A competitive advantage in the context of procurement by an organization such as McDonalds refers to its ability to offer customers quality goods or products with more value relative to competitors. Overall, a competitive advantage is built over time and involves complex contributions from different departments in an organization. An organizations procurement department is a key contributor to its competitive advantage. An effective procurement process allows the selection of optimal suppliers and aligns them to the organizations mission (Britt, 2022). Such a process can also lead to tangible cost improvements and supply flexibility and agility. Costs improvements in the procurement process while being a key performance indicator to procurement professional also leads to an organizations competitive advantage by allowing the implementation of strategic procurement.
Achieving a competitive advantage through procurement requires optimization of the procurement process to reduce inefficiencies, mitigate risks, and offer quality products. The procurement process involves seven stages including organizational needs identification, supplier market assessment, gathering information about the provider, purchase strategy formulation, actualizing purchasing plan, negotiation and bid selection, and turn-around strategy implementation (Acquisition International, n.d). These stages in the procurement process can help McDonalds achieve a competitive advantage.
Achieving a competitive advantage through organizational need identification requires a company to be able to forecast its needs before they arise (Biedron, 2020). For a multinational such as McDonalds, this involves the use of data and artificial intelligence to predict the organizations needs. Using artificial intelligence eliminates the labor-intensive and often untimely needs identification process.
Like any company in the restaurant business, McDonalds has its specific suppliers of various products selected after fulling certain conditions regarding prices, quality, and timely delivery. To realize a competitive advantage in this stage, McDonalds should seek favorable terms from bulk suppliers, ensure suppliers do not miss supply deadlines and provide clear quality regulations.
At the initiation of the procurement process, McDonalds must ensure that the selected suppliers meet its selection criteria and other legal, and regulatory criteria. This ensures that the company does not suffer unnecessary financial or reputational loss which would erode its competitive advantage due to problems emanating from non-compliance with quality, legal, and regulatory requirements.
With more than 33,000 outlets in more than 110 countries, McDonalds delegates the procurement function to various subsidiaries and franchisees (CNN Business, 2022). However, the company is very specific about the quality of food and beverage served in these outlets and often conducts audits to ensure compliance. This creates a competitive advantage by ensuring a product in the USA tastes the same as a similar product in Asia or Europe.
For a behemoth such as McDonalds actualizing the procurement plan would be a massive undertaking if goods were centrally procured. However, with each restaurant free to procure goods from approved suppliers, the only difficulty which can arise is not ordering the products on time. The semi-autonomy afforded to outlets and franchisees by McDonalds ensures a competitive advantage by making the companys supply chain agile.
Fortunately, all McDonalds suppliers are pre-approved by the company with franchisees and McDonalds outlets being required to source their needs directly from them. For a company to qualify to be a McDonalds supplier, it must meet certain legal, regulatory, and quality criteria (Khan, 2018). Further, the suppliers are audited regularly to ensure compliance which creates a competitive advantage by making sure quality is maintained at all times.
For all intents and purposes, a process is not effective if the turn-around for goods ordered from suppliers is poor. Improving the turn-around strategy requires McDonalds to have effective communication with suppliers. Proper communication ensures that goods orders are received when sent, orders sent on time, and communication on inventory level relayed to suppliers in real-time. Luckily, advances in technology allow the integration of supplier systems with their clients which ensures real-time monitoring of the inventory levels and timely supply when a certain inventory level is breached.
Strategic procurement is a procurement process that allows an organization to plan ahead of time to receive goods on time, in the quantity and quality ordered, and on budget. Further, strategic procurement requires careful optimization of the procurement process. Compared to regular procurement, strategic procurement requires deliberate actions to find efficiencies across spend categories, supply risk minimization, and greater emphasis and bringing to the fore pricing and forecasting. The ultimate goal of procurement process optimization is to achieve competitive advantages that allow an organization to enjoy greater procurement process Return on Investment (Peterson, 2021). Ultimately, achieving a competitive advantage in the procurement process involves controlling and managing costs. In essence, creating an organizations competitive advantage is a process that creates value by balancing cost savings with product quality and compliance (Lysons, & Farrington, 2020).
The strategic procurement process is key to the establishment of an organizations competitive advantage when optimize properly and comprises seven stages. However, the seven stages also pose serious risks to an organization if they are not implemented properly. For example, a needs analysis mechanism that does not consider McDonalds organizational structure, structural needs, and procurement strategy risk an inadequate needs analysis (Weigel, & Ruecker, 2017). McDonalds needs should be stated accurately, within budget, and under a realistic schedule. Additionally, there is an elevated risk of inefficiency in contract management. Efficient contract management is an amalgamation of communication, management, and relationship-building skills. If for any reason McDonalds is unable to manage a contract effectively, the resulting damage could be detrimental to the entire organization.
Another potential risk that McDonalds could face is poor supplier selection (Willie, 2022). Despite measures by the company to ensure only the best suppliers are pre-qualified, unscrupulous suppliers could still beat the mechanisms in place and be pre-qualified to provide goods and services to McDonalds outlets. Such a scenario creates financial and reputational risks for the entire organization and could lead to the loss of McDonalds competitive advantage (Deshpande, 2022). A significant loss in the companys competitive advantage could herald the end of the profitability era. In addition, the company could fall prey to disorganized supplier relationships. McDonalds management has a fiduciary duty to shareholders to maintain good relationships with all stakeholders. If the relationship with suppliers were to fall apart, it would mean the disintegration of the companys supply chain loss of McDonalds competitive advantage. Finally, supply chain disruption due to external factors is another risk that could face McDonalds and is directly associated with the procurement process. The external factors that could lead to supply chain disruptions include pandemics, war, forces of nature, or supplier labor problems.
As the industry leader in electric vehicles, Tesla has established a strong reputation and brand as a company at the forefront of environmentally responsible transportation. Tesla is recognized for its innovative engineering, which includes its electric drivetrain, which is regarded as one of the most advanced in the industry (Bruijl et al., 2018). Furthermore, Teslas focus on AI research and autonomous driving technologies improves the safety and driving experience of its vehicles. Due to Teslas present low production capacity, it can take longer to meet the demand for cars. Research findings demonstrating a 9 percent decrease in capacity indicators from 2021 corroborate this theory (Lin, Lu, & Xu, 2022).
One of Teslas most important prospects may be the growing demand for environmentally friendly and sustainable transportation. When more people become aware of the negative environmental effects of traditional gasoline-powered automobiles, consumers may be more likely to consider purchasing an EV. One of Teslas largest external concerns may be the intensifying competition for electric vehicles (EVs). New competitors are entering the market, and established automakers are investing heavily in EV research and development.
SWOT Analysis Strategy
Because it has complete control over all production and delivery phases, Tesla can highlight vertical integration in this approach (Lin, Lu, & Xu, 2022). The company can reduce costs and increase productivity as a result. With the help of vertical integration, Tesla will be able to prevent bankruptcy, increase production efficiency, and reduce economic risks. Vertical integration will also help Tesla strengthen its position as a market leader, increase revenue, strengthen its reputation, increase sales and competitiveness. The main advantage of such a process is to reduce the costs of the enterprise. For example, the elimination of intermediaries reduces the costs of the company and at the same time improves the quality of the goods produced.
With a wider selection of products and services, the company may tap into new markets and increase revenue. Appearance of new equipment, upgraded technological standards and innovative product groups all this is an incentive to expand the product line on the basis of technological progress (Ellul, 2018). The emergence of new needs among consumers also directly affects the need to improve the assortment. The novelty of Teslas products will demonstrate the degree of compliance of the manufactured goods with modern market conditions and current trends. It will be able to provide a competitive advantage if Tesla produces something that competitors do not produce. However, this indicator is changeable, so Tesla should regularly work on creating and delivering new goods and services to the market.
Government subsidies and incentives for buying electric cars are a major source of Teslas sales and income worldwide. Therefore, as a strategy, Tesla can minimize the influence of the state. Mandatory is the supervision of state standards and ensuring the uniformity of measurements, which he organizes and conducts work on mandatory certification of industrial products. However, at the moment, measures are relevant to mitigate the sanctions pressure that has an impact on business. At the same time, support measures should be implemented in stages. In order to influence the investment process, for example, a reduction in the tax burden can be used (Hitt, 2020). This will make it possible to achieve a weakening of the hypertrophied attention of officials of control bodies.
In recent years, there has been a tendency in developed and developing countries around the world to radically rethink the concept of the transport process and the process of vehicle management. Therefore, creation of fully autonomous vehicle will solve the problem of improving transport efficiency and road safety. Therefore, Tesla should adhere to the strategy of developing a qualitatively new approach to solving the problems of creating and developing intelligent transport systems. Successful development and practical application of ITS will allow Tesla to minimize threats.
Competitiveness Strategy
To expand on its strengths, Tesla should continue investing in innovation and R&D for its electric drivetrain, autonomous driving technology, and AI research. This will help the business maintain its competitive advantage in the electric car market in addition to improving the driving experience and safety of its vehicles (Liu, 2021). Tesla should keep promoting the growth of renewable energy sources, as recommended by Pathak et al. (2022), to take advantage of the desire for sustainable and ecologically friendly mobility.
