Executive Summary

In the 21st century, competition in all segments of the economy has increased drastically. Any organisation that does not adopt the best industry practices risks being phased out of the market. Organisations need to be in the front position in recognising their respective industry trends, adopting the best appropriate practices, and maintaining competitive advantage at all times. The fashion industry is one of the highly competitive industries. The need to retain the spirited advantage is very real. Despite being one of the oldest industries in human civilisation, the industry remains highly dynamic and aggressive. Any lag can cost an organisation its reputation and competitiveness. With this hint, this paper uses ABASCO Ltd as a case example of a company that operates in the fashion industry. The paper presents the status of the job market in this industry, a yearly hiring plan for ABASCO Ltd, and the most appropriate hiring, selection, and retention tactics that the company can put in place to remain competitive within the industry.

Introduction

The fashion industry is characterised by big and competitive apparel brand names such as Marks & Spencer, John Lewis, Calvin Klein, Zara, Nike, H&M, and Adidas, among many others. With such competition, small companies have a big challenge to overcome to break even in the industry. Such a playing ground leaves them with little margin for error or any other actions that may jeopardise their competitive advantage. It is with this realisation that ABASCO Ltd seeks to adopt the best practices, especially in the recruitment and retention of employees to help the company in sustaining its success in the industry. This report will discuss the employment market in the fashion industry, devise a 12-month recruitment plan, discuss the most appropriate recruitment and selection methods, and evaluate the potential retention strategies that ABASCO Ltd can execute to deal effectively with the challenges it is facing in its human resources. Further, the report will provide an implementation plan for the recommendations that this report will generate.

Fashion Industry Employment Market

The fashion industry is highly dynamic. With the emergence of globalisation and groundbreaking technologies, competition has increased tremendously. Despite being one of the oldest industries, the dynamism of the fashion industry has allowed it to adopt changes in the economy and technologies across time. This observation is even more evident with the industrys adoption of e-commerce and other computer-related technologies. Some of the key highlights of competition and dynamism include short product life cycles, the abundance of product variety, unpredictable consumer demand, and complex supply chains, among others (National Statistics, 2014). As organisations seek to retain competitive advantage, the human resource segment plays a crucial role in this equation (Mello, 2002; Jones, 2014). Organisations need to attract and maintain the highest talent to beat the competition. Through human resources, organisations in the industry are guaranteed new fashion designs that can give them competitiveness and profits (Mondy & Gowan, 2005). However, with the short product life cycles that are characteristic of the industry, maintaining talent is not enough. However, attracting new talent all the time is a key aspect.

The £1.13trillion industry employs approximately 75 million people across the world and different segments of the industry. In the United Kingdom, the industry employs approximately 767,000 people. This figure is a decrease of 2.3% from 2009. On the other hand, in the United States, the industry supports approximately 3million people, although this figure has been reducing continuously (National Statistics, 2014). For instance, in the apparel-manufacturing sector in the United States, the industry employed approximately 1.8million people as compared to 303600 who were employed in 2011. The figure represents a reduction of 83% in the number of jobs that are provided in this segment (Statista, 2012). The graph below represents the trend in the number of jobs in the apparel manufacturing sector in the US from 2001 to 2011.

Apparel Manufacturing Sector Employment (USA) 2001-2011
Apparel Manufacturing Sector Employment (USA) 2001-2011

The above reduction in the number of people employed in apparel is reflected in the whole industry. However, despite this high rate of reduction of jobs that are available in the sector, the industry has grown in terms of revenues that are generated annually. For instance, in 2014, the UK fashion industry generated £26billion to the economy as compared to £21 billion, representing an increase of 22% (National Statistics, 2014). Such findings, which are also reflected in other markets, indicate that the industry has increased its production and efficiency through the adoption of technology, which is increasingly replacing the cost-intensive human labour (Jones, 2014). In response to the adoption of more efficient production technologies, the industry has experienced numerous layoffs of employees to pave the way for more organisational efficiency through technology.

In comparison with other industries, production in the fashion industry has not grown as fast. The low rate of industry growth has had a strong bearing on what the industry can compensate its employees (IBIS, 2014). As compared to other manufacturing and retail segments of the economy, the fashion industry has the lowest average weekly wage of any manufacturing industry in the United Kingdom. As of 2014, the average weekly wage was £371 as compared to £574 for the manufacturing industry as a whole. With such low wages, coupled with the industry trend of layoff and reductions in the workforce, it is easy to explain the high rates of turnover in the industry (National Statistics, 2014).

Looking at the trends in the industry, ABASCO Ltd is facing challenges, which are common in other outlets. However, to remain relevant and competitive, the organisation needs to revisit its recruitment and retention strategies to ensure that staff members are not only well talented but also can remain in the organisation for a longer period. Currently, the high rate of employee turnover of 14% at the organisations St. Albans site is a reflection of a dire need for the organisation to reflect on its employee retention strategies. Also, the organisation needs to address its low wages that range from £18,000 to £40,000 for the lowest and highest-paid individuals.

According to Jones (2014), the fashion industry is highly dynamic, and that retaining talent is not enough. It is important to create a platform where the existing talent can grow and/or adapt to the emerging fashion trends, which can greatly ensure that the organisation remains relevant and profitable. Also, it is important to adopt the best recruitment and employee selection strategies that can allow the spotting of new talents, which are important in bringing fresh ideas in the organisation (Saunders, Millmore & Thornhill, 2007). Without the ability of an organisation to adapt to changes in the industry, it is easy to produce obsolete or slow-moving products that are not in demand, a nightmare that fashion industry players must avoid at all times (Robbins & Judge, 2013).

In the quest for attracting and maintaining employees in the long-term, organisations face numerous hurdles. For instance, the low wages that are offered in the industry are a great turnoff for potential employees who may be motivated to look for jobs in other better-paying sectors (Flanagan, 2014). For this reason, many employees see a job in the fashion industry as a transition job as they look for other places, which can partly explain the high rate of employee turnover at ABASCO Ltd. Consequently, the process of ensuring the recruitment and retention of employees at ABASCO Ltd requires great changes that must be adopted immediately.

Apparel Manufacturing Sector Employment (USA) 2001-2011

One of the easily recognisable problems that ABASCO Ltd is facing is the lack of a recruitment strategy and plan at the organisation. In a highly dynamic industry, it is important to put appropriate measures of ensuring that qualified and highly motivated employees are recruited. The process of recruiting the right talent for the right jobs has evolved greatly. It requires more than just academic qualifications for an organisation to fill its vacant positions (Jamieson & OMara, 1991). ABASCO Ltd must make critical decisions on what it wants in various positions, whom to target, how to staff the recruitment, and/or what message to convey to attract the right people (Holbeche, 2001). When not handled in the right way, ABASCO Ltd may end up with unqualified job applicants. It may fail to consider diversity. Further, by hiring the wrong people from the defective recruitment process, the organisation may end up experiencing high turnover and poor performance among another challenge (Fraser & Hunt, 2011). In this segment, important recommendations will be made on the methods that ABASCO Ltd should use to meet its workforce requirements. The report covers different widely researched recruitment topics such as:

  1. Reaching the targeted job applicants
  2. Identifying the right people to be recruited
  3. Timing of the recruitment exercise
  4. Designing and disseminating the recruitment message
  5. Evaluating past recruitment activities
  6. Managing the whole recruitment operation

Identifying the right people to be recruited

The proposed model of the recruitment process is an important tool that guides the steps through which ABASCO Ltd should carry its recruitment efforts. By carefully adhering to the steps that have been proposed, the organisation can achieve better outcomes for its recruitment efforts. The following diagram represents the various steps of the model, which will be discussed further.

The various steps of the model
The various steps of the model

Recruitment Objectives

The first important step in the recruitment process is the establishment of recruitment objectives for the positions that the organisation seeks to fill. For instance, one of the objectives should relate to the number of open positions in the organisation at that given time. Further, the organisation must set an objective on the timeframe for filling such positions. In this case, the organisation must decide whether the positions will be filled urgently, on a rolling basis, or within any other agreed-upon timeframe. It is important to decide the characteristics of the candidates the organisation seeks (Hackman, 2005). In this case, the organisation must set the level of education, knowledge, skills and abilities, interests, values, diversity, job performance goals for new personnel, and the expected retention rate for the new hire.

In the setting of these objectives, the organisation needs to be well aware of the expectations of each position. It has to match the position accurately with the skills and qualifications that are desirable in the targeted candidates. Therefore, the process requires the input of the HR personnel, as well as line managers, who can shed more light on the requirements of each position in their respective areas of supervision. Further, in the setting of these objectives, the organisation must consider its brand name and therefore set its recruitment objectives to reflect its brand identity. According to Allen (2004), a brand is referred to how a company wishes its forthcoming and active workforce to distinguish it.

Brand identity requires deliberate efforts for an organisation to achieve it. For instance, ABASCO Ltd operates in a highly competitive sector. The industrys big brand identities have set the bar too high. However, through describing the organisation in the recruitment literature, highlighting the brand in the organisations website, as well as treating prospective employees well during interviews, ABASCO Ltd can achieve a brand identity that can reflect well on its prospective employees, thus leading to better outcomes for the recruitment process.

Develop a Recruitment Strategy

After establishing the recruitment objectives, it is important to develop a good strategy through which the organisation will meet the objectives and consequently fill the available positions. The strategy is a specific action plan, which guides the organisation on systematic actions and timeframes for achieving each objective.

Carry Out Recruitment Activities

After creating a good recruitment strategy, it is important to actualise the objectives by carrying out agreed-upon recruitment activities. Such activities may include advertising through the organisations website, recruitment campaigns in universities, and advertising through credible recruitment agencies and any other method or activities that the organisation may agree upon (Bagshaw, 2004).

Evaluate Recruitment Results

Many organisations and decision-makers who are involved in the recruitment efforts are mainly concerned with the outcomes of the efforts. In this case, managers mostly measure the success or failure of the recruitment efforts in terms of whether they have been able to achieve the set objectives (Charlton, 2000; Jones, 2014). However, such an approach does not give the organisation time to review the effectiveness of the recruitment activities that the organisation has undergone (Armstrong, 2011). Managers cite different reasons for their lack of evaluation of recruitment results, including the large amounts of data collected in the process or other cases, lack of adequate data to carry out the evaluation.

Evaluation of recruitment results allows an organisation to review and, where necessary, make important changes to improve the effectiveness of the recruitment efforts. Also, it allows HR to determine and prove the importance of these recruitment activities to the organisation. For example, through evaluations, an organisation can determine the activities that yield the most recruits, the universities that yield most hires, employees who stay in the organisation for a longer time, and those who have the highest performance reviews. Such an evaluation can allow the organisation to drop some universities or recruitment activities while at the same time scaling up others.

12-Month Recruitment Campaign Plan

The following is the recruitment campaign plan that ABASCO Ltd will adopt for its recruitment activities.

Recruitment Policy

To develop and implement a long-term recruitment plan for ABASCO Ltd, which includes a recruitment schedule based on the historical trends in the supply and demand for all major disciplines in the fashion industry

Recruitment Goal

To recruit employees based on resignations, terminations, or growth of the organisation throughout the year

Recruitment Strategies

  1. To contact prospects as early possible to ensure competition in filling available positions
  2. To focus recruitment efforts on the fashion industry professionals who are completing their studies, as well as those who are already working in other fashion industry companies
  3. To ensure a continuous year-round recruitment schedule

Recruitment Structure

The recruitment cycle for ABASCO Ltd for____________ [Name of Training Institution/Programme] will begin on__________ [Date] of each year

The HR, in collaboration with other personnel in the respective departments, will coordinate the recruitment efforts

Recruitment objectives will be reviewed annually in February

Recruitment Activities

  1. Obtaining legal contracts for employees who will commence work at the organisation
  2. Follow up with interviewed candidates
  3. Quarterly meetings of the recruitment committee for reviewing action plans and development of implementation strategies
  4. Attending as many career fairs as possible

12-Month Recruitment Plan

The following recruitment plan highlights scheduled quarterly recruitment activities for ABASCO Ltd.

PERIOD ACTIVITIES
January-March
  • Place new employees and orienting them into the organisation
  • Carry out a needs assessment to determine the skills and employment requirements for the organisation
  • Compile employment statistics for the various job positions in the organisation
  • Update job descriptions and printed recruitment materials
  • Identify recruitment conferences, fairs, and other scheduled activities
  • Meet with recruitment committee to discuss the years campaign and fine-tuning the campaign by adopting their recommendations where applicable
April-June
  • Establish recruitment priorities
  • Recruitment committee meeting
  • Begin preparations for the attending career fairs and fashion school recruitment campaigns
  • Discuss various market practices and set the expectations for the planned recruitment activities
July-September
  • Register various placement service providers
  • Inform various target training institutions on the recruitment efforts
  • Place ads on reputable fashion industry websites, newspapers, and journals
  • Design/review employee contracts
October-December
  • Carry out visitations to various training institutions
  • Shortlist, interview, and select candidates
  • Make offers to successful candidates to resume employment in January the following year
  • Review the success of the recruitment campaign
  • Meet with the management to discuss the results of the review

The following table is a summary of the recruitment process for ABASCO Ltd.

1. Preparation for recruitment 2. Prospects 3. Suspects 4. Applicants 5. Candidates 6. Finalists 7. Hired
Prepare a practice assessment plan Identify new candidate(s) Provide descriptions of available opportunities Sending CVs Phone interviews Completion of the interview process Regular communication with candidates before resumption
Determine the current roles of existing staff members in the organisation Use targeted emailing t reach prospects Determine interest/needs of providers Screening of CVs Provide a copy of the contract Finalisation of contract negotiations Orientation
Establish salary and benefits requirements of the various positions Attend career fairs Follow-ups with interested people Tracking and referral of candidates Follow-up with the candidate(s) Formal allocation of duties
Establish an in-house and external recruitment system Advertise through the internet and mainstream media Reference and credentials checks
Develop recruitment promotional materials
Develop a contract for the available positions
Establish the selection criteria
Determine the recruitment plan

Selection Methods

It is important to note that for an organisation to achieve its goals and/or employ the right people, the right skills and motivation are an obligation. When an organisation recruits the wrong people, it is doomed to fail. The situation must be avoided all the time. To achieve this goal of recruiting the right employees, it is important to ensure that the selection methods of employees that are used in the organisation are good. Such selection methods must reconcile the needs of the employees and employers (Human, 2003). Many organisations strive to meet the dual goal of attracting the most productive employees and providing the best organisational environment for the employees since they (employees) seek employment from organisations that meet their demands. Consequently, the selection methods that organisations employ in recruiting the best employees are very important. They should not leave any margin for error.

Selection methods that an organisation utilises must adhere to four important characteristics, namely, validity, impartiality, the scope of usage, and cost. In terms of validity, the selection methods must be accurate in ensuring that the identified test scores correlate with the expected performance expectations. In terms of impartiality, the selection method must be fair. It should not discriminate people based on their sex, religion or other factors that are not part of the job description (Hackman, 2005). In terms of the scope of usage, an organisation must determine how many job tasks the method can be applied. Lastly, the cost of the method is important. It should factor in the organisations resources and financial capability. Below is a description of the various selection methods that ABASCO Ltd should adopt on a need basis to ensure that the right people are recruited for the right job.

Preliminary Screening

With the level of publicity that the internet has allowed, it is a guarantee that any advertised position is likely to attract hundreds or even thousands of applications. The preliminary screening involves cutting down the number of applicants based on their qualifications as required by the specific role (Bagshaw, 2004). In his case, the organisation can shortlist a manageable number of people who it can now contact for formal interviews among other selection criteria.

Telephone Interview

After shortlisting the prospective candidates, the first important step is to perform telephone interviews. Telephone interviews are very important since they allow an organisation to determine whether the candidates are still interested in the position (Armstrong, 2011). Further, it is an important method for small organisations since it saves money and time by avoiding face-to-face interviews immediately after the preliminary screening. Telephone interviews allow the organisation to further shortlist the candidates who can articulate their qualifications and skills as required by the organisations staffing needs.

Selection Tests

Selection tests are important in reducing the number of interested candidates to a manageable number. These tests are important since they allow an organisation to come up with a list of candidates who have the right skills, aptitudes, and other characteristics that are necessary for the job (Human, 2003). As a kind gesture, all candidates must be informed early in advance of the tests for preparation. These selection tests include psychometric testing, aptitude tests, in-tray exercises, and presentations. For ABASCO Ltd, these tests are important in helping the organisation identify the best talents.

Panel Interview

For ABASCO Ltd, it is highly recommended to have panel interviews. Panel interviews allow candidates qualification to be reviewed by a wider number of people. It gives a better impartial outlook for each candidate and consequently his or her appropriateness for a given position. ABASCO Ltd is a company, which operates in a highly dynamic industry that requires talent and special aptitudes for its candidates to ensure a competitive advantage (Bagshaw, 2004). A panel interview has two main purposes, namely, collecting information on the qualification of the candidate and determining how he or she fits the requirements of the job. Such information is important since it allows panel members to check the skills, experience, and the general background characteristics that are important in determining the most suitable candidate. The second purpose of the interview is to give the candidates more information relating to the applied position and clarify on issues that the candidate may not have understood well. The third objective is to give the candidates a positive view of the organisation and to ensure that they feel they were given a fair hearing, which is good for the organisations brand.

The panels composition must be composed of people who have knowledge and experience in the various roles that are being sought. It is also important to ensure that the panel members are of a higher rank than what is being sought. For fair and impartial hearing, the organisation should strive to ensure that both genders are represented in the panel with at least one female at all times (Holbeche, 2001). Another important aspect relates to the interview questions during the panel interview. The interview questions must be developed based on the persons specification of the job. In the end, the panel interview should act as the final selection method where the possible candidates and prospect employees are identified and/or offered a job subject to their agreement of the rules of the contract.

Retention Strategies

With the cutthroat competition in the fashion industry, ABASCO Ltd needs to find ways of ensuring that the organisations employee is there in the long run, to ensure best returns for investors, as well ensuring consistency. High employee turnover can lead to low productivity, which can greatly affect the organisations competitiveness (Robbins & Judge, 2013). Therefore, an organisation needs to put in place employee retention strategies to address its current employee retention problems.

Firstly, the most important retention strategy starts in the recruitment and selection process. During this stage, the organisation must strive to hire the best people. Hiring the best workers makes them (employees) feel at ease in their positions and less stressed. The situation translates into job longevity and a feeling of security. When an organisation hires underperforming employees, they are likely to be put under pressure by the management. Besides, their inability to fit in the job context can lead to high turnover in the organisation (Human, 2003).

Secondly, ABASCO Ltd needs to offer competitive benefits packages that are in line with employee needs. When employees feel that they are not adequately compensated, they are likely to have low performance and/or seek other better opportunities. For example, offering wellbeing cover, sequestration benefits, and life indemnity is an important step of maintaining the workforce. Further, offering small perquisites such as free bagels on Fridays and other rewards might seem small. However, they are very important in retaining employees (Saunders, Millmore & Thornhill, 2007). For instance, the fashion industry is known for its low compensation rates as compared to other industries. Therefore, ABASCO Ltd needs to review its compensation packages to offer its qualified and highly motivated employees what fits their needs.

Thirdly, providing some employee development opportunities such as training and education leaves is a very important process of employee retention (Mello, 2002). Also, the organisation can motivate its employees through contests and incentives. Lastly, the organisation must closely follow up on employee welfare through stay questionnaires, exit questions, and other feedback methods that can allow the organisation to adjust accordingly to guarantee a good working environment for the employees (Jamieson & OMara, 1991).

Conclusion

The fashion industry is highly dynamic and competitive. To remain competitive, human resource plays an important role in ensuring that employees comprise the right people for their respective positions. Therefore, it is important to ensure that recruitment, selection, and employee retention methods are the best. Such processes must ensure that the human resource goals of the organisations are met. The recruitment and selection methods that have been discussed in this report are critical. Their adoption by ABASCO Ltd is highly recommended. The recruitment campaign plan is very important since it will guide the organisation in streamlining its recruitment efforts. Further, the retention methods are very critical in ensuring that once the best candidates are recruited, they can stay in the organisation for a longer period to guarantee competitiveness and return on investment.

Reference List

Allen, R. (2004). The Need for Diversity in Corporate Training: One Size Doesnt Really Fit. Industrial and Commercial Training, 26(10), 15-17.

Armstrong, M. (2011). Armstrongs handbook of strategic human resource management London: Kogan Page.

Bagshaw, M. (2004). Is diversity divisive? A positive training approach. Industrial and Commercial Training, 36(4), 153-157.

Charlton, G. (2000). Human Habits of Highly Effective Organisations. Western Cape: Van Schaik.

Flanagan, J. (2014). Virtual Reality and retail: Fashions E-Commerce. Web.

Fraser, J., & Hunt, E. (2011). Faculty diversity and search committee training: Learning from a critical incident. Journal of Diversity in Higher Education, 4(3), 185-198.

Hackman, J. (2005). The design of work teams: Handbook of organisational behaviour. Englewood Cliffs, N.J: Prentice-Hall.

Holbeche, L. (2001). Aligning human resources and business strategy. Oxford: Butterworth-Heinemann.

Human, L. (2003). Contemporary Conversations: Understanding and Managing Diversity in the Modern Word. Coree, S

Introduction

Human resource management has gone a long way from being an obscure and novel approach to a legitimate and widely recognized concept among all modern business practices. Academic efforts dedicated to studying and expanding the field of HRM have broadened the views on the subject and significantly improved the information base available to managers who wish to guide and motivate their employees better (Andersen & Nowak, 2015). HRM is widely utilized in any field of industry that deals with large numbers of employees, ranging from medicine and healthcare services to metallurgy and vehicle production. HRM is a complex field of practice, as every individual manager is required to assess, analyze, and synthesize large amounts of research and information to determine what is the best fit for the organizations they work in.

A quick google search reveals various sets of allegedly best HRM practices, promoted by numerous academic and non-academic sources. Academic journals in the field of human resource management publish researches that define practices utilized in the context of a particular industry, with a series of general recommendations for other HRM specialists to use. These quick and easy tips openly available in the literature and the internet provide basic knowledge and techniques of HRM practices, but at the same time significantly marginalize the role of the HR managers and simplify their work at the cost of organizational efficiency (Pfeffer, 2015). The purpose of this paper is to examine the concept of best practices in HRM as well as the benefits and limits of their applicability within the scope of for-profit and non-profit organizations.

What are Best HRM Practices?

The term best practices is loosely defined as a set of practices that lead to improved organizational performance. However, depending on the circumstances and scope of research and practice, the term may possess several meanings. For example, some researchers define the term best practices as a set of practices that can be implemented in any business or organization regardless of the context (Andersen & Nowak, 2015). Another definition of best practices states that best practices are those likely to work out in the majority of organizations and are supported by evidence. The retroactive model defines best business practices as those utilized by the most successful companies. The logic behind such a definition revolves around the idea that if a company maintains a leading position for a significant period, its practices must be superior to those of its competitors. The situational approach to best practices dictates that no HRM practice is best by default, and the company specifics as well as the talents of its managers define the success or failure of any particular practice (Croonen, Grunhagen, & Wollan, 2016). The resource model states that the best HRM practices are those that grant the best results while remaining within the organizations ability to implement and sustain (Andersen & Nowak, 2015).

The purposes of best HRM practices also require a definition. Armstrong and Taylor (2014) define HRM practices as ways in which a company can enhance its performance and obtain a competitive advantage. Shields et al. (2015) claim that best HRM practices are those that enhance the employees ability to absorb, share, transfer, and create knowledge, which would later transform into increased productivity and competitive advantage. As it is possible to see, definitions of best practices are many. In most cases, the researchers define best about the HRM model, utilized in their respective studies.

Nature of Best HR Practices to the HRM Models

Studying the best HR practices is impossible without deciding the HRM model, which would be used as a framework for the analysis. HRM models serve many purposes. One of these purposes involves providing an analytical framework for the study. Another revolves around legitimization and distinguishing of certain HRM concepts like best in comparison to others, within the scope of the model (Croonen et al., 2016). For example, all HRM models acknowledge that training and selection of personnel is an important part of HRM. However, the differences appear when trying to compare distinctive approaches to selection and training. The third purpose is the characterization of HRM practices and the establishment of variables that could be used for comparison. This is important, as the greater number of variables would provide a more accurate reflection of the effectiveness of HRM practices, which helps to determine the best one. On the other hand, a multitude of unnecessary variables can muddle the results. Lastly, HRM models are utilized as heuristic devices to help discover the nature and significance of key HRM practices.

To summarize, best HRM practices can be defined only within the scope of a particular HRM model, which serves as an even field for comparison of different techniques. The choice of a working model may affect the definition of best practices considerably. An example can be made utilizing TQM practices, which are considered the best practices in operational management, as they help streamline logistics processes, increase the quality of production, speed up production times, and allow for more participant and informal forms of organization. If we use the Fombrun, Tichy, and Devanna HRM model for practice analysis, TQM would indeed be presented as the best practice in any given situation, as it emphasizes the four functions of HRM and their interrelatedness (Andersen & Nowak, 2015). However, this model would not be able to explain why TQM proves efficient in some areas of the world while showing subpar performance in others, such as China.

Fombrun, Tichy, and Devanna HRM model do not include environmental or contingency factors that impact HR functions. However, in the scope of the Warwick HRM model, TQM would not be considered the best practice for Chinese businesses and organizations, as the model takes into account the cultural factor, which is prevalent in the success or failure of TQM (Warner, 2014). Many Asian cultures are proven to be inimical to participative management techniques necessary for the successful implementation of TQM. The Chinese culture has a strong prevalence of autocracy, compliance, and obedience, which is engrained into the mindset of Chinese people. They would not be receptive to TQM, which means it cannot be considered the best practice when applied in Asian settings. Thus, when talking about the best HRM and business practices, the first question that needs to be answered is the model, in the scope of which practices would be analyzed.

