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Distribution Channel And Parle Essay

Distribution Channel And Parle Essay

Introduction
The bread and biscuits constitutes the largest segments of consumer foods in India. Both Biscuits and Bread are items of mass consumption in our Country. Almost 2 million tons of biscuits are produced in India each year and consumption is growing at 10-12 per cent annually. The per capita consumption of biscuits in the country is about 1.52 kg annually. Contrary to popular belief that biscuits are consumed by the middle and high income groups, it is actually the only nutritious and hygienic food product for children, lower income groups and the rural population.

Nearly 50 per cent of biscuits produced are consumed in rural areas and 30 per cent by income groups earning below Rs 750 per month.

Every 100 gm of glucose biscuits roughly provides 20 per cent of energy, protein and calcium required by an average adult. So as to explore the opportunities in these sectors, a large no. of companies is trying to increase their consumer base in these areas. For this they are offering various promotional schemes in order to make their brand familiar to consumers and to have a Competitive edge.

Parle G Industries has made a rapid progress in the variety, quality and quantity of biscuits and baked foods and has become India’s biggest brands and the preeminent food brand of the country. It is equally recognized for its innovative approach to products and marketing. The company’s offerings are spread across the spectrum with products ranging from the healthy and economical.

About the company
In 1929 a small company by the name of Parle products emerged in British dominated India.The intent was to spread joy and cheer to children and adults alike, all over the country with its sweets and candies. The company knew that it wouldn’t be an easy task, but they decided to take the brave step. A small factory was set up in the suburbs of Mumbai, to manufacture sweets and toffees. The Parle brand became well known in India following the success of products such as the Parle-G biscuits and Thums Up soft drink. The original Parle Company was split into three separate companies:

Parle Products
Parle Agro
Parle Bisleri

Today, the great strength of Parle Products is the extremely widespread distribution network. Even at the remotest places, you can buy Parle biscuits and sweets from the local grocer. It has taken years to create this extensive network. Parle’s sales force started with one salesman in Bombay and some agents in few other cities. Gradually, Parle Products expanded. Soon sweets and biscuits were being sent by rail to Calcutta, Delhi, Karachi, Madras and other major cities. As production increased, distribution was amplified. Full time salesmen were appointed in different areas. Currently, Parle Products has over 33, 00,000 distribution outlets.

Distribution Channel Network of Parle-G

Intensive Distribution- Parle uses, Intensive Distribution for Parle G. This is the ideal strategy for the market leader as intensive distribution has the following advantages; Increases coverage and sales.

Increases product availability.
Encourages retailers to compete aggressive.

Higher competition leads to narrower margins for the retails hence, increases the ultimate margin for the manufacturer.

Channel members of the distribution network: The Parle distribution network for biscuits has essentially four levels as enlisted below: Parle Depots
Wholesalers and Distributers
Carry Forward Agents (if required)
Retailers

Channel members and logistics: Parle has nearly 1500 wholesalers, catering to 425000 retail outlets directly or indirectly. A two hundred strong dedicated field force services these wholesalers and retailers. Additionally, there are 31 depots and Carry and Forward agents supplying goods to the wide distribution network. Parle has level 1, level 2, level 3 distribution channels levels. Level1- Availability at all departmental stores across the length and breadth of the country. Level2- Channel exists for customers scattered throughout the country. Level3-Mass consumption and suitable for National and International coverage.

Channel Dynamics: Parle has a multi-channel marketing system since it uses more than two marketing channels to reach all its customer segments.

Parle Distribution Network Logistics

Selection of Channel Members: Parle takes into consideration a host of factors while selecting the channel members. This is because it believes that selection of channel members is a long run decision and the rest of the decision regarding the supply chain depends upon the efficiency and coverage by the channel members. The following are the host of factors considered by the company in selecting the channel members: Authentication is required by the regarding the identity of the channel members, which includes the name and address, photograph of the location. Proof of solvency which requires name and address of the channel member’s bankers Safety of the inventory, which means that the distributor/ dealer should get the stock of the company insured. Inventory or the perishable goods kept by the distributor/ dealer should be in good condition which means a detail of storage space and Refrigeration facility is to be provided. Details of the delivery vehicle, which includes the following.

1. Light Commercial Vehicles:
2. Matador
3. 3 Wheeler Van
4. Tricycle Van and Hand/Push cart.
5. The number and model of each of the vehicle needs to be furnished to the company. Company acknowledges the fact that it needs to be sensitive to the market demands. For this it requires that a number of salesmen needs to be present on the field. The salesmen too are divided into various categories like

1. The Field salesmen
2. Counter salesmen

The details of Clerical Staff and labour are to be provided. The technical competence of the salesmen needs to be mentioned. Details of the various products of other companies that the channel member keeps have to be provided. The following also need to be furnished with the above: 1. The annual sales of these products have to be mentioned. 2. Details of complementary products and product lines need to be mentioned. Dealers of the company must carry a good reputation. This is due to the fact that Parle believes that the reputation of the dealer affects the clientele in the long run. Market coverage by the distributors needs to be defined which includes details of Geographic coverage and Outlets per market area. The company also requires the dealers to furnish any Advertising and Sales initiative undertaken by them on behalf of the company.

Channel Members of the Parle Distribution Network
a) Distributors:
One of the main factors, which keep the distributors motivated, is the margin. Usually the margins offered by Parle are 8%. Now-a-days it has been raised to 8.5%. Volume wise this comes out to be a big figure since Parle’s product has a good demand in the market. However compared to the other companies the margins are still lower since the new players in the market offer a much higher margin. But the very fact that Parle’s products have good demand in the market motivates the distributors to stock it. Parle Products being a cooperative cannot afford to give heavy monetary incentives. Parle’s products are considered to be value for money since the company does not believe in charging high margins. In fact all monetary incentives are just the short run means to promote the company’s product.

b) The Retailers:
Trade schemes: these are undertaken by the company only for the hard selling items. Glow boards: the company puts up glow boards at the retailer and pays the major portion of the cost. Schedule of the salesmen: they provide the retails with this schedule so the retailers can pre -estimate the quantities of the various products needed. Infrastructure facilitation: the company facilitates the retailers to buy beautiful stalls by formulating an easy payment program and a commitment to buy back the equipment at a reasonable price when the value of the equipment has depreciated.

Distribution Channel and Parle

The company’s strength is in the procurement of raw materials and essentially not the distribution of its product. Even though Parle is the market leader in biscuits. But, distribution logistics is the industry’s main problem. While the other companies fail to replenish demand due to lack in procurement of rawmaterial, Parle’s inventory management is sound. Parle has loyal cooperatives that provide products only to them, over time the relationship of trust has built up with these people that Parle leverages now. The transport channel is another strong point for Parle. As these transporters have grown with the company overtime; the bonding with them enables the company to give least margins when it comes to the distributors in the industry, lowering the costs.

Parle believes that there is an ongoing demand in the market and therefore no promotions are needed to increase the sales, also the fact this would affect the cost of the product the company doesn’tundertake many promotion schemes. Parle is able to provide products at the least price in the industry, and is able to give least channel margins as the channel members earn through volumes and not through high margins. The company has been able to push its new products into the market by hooking them onto the fast moving products like Parle butter bite. Because of the strong relationship that Parle shares with the constituent channel members, it forces the channel members to carry all its new products.

Suggestions for Distribution Channel
The following are the suggestions that Parle can implement to better its distribution channels: Increase the margins: In order to motivate the channel members it is also very essential for the company to increase the margins for the hard selling items. Pushcarts: These should be increased in number in order to increase the market reach (especially the rural market). This can provide with a very effective channel. Parle should also go in for ‘Parle’ Zones: It is primarily for big city retail outlets. Here all the Parle products can be stalked. This can be an effective mode of umbrella marketing. This strategy can be implemented in regions where the footfalls are large in number. The advantages of this alternative channel would be as follows:

1. Full range display.
2. Easier to promote new products.
3. Easy to push impulse purchase products.
4. The Parle Brand building exercise will be enhanced.

The Marketing Strategies Of Dell Inc Commerce Essay

Competitive advantage and market superiority tends to be among the top of the list of priorities of any business or commercial entity nowadays. Dell as a company has often been viewed as having a singular strategy, manufacturing build and selling products that are cheaper and more efficient than its competitors. In 1984, with only $1,000 in startup capital, Michael Dell established Dell as the first company in its industry to sell custom-built computers directly to end users, bypassing the dominant system of using resellers to sell mass produced computers. The following will explain how Dell utilizes the direct business model which increase the speed to market, superior customer service and dedication, and how Dell applies the latest technology more efficiently than the leading competitors.

Since a young age Michael Dell has been intrigued and fascinated in the idea of eliminating unnecessary steps. So it was not surprising when he established a company where there marketing strategy was based on eliminating the middleman. “We sell computers directly to our consumers, deals directly with our suppliers, and communicate directly with our people, all without the unnecessary and inefficient presence of intermediaries. We call this “the direct model,” and it has taken us, to use a common phrase at Dell Computer Corporation, “direct to the top”” (Dell, xvii). The direct business model eliminates retailers that add unnecessary time and cost, that could diminish Dell’s understanding of customer expectations. The direct model allows Dell to build every system in order to provide customers more powerful, better configured systems at competitive prices.

Dell’s direct business model is based on direct selling, eliminating the use of resellers and channels of retail. Dell was able to build brand loyalty amongst its consumers over a period of time through building direct relationships with them, constantly speaking to customers, and analyzing their preferences when purchasing a product. Through building these direct relationships which is a key component of the direct business method, Dell was able to understand and analyze the specific preferences of their consumers to satisfy their needs and wants. Expanding on the theme, Michael Dell expresses the emphasis of using the direct method thru direct relationship marketing:

With an average of approximately 1,400 telephone calls received daily, Dell gets real-time input from its customers regarding their product and service requirement, their views on various products in the market, and their response to Company advertising. This input gives the Company a competitive advantage in tailoring its product offerings and communication programs to meet its customers’ needs. Direct relationship marketing also eliminates the 25% to 45% dealer mark-up, thereby enabling the Company to price its products aggressively. In addition, the Company’s marketing strategy allows it to sell its products through Company employees who are trained specifically to sell Dell product.(Dell, 31)

The efficiency of the direct business model by of direct marketing relationships benefited Dell tremendously. Rather than doing guesswork on what they thought customers wanted; they were able to find out exactly what customers desired and preferred. So not only was Dell able to manufacture the products that customers wanted, but they were also able to develop them at high quality. “Our ability to produce a line of high performance products compatible with accepted IBM standards.( In fact, many of our products had performance features that were superior to IBM systems, and were frequently top-ranked by publication such as PC Magazine and PC World.)” (Dell. 31)

Dell has been able to excel ahead of its competitors through the use of the direct model. One key strength that gave Dell a competitive advantage according to Michael Dell was, “Michael Dell’s focus on concrete issues like cutting operation costs, improving delivery time, and maintaining customer service is the underlying force that has driven the company. Michael Dell’s establishment of the “direct model,” as well as his exploitation of the benefits of the Internet, has contributed vitally to the company’s successes in both the US and overseas markets.” (Richard San Juan, Gaebler Ventures)

In 1998, Dell became the number two manufacturers and marketer of personal computers in the world. Michael Dell was able to take his company that he started with the little money he earned in college, and turn it into one of the most profitable company’s today. Dell grew five times faster than the industry rate. Stocks rose more than two hundred percent, which is the largest share gain in the S&P 500 and NASDAQ 100. In the chart below, statistics shows that Dell has been able to thrive within the PC market, having the second largest market shares behind Hewlett-Packard in 2009. Although this chart is from the first quartile of 2009, in 2010 Dell’s market shares increased by 12.6 percent.

Dell’s market share in U.S. and Worldwide (in Q1 2009) compared to other top PC makers.( Dell’s “Direct Model” to Success – Dell’s Business Plan, San Juan)

Dell has been able to excel ahead of its competition within their industry. They were able to do this because companies continued to guess what products their customers actually wanted, Dell was already aware of their customers wants and needs for their products. Dell had the upper hand on its competitors because other company’s were manufacturing product based on the assumptions. Companies such as HP, Acer, Toshiba, Gateway, and Apple were losing a lot of capital. This is from their lack of knowledge of the consumers.

Although many analyst may have criticized Dell’s marketing strategy as one that is very simple and basic, it has been proven to be very efficient. Dell continues to maintain market leadership and profitable growth, and continues to reach out to new markets. Although later on in the text we will get into how Dell marketing strategies were incorporated thru the Internet, information and communication technologies and the Internet are greatly used in its direct business model. In the figure below of The Delta Model Map, the three major categories of Dell’s core competencies are shown. These three major categories are system lock in, best products, and total customer solution. The strengths and capabilities of Dell’s company can be seen on the map.

