). Web.
  9. The official company website (2009). Web.
  10. UW business school (2003) Starbucks Corporation: Competing in Global market- Case. Web.
  11. The official company website (2009). Web.
  12. Gordon Bowker et al. (2004) Starbucks Corporation: Competing in a Global Market. Web.
  13. Stewart Allen (2004), Starbucks, monoculture, and American Imperialism idea. Web.
  14. The official company website (2009). Web.
  15. Stewart Allen (2004), Starbucks, monoculture, and American Imperialism idea. Web.
  16. Stewart Allen (2004), Starbucks, monoculture, and American Imperialism idea. Web.
  17. Stewart Allen (2004), Starbucks, monoculture, and American Imperialism idea. Web.
  18. UW business school (2003) Starbucks Corporation: Competing in Global market- Case. Web.
  19. UW business school (2003) Starbucks Corporation: Competing in Global market- Case. Web.
  20. Gordon Bowker et al. (2004) Starbucks Corporation: Competing in a Global Market. Web.

Mergers, Acquisition, and International Strategies in McDonald and Carls Jr. Corporations

Introduction

A merger is a business expansion strategy in which two or more companies combine to form one new company. On the other hand, an acquisition is a business venture in which one company purchases another one without formation of a new company. In general, a merger and an acquisition entail consolidation of two or more corporations to form a competitive joint synergy.

In this paper, McDonald and Carls Jr. Corporations have been chosen to illustrate the effectiveness of mergers and acquisitions as business expansion strategies. McDonalds Corporation is one of the leading fast food restaurants that have gained global competitive advantage through acquisitions. Unlike McDonalds, the competitive advantage of Carls Jr. is product differentiation and effective customer service. Carls Jr. operates mainly in the United States of America.

McDonalds Corporation

McDonalds is the largest chain restaurant in fast food industry. The company started in 1940 as a barbecue restaurant in California. Its main products are hamburgers, breakfast items, cheeseburgers, and soft drinks. Today, McDonalds Corporation serves over 65 million customers on a daily basis in 120 countries around the world. Its main expansion strategies are competitive customer service, high quality products at affordable prices, product differentiation, effective marketing and acquisitions (Mujtaba & Patel, 2007).

During its initial business expansion phase, McDonalds Corporation employed high quality customer service and product differentiation as strategic marketing tools to gain a strong market presence in the United States of America. By mid 1980s, McDonalds was among the biggest fast food restaurants in the United States of America.

This strong market presence prompted the need to explore overseas markets. A stronger domestic market presence was essential in propelling the fast food leader to the international scene. Acquisitions were among the effective strategies that would ensure quick expansion of McDonalds Corporation.

Acquisitions were also thought to be strategic management tools that would help McDonalds overcome the challenges of new markets. McDonalds Corporation hoped to use the already established market presence and successful business models of existing companies in new market environments (Mujtaba & Patel, 2007). In response to these needs, it acquired Donatos Pizza, Chipotle Mexican grill, and Boston Market between 1998 and 2000 (Derdak & Pederson, 2004).

The above acquisitions made McDonalds the biggest chain of fast food restaurants in North and South America. The acquisitions were strategic because they increased the product line and domestic market presence of McDonalds Corporation. Donatos pizza is based in Columbus, Ohio with over 200 outlets in the United States of America. Its acquisition made McDonalds Corporation the dominant fast food restaurant in Ohio with an entry in the pizza industry.

Chipotle Mexican grill had over 1200 restaurants in 43 states and countries in the world. Among its market strongholds are Canada, England France, and Russia. It specializes in tacos and burritos as the main products. Its acquisition by McDonalds in 1998 made the latter the biggest fast food restaurant in Canada and England (MarketLine, 2012). It also extended McDonalds product line by inclusion of tacos and burritos.

By the year 2000, McDonalds Corporation was the leading fast food restaurant in Washington, DC, Ontario, Toronto, Quebec, and Paris thanks to the acquisition of Chipotle Mexican grill. McDonalds Corporation acquired Boston Market (Formerly known as Boston Chicken) in 2000.