Qualities of Best HRM and Business Practices

Practices reviewed and considered to be named the best in a particular field or a situation needs to possess a set of qualities that would enable them to enter into the competition. These practices must be measurable. The goals, processes, and results of the practice must be measured to quantify their effectiveness. Practices would also need to be reproducible. The proposed techniques have to be fully documented, which would enable their reproduction by other HRM specialists. Practices would need to be effective. The main reason why the proposed techniques are considered the best is due to their notorious efficiency when compared to other methods and practices that have similar goals in mind.

If a technique or series of HRM techniques fits the following criteria, it may be considered the best HRM practice. However, the reason why there is an overabundance of such techniques in the information field is that the standards presented above are very loose. Every HRM specialist follows their criteria of what they consider to be valid HR practices. The discrepancy lies in the applicability of every individual set of practices to a particular business. Some practices, while adequate and viable, may not be the best for a particular enterprise. On the other hand, if the standards are placed too high, some potentially valid and useful ideas may be left out based only on estimations and preliminary research.

The Difference between Best Practices and Promising Practices

There is a certain degree of confusion between these two terms, as promising practices are often presented as the newest expertise in the field, while not fitting some of the criteria listed above. The main difference between best practices and promising practices lies in the evidence provided to support the argument (Armstrong & Taylor, 2014). If we take professional HRM standards developed by associations and large organizations, they are typically based on the results of numerous researches in the field.

Any dedicated research on the matter is considered circumstantial evidence, as the effectiveness of techniques tested is largely defined by various internal factors unique to particular organizations participating in the research, as well as numerous external economic and political variables (Armstrong & Taylor, 2014). However, repetitive success throughout numerous researches overtime is the prime indicator of viability for these techniques. Promising practices are different in a way that they do not possess the same amount of academic support behind them. Many stories of success, often utilized as examples of promising practices being effective, fall into that category. Therefore, before contemplating the utilization of a best practice in the scope of their organization, a manager must first assess the amount of evidence supporting the practice. While promising practices may often appear as innovative and may have the potential to work in a particular HRM environment, it is often impossible to utilize them to their full potential due to a lack of documented evidence.

Factors that Limit the Applicability of Best HRM Practices

As far as HRM practices are concerned, the main factor that defines the usefulness of a technique within the scope of a particular enterprise is reproducibility. After all, practice is considered useless if it cannot be utilized by the HR specialist and effectively reproduced in business. It must be noted that all management techniques provide some measure of success when compared to the baseline, where HRM techniques are either not employed. Thus, one of the factors that limit the use of best HRM practices is the ability to either replicate the practice or adapt it to serve the purpose of the organization. It is also the most troublesome feature to attain.

Another important factor is the ability of a manager to understand and utilize the best HRM practices in particular situations. Sometimes, managers are underqualified or do not possess the necessary knowledge and understanding to correctly implement these practices. Servant leadership and transformational leadership are being widely popularized in HRM, but they would be useless if the manager does not possess the charisma and understanding to make them work (Roueche & Rose, 2014). In contrast, hero-type leadership with the centralization of all major functions in the hands of a single manager would not work if the said manager does not possess a vision coupled with immense capabilities for working.

Another factor includes the realities of a particular community where the business is located. The HR manager has to make certain that the utilized technique can be applied or adapted to fit the needs and realities of the organization and community at large.

Alignment with the intended goals is a very important factor to consider when adopting an HRM practice. Any intervention has specific goals in mind. If an intervention does not address these goals in full, it cannot be considered the best practice for that particular scenario.

The availability of resources has to be recognized. While some HR practices are notorious for their effectiveness, the organization may not always have the resources on hand to utilize the technique. For example, while promoting employee education paid for by the company is noteworthy for establishing long-term ties and improving the quality of human resources, it may not be applicable for a small business that is barely making ends meet.

Cost-efficiency is key. This criterion ties in with the availability of resources. The effectiveness of the intervention must be worth the amount of money spent on it. Between an intervention that produces great results at a great cost and an intervention that produces merely good results, but requires significantly fewer resources, the latter is usually considered favorable.

The Benefits of Utilizing Best Practices in HRM

Many organizations and HRM specialists utilize the best practices for a specific reason  these practices have been tested in numerous environments and found successful, therefore utilizing them offers a greater chance of accomplishing company goals than anything that a manager can come up with on their own, as the margins for failure in the latter case are significant. It is why the majority of HRM advice is aimed at novices or beginner specialists who require a framework to start their practice. While large companies have the experience and the financial backbone to afford experimentation on a smaller scale, starting businesses do not have the margin for failure. There are several benefits of utilizing the best HRM practices (Northouse, 2015).

One of them is improved authority. This factor comes into play during the process of introducing and managing change. The employees are typically opposed to change at first, as they have become comfortable and familiar with the current routine. They may be skeptical or outright hostile to the proposed organizational changes. Utilizing a practice that has been proven to be effective is a good way of reducing anxiety and gaining trust and support, which is a necessary part of accepting change (Northouse, 2015).

Another benefit lies in improved organizational credibility. Utilizing HRM techniques that are widely recognized builds up the image of the company as one that follows progressive trends and bases its practices on evidence and research. This is an important tool to attract customers and potential employees into the organization (Northouse, 2015).

Utilizing the best HRM practices has improved funding potential. This point is important on both external and internal levels. The utilization of best HRM practices makes the company a more attractive sight to the investors. On the other hand, it also makes it easier for the HR manager to justify HR-related expenses to the directorial board. Some business owners are self-made entrepreneurs who lack the academic knowledge and a background in management and economics. They may view the needs of the HR department as secondary or even tertiary. Thus, an argument supported by widely-acknowledged specialists in the field may be necessary to convince them to provide the necessary funding for the department (Northouse, 2015).

Best HRM practices eliminate doubt. They are often provided with a framework and a checklist of processes to complete and items to acquire. This is especially true in the case of government standards and association lists of recommended practices. The structure and implementation process have plenty of documentation that makes the implementation of the practice easier to sustain and follow. The manager does not need to invent it from scratch and risk missing any of the critical aspects required for effective HRM (Northouse, 2015).

Best HRM practices have a consultative value. Many HRM agencies work utilizing widely-acknowledged frameworks and provide consultations on how to best utilize particular practices in particular business environments. Using a recognized technique enables the use of outside expert help to tailor-fit it to the situation at hand. Also, the inventors of particular best practices and tools are widely known, which enables direct dialogue with the progenitor of the practice in question. Lastly, the utilization of a framework makes it easier to describe the situation to anyone not closely familiar with the inner workings of the organization (Northouse, 2015).

The greatest benefit of utilizing best practices is knowing that the practices work. It removes the sense of uncertainty in both managers and employees, which causes significant changes in confidence and behavior. Doubt often causes HR managers to second-guess their decisions, which leads to reduced effectiveness of whatever changes they are trying to promote, as the employees begin to share the uncertainty and resist change whenever they feel it does not work the way it should (Northouse, 2015).

Thus, it is evident that the utilization of the best techniques offers plenty of advantages to all levels of HRM practice. It offers a series of tools that are widely acknowledged and can be fitted to most scenarios at hand. They significantly simplify the job of an HR manager to set up and utilize an effective human resource management system, especially when the manager lacks the required experience in the field.

Who Benefits from Utilizing Best Practices in HRM?

Several groups of stakeholders may benefit from the application of the best and recommended HRM practices in their company. The first and most numerous group is the employees of the company. The majority of widely acknowledged HRM practices exist to ensure these basics are covered completely. The employees benefit from best practices when those replace non-existent or inefficient ones. They also help the process of accommodation and change acceptance go smoother (Brewster &Cerdin. 2017).

The second group of stakeholders to benefit from the utilization of the best HRM practices in the company are the owners, sponsors, and funders of the company (Brewster & Cerdin. 2017). Efficient and proven techniques bring insurance that their money is not spent on idle frivolities and that they can expect results. Besides, the implementation of these techniques makes it possible to predict and quantify any positive results from the intervention, making it easier to attract additional funding from sponsors and stocks.

The third group of stakeholders to benefit from utilizing the best practices of HRM are the managers themselves. Popular and well-researched methods provide a solid framework to follow, which saves time, provides results, and ensures no critical mistakes are being made. While it takes an effort to adapt an existing framework to the situation and the realities of an existing company or a business, it is significantly easier and faster than developing a custom HRM framework from the ground up (Brewster & Cerdin, 2017).

The last group of stakeholders to indirectly benefit from the introduction of modern practices by the HRM department are the customers. According to Rees and Smith (2017), they would benefit from the increase in the quality of products and services as well as from improved employee satisfaction and dedication. However, some researchers, namely Andersen and Nowak (2015) claim that the benefits from the introduction of best HRM practices for the customers can only be evaluated by how successful these practices were implemented, as the use of allegedly superior practices does not automatically guarantee success or increase in quality or productivity.

When to Utilize Best Practices in HRM?

One of the common mistakes made by the HR managers is a failure to recognize the need for change and the use of best practices within the scope of their organization. The implementation of something new inevitably launches the process of change, which often comes with additional expenses, reduced productivity, and general discontent of the employees. Therefore, the opportunities to utilize the best HRM practices must be identified before they are being proceeded with. While there are many instances when a change in the existing HRM methodology is required, it is possible to identify the most common reasons for it.

One of the reasons to utilize the best HRM methods involves the adaptation of a new practice or a program. It is always easier to introduce a new HRM technique when it goes along with the general overhaul of the existing management and quality control systems. It is easier to implement new practices with employees that are not familiar with how the previous system was running. They are more open and accepting towards best HRM practices, and the status of the techniques as effective and recognized has a positive influence on morale.

Best HRM practices are useful during crisis management. For example, an organization experiences a serious HRM problem that needs to be dealt with as immediately as possible. Usually, a crisis is associated with high turnover rates, a lack of essential personnel to maintain operations, employee riots, increasing labor inefficiency, etc. In these situations, the manager does not have the time to develop a personalized strategy. Implementing one of the best and widely-recognized practices would lend the necessary results to continue operations and would have higher chances of being accepted and acknowledged by the remaining personnel.

Utilizing tried and true practices can help to restore the Status Quo. Sometimes a tailor-made strategy devised by the HRM manager does not work as intended. In these situations, it is safer to utilize a proven strategy to maintain operations at a reasonably high level. This works well when the initial intervention has been designed with a widely recognized HRM practice as the initial framework. In that case, it would only require reverting custom changes to increase the effectiveness and productivity of labor.

It must be noted that best HRM practices are useful in community mobilization. In some scenarios, the community is directly demanding a need for a new and effective HRM strategy. Using an acknowledged and respected HRM practice removes any doubts they might have about the intervention, provides a promise of efficiency and success, and removes many unnecessary and time-consuming processes standing in the way of the implementation of the new system.

Lastly, the best HRM methods are in line with demands by funders, sponsors, and higher-up officials. With the emergence of the Internet as a source of information, many non-HRM decision-makers become more familiar with the basic and popular HRM concepts, which sometimes evolves into a demand to utilize these familiar and notably effective practices within their organization. This may cause certain complications, as the HRM would, at times, be required to explain to the major stakeholders why a particular system would not very efficient in the scope of the company. Nevertheless, a failure to respond to the demands of its major stakeholders may result in a loss of trust and funding (Rees & Smith, 2017).

Do Best HRM Practices Work for Everyone?

Despite the widespread use and advertising of the best HRM practices in practical and scholarly fields of management, the popularity of the universal recipes for success is finding opposition both in the ranks of academics and practice management specialists. One of the most common reasons for implementing the so-called best practices is to avoid reinventing the wheel. Indeed, the majority of the concepts utilized by all HRM approaches are universal in implementation. However, there are several problems with that approach. As it was accurately mentioned by some of the HRM experts, if nobody tried to re-invent the wheel, our current wheels would have still been made of wood and stone. The purpose of this section is to analyze and highlight some of the more apparent flaws in the concept of best HRM practices.

Best HRM Practices Do Not Exist

The concept of best-fit practices in HRM denounces the existence of objectively best HRM practices as a class. The reason for that being that no HRM practice should be taken out of context and the situation in which it was implemented and utilized. Rees and Smith (2017) point out that in many cases, the academics perceiving and analyzing successful HRM strategies in a business environment suffer from several mistakes.

One such mistake is hindsight judgment. The researchers make a backward correlation between the results of an intervention and the actions and reasons taken during the implementation. It can be summarized as if the results were beneficial to the company, the line of thought behind the intervention must be correct. At the same time, the process of decision-making about the internal and external factors is rarely investigated (Spears & Laurence, 2016). Many cite the HRM strategy used in Google as exemplary while forgetting the marketing situation that Google was at the moment of its foundation in, the situation it is in now, and the relation between HRM and the companys success and retention rates. While Google is a useful example, it does not fit the situation the majority of managers and companies are in, as they do not have the same size, employees, managers, and specifics.

The Survivors Mistake is often found in hindsight analyses. A term coined from the American military engineering department that devised bombers during WW2. The term implies the use of a small number of successful survivors to constitute the majority of the sample while ignoring the information that could be provided by analyzing failed ventures. Indeed, the majority of best HRM strategies are revered based on the samples that followed it and found success, whereas the data provided by companies whose HRM departments followed the same methodology but failed is largely overlooked (Spears & Laurence, 2016)

Personal qualities decide everything. One particular branch of HRM analysis focuses on the initial driving forces behind employees and their managers as well as on the leadership skills of individual specialists. According to this theory, while modern HRM practices can enhance performance to some degree, most results are defined by effective recruitment strategies and personal qualities of the employees themselves, as well as capabilities for self-organization. While generally unpopular among the HRM managers, this point of view states that HRM is largely useless beyond being part of the recruitment commission (Pfeffer, 2015).

The Best-Fit Practices Approach

As it was demonstrated in the previous chapters, using best practices as a panacea has several downsides to itself. While the use of a standardized and research-proven HRM strategy more likely to produce good results and is relatively safe to implement, it is unlikely to produce outstanding results, as those are typically attributed to practices specifically tailored to every individual organization, process, and employee (Ramalingam, 2014). An HRM manager is more than an operator of a grander practice developed by someone else. Instead, a manager is a leader armed with many tools and practices that he or she can combine, dissect, and fit according to the needs of a particular company or community. This approach is commonly referred to as the best-fit practice approach.

It is riskier and requires more experience from the HRM and the managerial department, as in some cases the situation may call for an unorthodox method of human resource management and leadership. For example, even the autocratic leadership model, which is largely looked down upon by the modern leadership theorists, can apply and appropriate to situations when the situation is critical and requires a hands-on approach (Ramalingam, 2014). Such situations are common in the highly competitive business landscape, where many companies are not in the position to grow and develop servant leaders, as it is a lengthy process that does not lend immediate results. In some structures, such an approach to HRM may even prove fatal. A naval ship with more than one captain will not be able to survive a storm, as its subordinates will be receiving conflicting orders. Large and successful companies utilize the best-fit practice approach in their HRM operations, while smaller companies that are looking up to the top see their model as an unconditional best practice, which is erroneous.

Conclusions and Recommendations

The title of Best Practices, which are often given to particular techniques and models, is a highly subjective term that tends to be idolized without realization. At the end of the day, any practice or technique is a tool meant to be implemented in a particular case or scenario. A hammer is a tool developed for hammering nails in. It can be used to hammer a screw into the wall as well when a screwdriver is missing, but it will not be as efficient as a screwdriver. In the field of HRM, there is no room for absolutes. Objectively best techniques for every situation do not exist, as every situation and every company is unique. What works perfectly for one situation does not fit the other as much as it is expected.

The term best techniques should be replaced with universal techniques. These would be the frameworks and practices that apply to the majority of companies and situations. They can be scientifically tested and utilized to provide a quick and efficient framework to serve the needs of any organization in the event of a crisis or an emergency. Following the template or making slight adjustments to it, however, is not the true purpose of the HR manager. The role of the specialist is to produce tailor-fit solutions to individual companies based on their nuances and internal conditions as well as the overall situation in the labor market.

Abolishing a dogmatic approach to HRM practices and management practices, in general, will inspire academic effort in the field as well. Many individual HR managers would be encouraged and inspired to conduct research and promote innovations of their own without being looked down upon for not following the rigid guidelines of the aforementioned best practices, while at the same time improving the efficiency of the companies and their personnel. Following templates created by other people without thinking critically and without inspiration has led many companies to their downfall. One does not become a leader by copying what the leaders do. One does so by learning from them and improving on what they have built. Thus, the best-fit approach, while more complicated, risky, and time-consuming, is better than the best practices approach in the long run.

References

Andersen, M., & Nowak, C. (2015). Human resource management practices. New York, NY: Springer.

Armstrong, M., & Taylor, S. (2014). Armstrongs handbook of human resource management practice. London, UK: Kogan Page Publishers.

Brewster, C., & Cerdin, J. L. (2017). HRM in mission driven organizations: Managing people in the not for profit sector. New York, NY: Palgrave.

Croonen, E., Grunhagen, M., & Wollan, M. L. (2016). Best fit, best practice, or stuck in the middle? The impact of unit ownership on unit HR performance in franchise systems. International Entrepreneurship and Management Journal, 12(3), 697-711.

Northouse, P. (2015). Leadership: Theory and practice (7th ed.). New York, NY: Sage.

Pfeffer, J. (2015). Leadership BS: Fixing workplaces and careers one truth at a time. London, UK: Harper.

Ramalingam, B. (2014). From best practice to best fit: Understanding and navigating wicked problems in international development. Web.

Rees, G., & Smith, P. (2017). Strategic human resource management: An international perspective (2nd ed.). New York, NY: Sage.

Roueche, G., & Rose, R. (2014). Shared vision: transformational leadership in American community colleges. Lanham, MD: Rowman & Littlefield.

Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A.,McLean, P., Plimmer, G. (2015). Managing employee performance & reward: Concepts, practices,

Executive Summary

This business plan is about DramaProx Productions, which is a startup company dealing in the production of drama programs for the UK entertainment industry. Research studies show a significant market share and penetration capabilities with innovative political episode programs in demand in the UK entertainment market that present with an exploitable business opportunity. Analysis of secondary and primary research data revealed a strong positive trend among different age groups for drama episodes programs. In a market with perfect competition, the results show a high penetration rate, market capitalization, and profit margins could be attained within three years.

General Company Description

DramaProx Productions aims to produce drama episodes for the UK entertainment industry. The company will focus on the provision of unique drama programs consisting of different episodes in the UK entertainment market. The aim is to generate revenue from entertainment while increasing the market share across the entire local and global markets to generate more revenue and give the company global status.

Mission Statement

To be the leading producer of world-class political drama programs for the UK entertainment industry.

Goals and objectives

DramaProx Productions to become the source of entertainment offering unique drama entertainment programs for the local UK and global markets.

  1. To create a 20% market penetration rate in the first six months of production
  2. Attain a break-even point with 100 units in the first six months of production
Break-even point.
Figure 1: Break-even point.

Figure 1 reports the total number of sales for profits to reach the margin of safety to cover variable and fixed costs to make the total revenue greater than the total expenses resulting in excess revenues that can sustain the business (Alasadi & Al Sabbagh 2015).

The Concept

The idea is to invest in the UK entertainment industry by providing high-quality world-class drama programs.

Feasibility Report

The UK film industry provides a market opportunity for drama programs because of the strong 9% positive growth in the number of cinema tickets sold between 2014 and 2015 locally. This amounts to net positive profits of £171.9 million (Film forever, n.d). Driven by the concept of figures, Gruber et al. (2015) agree with Film forever (n.d) that the figures released between 2006 and 2016 show a relatively stable and rapidly growing drama entertainment sector in the UK with an annual turnover of £7.3 billion, making an 11% share of the global box office volume of tickets sold per annum, indicating a niche market.

Business description

This is a business that specializes in the production of world-class drama programs for the UK and the global entertainment industry (Verzuh 2015). The basis is Zhu (2013) who views the UK entertainment market to be relatively mature, dynamically changing, and increasing demand for high quality scripted content. Such a situation unfolds into strong market forces and demand for locally produced content that outstrips the imported series (Stutely 2012). The argument by Ryan (2016) is reinforced by ITVs acquisition of the Mammoth Screen and Twofour Group.

Disposable income.
Figure 2: Disposable income.

Figure 2 reports the status of the GDP per person and disposable income per household in the UK, which is a strong indicator of the consumption readiness of drama programs in the UK (Chibnall & McFarlane 2009). Each year shows an increase in disposable income which fell slightly in the 2014/2015 report but remains robust. According to Kroenke and Boyle (2015) and Luostarinen and Gabrielsson (2006), this responds well with the behavior of high-income groups.

Secondary Research

An insight into the level of satisfaction based on the UK Customer Satisfaction Index shows a strong level of satisfaction with foreign drama programs other than local drama programs (Christopherson 2013). An example includes the West wing, which was rated at 8.3 out of 10 indicating an attractive tendency towards foreign drama compared with local programs. The emerging gap can be filled by providing local high-quality political programs. Primary research conducted between 2016 and 2017 reveals the need to fill the gap as reported in figure 3.

Level of satisfaction.
Figure 3: Level of satisfaction.

Macro Analysis

A significant number, consisting of 8,205 productions are scheduled to be released in the 2017 season alone. These include 376 productions that are in development, 120 in pre-production, and 196 in production. A critical analysis shows an industry that consists of drama programs that go through different stages of production and viewing.

Competitors

Global media companies have cut a significant market share by offering different drama programs for entertainment such as the west wing television series by Warner Bros. Television. According to market research extrapolation views by Jarzabkowski and Kaplan (2015), Hair (2015), and Evans (2015), in the UK alone, the number of competitors has grown by 32% from 2009 to 2016. By Alasadi and Al Sabbagh (2015), performance categorizations of companies in the field of drama include Red Production Company, Hartswood Films / BBC Wales, and Kudos Film & Television as among the best. As of now, the number of companies producing film and drama programs has grown to 6,000 with 405 distribution channels as well as 215 film exhibitions. Distinctly, the small companies have a turnover which is under £250,000

Primary Market Research Segments

Based on the concept of market ratios by Ferraro and Brody (2015), the proportion of adults who attend entertainment and specifically drama events constitute 25% with 21% claim that they regularly attend the theatre. According to Fayolle and Liñán (2014), an increase in demand for drama programs among all age groups is uniform.

Table 1: In-venue and online survey results.

Site A Site A Site B Site B
Age cohort Online Survey (%) In-venue (Audience) (%) Online Survey (%) In-venue
(Audience) (%)
18-34 36 23 27 17
35-44 17 10 18 14
45-54 24 19 23 22
55-64 17 23 21 25
65- 7 26 10 22

Table 1 reports on the tendency of consumer behavior of people aged between 18 and 34 interested in drama entertainment programs. The highest has 36% followed by the 45-54 cohort with 24% for the online survey and 23% and 23% respectively for the in-venue survey for site. A similar trend was observed in site B with 27% for the 18-34 cohort and 23% for the 45-54 cohort in the online survey having a positive stance with 17% of the 18-34 cohort showing a 17% positive stance and 45-54 cohort showing a 22% positive stance. Analytically, the responses from both sites, A and B for the different age groups show strong demand and market for the programs.

Porters Five Forces

Figure 4 shows Porters five forces model providing a summary of the nature of competition and the nature to marketing environment the company is to operate.

Supplier power

The supplier in the drama industry will include the company that produces the drama programs.

Buyer Power

UK buyers have a strong and entrenched desire for drama. The UK market attained £1.1 billion in sales despite the temporary dip in 2013. A £1.6 billion increase occurred in 2016.

Competitive Rivalry

Competition from the US drama products was equivalent to 26% while that from UK films was 10% with the UK market share being 16% of the global drama entertainment industry.

Threat of Substitution

The substitutes include the British drama television series, which include the British comedy-drama television programs (2 C, 70 P), British drama television series by decade (7 C), ITV television dramas (6 C, 477 P), and the British teen dramas (19 P) among other programs.

Threat of New Entry

Due to the barriers of high capital, marketing, and production challenges as well as training costs, the number of new entrants could be small.

Porters Five Forces Model.
Figure 4: Porters Five Forces Model.

The Marketing Plan

Primary research conducted between January 2016 and February 2017 reveals a decline in the level of satisfaction among customers from 80% for international drama programs to 76% in the same period.

Mission

To create new political drama programs that attract new and old customers.

Business goals

  1. Provide innovative world-class drama programs for the entertainment industry in the UK.
  2. Build credible demand for drama programs as a new product line to achieve a 25% market penetration in the UK.
  3. Create a new market frontier for the DramaProx Productions drama programs

Marketing Objectives

  1. To achieve 20% of sustainable profits by the first year of production
  2. To penetrate the new market and achieve a 20% market share by the first year
  3. Create a strong brand with a customer loyalty rating of 50%

Table 2: Marketing Strategy.

Market Growth Market development strategies (Ross and Byrd 2015)
Use of social media such as Facebook and YouTube
Use of streaming media
Targeting theatre
Diversification strategies
Through target markets
Innovative political drama programs
Create programs for all audiences
Provide different episodes with unique information in each
Market penetration strategies (Rothaermel 2015)
Use of social media, targeting different audiences
Product development
Political drama programs
Use of reality information

Table 2 is about the marketing strategy. The core business will be to create serial political drama programs similar to the American version of West Wing.

Revenue Model

DramaProx Productions will adopt both the low cost and Recurring Revenue models as the most appropriate frameworks for growth and profitability (Wahab, Al-Momani & Noor 2015). According to Bodea et al. (2015), the low-cost model reflects the value proposition of drama programs to driving up sales.