The relatively expensive cost of Tesla vehicles in comparison to conventional gasoline-powered cars is one disadvantage. To address these issues, Tesla should continue working to make its cars and energy storage devices less expensive (Lin, Lu, & Xu, 2022). This objective might be attained by lowering the cost of raw material acquisition and raising the automation and productivity of the production process. The deployment of these complexes should solve the most pressing problems facing Tesla.
Profitability Strategy
Due to the formation of programs and plans to reduce costs, companies achieve positive results. In this case, first of all, expenses are optimized, which directly affect the final cost of products (works and services). For example, this is a change in suppliers of goods and services, renegotiate contracts on more favorable terms, and purchase cheaper raw materials. In addition, it is possible to reduce expenses by optimizing the staff, reviewing the terms of remuneration and bonuses. Moreover, it is possible to reduce overhead costs, for example, to move to offices that are remote from the center and more affordable.
Maximize profitability is possible by increasing receipts for individual items that are included in other expenses. These include receipts related to the provision for a fee for temporary use (temporary possession and use) assets of the organization. In addition, money from the sale of industrial ideas, rights to invention patents, and other types of intellectual property is considered as other income (Williams, 2021). Profits through involvement in other organizations permitted capitals, such as interest and other income from securities, may also be able to boost Teslas bottom line.
Communications Plan
In the process of communicating competitive strategies with the client, it is important for the seller not to get into describing the advantages of the product, emphasizing the disadvantages of competitors goods. Balance is important here: a correct story without derogatory descriptions of other companies, objective advantages of Teslas offer. This is the only way to build the clients trust, emphasize interaction with them. Long descriptions, tedious monologues confuse both visitors and sellers themselves; it is necessary to briefly explain the most important product features.
Communicating competitive strategies to employees should be aimed at resolving potential conflicts of interest. The interaction is carried out in order to solve a problem or promote effective collaboration on a project and a competitive strategies task (Tesla Inc., 2021). Effective working interaction will allow to identify obstacles and provide feedback, but the main goal is to achieve an improvement in the current competitive strategy. At the same time, working interaction should be an exchange of information about the plan, even if it is transmitted in a non-verbal way and only by one manager.
To communicate profitability strategies to customers, it is necessary to form a vision of their service. Its worth telling them what Tesla is going to achieve as a result of interacting with them. The next point will be to discuss the new vision and mission and values that will define every aspect of customer service (Gerus et al., 2022). After that, it is necessary to implement a new strategy for customer access to the organization. To communicate profitability strategies to employees, Tesla needs to use meetings of the CEO with department directors and department heads. This is a great opportunity to directly inform them about the results of the companys activities and current projects on profitability strategies, discuss plans for the future and resolve any issues that arise. Then managers can quickly and easily pass information down the boss subordinate chain so that eventually this information reaches every employee. This will promote an open dialogue and exchange of experience between departments, will help employees to expand the circle of contacts and learn about the most effective approaches to profitability strategy.
Corporate Social Responsibility
The head of Tesla is the moral leader of the company, setting the general climate and determining the degree of ethics of actions. Elon Musks highly moral behavior encourages employees to follow ethical standards. Ethics courses include advanced training and professional retraining programs for Tesla employees (Pathak et al., 2022). The purpose of such courses is to increase the general culture of behavior, as well as to bring employees to the idea of moral responsibility and moral consequences of their actions.
From the data of the Tesla report, it follows that the actual sales volume is higher than planned, and the selling price was lower than planned. At the same time, the amount of actual revenue is more than planned, and the cost of sales, on the contrary, is lower than planned. All of these factors increased the actual profit compared to the planned one. It can be concluded that the companys profit has increased as a result of efforts after factor analysis of sales profit in two different ways, including both the method of absolute differences and the method of chain substitutions.
Sources
Bruijl, D., & Gerard, H. T. (2018). The relevance of Porters five forces in todays innovative and changing business environment. Available at SSRN 3192207.
Ellul, J. (2018). The technological system. Wipf and Stock Publishers.
Gerus, S., Jones, G. A., Parish, E., Phillips, P., & Williams, M. F. (2022). Tesla, Inc. A study of public accounting and related economic concepts, p. 72.
Hitt, M. (2020). Strategic management: Concepts and cases: Competitiveness and globalization. 13th ed. Cengage Learning.
Pathak, P., Yadav, V., Pillai, S., Das, S., & Kansal, G. (2022). We are unveiling the success behind Teslas digital marketing strategy. In Emerging technologies in data mining and information security: Proceedings of IEMIS 2022, Volume 1 (pp. 251-260). Singapore: Springer Nature Singapore.
Lin, P., Lu, Y., & Xu, Z. (2022). Teslas dilemma and future development trends. In 2022 7th international conference on financial innovation and economic development (ICFIED 2022) (pp. 21742180). Atlantis Press.
Liu, S. 2021. Competition and valuation: A case study of Tesla Motors. IOP conference series: Earth and environmental science, 692.
Tesla Inc. 2021. Impact Report 2021. Web.
Williams, L. 2021. What will Tesla do next? Investment monitor. Web.
This assignment is a case study on organizational change and change management. The case study is based on a Canadian based organization known as Shell Canada. This organization is one of the many organizations which have undergone through major changes in the recent past. The change which has taken place in this organization is in the form of restructuring. This discussion starts with a brief overview of an organization and the theoretical perspectives to organizational change.
The discussion thenoes on to highlight the changes in the organization in terms of internal and external pressures of the changes, various types of change, the managements role in the change process, resistance to the change process, the consequences of the change process and flow chart for the change process.
Shell Change Management Case Study: Discussion
Definition of an Organization
An organization is a group of people who work together with coordinated efforts to achieve certain objectives or goals. Organizational goals and objectives are of various categories and it is this variation of goals and objectives which classify organizations into three main categories namely profit-making, service-based and social responsibility based organizations (Murray, Poole, & Jones, 2006. pp.45-69). The study of organizations is made possible by the use of organizational theoretical models or approaches.
These theoretical models are mainly used to explain organizations in terms of structure and culture. Organizational culture refers to shared beliefs, values, norms and practices which characterize an organization. Organizational structure refers to how the organization is structured, how power and authority to make decisions are distributed along the structure of the organization and who takes what directives or instructions from whom and when (Robbins, 1996).
Theoretical Perspectives to Organizational Change
There are various perspectives of looking at organizational change in terms of how it occurs, why it occurs and how to address the issues of resistance to change in organizations. The perspectives take the form of theories or models. These two terms (theories and models) are used interchangeably although they do not mean the same. While theory is used to imply abstract insights to a subject, models are used to connote a particular set of procedures, methods or plans which may be used to undertake a particular action (Kezar, 2001).
In organizational context, many scholars use the term models instead of theories. Even when the term theory is used, it is used as model to lead organizations in their actions (Kezar, 2001). There are two main theoretical models of explaining and conceptualizing organizational change namely the Evolutionary and the Teleological models. The major distinction between the two is the manner in which they address the issue of determinism in the change process.
The Evolutionary model seems to embrace the idea of determinism in explaining organizational change while the Teleological perspective tends to de-emphasize it. However, both models tend to conceptualize organizational change as a liner and rational process which occur due to forces internal and external to organizations. Each of the models has got several other approaches of explaining and conceptualizing organizational change (Kezar, 2001).
Evolutionary model of organizational change
The major assumption in this model is that change in organizations depends on the situations and environments in which organizations operate. This model has its origin from the natural selection theory which was adopted in organizational change with the philosophy that change is always happening naturally and no force can effectively prevent it from happening (Towers, 2008).
Later on, there emerged the Resource Dependence approach which purports that organizations can never be self-sustaining but they rely on external environment and resources, and therefore managers in organizations have to come up with adaptive systems to enable them to cope and survive in the ever-changing internal and external organizational environments (Towers, 2008).
The Evolutionary model, in general, tends to emphasize on determinism, that is, organizations operate in an unpredictable socio-cultural, economic and political environments which automatically dictate how they should operate.
According to the model, change occurs in a liner manner but may also occur spontaneously as the environment may dictate and therefore managers cannot anticipate it. Managers should, therefore, embrace change, either from internal or external forces and develop adaptive mechanisms. Employees are supposed to automatically understand and embrace organizational change without questioning (Towers, 2008).
Teleological model
This model is also known as scientific management or planned change. The major assumption of this model is that change in organizations occurs as a result of concerted efforts by organizational leaders who see the necessity of change, plan and execute it for the benefit of organizations. This model is perhaps the most common in the literature of organizational change (Keys & Fulmer, 1998).
Approaches which lie under this category include Organizational Development, Strategic Planning and Organizational Learning. The Organizational Development approach is very popular in this category and it involves managers doing an analysis of their organizations to know the problems they are facing and then coming up with solutions to these problems as well as strategies of how to improve organizational productivity using minimum resources (Keys & Fulmer, 1998).
The change process and management
The change process can be contextualized using Kurt Lewins approach to change management which falls under the category of the teleological model of change. Lewin came up with what he called three-stage theory which involves three stages or steps namely unfreezing, changing and freezing (Cummings & Worley, 2008). In the first step (unfreezing), the organization is supposed to be motivated and prepared for the change.