Boston Market had 550 restaurants in 28 states in the United States of America, Australia, Sydney, and Canada prior to its acquisition by McDonalds Corporation. Thus, the acquisition of Boston Market by McDonalds Corporation expanded the market presence of the latter in Australia and Canada. McDonalds was able to use human resources and the success story of Boston Market to enter into new market environments without incurring establishment and administrative costs.

In general, the decision to acquire the above three fast food restaurants by McDonalds Corporation was strategic. This is because it enhanced quick expansion into international markets without incurring establishment and administrative costs. According to MarketLine report (2012), many organizations fail to establish themselves in new markets because of the inability to adapt to new consumer cultures. Thus, acquisitions are effective tools of overcoming cultural shocks in new market environments.

Carls Jr. Corporation

Carl Karcher and Margaret Karcher started Carls Jr. as a hamburger restaurant in California in 1941. It was initially called Carls Drive-In barbecue until 1956. The stiff market competition of the 1990s made it difficult for Carls Jr. Corporation to establish itself in Texas and Arizona.

Its expansion has been slow due to its management strategies that discourage mergers and acquisitions. The major challenge to its expansion is the competition from McDonalds Corporation, which has the largest market presence in the United States of America. Currently, Carls Jr. is planning to expand its operation into international markets. The first proposed destinations are Singapore, Russia, Australia, New Zealand, Denmark, and Brazil among others.

The most effective and profitable company for a merger or acquisition for Carls Jr. is Starbucks Corporation. This is because of its wide international market presence that makes it the third biggest chain restaurant in the world. Starbucks Corporation is the leading coffeehouse restaurant in the world with over 20300 stores in 61 countries. Its strongest international market presence is Japan, Canada, China, the United Kingdom, Mexico, Taiwan, Philippines, and India among others.

Besides hot and cold coffee, Starbucks Corporation also deals in snacks, sweet pastries, salads, and cold sandwiches. The joint venture of Carls Jr. and Starbucks Corporations will be profitable for the former because of expanded product line. Carls Jr. will also benefit from the international market locations of Starbucks without incurring extra administrative and establishment costs.

The business and corporate strategies of McDonalds Corporation

The mission of McDonalds Corporation is to be the customers favorite place to eat in the world. The business strategy for McDonalds is market led, and customer focused innovations. To achieve this, McDonalds undertakes extensive market research to establish its customers and their needs.

It then designs its products to meet the needs of all age groups. The prices are also varied to meet the needs of people from all social classes. The wide market presence ensures that McDonalds is the restaurant of choice for majority customers in the world (Mujtaba & Patel, 2007). McDonalds corporate strategy is business diversification and international expansion. McDonalds employs related diversification by proving various meals that meet all customer needs.

Recommendations for improvement

The most effective recommendation for McDonalds Corporation is vertical integration. This is a cost cutting strategy, which is achieved by using an organizations own inputs and distribution channels. McDonalds Corporation should produce its own inputs and develop its own transportation and distribution systems. This will reduce overall costs and increase the companys profitability.

Proposed business and corporate strategies for Carls Jr.

The most effective business level strategy for Carls Jr. is high quality product branding. Effective branding of Carls Jr. Corporation and its products will attract the attention of new customers in new market environments (Gussoni & Mangani, 2012). This will offer it a competitive advantage against other market players. For corporate level strategy, the most effective recommendation for Carls Jr. is international expansion. This will provide the company with a global market for its products (Stoy & Kytzia, 2004).

References

Derdak, T. & Pederson, J.P. (2004). McDonalds. In Derdak, T & Pederson, J.(Eds.), International directory of company histories. 3rd Ed (pp. 108-109). New York: St.James Press.

Gussoni, M. & Mangani, A. (2012). Corporate branding strategies in mergers and acquisitions. Journal of Brand Management, 19, 772-787.

MarketLine (formerly Datamonitor), Financial Deals. (2012). McDonalds Corporation  Mergers & Acquisitions (M&A), Partnerships & Alliances and Investment Report Nov 27, 2012. New York, NY: Alacra Store.