The Delta Model maps identifies three major categories of an organization’s core competencies.( Dell’s e-Marketing Strategies to Enhance Competitiveness, Chen)

System Lock-In – is the ability for a company like Dell to “lock-in” customers. Having customers that are brand loyal and continuously purchase products from that company such as Dell is to be “lock-in”. Dell having websites, and phone numbers for customers to assist them with any issues they may have increases the trust and loyalty customers have for the company.

Best Product- is products or services that are perceived by customers to be more efficient in the areas of quality, feature, functionality, sales services, and cost leadership. Dell provides customer with high quality prices at low cost because they take part in direct sales.

Total Customer Solution- The ability of an organization to offer and deliver integrated solutions to meet customer needs and satisfaction. Solutions comprises of products or services, products coupled with services, and customer integration and engagement business processes.( Dell’s “Direct Model” to Success – Dell’s Business Plan, San Juan)

Dell also introduces the latest relevant technology much more quickly than companies with slow moving, indirect distribution channels, and turning over inventory every three days on average.

Dell success is due in part to that they always had the willingness to look at things differently. In the industry that they are in that is important, and to stay motivated. This is important because when Dell first began using the Internet and expanding their business, many people said that it would not work. These were the same people who had doubted the direct business model and said it would fail. When Dell first began using the Internet to expand their business they had three objectives: “to make it easier to do business with Dell, to reduce the cost of doing business with Dell, and to enhance our customer relationship.”(Dell, 101) By using the Internet to help quicken the speed of information flowing between companies, made it possible to obtain precision and speed to market for products and services in very positive way.

Internet marketing or e-marketing strategies can be defined as “the design of marketing strategies that capitalizes on the organization’s electronic or information technology capabilities to reach specified objectives.” (Strauss et al, 2006, pg. 41). With the use of communication and technology, Dell has been able obtain customers information and history and store it in a warehouse. This information can be retrieved and accessed anytime for reporting issues. This data system warehouse serves as the safe of Dell’s marketing knowledge management system. So this is where Dell employee go to when analyzing customers behaviors and trends.

Understand the behavior of the customers is a very critical part in Dell’s marketing strategy. So thru having this data systems warehouse and the use of the direct business model, Dell is able to deliver the best experience to customers, whether it’s online or in stores. “The deliverables of the customer experience objective are: Best value proposition,; highest quality and most relevant technologies; customized systems; superior tailored service and support Products and services that are easy to buy (online 24×7) and use.” (Dell’s “Direct Model” to Success – Dell’s Business Plan, San Juan)

Dell divides their customers into two major groups, relationship and transactional. These two groups are very essential in the success of Dell’s products. “Relationship customers are customers who buy repeatedly and in larger quantities or value, while Transactional customers are customers who buy less frequently and in smaller quantities or value. Both Relationship and Transactional customers are further sub-segmented.” (Dell Marketing Strategies, Cage)

Transactional Vs Transformational Leadership

This essay is required to conduct a better understanding of leadership styles transactional and transformational leadership styles from researching on Richard Branson and Steve Jobs’ success, and discuss about different types of changes (incremental and radical changes) may occur in an organisation in order to learn change management methods can be applied to a real case (Virgin Group).

Although both of the excellent leaders exhibit characteristics of both transactional and transformational leadership styles, this essay will identify Steve Jobs as a transactional leader and Richard Branson as a transformational leader with three reasons for each statement.

This essay will identify and describe six examples of changes (incremental and radical) for each leader (three examples each type).

At last, this essay will discuss about the concepts of change management and explain Kotter’s 8-Step Change Model by applying to a real case (Virgin Group).

Transactional Leadership VS Transformational Leadership

Good leadership is the key to the success of an organization. Transactional leadership is performance-oriented and transformational leadership is people-oriented. To be more specific, transactional leadership involves reinforcement to monitor and justify followers’ performances by using reward and punishment, while transformational leadership tends to inspire and motivate the followers’ loyalty and concentration by leaders’ charisma.

Steve Jobs as Transactional Leader

Transactional leaders’ characteristic behaviours are: (Barbuto, 2005)

Contingent Reward

Contingent reward is actually a usual way that most of the managers use to motivate teams, create positive competition and improve effectiveness.

Steve Jobs had the impressive ability to notice talent and active employees and allocate them to the right place in the company. Each year, Jobs took his “top 100” people on a retreat. It is not only a reward as a vacation, but also an acknowledgement from STEVE JOBS!

In my opinion, acknowledgements from successful genius would be the best reward for my hard working.

Management by exception

Transactional leaders take actions based on the exceptions (performance) of the employees. Steve Jobs categorised his followers as either “geniuses” or “bozos”, and quickly firing those who fall in the latter camp (Greene-Blose, 2012).

Another characteristic of transactional leadership would be the desire for control which is typical Steve Jobs’ style. His favourite presentation tools were a whiteboard and a Magic Marker, which gives him fully control in the conference. After his reinventing Apple, Jobs had several weeks of product review sessions. Finally he run out of patience and shouted the team to stop, grabbed a Magic Marker to the white board and wrote down four words: Consumer, Pro., Desktop and Portable. Then he said:”Here is what we need!” (Isaacson, 2012)

This is Steve Jobs, full of power and passion, who gave clear incentives and strategies to his followers with his wisdom and visions.

Richard Branson as Transformational Leader

Transformational leaders’ characteristic behaviours are: (Barbuto, 2005)

Idealized influence

Richard Branson has become a role model for his followers inside or outside of his “Virgin Empire” by his own passionate and fearless life style. With his own words, “You want to create something you are proud of… That has always been my philosophy of business” (Branson), Richard Branson broke many world records such as the fastest recorded Atlantic crossing by boat, the first Atlantic crossing by hot-air balloon, etc. He proved that anything is possible to his followers and the rest of the world with real examples. (Ocker, 2008)

Inspiration motivation

Richard Branson is a visionary leader with dreams and relentless work attitude which make those dreams come true. At the early stage of Virgin Group business, he once said:”I want Virgin to be as well-known around the world as Coca-Cola”. (Branson) After decades of time, the brand of Virgin have become world well-known, and covers many different areas of business which Coca-Cola wound not dare to try. Those kinds of ambitions and courage ties his group together and close, and leads him to keep on improving Virgin Group services and productions.

Individualized consideration

Richard Branson’ business maxim is staff first, customers second and shareholders third (Locke, 2009). One of his most famous and interesting story would be the lawsuit against British Airways for its protracted libel actions and ended with a settlement of about £600,000 total. After Richard Branson got the money, he divided it to all his employees for their hard working. It was not only a reward, but more like sharing a triumph.

On the other hand, the major reason of Richard Branson’s business success is that he takes care of customers’ needs with innovations and consideration, such as placing a rubber ducky in each bathroom of Virgin-owned hotels in order to make guests feel ate home, putting Listening Posts in their record stores and allowing customers to listen to entire CDs before purchasing. (Richard Branson Virgin)

In general, transformational leadership style is considered more as a friendly and flexible way to organize a company, while transactional leadership is considered more tough and efficient. It is hard to say which one is better. All the good leaders all over the world (include the two above) have the characteristics of the both leadership styles., such as Steve Jobs’ charismatic characteristics and spiritual motivating speech skills (Transformational), and Richard Branson’ strict management ways on the lower level positions in the organisation (Transactional). Transformational leadership does not replace transactional leadership but improves the effectiveness of transactional leadership from a different angle. (Bernard, Bass, & Riggio, 2005)

Incremental Changes VS Radical Changes

Changes are inevitable in human lives as well as in business operations. Incremental change takes place over a long time period for development purposes, while radical change is more often triggered by a crisis or a business opportunity.

There are several differences listed in the following table.

Incremental Changes

Radical Changes

Reasons

Business development

Expansion

Dealing with crisis

Seizing a significant business opportunity

Period

Long period of time

Short period of time

Examples

Improvement

Such as TQM, new system implementation

Revolutionary changes

Such as restructuring, merger, take-over

Approaches types

May be small, slow, on-going

May be onetime events, quick

Respond and effect

Hardly noticed by the management level

Immediately adapt

May cause resistance to changes

Steve Jobs – Incremental Changes

Example1: Pixar

In 1986, Steve Jobs bought “The Graphics Group” from Lucasfilm for $10 millions, changed the name to “Pixar” and started his career in animation manufacturing. With his visionary plans and technology support from his computer company NeXT, Pixar developed a software package called RenderMan (which has been widely accepted and used in filmmaking industry). RenderMan was implemented into the existing Pixar production line slowly in order to improve quality of the products. After ten years time, Pixar finally achieved an amazing success in the animation filming industry. It kept producing a series of animation films, beginning with Toy Story (1995), which led Pixar’s worth to over $1.5 billion.

It took 10 years to implementing and perfecting the new software into production and transferring Steve Jobs’ leadership style into Pixar’s existing operation, and achieves a remarkable improvement at the end. This is an incremental change made by Steve Jobs.

Example2: Digital hub strategy

After Steve Jobs returning to Apple in 1997 as an “interim” CEO, he successfully brought Apple back to profitability with a amazing consumer desktop computer – iMac. By facing negative predictions about proclaiming PCS would disappear within a couple of years, Steve Jobs continuously led Apple to keep on perfecting “i” products with the meaning of “internet, individual, instruct, inform and inspire” as the same way Apple always do. (Steve Jobs’ introductory 1998 iMac slide show)

In 2001, Steve Jobs unveiled the Digital Hub Strategy to the public and in the next 10 years time he kept on launching a series of new products which extremely changed and led the trade of the whole world. (Kurian, 2012)

There was an interesting event that Steve Jobs called himself as the “iCEO” of Apple instead of “interim” CEO humorously which entertained the public very much (Macworld San Francisco 2000). It was also a smart way to promoting “i” products while teasing with the board of Apple for rehiring him as a temporary executive officer.

This huge successful change took 10 years to be accomplished followed by Steve Jobs’ leadership piece by piece. It maintained the old producing direction and improved production qualities. It was a long period on-going process of implementing Jobs’ wisdom into Apple Company.

Example3: Retirement from Apple

Steve Jobs was diagnosed with pancreatic cancer in 2003, but he kept on denying any serious problem. That is why everyone was surprised when Apple announced that Steve Jobs would not go on stage for the Macworld keynote in 2009, and he took six months off at the same year. Jobs finally resigned as CEO of Apple in 2011 but remained as the Chairman of the company’s board, and he passed away after 6 weeks. (Kurian, 2012)

There may be some radical changes involved for damage control purpose, but in general, Steve Jobs took care of his retirement carefully and smoothly to avoid negative impact within 3 years time. For instance, he distributed his responsibilities to other executives step by step, and before his final resign, he strongly recommended Tim Cook in written, that letter was released to the public later in order to retain faith. The whole process was carefully planned and implemented in a long time step by step. In my opinion, it can be an incremental change.

Steve Jobs – Radical Changes

Example1: Macintosh VS Lisa

In the early 80s, Apple was creating a business-oriented computer named Lisa under Steve Jobs’ supervising, but later after that, Steve Jobs thrown out of the Lisa project because of his bad temper. He was so angry and decided to take revenge by developing a small project called Macintosh in order to destroy the sales of Lisa. (Kurian, 2012)

It was a radical strategy. Macintosh had user-friendly interface (point-and -click) which inspired other computer manufactories and changed the direction of computer industry since then, but it was not as welcome to the market as Jobs expected though. At that time, IBM’s PC was more compatible with its cheaper price.

Because this action was taken rapidly without well planning and careful market researching, Macintosh project failed.

Example2: Staging a Coup

There was another revenge taken by Steve Jobs after his removal from Lisa project, he tried to stage a coup. As we all know, he failed again. (Kurian, 2012)

It was a restructuring plan, and he took actions rapidly. But without endorsement from Apple’ board of directors and support from other colleagues, he got fired from his own company.

Example3: Reinventing Apple

By 1996, Apple rehired Steve Jobs as an “informal adviser to the CEO”. At that time, Apple was keeping on losing money and Steve Jobs staged another coup. He successes this time and became an “interim” CEO in 1997.The first thing he had done after his promotion is cutting off the production lines and focused on four products. This effective decision brought the lost confidence back to the Apple community (Kurian, 2012). In the meantime, Jobs took other actions such as announcing a new slogan “Think Different” and launched an amazing project which brought Apple’s resurgence lately, the iMac. (Edwards, 2008)

Those actions and decisions above are radical changes (restructuring and redesigning the production processes). They were new strategies to the company for solving a financial crisis in a short time period.