The management must engage the employees and create a state of discontentment with the prevailing conditions in the organization. While doing this, the management should also ensure that they set out deadlines for themselves to come up with a new dispensation of doing things (Cummings & Worley, 2008). This stage is about doing a cost-benefit analysis about the proposed change and weighing whether the pros of the change outweigh the cons, then creating the necessary motivation for the change.
This stage is, therefore, the preparatory stage and is very crucial because it determines the success of the change if effected. When employees are highly motivated to change, the resistance to change is minimized and vice versa (Cummings & Worley, 2008). The next stage is the change stage which is also known as the transition stage and involves implementing the change. This is the hardest stage in change implementation because employees are always reluctant to move out of their comfort zones despite any motivation.
During this stage, therefore, employees need to be guided and encouraged to undertake the change. To realize a smooth sailing through this stage, employees need to be given the necessary training for them to acquire the knowledge and skills for navigating successfully through the transition stage (Cummings & Worley, 2008). The final stage is the freezing stage, which is also known as a refreezing stage. During this stage, the organization has successfully sailed through the change process and is now leaving in a new dispensation.
There is, therefore, the need of creating a new culture in the organization which is in line with the new organizational dispensation (Cummings & Worley, 2008). This approach has however been criticized for being very simplistic especially in the way it assumes that people can be taken through these stages without difficulties. Its critics argue that the approach is a bit mechanical and unrealistic.
But despite the criticism, the approach remains common in the world of organizational change even today, especially in the preparation of employees for change mainly through doing appraisals and evaluation of organizational activities and their effectiveness (Cummings & Worley, 2008).
These practices of appraising and evaluating organizational activities and programs can be explained as a contemporary Lewis approach to organizational change, which may be described by many as a participatory approach to organizational change (Cummings & Worley, 2008).
Shell Canada
The organization of my choice is Shell Canada. This is a branch of the Shell group of companies which are spread all over the world with a history of over 93 years in business and with its headquarters in London. The organization underwent some major organizational changes at the wake of the millennium, that is, in 2000 (Grant, 2002).
The changes witnessed in the organization
The changes basically entailed major restructuring of the organization to make it more productive, especially due to increasing competition from other oil and gas producing companies like B P. The restructuring saw some 1000 positions scrapped as well as the redesigning of the coordination and organizational control systems to make them more sensitive to, and respond adequately to competition.
The elimination of the 1000 corporate positions in the organization led to the decentralization of power to make decisions to divisions (shell Canada included). This also made the top leadership of the Canada division make decisions with ease and in a timely and efficient manner (Grant, 2002).
Internal and external pressures of the change
Organizational change may emanate either from internal or external environment of an organization. Internal environment constitutes things like profit maximization, expansion, bankruptcy, change of objectives, adoption of new technology as well as mergers and acquisitions. External environment constitutes the things which are beyond the control of the organization and may include things like competition, increased cost of production, political and social risks as well as rates of inflation.
One of the internal factors which necessitated the restructuring of Shell is the desire to maximize profits. This was to be achieved mainly through the elimination of 1000 corporate positions and the decentralization of power to make organizational decisions to divisional leaders and managers, with a view of doing away with the bureaucratic red tape which hindered organizational efficiency and effectiveness as well as the maximization of profits by the organization (Grant, 2002).
One external pressure which precipitated a change in Shell Company was competition from other oil and gas producing companies like BP, which were entering the market with a storm and promising customers more customer friendly goods and services at very friendly prices.
This made the organization see the need of restructuring to streamline its systems to allow for proper competition with its peers. The increase in the number of oil and gas producing companies also broke the monotony of Shell in the field of oil and gas, thus prompting the organizational changes (Grant, 2002).
Various Types of Change
According to the national academy for academic leadership, first-order change is a change which is reversible. This type of change entails doing more or less the same things which an organization has been doing with little variations (National academy for academic leadership, 2011). This type of change is usually not transformational and aims at restoring equilibrium in the systems of an organization or retaining the status quo.
First order changes, therefore, happen within the existing organizational structure and does not entail any new form of learning (National academy for academic leadership, 2011). Second order change is a change which is irreversible.
This type of change involves doing fundamentally new things within an organization; either as a result of internal or external pressure. This type of change is usually transformational and thus entails the learning of new concepts as well as the adoption of new approaches to organizational functions, processes, and procedures (National academy for academic leadership, 2011).
Managements Role in the Change Process
Management is about planning, coordinating and controlling organizational resources so as to facilitate the achievement of organizational goals and objectives in an efficient and effective manner. The nature of management therefore only allows for the top leadership of an organization to act as the drivers of the organization in a way which facilitates the organization to achieve its goals and objectives, including the management of organizational change.
The role of the management of Shell Company in the change process was basically to plan and execute the change in a manner which was efficient and cost-effective so as to minimize resistance while maximizing the success of the change. The Shell management was actively involved in brainstorming and evaluation of the organizational functions and processes as well as doing an environmental scan to understand the market trends so as to inform the change process (Grant, 2002).
The management was able to analyze the market and thus saw the need for the radical departure from bureaucratic red tape and create a more lean organization, which was highly decentralized so as to maximize on organizational efficiency and effectiveness (Grant, 2002).
Resistance to the Change Process
Due to the proper calculations and planning of the change process by the management, there was no resistance to the change. This was basically because the restructuring did not require the consultation of the corporate level employees who were affected by the change. The reason why the management did not seek the views of the targeted employees in the restructuring was that it was obvious that they would resist.
The Consequences of the Change Process
One consequence of the changes in Shell was the remarkable reduction of head office costs following the elimination of the 1000 corporate-level jobs, most of whom had offices in London. Following the changes also were increased organizational efficiency as well as an increase in the number of returns due to the huge savings on management and running costs.
The employees remuneration was also increased marginally thus leading to low turnover rates in the organization. The organization also increased its competitive advantage at the global market of oil and gas products (Grant, 2002).
Flow Chart for the Change Process and the Consequences
References
Cummings, T. G. & Worley, C. G. (2008). Organization development & change. Farmington, MI: Cengage Learning. Print.
Grant, R. M. (2002). Organizational Restructuring within the Royal Dutch/Shell Group. Web.
Keys, B., & Fulmer, R.M. (1998). Executive development and organizational learning for global business. New York, NY: Routledge. Print.
Kezar, A. J. (2001). Understanding and facilitating organizational change in the 21st century: recent research and conceptualizations, Volume 28, Issue 4. New York, NY: Jossey-Bass. Print.
Murray, P., Poole, D and Jones, G. (2006).Contemporary issues in Management and Organizational Behavior. Farmington Hills, MI: Cengage Learning. pp.45-69.
National academy for academic leadership. (2011). Leadership & Institutional Change. Web.
Robbins, S. P. (1996). Organizational behavior: concepts, controversies, applications, (7th Ed.). Englewood Cliffs, NJ: Prentice-Hall.
Towers, I. (2008). Organizational change: processes, contexts and perspectives. Ottawa, ON K1A 0N4: Library and Archives Canada. Print.
Management of a department is a complex issue because of the existence of multiple challenges that might occur during the working process. For this reason, the core responsibility of an effective leader is the implementation of the five basic functions of management with the primary goal to organize the work of a certain unit in an acceptable way that guarantees high-performance levels and excellent outcomes. For the department that includes 100 employees (10 supervisors and 90 packers), there is an essential need for the implementation of specific skills to create conditions beneficial for the future rise of the unit. That is why the proposed plan of action includes interventions in the most critical spheres to consider all significant factors and eliminate issues that might deteriorate results.
Planning
Planning is the first important function of management that should be discussed. As a new manager of the given department, it is critical to ensure that people, as the most important resource in any business, feel comfortable and have all conditions that are needed for their effective functioning. In accordance with the modern approach, a positive climate is a key to improved collaboration and better results (Baack, Reilly, & Minnick, 2014). For this reason, it is fundamental to plan activities aimed at the development of teamwork and cooperation skills among employees. These will include
The first meeting with all staff to get acquainted and understand the current needs
Regular meetings with supervisors to discuss problematic issues
Meetings with staff members to remain informed about their state
Creation of positive and achievable goals that would be rewarded
Provision of support to employees experiencing hard times or facing some problems
As it can be seen from the set of planned activities, the primary goal for the first stage of working as a department manager is the establishment of a positive atmosphere in the collective and cultivation of the appropriate organizational culture that will help workers to become more effective. Research shows that 85% of individuals accept the importance of the climate within a collective and recognize its strong influence on performance (Baack et al., 2014). That is why, via the planning function, it is critical to ensure that all needed alterations to preserve or improve the functioning of the unit are covered and added to the current schedule with the primary goal to create the basis for future growth. It becomes a critical activity for the initial period of working as a manager as this phase helps to establish relations with the staff and recognize their problems.