Mujtaba, G.B. & Patel, B. (2007). McDonalds Success Strategy And Global Expansion Through Customer And Brand Loyalty. Journal of Business Case Studies, 3(3), 55-66.

Stoy, C. & Kytzia, S. (2004). Strategies of corporate real estate management: Strategic dimensions and participants. Journal of Corporate Real Estate, 6(4), 353-370.

Corwin Corporation: Project Management

Introduction

Its an international manufacturing low-cost high-quality rubber component. Organizationally it maintained the same structure for more than 15 years and its top management was highly conservative and used a marketing approach to find new markets rather than exploring new products. For any product request, Corwin Corporation considered it if it provided the same profit margins and total profitability in terms of follow-on contract.

Main body

From 1980 to 1983 Corwin received a specialty product assignment from Peters Company which was profitable leading to the development of a good business relationship. In 1982 Peters Company requested for development of a specialty product with Corwin. In the beginning, Gene was reluctant to accept the offer but after a long discussion, he gave in and this was followed by a proposal to be presented to Peters Company. Dan West was selected to be the project leader after which their proposal was accepted. This was then followed by a letter from Delia authorizing Corwin to begin working on the project immediately.

The proposal was prepared in the absence of other majors like Reddy who was on vacation. He also did not support the position given to West as the team leader. As the researches started things were not going as planned with Ray, a representative from Peters Company was ruining everything by imposing his non-performing directions. West was even forced to spend 12000 more on materials. Ray ordered the sacking of potential members from the research laboratory claiming incompetency in their works. Due to these challenges, Reddy came in to bail West out which led to the formulation of new laws unfriendly to Ray. A new test matrix for the research was prepared and this made Ray angry and went on to spoil their reputation at Peters Company which led to the immediate termination of the research development.

Some of the major mistakes done by Corwin were the assigning of Dan West as the project leader who was an expert in the internal projects rather than external ones of which he lacked the experience and exposure. Secondly, preparation of a project proposal which was usually executed by the three vices and the president was done in the absence of some of them which did not appear professional. Lastly, the fact that more experienced personnel, like the R&D director (Reddy), was not informed.

Companies should never risk bidding on projects based on rough draft specifications as this can lead to unqualified undertakings which may turn out negative to the whole idea as in the case of Corwin which leads to eventual losses. The proposal preparation should have been given more time and patience with the active involvement of the four principles. This should have given more final and well-allocated responsibilities to more experienced personnel which could have efficiently overcome the failure to deliver. It is very important to inform line managers of proposal activities as this can avoid obvious mistakes like going into contracts with the wrong opponents as one can advise earlier either against or for it.

Immediate procurement of all materials is a mistake as this can lead to unforeseen losses as in the case of West who was forced to purchase more materials outside the budget with Rays project redirections. In such a case he could have reduced the losses by ordering lesser materials. Corwin should have catered for the extra costs by undertaking all the matrix tests till when promising results were found rather than redirecting the project just after few tests. As we can see, redirecting the project led to their total misplacement which was never cost-effective.

Corporation Crimes and Endangerment of Society

Civil society is often influenced by many factors surrounding it. The threats induced by corporations and individuals targetting such businesses can differ significantly, creating a prominent subject for scientific discussion. Even though there is no universal consensus on this topic, a crime-committing company presents a much greater danger for the community around it. In this work, the negative influence of an organizations criminal activities will be presented, and the case of hazardous infant supplements distribution will be discussed.

Illegal action undertaken by a corporation can have detrimental consequences for various social groups. Alcadipani et al. (2019) provide a thorough investigation into large companies unlawful behavior, stating that such institutions obtain a higher amount of responsibility. Corporations from various economic fields often have an enormous impact on social and business-related events, increasing the adversity of crime activities (Alcadipani et al., 2019). Particular individuals and small organizations usually have a short range of production, only affecting local populations, while large-scale companies encompass various societal groups, even from different regions (Alcadipani et al., 2019). Thus, criminal actions performed by corporations can cause dire outcomes for their workers and other people involved.