Richard Branson – Incremental Changes

Example1: Virgin Atlantic

There are some unique features Virgin Atlantic has while other airways may not have can be considered as incremental changes. Such as, serving a cup of ice cream while passengers watching movies during travelling in order to provide a better service. Virgin Atlantic does not provide meals for short distance flight in order to reduce ticket price. This kind of services is provided for improving quality of service.

Example2: Virgin Group

Because Richard Branson received a lot of support from his family and friends during hi early period of business stage (borrowed money from his auntie and supported by John Lennon), the whole Virgin Group services can be considered as a long term process for implementing Richard Branson’s plan of giving back to the society and helping those people who has ambitious but doesn’t have opportunities. Such as, Virgin Money provides a set of formalised documentations help people who need loans. Although Virgin Money U.S. did not work well in USA, Richard Branson helped millions of people with his good heart in UK. Those actions can be considered as Incremental Changes.

Example3: Eco-friendly efforts

In 2007, Richard Branson launched Virgin Earth Challenge dedicating in to environmental issues. He made several decisions that supervised the whole world, such as a $25 millions prize for inventors who comes up with a viable solution for scrubbing carbon gases from atmosphere. He also pledged to reinvest all profits from Virgin transportation business over the decade into developing ecologically benign fuels.

This kind of actions may not affect other Virgin companies, but they will improve Virgin Group’s reputation, it is also a long time period project.

Richard Branson – Radical Changes

Example1: Virgin Records Shop

At the beginning, Richard Branson started his records business as mail ordering company in London, and it went well. After a postal strike, the mail order business was crippled. Richard Branson was forced to seek new outlets and he opened his first retail store in Oxford Street in 1971.

This was a strategy for dealing with a crisis situation, and operated immediately. It changed Virgin Record’s business process and structure.

Example2: Selling Virgin Music Group

Selling Virgin Music probably would be the hardest decision Richard Branson has ever made in his whole lifetime. This decision was made in order to get money to take Virgin Atlantic back into private ownership (Vinnedge, 2009).

This change was forced by a financial crisis and included restructuring process.

Example3: Closing Virgin Money U.S.

Richard Branson launched a loan servicing company called Virgin Money U.S. in America in 2007, and began its withdrawal after 2 years (Lepro, 2010). Its social loans were transferred to Graystone Solutions. This time, Richard Branson misjudged the market and had to make the decision in order to limit the damage. Other reasons of this collapse might be the bad economy and different culture in America. This change included restructuring and take-over in a short time.

To sum up the above examples and explanations, incremental changes are normally well planned and taken over by pieces, there is less possibilities of failure. Radical changes are immediate responses for a crisis or significant opportunity, there are chances of failure.

Change Management in Virgin Group

Story of Virgin Mobile

In 2007, Virgin Group announced the completion of its biggest challenge which brought over 10 million customers and 13,000 employees – merger of NTL, Telewest and Virgin Mobile under the Virgin Media brand. It is known as the largest Virgin Company in the world.

This operation took more than two years to complete the whole the merger, and Virgin Group handled it carefully, especially on employees’ resistance.

Reasons of employees’ resistance to this change and strategies

It is necessary for leaders to understand that resistances to changes are normal. In order to deal with those obstacles, leaders have to identify reasons of employees’ resistances firstly and develop different strategies for different situations.

Some common reasons are following:

Fear

Mostly, employees’ fear comes from uncertainty about their career. In this situation, employees were worried about if there would be a layoff or if they were qualified for the new company.

Strategies: Virgin Group kept employees involved during managing changes. The high level of the management went done to the front line staff and listened to the staff’s ideas and problems, and shared their own experiences. Richard Branson took care of individual needs carefully. Meanwhile, he also announced that if the employees no longer have the enthusiasm, they would be better to find a new job. As long as the employees performed with full responsibilities, they would always be considered as a part of the company. This kind of instructions increased the sense of the urgency, and motivated employees to move on positively.

No faith in new process

Former NTL and Telewest employees might have uncertainties about the new process of Virgin Group. Because NTL and Telewest Company had several years of struggling with the bad economy environment, they could not be sure whether the new company would lead them to improve the organisational performance.

Strategies: Richard Branson gave responsibilities to his employees, and went to the front line personally to inform clear instructions. Establishing clear instructions and explanations, and demonstrating a picture of a better future would increase employees’ faith and certainty of the new process.

Comfort & personal preference

Former NTL and Telewest employees had their own ways of daily operations, and the new company brought its new ways of doing business, so they might have the difficulties to adopt the new culture. Such as, those staff had their old way of dealing with customers’ calls by following the instructions and scripts strictly, while Richard Branson believes that each customer would have his/her unique problem, staff should help different customers differently.

Strategies: Richard Branson threw away all the scripts and told call-center employees to help customers within one call if possible. In order to support their work, he allocated necessary resources to the font line.

Lack of knowledge

Although some former NTL and Telewest employees were expert in their old company, they might need to start from the beginning since the new company had its unique ways of doing business.

Strategies: For this kind of anxiety, Richard Branson responded with three words only: “Live and Learn”! He provided resources and training programs for employees in order to create a positive learning environment, and he also encouraged communication among different levels of the management to understand individual difficulties.

Lack of trust

Virgin Group has different diversity of businesses and it used to prefer small piece of business, whether Richard Branson has the ability to lead the large company to make profit and keep growing would be unpredictable. This is the reason that some employees might have difficulties to adapt the changes.

Strategies: Richard Branson kept developing new products and services, and led the company to profitability, such as more packages of Virgin Broadband, more channels and TV programs for Virgin Media Television, and etc. Those successes brought back the trust in several years, not immediately.

Application of Kotter’s Change Model

Create Urgency

At this stage, it is necessary to deliver a message that the whole company really needs this change. The company has to provide solid reasons and convincing dialogues support this decision. To Kotter’s belief, this stage is the most important stage; lack of preparation would easily lead to a project failure.

In Virgin Media’s case, leader should show people NTL and Telewest’s poor performance reports and most importantly, the potentials, because no one will have faith in a failed business. With a brief introduction of development scenarios, leader should emphasise the opportunities and benefit from this merger.

Form a Powerful Coalition

In order to influence people to accept the change, leader needs a group of key people from different department to support the change management process. They don’t necessary have to be who has legitimate power, but also can be expert, and other influential people.

In Virgin Media’s case, leader should select powerful and influential people from ex-NTL and ex-Telewest Company, and select good communicators from Virgin Mobile, in order to organise a supportive team. Once organised, the team needs to work together and continuing to create urgency in their own working areas.

Create a Vision for Change

The next step would be generating an overall vision about the change, including values and reasons of the change, short summaries, and strategies to execute that vision.

In Virgin Media’s case, leader should have a clear idea about what to do with ex-NTL and ex-Telewest, and why Virgin Mobile needs to conduct a merger with them. As the matter of the fact, Richard Branson was trying to build the first “quadruple play [1] ” media company in UK, and after couple of years hard working, he did it.

Communicate the Vision

After creating the vision, leader should deliver the message to the team members, and with their help, the message can be distributed to all aspects of the company. The message should not be sent through meetings only, most importantly through daily communications among the whole company.

In Virgin Media’s Case, Richard Branson tried to communicate with employees as much as possible and motivate them to maintain in a positive working attitude. Those ideas and visions were implanted into employees’ mind during those communications.

Remove Obstacles

In order to ease employees’ resistance to changes, leader should avoid having resistance to employees’ resistance. Leader should be willing to listen and understand employees’ difficulties and find a way to help them walk through it.

In Virgin Media’ case, Richard Branson provided clear instructions to all employees, and went to the front-line in person to listen to employees. He allocated necessary resources to them and tried to create a learning environment, in order to improve performance.

Create Short-term Wins

Celebrations for short-term wins would be the easiest and most efficient way to prove that “we are doing the right things and we are doing things right”. It is not only for motivating employees’ passion of working, but also for gaining trust.

In Virgin Media’s case, leader should recognize and reward people for their excellent performance and making changes happen, and encourage them to keep on working positively.

Build on the Change

Kotter believes that it is very important for leaders to avoid celebrating too early and being complacent about current short-term success. There would be always rooms for improvement.

In Virgin Media’s Case, Richard Branson kept on producing and developing new products and services, and tracking on employees’ performances all the time. He went through daily operations in details in person to seek for ways of improvements.

Anchor the Changes in Corporate Culture

Formalising the changes and including them as part of organisation’s culture would be the last step of change management process. This step can be considered as a closure and promotion.

In Virgin Media’s case, Richard Branson announced Virgin Group’s success to the public all the time through different kind of channels, such as TV, radio, Virgin websites, blogs, magazines and etc.

Conclusion

After researching on Steve Jobs and Richard Branson’ life stories as a leader, this essay is conducted in order to gain a better understanding about the concepts of being an excellent leader.

Leadership Style

Steve Jobs was considered as a tough and strict (even “dictatorial”) leader, but he was also a respectful leader who could inspire and motivate followers by using his wisdom and charismas. Richard Branson is considered as gentle and flexible leaders, but he is very strict on day-to-day operations. As a leader, being transactional can improve employees’ performance while being transformational can improve effectiveness. Therefore, there is no one simple leadership style for one organisation. Both of the leadership styles are crucial to a business’ success.

Types of changes

Incremental change may takes place over a long time period for development and improvement purpose, while radical change may be triggered by a crisis or a business opportunity and generated in a short time period.

Because incremental changes are normally well planned and taken over by pieces, there is less possibilities of failure. Radical changes are initiated immediately after realising a crisis or significant opportunity, so without a careful plan and on-going monitoring there are chances of failure.

Change Management

It is important to understand that employees’ resistance to changes are natural, but how to manage those negative feelings are critical. In general, leader should keep employees involved in the decision making, address their problems and seek for solutions, create a positive learning environment and make the change happen by working with employees as an example.

Change management processes should be carefully planned and operated, especially the preparing stage (Create Urgency). A powerful coalition’s positive support would make the operations accomplished smoothly, that is why selecting the right team member is very important. Leader and coalition should lead by examples, communicate with employees and deliver visions as much as possible. Do remember celebrating on short-term wins and establish big victory formally as company’s culture.

The Marketing Strategies Of Dell Inc Commerce Essay

Competitive advantage and market superiority tends to be among the top of the list of priorities of any business or commercial entity nowadays. Dell as a company has often been viewed as having a singular strategy, manufacturing build and selling products that are cheaper and more efficient than its competitors. In 1984, with only $1,000 in startup capital, Michael Dell established Dell as the first company in its industry to sell custom-built computers directly to end users, bypassing the dominant system of using resellers to sell mass produced computers. The following will explain how Dell utilizes the direct business model which increase the speed to market, superior customer service and dedication, and how Dell applies the latest technology more efficiently than the leading competitors.

Since a young age Michael Dell has been intrigued and fascinated in the idea of eliminating unnecessary steps. So it was not surprising when he established a company where there marketing strategy was based on eliminating the middleman. “We sell computers directly to our consumers, deals directly with our suppliers, and communicate directly with our people, all without the unnecessary and inefficient presence of intermediaries. We call this “the direct model,” and it has taken us, to use a common phrase at Dell Computer Corporation, “direct to the top”” (Dell, xvii). The direct business model eliminates retailers that add unnecessary time and cost, that could diminish Dell’s understanding of customer expectations. The direct model allows Dell to build every system in order to provide customers more powerful, better configured systems at competitive prices.