Organizing
Application of the organizing function of management helps to bring all resources together to guarantee the highest performance levels and achievement of tasks and goals outlined in the planning section. Any firm has such resources as materials, finances, facilities, and people (Kotler & Keller, 2015). For the manager of the selected department, personnel remains the most valuable resource that should be governed in an appropriate way (Baack et al., 2014). At the moment, Amazon has an active organization and aligned cooperation between various departments, which helps to work fast and meet clients requirements. However, some changes can be added to improve relations within a given unit without any reconsideration of the work of the whole corporation.
Departmentalization can be selected as a potent option for the organization of resources and their practical distribution. It presupposes grouping people and activities into departments that can accomplish specific and narrow goals faster and with better results (Baack et al., 2014). In such a way, groups consisting of 2 supervisors and 18 packers can be created and used to work with different types of orders. The urgent and fragile orders should be given to the department consisting of the most experienced employees; moreover, they should be provided with all the resources needed to meet clients requirements in the first turn. Other groups should be delegated to different tasks regarding their preferences and skills.
It is expected that the given approach to the organization might help to improve the work of the unit and achieve better results. First, better distribution practices will help to work with a higher level of performance and satisfy customers (Metz, Piro, Nitowski, & Cosentino, 2019). Second, grouping regarding skills and preferences will contribute to the reduction of the level of stress and mistakes rate, which is critical for the work of any collective. In such a way, this approach to the organization should be utilized to achieve a positive change.
Staffing
Staffing is another fundamental component of the work of any top manager as it guarantees that the collective has the desired amount of workers to accomplish existing tasks. It also helps to ensure that the right workers do the right job and have no difficulties with their understanding (Kotler & Keller, 2015). It is also closely related to the organization as a delegation of tasks is impossible without the existence of skilled and experienced specialists who can perform activities demanded at the moment. To succeed in the given sphere, it is important to introduce manpower planning presupposing searching and choosing appropriate persons to replace members that leave or are promoted. It will ensure that there will be no understaffing and problems with some tasks (Kotler & Keller, 2015). Additionally, this function presupposes monitoring of the current state of the staff to consider individuals levels of skills, their experiences, and successes to introduce rewards or additional training to prepare members of the collective for more complex tasks.
That is why there should be a pool of potential workers who can be hired to replace members that leave. It can consist of specialists from other departments, companies, or the employment market who are attracted by an opportunity to work in Amazon. Second, human resource management is a core activity of any unit, regardless of its size. It is critical to utilize effective HR practices such as rewarding, motivating, and supporting, to ensure that workers will stay in the department and engage in additional training to demonstrate outstanding performance and positive outcomes (Kotler & Keller, 2015). The application of these methods will help to solve the majority of problems with the staff and, moreover, contribute to the establishment of the desired organizational culture, which is one of the main goals of any effective manager.
Leading
Leading is the next core function that should be taken into account when organizing the work of the department. Regarding the nature of Amazon, which is known as a positive, innovative, and continually growing brand, it is critical to utilize approaches and practices that are related to these attributes and contribute to the future cultivation of the companys image. For this reason, the transformational leadership style seems an appropriate choice to cope with the challenges and create the basis for the effective work of the collective (Baack et al., 2014). Thus, this leadership style presupposes that top managers encourage, inspire, and motivate all employees to drive positive change and use innovative approaches to improve results and create the basis for the future success of the company (Andersen, Bjørnholt, Bro, & Holm-Petersen, 2018). The use of this approach presupposes that a leader should become an active actor who works with all specialists and realizes their current needs and problems.
Effective supervision and motivation techniques should be employed. It presupposes feedback from all members of the collective and discussion of current challenges. Additionally, regular meetings can be needed to offer innovative or unusual solutions to some problems and methods that can be used by employees at their workplace (Kotler & Keller, 2015). At the same time, transformational leadership presupposes that there are rewarding practices showing that specialists move in the right direction and contribute to the success of Amazon by their actions (Sayyadi, 2019). Innovation should be taken by people as a positive aspect of the work of any member of the collective and emphasized to motivate other ones to use similar approaches.
Control
Finally, control is another critical function that should be used to organize the work of the department and achieve outstanding results. Any leader should remain informed about the real situation in the unit and its ability to cope with all tasks. For this reason, there is a need for the introduction of several tools that can help to perform the control function. First, a standard performance should be established to introduce a specific milestone that should be critical for all employees (Baack et al., 2014). They should realize the need to follow some rules and comply with the existing demands. Second, effective measurement of actual performance is essential to notice problems or drawbacks in the current approaches and eliminate them via the use of new instructions, methods, or additional training. In this regard, corrective action also becomes an important element of control. It can be realized via the discussion of problematic areas with supervisors or the whole collective to formulate a practical solution and use it in practice.
It is also vital to ensure that controlling function is not taken as a sort of punishment by the staff. On the contrary, in modern organizations characterized by extreme sophistication and complexity, activities belonging to this sphere are critical to eliminate problematic areas and guarantee that there will be all conditions needed for future growth. For this reason, employees should be explained benefits that can be associated with the improved measurement of performance and the introduction of standards. A leader should emphasize their role in the achievement of positive results, the formation of appropriate organizational behavior, and sustainable development.
Conclusion
Altogether, the work of a leader of the discussed unit presupposes the employment of the five basic functions of management such as planning, organizing, staffing, leading, and control. Their practical use can help to establish effective organizational behavior patterns and ensure that workers will benefit from the current conditions and demonstrate outstanding performance levels. The changes in all five spheres are critical for the alignment of the work of the unit and its ability to promote the rise of Amazon, the growth of clients satisfaction, and their devotion. That is why the correct understanding of these elements is fundamental for any top manager.
References
Andersen, L. B., Bjørnholt, B., Bro, L. L., & Holm-Petersen, C. (2018). Achieving high quality through transformational leadership: A qualitative multilevel analysis of transformational leadership and perceived professional quality. Public Personnel Management, 47(1), 5172. Web.
Baack, D., Reilly, M., & Minnick, C. (2014). The five functions of effective management (2nd ed.). Chandler, AZ: Bridgepoint Education, Inc.
Kotler, P., & Keller, K. (2015). Marketing management (15th ed.). New York, NY: Pearson.
Metz, S., Piro, J. S., Nitowski, H., & Cosentino, P. (2019). Transformational leadership: Perceptions of building-level leaders. Journal of School Leadership, 29(5), 389408. Web.
Sayyadi, M. (2019). How effective leadership of knowledge management impacts organizational performance. Business Information Review, 36(1), 3038. Web.
The heuristic model is one technique that businesses can use to solve their planning and scheduling issues. It can be defined as an approach to problem-solving that utilizes rules of thumb to create a feasible and quick but not optimal solution to a problem and obtain fast results (Langley et al., 2020). This model is used to solve large problems because it helps to break them into more manageable issues.
One example of the heuristic model is the grid technique (see Figure 1). It is often used to help companies determine the least-cost location for their facilities (Langley et al., 2020). The purpose of this technique is to identify the center of gravity for finished products and raw materials, that is, a location in which the companys transportation costs will be minimized (Visser, 2019). This location is calculated based on the coordinates of main sources of raw materials and markets determined from the grid.
Figure 1. An example of the grid technique (Langley et al., 2020).
The decisions that can be made using the heuristic model are mainly concerned with large or urgent problems. For example, this approach is often used to identify the appropriate locations for plants or warehouses, select suppliers, and provide short-term scheduling solutions. The main benefits of this model are that it allows for dividing complex problems into manageable parts and reduces the number of alternatives for further consideration (Langley et al., 2020). For example, when deciding on the location of the plant, this model can be used to select only those options that fit certain criteria, such as the proximity to markets and the airport. The disadvantage of the heuristic model is that it does not provide optimal solutions to the problem and lacks flexibility (Visser, 2019). It means that the solution developed using this problem will not be able to serve the company for a long time. If there are changes in organizational processes, the model will have to be applied anew because the old solution may be no longer viable.
References
Langley, C. J., Novack, R. A., Gibson, B., & Coyle, J. J. (2020). Supply chain management: A logistics perspective (11th ed.). Cengage Learning.
Visser, H. (2019). Logistics: Principles and practice. Taylor & Francis.
Airline industry is one of the profitable industries today and in future. Ryanair is a UK-based company followed the structure of successful Sourthwest Airlines located in the USA. An industry with this kind of rapid change presents several challenges for companies like Ryanair, namely production costs, and monopolies. Production and technology are the primary driving factors of this industry (Drejer, 2002).
At the beginning of the new century, Ryanair looks for ways to deliver customer satisfaction at a lower cost, smaller size, and higher speed. Ryanair is profitable corporation but it will require changes in competitive strategy to remain in an industry and, under some circumstances, it can occasion the decision to exit a business or an industry. The company mission is to deliver high quality services to diverse customers. Its strategy is to expend the business through acquisitions and merges with other low cost carriers in Europe. The company proposes low cost services for business and individual customers.
Environmental Analysis
PESTEL
In the UK, political and legal environment is favorable for airline carriers because of stable political situation and protective legal measures. Ryanair operates in high dynamic environment which requires continuous optimization of a product mix and new ways of doing business. Price competition, backed by improved efficiency, is the main feature of Airline industry today. Many UK based companies fight for survival in markets faced global competitor ion.