Corporate misconducts are frequently reported, making organization crimes a repeatedly occurring event. According to a recent CNN investigation, colossal health and environmental damages were inflicted by four corporations producing baby foods (LaMotte, 2021). The case presented regards the threatening amounts of hazardous substances found in various infant food supplements (LaMotte, 2021). Such toxic metals as arsenic and lead were significantly increased, thus stating a well-being risk (LaMotte, 2021). The companys negligence towards routine check procedures might have drastic consequences, impacting people worldwide. Altogether, illegal activities performed by large companies affect a large number of populations.

References

Alcadipani, R., & Medeiros, C. R. (2020). When corporations cause harm: A critical view of corporate social irresponsibility and corporate crimes. Journal of Business Ethics, 167(4), 285297.

LaMotte, S. (2021). Leading baby food manufacturers knowingly sold products with high levels of toxic metals, a congressional investigation found. CNN.

Tbe Origin of Unions and Corporations and Consumer Protection

The Origin and Nature of Unions

The history of labor unionism dates back to the 18th century when craft unions were formed in the United States (US). According to Shaw, during this time, groups of skilled artisans  carpenters, shoemakers, tailors, and the like  formed secret societies for two reasons: to equalize their relationship with their employers and professionalize their crafts (p. 299). The involved parties agreed on various issues, such as the number of working hours and the acceptable wages and swore not to work for any entity that was not willing to meet the set terms. Importantly, the workers in these unions pledged to keep their allegiance as a secret because, until the mid-1800s, it was a crime for employees to form unions, and thus anyone involved in such activities would be prosecuted for conspiracy.

Despite the challenges that labor unions faced, workers did not give up, and in 1869, the first formal trade union, the Knights of Labor, was formed and it had national representation. The Knights sought to unite all workers despite their different skills, gender, or race, and form one major union that could address their interests, especially collective bargaining. The Knights set the pace for the emergence of other labor unions and in 1886, the American Federation of Labor (AFL) was formed, and it mainly focused on bringing together other various craft unions. However, with time, AFL became appealing to skilled laborers, and it became more popular than the Knights were and by 1917, it had over 2 million registered members (Shaw, p. 299). Nevertheless, despite this progress companies used the existing laws to repress labor unions, specifically the 1890 Sherman Act, to obtain anti-strike injunctions from the courts on the grounds that strikes illegally restrained trade (Shaw, p. 299). Under this law, a firm would merely allege that a planned strike would cause damage and get a restraining order even without providing proof.

However, the 1929 stock-market crash and the ensuing Great Depression, was a blessing to labor unions because the public started sympathizing with the plight of workers. In 1932, Congress passed the Norris LaGuardia Act, which barred the issuance of federal injunctions in labor disputes that did not involve any form of violence (Shaw, p. 299). Three years later in 1935, Congress passed the Wagner Act establishing a federal right to unionize (Levine, p. 531). Therefore, workers were now allowed to join unions of their choosing for collective bargaining, and employers were legally prohibited from interfering with the operations of such unions. According to Shaw, by the end of World War II, unionized workers had reached 12 million due to the Wagner Act (p. 299). However, the widespread strikes post the war era led to the passage of the Taft-Hartley Act in 1947 and outlawed closed shops, which could only hire union members. This law is still in effect today and it bars unions from engaging in unfair practices, including secondary boycotts and sympathetic strikes.

The Origin, Development, and Nature of Corporations

Before the 1800s, the first entities with semblance to corporations were established in Europe to promote the public good through building institutions, such as learning institutions and hospitals, as not-for-profit organizations. During this time, corporations were subject to control by governments, and they operated under strict constitutions. However, in the 17th century, these entities shifted focus from public good to money making, with the accumulated wealth being used mainly to finance European imperialism. Specifically, Britain was the leading player in the establishment and development of corporations to control trade and resources around the world. In the US, the colonial monopoly enjoyed by the British aristocracy ended after independence and other players. According to New Internationalist, the modern-day corporations emerged in Britain after the passage of an 1844 Act that gave such organizations to define their purpose. In other words, governments were no longer controlling corporations  a task that was left for the courts. Within a year, the concept of limited liability was born whereby shareholders personal assets were protected from the consequences of their corporate behavior (New Internationalist). This development set the stage for corporate irresponsibility.