SWOT Analysis

Table 3: SWOT analysis.

Strengths
Innovative episodes
UK based
Weaknesses
Low market penetration
A new market entrant
Opportunities
Growing entertainment market share
Threats
International drama programs such as the West Wing

Positioning strategy

Product positioning in the drama programs production market that is characterized by perfect competition difficulty task (Alasadi & Al Sabbagh 2015). However, creating political drama programs will provide the platform for product positioning.

Distribution channels

A website will be created to host the programs based on the pay and download model to access the programs (Baker 2014). A customer will be required to make online payments using the visa card and other viable payment modes.

Promotion

This will be achieved by advertising the episodes on different media platforms such as TV channels and social media platforms such as Amazon and Facebook among others (Salamzadeh & Kawamorita Kesim 2015). According to Ravindran (2016), discounting some episodes and sending messages via mobile phones will be another promotion platform.

Pricing

Studies show pricing to be a strong indicator of the quality of a product. Low prices create the perception of a poor quality product while high prices create the perception of a high-quality product (Nicolò 2015). Studies by Narayanan and Fahey (2005) and Hopewell (2016) on consumer behavior show that highly-priced entertainment programs in the UK attract a higher volume of customers than low priced programs.

Customer relationship management

  1. Address customer complaints immediately as they arise
  2. Communicate via emails 
  3. Provide a common on-line platform for collecting data about customer satisfaction

Operational Plan

Launching plan

An appropriate venue and office will be located and hired for rolling out the entertainment programs (Fleisher & Bensoussan 2015). According to Wild, Wild, and Han (2014) and Kasabov (2015), an initial roll out incentive will be provided as the first episode at discounted prices while successive programs will be fully priced (Armstrong, Adam, Denize & Kotler 2014). Bryman and Bell (2015), Brinckmann and Kim (2015), and

Davila, Foster, and Jia (2015) note that strategies should be in place to increase the size of the audience in the first 3 weeks.

legal Issues

The company will invoke the Insolvency Act 1986 and the Companies Act 2006 as a way of compliance with the policies and laws for establishing a limited company. Under the company act, the company will define the directors duties and other officers working for the company (Finch 2016). The discourse is in appendix II.

Management Team and Organization

Management Structure.
Figure 4: Management Structure.

The company will start with a lean management staff which will increase as the capital and market share increases as shown in figure 4. Appropriate recruitment practices and policies as well as disciplined procedures and motivation will be used in the recruitment and selection of employees, which underpins the companys key growth strategy.

Customer value proposition

The drama programs are designed with packaged political entertainment episodes for different age groups ranging between 18 years to 65 years.

Financial Analysis

This is based on the following assumptions:

  1. Employees will work permanently
  2. Salaries will depend on company profits.

Discourse in appendix I.

Reference List

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Appendix I

Table 5: Financial analysis.

Liabilities and Capital
Liabilities
Current Borrowing £0
Long-term Liabilities £0
Accounts Payable (Outstanding Bills) £610
Additional Current Liabilities (interest-free) 1000
Total Liabilities £710
Capital
Total Planned Investment £115,110
Loss at Start-up (Start-up Expenses) (£4,760)
Total Capital £110,460
Total Capital and Liabilities £110,960
Total Funding £115,890

Table 5 reports the Accounts Payable (Outstanding Bills) of £610 with the total liabilities being £710. The Loss at Start-up (Start-up Expenses) amounts to £4,750 while the planned investment is equivalent to £115,110. The report shows that the total capital and liabilities amount to £110, 960 while the total capital is £110,460, which amounts to £115,890.

Financial ratios

Table 6: Financial ratios.

Common Financial Ratios
Debt Ratio (Total Liabilities / Total Assets) 0.58
Current Ratio (Current Assets / Current Liabilities) 1.08
Working Capital (Current Assets  Current Liabilities) 660
Assets-to-Equity Ratio (Total Assets / Owners Equity) 2.29
Debt-to-Equity Ratio (Total Liabilities / Owners Equity) 1.27

Table 6 reports the financial ratios of the expected performance of the business.

Start-up Costs

Table 7: Start-up Costs.

Non-cash Assets from Start-up £3,200
Cash Requirements from Start-up £108,950
Additional Cash Raised £0
Cash Balance at the Starting Date £108,950
Total Assets £111,950
Start-up Funding
Start-up Expenses to Fund £5,850
Start-up Assets to Fund £112,050
Total Funding Required £118,700

Table 7 is a detailed account of the non-cash assets with a start-up of £3,200 and cash requirements with start-up totaling £108,950 as well as the cash balance on starting date of £108,950. The value of the total assets is £110,950 with start-up expenses to fund being £112,250 and the total funding required being £118,700.

Funds Breakdown

The startup capital sums up employee salaries that are projected to be £ 50,000 with the office rent being £2000. Hardware devices such as computers and other data collection devices are projected to cost £8000 and the software will cost £10,800. The balance from the £115,700 of the total funding required could go to maintenance and other accruing expenses. Besides, additional funds will be required for the advertisement and marketing that is estimated to be £7500.

Working Capital Requirements

Based on 45 credit terms, it is possible for the working capital to be as follows:

  1. Accounts receivable = 45 x 282,500 / 365
  2. Accounts receivable = 34, 828
  3. Accounts receivable % = (34,828 / 282,500) ×100% = 12.328%

The results imply that the working capital requirements when credit has been offered for to 45 days become £ 282,500.

The Net Working Capital Requirement was arrived at by using accounts payable, inventory working capital requirements, and accounts receivable. This can be expressed as: Net working capital requirement = Accounts receivable+ Inventory  Accounts payable, which is equal to 13.9% networking capital. Improving the terms of service for 45 days more could increase by 41.1%.

Sales Forecast

The sales are forecasted to increase rapidly because of the increasing demand drama programmes as shown in table 8.

Table 8: Sales forecast.

Sales Forecast
Year 1 Year 2 Year 3
Sales
Consulting fee £19,000 £245,000 £550,000
Other £0 £0 £0
Total Sales £19,000 £250,000 £550,000
Direct Cost Year 1 Year 2 Year 3
Consulting services £2,340 £46,800 £77,220
Other £0 £0 £0
Subtotal Cost of Sales £2,340 £76,800 £87,120

Table 9: Three year cash flow projections.

Summary

This report covers the financial analysis and business environment of Agthia Group. The company is publicly traded under common stock on Abu Dhabi Securities Exchange. It is among the food and beverage industry leaders. The current business environment is favorable for growth. The PESTLE analysis indicates a favorable political environment in the UAE, stronger economic growth, rising populations, disposable incomes, technology adoption, change in consumer consumption patterns, legal environments, and the desire to protect the environment.

Additionally, the financial ratios of the company for profitability, liquidity, solvency, operating efficiency, and stock market performance are also positive. Hence, potential investors should consider Agthia Group for investment. While the company is good for investment some economic developments, such as the rising costs of utilities and a slowdown in revenues could due to low oil prices have affected returns. Besides, major operations of the company are in the Middle East region, which constantly faces threats of terrorism and war. These factors have slow down the growth of the company and limit its strategic goals.

Introduction

This financial analysis report focuses on the Agthia Group. The two-part report covers issues related to the company in part one and presents a financial analysis report in part two. Some of the most recent economic turmoil and financial crises across the globe have demonstrated the need to have reliable information about firms for decision-making, particularly for investors, creditors, management, and other market participants. Using financial ratios, one can determine both the short-term and long-term viability of a business entity (Drake & Fabozzi 2012; Warren 2014). A careful selection of ratios is vital to ensure that information presented is useful for decision-making. The choice of these ratios is largely determined by the intended purpose of the information.

Part 1: Understanding the Company

About Agthia Group

Established in 2004, Agthia Group is the main food and beverage firm in Abu Dhabi (Agthia Group 2017). The company is publicly traded on the Abu Dhabi Securities Exchange with the ticker symbol, AGTHIA. Senate General Holding Corporation, which is an Abu Dhabi Government company, controls the majority shares (51%) while other retail and institutional investors, including Emirates International Investments LLC (5.57%) and the Abu Dhabi Retirement Pensions and Benefits Fund (NA) control the remaining percentage (Mubasher 2016).

Agthia Group has established its assets in the UAE, Egypt, Oman, and Turkey. The company provides an excellent portfolio of integrated businesses offering exceptional quality and trusted food and beverage brands for consumers and users across the wider Middle East, GCC, and Turkey. It boasts of more than 3,000 employees who handle various aspects of business management and operations, including product manufacturing, distribution, and marketing (Agthia Group 2016). Agthia Group deals in water, flour, animal feed, juices, and dairy using different subsidiaries. Additionally, the company recently ventured into frozen vegetables, tomato paste, fruit puree, and baked products.

According to the information contained in the companys annual report 2015, the company performed well based on a year-over-year evaluation with double-digit revenue and profit growth (Agthia Group, 2015a; 2014a; 2013ba). These performances showed the companys capability to drive its sustainable growth strategy through continuous improvement of its core businesses while focusing on other product development for diversification and massive regional presence. The companys net sale was AED 1,866 million representing a growth of 13%, the net profit rose to AED 231 million (a 20% increment in the net profit) (Agthia Group 2016).

Major operations

Agthia Group subsidiaries include Al Ain Water, Al Bayan, Alpin Natural Spring Water for water products, Grand Mills for flour, Agrivita for animal feed, Al Ain Fresh, and Capri Sun specialize in juice, and Yoplait that offers dairy products. As previously observed, the company also introduced other products, including tomato paste, frozen vegetables, fruit puree, and baked goods (Agthia Group 2016). These companies mainly handle the manufacturing, distribution, and marketing of the above-mentioned products.

The companys assets are spread in four countries, and the products are sourced in the UAE, Egypt, and Turkey.

Products and Services

Agthia is one of the leading food and beverage groups in UAE and ranked among the top ten of food and beverages in the Middle East. It operates in the food and beverage sector with a diversified chain of products in various segments, including flour; animal feed; bottled water; beverages; processed fruits and vegetables; dairy; and frozen baked products. It is important to recognize that the company has embarked on massive diversification to grow its brand in the Middle East region. More importantly, Agthia now focuses on international distribution across Europe, Africa, and the wider Middle East Region (Agthia Group 2015a). Overall, the company has 15 brands under seven food and beverage categories (Euroland 2016).

Major Competitors

The food and beverage industry in the Middle East is highly competitive because most companies from neighboring countries consider it an emerging lucrative market. While the industry is highly fragmented with small producers, there are well-established companies that perform better than Agthia Group. Almarai and Savola groups are Saudi Arabia companies that have dominated the food and beverage industry in the Middle East, according to Forbes Middle East ranking in 2016 (Maceda 2016). Additionally, the Americana Group of Kuwait, Oman Flour Mills, Al Kabeer, IFFCO Group of Companies, Al-Matahin (Bahrain Flour Mills Company), Al-Watania Poultry, and Solico Group with its root in Iran are also leaders in this industry. Overall, Agthia Group faces competition from both well-established and highly diversified companies, as well as from other small fragmented firms. Nonetheless, it is imperative to note that Agthia Group is among ten leading firms in the food and beverage industry in the Middle East.

Agthia Group in Stock Market

As mentioned above, the company is listed in the Abu Dhabi security exchange. The company trades in ordinary stock since its IPO in 2005. The analysis demonstrates that Agthia Group realized massive following its IPO. For instance, revenue has grown to AED 1.9 billion (4.3 times), while net profit has increased to AED 0.9 billion (7.9 times) (Euroland 2016). Additionally, total assets have reached AED 2.4 billion (2.9 times), market capitalization is now AED 4.6 billion (6.1 times), ROA 10.1% higher (2.7 times), ROE is now about 14.9% higher (3.5 times), and working capital to net sales is now 2.5% higher (0.5 times) (Euroland 2016).

The current share price is AED 6.35 with a traded volume of 16,876 and a turnover of 107,228.06 (Mubasher 2016). The lowest share price was AED 5.94 while the highest was AED 6.46 (Mubasher 2016). Notably, the company stock price is most likely to improve as it executes strategic goals, including expansion and acquisition. Further growth in revenue and profit will also lead to a higher share price.

Audit Report Analysis (Annual Report)

Agthia Group auditor is KPMG. The auditor concluded that the financial statement of the fiscal year 2015 was a fair representation of the fiscal position of Agthia Group in the financial year 2015, its performance, and consolidated cash flow based on the International Financial Reporting Standards (Agthia Group 2015b).

According to the audited report of the company, its financial performance has increased steadily. The companys net sale was AED 1,866 million representing a growth of 13%, the net profit rose to AED 231 million (a 20% increment in the net profit) (Agthia Group 2015b). Additionally, strong performances were also demonstrated on return on assets, return on equity, and return on net capital employed. All these indicators grew by 1% relative to the fiscal year 2014.

Significant Events

In the fiscal year 2015, Agthia Group realized several important events related to capital expansion projects in the UAE and across other areas of operations (Agthia Group 2015a). The company installed additional production and warehousing infrastructures in available facilities. It also added new facilities following the acquisition of Al Bayan Water Company (Agthia Group, 2015a). Al Bayan Water is among the major five-gallon water firms in the UAE with a presence in Oman. The company also introduced new products and variants in different categories and improved packaging and artwork (Agthia Group 2017). Additionally, it installed a new high-speed bottling line, which was responsible for an increased capacity of over 40% to 74 million cases each year. This facility was scheduled for completion in April 2016. Still in the year 2015, Agthia Group revamped its capacity for animal feed production in the UAE and bottled water in Turkey (Agthia Group 2015a). The company also became the first Agri company in the UAE to attain the status of FSSG 22000 following the upgrade of the food management system of grand mills flour and animal feed facility. It also expanded the storage facility of the Al Ain warehouse to 32,000 pallets (Agthia Group, 2015). In 2012, it bought a new warehouse in Dubai to expand its storage and distribution capacity.

The company also made a significant acquisition in Turkey following the deal involving a Turkish water company. Between 2013 and 2016, the company has signed multiple distribution agreements with major companies in the region, including Monster, Al Foah, the Olayan Group in the KSA, and JV in Kuwait to produce Al Ain Water (Euroland 2016) (Agthia Group, 2014b; 2013a).

In 2017, the company also experienced a change of leadership following the resignation of Iqbal Hamzah. Tariq Ahmed Saeed Al Wahid was appointed as the acting CEO to provide leadership and execute the growth strategy to attain revenues of US$1 billion by 2020 (Agthia Group 2017).

Industry Demands

Demand status is described as attractive to players and investors (Chummee & Yimprasit 2014). This implies that the industry is thriving due to the noted high GDP per capita, increasing the labor force, and limited food production capacity of existing facilities (Chummee & Yimprasit 2014). Analysts conclude that healthy food and beverage categories and other premium food products have huge growth potential (Chummee & Yimprasit 2014). The UAE is considered the best starting point for investors who wish to penetrate the region. Leading companies tend to have the right product, local partners, and product positioning to excel in the region (Chummee & Yimprasit 2014).

The food and beverage sector in the region is as diversified as it is profitable. This sector witnesses shifting industry trends not only in the mature markets of Europe and the U.S., but also in emerging markets such as China, the Middle East, and India. Additionally, it is experiencing a marked change in consumption patterns, particularly driven by health awareness campaigns, rising incomes, and increasing demands because of the rising population. Consolidation, the emergence of developing nations coupled with their population growth, and increasing government regulations are influencing food manufacturing companies and their business strategies.

As the Food and Beverages industry grow rapidly, it puts manufacturers under pressure to keep up with the changing trends and the shift in consumer interests. Multiple factors are available to help industry leaders better evaluate and forecast upcoming trends to maximize their returns. First, the frequency of consumption of the product as the population of the UAE and the countries that Agthia exports are increasing.

This frequency shows a larger potential customer base demands more of non-alcoholic products, such as mineral water, milk, and juices. Agthia has been expanding its water business over the past two years through facility upgrades and multiple acquisitions. The segment, which includes the Al Ain and Al Bayan water brands, continues to be a key driver of growth, according to Tariq Al Wahedi, the acting chief executive officer of Agthia. Second, cultural demand is reflected in emerging trends. For instance, affluent consumers and busy professionals now opt for caned products and fast foot to save cost and time. These aspects of consumer behavior influence the growth and success of the industry.

Third, purchase intent shows how much consumer behavior has to change for consumers to experience the product and immediate benefits. However, purchase intent would not be difficult to attain because of rising cultural demands. Fourth, product innovation is also driving demands. Agthia Group has revamped existing products and introduced new lines of food and beverage products to create new markets and explore new opportunities. The company also uses both traditional and social media to drive its brand. Users of the companys Web site can purchase products or share related information to others using different social media platforms, including Facebook, LinkedIn, and Twitter. Fifth, Agthia Group controls its supply chain and ensures fulfilling the local demand as they expand and promote new products. That shows that Agthia has the requisite infrastructure in place to meet the increasing demand. Finally, the company continuously invests in research and development (R&D) to develop new products and conducts thorough market research to determine demands.

Industry laws and regulations also influence food and beverage industry practices. The UAE all manufacturing activities are regulated by the federal body  Ministry of Economy (see appendix). A distinct Federal and Emirate-level government organization plays a role in regulating the development and inspection and certification of some standards involving food Safety. The Emirates Authority for Standardization and Metrology (ESMA) role is to prepare, approve, publish, review, modify, issue, and adapt standards and technical regulations, as well as to determine the national measurement system in line with GCC standards (see appendix).

In Abu Dhabi, the responsibility of enforcing standards and inspections is under the Abu Dhabi Food Control Authority.

The Food and Drink Federation in the UK predicts a huge potential for future growth for the food and beverage industry. The growth might reach 20% by 2020 based on the forecast (Hughes 2016). As mentioned earlier, the Agthia group extended its exports to more than 20 countries and expanded its operation in four more countries (Sahoo 2017). In 2016, the Agthia group net profit increased by 10 percent from the previous year while net revenue grew 8%. Much of the revenue originated from the Groups water business, as it is more demanded and now the core business of the company. This growth shows the resilience of the food and beverage industry to the economic turmoil.

In the Food and beverage industry, particularly halal and organic foods are among the growing segments in the GCC region, and it is expected to grow at the rate of 8.5% and reach $1.5 billion by 2018. With rising incomes in most Muslim countries, the global halal food and beverage market is expected to reach US$1.6 trillion by 2018. This is seen as a significant growth opportunity within the region. For example, in the UAE, the Jebel Ali Free Zone (JAFZA) is developing two cutting-edge Halal Zones, one for international markets and the other for the local and regional markets.

These Halal Zones will provide integrated services to streamline the halal supply chain. Moreover, Alpen Capital predicts a growing demand for organic food in the GCC (Alpen Capital 2015). According to Alpen Capital (2015), the UAE, Agthias main market, has witnessed one of the fastest population growth rates in the world in recent years, given the influx of people from all over the world (p. 4). Hence, the demand and growth rates are more likely to improve, as well as earnings for the company (Zawya 2016).

As consumers become more health-conscious, there is a greater demand for healthy foods. In emerging markets, including the GCC, there is an increased demand for low-fat dairy products and low-calorie foods, particularly in the GCC, which has higher-than-average rates of obesity and chronic diseases. As such, there is likely to be a greater demand in the future for healthy food and beverage products.

The sophistication of global and regional consumers today coupled with rising health awareness has led to noticeable changes in the types of processed foodstuffs that are in demand, putting pressure on producers to improve their product offerings. For instance, mixed flavored juice products are becoming more popular at the expense of traditional single flavored products, and consumers preference for juice products without additives is rising. Conventional water without functional additives makes up the largest segment of the bottled water market, and it is expected to reach $166.5 billion by 2018, while the market value for flavored and functional water is expected to reach $28.8 billion in 2018, a CAGR of 12% from 2013 to 2018. Further, bottled water consumption in the GCC will rise by 50% to more than 21 billion liters by 2020  98% is locally produced (Beer 2014). Globally, there is an increased demand from developing nations, such as China, Brazil, Russia, and India, and Asia is expected to consume half of the production by 2023.

In the GCC region, poultry is a growing sector (+12% CAGR 2010-2020)  65% of the consumption is met through imports while increased demand for premium protein continues to rise (Alpen Capital 2015). Much focus is now on the demand for improved Halal standards.

The most recent report by Euromonitor International demonstrates that the soft drinks market size in the Middle East and Africa is expected to cross 81.4 billion liters this year, of which, 1.9 billion in the UAE market (Mounzer 2016, para. 3). As for the bottled water sector, the report shows that the Middle East and Africa regions market size will attain 50.5 billion liters in 2016, of which, the UAEs market size will reach 1.2 billion liters (Mounzer 2016, para. 3). Drinking water (60%) is the most consumed beverage in the GCC, followed by juice (20%), and soft drinks (17%).

The business environment in 2017 will remain difficult due to external forces driven by cost changes. The overall key drivers include health and wellness, safety, social impact, experience, and transparency (an overarching driver).

Influence Factors  PESTLE Analysis

Various factors, including technology, health awareness, and regulatory environments in the food and beverage industry have become critical influencing factors. One can understand these factors by applying business environment analytical tools, such as PESTLE analysis.

Political  although the UAE is relatively stable, other countries in the Middle East and Africa pose critical political challenges to the growth of the company due to insecurity, terrorism, and poor governance.

Economic  the per capita income is rising in the region. As such, consumers have more spending power, and they are most likely to improve consumption. Economic factors demonstrate a promising future for the industry. On the other hand, low oil prices and rising costs of utilities following the reduction or abolishment of energy subsidies have affected the economy negatively, leading to high costs of doing business and poor revenues (Maceda 2016; Arqaam Capital Limited, 2016). Agthia had predicted a slowdown in gains in the subsequent year 2017 (Sahoo 2016).

Social  emerging social practices, such as modern life consumerism, health, and wellness awareness campaigns, drive consumption of processed foodstuff across the globe, and the Middle East region is no exception (Deloitte Development LLC 2016).

Technological  technological factors have transformed food processing in the region. Agthia has installed some of the latest state-of-the-art equipment to boost production and meet recommended best industry standards.

Legal  consumers now require transparent processes. That is, food manufacturers must reveal the contents of their products. In this regard, they must meet food safety standards to avoid lawsuits.

Environment  water is now an important commodity in the Middle East and a core business for Agthia. The company must strive to reduce wastage, ensure efficient energy use, and protect the environment. Environmental protection will be critical for industry players in the future.

Part 2: Financial Statements Analysis and Understanding the Financial Statements

Brief about Financial Analysis

The financial analysis for Agthia Group covers the fiscal period 2013 to 2015 (Agthia Group 2013b). Ratio analysis involving liquidity, profitability, solvency, operating efficiency, and stock market performance is applied to determine the trend and understand the company performance year-over-year. These ratios will provide an insight into the companys financial health, and detailed calculations for all the ratios are provided in the appendix.

Liquidity

Current Ratio

The Three Year Cash Flow Projection
Years INITIAL 1 2 3
Initial cash
Cash at Start of Period £0 £500,000 £276,005 £360,230
CASH FLOWS FROM OPERATIONS
+ Revenues from Sales £1,245,000 £1,743,000 £2,739,100
 Variable Costs
 Materials used £250,000 £350,000 £550,100
 Labor incurred £100,000 £140,000 £220,100
 Additional overhead £50,000 £70,000 £110,100
 Sales or billing Commissions £74,700 £104,580 £164,140
 Fixed Costs
-Hardware and software Operations £500,000 £500,000 £510,000
 Telecommunications £8,000 £8,000 £8,000
 Legal Services provisioned £20,000 £20,000 £20,000
 Accounting Services offered £20,000 £20,000 £20,000
 Insurance Services £100,000 £100,000 £100,000
 Personnel Costs
 Administration Salaries £56,000 £56,000 £56,000
 Sales and marketing Salaries £144,000 £144,000 £144,000
 Other Personnel Overheads £30,000 £30,000 £30,000
Operations Sub-Total (£107,700) £200,420 £816,660
CASH FLOWS FROM INVESTMENTS
 Hardware and Software Applications £1,500,000
 Equipment and data communication tools £750,000
Investments Sub-Total (£2,250,000) £0 £0 £0
CASH FLOWS FROM FINANCING ACTIVITIES
+ Sales of Equity £1,500,000
+ Commercial Loans
2013 2014 2015 Industry Average 2015
1.99 1.59 1.94 1.73

Source: (Morningstar, Inc. 2017; Fusion Media Limited 2017; GuruFocus.com, LLC 2017; Thomson Reuters 2017)

The current ratio for the last three years indicates that Agthia Group had a ratio beyond 1, and the company has a higher current ratio than the industry average. Therefore, Agthia can meet its short-term debts as they fall due on a particular date.

This ratio generally offers a quick method to assess the financial health of Agthia. Higher ratios are preferred because they demonstrate high chances of paying off debts. That is, Agthia has a good percentage of asset values compared to its total current liabilities.

Quick Ratio or Acid Test

2013 2014 2015 Industry Average 2015
1.51 1.10 1.51 1.31

Source: Source: (Morningstar, Inc. 2017; Fusion Media Limited 2017; GuruFocus.com, LLC 2017; Thomson Reuters 2017)

Agthia has also maintained quick ratios above 1 for the last three fiscal years, and it performs better than the industry average. Thus, Agthia can meet its short-term obligations when necessary. Ratios below 1 indicate poor liquidity.

Profitability

Gross Margin Ratio

2013 2014 2015 Industry Average 2015
27.12% 27.99% 32.00% 32.45%

Gross Profit Margin for the company has increased from 27% to 32% in the fiscal year 2015, while the industry average is 32.4%. This ratio has increased since 2013, showing that Agthia is at par with the industry average. Hence, it makes profits of about 27 to 32 from every AED invested.