Within rapidly changing environment, this kind of development ensures that long-term survivors are those firms who are more competitive and are better able to satisfy consumer needs and adapt to the new competitive environment. Ryanair obtains a strong brand image in the Airline industry proposing high quality products. Nevertheless, the weakness is lack of strategic vision, high labor and economic declines (Drejer 2002, see appendix 1).
Economic situation in Ireland has an impact on Ryanair as it reduces purchasing power of such carriers as EasyJet and Aer Arann. Ryanair has to develop new marketing strategy. The implementation will require additional spending, but they are essential for the company, because without these facilities it will not be able to compete on the market and increase its sales rate. Demographic and cultural situation in the country do not have a great impact on the company and its performance. This, increased number of car buyers and investments in real estate market create opportunities for Ryanair to expand its business (Buckley and Ghauri 1999).
In terms of technology and environment, Ryanair relies chiefly on an efficient market system and product improvement. The traditional market for Airline is not in maturity one, and today it offers a limited opportunity for high profits, so it sets about developing products, that are both distinctive and could be sold at a premium price. A specialized product range, based on two basic lines of business, necessitated a clear identification of target market. Ryanair continued its policy of fleet commonality to keep staff training and aircraft maintenance costs as low as possible, using Boeing 737 planes (OHiggins 2007, p. 699).
The original mission had made it clear that it was in the relatively unexploited sector that Ryanair saw its clearest opportunity for innovation. As the most important, these basic lines of business allows Ryanair set out to create a range of high-quality products that are distinctive in quality and technology (Dobson and Starkey 2004).
SWOT
The opportunities of Ryanair include: high potential to growth and profitability of the company; promotion to other segments; improvement of product range. The technological advances are aimed to maximize security of customers and fasten the process of informational interchange. Intranets allow industry to react faster delivering customer satisfaction. Technology replaces traditional methods of Airline business, and causes growth of on-line operations. Improvement of Internet services and Website will help to satisfy the customers needs. Ryanairs low cost approach helps the company to maintain long-run supplier relationships and ensure profitability (Drejer 2002).
One such measure was web-based check-in from March 2006, and priority hoarding, with over half of passengers availing of this, thus saving Ryanair costs on check-in staff and airport facilities, as well as time (OHiggins 2007, p. 700). New technology and organizational management system open new opportunities for Ryanair. Technological innovations and creativity in production can be regarded as business philosophy of Ryanair. Unique technology management employed by Ryanair is aimed to coordinate production process with all levels of the organizational structure including their interaction and performance.
The balance of authority has undoubtedly shifted to traditional management who now has more selection over how it conducts relations with their workers and process. Innovation in production technologies and computerized system of supply chain is the main opportunity for Ryanair. It needs innovative assembly lines in order to increase volumes of sales, and storage capacity. Internet is another toll which can help Ryanair to reach its potential buyers without additional spending on promotion and advertising (Dobson and Starkey 2004).
Weaknesses involve economic problems affected European and Asian countries. Constraints of global economic environment include legal barriers and European law. Many European countries restrict access to those goods which do not meet their standards. This means that goods and materials can be barred access on the grounds that they break national rules on health, safety and environmental protection. Ryanair designed and developed all the products in order to meet international standards and local requirements. Operating on a pan-European basis involves Ryanair addressing the issue of cultural difference and consequently developing a balance between standardization and adaptation (Drejer 2002).
Since the beginning of the 1990s, airline industry decline was the main threat affected many companies. In spite of this threat, Ryanair sustains strong market position and leadership. Also, the threats involve decrease in sales of Airline industry. The changes in the environment are changed the demand, but they do not have a significant influence on customers purchasing power. The threat is population shift which has a great impact on sales. Increase in interest rates and non-compete clause are another problems for Ryanair during the last years (see appendix 2,3,4).
Current Problem Diagnosis
Increased competition on the international arena threatens profitability of such giants as Ryanair. The main problem was that imported Airline accounted for 20 percent of the UK airline consumption which limited price level and competition in the home market. The first group of competitors includes local companies; the second group involves international companies and international competition, and the third one is global competition.
In this case, Ryanair develops multidimensional strategy to cover three competitive segments: local (national), international and global. This strategy involves brand positioning, market segmentation, strategic alliances and value pricing strategy. New competitors may find it difficult to gain access to delivering service, which will make it difficult to provide their service to customers or obtain the inputs required or find markets for their outputs. On the other hand, these mega-Airline markers represent the main threat for Ryanair in the UK (Thompson and Martin 2005).
Employees, who have perhaps worked within the traditional system for a number of years, must now learn a new methodology using technology with which they may not be too familiar. Resistance to change often occurs within businesses that are seeking to introduce an Internet component. If it successfully navigates this balance, it will find that it can not only maintain its current position but also expand into new territories and possibilities for profitability/growth
Strategy Formulation
The mission of Ryanair is to reach wider target audience and expend internationally. Vision is that product quality is used as a strategic weapon and the aim of Ryanair is to maintain high quality standards at costs lower than competitors. Marketing strategies are the broad approaches Ryanair intends to adopt in the longer term to achieve its marketing objectives in accordance with its marketing policies. Strategies are developed for the following: The market segments in which Ryanair will concentrate and the marketing position it proposes to adopt in each segment (i.e., the extent to which it positions itself close to a competitor but establishes differentiation through product features and price distinction, or the extent to which it attacks markers established by gap evaluation) (Drejer 2002).
The blend of controllable marketing variables required producing the response wanted in the target market. The mix includes new products, prices, promotion, advertising, field sales and distribution (Thompson and Martin 20050.
Following Mckinsey 7 s model, strong corporate culture is one of the main strengths which help the company to compete. The culture and structure of Ryanair develop over time and in response to a complex set of factors. Usually large organizations like Ryanair have more formalized structures and cultures. Increased size is likely to result in separate departments and possibly split site operations. Another important feature of Ryanair is the non-price competition which takes form of branding, advertising, promotion, and additional services to customers and product innovation. Speaking about the nature of competition it is possible to say that Ryanair has a competition advantage.
Price competition involves businesses trying to undercut each others prices; this will be dependent upon their capability to reduce their costs of production. Brand equity represents the added value that accrues to a product as a result of Ryanairs prior investments in the marketing. Brand equity is thought of as an asset representing the value created by the relationship between the brand and customers over time (Mintzberg et al 2004; see appendix 1).
Evaluation of Strategic Options
Vision of cultural and social values has a direct impact on Ryanair and its market performance. This factor could be interpreted as strength but globalization process and changing international relations show that cultural and social values become opportunities rather strategies for global airline carriers. A solid understanding of cultural preferences is important for any company that markets such products internationally.
Ryanair leverages superior cultural understanding to compete effectively with large foreign firms. It is possible to say that it has an advantage drawing from tradition. Recent years many people are concern about their health and quality of water they use. Industry structure and market position of Ryanair suggests that threat of entry is low. Airline giants like Ryanair resist strongly, so it makes it difficult for new organizations to enter the Airline industry (Grant, 1998). For Airline company ability of a firm to use its resources and capabilities to develop a competitive advantage through distinctive competencies does not mean it will be able to sustain it.
Two basic characteristics determine the sustainability of a firms distinctive competencies: durability and imitability. Thus, it ensures that it obtains a leading position and is able to compete with direct and indirect competitors. New economic landscape, Ryanair has to choose a new strategy aiming to address new market and environmental changes. Taking into account current situation, it is possible to say that Ryanair has to develop a completely new vision of its marketing system based on global strategies.
Specification in Ryanair is determined as a result of an organizations policy, which in turn resulted from decisions on its market policy, which in turn resulted from its consideration of the market or customer needs, requirements, and the activities of competitors. This is the process of designing quality into the service. Sales strategy is on a one-to-one basis (see appendix 5,6,7).
Strategy Implementation
In relation to competitors, Ryanair provides comparable buyer value but perform the activities more efficiently so as to attain a cost advantage, or perform the activities in a unique way which raises the value to the consumer and thus allows them to command a premium price the concept of differentiation. The activities performed may be grouped into two categories: those associated with the core activities of on-going production, marketing and servicing are referred to as primary activities while those providing inputs, technology, human resources and infrastructure to support the manufacturing function are referred to as support activities. Quite clearly, the primary activities draw on a wide variety of support activities in their on-going management (Gardiner, 2005).
The case of Ryanair market position allows to say that marketing becomes an orientation for the total business, a way of business life. Customers and consumers are perceived as the reason for business existence and their wants and needs become the bases for designing total systems of action. A narrower conception, which is an extension of the business orientation, is concerned with the basic management activities the entrepreneurial functions-that have to be performed to manage micro-marketing systems. Through marketing, the critical role of consumption is recognized and cultures become reoriented from Producers to consumers cultures (Drejer, 2002).
Some critics state that the weakness of Ryanair is lack of promotion campaigns aimed to attract new customers, and absence of competitive advantage. High labor and energy costs are the main threat for Ryanair. Economic recessions and industry declines affect Ryanair and its market performance. The role of Strategic Alliances is made all the more complex and thought provoking because of the competition of ideas between different academic and political standpoints.