Dell’s direct business model is based on direct selling, eliminating the use of resellers and channels of retail. Dell was able to build brand loyalty amongst its consumers over a period of time through building direct relationships with them, constantly speaking to customers, and analyzing their preferences when purchasing a product. Through building these direct relationships which is a key component of the direct business method, Dell was able to understand and analyze the specific preferences of their consumers to satisfy their needs and wants. Expanding on the theme, Michael Dell expresses the emphasis of using the direct method thru direct relationship marketing:

With an average of approximately 1,400 telephone calls received daily, Dell gets real-time input from its customers regarding their product and service requirement, their views on various products in the market, and their response to Company advertising. This input gives the Company a competitive advantage in tailoring its product offerings and communication programs to meet its customers’ needs. Direct relationship marketing also eliminates the 25% to 45% dealer mark-up, thereby enabling the Company to price its products aggressively. In addition, the Company’s marketing strategy allows it to sell its products through Company employees who are trained specifically to sell Dell product.(Dell, 31)

The efficiency of the direct business model by of direct marketing relationships benefited Dell tremendously. Rather than doing guesswork on what they thought customers wanted; they were able to find out exactly what customers desired and preferred. So not only was Dell able to manufacture the products that customers wanted, but they were also able to develop them at high quality. “Our ability to produce a line of high performance products compatible with accepted IBM standards.( In fact, many of our products had performance features that were superior to IBM systems, and were frequently top-ranked by publication such as PC Magazine and PC World.)” (Dell. 31)

Dell has been able to excel ahead of its competitors through the use of the direct model. One key strength that gave Dell a competitive advantage according to Michael Dell was, “Michael Dell’s focus on concrete issues like cutting operation costs, improving delivery time, and maintaining customer service is the underlying force that has driven the company. Michael Dell’s establishment of the “direct model,” as well as his exploitation of the benefits of the Internet, has contributed vitally to the company’s successes in both the US and overseas markets.” (Richard San Juan, Gaebler Ventures)

In 1998, Dell became the number two manufacturers and marketer of personal computers in the world. Michael Dell was able to take his company that he started with the little money he earned in college, and turn it into one of the most profitable company’s today. Dell grew five times faster than the industry rate. Stocks rose more than two hundred percent, which is the largest share gain in the S&P 500 and NASDAQ 100. In the chart below, statistics shows that Dell has been able to thrive within the PC market, having the second largest market shares behind Hewlett-Packard in 2009. Although this chart is from the first quartile of 2009, in 2010 Dell’s market shares increased by 12.6 percent.

Dell’s market share in U.S. and Worldwide (in Q1 2009) compared to other top PC makers.( Dell’s “Direct Model” to Success – Dell’s Business Plan, San Juan)

Dell has been able to excel ahead of its competition within their industry. They were able to do this because companies continued to guess what products their customers actually wanted, Dell was already aware of their customers wants and needs for their products. Dell had the upper hand on its competitors because other company’s were manufacturing product based on the assumptions. Companies such as HP, Acer, Toshiba, Gateway, and Apple were losing a lot of capital. This is from their lack of knowledge of the consumers.

Although many analyst may have criticized Dell’s marketing strategy as one that is very simple and basic, it has been proven to be very efficient. Dell continues to maintain market leadership and profitable growth, and continues to reach out to new markets. Although later on in the text we will get into how Dell marketing strategies were incorporated thru the Internet, information and communication technologies and the Internet are greatly used in its direct business model. In the figure below of The Delta Model Map, the three major categories of Dell’s core competencies are shown. These three major categories are system lock in, best products, and total customer solution. The strengths and capabilities of Dell’s company can be seen on the map.

The Delta Model maps identifies three major categories of an organization’s core competencies.( Dell’s e-Marketing Strategies to Enhance Competitiveness, Chen)

System Lock-In – is the ability for a company like Dell to “lock-in” customers. Having customers that are brand loyal and continuously purchase products from that company such as Dell is to be “lock-in”. Dell having websites, and phone numbers for customers to assist them with any issues they may have increases the trust and loyalty customers have for the company.

Best Product- is products or services that are perceived by customers to be more efficient in the areas of quality, feature, functionality, sales services, and cost leadership. Dell provides customer with high quality prices at low cost because they take part in direct sales.

Total Customer Solution- The ability of an organization to offer and deliver integrated solutions to meet customer needs and satisfaction. Solutions comprises of products or services, products coupled with services, and customer integration and engagement business processes.( Dell’s “Direct Model” to Success – Dell’s Business Plan, San Juan)

Dell also introduces the latest relevant technology much more quickly than companies with slow moving, indirect distribution channels, and turning over inventory every three days on average.

Dell success is due in part to that they always had the willingness to look at things differently. In the industry that they are in that is important, and to stay motivated. This is important because when Dell first began using the Internet and expanding their business, many people said that it would not work. These were the same people who had doubted the direct business model and said it would fail. When Dell first began using the Internet to expand their business they had three objectives: “to make it easier to do business with Dell, to reduce the cost of doing business with Dell, and to enhance our customer relationship.”(Dell, 101) By using the Internet to help quicken the speed of information flowing between companies, made it possible to obtain precision and speed to market for products and services in very positive way.

Internet marketing or e-marketing strategies can be defined as “the design of marketing strategies that capitalizes on the organization’s electronic or information technology capabilities to reach specified objectives.” (Strauss et al, 2006, pg. 41). With the use of communication and technology, Dell has been able obtain customers information and history and store it in a warehouse. This information can be retrieved and accessed anytime for reporting issues. This data system warehouse serves as the safe of Dell’s marketing knowledge management system. So this is where Dell employee go to when analyzing customers behaviors and trends.

Understand the behavior of the customers is a very critical part in Dell’s marketing strategy. So thru having this data systems warehouse and the use of the direct business model, Dell is able to deliver the best experience to customers, whether it’s online or in stores. “The deliverables of the customer experience objective are: Best value proposition,; highest quality and most relevant technologies; customized systems; superior tailored service and support Products and services that are easy to buy (online 24×7) and use.” (Dell’s “Direct Model” to Success – Dell’s Business Plan, San Juan)

Dell divides their customers into two major groups, relationship and transactional. These two groups are very essential in the success of Dell’s products. “Relationship customers are customers who buy repeatedly and in larger quantities or value, while Transactional customers are customers who buy less frequently and in smaller quantities or value. Both Relationship and Transactional customers are further sub-segmented.” (Dell Marketing Strategies, Cage)

Transactional Vs Transformational Leadership

This essay is required to conduct a better understanding of leadership styles transactional and transformational leadership styles from researching on Richard Branson and Steve Jobs’ success, and discuss about different types of changes (incremental and radical changes) may occur in an organisation in order to learn change management methods can be applied to a real case (Virgin Group).

Although both of the excellent leaders exhibit characteristics of both transactional and transformational leadership styles, this essay will identify Steve Jobs as a transactional leader and Richard Branson as a transformational leader with three reasons for each statement.

This essay will identify and describe six examples of changes (incremental and radical) for each leader (three examples each type).

At last, this essay will discuss about the concepts of change management and explain Kotter’s 8-Step Change Model by applying to a real case (Virgin Group).

Transactional Leadership VS Transformational Leadership

Good leadership is the key to the success of an organization. Transactional leadership is performance-oriented and transformational leadership is people-oriented. To be more specific, transactional leadership involves reinforcement to monitor and justify followers’ performances by using reward and punishment, while transformational leadership tends to inspire and motivate the followers’ loyalty and concentration by leaders’ charisma.

Steve Jobs as Transactional Leader

Transactional leaders’ characteristic behaviours are: (Barbuto, 2005)

Contingent Reward

Contingent reward is actually a usual way that most of the managers use to motivate teams, create positive competition and improve effectiveness.

Steve Jobs had the impressive ability to notice talent and active employees and allocate them to the right place in the company. Each year, Jobs took his “top 100” people on a retreat. It is not only a reward as a vacation, but also an acknowledgement from STEVE JOBS!

In my opinion, acknowledgements from successful genius would be the best reward for my hard working.

Management by exception

Transactional leaders take actions based on the exceptions (performance) of the employees. Steve Jobs categorised his followers as either “geniuses” or “bozos”, and quickly firing those who fall in the latter camp (Greene-Blose, 2012).

Another characteristic of transactional leadership would be the desire for control which is typical Steve Jobs’ style. His favourite presentation tools were a whiteboard and a Magic Marker, which gives him fully control in the conference. After his reinventing Apple, Jobs had several weeks of product review sessions. Finally he run out of patience and shouted the team to stop, grabbed a Magic Marker to the white board and wrote down four words: Consumer, Pro., Desktop and Portable. Then he said:”Here is what we need!” (Isaacson, 2012)

This is Steve Jobs, full of power and passion, who gave clear incentives and strategies to his followers with his wisdom and visions.

Richard Branson as Transformational Leader

Transformational leaders’ characteristic behaviours are: (Barbuto, 2005)

Idealized influence

Richard Branson has become a role model for his followers inside or outside of his “Virgin Empire” by his own passionate and fearless life style. With his own words, “You want to create something you are proud of… That has always been my philosophy of business” (Branson), Richard Branson broke many world records such as the fastest recorded Atlantic crossing by boat, the first Atlantic crossing by hot-air balloon, etc. He proved that anything is possible to his followers and the rest of the world with real examples. (Ocker, 2008)

Inspiration motivation

Richard Branson is a visionary leader with dreams and relentless work attitude which make those dreams come true. At the early stage of Virgin Group business, he once said:”I want Virgin to be as well-known around the world as Coca-Cola”. (Branson) After decades of time, the brand of Virgin have become world well-known, and covers many different areas of business which Coca-Cola wound not dare to try. Those kinds of ambitions and courage ties his group together and close, and leads him to keep on improving Virgin Group services and productions.

Individualized consideration

Richard Branson’ business maxim is staff first, customers second and shareholders third (Locke, 2009). One of his most famous and interesting story would be the lawsuit against British Airways for its protracted libel actions and ended with a settlement of about £600,000 total. After Richard Branson got the money, he divided it to all his employees for their hard working. It was not only a reward, but more like sharing a triumph.

On the other hand, the major reason of Richard Branson’s business success is that he takes care of customers’ needs with innovations and consideration, such as placing a rubber ducky in each bathroom of Virgin-owned hotels in order to make guests feel ate home, putting Listening Posts in their record stores and allowing customers to listen to entire CDs before purchasing. (Richard Branson Virgin)

In general, transformational leadership style is considered more as a friendly and flexible way to organize a company, while transactional leadership is considered more tough and efficient. It is hard to say which one is better. All the good leaders all over the world (include the two above) have the characteristics of the both leadership styles., such as Steve Jobs’ charismatic characteristics and spiritual motivating speech skills (Transformational), and Richard Branson’ strict management ways on the lower level positions in the organisation (Transactional). Transformational leadership does not replace transactional leadership but improves the effectiveness of transactional leadership from a different angle. (Bernard, Bass, & Riggio, 2005)

Incremental Changes VS Radical Changes

Changes are inevitable in human lives as well as in business operations. Incremental change takes place over a long time period for development purposes, while radical change is more often triggered by a crisis or a business opportunity.

There are several differences listed in the following table.

Incremental Changes

Radical Changes

Reasons

Business development

Expansion

Dealing with crisis

Seizing a significant business opportunity

Period

Long period of time

Short period of time

Examples

Improvement

Such as TQM, new system implementation

Revolutionary changes

Such as restructuring, merger, take-over

Approaches types

May be small, slow, on-going

May be onetime events, quick

Respond and effect

Hardly noticed by the management level

Immediately adapt

May cause resistance to changes

Steve Jobs – Incremental Changes

Example1: Pixar

In 1986, Steve Jobs bought “The Graphics Group” from Lucasfilm for $10 millions, changed the name to “Pixar” and started his career in animation manufacturing. With his visionary plans and technology support from his computer company NeXT, Pixar developed a software package called RenderMan (which has been widely accepted and used in filmmaking industry). RenderMan was implemented into the existing Pixar production line slowly in order to improve quality of the products. After ten years time, Pixar finally achieved an amazing success in the animation filming industry. It kept producing a series of animation films, beginning with Toy Story (1995), which led Pixar’s worth to over $1.5 billion.

It took 10 years to implementing and perfecting the new software into production and transferring Steve Jobs’ leadership style into Pixar’s existing operation, and achieves a remarkable improvement at the end. This is an incremental change made by Steve Jobs.

Example2: Digital hub strategy

After Steve Jobs returning to Apple in 1997 as an “interim” CEO, he successfully brought Apple back to profitability with a amazing consumer desktop computer – iMac. By facing negative predictions about proclaiming PCS would disappear within a couple of years, Steve Jobs continuously led Apple to keep on perfecting “i” products with the meaning of “internet, individual, instruct, inform and inspire” as the same way Apple always do. (Steve Jobs’ introductory 1998 iMac slide show)

In 2001, Steve Jobs unveiled the Digital Hub Strategy to the public and in the next 10 years time he kept on launching a series of new products which extremely changed and led the trade of the whole world. (Kurian, 2012)

There was an interesting event that Steve Jobs called himself as the “iCEO” of Apple instead of “interim” CEO humorously which entertained the public very much (Macworld San Francisco 2000). It was also a smart way to promoting “i” products while teasing with the board of Apple for rehiring him as a temporary executive officer.

This huge successful change took 10 years to be accomplished followed by Steve Jobs’ leadership piece by piece. It maintained the old producing direction and improved production qualities. It was a long period on-going process of implementing Jobs’ wisdom into Apple Company.