Net Profit Margin

2013 2014 2015 Industry Average 2015
10.50% 11.68% 12.39% 12.27%

The net profit margin percentage has increased from 10.5 to 12.3% between the fiscal year 2013 and 2015, while the industry average is slightly lower (12.27%). Agthia still realizes profits, after all, operating expenses, costs, taxes, and any preferred stock dividends have been eliminated, and the percentage shows that Agthia changes its revenues into profits for shareholders.

Return on Investment

2013 2014 2015 Industry Average 2015
8.15% 8.74% 9.7% 12.03%

Return on Investment ratio shows an increasing trend from 8.15% to 9.7% between the fiscal period 2013 and 2014 compared to an industry average of 12.03% (2015). Thus, currently, Agthia is generating about 9.4% cents income from every AED it holds as assets.

Solvency

Debt/Equity Ratio

2013 2014 2015 Industry Average 2015
714 / 1,250 830 / 1,380 831 / 1,544
0.57 0.6 0.53 

The debt to equity ratio shows the fraction of Agthia financing that originates from banks, creditors, and investors. A higher ratio generally shows that Agthia relies heavily on bank loans instead of investors to finance its expansion and other investments. Agthia debt to equity ratio has ranged between 0.5 and 0.6 over since 2013. This ratio shows that Agthia uses about 50% of external financing for its strategic business goals.

Time Interest Earned Ratio

2013 2014 2015 Industry Average 2015
124518 / 9842 160276 / 15126 193287 / 15126 
12.65 10.59 12.78 

Time Interest Earned Ratio (debt service ratio or fixed charges cover ratio or Interest coverage ratio) demonstrate the frequency of annual interest expenses are covered by income before interest and tax (net operating income) of Agthia Group. It is a long-term solvency ratio, which shows that Agthia Group can pay its interest charges when they fall due. In the fiscal years 2013, 2014, and 2015 Agthia Group had a positive interest expense ratio of 12.65, 10.59, and 12.78 respectively.

Operating Efficiency

Asset Turnover Ratio

2013 2014 2015 Industry Average 2015
0.82 0.79 0.81 0.86

Source: (Morningstar, Inc. 2017; Fusion Media Limited 2017)

The total asset turnover ratio demonstrates net sales as a percentage of assets to indicate how many sales are generated from every AED of Agthia assets. For this company, a ratio of 0.81 shows that every AED of assets produced 81 cents of sales for the company.

Inventory Turnover Ratio

2013 2014 2015 Industry Average 2015
3.37 3.58 4.7 4.8

Source: (Morningstar, Inc. 2017; Fusion Media Limited 2017)

This efficiency ratio indicates how effectively Agthia manages its inventory for a fiscal period. The company ratio showed an increase from 3.37 times to 4.7 times relative to the industry average of 4.8 times.

Stock Market Performance

Price Per Earning Ratio

2013 2014 2015 Industry Average 2015
13.46 14.70 15.82 18.53

(Morningstar, Inc. 2017; Fusion Media Limited 2017)

This market prospect ratio has increased from 13.46 in the fiscal year 2013 to 15.82 in the fiscal year 2015. It shows that investors are willing to pay AED 15.82 (this is the multiple at which the stock is currently trading). The ratio helps investors to determine the worth of a share-based on what they are ready to pay.

Conclusion and Recommendations

Based on the analysis of the company business environment and its financial performance for the fiscal years 2013, 2014, and 2015, it is concluded that Agthia Group is a relatively stable company operating in a growth-oriented environment, and it is supported by a strong financial performance. The company does not have negative ratios, and it is on par with the industry average ratios. Nonetheless, it must focus on risk management to protect earnings and predict potential failures (Fathi, Zarei & Esfahani 2012; Atrill & Hurley 2012; Bhandari & Iyer, 2013).

The decision to invest, therefore, is made based on the following observations. First, the company is poised for massive growth. Most reports covering the food and beverage industry in the Middle East have demonstrated that this industry will continue to grow steadily. Moreover, the company also understands how water consumption has increased and now significantly contributes to its revenues. Consequently, Agthia has invested heavily in water production and distribution, including the signing of distribution contracts. Second, the company is financially stable. As previously noted, Agthia Group does not have any negative ratios. Moreover, revenue, profit, and other margins have continued to grow year-over-year for the fiscal periods analyzed.

As the company expands its operations to other countries, it is expected to earn more revenues and profits for shareholders. Third, PESTLE analysis indicates that population growth, the rise in disposable incomes, the focus on environmental conservation, technology-driven approaches, and efforts to manufacture products that adhere to halal standards are most likely to support growth in the GCC region. For better returns on stock, a growth-oriented investor should use a buy-and-hold approach for a long-term period to gain higher earnings once the companys share price has appreciated (Abramov, Radygin & Chernova 2015).

However, it is also noted that the low oil prices and rising utility costs are major economic developments that have affected the company negatively. These developments have led to increments in operation costs and a slowdown in revenue generation. Additionally, Agthia major markets are found in the Middle East. However, this region is prone to terrorist attacks and wars. The act of lawlessness in some regions has negatively affected the growth of the company. Thus, any potential investor needs to understand how changes in economic activities, government decisions, and other factors influence stock markets and companies overall performance.

Reference List

Abramov, A, Radygin, A & Chernova, M 2015, Long-term portfolio investments: New insight into return and risk, Russian Journal of Economics, vol. 1, no. 3, pp. 273293. Web.

Agthia Group 2013a, Annual report 2013, Agthia Group, Abu Dhabi, UAE.

Agthia Group 2013b, Consolidated financial statements for the year ended 31 December 2013, Agthia Group, Abu Dhabi, UAE.

Agthia Group 2014a, Agthia Group PJSC:

Business networking is one of the most essential marketing strategies in the world (ODonnell, 2013). Business networking provides mutual benefits for the companies involved. Moreover, the activity enables companies to reach marketing leads and referrals that would otherwise be difficult to find using conventional advertising techniques. In the recent past, most business networking methods involved trade shows, among others.

However, technology has brought new business networking techniques such as online business networking. Internet-based business networking has revolutionized marketing. The technique has reduced the cost of marketing by making the world a digital village. It is now easier for businesses to the network from their stations through information technology than before. Moreover, businesses, which are barred by distance, can scale the costs through internet-based networking. Besides, business networking has enhanced collaboration between companies across the globe. This paper will explore business-networking strategies that enhance collaboration (Cross, Martin, & Weiss, 2006).

Business networking

Business networking is an essential socio-economic business activity, which enables individuals to create and act upon business prospects. When business people create, utilize and recognize business prospects through socio-economic methods then they are said to be networking. Activities such as mentoring were considered as acts that promote professional success (Walker, 2006). Business networking involves social networking activities to improve business interests. Business networking helps organizations to strengthen existing business relationships as well as build new business relations.

These relationships are expected to create new business prospects for the organizations involved in business networking. In most cases, professional networking services are implemented using information technology to promote business networking. Business networking has been tested in various countries globally. It has been realized that business networking is one of the most cost-effective ways of creating new business ventures. Moreover, business networking is more vital to businesses than marketing. Business networking is considered cost-effective because it utilizes fewer resources. However, it should be noted that business networking requires a personal commitment. In essence, companies offer more personal commitment than resources in business networking. Examples of business networking activities across the world include guanxi, blat and old boy networks (MacCormack, Forbath, Brooks, & Kalaher, 2007).

It should be noted that the above-mentioned networks are informal. However, formal networks require regular meetings, which may be conducted after a given specified period. Moreover, these businesses exchange referrals. Formal business networking involves meetings outside the circles to achieve one-to-one business networks. In some cases, business networking is done over the internet or through the business community.

In this regard, internet-based connections have seen substantially rise because of its capacity to bring people together at reduced costs irrespective of distance. The internet has made the world a global village thereby connecting big corporations and small businesses alike without incurring huge costs. Most internet-based businesses provide marketing information to improve trade levels. This has enabled large corporations to succeed in businesses both locally and offshore. In essence, business networking provides value chains and networks. Face-to-face business networking techniques have been utilized for many decades.

These techniques have been utilized by most companies worldwide in the search for leads. However, advancement in online marketing has taken center stage for most parts of business networking due to its reduced costs. Nonetheless, most companies tend to utilize both techniques to reach more leads as is often witnessed in trade shows around the world (Walker, 2006).

Online business networking has also proven to be good because it tracks all the details of business campaigns thereby promoting accountability. Most businesses utilize business networking in their marketing strategies. This happens because business networking helps businesses involved to develop trust among them that enables the businesses to raise their business profiles and brands. In most cases, business networking involves suppliers and businesses because the two groups of businesses require a strong sense of trust. Companies hold business secrets for competitive advantage. In most instances, suppliers know these business secrets.

Business networking between businesses and suppliers helps both parties to keep each others business secrets for a competitive edge. Networked businesses are usually supportive of one another. Besides, these businesses are always open to one another (Walker, 2006). Nonetheless, these are hierarchical business networks, which are usually selective. Either way, business networking benefits all businesses involved by strengthening collaboration.

Current strategies for networking

Business networking incorporates the conceptualization and management of many networking strategies. These include electronic commerce (EC), supply chain management (SCM) and consumer relationship management (CRM), among others (Sexsmith & Angel, 2011). While electronic commerce emphasizes the shaping of transactions, consumer relationship management emphasizes the relationship process.

On the other hand, supply chain management emphasizes production and planning activities. It is worth noting that businesses that represent electronic commerce network strategy tend to concentrate on contracting and information processes. In contrast, businesses that show a supply chain management strategy tend to concentrate on information that relates to the transformation and flow of goods from raw materials to finished products.

On the other hand, businesses that portray customer CRM tend to concentrate on awareness, after-sales, evaluation, and settlements with customers. Most companies tend to utilize all three network strategies to maximize their efficiency in business. Nonetheless, more strategies and frameworks have also been developed to improve service delivery to customers (Walker, 2006).

Companies are increasingly using business-networking strategies to reach their marketing goals. Moreover, companies are embracing collaboration as a way of increasing opportunities. These organizations develop relationships with the community and other stakeholders to complement their core expertise. This theory concurs with Druckers argument that no single company can solve all the grave issues facing the world (Shuman, 2010).

This has forced organizations to form business networks with other organizations to reach more customers or to complement their expertise. Current strategies for networking include digital networks that have created opportunities for collaboration. Digital networks play an important role in changing the way companies and customers collaborate. Of great importance are enterprise technologies that have been vital in promoting the success of collaborative business networks (Shuman, 2010).

These enterprises facilitate the building and functionality of business networks. Digital networks are essential in creating ways through which customers can engage in value creation for companies. These networks are especially significant because they lower the cost of reaching numerous customers for interactive business network activities. Moreover, these network strategies have enabled companies to tap into the social dimensions of consumers through constant monitoring of information from virtual communities. Essentially, digital networks have improved collaboration (Gomez-Arias & Genin, 2009).

Some of the most current business strategies for the network include internet-based networking technologies that have transformed business networking and collaboration. Some of these strategies have been lifted by the invention of the Cisco collaboration framework, which saved Cisco about 700 million dollars with the added advantage of providing increased production. The framework provides a clear path for increasing and accelerating business value (CISCO, 2016).

This framework is essential in providing methods that can be utilized in improving the sharing of knowledge among customers and other stakeholders of the company. Moreover, the framework can also be utilized to take advantage of social networking technologies utilized in a business environment. In essence, this framework can improve the productivity of the business by transforming operations thereby giving the business a competitive edge. Therefore, effective collaboration can be achieved through the implementation of concerted business networking strategies that actively manage people and technology (Dewar, Keller, Lavoie, & Weiss, 2009).

Also, the strategies should have the capability of managing new organizational processes. Besides, the strategies should help in developing and managing workflows as well as capabilities for increased efficiency. In case the named benefits are not achieved, the business can be exposed to damages and uncontrolled processes that would make the business to make a downturn (Word, 2009).

In essence, business-networking strategies that enhance collaboration can move companies faster, help those companies make smart decisions and enable them to source knowledge from a deep well. Moreover, these strategies can enable businesses to operate efficiently across barriers that include distance and time. Todays organizations are considered as a collection of their capabilities, which assemble to achieve a specific goal.

These networks are required to collaborate to achieve their respective as well as collective objectives (Shuman, 2010). Current business networking strategies are aimed at creating value for a dynamic collaborative network. Networking strategies require collaborative value swaps. Moreover, customers need to be involved in every step of product or service creation. The rise in business networks has taken apart past value chains to promote collaborative business networks for creating value. In essence, current strategies emphasize the need to satisfy customer needs with a focus on increasing efficiency at lowered costs.

Effects of collaboration

Collaboration is vital to modern businesses because it is at the center of business processes. Several metrics used to measure the effectiveness of organizations have that collaboration ensures efficiency. These metrics include business process reengineering and process-based tools, among others. Although most companies have spent heavily on collaboration software, it is worth noting that business-networking strategies offer the best ways of enhancing collaboration. Companies should have the ability to chart and scrutinize value attributed to employee networks (Shuman, 2010).

By emphasizing on value created by these networks, companies can achieve effective collaboration. When companies quantify the benefits of collaboration as well as their costs, the value of networks can be assessed. Moreover, this can be achieved by mapping interactions to provide a base for value assessment. In a business world that changes continually, new networking strategies provide collaboration potential.

In this regard, companies should take advantage of the new networking strategies to improve collaboration. An effective collaborative network should be dynamic. Also, it should be fit for its purpose. Moreover, an effective collaborative network should have the capability of iterating its components. Besides, the network should iterate how its components link to each other. It should also have a way of linking its components in an innovative manner (Marland, Spasser, Khan, & Overby, 2014).

An effective collaborative network should have the ability to leverage existing resources in an organization with the benefit of creating new value. A collaborative network is considered as a collection of businesses, organizations, or persons that have means and capital required to realize specific goals. Collaborative networks require vibrant processes, inventiveness, and agility. This becomes important because every organization wants to satisfy the customers needs.

In this regard, these organizations would require various interactive connections to satisfy consumers needs. Consequently, one organization can be forced to participate in different business networks concurrently to address customers needs. In most cases, the organization becomes the choreographer to ascertain multiple concurrent collaborative networks. In the present business dimension, collaborative networks define businesses.

Businesses are nowadays not considered competitive because of their goods. Instead, businesses are considered competitive based on their abilities to create and sustain business networks that are collaborative and work across cultural boundaries. Business networks should be able to enhance collaboration by delivering value to their members and customers. Moreover, it should be noted that business networks are impossible to be bought; instead, businesses should be ready to build collaborative networks from scratch (Shuman, 2010).

It should also be noted that organizations cannot build networks but individuals can build networks. Therefore, only companies with the capability of pulling together and running a group of shared networks can be viable. In essence, corporations today need not only specialized expertise but also collaborative capability. While most chief executives have noted the need for collaborative networks in their organizations, however, they have failed to achieve it within their organizations. Most of these chief executives cited a lack of expertise in collaborating externally given its complexities.

This brings to focus the need to shift ways of thinking when focusing on business networking to help achieve collaborative networks (Shuman, 2010). Chief executives need to explore the benefits of collaborative networks as a function of the costs involved. Therefore, organizations should appraise collaborative network design principles to ensure that they are fit for their businesses before proceeding with the implementation of the same.

Benefits of the better business network

An effective business network is one that enhances collaboration. For the benefits of the business network to be achieved, all stakeholders should be taken aboard to improve its effectiveness. This ensures that employees embrace a business network strategy to be implemented. A good business network has numerous benefits to its implementers (Applegate, Austin, & Soule, 2009). It has been proven that companies with an effective collaborative network have a great chance of improving their business processes. Effective networks enable businesses to reach consumers that are beyond their grasps concerning market or geography.

This is made possible because the internet has unprecedented reach throughout the globe. The Internet gives firms vast information regardless of their locations. Consequently, this lowers the cost of researching customer needs. The company can address consumer needs after utilizing digital networks to evaluate their needs. Additionally, effective business networks offer good scalability to firms. This ensures that companies can extend their reach with no ramifications on the quality of information. Therefore, more customers can be reached without affecting the quality of collaboration.

For instance, digital networks offer rich interactions with numerous consumers in a consistent manner. Besides, effective networks offer persistent interaction between customers and companies. This is in contrast to past strategies, which offered episodic engagement. New technologies have made digital networks more persistent in engaging customers (Applegate, Austin, & Soule, 2009).

Effective business networks offer standardization that guarantees increased data and intelligence sharing for members of a collaborative business network. Moreover, effective business networks cushion businesses from security concerns which envelope most networking strategies. Better networks embrace openness, which promotes the sharing of data and intelligence for improved efficiency.

Business networks offer additional benefits to firms if they can aggregate and analyze data on behalf of the business (Boudreau & Lakhani, 2013). For instance, Beiersdorf has a network that integrates intelligence by analyzing its data from external data companies like Nielsen. This information helps the company to know its achievements across various variables. Moreover, organizations such as Hawaii State have also utilized the geospatial platform for purposes of collaboration, which have been important in improving its disaster response techniques. In all these cases, it is evident that effective networks are vital to organizations.

Networks also help companies to build insights from customer interactions, which enable the companies to adapt to the ever-changing business environment. The benefits of the network will be extensive and invisible. Every enterprise will be expected to incorporate a collaborative network to succeed in business. Networks are beneficial to companies regardless of specialization.

The business network has the benefit of achieving a collaborative advantage (Huxham & Vangen, 2007). Collaborative advantage inspires individuals to achieve new heights that would otherwise be impossible. The business network also helps in harnessing cultural diversity. This is essential in creating shared goals for maximum productivity. Moreover, when collaborative advantage is achieved, then employees get job satisfaction because their efforts are appreciated. In this regard, employees can monitor their career progress. Effectively, employees who enjoy collaborative advantage have an edge over others because they possess better problem-solving skills.

Business networks also offer career opportunities to members of the network system. The business network builds employee confidence in sharing information that can improve business productivity (Boudreau & Lakhani, 2013). Moreover, the business network provides a direct link between consumers and company personnel that gives the company an idea of consumer needs. If well managed, the business network is vital to business enterprises and organizations throughout the globe.

Effective business network

The 21st century has come with new demands from customers. Customers have reduced their spending power due to difficult economic times with increased demands. Consequently, firms face great pressure to offer increased value for their products and services to customers. Also, the firms face difficulties in improving efficiency even as they reduce the cost of production. It is also interesting to note that firms are forced to produce compelling goods or services. In essence, goods or services must be tailored to the customers needs. This has created the need for collaboration to help identify and address customer needs by networking with stakeholders such as suppliers, customers, and partners, among others. In this regard, companies are increasingly looking for ways of creating effective business networks that enhance collaboration (Boudreau & Lakhani, 2013).

An effective business network can only be achieved by incorporating employees and other stakeholders within and outside the organization. Also, a good collaborative network should be implemented to maximize the benefits of business networking for the organization. However, it should be noted that collaboration needs connectivity. Therefore, technological advances in connectivity have what it takes to enhance collaboration. Moreover, enhanced collaboration provides the platform for creating value-added goods or services (Boudreau & Lakhani, 2013).

Effective networks require that customers participate in creating, making as well as selling goods or services. This can only be achieved by improving connectivity between customers and organizations. An effective network promotes the creation of value. Business enterprises have evolved in the 21st century through collaborative business networks. Effective networks require individuals involved to embrace the sharing of information (Boudreau & Lakhani, 2013).

Resistive cultures to data sharing would greatly impede the sharing of business intelligence thereby lowering the level of openness between members of a collaborative network. In this regard, an effective business network should be open. This enables it to have the capability of connecting with ant technology or protocol thereby widening the range for amassing business data. Additionally, an effective business network should be comprehensive to incorporate many partners with the ability to collaborate on a global scale. Besides, the effective network should have the capability of doing multiple processes.

For instance, the Amazon system has the capability of not only finding partners but also purchasing from them as well as tracking the status of shipments, among others. Furthermore, an effective network should be intelligent (Boudreau & Lakhani, 2013). This enables the network to aggregate and analyze information successfully. This would enable the network to unlock business opportunities as well as anticipate setbacks.

Steps and Actions

Before implementing a collaborative network system, all employees should be made aware of the system. Employees should also understand the technology platform that has been used to develop a new collaboration strategy. Moreover, it is essential to note that all stakeholders comprehend the significance and expected outcomes or benefits of the system to be implemented. This is aimed at ensuring that all employees understand and embrace the collaboration strategy to be adopted. The management should also examine if the organizational culture promotes information sharing. In case, employees are encouraged to hoard information, then this has to be eradicated to pave way for collaborative networks. Once the business has been set on a collaborative spectrum, the following steps must be followed in setting up a collaborative business network system (DeLoatch, 2016).

Senior managers should be enlisted to help promote teamwork between various departments in readiness for collaborative system enterprise. Firstly, the organization should also create business rationales for the collaborative network program to be implemented. This could be achieved by instituting business objectives and identifying a collaborative network system that supports the objectives. Secondly, the organization should teach its employees how to make good use of the collaborative system to be rolled out. This involves two main processes, one that teaches employees the technical aspects of using the system and the beneficial facets of utilizing it. Thirdly, the organization should evaluate the adoption and usage of the system by taking the correct measurements. Finally, the organization should find ways of keeping the employees involved with the system (DeLoatch, 2016).

Network pitfalls

As much as business-networking offers value to both companies and consumers, it also has pitfalls. For instance, when companies extend their networks, this exposes the company to multiple potential risks in terms of their security. This pitfall has discouraged most executives from participating fully in implementing collaborative networks because they are afraid of the risks involved when collaboration stops.

Vital company secrets could be leaked out when fractures develop between two or more collaborating networks (Sacchetti, 2012). Another pitfall that companies engaged in collaborative networks face is lack of standardization. Standardization of software has been made difficult because companies are unwilling to swap convenience for customization. These companies do not comprehend the need for standardization for increased data through business networks.

Government regulations sometimes curb the level of openness in collaborative networks. This can act as a pitfall to business networks because government regulations would limit the level of openness between networks thereby limiting the amount of data shared. People tend to hesitate when it comes to sharing data outside their departments or even beyond the business. This happens because they fear losing control of their departments or businesses (Sacchetti, 2012). This can be a pitfall in the business network when it hinders information sharing in collaborative networks.

Another pitfall that concerns business network happens when companies consider collaboration as outsourcing. In this regard, some companies apply production outsourcing to collaboration to lower their production costs. These companies do not gain all the benefits of business networking when they take the outsourcing approach to collaboration. Instead, they realize failure in reaching their objectives because no value is created.

Networking pitfalls are disruptive. Firms or individuals should have prior plans made before they get into the business network. In case one is attending a business event, the individual should understand the scope of going to that event beforehand to avoid confusion. Individuals should focus on how they are going to stand out at the event. They should also consider the unique values they are going to add to the event.

In the case of an internet-based network, the business should asses its suitability in the forum. Another network pitfall that should be avoided is forgetting to analyze potential participants. Failing to analyze participants in the network would mean that an individual or business does not comprehend the network strategy to be pursued. Time is also of the essence, businesses or individuals participating in the business network should keep time. Arriving late can give a lasting impression on partners thereby hindering progress (Sacchetti, 2012).

How to maintain a network

For companies to maintain networks, several risk factors should be considered. For instance, security issues should be evaluated o assess trust levels for openness. In most cases, companies are advised to offer a data-centric approach to collaboration. Although this approach offers zero trusts as it is known, it ensures that all required information for collaboration is availed. Most companies seek business interests in collaborative networks, consequently, maintaining the network requires that required data be availed to members. An effective network can only be maintained when standardization is encouraged.

Standardization would offer increased data as well as intelligence sharing for the creation of value in business networks. Government regulations should be accommodative for the sharing of data to help maintain the business network. This is essential because, in some countries, the kind of data shared between companies or individuals is restricted. This can hamper the maintenance of a good network. Maintenance of a business network requires organizations to control cultural resistance to information sharing. As mentioned above, most companies have organizational cultures that hider sharing of information. Besides, people are usually hesitant when it comes to revealing information surrounding the workings of their departments. This culture should be controlled to enable openness for effective collaborative networks (Sacchetti, 2012).

For companies to maintain the business network, they need to separate collaboration from outsourcing. By mixing the two business processes, trust can be destroyed because the firm would view others as a means to cut costs. In the end, little will be achieved and the business would be forced back to the drawing board. Firms that maintain networks go beyond wage arbitrage. These firms collaborate with other partners in the search for knowledge and skills with emphasis on improving their top-line.

It should be noted that while outsourcing seeks to replicate products at a cheap cost, the collaboration seeks new value on the products. Companies should, therefore, recognize the difference between outsourcing and collaboration to avoid mistakes in implementing a collaboration enterprise. In essence, firms that need to implement collaboration effectively should explore their calculated role for collaboration. The strategic role of the network should be following the business strategy (Miller, Besser, & Malshe, 2007).

Also, the company should plan adequately for rolling out a collaborative network. The company should also invest extensively to develop collaborative potential. The strategic role in developing a collaborative network should be to increase product differentiation. This can be achieved by leveraging members superior competences. Moreover, the company should consider members contextual knowledge. This would enable the company to assess drivers of product differentiation namely cost, capability, and context.

Companies should also think strategically if they expect to maintain a business network. Partner selection is very important for managers to achieve competitive advantages of collaboration. This requires an assessment of partner merits along with multi-dimensional lenses. This helps the company to decide on areas to invest strategically in-network and the technology to be utilized in that case. Firms should also recognize the fact that collaboration can only be maintained if it is applied in the correct situation.

That is, the approach taken by the company should be suitable for the challenge. It should also be noted that a business network requires trust. However, trust cannot be built without personal commitment. Therefore, companies should have the right individuals with the capacity to offer a personal commitment to a good collaborative network. Maintain a business network is not easy; a lot of commitment must go into its operation and running (Lockett, Jack, & Larty, 2013).