In the US, a court ruling in 1886 indicated that a corporation was a natural person under the law. This determination was abused under the 14th amendment of the Constitution, which stated, no state shall deprive any person of life, liberty or property (New Internationalist). This clause was meant to protect freed slaves in the South, but it was used to guard corporations and minimize regulations. With the unbridled and pervasive capitalism of the 19th century, corporations continued to evolve to become what they are contemporarily.

Limited liability defines the default nature of corporations in the 21st century. Under this model, Shaw notes that shareholders or stockholders (those that provide capital resources) own the organizations, and they are financially liable for debts of the organization only up to the extent of their investment (p. 152). On the other hand, stakeholders include every other party involved or affected by corporations, including governments, consumers, workers, shareholders, and society. The issue of corporate morality is debatable due to the vanishing individual responsibility based on the nature of these entities. While it could be argued that every shareholder shares personal responsibility for what occurs in corporations, the diffusion of accountability also means that no one is morally responsible.

With the evolution of corporations to focus on money, the issue of corporate social responsibility emerged. Companies had an implied moral obligation to make social goals as important as economic ones. However, the primary duty of organizations is to make a profit and maximize the shareholders wealth. In the process, various externalities  the unintended negative (or in some cases positive) consequences that an economic transaction between two parties can have on some third party (Shaw, p. 161) occur. For instance, pollution due to company operations is an externality. The idea of corporations is complex and it continues to evolve into a sophisticated maze with most entities focusing more on profits and less on the public good.

Consumer Protection

Before the 1900s, consumers were not adequately protected, and thus they had to check and verify the quality of the products they were using. Sellers could only be held responsible in cases of gross and blatant negligence. According to Corradi, The first consumers organizations were born in Denmark in 1947 and in Great Britain in 1955 where the Government created the Consumer Council&But the real normative breakthrough came with the Single European Act; it modified the Treaty of Rome. However, the introduction of the Federal Trade Commission (FTC) in 1914 had sought to protect consumers. Various players are involved in the issue of consumer protection, including governments, NGOs, corporations, and individuals to ensure that people are guarded against the harmful effects of products that they use.

Governments around the world have created product liability laws to ensure that companies are regulated to manufacture goods that are safe for human consumption. In the US, Congress passed the Consumer Product Safety Act in 1972, which is part of the governments regulation efforts to protect consumers from harm or injury when they use different products (Shaw, p. 195). Every product in the market has to undergo specific testing and verification to make sure that it meets the set safety standards. As such, if the relevant body realizes that a certain product has been released to the market without proper testing, recalls are made, where possible. This assertion explains the increasing number of vehicle recalls over the last 20 years, and Shaw notes that one in every 12 cars is recalled (196). Consumer protection comes with economic costs for companies because they are expected to take extra measures in compliance with the set laws.

However, it is important to question whether regulations as part of consumer protection are effective. Shaw argues that people work under the assumption that whatever they can find in the market, especially foodstuffs, is tested and certified (p. 198). However, this presumption is misplaced because the available data shows that regulation has many loopholes, and thus it does not guarantee the safety of products. For instance, the meat sold in the US is prone to mad cow disease and unapproved drugs could stay in the market for a long time without the realization of the Food and Drug Administration (FDA). In addition, Shaw warns that some products, such as shampoos, other personal care, and cosmetic items, are not under any regulation to ensure consumer safety yet some have ingredients deemed harmful (p. 198). Therefore, while the purpose of consumer protection is to guard users against the harmful effects of products in the market, the regulation approach adopted by many governments is wanting and it might not guarantee safety.

Works Cited

Corradi, Antonella. International Law and Consumer Protection: The History of Consumer Protection. Global Law and Justice. 