Example3: Retirement from Apple

Steve Jobs was diagnosed with pancreatic cancer in 2003, but he kept on denying any serious problem. That is why everyone was surprised when Apple announced that Steve Jobs would not go on stage for the Macworld keynote in 2009, and he took six months off at the same year. Jobs finally resigned as CEO of Apple in 2011 but remained as the Chairman of the company’s board, and he passed away after 6 weeks. (Kurian, 2012)

There may be some radical changes involved for damage control purpose, but in general, Steve Jobs took care of his retirement carefully and smoothly to avoid negative impact within 3 years time. For instance, he distributed his responsibilities to other executives step by step, and before his final resign, he strongly recommended Tim Cook in written, that letter was released to the public later in order to retain faith. The whole process was carefully planned and implemented in a long time step by step. In my opinion, it can be an incremental change.

Steve Jobs – Radical Changes

Example1: Macintosh VS Lisa

In the early 80s, Apple was creating a business-oriented computer named Lisa under Steve Jobs’ supervising, but later after that, Steve Jobs thrown out of the Lisa project because of his bad temper. He was so angry and decided to take revenge by developing a small project called Macintosh in order to destroy the sales of Lisa. (Kurian, 2012)

It was a radical strategy. Macintosh had user-friendly interface (point-and -click) which inspired other computer manufactories and changed the direction of computer industry since then, but it was not as welcome to the market as Jobs expected though. At that time, IBM’s PC was more compatible with its cheaper price.

Because this action was taken rapidly without well planning and careful market researching, Macintosh project failed.

Example2: Staging a Coup

There was another revenge taken by Steve Jobs after his removal from Lisa project, he tried to stage a coup. As we all know, he failed again. (Kurian, 2012)

It was a restructuring plan, and he took actions rapidly. But without endorsement from Apple’ board of directors and support from other colleagues, he got fired from his own company.

Example3: Reinventing Apple

By 1996, Apple rehired Steve Jobs as an “informal adviser to the CEO”. At that time, Apple was keeping on losing money and Steve Jobs staged another coup. He successes this time and became an “interim” CEO in 1997.The first thing he had done after his promotion is cutting off the production lines and focused on four products. This effective decision brought the lost confidence back to the Apple community (Kurian, 2012). In the meantime, Jobs took other actions such as announcing a new slogan “Think Different” and launched an amazing project which brought Apple’s resurgence lately, the iMac. (Edwards, 2008)

Those actions and decisions above are radical changes (restructuring and redesigning the production processes). They were new strategies to the company for solving a financial crisis in a short time period.

Richard Branson – Incremental Changes

Example1: Virgin Atlantic

There are some unique features Virgin Atlantic has while other airways may not have can be considered as incremental changes. Such as, serving a cup of ice cream while passengers watching movies during travelling in order to provide a better service. Virgin Atlantic does not provide meals for short distance flight in order to reduce ticket price. This kind of services is provided for improving quality of service.

Example2: Virgin Group

Because Richard Branson received a lot of support from his family and friends during hi early period of business stage (borrowed money from his auntie and supported by John Lennon), the whole Virgin Group services can be considered as a long term process for implementing Richard Branson’s plan of giving back to the society and helping those people who has ambitious but doesn’t have opportunities. Such as, Virgin Money provides a set of formalised documentations help people who need loans. Although Virgin Money U.S. did not work well in USA, Richard Branson helped millions of people with his good heart in UK. Those actions can be considered as Incremental Changes.

Example3: Eco-friendly efforts

In 2007, Richard Branson launched Virgin Earth Challenge dedicating in to environmental issues. He made several decisions that supervised the whole world, such as a $25 millions prize for inventors who comes up with a viable solution for scrubbing carbon gases from atmosphere. He also pledged to reinvest all profits from Virgin transportation business over the decade into developing ecologically benign fuels.

This kind of actions may not affect other Virgin companies, but they will improve Virgin Group’s reputation, it is also a long time period project.

Richard Branson – Radical Changes

Example1: Virgin Records Shop

At the beginning, Richard Branson started his records business as mail ordering company in London, and it went well. After a postal strike, the mail order business was crippled. Richard Branson was forced to seek new outlets and he opened his first retail store in Oxford Street in 1971.

This was a strategy for dealing with a crisis situation, and operated immediately. It changed Virgin Record’s business process and structure.

Example2: Selling Virgin Music Group

Selling Virgin Music probably would be the hardest decision Richard Branson has ever made in his whole lifetime. This decision was made in order to get money to take Virgin Atlantic back into private ownership (Vinnedge, 2009).

This change was forced by a financial crisis and included restructuring process.

Example3: Closing Virgin Money U.S.

Richard Branson launched a loan servicing company called Virgin Money U.S. in America in 2007, and began its withdrawal after 2 years (Lepro, 2010). Its social loans were transferred to Graystone Solutions. This time, Richard Branson misjudged the market and had to make the decision in order to limit the damage. Other reasons of this collapse might be the bad economy and different culture in America. This change included restructuring and take-over in a short time.

To sum up the above examples and explanations, incremental changes are normally well planned and taken over by pieces, there is less possibilities of failure. Radical changes are immediate responses for a crisis or significant opportunity, there are chances of failure.

Change Management in Virgin Group

Story of Virgin Mobile

In 2007, Virgin Group announced the completion of its biggest challenge which brought over 10 million customers and 13,000 employees – merger of NTL, Telewest and Virgin Mobile under the Virgin Media brand. It is known as the largest Virgin Company in the world.

This operation took more than two years to complete the whole the merger, and Virgin Group handled it carefully, especially on employees’ resistance.

Reasons of employees’ resistance to this change and strategies

It is necessary for leaders to understand that resistances to changes are normal. In order to deal with those obstacles, leaders have to identify reasons of employees’ resistances firstly and develop different strategies for different situations.

Some common reasons are following:

Fear

Mostly, employees’ fear comes from uncertainty about their career. In this situation, employees were worried about if there would be a layoff or if they were qualified for the new company.

Strategies: Virgin Group kept employees involved during managing changes. The high level of the management went done to the front line staff and listened to the staff’s ideas and problems, and shared their own experiences. Richard Branson took care of individual needs carefully. Meanwhile, he also announced that if the employees no longer have the enthusiasm, they would be better to find a new job. As long as the employees performed with full responsibilities, they would always be considered as a part of the company. This kind of instructions increased the sense of the urgency, and motivated employees to move on positively.

No faith in new process

Former NTL and Telewest employees might have uncertainties about the new process of Virgin Group. Because NTL and Telewest Company had several years of struggling with the bad economy environment, they could not be sure whether the new company would lead them to improve the organisational performance.

Strategies: Richard Branson gave responsibilities to his employees, and went to the front line personally to inform clear instructions. Establishing clear instructions and explanations, and demonstrating a picture of a better future would increase employees’ faith and certainty of the new process.

Comfort & personal preference

Former NTL and Telewest employees had their own ways of daily operations, and the new company brought its new ways of doing business, so they might have the difficulties to adopt the new culture. Such as, those staff had their old way of dealing with customers’ calls by following the instructions and scripts strictly, while Richard Branson believes that each customer would have his/her unique problem, staff should help different customers differently.

Strategies: Richard Branson threw away all the scripts and told call-center employees to help customers within one call if possible. In order to support their work, he allocated necessary resources to the font line.

Lack of knowledge

Although some former NTL and Telewest employees were expert in their old company, they might need to start from the beginning since the new company had its unique ways of doing business.

Strategies: For this kind of anxiety, Richard Branson responded with three words only: “Live and Learn”! He provided resources and training programs for employees in order to create a positive learning environment, and he also encouraged communication among different levels of the management to understand individual difficulties.

Lack of trust

Virgin Group has different diversity of businesses and it used to prefer small piece of business, whether Richard Branson has the ability to lead the large company to make profit and keep growing would be unpredictable. This is the reason that some employees might have difficulties to adapt the changes.

Strategies: Richard Branson kept developing new products and services, and led the company to profitability, such as more packages of Virgin Broadband, more channels and TV programs for Virgin Media Television, and etc. Those successes brought back the trust in several years, not immediately.

Application of Kotter’s Change Model

Create Urgency

At this stage, it is necessary to deliver a message that the whole company really needs this change. The company has to provide solid reasons and convincing dialogues support this decision. To Kotter’s belief, this stage is the most important stage; lack of preparation would easily lead to a project failure.

In Virgin Media’s case, leader should show people NTL and Telewest’s poor performance reports and most importantly, the potentials, because no one will have faith in a failed business. With a brief introduction of development scenarios, leader should emphasise the opportunities and benefit from this merger.

Form a Powerful Coalition

In order to influence people to accept the change, leader needs a group of key people from different department to support the change management process. They don’t necessary have to be who has legitimate power, but also can be expert, and other influential people.

In Virgin Media’s case, leader should select powerful and influential people from ex-NTL and ex-Telewest Company, and select good communicators from Virgin Mobile, in order to organise a supportive team. Once organised, the team needs to work together and continuing to create urgency in their own working areas.

Create a Vision for Change

The next step would be generating an overall vision about the change, including values and reasons of the change, short summaries, and strategies to execute that vision.

In Virgin Media’s case, leader should have a clear idea about what to do with ex-NTL and ex-Telewest, and why Virgin Mobile needs to conduct a merger with them. As the matter of the fact, Richard Branson was trying to build the first “quadruple play [1] ” media company in UK, and after couple of years hard working, he did it.

Communicate the Vision

After creating the vision, leader should deliver the message to the team members, and with their help, the message can be distributed to all aspects of the company. The message should not be sent through meetings only, most importantly through daily communications among the whole company.

In Virgin Media’s Case, Richard Branson tried to communicate with employees as much as possible and motivate them to maintain in a positive working attitude. Those ideas and visions were implanted into employees’ mind during those communications.

Remove Obstacles

In order to ease employees’ resistance to changes, leader should avoid having resistance to employees’ resistance. Leader should be willing to listen and understand employees’ difficulties and find a way to help them walk through it.

In Virgin Media’ case, Richard Branson provided clear instructions to all employees, and went to the front-line in person to listen to employees. He allocated necessary resources to them and tried to create a learning environment, in order to improve performance.

Create Short-term Wins

Celebrations for short-term wins would be the easiest and most efficient way to prove that “we are doing the right things and we are doing things right”. It is not only for motivating employees’ passion of working, but also for gaining trust.

In Virgin Media’s case, leader should recognize and reward people for their excellent performance and making changes happen, and encourage them to keep on working positively.

Build on the Change

Kotter believes that it is very important for leaders to avoid celebrating too early and being complacent about current short-term success. There would be always rooms for improvement.

In Virgin Media’s Case, Richard Branson kept on producing and developing new products and services, and tracking on employees’ performances all the time. He went through daily operations in details in person to seek for ways of improvements.

Anchor the Changes in Corporate Culture

Formalising the changes and including them as part of organisation’s culture would be the last step of change management process. This step can be considered as a closure and promotion.

In Virgin Media’s case, Richard Branson announced Virgin Group’s success to the public all the time through different kind of channels, such as TV, radio, Virgin websites, blogs, magazines and etc.

Conclusion

After researching on Steve Jobs and Richard Branson’ life stories as a leader, this essay is conducted in order to gain a better understanding about the concepts of being an excellent leader.

Leadership Style

Steve Jobs was considered as a tough and strict (even “dictatorial”) leader, but he was also a respectful leader who could inspire and motivate followers by using his wisdom and charismas. Richard Branson is considered as gentle and flexible leaders, but he is very strict on day-to-day operations. As a leader, being transactional can improve employees’ performance while being transformational can improve effectiveness. Therefore, there is no one simple leadership style for one organisation. Both of the leadership styles are crucial to a business’ success.

Types of changes

Incremental change may takes place over a long time period for development and improvement purpose, while radical change may be triggered by a crisis or a business opportunity and generated in a short time period.

Because incremental changes are normally well planned and taken over by pieces, there is less possibilities of failure. Radical changes are initiated immediately after realising a crisis or significant opportunity, so without a careful plan and on-going monitoring there are chances of failure.

Change Management

It is important to understand that employees’ resistance to changes are natural, but how to manage those negative feelings are critical. In general, leader should keep employees involved in the decision making, address their problems and seek for solutions, create a positive learning environment and make the change happen by working with employees as an example.

Change management processes should be carefully planned and operated, especially the preparing stage (Create Urgency). A powerful coalition’s positive support would make the operations accomplished smoothly, that is why selecting the right team member is very important. Leader and coalition should lead by examples, communicate with employees and deliver visions as much as possible. Do remember celebrating on short-term wins and establish big victory formally as company’s culture.