How business network differs globally

Different countries have various government policies and regulations concerning data and intelligence sharing. This factor greatly affects the effectiveness of collaborative networks. For instance, restrictive countries hamper openness between networks thereby reducing the efficiency of collaboration. On the other hand, countries that allow the flow of data like the United States promote collaborative networks thereby promoting the creation of value. Business networks differ concerning technologies utilized in their implementation. For instance, most third world countries use traditional business network strategies (Tang, 2011).

Most organizations and businesses in low-income countries use trade shows to develop their business networks. This involves attending local trade shows to increase personal networks. However, the reduced cost of technology has also enabled some medium and large-scale businesses in low-income countries to focus on internet-based networks in parallel with face-to-face networks. Most of these companies are yet to enjoy the full benefits of the business network because they have fewer resources to cover the added cost. Also, consumers in low-income countries tend to focus on basic needs. This reduces the effectiveness of business networking in low-income countries (Tang, 2011).

Case studies from low-income states have shown that the business network is not as revolutionary as it is in middle income and high-income countries. However, this failure does not disapprove of the benefits of the business network. Even a small dimension, businesses in low-income countries develop because of skills gained from interactions and business networking. It should be noted that informal business network is predominant in developing

Introduction

Marketing communications are messages and related media used to communicate with the target market. It involves all the traditional forms of promotion including advertising, sales promotion, personal selling, publicity and public relations. It also includes all points of contact between the organization and other stakeholders. Jefkins, F. W., (1982).

Marketing communication originally focused on the conception and implementation of printed marketing security; but this has changed in recent times through research to include the use strategic tools of branding and marketing in order to ensure dependability of message delivery throughout an organization. Holm, O. (1998), The change from customer service to customer relations and the change from human resources to human solutions are as a result of revolution in marketing communication. In branding, opportunities to contact stakeholders are called brand touchpoints. Etzel, M.J., Walker, B.J., & Stanton, W.J. (2004).

The development of the international marketing plan covers the same dimensions as those of domestic planning process. Kotler, P. (2003),

Integrated marketing communication

Integrated Marketing Communication (IMC) is a planning process build up to ensure that all product contacts received by a customer of a product or service, are relevant to that person and the same over time.

Littler, D., Leverick, F. (2004) It can also be defined as a holistic approach to promote buying and selling in the digital economy which comprises both online and offline marketing channels

Online marketing channels incorporates e-marketing campaigns or programs, from search engine optimization (SEO), pay-per-click, affiliate, email, banner to most recent web related channels for webinar, blog, RSS, podcast, and Internet TV. On the other hand Offline marketing channels are customary print (newspaper, magazine), mail order, public relations, industry analyst relations billboard, radio, and television. Schultz, Don E. (1999),

Integrated Marketing Communication is more than the harmonization of a companys departing message between different media and the uniformity of the message throughout. It is a marketing plan that is aggressive and that captures and utilizes an extensive amount of customer information in setting and tracking marketing strategy.

Moreover very few organizations have been able to change over to IMC from stand alone marketing efforts. But those organizations which have transformed themselves towards this arrangement are enjoying the rewards in terms of higher returns from investment in marketing activities, increase in brands equity and increased market share. Examples include companies like McDonalds, Logitech International, and Hyatt Regency.

IMC is bringing in a new period in which marketers combine communication messages across all available media channels into an uninterrupted brand experience. Low, George S. (2000), As part of a successful integrated marketing strategy, IMC combines public relations, social media advertising, online, and other communications variables into one solid entity all sharing the same message.

The means to effective integration is the cohesiveness between various marketing messages, and the understanding that marketing is essentially a conversation between a company and its prospective customer. Preston, Christopher (2000), It is not one specific marketing campaign or press release; rather, how the blending and execution of such disciplines express a message synergistically, and at every possible customer touch point.

IMC includes the various tools such as advertising, public relations, personal selling, sales promotion, direct & database marketing, sponsorship, event marketing, social media marketing, and online marketing (search, banner advertising, affiliate, etc.) Pickton, D., Broderick, A. (2001),

International Advertising

The success of advertising is to a large extent dependent on the cultural and linguistic attitudes of the target population.Advertising often uses informal language which may have limited understanding across national precincts and is rarely capable of being translated effectively. Petty, R.E., Cacioppo, J.R., & Schumann, D. (1983). To be successful advertising must draw from and be part of culture sharing the language and values of the target audiences. Unfortunately global brands like coke have build up universal arguments based on the common imagery lifestyle concepts and heroes.

The company needs to choose a medium(s) that gets the desired message to the target audience where they are likely to be ready to receive it. Advertising has several benefits for the advertiser. First the advertiser has control over the message. The advert and its message are prepared to meet the specifications of the advertiser. Therefore the advertiser can channel its message to a huge number of potential consumers in a single hit, at a relatively low cost per head. Percy, L., Rossiter, J., Elliot, R. (2002),

Advertising is swift when compared to other elements of the marketing communications mix (for example personal selling, where the whole sales force would require to be briefed, recruited or even trained). Therefore an advertiser has the opportunity to communicate with all (or many of) its target audience concurrently.

Advertising can be a useful tool in the mix, and provides good exposure. It can produce top-of-mind awareness, and draw prospects close to begin a conversation with the company that can lead to sales. With IMC, advertising gives people contact to you through a web site or phone number listed in the advertisement. Unless advertising leads quantifiably to an interaction or dealings with the company, it is seen as wasteful by most enterprises today. Thus IMC can use advertising to entice someone to check out a website, for example, but not make the commitment of exposing themselves to a salesperson.

This has been the impediment of advertising in the past: the ad either must be so forceful that it drives a hot prospect to your door, or it simply creates awareness of you or your product. By reducing the risk of disclosure and commitment (from the prospects perspective), and placing value and personalization in each interaction, the prospect is enticed into a relationship and transaction. Advertising can be a useful signboard that leads to the company entrance and finally to the cash register. Aaker & Biel, (1993), & Wells, (2000)

Branding

Branding is the creation of identification of the company or product, what it stands for, and a constructive relationship in the targets consciousness and is a very important element in marketing. It should be consistent throughout the IMC promotions. Foltner, K., & Mansfield, B. (2006). Coca-Cola has a characteristic look (the cursive writing, the shape of their old bottle), and is identifiable even all over the world. This put together with their ad campaigns; they create a happy recognition everywhere. Soerensen, Ralph Z. & Wiechman, Ulrich E. (1975),

Excellent communication depends upon an exchange. Each party must offer something of value, as perceived by the other, and they must be willing to exchange. With IMC, part of the value the company needs to gain from your prospect or customer is information about them, and a way to continue communications beyond an initial exchange. When the right incentive is created the prospects will provide the desired information. Tracking the information, building the marketing effort to meet their need will most likely lead to a transcendental relationship. Aaker, D. A. & Joachimsthaler, E. (2000).

Online marketing

Today many customers are online and companies that embrace IMC use the suitable methods to reach and retain them. Integrated Internet marketing strategy is where the money is today  blogs, search marketing and optimization are driving qualified traffic to websites and getting responses from the millions of internet users on a daily basis. Coca-Cola utilizes online media for a range of purposes including building brand knowledge, motivating trial, and of course, express reactions. Porter, M.E. (2001),

In New Delhi the Coca-Colas brand campaign for the 2007 summer extended to the new media platforms including www.myenjoyzone.com. It is a one stop interactive, online destination for Coca-Cola consumers in India. The innovative internet platform has over 4 Lac+ registered users, in the age band of 19-24 yrs. The site is extremely contemporary in its appeal and supports multi user capabilities to address all the key youth passions- be it music, gaming, cricket and movies

The company web site should be available at all times, and should provide relevant information. Shepard, David (1999), Coca-Cola posted the scripts for its Vanilla Coke ads on its site, with an open offer to consumers that they can make their own commercial and win $10,000. Further, the winning commercial was to be posted on Cokes own website: the brand and brand experience will truly be interpreted by a customer.

Although this goes back to the half-century-old practice of asking consumers to write taglines, it also goes far beyond it. When a commercial is officially placed on the website it is a whole new level of customer involvement in how the brand communicates. At the end of the day, of course, Coke still decides what speaks for the brand  but it is doing so more than ever in the language of the consumer. Since the purpose of marketing is to generate revenue, increase market share, drive preference to purchase, and/or build brand awareness, marketers need to find ways to do this effectively; and embracing an integrated marketing strategy is the first step.Wimmer, R. D. & Domminick, J. R., (2003).

The concept of IMC involves two fundamental aspects; stability of positioning, message and tone across all different media the simultaneous achievement of several specific marketing goals.

Goal of Integrated Marketing Communication

Integrated Marketing Communication is a management concept that is intended to make all the fundamentals of marketing communication such as advertising, sales promotion, public relations work together as a united force, rather than allowing each to work in separation.

Thus the purpose of integrated marketing communication is to generate and maintain a single look message in all elements of a marketing campaign.

A successful integrated marketing communication plan will customize what is needed for the client based on time, budget and resources to reach target or goals.

Reasons for the growth of IMC

There have been several changes in the advertising and media industry that have resulted in IMC becoming a most important strategy for most advertisers

  • Shift from media advertising to several forms of communication (including promotions, product placements, mailers&)
  • Shift from mass media to more specialized media, which are cantered on exact target audiences.
  • The shift from a market dominated by manufacturer to a one that is dominated by the retailer. This shows the market control has gone into the hands of the Consumer.
  • The shift from a general-focus advertising and marketing to data-based marketing.
  • Shift from little agency responsibility to greater agency accountability. Agencies nowadays play a larger task in advertising than ever before.
  • The shift from traditional compensation to performance-based compensation. This motivates people to do better because they are rewarded for the increase in sales or benefits they cause to the company.
  • Shift from inadequate Internet access to widespread Internet accessibility. This means that people have access to what they want 24/7 and that the advertisers can also target different people 25 hours a day. Webster, Frederick E., Jr. (1998),

Benefits of IMC

Although a lot of effort is needed in Integrated Marketing Communications it also brings many benefits. It can generate competitive advantage, increase sales and profits, while saving money, time and strain. Schultz, Don E., (1993),

IMC covers communications around customers and facilitates them move through the different stages of the buying process. The organization concurrently consolidates its image; build ups a dialogue and fosters its relationship with customers.

This Relationship Marketing bolsters an attachment of loyalty with customers which can guard them from the expected assault of competition. The ability to keep a customer for life is an authoritative competitive advantage.

IMC also boosts profits through increased effectiveness. At its most central level, an integrated message has more impact than disorganized innumerable number of messages. In a hectic world, a consistent, consolidated and crystal clear message has a better probability of cutting through the noise of over five hundred commercial messages which barrage customers each and every day.

On another note primary research proposes that images shared in advertising and direct mail improves both advertising awareness and mail shot replies. So IMC can boost sales by stretching messages across several communications tools to create more opportunities for customers to become aware, stimulated, and eventually, to make a purchase

Cautiously connected messages also assist buyers by giving instant reminders, renewed information and unique offers which, when presented in a planned progression, help them move comfortably through the stages of their buying process& and this reduces their misery of choice in a multifaceted and hectic world.

IMC also makes messages more reliable and therefore more realistic. This diminishes the risk in the mind of the buyer which, in turn, cuts down the search process and helps to dictate the effect of brand evaluations.

Un-integrated communications drive disjointed messages which weaken the impact of the message. This may also confound, discourage and provoke nervousness in customers. On the other hand, integrated communications present a comforting sense of order. Phelps, Joeseph, T. E. Harris, and E. Johnson (1996),

Reliable descriptions and appropriate, helpful, messages help cultivate a long term association with customers. In this case customer databases can identify exactly which customers require what information when& and during their whole buying life.

Lastly, IMC saves money as it abolishes repetition in areas such as graphics and photography since they can be distributed and used in say, advertising, demonstrations and sales literature. Agency bills are trimmed down by using a single agency for all contacts and in case there are several agencies, time is saved when meetings bring all the agencies together  for seminars, innovative sessions, tactical or strategic planning. This eases workload and consequently stress levels  one of the many benefits of IMC.

Barriers to IMC

Notwithstanding its many advantages, Integrated Marketing Communications, or IMC, has many difficulties.

Besides the usual resistance to change and the special difficulty of communicating with an extensive array of target audiences, there are many other impediments which restrict IMC. These include: Functional Silos; subdued Creativity; Time Scale disagreements and a lack of Management experience. Kitchen, Philip J. and Don. E. Schultz (1999),

Take functional silos. Unbending organizational structures are infested with managers who protect both their budgets and their power support.

Sorrowfully, some organizational structures detach communications, data, and even managers from one another. For instance the PR department frequently doesnt report to marketing. The sales force hardly ever meets the advertising or sales promotion people and so on. Envisage what can occur when sales reps are not told about a new promotional offer!

And all of this can be provoked by turf wars or internal supremacy battles where definite managers oppose having some of their decisions (and budgets) established or even manipulated by someone from another department.

The two most difficult questions are what should a truly integrated marketing department look like? And how will it affect creativity?

It ought not matter whose original idea it is, but frequently, it does. An advertising agency may not be so passionate about developing a creative idea produced by, say, a PR or a direct marketing consultant.

IMC can limit creativity. No more wild and crazy sales promotions if they do not fit into the largely marketing communications strategy. The joy of widespread creativity may be stifled, but the inventive challenge may be greater and eventually more satisfying when operating within a rigid, integrated, creative brief.

Integrated Marketing Plan

A victorious integrated marketing communication plan will adapt what is needed for the customer according to time, budget and resources to arrive at target or goals. Small business can establish an integrated marketing communication plan on a small budget using a website, email and SEO. Large Corporation can create an integrated marketing communication plan on a large budget using print, mail order, radio, TV plus many other online ad campaigns.

The three stages of an integrated plan

It is not rational to imagine a multichannel cataloguer to go from customary segmentation to a fully integrated contact strategy suddenly. There is need to mitigate into an integrated marketing plan though a three-stage approach: simple segmentation, advanced segmentation, and marketing mix modelling.

Stage one: simple segmentation

This presumes that you can add a simple level of segmentation to have or not to have an e-mail address on file for the customer to the existing methodology. The matching segmentation thats always worked stays integral, with one added crease. As a substitute of launching e-mail campaigns to tens or hundreds of thousands of customers under one single campaign code or a handful of preview codes, the same segmentation practices for your e-mails are used just as in your print mailings, and can appraise response down to the segment level. Peltier, James W. and John A. Schibrowsky (1997),

When the period is complete, response is not measured on profitability solely for the e-mail promotion or the catalogue campaign but relatively for the entire communication string  all e-mails, catalogs, postcards, and everything else that added to those orders. Schultz, Don E. and Scott Bailey (Forthcoming, 2003), This becomes less important whether X e-mail or Y catalogue trooped the sale; the issue is put on two more-essential questions: How much was used up to get each order, and how cost-effective was each order when it came in? All correlated costs for a segment are reflected one against all associated sales.

No longer are e-mail campaigns computed separately against catalogue mailings and decisions made, perhaps incorrectly, that the catalogue is no longer necessary, because e-mail is working so well. Instead a truer representation of the whole performance is assessed based on the absolute set of links to a customer group. Shannon, C.E., Weaver, W. (1949),

Stage two: advanced segmentation

Applying an added progressed segmentation model to your multichannel business means moving from traditional RFM, frequency of purchases, and monetary spending levels dictate the classification of customers, to a plan where RFM is improved, particularly by channel. While RFM variables alone may decide how profound and how recurrent a file is mailed, CRFM (C representing purchase channel) looks initially at channel to verify the sequence and kind of communications (catalogs, e-mails, postcards, etc.). Ludlow; F. Panton. (1992)

There are two questions to tackle for each customer regarding purchase channel: through which channel did he make his first purchase, and through which channel did he make his most recent purchase? Then inquire if the first acquisition was compelled by a mailed catalogue or an online marketing endeavour. If you recognize that the customer was mailed a catalogue as a prospect but answered through the Web, its apparent that even though the customer is an online buyer, he still reacts positively to catalogue mailings.

If the same customer is a multi-user and has at all times countered through the Web, the temptation might be not to mail him again. This could be an oversight shunned by evaluating what drove that first channel purchase. Peppers, Don (2002),

If a customer is a catalogue responder or has responded to a catalogue mailing by phone or mail at any time during his life on your file, the mailings are taking part in his responsiveness, so he should be put on a communication plan that incorporates both e-mail and catalogue mailings. Clients obtained through online marketing efforts who have only ever responded by way of the Web may very well be candidates for far fewer catalogue mailings without a significant drop in performance. McArthur, D N., & Griffin, T., (1997).

Stage three: marketing mix modelling

Marketing mix modelling constructs on the notions of media blend modelling that are used by advertisers to establish the most successful frequency and fighting of space, television, radio, mailings, and other media. Wells et al., (2000) & Payne and Holt, (2001) By factoring for when communications are placed into the market and how reply comes in and goes out accordingly, you can take a more mathematical approach to projecting reaction.

A multivariate approach, marketing blend modelling takes into account the typical RFM variables along with first and most recent purchase channel, purchase frequency by channel, e-mail type by response (for instance, if a customer responds to promotional e-mail but doesnt buy online otherwise), monetary by channel (cumulative and average), and more. Working with a qualified modelling company or a database co-op to determine the right channel mix can add a significant level of difficulty to any direct marketers contact strategy. Kitchen, P J., (1999).

Test and measure

The majority multichannel marketers will discover themselves capable of executing stages one and two with relative simplicity. Still, theres no magical answer that says, Mailing eight times and e-mailing 46 times is the perfect mix. The answer is to investigate the various contact strategies against one another with apparent goals and control measurements. Young, Charles E., (2000) By means of sample sizes from which dependable results can be acquired, generate hold-out and frequency tests with a variety of combinations of catalogue and e-mail campaigns. The objective should be to discover the marketing mix that generates the highest level of sales and the lowest cost and maximum profit. In other words, the goal is to make the most of sales and ROI concurrently.

By generating a unique, relevant, and enduring brand position and developing a solid understanding of your customers purchasing behaviours, you give yourself perhaps the most important tool of all: a fighting chance. The function of the catalogue may be shifting, but the prospect for the multichannel merchant is as strong as ever when integrated with brand and executed through an absolute appreciation of the information. Gronstedt, A., & Thorson, E., (1996).

Budget Allocation

The integrated marketing communications plan must have a target budget and resources assigned to each element of the plan. Depending on the size of the budget, their might be the need to make trade-offs between methods to achieve the desired goals. In addition, there is need to have the internal or external resources aligned to carry out the plan. Schultz, D.E., Tannenbaum, S.I., & Lauterborn, R.F. (1996).

A good marketing communications plan can take the company marketing efforts to the next level. Test what works and feed the information back into the plan.

Conclusion

Advertising and other forms of promotion are an important part of the marketing process in many organizations. Over the years, the amount of money spent on advertising, Sales promotion, direct marketing, and other forms of marketing communication has risen enormously, across the nations.

To comprehend the role of advertising and promotion in a marketing program, one must understand the role and function of marketing in an organization. The fundamental mission of marketing is to combine the four controllable elements known as the marketing mix, into an all-inclusive program that makes exchange with a target market possible. The elements of the marketing mix are the product or service, price, place (distribution), and promotion.

For several years, the promotional function in most companies was dominated by mass-media advertising. However, more and more companies are recognizing the importance of integrated marketing communications, coordinating the various marketing and promotional elements to achieve more resourceful and successful communication programs.

There are a number of issues that have inspired marketers to move toward IMC as well as ad agencies and other promotional facilitators. Reasons for the growing importance of the integrated marketing communications sensitivity include a speedily changing environment with reverence to consumers, technology, and media. The IMC progress is also being driven by transformations in the ways companies market their products and services. A reallocation in marketing dollars from advertising to sales promotion, the rapid growth and development of database marketing, and the fragmentation of media markets are among the key changes taking place.

Promotion plays a vital role in marketing communication. It is accomplished through a promotional mix that includes advertising, personal selling, publicity/public relations, sales promotion, direct marketing, and interactive/Internet marketing. The intrinsic advantages and disadvantages of each of these promotional-mix elements influence the functions they play in the general marketing program in developing the IMC programs. The marketer must settle on which tools to use and how to mingle them to achieve the organizations marketing and communication objectives. Promotional management entails coordinating the promotional-mix elements to develop an integrated program of effective marketing communication.

The execution of integrated marketing is indispensable in todays market place. Consumers are presented with tonnes of information from thousands of different advertisers each day. It has developed into a custom to discard messages that have no constructive appeal to a particular need or attention. On the other hand, marketers should ensure that they are doing everything feasible to reach these consumers at a time when they are interested in value proposition. This requires that the message has to be where the consumers are looking all the time.

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Abstract

This paper will discuss management consultancy practices and will explore the benefits that SMEs will obtain from adopting management consultancy practices. Moreover, it will review various definitions of SMEs and compares management consultancy practices employed in Sri-Lankan SMEs and UAE. There are two types of research methodology employed in this paper. These include qualitative and quantitative methods. However, more emphasis will be put on qualitative research. The method of data collection employed in this research will be one to one interviews that will be conducted on selected five UAE small and medium-sized enterprises (SMEs). The conclusions that will be drawn from the research will offer some insight on whether SMEs should adopt management consultancy practices or not.

Introduction

Presently, the world of business is facing constant transformations and challenges. For small micro-enterprises to thrive in a more complicated environment, they will need to engage consultancy services in their businesses to help improve their performance. In every business, there comes a time when the management will require to expeditiously seek external expertise due to limited resources or when the available resources are being utilized maximally. The small micro-enterprises are faced with difficulties in trying to decide whether to hire consultants or not. This is largely due to the fact that they may not be sure of the costs involved, are not familiar with the business, they dont understand how to go about it or they are not certain whether they will get time to ensure that the work is done or not. Small businesses will need to hire consultants so as to get in touch with specific expertise that cannot be accessed within the organization. Qualified consultants have various skills, individual attributes as well as knowledge which they can pass to the regular employees. Every small business has special needs and necessities. However, there are several advantages that a business advisor can inject into a small business regardless of the sector or industry.

This paper will discuss management consultancy practices and also explore the benefits that SMEs will get from adopting management consultancy practices. Moreover, it will also review various definitions of SMEs and compares management consultancy practices employed among SMEs in Sri-Lanka and UAE. There are two types of research methodology employed in this paper. These include qualitative and quantitative methods. However, more emphasis will be put on qualitative research. The method of data collection employed in this research will be one to one interviews.

Definition of SMEs

Analoui and Karami (2003, p.24) confirm that there are several definitions of Small and Medium sized Enterprises (SMEs) due to a wide range of businesses that fall under this portfolio. The best definition of an undersized firm is still the one employed by the Bolton commission in its report on micro firms written in the year 1971. This report stated that an undersized firm is an autonomous business that is run by its owner (s) and possess a little market share. This report additionally adopted several statistical descriptions and approved that size is related to the sector. This implies that a firm of a specified size may be small in connection to a specific sector whereby the market is well established and there are several competitors; while a firm of corresponding size may be termed as large in different sectors with smaller number of competitors or fewer firms inside it. Moreover, an SME can be defined as a venture that has completed trade registration or corporate registration in agreement with law requirements and in conformity with the following criteria:

  • In the mining, construction, quarrying and manufacturing industries, an SME can be a paid-in investment of 2.42 million US dollars or a smaller amount.
  • In the fisheries, forestry and agriculture, gas, electricity and water, commercial, warehousing, communications and transportation, finance, real estate, and insurance, commercial and industrial services or personal or social services industries; a sales income of 3.03 million US dollars or a small amount in the previous year for an organization may qualify it for an SME.

The key factors that determine if a company is an SME include the annual revenue or the balance sheet and the number of staff. In the event that an organization has employees below two hundred and fifty, then it can be categorized as an SME. In addition, the yearly revenue for such an organization should be approximately 50 million Euros. it is also worth noting that there are business organizations that still employ less than 50 workers and as such, they may not be categorized as SMEs. They are rater referred to as small scale businesses. Hence, SMEs have a particular classification since they are not necessarily small businesses.

A firm is termed to be micro if it has employed less than ten employees and realizes annual income of two million Euros or less or a balance sheet sum of the same amount. In reference to the kind of business the government organizations are providing leadership, an SME is defined in relation to the number of regular staff as described below:

  • In the construction, quarrying, manufacturing and mining industries, the number of constant employees must be lower than two hundred.
  • Ventures with lower than one hundred constant employees are grouped as SMEs in the following industries: leasing and real estate industries, forestry, agriculture, animal husbandry and fisheries industries, gas, electricity and water industries; retailing and wholesaling industries; restaurant and hotel operation industries; insurance and finance industries; communications, warehousing and transportation industries; technical, professional and scientific industries; medical, social welfare and healthcare service industries; leisure, cultural and sporting service industries; educational service industries in addition to extra service industries. Small micro-enterprises also refer to businesses with less than five people who are working on regular basis.

The European Commission defines SMEs as small firms with maximum of ten employees who are employed on full-time basis. Additionally, the firm must realize annual revenue of a maximum of two million Euros or have a balance sheet of the same amount. The European commission also defines SMEs as micro firms with maximum of fifty employees who are employed on full-time basis and with a balance sheet of up to ten million Euros or annual revenue of the same amount (Johnston & Beaton 1998, p.200).

SME family business Vs non family business

There is no clear definition of what comprises a family business. However, a business with one family associate who is actively engaged in the business is considered to be non-family business, while a business with more than one family associate who is actively engaged in the business is perceived to be a family business.