Levine, Peter. The Legitimacy of Labor Unions. Hofstra Labor and Employment Law Journal, vol. 18, no. 2, 2000, pp. 529-573.

New Internationalist. A Short History of Corporations. Web.

Shaw, William. Business Ethics. 8th ed., Cengage Learning, 2014.

Australian Law of Business Organizations Whistleblower Corporations Act 2001

Whistleblower

A whistleblower is a person that reports any improper conduct that they may observe in their areas of responsibility. In the context of a corporation, it involves an employee reporting his or her colleague in case they find out that they are involved in actions that may prove disastrous to the company. There may be some negative practices that employees may be involved in which the management may not be aware of. An employee that observes such conduct may choose to report to the necessary authorities for an appropriate action to be taken (Australia, CCH Corporate Law editors, CCH Australia Limited, 2009). The action taken by the employee to report the incidence is called whistleblowing while the person reporting is called a whistleblower. Whistleblowing may either be external or internal depending on the authority that the whistleblower chooses to use. In most cases, employees will be encouraged to use internal whistle-blowing so that they dont cause a lot of attention to the external environment.

How the context of an audit may lead to a whistleblower coming forward

Company auditors are responsible for counterchecking all the financial reports that have been submitted for publication by the financial controllers of the company. They are usually viewed as the ultimate authority to approve the accounts before they are published in media for public view. Auditors have specialized skills to approve the transactions that have been made in the books and hence be able to question any transaction that appears wrong. Their signature is enough to tell the company and the public that the records are correct. There may however be instances when the auditors may collaborate with financial controllers to manipulate the records to show wrong reports. One notable instance of auditors that collaborate with the entire management of the company to give wrong information was that of Enron. The company had received a lot of credit from economic experts considering its faster growth. The concussion was made after looking at the financial reports of Enron that showed how fast it was growing. After it became clear that the company was not performing well and had to be shut down, its auditors Arthur Anderson were charged for acting against their employment ethics and helping the company to manipulate the accounts rather than exposing them.

Potential ethical issues that may arise for the auditor

An auditor is an overall determinant of how realistic the financial reports published for the public will be. Their judgment is never questioned as they are deemed to understand what they are doing better. Any small mistake that they make is culminated to be a lie to the public and especially the investors and potential investors of the company who rely on such reports. Auditors have special principles that they have to operate on which allows them to make necessary inquiries either from the company staff or fellow editors to ensure that what is published to the public is accurate. The ethical issues that may be charged against them if they provide wrong reports are for lying to both the company and the public (Kennedy & Richards, 2004). When such a case is recorded necessary investigations will be carried out and once found guilty they will be charged accordingly.

Potential legal issues that may arise for the auditor

An auditor that has been found guilty of the offense will be charged under the Australian law for breach of justice through the conducts that they have been involved in to manipulate such accounts. They will also face the risk of being discontinued from their auditing services as they have proved that they can not be trusted by the public. They will also be required to pay for all the inconveniences that they have caused to the public and the company by signing in to wrong financial reports. Depending on the level of their mistakes, various charges under the whistleblowers act will apply to them. If the auditors were reported by a whistleblower, then it will have to be identified whether the act was intentional or not.

The potential for conflict in the ethical and/or legal issues faced by auditors

The main point of conflict when it comes to auditors is the wider area of society that they cover and the fact that their issues are directly linked to financial investments. This is an area that will not only affect the company but also the other stakeholders that are affiliated with the company. When wrong information is displayed about the financial progress of a company, they display a certain kind of picture in the minds of an individual which affects their investment decision. Publishing wrong information implies that the auditor is playing games with the investments that have been made in the company by its stakeholders (Moye, 2004). This is the reason why stern measures are taken against their actions to not only protect the stakeholders but also the company. Audit reports enable the company and the public to make informed decisions about their investments.