Evaluation of Trade Promotion Activities by Governments

This research proposal proposes the research of trade promotion in a different context. While existing literature focuses trade promotions on a more internally oriented basis i.e. it focuses on promoting manufacturer / distributor relationship, the proposed research on trade promotion activities will be mostly externally oriented, though some of the activities provided by the trade promotion organisations do gear for internal purposes (Givovannucci, 2001).

The team “trade promotion organisation” used in this proposed research will adhere to those organisations known to International Trade Centre as promoting trade on a national basis. International Trade Centre’s directory covers national trade promotion organisations and other trade-support institutions both public and private owned operating on either a regional or interregional basis, while this category includes organisation such as ministries involved in international trade; export promotion organisations, import promotion offices, chambers of commerce and industry, trade associations and operational trading points (ITC Website).

The fact that potential importers are not located in home country has prompted the establishment of foreign offices in host countries with greater trade opportunity. Not only this, the main functions of these foreign offices summarized by Marchers (1987) can be illustrated as follow:

  • Creating a general awareness of the home country as trading partner, this is especially useful when the country does not have either an embassy or a commercial body in the target market
  • Promote existing goods and new products to both new and existing importers in the host country
  • Suggest product adaptation measures to home manufacturers for improvement on the marketability of exports
  • Provide general market information and trade inquiries to producers at home to facilitate market and product development
  • Implementing trade promotion programmes

The recent changes in global economy over the past two decades indicated that trade and investment do not behave as independent variables. KOTRA, for instance recognizes both trade and investment are symbiotic, the notion of trade brings investment and investment creates trade opportunities has prompted the KOTRA reform in 1997. The reform completed with the increased service coverage and change of name from Korea Trade Promotion Agency to the Korea Trade-Investment Promotion Agency.

Considering the changing nature of trade promotion from the traditional exporting promotion mechanism to the incorporation of investment promotion activities such as those in KOTRA, the trade promotion activities in this research context is defined as “activities conducted by trade promotion organisation to promote international trade (export and import) and investment”.

Trade shows are generally industry or trade specific, it gives the organisation the chance to show how they compare with the competitors who are often present at the same event. As the budget for such participation can be quite substantial, participants usually plan their involvement well ahead coupled with communication to the potential customers prior to the event (Adcock et al., 1993). The significance and number of trade shows, exhibitors and visitors is becoming increasingly important. Cologne trade fairs for instance bring together 28,000 exhibitors from 100 countries with 1.8 million buyers from 150 countries (Jobber, 2001).

Organisation Background

KOTRA is a non-profit government-owned trade promotion organisation established in 1962 in Seoul, Korea. The main objective of the company is to meet the national policy goals of promoting trade and investment together with technology cooperation assistance to member companies.

With the increasing trend of globalisation, KOTRA currently operates 115 foreign offices in 79 countries. KOTRA, Kuala Lumpur was established in 1973 to promote bi-lateral trade and investment between Malaysian and Korean companies.

Situated in the middle of the city centre of Kuala Lumpur, KOTRA is managed by a mixture of 5 Korean expatriates and 8 local employees alleged to have sufficient local knowledge about the business condition in Malaysia.

The services provided by KOTRA Kuala Lumpur can be largely divided into 3 main categories:

3.1 Events: Trade promotion activities as mentioned earlier to promote bi-lateral trade. KOTRA Kuala Lumpur engages extensively in the participation and sub-hosting of trade fairs (e.g. Seoul International Food Technology Exhibition and Seoul Electrical and Electronics Products Trade Week), organising trade missions (both incoming and outgoing), business meeting and trade matching programmes.

3.2 Inquiries: KOTRA Kuala Lumpur handles business inquiries from both Korean and Malaysian companies. A substantial part of KOTRA’s human resources is exhausted in conducting local market survey requested by Korean companies in Korea. This part of the inquiry is where the local knowledge of the local staff is most comprehended.

3.3 Other Services: Resource centre open to the public with compilation of brochures of Korean companies and product display facilities.

4. Rationale for the Chosen Topic

In this research it is decided to research on the proposed topic due to my past working experience in Korea Trade-Investment Promotion Agency (KOTRA) based in Malaysia. My position as a Trade and Research Executive had exposed me to the trade promotion activities that KOTRA provides to promote bi-lateral trade between Malaysian and Korean companies.

In the course of my service in KOTRA, I noticed that the agency has no formal evaluation system to assess the performance for most of its trade promotion activities. There was only ad-hoc evaluation in the form of follow-up when requested by the companies, which the initial inquiry was made.

As some of this trade promotion activities require substantial financial and human resources, it will be beneficial if evaluation can be carried out. The result of the evaluation will also be advantageous to the Agency for designing future promotion programs.

Research Questions

Essentially, this research proposed the examination of one basic question: how successful are trade promotion activities in promoting international trade? Prior to obtaining the answer for research question, it raises additional questions such as: Why does government establish trade promotion abroad? How does trade promotion organisation contribute towards promoting international trade? How does the entrepreneur perceive the above type of trade promotion activities? In what way trade promotion organisation can do provide greater benefits to the businesses?

Research Objectives

The ultimate objective of this research is to critically evaluate the impact of trade promotion activities conducted by government-owned trade promotion organisations. In the process of such evaluation, this research will seek to gain an insight as to how entrepreneur perceives a particular form of trade promotion activity; subsequently lead to the generation of recommendations by which trade promotion organisations can provide greater benefits to corporations.

As a summary of the above, the research objectives are enlisted below:

  1. To critically evaluate the impact of trade promotion organisation in promoting international trade.
  2. To explore the perception in businessman towards the usefulness of such trade promotion activities.
  3. To recommend conditions in which trade promotion organisation can provide greater benefit towards promoting international trade.

Literature Review

The research of trade promotion in the context of this proposal has been conducted by scholars such as Czinkota (2002), Seringhaus and Rosson (1998), Seringhaus (1989), Zafal et al., (2002) and Wilkinson and Brouthers (2000). The list of literature however, is not conclusive, as more will be reviewed as the research progresses.

Some authors use the term export promotion program when referring to the trade promotion activities conducted by trade promotion organisations (Zafar et al., 2002, Czinkota, 2002). Even though export promotion program is the main agenda of the trade program in most developing countries, the endeavour of some trade promotion organisations in promoting international investment and assisting importers should not be neglected.

The measures for evaluating trade promotion activities are effectiveness, efficiency and impact (Nyberg, 1987). Most of the research conducted to date focuses on the evaluation of the aspect of effectiveness and efficiency. Wilkinson and Brouthers (2000) established a linkage between trade promotion activities (such as trade show, trade mission, computer generated trade leads) and export performance, Seringhaus and Rosson (1998)’s work is more activities specific whereby analysis to a single trade promotion activity such as trade fair is focused upon. Similarly, the research of trade missions is documented by Seringhaus (1989).

Zafar et al., (2002) analyse the export promotion programme in Malaysia by differentiating the functions of public and private trade promotion organisation, the finding of the research indicated that more need to be done especially by the Malaysian government in developing international trade and create awareness of such promotion programmes among SMEs.

A theoretical framework indicated by these literatures claimed that: the tendency of firm seeking information on export promotion programs and the awareness of the availability of these information vary according to the firm’s demographics and level of prior exporting experience. The framework is illustrated as follow:

Figure 1: Firm Demographic / Export Characteristics and Information Seeking / Export

(Source: Zafar et al., 2002)

Another source of literature pertaining trade promotion activities is available from International Trade Centre (ITC). ITC functions under the United Nations Conference on Trade Development (UNCTAD) and World Trade Organisation (WTO). It incorporates more than 1000 trade promotion organisation in its database. Being a neutral organisation with the ultimate goal of individual trade promotion organisation, ITC seeks to establish guiding principle to which trade promotion organisation is to perform to achieve their objective (Nyberg, 1987), (Moreira, 1990) and (Melchers, 1987). ITC’s quarterly magazine International Trade Forum is a very informative source for the proposed research topics.

Methodology

The nature of this proposed research is exploratory, rather than explanatory, as not much literature has been publicized on the issue of trade promotion activities by trade organisation. As such, the research will adopt a grounded theory approach developed by Glaser and Strauss (1967). According to them, grounded theory is the discovery of theory from data and that is systematically obtained from research. The theory developed is derived from data and then illustrated by the characteristics examples of the data. In other word, the theory is inductively derived from the study of the phenomenon it represents (Strauss and Corbin, 1997).

The research proposes the use of methodological triangulation concept developed by Denzin (1978) to overcome the potential bias and susceptible of using one particular method of data collection. The original term “triangulation” refers to a surveying / nautical process in which two points (and their angles) are used to determine the unknown distance of a third point (Tashakkori and Teddlie, 1998).

A combination of data collection method of in-depth interview, semi-structured interview and participant observation will be used in the proposed research. An in-depth interview or unstructured interview is an informal type of interview aimed to explore in depth a general area such as trade promotion activities. The interview will be conducted without any predetermined list of questions, although a clear ideal area to explore need to be established prior to the interview. In such data collection method, interviewee is given the opportunity to talk freely about trade promotions, the behaviour and belief with regards to the topic area (Saunders, Lewis and Thornhill, 2003). This phenomenon is sometime known as the informant interview as it is the interviewee perception that guides the conduct of the interviewer (Robson, 2002).

Participant observation is where “the researcher attempts to participate fully in the lives and activities of subjects and thus becomes a member of their group, organisation or community. This enables the researcher to share their experience by not merely observing what is happening but also feeling it” (Gill and Johnson, 1997). Even though participant observation has been used much less in management and business, it can indeed be a very valuable tool especially when the research is adopting triangulation approach (Saunders, Lewis and Thornhill, 2003).

Data Collection Methods

The research proposes the commencement of in-dept interview with the Assistant Director of KOTRA to obtain an in-depth exploration of the trade promotion activities in a broader context. The interview(s) will be conducted by telephone in which the whole conversation will be tape-recorded. Given the disadvantages of conducting interview through telephone, the lack of personal contact and trust establishment will be compensated by the speed of data collection and lower costs associated with long-distance access.

The interview(s) is estimated to last between half an hour to an hour, a schedule of questions will be prepared in advance to ensure the clear idea of areas to be covered in the conversations. However, the interview will not adhere to the schedule of questions strictly considering the nature of informant interview discussed earlier.

The participant observation will be conducted in UK. The research proposes to adopt the role of “participant as observer” developed by Gill and Johnson (1997). In “participant as observer”, the role of researcher will be revealed, both the researcher and subjects are aware of the fact that it is a fieldwork relationship (Ackroyd and Hughes, 1992). It is believed that the divulgement of researcher’s identity will enable to ask questions of the research subject for the enhancement of understanding.

It is very likely that the workshop participants are new users to the trade promotion activities. The data collected from these participants will help to generate theory on the perception of non-user on trade promotion activities.

Data Analysis

This research proposes to use a combination of qualitative and quantitative data analysis approach. Data obtained through in-depth interviews and participant observation will be analysed using the set procedures from grounded theory approach of open coding, axial coding and selective coding (Strauss and Corbin, 1998). Grounded theory approach is considered as structured and systematic. The advantage of the approach is that data analysis can be conducted in a less formalised and proceduralised manner while maintaining a systematic and rigorous approach to arrive at a theory (Saunders, Lewis and Thornhill, 2003).

In addition to this, the research will also make use of the data management and statistical analysis software such as Statistical Package for the Social Sciences (SPSS). The software is accessible from the Management Centre that is of great use for the presentation of graphical findings.

Resource Requirement

The review of literature will be obtained largely from the library facilities (for published copies) and Learning support Services (for electronic copies).

The commencement of the fieldwork will assume the extensive usage of telephone and Internet facilities. This is mainly due to the long-distance access into KOTRA and samples provided by the organisation. Subsequent interviews on non / new users of trade promotion activities as a result of participating the workshop will also be conducted by telephone or Internet depending on the interviewees’ preference.

A trip to Trade Partners UK in London for the workshop will be arranged either in beginning of November or December. During the trip, a visit to the Malaysian Trade Commission in London will also be organised. The Commission requires an appointment with prior to the visit.

 

Impact of Globalisation on the Telecommunication Industry

Title

What is the Impact of Globalisation on the telecommunication industry of Pakistan?