Jones and Haven-tang (2005, p.74) emphasize that governance and competency are issues to be put into consideration for a family business to excel and for a plan for succession of management and leadership to continue. There is need for family businesses to constantly build up competencies and attract managers who possess managerial competencies for the businesses to excel because starting and managing a SME may face several challenges just like running a big firm. Individuals who own small businesses lack managerial capabilities which may lead to business failure. Studies demonstrate that family businesses are more likely to depend on networking rather than relying on formal education or on the job experiences in establishing successors. Business performance may also decline when family ventures concentrate on family visions of the business instead of focusing on maximizing profits. Family businesses are usually concerned with improving the lives of family members across generations (Poutziouris 2006, p.80). Therefore, the vision of family business differs with that of non-family business. In most cases, the aim of family business is to employ members of a family in the administration team and guarantee independent possession of the business.

Comparing SMEs and big firms

Harvie and Lee (2002, p.241) argue that there are operational disparities between large and small companies. Big and small firms vary on how they practice quality enhancement. These differences include structures, procedures of developing policies, and use of resources. The major distinguishing element of big firms is the presence of hierarchy with many levels of management. Big firms have high rank of standardization, specialization and formalization which small firms lack. SMEs are more advanced in developing improvement ideas due to their low extent of specialization. Large firms are bureaucratic while SMEs are mostly organic. The chain of arriving at decisions in large firms is extended as compared to small firms. It is evidenced that smaller firms are moderately and completely less likely to offer external training to all levels of employees as compared to larger firms.

Management consultancy practices and origins

Management consulting refers to the process of assisting organizations to enhance their performance mainly through studying the problems that are currently facing the business and coming up with enhancement plans. Businesses may rely on management consultancy services for several reasons. These encompass access to special skills offered by consultants and getting external (and most probably objective) opinion. Due to the fact that consulting firms are exposed to and linked with several organizations, they are informed of the best practices in the industry. However, the transferability of these practices from one business to another could be restricted by the nature of situation at hand. In addition, consultancies can offer assistance in transforming the management of an organization, implementing of new technology, establishing training skills, developing policies, or operational enhancement services. Management professionals frequently bring their personal proprietary frameworks or methodologies to direct detection of problems besides serving as the foundation for proposing more efficient methods of doing job tasks (Czerniawska & May 2004, p.211).

The origin of management consulting is attributable to the emergent of management as a special area of study. Arthur D. Little was the earliest firm to be established in the field of management consulting. This firm was established way back in 1886 by MIT don and was incorporated in the year 1909. Although this firm initially specialized in scientific research, it later developed into a universal management consultancy firm. Later on, Booz Hamilton was incepted before the start of 1915.This was the first consultancy firm to provide services to both government and industry customers.

The Glass-Steagall banking act paved way for various business ideas that were attached to offering consultancy services. Although consultancy services had been in place for long even before the start of 1930s, lack of well defined rules and regulations often led to conflicts when conducting the business. Since 1950s and beyond, consultancies expanded their businesses in America, Europe, South America and Asia. After the Second World War, several fresh firms in management consulting were established. This brought a scrupulous systematic move towards the study of strategy and management. In addition, several firms that were already running consultancy services during the1960s and 1970s were mainly motivated by knowledge obtained from various centers of excellence. Some of these centers included the Harvard school of business and Mckinsey. These learning centers were indeed instrumental in offering guided and practical knowledge on various consultancy related fields such as Strategic administration. Several other professional scholars also acted as impetus towards knowledge acquisition in the field of consultancy bearing in mind that they were also part and parcel of most consulting teams.

Sadler (2001, p.400) confirms that the industry marked significant development in the 1980s through 1990s by obtaining substantial significance in connection to state GDP. It is worth noting that firms which had engaged themselves in consultancy were quite small during the 1980s. However, there were about 30 firms that were in this business during the 1990s. This number had risen from merely five firms. At the start of 1980s, the industry experienced tremendous growth that was facilitated by the demand for organization and strategy consultancies. It is worth noting that information technology was largely responsible for myriads of development that were witnessed during the 1990s. In mid 1980s, the large accounting firms penetrated the information technology consulting sector.

Ernst & Young, PWC, Deloitte Touché Tohmatsu and KPMG were classified as the large four bookkeeping firms. These firms frequently provided advice plus their regular services. However, towards the end of 1980s and onwards, consulting services became more crucial in connection to the advancement in the market of auditing and accounting. Towards the mid 1990s, the above firms had developed more than the service providers interested on organization and corporate strategy. The consulting business went on as usual notwithstanding the case scenario whereby some of the well established firms divided their lines of service. The latter division was largely caused by Enron scandals. The situation was worsened when Arthur Andersen declined in terms of performance. The industry declined in the year 2001 prior to improving the previous year with a present inclination towards a clearer division of executive consulting firms.

Management consulting practices of SMEs in Sri-Lanka

The SMEs in Sri-Lanka contribute significantly towards the economy of this country by creating more employment opportunities, bridging the gap between sector growth inequalities besides income generation, modernization and technological improvement. Research indicates that Sri-Lankan SMEs add up to eighty- ninety percent of the total businesses and contribute twenty percent of the industry value. SMEs account for seventy percent of employment created in the trade sector. However, this sector is currently facing many challenges that are limiting faster development; especially difficulties in accessing finances, expertise development and entrepreneurship, market significance and enhancing competitiveness. For SMEs to remain competitive and strive for growth, they need to employ consultancy services. Management consultancy practices will help SMEs to formulate good policies that will enhance their effectiveness and efficiency. It is crucial for Sri-Lankan SMEs to consider the strategies implemented by adjacent regions, especially in Eastern parts of Asia. This is because SMEs in East Asia share similar constraints with Sri-Lankan SMEs that hamper their development (Annandale 2005, p.100).

There is an urgent need for SMEs in Sri-Lanka to seek management consultancy services which include business planning and strategy. This is because advice and support for SMEs in medium and low income states are faced with global challenges. There are a number of consultancy firms in Sri-Lanka that provides services to SMEs for instance, the Enterprise Development. This firm provides services particularly in remote areas. The objective of Enterprise development is to establish mentoring and training program that are sustainable. This program aims to develop and spread out several skilled business consultants who have the potential to deliver a wide range of services tailored to meet the needs of small micro enterprises in Sri-Lanka.

The business advisers in Sri-Lanka provides mentoring and on the job training to the local employees and trainees. They also help SMEs to come up with rational business evaluation plans. They moreover offer direct mentoring to help customers to develop essential skills such as marketing and financial reporting.

Annandale (2005,p.100) confirms that though a number of special credit schemes for small micro-enterprises have been initiated in Sri-Lanka, amid the policies instigated to enhance access to money, the preparation of business plan seems to be slow and thus, there is need for concern. At present, the Sri-Lankan small micro- enterprise toolkit offers some data on its website concerning the design of, and the motivation for, coming up with a business plan that is successful. For this to be achieved, management consultancy practices for SMEs in Sri-Lanka need to be improved to increase the efficiency and effectiveness of this sector.

Small micro- enterprises are more innovative and development oriented, thus they need more attention and joint support. Additionally, these firms have improved prospects for achievement because it is easy to manage their finances and administration. Moreover, SMEs would be more approachable to policy aid and facilitation. Lastly, if small micro-enterprises are provided with initial help and facilitation, they would have improved success.

Management consulting practices of SMEs in UAE

The SMEs sector in United Arab Emirates creates employment opportunities for more than fifty percent of UAE labor force. Small micro enterprises that employ below two hundred and fifty workers, conversely, lack appropriate business and marketing power to remain competitive. There are a number of consultancy firms in UAE that help SMEs to improve their businesses. For instance, the Flagship is the chief marketing and management firm in Dubai and is instrumental in this area. This firm helps SMEs to improve their marketing expertise by highlighting new global practices in addition to tailoring international practices for the domestic market that is increasing competence and outcome oriented. The SMEs in UAE need to engage consultants to get solutions and techniques that would allow them to get a bigger market share and establish better connections with their customers through effective management and marketing techniques (Biggs 2010, p.200). Marketing plays a significant role in the growth of SMEs. However, the need for advertising events to maintain and develop these organizations in a competitive corporate environment was never evident in the UAE.

Internal vs. external consultants

External consultants are people who help business organizations to come up with business strategies, lay out plans to reduce costs and create business plans, in addition to solving wide range of intricate issues. On the other hand, an internal consultant can be described as any group or individual that provides services to internal customers in a consultative ability. Secondly, external consultants provide business solutions which range from business plan to reorganizing operation procedures. While internal consultants provide services to internal customers in a consultative ability which include bringing a specialized administration advisory skill to enhance the base line performance of the organization or company: working within the corporate structure to resolve business problems and implement remedies in fields that encompass organizational efficiency or growth, improvement of the processes, or strategic scheduling: playing the role of a facilitator, change representative, educator, or instructor within your organization: aiding internal customers in a joint service group business, for instance finance; information technology; human resources; and quality management.

Moreover, external consultants usually take duration to comprehend the organizational culture, assess the situation, and come up with the best solution while, on the other hand, internal consultants are familiar with the organizational culture and its easier for them to solve problems (Lukas 1998, p.78). External advisors could be valuable in developing strategies and suggesting the way out. However, these advisors mostly lack an indulgent of the customer culture and more significantly how to incorporate change administration in the existing society as compared to internal consultants. The external advisors could be a valuable resource when an organization wants an objective scrutiny of skill or condition in a particular field while, internal advisors are employed across the organization from business planning/ corporate development to diverse human resources and additional service or support roles.

Lukas (1998, p.78) argues that despite the differences between external and internal consultants there exist similarities in the roles they play in business. These include: advisory firms mostly share a general move towards delivery entailing: understanding the condition and difficulty or opening that need to be tackled; developing the company case to sustain the general plan: defining the planned framework, launching baseline and recognizing and prioritizing openings: planning and building the key and creating execution plans: building up detailed execution plans, deliver payback and oversee optimization process.

Benefits of consultancy services

Indentifying of gaps and challenges within the businesses

From a careful review of literature, studies have shown that consultancy services play a significant role in ensuring victory and survival for small businesses (Sturdy et al 2009, p. 3). Notably, consultancy services help business owners to identify the gaps that exist within the numerous sections of their business. For this case, it is arguable that consultancy services also help small entrepreneurs to fill the gaps in their businesses in order to meet the interests of their clients. Needless to say, Smallbone and Welter (2001, p. 1 2) comprehend that most of the SMEs fail due to lack of know-how in certain areas, a factor that is attributed to limited skills and unfavorable organizational challenges. According to McKenna (2006, p. 23), it is evident that consultancy services help to improve the overall management of small businesses. This has to do with matters of rendering primary services to small scale consumers. In line with this, one can therefore, infer that such services are the core tools of marketing products and services provided by small and medium enterprises (Smallbone & Welter 2001, p. 17).

I agree with McKennas (2006, p. 72) arguments that SMEs should understand the market trends better in order to seize infrequent opportunities. Additionally, it is certain that consultants might know the market better than business people. For this reason, they help them to obtain a fresh look on the existing situation from a business point of view. Consequently, this helps SMEs to be able to identify goods and services that are on high demand at a given season. In addition to this, they help entrepreneurs to get a direction for running their businesses (Andriejute & Snieska 2004, p. 14). For this reason, consultants aid entrepreneurs to develop an organized thinking through which they are able to utilize their assets to meet the sales targets in a given time frame (Sturdy et al 2009, p. 5).

Aids the businesses with marketing skills

Shaw, Shaw and Turley (2000 p. 81) argue that in as much as a small and medium business would desire to grow, marketing is not an easy task. This is due the fact that it needs sophisticated strategies to allow business operators to reach out a large number of people within a short period of time. Sturdy et al (2009, p. 3) note that in order to be competent marketers, SME operators should have the skills to convince customers about the goods or services rendered in order to make their business competitive. For this reason, every small and medium entrepreneur should be convinced that consultancy services will help to boost and add value to their products in the market (Smallbone & Welter 2001, p. 43).

In connection to the above, empirical surveys have revealed that approximately 35% of SMEs collapse due to failure to examine the feasibility of their business ideas before implementing them (McKenna 2006, p. 34). Therefore, it has been proved that consultancy services benefit SMEs by helping them to examine the feasibility and viability of the businesses ideas before they implement them. At this juncture, feasibility test has to do with matters related to examining the technological, personal, legal, environmental, market and financial viability of a business (Andriejute & Snieska 2004, p. 13).That notwithstanding, economic scholars are quite unanimous that consultancy services help SMEs to conduct and carry out financial review, a factor that prevents premature failure of their businesses. Research has revealed that more than 50% of small and medium-sized entrepreneurs often give up running their business after realizing that they are not feasible financially (McKenna 2006, p. 42). Moreover, they lack better strategies of financing their businesses. For this reason, it is argued that consultants play a significant role in not just examining feasibility of a business but also on effective management of such businesses (Shaw, Shaw & Turley 2000 p. 81).

Impacts businesses with specific skills

According to Sturdy, et al (2009, p. 4), obtaining specific skills is one of the benefits that is derived from consultancy services. It is imperative to note that there are some skills that are non-existent or scarce in businesses. Therefore, hiring consultancy services acts as an eye opener for entrepreneurs to embrace the benefits of such skills. Notably, as the business expands it reaches a point where an entrepreneur and his management team need to consider external expertise in order to expand it fully (Andriejute & Snieska 2004, p. 14). Succinctly, this has to do with consideration of expertise such as skills, knowledge and resources that are limited or partially utilized, a factor that creates an opportunity for further investment. It is important to note that though some business has what it takes to grow in terms of skills and resources, there is need to look for better options within the external environment (Sturdy, et al 2009, p. 6).

Provide entrepreneurs with an independent view

In addition, empirical studies have revealed that consultancy services help small entrepreneurs to obtain independent view from consultants (Sturdy et al 2009, p. 11). It is essential to consider the fact that most of the consultants are non-members of the business and hence they bring in their objective and independent view related to the impending problems facing the business (McKenna 2006, p. 52). In connection to this, research has revealed that most businesses face challenges due to poor strategies of making decisions. In this case, difference in opinions causes chaos and conflicts, a factor that is likely to affect the growth and management of a business (Shaw, Shaw & Turley 2000 p. 83). To avoid such cases, consultants act as the best alternative to help the business to make decision on crucial matters. Note that consultants are never involved in internal politics and for this reason; they are likely to provide opinions and views that are unbiased (Andriejute & Snieska 2004, p. 15). In line with this, consultancy services assist entrepreneurs to obtain external perspectives and this encourages imagination and creativity.

Acts as a drive for change

McKenna (2006, p. 60) asserts that there comes a time when a business requires unique drive in order to change. In line with this, this author analyzes that comprehensive change in SMEs is crucial since it brings about growth and development. Nevertheless, management of change in a business is crucial and highly valuable in order to monitor the performance of a business. According to Smallbone and Welter (2001, p. 45), change management in business is crucial and its one of the most useful services rendered by consultants. In this case, studies have shown that 70% of the SMEs have benefited from consultancy services where they are able to structure and employ coherent approaches in realizing growth and development (Sturdy et al 2009, p. 14).

In order to experience such changes, there is need to conduct an assessment in the business in order to come up with recommendations related to areas that deserve changes. In this case, consultants are the best people to use while conducting such assessments. This is due to the fact that they are neutral and hence they will make recommendations that are not subjective. Note that whenever, employees happen to conduct such assessments, they are likely to make recommendations that will favor them in their areas of work. Moreover, such recommendations might not even be beneficial to the business. In this case, consultants will not only make recommendations just for the sake if improving the organizational structure but they will also ensure that the changes help to maximize productivity. McKenna (2006, p. 61) refers to consultancy services as catalysts for change. This is due to the fact that they also advise small scale entrepreneurs on how to implement recommended changes.

Acts as a tool for identification, classification and solving of problems in small businesses

Additionally, studies have shown that a large number of consultants watches over the process of problem solving and also advise the entrepreneurs on effective means of affecting a long-lasting solution. It is important to mention that most of problem solving techniques calls for the management to make major changes in businesses (Shaw, Shaw & Turley 2000, p. 84). For this reason, consultants play a significant role of making the managers to understand the effects of the changes made their value and benefits to the business. In line with this, McKenna (2006, p. 64) asserts that problems that affect small and medium entrepreneurs can be diagnosed and classified in levels. In most case, entrepreneurs fail to do this by themselves, and this causes multiple problems in businesses. Therefore, to avoid the hurdles, small and medium entrepreneurs employ consultancy services in order to help them change their course of thinking. According to Sturdy et al (2009, p. 9), failure to recognize and rank problems compels entrepreneurs to apply a common measure to all of them. In most case, this might be ineffective and uneconomical since different cases require distinct measures. Shaw, Shaw and Turley (2000, p. 82) comprehends that with the aid of consultants, it is easier for entrepreneurs to diagnose, classify and determine appropriate measures to be taken to solve each problem.

Acts as source of temporary and professional services in small businesses

Another benefit of consultancy services is that they provide small business entrepreneurs with temporary and professional services. It is imperative to note that small businesses often get themselves in a position whereby they lack adequate expertise (Shaw, Shaw & Turley 2000, p. 82). In this case, they are unable to hire or employ extra managers and employees. Therefore, studies have shown that most of them use consultants as temporary professionals. Notably, this helps the businesses to run well rather than breakdown due to lack of professionals.

In addition to this, evidence has shown that those businesses that use consultant services often perform well than those who decline such services. This is due to the fact that, whenever an entrepreneur engages some of the activities such as assessment to consultants, the managers are relieved. In this case, they are able to concentrate on core business activities such as controlling resources and monitoring the staffs. Besides this, consultancy services provide small and medium-sized entrepreneurs with interim management services. This entails temporary resources, skills and techniques that can be used in management. Notably, is normal

Quality Policy for the company in accordance with the ISO 9001:2008 requirements

Oberoi Hotels & Resorts is a five-star company that is governed by the ISO 9001:2008 quality policy (Oberoi Hotel, 2010). The reputation of the hotel both locally and internationally called for the need to formulate documentation that helps check and evaluate the quality management system to enhance the effectiveness of the hotel. The amazing services have enhanced recognition from all over the world, bringing forth a number of awards.

We are looking to position ourselves well globally and to ensure our presence is largely felt.

We attest to the fact that people are a great company asset and the company aims to demonstrate leadership to ensure these peoples needs are satisfied.

We strive to be an organization that is environmental friendly. The company is aiming to recycle products after use and encourage the usage of natural resources.

To realize this, the following measures will be undertaken:

  • We are looking to undertake intensive research to ascertain the tastes of our guests and subsequently develop a product that meets their expectations.
  • The company opts to employ from the wider world market. The individuals selected will be from different parts and have an exposure to different cultures. This will ensure the employees have a wide exposure.
  • We bank our trust in the competent staff employed to provide state of the art services to the guests as the firm is committed to thriving economically. In addition, the company has an organizational culture that ensures mutual understanding and trust upon her employees. This is a positive move towards a cordial working relationship among the company workers.

Stakeholders

Chairperson

He/she is the nerve of the hotel. He is at the top of management organ responsible for decision-making and his/her decisions and actions have a direct impact on the organization performance. The major role of the chairperson is to monitor the welfare of the hotel and its organs. Company profitability, friendly environment to both the guests and employees are major needs of the Chairperson.

Bank

The banks service of advancing loans to the hotel makes it a major investor. The need for the bank is accountability in handling the accounting books. In addition, the bank is relying on the hotel revenue base and reputation.

Shareholders

Given the status of the hotel as a public limited company, shareholders are a vital component in the company. These individuals inject their fortune into the business and are responsible in the election of the members who make up the executive board.

Employees

They are responsible for the day-to-day operations of the hotel. The success of the company in terms of performance lies on them. The important need of the employee is an excellent working environment that ensures his health and welfare is taken care of.

Suppliers

These compose of individuals who provide external support to the company. Their services are unique as they cut across the entire operations of the hotel. They range from consultancy to provision of high-quality products used in the daily running of the hotel. Suppliers need is constant flow of services and goods to the company.

Five processes required to fulfill stakeholder needs

  1. Ensuring provision of state of the art services and luxury to the hotel guests
  2. Enhancing efficient management of interest and dividends; this incentive will protect the shareholders.
  3. Efficient maintenance of accounting books to keep the bank trust.
  4. Nurturing a comfortable environment and adopting an employee sensitive working culture.
  5. Monitoring of suppliers contract and making renewals after appraising its services.

Task Inputs and Outputs

Task Inputs and Outputs

Parameters of performance

Parameters of performance

Key elements

  1. Top-level management is vital for the motivation of employees. Their commitment towards formulation of sound motivational policies is paramount to the development of the company. Reward and benefit schemes are some of the ways to demonstrate commitment by the top management. The process of continual development calls for the allocation of enough resources by the management; this will keep many people in the course of development.
  2. The company needs to be well versed with the feelings of the guests. Daily feedback from these guests ensures that their comfort is taken care of, and keeps in course the development of the hotel. The feedbacks from the guests help during decision making by management to ascertain whether the firm is on the right path.
  3. Continuous feedbacks from employees helps keep the firm in its continuous development course. Employees are responsible for the growth of the firm because of their day-to-day operations. Maintaining equality among employees is paramount in enhancing motivation and building of confidence. The feedback information is important in evaluating feelings of employees towards the working environment.
  4. Evaluating the information from the aforementioned procedures keeps the firm continuous development on track. Implementation of the above procedure is important if the company is to realize ultimate development.
  5. The information in the above procedure is important for the companys decision-making organ. The company management needs to set goals and lay out plans on how to achieve the set goals. The employees and stakeholders views are necessary to contain conflicts if need be. In addition, the shareholders fortunes are invested in the company and therefore have a say in relation to the set goals. The goals are important in enhancing the companys continuous development.

Legislation requirement

Australian government is keen in the conservation of environment. Mining sector has been identified as the greatest contributor of environmental pollution. BHP Billiton is an example of companies in the mining sector. The company deals with an array of products ranging from uranium to petroleum mining. Considering the sensitivity of mining uranium and to help prevent environmental risks, strict legislative statutes have been formulated. BHP Billiton was undergoing expansion and therefore the need to abide with some federal and state legislation related to environmental control. Some of these are explained below.

Federal legislation

  • Environmental Protection and Biodiversity Conservation Act 1999 (BHP Billiton, 2009):

    • The legislation postulates that the state is mandated to look into the projects that impact on the natural ecosystem or any nuclear project before tendering an approval.
  • Australian Radiation Protection and Nuclear Safety Act 1998 (BHP Billiton, 2009):

    • The act is responsible for protecting the welfare of the public. Moreover, it helps protect the environment from the negative effects of radiation.
  • Environmental protection Act 1981 (BHP Billiton, 2009):

    • The act addresses matters of the sea especially the disposal of materials into the sea. The aforementioned project needed shipment vessels to transport the raw materials, therefore the act is applicable to check the dumping of materials.
  • National Greenhouse and energy reporting Act 2007 (BHP Billiton, 2009):

    • The undertaking of the project could lead to gas emissions above the required levels. The National Green House and Energy Reporting Act postulate the levels of regulated gases.

State Legislations

  • Northern Territory Environmental Assessment Act.

    • The act is responsible for the assessment of the project environmental impact on the entire state (BHP Billiton, 2007).
  • Adelaide Dolphin Sanctuary Act 2005:

    • The act is responsible for the protection of the dolphin family of Adelaide estuary. The company is in a bid to construct an additional port and there is need to comply with the act.
  • Environmental Protection Policy 2007 (BHP Billiton, 2007):

    • This is a policy responsible for the regulation of noise pollution. The policy therefore helps foster a favorable working environment.
  • Environment Protection policy 1994 (South Australia):

    • The aim of the legislation is to help in the reduction of emissions into the air by a project. Its main intention is to maintain good quality of the air. The initiation of the project will lead to emissions that might reduce the quality of the air. The project entails fuel burning.

Stakeholders of the organization and their needs

Investors

The investors of the company are those who have injected their savings in the company to facilitate its projects. These individuals include the shareholders and other business partners with the BHP Billiton. Their primary need is good financial returns on investment. This is achievable through the employment of sound business practices. Another need is the mitigation of risks. Effective mitigation of risks ensures the firm is kept on a strong financial footing (BHP Billiton, 2007).

Customers

The customers of this company are always corporate. The customer base is made of large organizations that have an interest in the mined raw materials. Their primary need is the quality of the output. Customers need value for their money and therefore a high quality product is of the essence. Getting after-sale services from the company is another customer need. The services are in the form of technical and commercial support.

Employees

They are an important component in the organization. They have several needs that include a favorable working environment. Another need is a good working culture that enhances career growth and development while creating opportunities.

Government

The term government encompasses both central and local government. The main objective is to ensure that the firm operates within the established legislation. In addition, they follow the company performance to ensure issues related to environment and other parameters are addressed.

Suppliers

These include both the local and international companies that help in the project. They are interested in timely payment for their services. In addition, they are keen on the quality requirement of the company in relation to its suppliers.

Processes that describe the organizations operations

Mining

Mining is a below the surface process that involves drilling into the earth surface before using a hoist to remove the mineral.

  1. Boring: This is the use of a machine designed well to cut into the mine. Boring machine services comes after the cutting into the mine. This enlarges the surface area for human access. The process enhances the safety of the workers.
  2. Hoisting: This is the use of a hoist shaft to remove the minerals that have been extracted from the mine. A stopping mechanism is important in the process to help prevent hazards as the process involves a pull against gravity laws, which is dangerous (BHP Billiton, 2007).

Processing

The harvested treasure needs to undergo filtration processes to remove the unwanted material and remain with the required mineral. The sub processes include:

  1. Comminution  This is the process of breaking down the minerals and channeling them for filtration.
  2. Floatation  This is the stage where filtration is done. The lighter materials are easily filtered at this stage.