Protection of the whistleblowers

Whistleblowing is not an easy responsibility considering the consequences that the concerned employees may be subjected to. Most people choose to keep quiet because they want to protect their jobs. When it comes to displaying the financial reports of a company, the management will never wish to display reports that will suggest to the public that they are not performing well (Vandekerckhove, 2006). When they discover that they have recorded a poor performance that is likely to scare investors away, they will collaborate with the auditors to enhance the reports. Depending on the agreements that are entered into by the auditor, they may agree to them and use all their financial skills to blindfold the public. Company employees are mainly relying on the services of their company for their growth which makes most of them suppress such information. They may clearly understand the harm that they are causing not only to themselves but also to the public. The harm they cause to themselves is that when the matter comes to light, they may also be liable to legal judgment for not revealing the scandal on time. They may also fear that if they report the scandal, the company may have fewer investors and customers and hence risk their career.

Employees may not be sure of the consequences that may befall them when they choose to report or suppress a scandal. This has hence raised the need for them to be granted necessary protection that will enable them to report the issues. The government of Australia realizes the risk that the employees are exposed to and the importance of them reporting such scandals to protect investors. Another risk that the whistleblowers may be exposed to is when they make a wrong assumption concerning the same. The court will not declare any judgment on an individual before carrying out the necessary investigation to prove the allegations. Most employees may suspect a scandal but not be bold enough to report the same because they are not sure about it. They may be afraid that legal action may be taken against them if the parties concerned are proved innocent by the court of law.

The Australian law on business organizations has put measures that will ensure that any suspect that is forwarded to them by a whistleblower is treated with secrecy until the necessary investigations are complete. The whistleblowers are assured that they will not be punished if the information is found to be invalid but credited for showing concern for the performance of the company. They are also assured that the information will not be revealed to people that are likely to frustrate them like their colleagues and employers. They are also assured of subsequent protection during and after the hearing of the cases in case their allegations are justified. The court will ensure that their career life is not affected by them choosing to stand for truth.

The potentially serious consequences of blowing the whistle

Blowing the whistle can have serious consequences on the career life of an employee as well as the company. All this will depend on how the case has been treated and the decision that will be taken by the court. An employee that will be suspected to have blown the whistle is at risk of losing his or her job or being left out in the rewarding procedures of the company (Yalden, 2008). If the company engaged in the activity knowingly to hide its financial progress may subject the whistleblower to serious torture. Most of them will be treated badly in secret so that they are not suspected. The whistleblowers may be accused of poor performance in the company and hence being denied salary increments and promotions. They may be given demotions or made to do more work than they are meant to do. They may be sidelined by their colleagues who may look at them as traitors than cannot be relied on.

Blowing the whistle may also have serious consequences on the management of the company or the auditors concerned. If they are reported in the court of law and found guilty, they may not only lose their jobs but will also be subject to pay high fines in form of compensation for the inconveniences caused to the various parties. The charges against the auditors and the company management will depend on how long they have been involved in the scandal (Gay, 2006). The Enron scandal was considered to be the biggest audit scandal that had been recorded at the time. It led to the closure of the company and the auditors. They were also required to pay large amounts of money in form of fines and compensation to the workers. The level of the scandal had reached an advanced stage that required an advanced hearing. There was no prior whistleblower of the company as the scandal was well coordinated. It came to light years after the scandal began which made most of the involved parties suffer serious court penalties.

Bibliography

Australia, CCH Corporate Law editors, CCH Australia Limited, (2009), Australian Corporations & Securities Legislation 2009: Corporations Act 2001, ASIC Act 2001, related regulations, Melbourne: CCH Australia Limited.

Gay, G, (2006), Auditing and Assurance Services in Australia. London: McGraw-Hill.

Kennedy, R, & Richards, J, (2004), Integrating human service law and practice, Oxford: Oxford University Press, Original from Indiana University.

Moye, J, (2004), The Law of Business Organizations, London: Cengage Learning.

Vandekerckhove, W, (2006), Whistleblowing and organizational social responsibility: a global assessment, New York: Ashgate Publishing, Ltd.

Yalden, R, (2008), Business organizations: principles, policies and practice, Melbourne: Montgomery Publication.