Introduction

My proposal is intend to show the impact of globalisation on the telecommunication industry of Pakistan. Globalisation affected the every industry of the world and it affected a lot telecommunication industry in the world especially in developing countries. I want to focus on the telecom industry of Pakistan. Through globalisation we try to meet to the requirements which people facing in this existing world. The globalisation has its both aspects positive and negative. Now it depends on us how we use the globalisation factor to take advantages from them. In developing countries people are confused as well from globalization. It gives more and more benefits to the companies and it has its bad impacts on small business as well. It affects the local chains. Most of the time the local chains doest want any other company to be as a competitor because they want to rule in the market as a monopolist. There is only globalization which can give relief to the people and give better thing better opportunities and better understanding of the product. The world has become a global village now you can get anything anywhere in the world it is all charisma of globalisation. Globalisation made world so closer to each other and specially the telecom sector. We need every where to communicate in the world on different issues and different location. It is the required of modern world.

Telecom Industry in Pakistan or Background

Telecom department came into existence in Pakistan in 1962. It is too old now. PTCL was the first company which started the telecom sector in Pakistan. In start PTCL was only the company which provides all the telecommunication facilities to the whole population of the Pakistan. But with the passage of time many other cellular companies started their business in Pakistan. The first licence issues to Paktel and Pakcom in Pakistan in the category of cellular services in 1990 then second step took by PTCL to launch its subsidiary Ufone in Pakistan that was the first step in the telecom sector to attract people. PTCL launched Ufone in 1991.

Three years passed but no any cellular company started its business. What was the story behind this why any company did not pay attention to get into a big market? Because Ufone was the subsidiary PTCL and they didn’t let do any other company to come in to the market. They had the monopoly in the market. They didn’t issue any single licence to any company to get in to the market. After three years in 1994 they issued a licence to company called Mobilink. The founder of the company was Motorola USA. Mobilink was the first company which started its business to an Ufone holding market. It was a big challenge for Mobilink to get in to market and start its business and give hard time because Ufone had monopoly in the market and the home advantage as well. Now the Orascom telecom the Egyptian group is controlling the company. According to PTA (Pakistan Telecommunication Authority) Mobilink has nearly 30million subscribers and the leading cellular company in Pakistan.

After this the Govt of Pakistan realise that there is still room in the telecom industry and they issued 2 more licences in 2004 that was the real time when the telecom boom started in Pakistan. That was the time when we can say the globalization affected the Pakistan telecom sector. It was the ideal time and for the people when they get benefited from globalization. This time these two companies have to penetrate the market. When any company wants to penetrate the market? They give more incentive to the general public. General people get benefits from this development. There was competition in the market but there was space as well for the more cellular companies to come in and provide more and more benefits to the people. Initially when the telecom trend started in Pakistan it was unable to afford for the poor people but with the passage of time it became in the reach of poor people.

In 2008 the China mobile launched its services in Pakistan as well. As we know very well china mobile is a largest cellular company in the world. With the commencement of China Mobile in Pakistan the competition increased more but it all goes in the benefit of globalization in the telecom industry of Pakistan.

Rational and Significance

As we know very well the globalisation playing major role in developing countries on every type of industry and business. I want to look at the actual impacts of globalisation which are affecting the telecom industry of Pakistan. What types of advantage and disadvantages telecom industry achieved? What is the contribution of telecom industry in the economic growth? What are the impacts of all this advancement on the social and cultural factors of the company?

Literature Review

Many people wrote about the telecommunication and the impact of globalisation on telecommunication. They mentioned that what major changes came in the industry of telecommunication due to globalisation. With globalisation lots advancement came in Pakistan telecommunication sector. Now Pakistan is on the level off all countries in the region in the telecom sector. The telecom is giving more benefit to people more as compare to before.

B. Midhat M. Sana (2006) Business and Public Policy

Globalisation is breaking the gaps and epically its impact on telecommunication and information. Creating paradox between who have information and who have not. This revolution is providing chance to everyone to contribute as much as they can. Now a day’s information systems are plying major role in developments of countries and the telecommunication is one of them. In the current time of the world people don’t have many things like food, shelter and water etc but they should have the telecommunication facilities to communicate the others. Today, the telecommunication has become more dominant factor in the development of any country and it is playing a vital role as well. It is necessary to have better telecommunication faculties for every country.

M. Yousaf Haroon (2002) Digital Opportunity Initiative for Pakistan

In the recent business scenario the world is facing a great recession and every sector of economy going to downfall. Recession at-least hit the every sector of economies. The revenues are going down day by day only one sector which is a bit far away from recession. Pakistan Telecommunication Authority (PTA) considered telecom as a telecom industry. Pakistan telecommunication authority very easily liberalised the telecommunication industry in Pakistan. Pakistan telecommunication faced a bad time in term of revenue and getting more customer but now slowly and steadily on the top now. The tele density was 44.06% in 2005 -2006 and it increased to 58.06 in 2007-2008. The revenue generated to telecom sector grown 35% in 2008- 2009. There was bit short fall in profit as well because the prices rise in food sector. Inflation hits every sector of life. While the growth in telecom sector was incredible as well it was up to 39% in 2008. PTA till now issued 92 wireless local loop (WLL) licences. PTA also gave 14 licences to the companies for Long Distance and International services (LDI). Internet service is available most of the cities and villages of Pakistan mostly it nearly reached to 2339. Most of the companies now is focusing on the northern areas and Azad Jamu Kashmir (AJK) to increase their customers.

B. Asjad (2009) Telecom Industry

In the current cellular service providing in the USA the most of the company charge extra bill by mistake. When any company representative call to cellular company about the billing information they say it is mistake and approximately 80% of USA business are over charged on their bills. When you talk to any cellular company representative about all these issues they say they all r coming from day 1st.

K. Ben (Dec-11 2005)

Telecommunication is getting more and more popular in the modern time because before that was a charm in the field. But with the passage of time and more advancement in the IT sector, the devices which are being used in the technologies make it more attractive. This attraction made this industry more profitable and heart touching.

4.1 Globalisation

Globalisation is process through which the world becoming closer day by day to do business and gain their object. There is no brief definition to describe the globalisation through globalisation we can bring anything closer to anyone. Globalisation can bring many things closer to gain the competitive advantage.

According to business dictionary we can define globalisation, “ Worldwide movement toward economic, financial, trade, and communications integration. Globalization implies opening out beyond local and nationalistic perspectives to a broader outlook of an interconnected and inter-dependent world with free transfer of capital, goods, and services across national frontiers. However, it does not include unhindered movement of labour and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately”.

Globalisation is way to connect the people of one country to another. It is possible through globalisation only. Globalisation is becoming very major factor of economics. There are groups pro-globalisation and anti globalisation. They have their own reservation about globalisation.

4.2 Effects of Globalisation

According to economist there are the effects of globalisation in the whole world. These are factors which affect the economies of the world.

4.2.1 International Trade

There is big effect on the international trade. Globalisation is factor helping in international trade too much. With the help of globalisation any company can start its business outside the country. For example a company losing its consumer in once country, globalisation is best toll to go abroad and start its business in any international market.

4.2.2 Technological improvement

Globalisation is also effecting on the technological improvement. if any international company launch its product in any host country with lots of technological advancement. The host country also makes his way to improve its technologies.

4.2.3 Multinational companies and influences

Multinational companies have offices in the world. The companies had head office in the parent country. They control all their operation from the head office. Like most of the car companies have offices in Japan. They control its entire production requirement from the head office.

4.2.4 Human resource mobility

Globalisation is also mobilizing human resource all over the world. It is helping us to understand the global cultural environment which is helpful for any business. Like the labour is much cheaper in Asia as compare to Europe. This is a positive edge for the most multinational companies to produce its goods in any other country and sell anywhere where they want. Like manpower shortage in Japan, Malaysia are forcing them to import labour from other countries.

4.2.5 Outsourcing

Globalisation is helping a lot in the outsourcing of the countries. Many countries are using globalisation as an outsourcing tool. China and India are the main countries which are helping the whole world in field of outsourcing.

4.2.6 Civil Society

Globalisation is affecting the civil societies a lot. Most of NGO’s working worldwide to help the people especially in developing countries. Especially the NGO’s for women rights and child labour.

4.3 Advantage of Globalisation

There lots of advantages which are gaining from globalisation.

Globalisation is increasing the trade between nations.

Globalisation is a movement of capital from developed country to developing country.

An organisation can work anywhere where the environment is suitable for business.

Globalisation is also a toll to communicate the whole world individually and collectively as well.

Globalisation is a greater toll to move the things around the whole world.

Globalisation is also a toll to remove the cultural barriers.

4.4 Disadvantages of Globalisation

Exchange f labour from developed to developing and problem of labour cost.

Globalisation could cause economic disturbance that one country affecting all.

World media can give benefit one to over another.

Globalisation is violating the rule of cultural and religion.

There is a chance to transfer of diseases among nations.

There is a healthy chance that materialism can be generated.

There are chances of war between the developing countries.

There are no rules in the developing countries about child labour and environment like pollution.

International bodies like WTO can break the confidence of nation.

Aims

Globalisation has broader range of positive and negative effects. My aim is to find out what are benefits or losses the Pakistan gaining from the globalisation. Globalisation has most probably positive effects on the developing countries and Pakistan comes under developed country. And find out what special effects on the telecom industry of Pakistan. Is the globalisation taking the telecommunication industry of Pakistan on boom or going down. As we know very well globalisation effecting a lot all over the world. I need to find out all those issues.

Objectives

What positive changes globalisation brought.

What particular benefits the people took from this globalisation revolution.

What are the benefits for Pakistan economy?

How much improvement came in the standard of living?

How much this industry contributing in the economy of Pakistan.

How many people think that this revolution brought positive changes in the country?

What negative factors globalisation cause in the economy.

Research Question

Is globalisation is good thing or bad?

Is globalisation is good for developing countries.

What losses face the by the small business due to globalisation.

Is globalisation effective for the telecommunication industry?

Research Methods

The research method is very important to make any further research or to make dissertation. The most appropriate research which I thought would be the exploratory. Exploratory research is the combination of Qualitative and Quantitative research. I would try to use all the methods of this research. My research would rely most of the descriptive method of research. In descriptive method research we collect, organise and summarise all the data and use for our research purposes. We manage data classify data according to our related needs and the compilation is also a very big process to do a proper research.

The most effective for me would be to at the journal which is related to telecommunication industry. I have done already emails to the concerned departments. Punch (2000) Dane’s (1999)

I can take mostly data from the official websites of the organisation. Most of the organisations publish all their market research and profit and loss statements. These websites would help me out a lot to handle all my relevant research. Sometimes there is not enough information in that case I know some of my friends in Pakistan in telecom sectors. They would provide me lot of information which is too beneficial for me. It easy to find out the data but the problem is to manage all the data and do the according to your need. I would use both qualitative and quantitative methods to make my research more real and knowledge able.

Time Line

No

Activity

Dates

1.

Final submission of proposal

20th April 2010

2.

Collect relevant data for chosen industry for proposed research

15th June 2010

3.

Arrangements for primary & Secondary data (emails, phone calls) will ready on

28th June 2010

4.

Compiling all the related research for further research.

5th July 2010

5.

First analysis of acquired data information

20th July 2010

6.

Start making report on basis of available knowledge

3rd Aug 2010

7.

First layout of research work

17th Aug 2010

8.

Final compilation of all progressed work

7th Sep 2010

9.

Checking & ready for submission final dissertation

15th Sep 2010

References

O. Mayeuri and C Gunthar (1995), Info. Tech. Globalisation Implication for Developing Countries, Commonwealth secretariat 1st Edition Pp 46 to 54

L. Frank J (2009), Globalisation Making of the World Society, Utopia Press Ltd. 1st Edition Pp 79 to 85

Punch, K.F. (2000), Developing Effective Research Proposals. London: Sage Publications

Dane, F.C. (1990), Research Methods. Cambridge: Thomas brooks.

Isabelle Paradis November-2006

http://www.thefreelibrary.com/Telenor+Pakistan+becomes+first+cellular+operator+to+complete+USF+…-a0208658564 site visited at 13.10, 09/04/2010

http://www.pakistaneconomist.com/pagesearch/Search-Engine2003/S.E112.asp site visited at 23.29, 11/04/2010

http://news.bbc.co.uk/1/hi/business/1790941.stm site visited 15.20, 11/04/2010

http://en.wikipedia.org/wiki/Mobilink site visited at 12.15, 14/04/2010

http://www.waridtel.com/about/index.phpsite visited 13.25, 14/04/2010

http://www.zong.com.pk/about_us.htmlsite visited at 14.20, 14/04/2010

http://www.businessdictionary.com/definition/globalization.htmlsite visited at 00.24, 15/04/2010

http://www.investorwords.com/2182/globalization.html site visited at 01.35, 15/04/2010

Evaluation of Trade Promotion Activities by Governments

This research proposal proposes the research of trade promotion in a different context. While existing literature focuses trade promotions on a more internally oriented basis i.e. it focuses on promoting manufacturer / distributor relationship, the proposed research on trade promotion activities will be mostly externally oriented, though some of the activities provided by the trade promotion organisations do gear for internal purposes (Givovannucci, 2001).