Order processing

This entails the reviewing of available orders to ascertain their completion time. Mini processes of this are:

  1. Contract review: At this state, the review is done to already established contracts to ascertain any differences in agreement. Given any difference, the customer is updated accordingly.
  2. Order confirmation letter. This is done after successful review on the contract has been done. The letter is official and sending it to the client is paramount as it acts as order reference point.

Supply

This implies the transfer of the minerals to the end user. The sub processes include:

  1. Pre-loading inspection  This ensures the checking of quality of the product as well as the space available for product placement.
  2. Railway- This mode of transport enables the transportation of bulk and therefore necessitating the transportation of minerals through trains.

After- sale services

This is meant to enhance customer satisfaction and enhance the bond with the company. The sub processes include:

  1. Follow-up  This is meant to acquire feedback information from the customer.
  2. Technical assistance  The Company taking responsibility of providing expertise to help the customer helps nurture healthy relationships.

Main processes and environmental aspects

Mining

Mining

Processing

Processing

Environmental impacts

Mining

Mining

Processing

Processing

Objectives

Mining

Mining

Processing

Processing

Actions for targets

Mining

Aspects Targets Action
Erosion and sedimentation Increase in vegetation by up to 12%
  1. Managable removal of top soil
  2. Land re-vegetation
Acid mine drainage formation 29 % reduction in contamination in 3 years.
  1. Treatment of water bodies
  2. Mining site rehabilitation
Fugitive dust emission 20 % dust reduction in 3 years.
  1. More usage of dust trappers
  2. Use of protective gear i.e. masks by the workers
Ecosystem Modification 90% transfer of animals in less than a year.
  1. Transfer of animals to a safer place
  2. Developing the ecosystem considering the impossibility of transfer.
Surface and contamination 31% less contaminated water in a 3 year period
  1. Efficient waste disposal management
  2. Treatment of contaminated water.

Processing

Aspect Targets Action
Cyanide and other chemicals 100 % stoppage of Cyanide usage.
  1. Stopping the use of cyanide
  2. devising an alternative
Waste Generation 30% reduction in a span of a year
  1. Improved waste management
  2. Reusage of waste through recycling
Heavy metal accumulation 43 % reduction of heavy metal
  1. Catalyst usage to aid in absorption
  2. Devising an alternative material
Gas emissions 15 % reduction of gas emissions in 2 years.
  1. Encouraging the use of alternative power sources.
  2. Maximum efficiency in the combustion of traditional fuel.
Acid waste 30 % reduction of acid waste in 2 years.
  1. Devising an alternative method to replace acid
  2. Employing efficient waste management

Methods that can be used to measure or monitor the progress.

Mining

Aspects Action Monitor
Erosion and sedimentation
  1. Managable removal of top soil
  2. Land re-vegetation
  1. Frequent check up
  2. Inspection of top soil
Acid mine drainage formation
  1. Treatment of water bodies
  2. Mining site rehabilitation
  1. Regular check up of the water sources
  2. Inspecting the process of rehabilitation
Fugitive dust emission
  1. More usage of dust trappers
  2. Use of protective gear i.e. masks by the workers
  1. Frequent research to ascertain the air quality
  2. Inputing dust sensors near the trappers.
Ecosystem Modification Transfer of animals to a safer place
Developing the ecosystem considering the impossibility of transfer.
Counting the animal population more often to keep track
Surface and contamination
  1. Efficient waste disposal management
  2. Treatment of contaminated water.
  1. Monitoring of water quality
  2. Carrying inspection of the disposal facility

Processing

Aspect Action Monitor
Cyanide and other chemicals
  1. Stopping the use of cyanide
  2. devising an alternative
Inspecting the use of cyanide and other chemicals.
Waste Generation
  1. Improved waste management
  2. Reusage of waste through recycling
Carrying out inspection on the recycling practices
Heavy metal accumulation
  1. Catalyst usage to aid in absorption
  2. Devising an alternative material
  1. Inputting sensors in the catalyst used to detect metals.
  2. Carrying out data collection in the mining site to derive prudent measures to be undertaken.
Gas emissions
  1. Encouraging the use of alternative power sources.
  2. Maximum efficiency in the combustion of traditional fuel.
Inspection of the air to ensure minimum particles are available in the air.
Acid waste
  1. Devising an alternative method to replace acid
  2. Employing efficient waste management
Evaluating the methods of disposal often

Occupational Health and Safety Management System

Legislative requirements for a commercial construction company.

Construction is a necessary element in the day-to-day developments of an economy. The legislative organ is mandated to devise statutes that guide this industry. The various requirements covering the construction industry are discussed here.

Prevention of fall

This legislation ensures the safety of the public. It provides stiff penalties to issues of negligence in the side of the constructor.

Boom-lift safe work procedure

The workers on the side of welfare need guarantee from the constructor and therefore the machines used need to be safe to prevent hazards.

Noise

The law is instituted to regulate the nuisance caused by the construction machinery. Construction sites are not conducive for habitation because of the noise pollution.

First-Aid

This is the medical attention given to an individual at the first instance of an injury. The legislation requires all firms to comply with this provision to ensure safety of workers is maintained.

Health and safety induction for employees

The safety of citizens is paramount and this legislation covers the regulations of inducting workers. Ways of protecting oneself together with the description of how to operate machines are envisaged in this legislation.

Prepare a health and safety co-ordination plan

The legislation is looking to ensure the coordination plan is in line with the safety requirements.

Safe brick laying procedure

The foundation of a building is important in supporting the entire structure. The legislation seeks to ensure safety in accordance to the materials used.

Risks for companys operations

  1. Faulty Scaffolding  This is an essential procedure in accordance to height requirements. It is a hazard that causes injury if it fails to be controlled by the company worker. Rechecking the scaffold before using it is a control measure.
  2. Boom Lift Movement- This lift is important in reaching peaks of tall buildings. The load being carried may injure the worker below it. Constant communication between the lift operator and the workers is paramount to prevent this.
  3. Noise  Workers may develop health implications when exposed to a lot of construction noise. Machine maintenance is important to control the noise. In addition, workers need provision of mufflers to control sound effects
  4. Amputation  Heavy machines can cause serious damage to individuals if not properly operated. Workers need to be well versed with the operations of machines and the danger zones.
  5. Lesions  Working with some machinery causes wounds to the workers of the company. Training and availing gloves to the workers is a sure way to prevent them.
  6. Collision  This occurs when several lifts are operating at the same time. Collision causes injuries to both the worker and operators.
  7. Explosion  Construction sites contain tanks i.e. the gas tanks that are of high pressure. Improper handling of these items is dangerous to the workers. The explosions can cause death in most cases. Storing these pressurized containers in a secure location helps curb the accidents
  8. Excavation  This entails the use of material when establishing a building foundation. This can cause injuries to the workers as it entails the use of heavy machinery.
  9. Manual material handling  This involves the use of manpower to extradite some tasks. Man is prone to error and mishandling of these equipments causes injuries to the worker responsible and other colleagues. These errors are controllable with the use of equipment handlers.
  10. Fatigue  This is tiredness of the workers. It is caused by many working hours, which makes workers lose concentration and subsequently causing injuries. Workers need to be given enough resting time and work for small durations.

Risk assessment chart

SNo. Risk name Probability Severity Risk value
Prob X ser
Rank
Scaffolding 5
(Moderate)
9 33 8
Boom lift Movement 2
Low
8 28 9
Noise 8
(High)
9 73 3
Amputation 8
(High)
10 87 2
Lesions 9
(High)
3 23 10
Collisions 3
(Low)
8 46 5
Explosions 2
(Low)
9 80 8
Excavation 9
(High)
10 84 1
Manual Handling of material 8
(High)
8 66 4
Fatigue 8
(High)
4 32 5

Actions for the risks

Risks Actions
Scaffolding
  1. Conducting trainings on its usage to create awareness
  2. Checking the scaffolding before use
Boom lift Movement
  1. Frequent communication when undertaking the task. This needs to be initiated by the machine operator to alert the other workers.
  2. Hiring and providing adequate training to the risk operators.
Noise
  1. Constant servicing of the machinery
  2. Proision of mufflers to insulate workers against sound
  3. Frequent change of shifts to limit the exposure to damaging noise
Amputation
  1. Providing safety gears i.e. gloves to workers handling the machine
  2. Installing insulators to machines which are likely to harm the workers. This will prevent direct exposure.
Lesions
  1. Availing protective material to the workers. These materials include gloves and helmets
  2. Creating awareness through training
Collisions
  1. Constant communication to ensure equipment is operated in an orderly manner.
  2. Availing devices to caution persons of danger while operating.
Explosions
  1. Storing the pressurized gas tanks in safe environments
  2. Training the employees on the safety requirements when handling the containers to prevent disasters
Excavation
  1. Restricting access to the construction site
  2. Frequent communication between the individuals dealing with the excavator and the other workers
Manual handling of material
  1. Restricting the manual handling of materials
  2. Acquiring handling equipment to help in the manual process i.e. trolleys
Fatigue
  1. Checking the working hours of individuals and encouraging work shifts
  2. Ensuring workers access nutritious foods to supplement the energy lost.

List of References

BHP Billiton. 2007, BHP Billitons stakeho

Introduction

Background Information

The Abu Dhabi government established the Masdar Institute as an independent and non-profit research-driven graduate university in 2007. The entity is dedicated to the provision of higher education and research in advanced energy and sustainable technologies. The Massachusetts Institute of Technology (MIT), through partnership initiatives, plays an integral role in the development of the curriculum. Presently, the university operates in collaboration with MIT to develop research and development (R&D) capacity in Abu Dhabi. According to Anderson (2013), the capacity building is meant to address a number of issues that are of importance to the UAE and the region.

The Masdar Institute is situated in Abu Dhabi, which is the capital of the United Arab Emirates. The institution plays a key role in the UAEs economic diversification. The diversification is realised through the development of a highly skilled human and intellectual capital. The institution intends to be a leader in industry collaboration efforts. Consequently, the university plays a key role in transforming the UAE into a knowledge based economy.

The Massachusetts Institute of Technology has played an important role in the establishment and development of the institute. According to Arthur and Boyles (2007, p. 87), the two universities have established partnerships on matters touching on research and curriculum development. Other areas of collaboration include student and staff recruitment initiatives. Upon completion of a degree, graduates from Masdar receive certification from the two partnering institutions.

The joint research initiatives are executed through direct one-to-one projects. For instance, the development of the institutions Doctoral of Philosophy in Interdisciplinary Engineering program was based on the MIT curriculum. To this end, faculty members from MIT are selected to sit on the institutions Research Supervisory Committee. The committee is tasked with the responsibility of assessing Ph.D. students (Arthur & Boyles 2007). The committee also selects a number of Masdar Institute Ph.D. students for an exchange program with MIT.

The University serves as source of innovation and human capital for the region providing qualified students with the opportunity to pursue graduate studies and research in critical areas such as renewable energy, sustainability, environment, water resources, engineering systems and management, advanced materials, among others. The organisation focuses on complex real-world problems that require a multidisciplinary approach for the development of solutions from an integrated technology, systems and policy perspective.

The Institute was officially opened on September 2009 and the first intake of students consisted of 89 students from an initial 1152 application. Presently, the institution is involved with more than 300 research initiatives. For instance, the Solar Beam Down, Innovation Ecosystems and Smart Grids projects are some of the two major research initiatives. Other research ventures include the famous Aviation Biofuels and Carbon Capture & Storage.

One patent has been issued so far, while over 20 applications are pending. In addition, it is noted that 20 invention disclosures are outstanding. Research partnerships have been setup with major multi-national companies like Boeing, IRENA and Toyota Motor Corporation. The institutes fellowship partners include Imperial College London (UK), RWTH Aachen University (Germany), Tokyo Institute of Technology (Japan), University of Waterloo (Canada), the University of Central Florida (USA), International Renewable Energy Company (IRENA), Toyota Motor Corporation, Siemens, ICT Fund, and others.

Overview of the Chapter

The discussion in this chapter is meant to provide a foundation for the entire study. To this end, a background into the institution is provided. Details relating to the history and current status of the institution are also presented. The chapter illustrates the objectives of this research undertaking. To this end, the thesis statement is presented based on the problems at the institution. The ultimate purpose of this research proposal is to assess the cause and effect of lack of integration and misalignment of the HR Strategy in the institution.

Current Scenario

Status of the organisation in terms of the business cycle

When one refers to the Sisson and Storeys business life cycle model, it appears that the organisation is currently moving from the start-up phase towards the growth stage (Budhawar & Boyne 2004). The number of faculty members is steadily increasing in the institution. The same applies to the number of research staff and students. Moreover, the organisations research partnerships and collaborations have expanded tremendously.

Looking at the overall organisation, one realises that there are three major components that make up its structure. The three are Faculty, Research, and the Administration (Chand & Katou 2007). There is an expansion of the Master and Interdisciplinary PhD program, as well as the increase in number of students. There is a substantial rise in the number of faculty members that are needed to deliver them. Moreover, the organisation is becoming popular locally, regionally, and internationally. There is increased level of awareness regarding the existing and ongoing projects and accomplishments. As a result, many organisations are partnering and collaborating with the entity in the form of new research projects. From Honeywell to Boeing, Emaal, and ADNOC, the number of research projects that are focused on sustainability has tremendously increased. A similar increase is seen in the number of research staff.

When it comes to the administrative employees, a look at the manpower shows that it has been decreasing due to high turnover and general dissatisfaction. The administrative staff members are considered a critical support aspect for the faculty and research divisions of the organisation. Due to this high turnover, the progress of the administrative functions to a growth phase is not as fast as the organisation requires. Administrative functions are understaffed and room for improvement and strategic partnership is not as strong as it should be (Chang & Katou 2007).

Status of the organisation in terms of the life cycle model

An analysis of the Life Cycle Model by Porter makes is it apparent that the organisation has since its inception been working towards the innovation strategy. The move is necessitated by the unique industry and the entitys line of work. Innovation was deemed a major competency that was a pillar of the organisations framework. With this strategy in mind, the organisations size remained rather small and the growth in manpower was not visible. The development led to increased workload, which was handled by the existing staff members. It caused stress and demotivation in the workforce. Looking into the administrative functions, innovation strategy is not very visible in terms of its translation into organisational practices, which in turn does not provide the necessary support for the other areas of the Institute.

The various factors of Rosemary Harrisons model are apparent in the organisations strategic aspect. In this regard, one should consider seven main steps, including:

  1. HR strategic management definition
  2. Developing a strategic method to develop human resources
  3. Determining HR management mission
  4. Respect to culture, structure and HR management,
  5. Setting HR management aims
  6. An integrative attitude toward HR strategic management
  7. A decision on when we need HR strategic management (Chan, Shaffer & Snape 2004).

For the purpose of this research, parts of the above points, such as defining HR strategic management, HR mission, and the strategic approach, are researched and analysed in chapters 3 and 4. The impact of the respect to culture, or lack thereof, and HR management is evident from the interviews conducted. The findings address the challenges and obstacles that are in the organisation.

In addition, the institution is required to factor in the fact that it is an emerging stage. The implication is that which means that its experiencing heavy growth and the HR strategy should support it by putting in place certain practices. The table below shows the proposed practices versus the current scenario of the institution.

Table 1: Comparison between the best practices and the current practice.

Best Practice Current Practice
Heavy Recruitment activities for maximisation of the workforce to absorb the heavy growth Recruitment has been on hold for about 8 months in the last year due to an internal project that was being completed. Then it was opened a few months back. The rate of recruiting administrative staff is very slow due to the large number of available vacancies, the availability of a limited number of recruiters and the exceptionally high expectations of the line managers.
A solid On Boarding and Induction that supports the influx of the new employees Due to the shortage in HR staff members, a solid on boarding/induction program is not in place. So new joiners have limited information once they start their journey with this institution.
Retention initiatives that incorporate employee engagement and participation This practice has not been prioritised since the inception of the institution and the main focus was on HR Administration. In the last year, there was a huge turnover and then it became evident that this practice is crucial to the retention of the employees and in boosting their morale.
Learning and Development opportunities for employees to develop themselves and the functions they are in Learning and Development is at its infancy and the true understanding of its significance and impact is not clearly appreciated. This may be attributed to the shortage of staff in many of the departments as well as the inability to follow-up on the learning and implementation.

Putting the HR department into perspective

In order to put the HR Department into perspective, it falls under the Office for Operations and Finance. The main role of the Office for Operations and Finance is to provide a wide range of services for staff, faculty and students to support the Institutes mission. It manages all fiscal and operational services for student Campus/Housing and financial services/activities including budgeting along with information technology, human resources and business services and procurement (Chang & Huang 2005).

The office also exerts presidential leadership at every level of the institution by negotiating, directing and facilitating substantive progress toward the achievement of Institute-wide goals. It does this by:

  1. Providing primary support to Institute leadership in identifying, obtaining and allocating the resources needed to achieve the Institutes mission and the goals and objectives of the Institutes strategic plan
  2. Developing and maintaining active relationships with Institutes units, MIT, industry and academic circles to ensure a positive and effective working environment for the Institute
  3. Providing oversight to the Institutes accounting processes, including financial relationships with ADFEC and regulatory relationships with the Department of Finance and Abu Dhabi government
  4. Interfacing between the Presidents Office and Institute departments to facilitate and act on financial and operational actions
  5. Preparing and managing the budget of the Institute
  6. Developing and coordinating the Institutes human resources strategy
  7. Promoting cooperation and dialogue among staff at all levels of Institute to accomplish the goals of the Institute and its component parts
  8. Facilitating an atmosphere of partnership and entrepreneurship between and among all organisational elements of the Institute and between the Institute and other entities in such critical areas as education, business and government
  9. Developing outstanding procedures and policies to safeguard Institute resources.

In 2013, the institute moved to its new campus and has been working to equip, testing, and commissioning its sophisticated labs. Due to the rapid growth of the Institute and lack of space, numerous space optimisation exercises have been conducted maximise the space for 28 to 62 faculty members which is not an ideal situation for a research intensive institution. Despite the economic impact of 2008, continuous resource optimisation exercises and cost-cutting initiatives have helped to avoid a major financial impact on research development due to the unforeseen financial difficulties (Truss 2003).

In such a fast growing environment, the VP Office engaged a Business Performance function that is responsible for facilitating business processes, functions and organisation design. This function operates from The VP Office and its focuses primarily on business requirements, workflow and leveraging technology to enable or alter business processes or practices. It identifies the institutional requirements for human resource, technical and financial support necessary to ensure the consistency of all elements of the institutional structure and layers (Truss 2003).

Analysis of the current business environment is needed to detect critical deficiencies and recommend solutions for improvement and also lead analysis of the technology industry and market trends to determine their potential impact on the Institute. The Institute needs to apply new technology to, and reuse existing technology for, business processes. The objective is to perform research and provide information on technical trends and report the major functions within the division. Such analysis will provide strategic solutions for designing business processes, functions and organisational structures, as well as research, identify and internally market enabling technologies based on the Institute requirements (Wan, Kok & Ong 2002).

It will assess near-term needs, using structured interview processes, to establish business priorities; consulting with technical subject matter experts and develop alternative technical solutions and advising on options, risks, costs vs. benefits and impacts on other business processes and system priorities. Due to the success of the its role in the EU-GCC Clean Energy Network, the Institute is looking into the possibility of building a legal entity that represents the GCC partners (Wan et al. 2002). The idea has been seconded by the Energy Team of the GCC Secretariat to be financially supported by the GCC. In addition, a research funding mechanism would be introduced to support the objectives of the GCCs agenda in the clean energy sector.

Strategic model for the operations and finance division

Recently, the institute developed and began to adopt an excellence strategy that has been development by the Office of the VP. The excellence model is to be cascaded to all the support functions under that office. The purpose of this model is to maximise operational excellence through optimisation of:

  • Systems: It looks into putting in place more effective Automated Systems to support the Divisions and Departments.
  • Standards: It deals with defining, developing and implementing policy, procedures and processes.
  • Structure: It defines roles and responsibilities with focus on knowledge development and transfer to local workforce.
  • Controls: It can be achieved by tightening budgetary and procurement controls
  • Compliance: It includes developing, implementing and monitoring a quality frame work which incorporates local and international practices.

Translation of the Strategic Model in to Initiatives

Table 2: Administration strategy of excellence model.

Administrative Departments Services
Administrative Service and Operational Effectiveness and Efficiency Optimisation Model Optimisation Challenges strategy Initiatives in Place or future plans- A brief Impact- Key Performance Indicators
Systems Turn a large volume of data into meaningful information and then into effective decisions Oracle
ERP
Responsive-MI to align any changes in the market and rapidly adapt operational excellence
Standards Rules and Regulations PPP as set working standards Agile-MI will quickly re-configure operations and supply chains to
achieve optimal cost and service levels
Structure Competent and Performance driven work force Empower employees of MI to make decisions and keep the process moving
Controls Optimisation and Scheduling in all areas of Operation KPIs definitions Lean-MI to become a lean Institute to minimise waste of resources and activities.
Compliance Quality controls and assurances as total quality management solution International, Local and regional excellence models (EFQM)

The role of the HR department

The Human Resources Department is established to support the mission of the Institute to be a top educational and research institution by providing leadership that assures efficient and effective management of the Institutes human resources. The HR provides advisory and consulting services to all members of senior management, line managers and unit heads as well as employees on all the HR-related services. Most of the HR functions are centralised within the HR Department and little HR responsibilities are delegated to the line managers. A small number of HR tasks, such as faculty recruitment and faculty performance management, are handled by the Deans Office with the support of the HR Departments (Ulrich & Brockbank 2005).

Moreover, Research staff recruitment is the responsibility of the Faculty member. Based on their budget and the research project needs, faculty members source, interview and select the Research staff that are needed to accomplish their project. The HR Department is responsible for the on boarding and the employee affairs aspect of their employment.

The HR mission and vision

The mission and vision of the Human Resources (HR) Department is to engage in best practice human resource management to provide excellent services, innovative solutions and visionary leadership in support of excellence for the Institutes educational mission. The Institutes mission is in keeping with the ideals of the late Sheikh Zayed bin Sultan Al Nahyan, founding father of the UAE, who believed strongly in responsible conservation, sustainable development and the importance of education. He believed that the real asset of any nation is its people. He especially believed on the importance of educating the human resource. To this end, he argued that the success of an individual should be determined by their level of education (Sheehan 2005).

Only by developing its human capital will Abu Dhabi achieve its long-term environmental and economic sustainability goals. The Institute is serving both these objectives by providing Abu Dhabi and the UAE with highly talented individuals and cutting-edge, world-class research in the field of renewable energy and sustainability.

The HR services

The HR Department aims to provide value-added services to management, faculty and staff in the following areas:

  1. workforce planning
  2. recruitment and retention
  3. induction
  4. performance management
  5. training and development
  6. employee relations
  7. compensation and benefits
  8. health insurance
  9. housing
  10. payroll.

HR as a business partner

HR also strives to progressively enhance the value of these services which include:

  1. Attracting, developing, and retaining outstanding faculty and staff who are committed to achieving excellence and who are engaged to achieve the vision, mission and values of the institute.
  2. Facilitating and supporting an organisational culture and work environment that advances the achievement of the institutes vision and mission while exemplifying the institutes values.
  3. Advancing working conditions in a manner that is sustainable for the university, effectively balancing needs and resources.
  4. Building and nurturing productive relationships internally and externally with stakeholders who impact the Institutes workplace and work culture.
  5. Developing organisational capacity to position the Institute for the future.

HRs Emiratisation strategy

The institutes Emiratisation strategy is not modelled on a quota-based system rather a skill-based Emiratisation policy has been developed to support the nationalisation initiative. The Emiratisation policy involves the capacity building with respect to skills. The policy ensures that enough nationals are empowered with skills necessary for the economic development. The Institute follows a long-term structured and holistic approach in its Emiratisation strategies and incorporates it in all its functions. The Emiratisation percentage has increased from 29% in 2010 to over 40% in 2013. Also, a fresh UAE national graduates program was introduced as strong relationships were created with local universities to acquire the top students from different majors (Salvi 2013).

Although there is a document that states the mission and vision of the HR Department, it seems that the HR strategy has not been declared on any document. This makes it difficult for the HR Department to cascade this strategy to its functions or to ensure its alignment to the cross-functional departments is difficult. The current unwritten HR strategy is a reactive strategy that responds to events and changes as and when then happen (Salvi 2013).

Problem Statement

In this section, the author briefly describes the main HR problem in the institution and the sub-problems that stem from them.

Problem statement

The major issue is the inability to integrate the unwritten reactive HR strategy to the organisations strategic objectives and directions as well as the difficulty in aligning it to the functions. This issue hinders the HR Department from supporting the vision and mission of the organisation and creates barriers in meeting the organisations human capital requirements.

Effects of the problem statement on HR functions

Some of the effects that the problem has on the HR are the:

  1. Misalignment between HR strategy and Organisations strategic objectives
  2. Weak Vertical and Horizontal integration to the Institutes functions which in turn affects the
  3. Line management
  4. organisational strategy

Research Objectives

The objectives of the research proposal are:

  1. To understand the level of alignment and integration that is currently present in the organisation
  2. To compare the current practice in the organisation with the literature on HR Strategy
  3. To investigate the cause and effect of any lack integration and misalignment
  4. To provide recommendations on the way forward

Scope of Research

The scope of this research will include a brief look at the institutions strategy and how HR can support that through an integrated approach. It will also include interviews from members of the senior management, functional directors as well as an HR focus group. This input would cover the following stakeholders:

  1. Senior Management (Horizontal Alignment)
  2. Functional Directors (Vertical Integration)
  3. Faculty Representatives (Stakeholders)
  4. HR Representatives (Subject Matter Experts, HR Strategy Implementers)

Due to the fact that this research proposal is focused on the HR strategy, further information will not be needed at this stage but surely for implementation there will be more input from other stakeholders.