Ryanair proves that Strategic Alliances are the best form to reach global dominance and reduce competition. So, it creates new opportunities for Ryanair on the global scale. Joint venture is another important part of Ryanairs international strategy. From the economic side Airline industry has to spend its own resources in order to meet the requirements focusing on technological efforts, security. Ryanair has also realized rapid expansion through capital injections (Gardiner, 2005).
Performance
In order to control performance, Ryanair applies financial measures and statistical control tools. The approach is inside-out, suggesting that Ryanair is seeking competitive advantage must first examine and develop its own distinctive resources, capabilities and competences before exploiting them in their environment. In the long run, however, it may be possible for Ryanair, through its choice of strategy, to change the strength of one or more of the forces to the companys advantage.
Taking into considerations the statistical data of Ryanair it is possible to say that it is profitable because the value exceeds the cost of performing various factions which include: financial management, technology management, organization and human resource management, supply and bound logistics, operations, outbound logistics, sales and marketing. Significant variations in national markets originate often in straightforward economic differences.
Ryanair cannot survive just waiting for the customer to come to it. Instead, it gets better at focusing on the specific market segments whose needs match our offerings. The marketing controls consists of the way in which the various component parts and techniques of the marketing effort are combined and varied in order to achieve marketing objectives. Both of these methods are applied successfully to problems of planning and control.
Both are effective tools for specifying, coordinating, and integrating activities, situations, and resources that are interwoven in order to reach project aims on time. The main advantage of these techniques is that they do not require large-scale computers except for complex situations. Managing the organization is therefore not just about managing functions, but managing linkages between those functions. More will be said about the integration of various facets of the value chain in the discussion on implementation strategies.
For Ryanair, technology related products are defined broadly to include both physical products and services. Products are perceived as means of problem solving for both buyers and sellers. The discussion relates to both consumer and industrial goods. Product-line management involves the addition of new products to the line, and the deletion or modification of current products. Product diversification (horizontal, vertical, or heterogeneous), may be the result of internal product policies or mergers.
Reasons for diversification vary from spreading risks to using by-products and increasing profits. New product policies and strategies may be offensive or defensive, convergent or divergent (Drejer, 2002). Ryanair may adopt a followership or leadership posture, and may choose a strategy of segmentation or product, differentiation. By differentiating new products they try to bend demand to meet their supply and so insure a niche in the marketplace.
Each of the new phases of the product- process (conceptualization, exploration, development, marketplace preparation, commercialization, and appraisal), is considered. Technology related product development should be seen as one of the core foundations of corporate planning. Its success or failure shapes corporate destiny. Because of this, particular attention is given to a conversation of new products, technology related products and diffusion processes, the product life cycle, and new-product failures. Channel balance, which is difficult to achieve for Ryanair, must be realized at various levels.
Conclusion
Economic forces affect Ryanair by the impact that they have on market potential and, at any point in time, market actualization. In addition, economic forces in a country may be influenced strongly by the infrastructure that exists, including the communications, energy, and transportation facilities. On a broader scale, the extent of economic development of a market influences the lines of business and methods by which business can be carried out in a country. Infrastructure is affected, as are all types of institutions within the country. Still, Ryanair obtain strong market position introducing new ways of doing business.
Communication, employed by Ryanair, is affected by internal and external environment, by the nature of the task, and by technology. Difficulties in communication can arise with production systems where workers are stationed continuously at a particular point with limited freedom of movement. Ryanair tries to penetrate deeper into current market. International expansion and global strategy is to aim at a particular target market.
One of the main functions of global and international promotional activity is of course to influence the perceptions of the consumer. Ryanair maintain policy of product standardization in order to sell them around the world under the same brand. In order to change and improve current situation, Ryanair should attract more customers and introduce new product lines including related technologies and markets.
This strategy will help Ryanair to survive and remain competitive in spite of market changes and economic crisis. Since buyers are often other-directed, they are concerned with what other group members think of them and their taste. Taste is not an acquired or inherited phenomenon. Consequently, opportunity exists for designers, manufacturers, and marketers to upgrade tastes. Learning implies repetition over time. What may be rejected in product design or color today may be viewed approvingly after a second, third, or fourth exposure.
Bibliography
Barnes, F. C., Tyler, B.B. Ryanair in 2005. Case 23. Strategic Management Textbook. Edit. M. Hitt, R.D. Ireland, R.E. Hoskisson, 7th, pp. 246-267.
Buckley, P.J. Ghauri, P.N. 1999. The global Challenge for Multinational Enterprise. Pergamon.
Dobson, P., Starkey, K. 2004, The Strategic Management: Issues and Cases. Blackwell Publishing.
Drejer, A. 2002, Strategic Management and Core Competencies: Theory and Application. Quorum Books.
Gardiner, P. 2005, Project Management: A Strategic Planning Approach. Palgrave Macmillan.
Grant, R. M. 1998, Contemporary Strategy Analysis, (3rd edn.). Oxford: Blackwell.
Mintzberg, H., Lampel, J. B., Quinn, J. B., Ghoshal, S. 2004, The Strategy Process. Pearson Education.
OHiggins, E. 2007, Ryanair the low fares airlines. University College Dublin.
Thompson, J. L., Martin, F. 2005. Strategic Management: Awareness, Analysis and Change. Thomson Learning.
Appendix
PESTEL Analysis.Porters Five Forces.Industry Life Cycle.Benchmarking.Balanced Scorecard.Porters Generic strategies.Ansoffs matrix.
The past few decades has witnessed a complete revolution on the way business is conducted and the approach through which organizations relate to one another. This has been facilitated by globalization, advancements in information technology, outsourcing, and a networked economy. Organizations are increasingly finding it necessary to rely on other organizations to effectively compete for scarce resources and ever-dwindling clients.
Smart companies are now relying heavily on effective supply chains to compete successfully in the global economy. They have realized that they must move away from their traditional business boundaries and cocoons and collaborate with other businesses to maximize on their profits. One of the areas they collaborate is on the supply networks, whereby each dedicated business associate focuses on only a few vital planned activities. This supply networks between organizations can be viewed as a new form of organization exhibiting complex connections between the players. This has given rise to the concept of supply chain management (Supply Chain Management 2008).
By definition, supply chain management is the integrated procedure involved in scheduling, controlling, and implementing the operations of the supply chain as proficiently as possible between organizations. It is a process that integrates major activities, from how the raw materials are sourced and stored, the work-in-process inventory, to how the finished products are distributed from the company to the consumers. It must also include collaboration and coordination with supply network partners, in most cases the suppliers of raw materials, third-party service providers, customers, and intermediaries (Supply Chain Management 2008).
Many modern companies are actively managing their supply chain activities in an attempt to achieve a sustainable competitive edge as well as maximize the value of their customers. Managers have realized that efficient and effective supply chains are vital tools for success (Supply Chain Management 2007). One such company is Johnson & Johnson, incorporated in the US, and has branches, networks, and subsidiaries all over the world. Below I attempt to describe the company, its products, and the supply chain in which it operates.
Johnson & Johnson Company
Johnson & Johnson, incorporated in the US, is a company that deals with a wide range of products, especially baby products. It has continued to grow steadily and to sustain itself in the ever competitive economy due to sound management policies. The company has enjoyed over a hundred years of continued growth and service to its most loyal customers. The company deals primarily with health and well-being products. Their wide range of products is used by at least a billion people worldwide everyday (Our management Approach 2008).
Johnson & Johnson credits their endurance and strength to their consistent business approach process and to the character of their customers. They have a guiding philosophy that put the needs and well-being of customers first. The management also takes responsibility towards their employees, the community, and the world in general (Our Management Approach 2008). The company has a wide range of baby products ranging from powders to medicated soaps.
Their baby powders helps to keep the skin soft, dry, and comfortable, while reducing friction that can be uncomfortable to the baby. Here, the company has developed Johnsons baby powder, Johnsons baby powder comforting Vanilla & Jasmine, and Johnsons baby powder calming Lavender & Chamomile. To help treat baby skin irritation and diaper rash, the company has developed Johnson baby powder medicated with aloe & Vitamin E. For extra moisture absorption, the company has come up with Johnson baby powder pure Cornstarch with Aloe Vera & Vitamin E (Johnsons Baby Powders 2008).
Johnson & Johnson has been at the forefront in developing children skin care products. They have the Johnsons baby lotion which helps to keep the skin smooth and soft. Johnsons soothing naturals nourishing lotion gives moisture to the skin for 24 hours and give relief to dry skin. Johnsons bedtime lotion and Johnsons bedtime bath are products designed to calm the baby before going to sleep (Johnsons Baby Skin care 2008). The company also designs specialty baby products such as Johnsons baby cologne.
Meeting the needs of around one billion consumers every day is no easy task. That is why Johnson & Johnson have invested heavily in supply chain management. Johnson & Johnson has over 250 operating companies worldwide. The company management approach is decentralized, but has strong links in supply chain management to save on costs and be able to serve the huge number of consumers of its products efficiently (Our Management Approach 2008).