Hospital Corporation of America: SWOT Analysis

SWOT Analysis

SWOT analysis is a commonly used method to analyze the internal and external environment of any company, including Hospital Corporation of America (HCA). A SWOT analysis evaluates strengths and weaknesses (internal factors) together with opportunities and threats (external factors). HCA Healthcare Inc. is one of the leading healthcare service providers in the USA. On December 31, 2018, the company had 173 hospitals in the US and six hospitals in the UK (HCA Healthcare, 2019).

The company generated more than $46 billion as total revenue in 2018 and 4.39 billion as net income (HCA Healthcare, 2019). HCA grows steadily without significant mishaps for the last five years. A SWOT analysis will help to identify if any changes in development are to be expected in the nearest future.

Strengths

  • The largest chain of hospitals in the US;
  • Efficient management;
  • Stable financial performance;
  • Strong mergers;
  • Top healthcare professionals.

Weaknesses

  • No significant presence outside the US;
  • Fraudulent activities (Kacik, 2019).

Opportunities

  • Aggressive expansion to the UK;
  • Expansions to other countries in Europe and Asia;
  • Acquisitions of smaller providers.

Risks

  • Changes in governmental policies;
  • Increased competition;
  • Adverse events hurting the US economy.

Radiology Budget

The budget was prepared for a radiology department in an HCA hospital that performs approximately 8,000 scans a year with an average cost of $2,000 per procedure. The budget includes monthly values for projected expenses and revenues for one year. The projected values are presented for three conditions: if the department performs at 80%, 90%, and 100% of its capacity.

Rubin (2017) states that fixed costs in radiology include salaries, fringe benefits, maintenance expenses, and housekeeping costs, while variable costs include bonuses, contract labor, supplies and pharmaceuticals, malpractice expenses, and others. All of these matters were included in the prepared budget. The assumptions for income and expense projections are listed in the Appendix. The revenues also vary depending on the performance and workload of the department.

When developing a budget in healthcare, it is preferred to avoid fixed budgets. According to Vraciu (1979), a fixed budget is unrealistic in healthcare; therefore, a flexible budget was prepared. The central problem is that the usability of such a budget is contingent upon the accuracy of the activity forecasts (Vraciu, 1979, p.136). A flexible budget allows understanding how revenues and expenses vary depending on different factors, including management efficiency, the performance of equipment, and demand for the services. Therefore, it was decided to include three levels of department performance.

References

HCA Healthcare. (2019). Annual Report 2018. Web.

Kacik, A. (2019). Whistle-blower accuses HCA of fraudulent billing practices. Modern Healthcare. Web.

Rubin, G. (2017). Costing in Radiology and Health Care: Rationale, Relativity, Rudiments, and Realities. Radiology, 282(2), 333-347. Web.

Vraciu R. A. (1979). Programming, budgeting, and control in health care organization: The state of the art. Health Services Research, 14(2), 126149.

Appendix: Assumptions

Item Assumption
Revenues: The revenues were calculated base on the assumption that the department performs 8,000 scans a year charging $2,000 per procedure
Medicare The percentages are allocated using the annual report for 2018 (HCA Healthcare, 2019)
Medicaid
Other
Expenses:
Salaries Salaries are calculated assuming that there are 3 three radiologists, 6 nurses, and one receptionist, and one manager
Bonuses Bonuses are assumed to be 15% of salary and depend upon the performance of the department
Fringe Benefits Fringe benefits are assumed to be 30% of the salary
Contract Labor Contract labor is assumed to include the services of accountants, network specialists, and marketing managers
Employee Training The employee training cost is calculated allocating $2,400 for training per employee
Supplies and Pharmaceuticals Supplies and pharmaceuticals were assumed to be between 8% and 10% of total expenses
Maintenance This item includes maintenance of radiology equipment, computers, network system, and software updates.
Housekeeping Expenses Housekeeping expenses are calculated, assuming the area of the department is equal to 2150 sq. feet.
Other Expenses Other expenses include malpractice events and any additional costs that cannot be attributed to other categories.