Research Design

The section will look at the structure of the research proposal and a brief of the content of the upcoming chapters. The research strategy that is employed in this research proposal is a case study based strategy, which is the exploration o a single subject or case in an organisation and exploring it from various angles (Anderson 2013).

Chapter Summary

The current chapter lays a foundation for the entire study. Background information is provided to outline a historical perspective of the study. The problem statement provides the central argument of the dissertation. The chapter also outlines other foundational aspects of the study like the research questions and brief overview of human resource integration. The extent to which the study covers is illustrated. The next chapter provides details touching on previous studies on human resource integration. The literature review is an extension of the background information.

Literature Review

Overview

In this section, existing literature on human resource strategies and integration is examined. A total of ten peer reviewed articles and three books on human resource will be used to discuss the subject. In this regard, several human resource strategies are outlined. The chapter also examines theoretical concepts around this concept. Some of the articles will help shed light on what brings about the lack of integration and how it can be resolved. The review aims at providing a roadmap for the HR integration, which is useful for the current study.

History of Human Resource Strategy Integration

Over the years, human resource integration has evolved from rudimentary elements to the current complex nature. Studies carried out by Rothwell (2001), Budhwar and Boyne (2004), and Chand and Katou (2007) illustrate this concept clearly. Human resource strategy integration is primarily understood from a number of perspectives.

Definition of Human Resource Strategy

Organisational strategy is a critical concept for every business entity and institutional set-up. Strategies provide an organisation with a sense of direction and purpose to guide employees. It is a dynamic and fluid concept that is designed according to the requirements of the organisation. Organisational strategy is the pattern of decisions in a company or institution. The decisions help to define and realise its core objectives and goals (Ulrich & Brockbank 2005). Consequently, the strategies help an organisation to come up with policies and plans aimed at realising the objectives identified.

The Concept of Human Resource Strategy

Debate on human resource strategy is not a new discourse. According to Budhwar and Boyne (2004, p. 346), these controversies date back to the early seventies. The seminal paper by Devanna (as cited in Budhwar & Boyne 2004, p. 34), is known to have elicited intense debate on the subject. Major discussion on human resource strategies included how best they could be integrated into an organisation. To this end, Truss, Mankin, and Kelliher (2012) argue that SHRM (Strategic Human Resource Management) should be viewed as an all encompassing concept. It provides a connection between the management and deployment of individuals within the organisation. It also highlights the link between the firm and its environment (Truss et al. 2012).

The argument by Truss et al. (2012, p. 88) clearly outlines the link between the HR strategy and that of the entire organisation. In this regard, human resource strategies are seen to provide a link between the workforce and how they fit in realising the goals of an organisation. The elements focused on include recruitment, performance and development towards achieving the strategic goals. HR plays a critical role in informing this aspect of the strategy because it manages all the activities that will make this happen. Human resource strategies take into account the employees in perspective of the organisation as a whole as well as the external environment.

The definition of human resource strategies is required to factor in industry policies and how they relate to an organisational set up. In this regard, HR strategy is characterised by underpinning policies and processes. The organisation implements these processes in order to manage the employees (Salvi 2013). In addition to the HR strategys influence on the organisation as a whole, this emphasises its importance in cascading the direction of the institution down to the more tactical aspects of HR, such as policies, procedures and processes.

The definition of a human resource strategy helps to illustrate the importance of the link between the people management and how they can realise an organisations core objectives. The link includes all the policies and systems required to meet the strategic objectives of a given organisation (Budhwar & Boyne 2004, p. 349). Contemporary scholars in the field argue that earlier definitions lack the visionary approach that should be associated with HR strategies. To this end, the subject has been re-defined to incorporate a more proactive strategic partnership approach.

Human resource strategies ought to be created and designed

Introduction

Background information

Organisational behaviour has become one of the most important areas of research as scholars seek to find its relevance in improving the performance of organisations. Several scholars have defined organisational behaviour in various ways. Singh (2010, p. 78) defines organisational behaviour as The study of human behaviour in organisational settings, the interface between human behaviour and the organisation, and the organisation itself. This scholar observes that the way an individual would behave as an independent entity is very different from his or her behaviour when acting within an organisation (Chaitanya & Tripathi 2001, p. 220). When acting on behalf of a group or acting within a group, there are some factors that would have a sharp influence on ones behaviour. This would make the behaviour different from that when one is acting as an individual and when is with the family or friends. According to French (2011, p. 39), organisational behaviour defines the organisational performance. It is suggested that the manner in which members of a given organisation behave will always define the way they address their duties (Mills 2007, p. 93). With the current competitive world market, most organisations are forced to find ways of developing the appropriate organisational behaviour that promotes teamwork, innovation, and the desire by the employees to push an extra mile whenever they are addressing their assigned duties.

The airline industry- and many other industries- are faced with numerous challenges, top of which are stiff competition, rising fuel cost, and the unstable market. Hong Kong Airline Limited has suffered from these problems as it seeks to gain ground in this fragile industry. However, sometimes the management finds it very challenging to address some of the pertinent problems because of the contrasting needs of the employees. According to Perkins and Arvinen (2013, p. 119), employees are very important part of any organisation. Their role in any firm will be directly reflected in the performance of that firm (Ranganayakulu 2005, p. 39). When the top management develops policies that are meant to address some of the challenges identified above, the employees are always expected to implement them in order to obtain the desired results (Aquinas 2006, p. 48). This can only be possible if there is a positive organisational behaviour that will strongly bind the employees to act in a specific way when addressing specific issues (Bissell & Dolan 2011, p. 38). The researcher suggests that the three elements of organisational behaviour of teamwork, innovativeness, and commitment are highly desirable in the current competitive business environment.

Hong Kong Airlines Ltd has been keen on offering quality services to its employees. It has achieved success through concerted effort of its employees to attract customers from China and other neighbouring countries. However, there has been a problem when it comes to managing some elements of organisational behaviour within this firm, especially when it comes to teamwork. The firm has not been able to come up with an effective organisational behaviour that can address the issue of how the employees should relate amongst themselves, and with the management unit. It is because of this that the researcher considered it necessary to investigate organisational behaviour at this firm to determine how it can be improved to address this problem at this firm.

Research problem, objectives and questions

The overall aim of this research is to determine the impact of organisational behaviour on organisational performance. The researcher seeks to determine how organisations can influence the performance of their individual employees by inculcating a positive organisational behaviour within the firm. To determine this, the researcher chose Hong Kong Airline as the organisation to base the research. The following are the specific objectives that the research seeks to achieve.

  • To determine the relationships between elements of organisational behaviour and organisational performance
  • To determine how the leadership of this organisation can influence the elements of organisational behaviour.

Based on the above objectives, it was important to develop research questions that would guide the process of collecting data. Walker (2011, p. 62) observes that when collecting both the primary and the secondary data, a researcher will always encounter massive information, some of which may be irrelevant but very interesting. The questions give a clear focus of the information that should be gathered both from the primary and secondary sources (Chis, Kemp & Legge 2007, p. 91). The research questions describing the process of data collection must reflect this (Randhawa 1997, p. 340). The following are some of the specific questions that the researcher seeks to respond to in this study.

    1. To what extent does organisational behaviour influence organisational performance?
    2. To what extent does the management of the firm under investigation try to inculcate positive organisational behaviour in their organisation?
    3. What is the impact of teamwork on increasing the employee productivity
    4. What is the impact of teamwork on organisational performance at the firm under investigation?

Importance of the research

Hong Kong Airlines Limited is operating in an industry that is highly sensitive and very competitive. A team of self-motivated and innovative employees can be valuable for this organisation in order to achieve success (Robbins, Odendaal & Roodt 2003, p. 74). The employees who directly interact with the customers should always maintain a positive attitude when handling the customers (Chand & Sethi 1997, p. 456). This will boost their level of satisfaction. Other employees in other areas must also maintain a positive workplace environment in order to promote teamwork when addressing various tasks. This can only be achieved when there is a sound organisational behaviour based on strong organisational policies (Parikh & Gupta 2010, p. 93).

The organisation has not been able to find appropriate policies that can help it address this problem because of some erratic organisational behaviour (Dayal & Adhikari 1970, p. 478). Conducting this research on the firm- and other related organisations- is justified because it seeks to find a way through which the current problem can be addressed (Rangnekar 2009, p. 372). It is expected that by the end of this research, the policy recommendations will be able to address some of the existing problems in managing the employees at this firm.

Scope of the study

According to Zsóka (2007, p. 31), it is always vital to clearly define the scope of the study in order to make the consumers of its content to understand its relevance under different contexts. This will eliminate cases of wrong application of the contents of this document. The secondary data in this research was collected from journals, books, newspapers, and other reliable internet sources (Dwivedi 2001, p. 410). Most of the secondary sources of data were based on varying environmental contexts and in different companies across the world. It has captured information from various companies in different countries from different perspectives (Rastogi 1996, p. 540). However, the researcher confined the process of collecting the primary data to a single company and in a particular country. All the primary data were collected from the employees of Hong Kong Airlines Limited in Hong Kong. Hong Kong Airlines Limited was appropriate because it was close enough to the researcher, and regular visits could be made without any strain. When using the information in this report based on the primary data, this fact should be considered in order to avoid a wrong application.

Chapter outline

It is important to discuss the outline of this dissertation at this stage. In chapter 2, the academic context is identified and discussed. A framework for this research is developed from the review of the literature. In chapter 3, the methodology for sampling, data gathering, data analysis, validity and reliability is explained and justified. In chapter 4, the findings from primary and secondary research will be analysed and discussed.

In chapter 5 the summary of the findings from all the chapters are clearly discussed and the implications are given.

Literature Review

The field of the organisational behaviour has attracted massive attention from scholars as they try to find the best ways through which organisations can achieve the best performance using their human resource. According to Yong and Altman (2009, p. 102), Organisational Behaviour is the study and application of knowledge about how people, individuals, and groups act in organisations. It seeks to determine how people relate among themselves and with the entire organisation in the process of undertaking their duties. Employees form an important resource in helping firms to achieve their strategic objectives. The individual output of a person has a direct impact on the final output of the organisation.

According to Willis and Hunt (2004, p. 638), employees cannot exist within an organisation in isolation. They need to interact, and find ways through which they can address some of the challenges they face during their work. This is what the study of organisational behaviour entails. Dwivedi (2002, p. 265) says, Organisational behaviour interprets people-organisation relationships in terms of the whole person, whole group, whole organisation, and whole social system with a view of building a better relationships by achieving individual, organisational, and social objectives. From this definition, it is clear that organisational behaviour is a broad field that encompasses various topics. As Dwivedi (2006, p. 536) notes, some of the important components of organisational behaviour include elements, social systems, organisational development, work life, change, and models, some of which, will be discussed in this section.

Organisational behaviour has been considered one of the areas that play an important role in improving organisational performance. Three main elements have significant impact on organisational performance. The type of leadership that is used in an organisation will define the ability of a firm to be successful. A leader who understands the needs of the employees and is able to balance the interests of all the stakeholders within an organisation will make an organisation successful in its operations. Group dynamics is the second element that defines how well employees can work as a unit to address common problems within their working environment. Finally, communication strategies are important in the normal coordination of employees and other stakeholders within a firm. All these elements can be understood adequately through organisational behaviour studies. These elements are critically analyzed in the section below.

Elements of Organisational Behaviour

In every organisation, it is important to understand the elements of organisational behaviour and their effect on the quality of life at work for the employees. According to Farnham (2004, p. 430), understanding the organisational behaviour starts with a proper understanding of its goals, vision, and values which are the fundamental elements. The elements are important in defining an organisational behaviour, especially the manner in which employees undertake their duties within a given firm. In turn, Finlayson (1975, p. 36) says that organisational behaviour directly influence the type of leadership, group dynamics, and communication strategies that an organisation uses in its normal operational activities.

These three elements determine the quality of work life for the employees within an organisation. The motivation of the employees in an organisation will depend on their perception towards the work life as presented by the above three elements. If they consider their work life to be of high quality, they will be motivated, and this will be reflected in their output. If they feel that they are ignored, and that the system is unfair, their level of motivation will be very low, and this will be reflected in their output (Gandhi 1992, p. 292). Excellence in performance by the employees is closely related to the way they perceive their level of satisfaction. It is clear, therefore, that these elements are interrelated, and depending on how one it is treated, it may have a positive or negative ripple effect with the final output affecting the organisational performance.

Organisational Behaviour Models

According to Gaper (2002, p. 24), in order to understand the concept of the organisational behaviour, it is important to analyse its models, and their relevance in different contexts. The four models include autocratic, supportive, custodial, and collegial systems (Garial, Singh & Chattered 2007, p. 450).

Autocratic

In an autocratic system, the power rests with the manager whose authority cannot be questioned by the employees. The employees are expected to be very obedient to their boss who issues instructions on how tasks are to be undertaken by different individuals. This authoritarian approach to management is slowly fading away in competitive organisations (Reddy & Gayathri 2000, p. 65). According to (), autocratic leadership has negative impact on teamwork and employees commitment. It creates the impression that employees are just tools to be used by the leader to achieve personal gains. This in turn will affect their productivity in the firm.

Custodial

According to Helmut, Anheier and Ben-Ner (1997, p. 95), this model emphasises on the relevance of using economic resources to control and motivate employees within an organisation. This model holds that every employee is always interested in working for an organisation that pays well. For this reason, they feel that the organisation is the custodian of their monetary needs if such an organisation pays well. An organisation should take advantage of this and pay its employees at competitive rates as a way of boosting their performance. Custodial model is very appropriate when it comes to encouraging innovativeness among employees. As () notes, when employees are comfortable with their working conditions, they tend to be more innovative. This will boost their performance at work.

Supportive

The managerial orientation of this model lays on the need for the leaders to offer relevant support to the employees in their respective duties (Jain, Jain & Dhar 2004, p. 330). Sometimes it may be necessary to offer some kind of guidance to the employees, especially when they are addressing tasks that are relatively new to them. In this model, the focus is on the job performance. The need for the employee at this stage may be recognition out of exemplary work or status within the firm. This model seeks to encourage commitment among the employees as a way of booting performance results of the employees.

Collegial

The fourth model seeks to motivate partnership between the management unit and the employees, or among the employees themselves. The model holds that teamwork is very crucial for the overall success of an organisation. Sometimes the management may ignore the force of working as a team, and this may negatively affect the overall performance of the organisation (Reddy & Gayathri 2000, p. 340). The model also seeks to instil self-discipline as employees learn to interact positively with others in order to coexist peacefully.

The first model of autocracy was majorly used during the industrial revolution when there was a massive distrust between employers and employees. It is based on McGregors Theory X, which holds that employees are always lazy, and for them to work as per the expectations there is need for the leader to make regular supervision of their work (Saiyadain 2003, p. 10). This explains why this model gives the leader absolute authority over the employees. For a leader to direct a group of lazy employees looking for excuses that can make them abscond their duties, he or she needs such kind of authority that would make him or her revered.

The other three models have more inclination towards McGregors Theory Y, which states that employees are self-motivated individuals who are always willing to deliver the best results even without direct supervision (Sayeed 1992, p. 350). The Transformational Leadership Theory has supported this modern approach. This new system seeks to empower the employees and take the supervisory tasks from the managers to the employees themselves. In this approach, individual employees are expected to evaluate their performance and determine if they meet the expected standards. With the use of the right motivational approaches, this has been determined to be the most effective strategy that can help individual employees to change their perception of being mere employees, to being active members of their organisation (Sharma & Joshi 2001, p. 210). They will assume the responsibility of making the organisation successful in its operations.

Social Systems, Organisational Culture, and Individualisation in the Workplace

According to Jyotsna and Sheetal (2005, p. 468), A social system is a complex set of human relationships interacting in many ways. In an organisational setting, the behaviour of an individual may have a direct or indirect impact on other members of the organisation. It means that in this system, a given behavioural pattern of an individual cannot be considered to affect just that one individual (Sharma & Mohapatra 2009, p. 440). They system will get affected by such behaviour in one way or the other, and for this reason, it is important to define how individual should behave while in the organisation. Through consistence, the leadership of an organisation should make an effort to create an organisational behaviour that will define how employees are expected to behave.

Kang and Singh (2006, p. 201) say that developing practices, customs and beliefs within an organisation may need high level of consistency and communication because some employees may resist change even if they are aware that it is necessary. People will depend on the set-up structures to define their behavioural pattern while in a firm. Katuwal and Randhawa (2007, p. 244) define individualisation as A situation when employees successfully exert influence on the social system by challenging the culture. This is very common when working with a team of innovative employees who are always interested in challenging the existing system. This approach is always core in maintaining a competitive environment within an organisation. The diagram below shows the way individualisation may affect different firms.

Impact of Individualization on an Organization
Source: (Mangham 1998, p. 318).

In the first quadrant marked A, there is very low level of individualisation and socialisation which results into isolation. This happens when employees try to avoid free interaction with other employees or members of the organisation. It is not healthy for the overall performance of the organisation. In the second quadrant marked B, there is little socialisation with a high level of individualisation. This means that employees have a strong urge to change the current system that they do not believe in, but the system does not allow them to socialise in order to change the existing system (Sharma 1997, p. 209). This would lead to rebellion among the employees as they struggle to make themselves heard by the relevant authorities.

In the third quadrant marked C, there is high level of socialisation, but low rate of individualisation. In this quadrant, employees interact freely, but they are not able to challenge the existing systems because of various factors. For this reason, they are forced to conform to the existing system even if they are not comfortable with it. In the fourth quadrant marked D, there is high level of socialisation and high rate of individualisation (Singh & Warrier 1985, p. 340). This is the most desirable quadrant both for the employees and for the employees. In this system, employees are at liberty to socialise freely with the fellow employees or seniors officers. They also have strong urge to develop new ways of addressing various tasks within their workplace. Their innovative thoughts will be supported by an enabling environment, which would result into creative individualism. According to Michael (2004, p. 96), very few firms are able to achieve creative individualism because of a number of reasons. It is not easy to have a system that not only allows for close interaction among employees and between the employer and the employees. This in effect, will always frustrate the innovative minds of the employees, a fact that may lead to rebellion.

Organisational Development

Ketola (2006, 160) defines organisational development as A systematic application of the behavioural science knowledge at various levels, such as group, inter-group, and in organisations to bring about the planned change. Organisational development seeks to promote the working environment of the employees, the productivity of the organisation, its ability to adapt to the environmental forces, and efficiency in its processes (Singh 2005, p. 217). A comprehensive process addresses all the systems and stakeholders in order to promote satisfaction and performance. To achieve this, it focuses on transforming attitude, values, behaviour, strategies, structures, and procedures within an organisational system in order to match the changing environmental forces (Michie & Williams 2003, p. 8). This way, the stakeholders within the organisation will be able to realise that the positive change they desire starts with them. They have to embrace the emerging technologies and be ready to address environmental forces that may affect their operations in different ways. As Kothiyal (2005, p. 120) says, organisational development is humanistic in nature. It lays emphasis on the potential of the employees to deliver success to an organisation. It embraces change, focuses on problem solving strategies, and employs experimental learning as ways of managing the changing environmental forces.

Quality of work life

It is always a general belief that employees would be interested in organisations that offer attractive remunerations. However, this is slowly changing with the emerging group of workers who prefer working in less stressful organisations. According to the research by Leach (1999, p. 285), most organisation have failed to reinvent their workplace environment to reflect the current needs of the employees. The employees themselves solely determine quality of work life, and the remunerations offered is just a fraction of what it constitutes. Employees, being human being, always prefer working in an environment where they are treated with respect. They want their leaders to be considerate when addressing various issues. This means that the management approach used in an organisation may play a pivotal role in determining the quality of work life. Having work programs which are regard and non-responsive to the changing systems in the environment may be very stressful to the employees (Strunk, Schiffinger & Mayrhofer 2004, p. 504). The management must ensure that they are responsive to the environmental changes, and be ready to listen to their junior employees and address their concern whenever they arise.

The approach used in assigning duties may also affect the quality of work life. Lysons (2004, p. 288) notes that employees enjoy doing what they have the best knowledge in so that they can celebrate their success. When employees are assigned tasks that are unique to them, they may be frustrated as they undertake their duties, and this may have negative impact on the quality of work life. Promoting teamwork and high level of interaction among the employees may be another strategy of improving the quality work life (Tripathi & Tripathi 2002, p. 170). Sometimes it may be necessary to allow employees to interact freely in order to promote a scenario where employees are able to help one another in case of difficulties (Blunt 1995, p. 112). A junior manager should find it easy to visit a mid level or a senior manager to help him or her address a problem in her tasks. Both will be able to learn new things in their management roles. Maintaining a high quality work life will help in maintaining a team of motivated employees, which in turn will boot the performance of the organisation (Nilakant 2001, p. 111).

Change

Change in an organisational context is unavoidable, yet the most complex task that organisations always struggle to implement in their system. Conformity is always popular among many employees and even managers (Omer & Jain 2001, p. 244). People want to work with systems they are well aware of so that they avoid making mistakes. However, when presented with new systems that may require them to re-evaluate their skills and competence, they developed a feeling that their capacity to hold their current offices is put in question or under investigation (Cassematis & Wortley 2013, p. 620). This creates some discomfort even among some of the best performers. It is the discomfort that most employees are scared of, making them reluctant to accept change.

Panda (2008, p. 425) warns that change is something that an organisation cannot avoid because environmental forces are not static. Failing to adjust the organisational systems to be in line with the current environmental forces is a sure way of planning to fail. Pandey (1997, p. 45) observes that Kodak was almost sent out of the market it once controlled because of its mistake of avoiding change whose time had come. Other firms have been eliminated because of avoiding change or being too slow in their change management to address the changing environmental patterns (Biswas 1998, p. 72). Any organisation that seeks to achieve better performance with its workforce must have a clear strategy that it plans to use when addressing the issue of change (Tripathi, Kapok & Tripathi 2000, p. 36). It is only through this that employees can remain relevant to the organisation.

Classical Organisation Theory

The classical organisation theory is one of the oldest theories that were very useful, especially before the First World War (Biswas, Srivastava & Giri 2007, p. 34). The theory held that the market is always self-regulated, and the most important thing that organisations should focus on is the production of goods (Tsahuridu & Vandekerckhove 2008, p. 110). This means that the system meant for the production of goods had to be protected at all costs. However, the theory ignored two important stakeholders who play pivotal role in a firms success. It never considered the interests of the customers or the employees. This theory could have been relevant during that period when major companies did not face any serious competition in the market (Panda & Gupta 2003, p. 155). It may not work in the current system. This is specifically so because it ignored the interests of the employees. It assumed that employees within an organisation have no alternative but to work within the firm to earn a living. This assumption may have been valid during that period, especially just before the industrial revolution. It is unfortunate that some organisations are still applying some of the concepts of this theory (Bhatnagar 2006, p. 54). This may explain why some of the giant firms are struggling to manage the needs of their organisations.

Neoclassical Organisation Theory

The Neoclassical organisational theory was a direct effort to address some of the misconceptions that were common in the classical organisation theory (Pattanayak, Misra & Niranjana 2003, p. 2002). Mayo was one of the theorists who came out strongly to challenge the classical organisational theories because of some obvious lapses it had. In defining the neoclassical organisational theory, Paul and Anantharaman (2001, p. 264) say, Organisation is a system of consciously coordinated activities, and the executive has an important role of creating an atmosphere where there is coherence of values and purpose. This scholar emphasises on the need for the leaders to find ways of managing their employees in a way that would enhance their satisfaction (Bhal 2005, p. 378). Sometimes management units tend to ignore some pertinent issues affecting their employees within an organisation. These issues may have a direct negative impact on the ability of a firm to achieve its objectives that rely on the output of the employees (Bhal & Gulati 2004, 15). The neoclassical organisation theory has been the bedrock upon which many of the current organisational theories have been developed.

Contingency Theory

The Contingency Theory of organisation has been seen as a superior model of managing the organisational problems than the above two theories. While classical and neoclassical organisational theories emphasised on the need to avoid conflicts as a way of evading their disruptive nature, the contingency theory focuses on how to address these conflicts because they are unavoidable. Prasad (1995, p. 335) says that conflicts within an organisation should not be avoided because it is always manageable. The important thing is always to determine ways through which such conflicts can be addressed to the satisfaction of all the involved stakeholders. This theory has been widely used to address the problem of managing change within an organisation (Rajeshwari 1999, p. 420). External environmental forces are dynamic, and this means that organisations need to find ways of remaining relevant despite this dynamism. The theory holds that it is the role of an effective management unit to adapt to the changing environmental factors (Bakacsi 1998, p. 189). Employees look upon the management to offer guidance on how to manage change within an organisation. It means that the managers should be well informed about the change and its impact on their organisation. They should also know how it should be addressed to avoid disrupting the equilibrium within the organisation.

Prayag (2000, p. 581) says that one of the best ways of managing change based on this theory is to allow the mid and low level managers to make independent decisions at the local level without the bureaucracy of having to receive all the instructions from the top management (Bhal & Gulati 2004, 15). They should have power to make independent decisions over their domains because this not only makes them become responsible for their actions, but also allows the organisation to be flexible in managing environmental forces (Unsworth, Dmitrieva & Adriasola 2013, p. 220). Making decisions contingent on the prevailing situation is vital in helping the mid and junior managers to remain relevant to the local environmental forces.

Systems Theory

According to Pravesh and Biswajeet (2000, p. 420), although system theory was developed as early as 1928 by Ludwig von Bertalanffy, its application in organisational setting was made in the early 1980s when it was finally reshaped by scholars such as Rosensweig, Kast, and Scott. This theory holds that an organisation operates like a large system with various components, which are closely interrelated. Any change on any of the variables or components of the system will affect other components directly or indirectly. One centr