The company partners with many other individuals and companies to make its work easier and also make sure that they concentrate on the key areas of its business, leaving the rest to its partners. It collaborates with raw materials providers, research scientists, pharmaceutical companies, and business professionals attracted in searching inventive commercialization solutions for its products. It collaborates with independent scientists and pharmaceutical companies mainly in the product development phase (Partners Johnson & Johnson 2008).
The company has put a lot of emphasis in building strong operational partnerships, especially with its supply chain networks to ensure that its core objectives of advancing the excellence of healthcare around the world, being profitable, respecting the environment, and supporting the local communities are attained. Johnson & Johnson also works with accredited transport companies and courier companies to ensure that its products are distributed efficiently across the globe (Partners, Johnson & Johnson 2008).
Johnson & Johnson has established an efficient, collaborative, and strong relationship with its suppliers. It sorely relies on the suppliers for the provision of raw materials, goods, and services needed to develop products. The company has continued to identify small and diverse suppliers who continue to add value and assist it to achieve its long-term expansion objectives (Suppliers Johnson & Johnson 2008).
Importance of Supply chain management to Johnson & Johnson
First, embracing supply chain management has helped Johnson & Johnson to reduce its costs of doing business through narrowing in on certainty and speed of response to the market while maximizing on added value. The tool has helped it compete efficiently on the local arena as well as on the global scene. Johnson & Johnson continue to rely on business professionals abroad to market its baby products at very competitive prices (Sovereign 2008).
The business environment experienced today is more competitive than ever. Companies, including Johnson & Johnson must function at a lower cost to be competitive. Companies must also build their basic strong points to differentiate themselves from their competitors. This is what Johnson & Johnson has done. Supply chain management has enabled it to divert its resources and focus on developing baby products a field it has performed optimally, while it continue to outsource tasks and processes that are less important to the objectives of the company. This has enabled Johnson & Johnson to survive while other companies are falling on the way (sovereign 2008).
Supply chain management has also enabled Johnson & Johnson to choose the right partners, manpower, and resources. The company now boasts of very strong and stable selling agents from the US to China. This has enabled it to stay ahead of the pack. The company has also been able to specialize in core areas and create a strong market niche for its products, thanks to the efficient supply chain management. No company holds a larger market share in baby products than Johnson & Johnson (Sovereign 2008).
Supply chain management has also helped Johnson & Johnson to add value to its products. Value addition has given its products a competitive advantage over other generalized products. This has also enabled more innovations to be added on the companys products to meet specific needs of different children. The company has developed a wide range of skin products to meet individual interests (Sovereign 2008).
Through operational flexibility, supply chain management has also enabled Johnson & Johnson to attain faster growth rate. Through contract manufacturing and outsourcing, Johnson & Johnson has been able to maintain its over one billion customers who use its products every day (Strategic Importance 2008).Overall, supply chain management has enabled Johnson & Johnson to comprehensively manage the transition of raw materials to finished goods. The procedure has made it possible for the company to offer high quality products to its customers (Supply Chain Management functions 2008).
Features that reflect common practice in Supply Chain Management
There are many features of the company operations that reflect common practice in supply chain management. According to Supply Chain Management (2008), some of the salient features exhibited by Johnson & Johnson include:
Development of a comprehensive strategic network optimization. Johnson & Johnson is tied to some 245 companies around the world and numerous distribution centres and facilities.
It has developed strategic partnerships with its distributors, suppliers, and customers. It has effective communication conduits that are used to pass vital information and improve on its operations.
It uses product design coordination to make sure that latest and existing products are always incorporated optimally into the supply string.
Johnson & Johnson has invested heavily in information and communication technology to maintain supply chain operations.
The company is involved in sourcing contracts, scheduling, and planning processes that make sure that it deals only in its key competencies of developing beauty and health products while leaving the rest to its partners and suppliers.
It has developed an efficient transport strategy which has taken care of the frequency of transporting its products, contracting, and the routes.
It plans on its daily production and distribution of its products, as well as taking care of all nodes in the supply string.
Interactions with supply chain partners to improve customer outcomes
Johnson & Johnson has a healthy symbiotic relationship with its suppliers, who supply it with raw materials, goods, and services. It carries its suppliers importantly for without them, the company cannot progress forward. Knowledge and expertise is applied to these raw materials brought by suppliers to create the value added products that Johnson & Johnson boasts of. These products are later sold to customers, after undergoing a lot of processes ((Partners, Johnson & Johnson 2008).
As already mentioned elsewhere, Johnson & Johnson has developed an efficient, strong, and mutual relationship with its suppliers. The company relies on them to provide raw materials, goods and services that are needed to develop products and service its customers at home and abroad. The company has continued to maintain a strong supply chain because they realize that the suppliers are the backbone of the company (Suppliers Johnson & Johnson 2008). They are as important as the customers. Below I attempt to illustrate how the interaction works.
Successes and failures of Supply Chain Management
Though Johnson & Johnson experienced some difficulties in implementing supply chain management in its operations, the successes of the tool far outweigh the failures. First, the company has been able to reduce on costs by making sure that it involves itself only on its key competencies. The tool has enabled Johnson & Johnson to come up with innovative products that continue to change the lives of consumers worldwide. Supply chain management has also helped Johnson & Johnson to remain competitive and remain ahead of its competitors through the production of value added products (Bhattacharya et al. 1996, pp.39-48).
There were some teething problems that were experienced in configuring the distribution networks. The management was unsure of the number and locations of companies they wanted to network with. This has since been dealt with. Distribution strategy also presented some problems, with issues raised about whether to follow centralized, decentralized or shared operating control system. The company settled for the decentralized management system and it has worked wonders.
Sharing of crucial company information with other companies also proved to be a draw back. Supply chain demand that valuable information must be shared in the course of collaboration. Some companies used the information to hold the Johnson & Johnson hostage. This has since been resolved and unfaithful companies have been shown the door. The company also experienced cash-flow troubles as it attempted to arrange the payment methods and conditions across different entities within the supply string (Supply Chain Management 2008).
All in all, it has helped Johnson & Johnson to revolutionalize its market share and offer products that continue to attract millions of consumers worldwide.
References
Bhattacharya, KA, Julian, LC, Gordon, B & Paul JK 1995, The Structure Conundrum in Supply Chain Management , The International Journal of logistics Management, vol 7, no. 1, pp. 39-48. Web.
Johnsons Baby Powders 2008, Johnsons. Web.
Johnsons Baby Skin Care: A skin Care Routine as Easy as A, B, C 2008, Johnsons. Web.
Our Management Approach 2008, Johnson & Johnson. Web.
The current literature review describes the main qualities and skills possessed by modern managers. Gillard and Price (2005) state that critical thinking is one of the main concepts and practices used by managers to grow and develop their strategic position. Good managers do much more than make good decisions, a broad view of the decision-making process provides a useful starting point from which to understand what groups must do. As managers and entrepreneurs, we should have confidence in our decisions, but it is a difficult task because of the turbulent market environment and changing economic conditions.
Grugulis (2009) and Madsen and Musto (2004) underline that it is difficult for a manager to be confident in his decision-making because a hallmark of the modern business environment is its chaotic nature In the organization, two types of decisions can be singled out: programmed (complex) and non-programmed (routine). Non=programmed decisions require more attention and excellent decision-making skills because there are outcomes that are difficult to predict and foreshadow. To ensure effective skills, a manager should take into account the following steps; information gathering; problem innovation; option selection; implementation; evaluation; feedback, learning, and refinement. For managers and entrepreneurs, the effective planning and managing process is one of the effective decision-making tools which help to ensure confidence and effectiveness of the decision. Some public sector bodies are primarily keen on evaluation, though for reasons which have more to do with accountability than with learning. failure to reappraise initially rejected alternatives, poor information search, selective bias in processing information available, and failure to work out contingency plans.
Myers et al (2004) state that in complex environment, it is really difficult for managers to have confidence in decision making. Critical thinking skills and cognitive processes are essential to get one from a particular situation to a more disengaged perspective. It is then sometimes argued that social, political, and legal institutions, along with the corporate culture and the particular roles and role responsibilities of the managers and companies in question, create a causal nexus that constrains what might consider morally appropriate behavior and often precludes the consequential avoidance of harm. In contrast to traditional decision-making,
The researches selected for analysis do not contain subjective or questionable information. All issues and problems are carefully analyzed and evaluated in terms of management theory. All decisions are affected by bounded rationality which means that managers have limited resources and time for decision making, so an ideal solution is impossible in any circumstances. Managers have imperfect and incomplete information, so they cannot objectively evaluate facts and data crucial for the decision-making. Management makes the right decisions about who to hire more often than not when an applicant screening system is effective. Management makes these correct decisions by hiring people who perform up to or exceed expectations (correct hires) and rejecting those applicants who would have been less than satisfactory performers on the job. Although management would prefer to be 100% accurate in these predictions such omniscience is impossible. The authors agree that management can make two types of wrong decisions when hiring from a group of applicants. The first mistake is to hire someone who performs below expectations on the job. These people are the incorrect hires. Failure to hire people who would have been satisfactory performers but never got the chance to show their stuff is the second mistake. These people are the incorrect nonhires. Managers are sensitive to the first type of hiring mistake because an individual performing below expectation must be retrained or terminated. Hiring mistakes of this kind cause expense and inconvenience to the organization and are highly visible.
References
Gillard, Sh., Price, J. 2007. The Competencies of Effective Project Managers: a Conceptual Analysis. International Journal of Management, 22 (1), p. 54.
Grugulis, i. 2009. Skills, Training and Human Resource Development: A Response. Economic and Labor Relations Review, 19 (1), p. 65.
Madsen, S. R., Musto, A. l. 2004. Traits, Skills and Knowledge Required of Successful Human Resource Leaders. Journal of Applied Management and Entrepreneurship, 9 (1), p. 76.
Myers, M. et al. 2004. Maximizing the Human Capital Equation in Logistics: Education, Experience, and Skills. Journal of Business Logistics, 2 (1), p. 65.
The focus of the science of management is to provide managers of organizations with a scientific basis for solving problems using the interaction of individual elements of the corporation in its interests as a single whole. This goal is essential for any organization, but it is especially challenging to achieve it for large companies with a high degree of specialization. This essay aims to identify the relevance of management science research and the main issues it examines.
It is tough to control and unite a team without any scientific knowledge of administration theory. Management acquaints a director with modern supervision methods, and peculiarities of their application in the conditions of different enterprises teach him to use knowledge about a concrete economic situation (Martin, 2018).
Having in mind the mechanisms of team management, administrators will be able to quickly make decisions, which should be both practical and comply with the current constitution of the organization. After all, in order for a company to achieve any goals, its tasks must be adequately coordinated (Martin, 2018). Therefore, the study of scientific management is a significant activity.
The science of management is sophisticated knowledge that encompasses several different research interests. The primary and most important concern of the right manager is to outline the plan that the organization will follow to achieve the desired results (Martin, 2018).
It is important to note, however, that the purpose of this management science is to investigate how to achieve maximum results with minimum effort and resources. Furthermore, an important milestone for such science will be the analysis of high-performance strategies and the screening of those that do not allow the achievement of objectives (Martin, 2018). Through the proper use of various factors of production, efficiency can be significantly enhanced.
In a practical application of management theory and science, the importance of real circumstances or contingencies in a particular situation is always recognized. For this reason, there are many different ways in which science can be applied. The best results of the application of control theory in todays world are demonstrated by aviation companies, whose dispatchers skillfully coordinate a large number of aircraft (Martin, 2018). When using the scientific method to solve control problems, it is necessary to remember that an organization is an open system consisting of interconnected parts. Therefore, an essential feature of the scientific approach to control is system orientation.
Lessons one can learn about leadership or styles of management are in wide availability within the modern media. The different ways in which organizations are now led have been subjects to multiple movies or TV series that depict main characters dealing with important business issues. The Godfather (1972) is among the classics of filmmaking; however, its value goes beyond the plot and the cinematography.
The movie has some important lessons about leadership and morals about life in general. Whether one is the head of a hugely successful company or leads a team working on a start-up, the Corleone family will teach both managers and leaders the different styles that they can emulate in order to be successful. The family is an example of how to do business and deliver results efficiently.
Positive Lessons from Don Corleone
One of the first lessons of the Corleone Family is associated with the idea that reaching success is a collaborative effort of everyone involved. In management, collaboration refers to the process of exchanging knowledge and experiences between team members. Effective leaders, as shown in the movie, allow the members of the team to combine their individual strengths with the advantages that the group as a whole has.
Moreover, managers make it possible to collectively deal with the weaknesses of the group and thus subsequently improve the productivity and retention of an entire organization. Similar to an organization in which each team member has strengths that are detrimental to corporate success, the Corleone Family is a combination of personas that complemented one another, although clashed sometimes, to reach the top of the business sphere. Thus, modern corporations can learn a lot from the leadership styles and lessons put forth in The Godfather.
The character of Don Vito Corleone is the epitome of both wisdom and wisdom and years of experience. While there are numerous people with experience, the real value is usually accomplished when a person can capitalize on the extensive knowledge and skills in order to help others, less experienced, to access guidance and have appropriate training for future generations. Thus, Don Vito is a representative of senior leadership, whose critical measure of success is associated with the removal of all obstacles over the years of being on the job. The experience of Don Vito in the family is considered the source of tribal family knowledge that can be used extensively to achieve family goals.
The example of Don Vito shows that transactional leadership can be a method for reaching success. This style of leadership is concerned with the process of exchange, for example, money for work or one favor to another. Throughout the movie, transactional leadership comes heavily into play. The famous line that Don Vito says, Ill make him an offer he cant refuse, shows that everything in life has its price or a point of pressure that can be used as a business advantage. Fair leaders thus ensure that every transaction is carried out fairly in order to preserve positive relations between parties.
Strategic focus is another critical characteristic of Don Vito Corleones style of leadership. Significant sections of the movie show the strategy that Don and his trusty advisors implement for managing family matters, deal with competition, as well as overcome setbacks. The leader of the family always thinks ahead, has backup plans in case if strategies do not work out, and is resilient. The strategy of the Godfather is also concerned with developing the most effective leadership capacities in other people. In the movie, this strategy is reflected in the evolution of Michael Corleone from a family outsider to the eventual leader of the group.
Don Corleone managed to develop leadership qualities in his son, who learned how to take charge, as seen in the scene at the hospital when Michael took the key stance in safeguarding his father from assassins. Relational leadership also comes into play in the exploration of Corleones approach. He capitalized on the power of familial relationships that have made the mafia an effective organization, which, notably, lacked ethics. The use of the term godfather in the movie shows that a person can have a significant leadership impact on a family despite not having any blood ties. Being a good leader, Don Corleone realized that he had to work hard in order to develop lasting and strong relationships with people whose skills were necessary to reach key organizational goals.
The Negative Side
While Don Corleone has several valuable lessons for good leadership, several ethical problems should be mentioned. As mentioned by Warner and Riggio (2012), the ethical issues depicted in The Godfather can be traced to the background of Italian-American history characterized by the patterns of violating moral standards to reach success. In the movie, Don Corleone is a very effective leader; however, it does not mean that his acts are morally right.
Ethical leaders aim to develop an environment with a minimum confrontation of parties. In The Godfather, the Corleone family prospers when it exploits other people and leaves a path of victims on their way. This quality of Don Corleones leadership is what makes his style of reaching success bad since good leaders will never sacrifice other people for personal sake.
Another negative point to mention in regards to the unethical qualities of Don Corleone as a leader is associated with corruption by power. This theme is one of the clearest in The Godfather and later depicted in the movies sequel. It refers to the process by which a law-abiding and hard-working Vito acquires both monetary and reputational power. Through intimidation and the subsequent murder, he becomes the key figure in a mafia family.
What is essential to understand is that Don Corleone diminished the influence of his criminal activity, justifying it as business or the fact that all authorities are corrupt. An important quote regarding this issue was at the very beginning of the film when Don noted the following: by chance if an honest man such as yourself should make enemies, then they would become my enemies. And then they would fear you (as cited in Weinstein, 2015, para. 1). Therefore, Don Corleone shows his authority through intimidation and the exercises of power by force. This quality makes the leadership of Don Vito unethical since morally good leaders are the ones who can fight the temptations of power and avoid the use of force at any cost.
Despite the success that Don Corleone attained over the course of being a mafia leader, the lessons from real-life point to the opposite of what the character did. As mentioned in the Fortune article by Weinstein (2015), a survey involving around 2,400 managers showed that employees performed better at their jobs when they were motivated by benefits rather than threatened with lost opportunities. Therefore, leadership is based on care, servant leadership, with the satisfied workforce being supported by honorable behaviors (Allen et al., 2016)& Several recommendations can be made based on the findings associated with Don Corleones positive and negative aspects of leadership.
Recommendations
First, it is essential to empower the team to be the most effective and proactive in solving problems that arise along the way. This empowerment can come from a variety of leadership styles as well as through building connections with followers. The Godfather was highly effective in building such connections and established a framework for the collaborative work of the family. Second, positive leaders should accentuate the good things in the process in order to facilitate discipline and engagement.
Don Corleone, on the other hand, led with fear. While there is a place for discipline in any organization, it is essential to acknowledge when workers are doing their job right, with praise and positive reinforcement being essential aspects of leadership.
Finally, good leaders should refuse to lead their organization by fear and intimidation, as shown in the example of Don Vito Corleone. The engagement in unethical behaviors will inevitably lead to adverse consequences for businesses, which is why it is recommended to take care and not fear as the foundation of a leadership style. Overall, a figure of the Godfather in the movie teaches the audience an important lesson. While a leader can be effective and facilitate collaboration to reach the established goals, intimidation and violence should never be the vehicles used for that purpose.
References
Allen, G. P., Moore, W. M., Moser, L. R., Neill, K. K., Sambamoorthi, U., & Bell, H. S. (2016). The role of servant leadership and transformational leadership in academic pharmacy. American Journal of Pharmaceutical Education, 80(7), 113.
Warner, N., & Riggio, R. (2012). Italian-American leadership in Hollywood films: Images and realities. Leadership, 8(3), 211-227.