The team “trade promotion organisation” used in this proposed research will adhere to those organisations known to International Trade Centre as promoting trade on a national basis. International Trade Centre’s directory covers national trade promotion organisations and other trade-support institutions both public and private owned operating on either a regional or interregional basis, while this category includes organisation such as ministries involved in international trade; export promotion organisations, import promotion offices, chambers of commerce and industry, trade associations and operational trading points (ITC Website).

The fact that potential importers are not located in home country has prompted the establishment of foreign offices in host countries with greater trade opportunity. Not only this, the main functions of these foreign offices summarized by Marchers (1987) can be illustrated as follow:

  • Creating a general awareness of the home country as trading partner, this is especially useful when the country does not have either an embassy or a commercial body in the target market
  • Promote existing goods and new products to both new and existing importers in the host country
  • Suggest product adaptation measures to home manufacturers for improvement on the marketability of exports
  • Provide general market information and trade inquiries to producers at home to facilitate market and product development
  • Implementing trade promotion programmes

The recent changes in global economy over the past two decades indicated that trade and investment do not behave as independent variables. KOTRA, for instance recognizes both trade and investment are symbiotic, the notion of trade brings investment and investment creates trade opportunities has prompted the KOTRA reform in 1997. The reform completed with the increased service coverage and change of name from Korea Trade Promotion Agency to the Korea Trade-Investment Promotion Agency.

Considering the changing nature of trade promotion from the traditional exporting promotion mechanism to the incorporation of investment promotion activities such as those in KOTRA, the trade promotion activities in this research context is defined as “activities conducted by trade promotion organisation to promote international trade (export and import) and investment”.

Trade shows are generally industry or trade specific, it gives the organisation the chance to show how they compare with the competitors who are often present at the same event. As the budget for such participation can be quite substantial, participants usually plan their involvement well ahead coupled with communication to the potential customers prior to the event (Adcock et al., 1993). The significance and number of trade shows, exhibitors and visitors is becoming increasingly important. Cologne trade fairs for instance bring together 28,000 exhibitors from 100 countries with 1.8 million buyers from 150 countries (Jobber, 2001).

Organisation Background

KOTRA is a non-profit government-owned trade promotion organisation established in 1962 in Seoul, Korea. The main objective of the company is to meet the national policy goals of promoting trade and investment together with technology cooperation assistance to member companies.

With the increasing trend of globalisation, KOTRA currently operates 115 foreign offices in 79 countries. KOTRA, Kuala Lumpur was established in 1973 to promote bi-lateral trade and investment between Malaysian and Korean companies.

Situated in the middle of the city centre of Kuala Lumpur, KOTRA is managed by a mixture of 5 Korean expatriates and 8 local employees alleged to have sufficient local knowledge about the business condition in Malaysia.

The services provided by KOTRA Kuala Lumpur can be largely divided into 3 main categories:

3.1 Events: Trade promotion activities as mentioned earlier to promote bi-lateral trade. KOTRA Kuala Lumpur engages extensively in the participation and sub-hosting of trade fairs (e.g. Seoul International Food Technology Exhibition and Seoul Electrical and Electronics Products Trade Week), organising trade missions (both incoming and outgoing), business meeting and trade matching programmes.

3.2 Inquiries: KOTRA Kuala Lumpur handles business inquiries from both Korean and Malaysian companies. A substantial part of KOTRA’s human resources is exhausted in conducting local market survey requested by Korean companies in Korea. This part of the inquiry is where the local knowledge of the local staff is most comprehended.

3.3 Other Services: Resource centre open to the public with compilation of brochures of Korean companies and product display facilities.

4. Rationale for the Chosen Topic

In this research it is decided to research on the proposed topic due to my past working experience in Korea Trade-Investment Promotion Agency (KOTRA) based in Malaysia. My position as a Trade and Research Executive had exposed me to the trade promotion activities that KOTRA provides to promote bi-lateral trade between Malaysian and Korean companies.

In the course of my service in KOTRA, I noticed that the agency has no formal evaluation system to assess the performance for most of its trade promotion activities. There was only ad-hoc evaluation in the form of follow-up when requested by the companies, which the initial inquiry was made.

As some of this trade promotion activities require substantial financial and human resources, it will be beneficial if evaluation can be carried out. The result of the evaluation will also be advantageous to the Agency for designing future promotion programs.

Research Questions

Essentially, this research proposed the examination of one basic question: how successful are trade promotion activities in promoting international trade? Prior to obtaining the answer for research question, it raises additional questions such as: Why does government establish trade promotion abroad? How does trade promotion organisation contribute towards promoting international trade? How does the entrepreneur perceive the above type of trade promotion activities? In what way trade promotion organisation can do provide greater benefits to the businesses?

Research Objectives

The ultimate objective of this research is to critically evaluate the impact of trade promotion activities conducted by government-owned trade promotion organisations. In the process of such evaluation, this research will seek to gain an insight as to how entrepreneur perceives a particular form of trade promotion activity; subsequently lead to the generation of recommendations by which trade promotion organisations can provide greater benefits to corporations.

As a summary of the above, the research objectives are enlisted below:

  1. To critically evaluate the impact of trade promotion organisation in promoting international trade.
  2. To explore the perception in businessman towards the usefulness of such trade promotion activities.
  3. To recommend conditions in which trade promotion organisation can provide greater benefit towards promoting international trade.

Literature Review

The research of trade promotion in the context of this proposal has been conducted by scholars such as Czinkota (2002), Seringhaus and Rosson (1998), Seringhaus (1989), Zafal et al., (2002) and Wilkinson and Brouthers (2000). The list of literature however, is not conclusive, as more will be reviewed as the research progresses.

Some authors use the term export promotion program when referring to the trade promotion activities conducted by trade promotion organisations (Zafar et al., 2002, Czinkota, 2002). Even though export promotion program is the main agenda of the trade program in most developing countries, the endeavour of some trade promotion organisations in promoting international investment and assisting importers should not be neglected.

The measures for evaluating trade promotion activities are effectiveness, efficiency and impact (Nyberg, 1987). Most of the research conducted to date focuses on the evaluation of the aspect of effectiveness and efficiency. Wilkinson and Brouthers (2000) established a linkage between trade promotion activities (such as trade show, trade mission, computer generated trade leads) and export performance, Seringhaus and Rosson (1998)’s work is more activities specific whereby analysis to a single trade promotion activity such as trade fair is focused upon. Similarly, the research of trade missions is documented by Seringhaus (1989).

Zafar et al., (2002) analyse the export promotion programme in Malaysia by differentiating the functions of public and private trade promotion organisation, the finding of the research indicated that more need to be done especially by the Malaysian government in developing international trade and create awareness of such promotion programmes among SMEs.

A theoretical framework indicated by these literatures claimed that: the tendency of firm seeking information on export promotion programs and the awareness of the availability of these information vary according to the firm’s demographics and level of prior exporting experience. The framework is illustrated as follow:

Figure 1: Firm Demographic / Export Characteristics and Information Seeking / Export

(Source: Zafar et al., 2002)

Another source of literature pertaining trade promotion activities is available from International Trade Centre (ITC). ITC functions under the United Nations Conference on Trade Development (UNCTAD) and World Trade Organisation (WTO). It incorporates more than 1000 trade promotion organisation in its database. Being a neutral organisation with the ultimate goal of individual trade promotion organisation, ITC seeks to establish guiding principle to which trade promotion organisation is to perform to achieve their objective (Nyberg, 1987), (Moreira, 1990) and (Melchers, 1987). ITC’s quarterly magazine International Trade Forum is a very informative source for the proposed research topics.

Methodology

The nature of this proposed research is exploratory, rather than explanatory, as not much literature has been publicized on the issue of trade promotion activities by trade organisation. As such, the research will adopt a grounded theory approach developed by Glaser and Strauss (1967). According to them, grounded theory is the discovery of theory from data and that is systematically obtained from research. The theory developed is derived from data and then illustrated by the characteristics examples of the data. In other word, the theory is inductively derived from the study of the phenomenon it represents (Strauss and Corbin, 1997).

The research proposes the use of methodological triangulation concept developed by Denzin (1978) to overcome the potential bias and susceptible of using one particular method of data collection. The original term “triangulation” refers to a surveying / nautical process in which two points (and their angles) are used to determine the unknown distance of a third point (Tashakkori and Teddlie, 1998).

A combination of data collection method of in-depth interview, semi-structured interview and participant observation will be used in the proposed research. An in-depth interview or unstructured interview is an informal type of interview aimed to explore in depth a general area such as trade promotion activities. The interview will be conducted without any predetermined list of questions, although a clear ideal area to explore need to be established prior to the interview. In such data collection method, interviewee is given the opportunity to talk freely about trade promotions, the behaviour and belief with regards to the topic area (Saunders, Lewis and Thornhill, 2003). This phenomenon is sometime known as the informant interview as it is the interviewee perception that guides the conduct of the interviewer (Robson, 2002).

Participant observation is where “the researcher attempts to participate fully in the lives and activities of subjects and thus becomes a member of their group, organisation or community. This enables the researcher to share their experience by not merely observing what is happening but also feeling it” (Gill and Johnson, 1997). Even though participant observation has been used much less in management and business, it can indeed be a very valuable tool especially when the research is adopting triangulation approach (Saunders, Lewis and Thornhill, 2003).

Data Collection Methods

The research proposes the commencement of in-dept interview with the Assistant Director of KOTRA to obtain an in-depth exploration of the trade promotion activities in a broader context. The interview(s) will be conducted by telephone in which the whole conversation will be tape-recorded. Given the disadvantages of conducting interview through telephone, the lack of personal contact and trust establishment will be compensated by the speed of data collection and lower costs associated with long-distance access.

The interview(s) is estimated to last between half an hour to an hour, a schedule of questions will be prepared in advance to ensure the clear idea of areas to be covered in the conversations. However, the interview will not adhere to the schedule of questions strictly considering the nature of informant interview discussed earlier.

The participant observation will be conducted in UK. The research proposes to adopt the role of “participant as observer” developed by Gill and Johnson (1997). In “participant as observer”, the role of researcher will be revealed, both the researcher and subjects are aware of the fact that it is a fieldwork relationship (Ackroyd and Hughes, 1992). It is believed that the divulgement of researcher’s identity will enable to ask questions of the research subject for the enhancement of understanding.

It is very likely that the workshop participants are new users to the trade promotion activities. The data collected from these participants will help to generate theory on the perception of non-user on trade promotion activities.

Data Analysis

This research proposes to use a combination of qualitative and quantitative data analysis approach. Data obtained through in-depth interviews and participant observation will be analysed using the set procedures from grounded theory approach of open coding, axial coding and selective coding (Strauss and Corbin, 1998). Grounded theory approach is considered as structured and systematic. The advantage of the approach is that data analysis can be conducted in a less formalised and proceduralised manner while maintaining a systematic and rigorous approach to arrive at a theory (Saunders, Lewis and Thornhill, 2003).

In addition to this, the research will also make use of the data management and statistical analysis software such as Statistical Package for the Social Sciences (SPSS). The software is accessible from the Management Centre that is of great use for the presentation of graphical findings.

Resource Requirement

The review of literature will be obtained largely from the library facilities (for published copies) and Learning support Services (for electronic copies).

The commencement of the fieldwork will assume the extensive usage of telephone and Internet facilities. This is mainly due to the long-distance access into KOTRA and samples provided by the organisation. Subsequent interviews on non / new users of trade promotion activities as a result of participating the workshop will also be conducted by telephone or Internet depending on the interviewees’ preference.

A trip to Trade Partners UK in London for the workshop will be arranged either in beginning of November or December. During the trip, a visit to the Malaysian Trade Commission in London will also be organised. The Commission requires an appointment with prior to the visit.

 

Impact of Globalisation on the Telecommunication Industry

Title

What is the Impact of Globalisation on the telecommunication industry of Pakistan?

Introduction

My proposal is intend to show the impact of globalisation on the telecommunication industry of Pakistan. Globalisation affected the every industry of the world and it affected a lot telecommunication industry in the world especially in developing countries. I want to focus on the telecom industry of Pakistan. Through globalisation we try to meet to the requirements which people facing in this existing world. The globalisation has its both aspects positive and negative. Now it depends on us how we use the globalisation factor to take advantages from them. In developing countries people are confused as well from globalization. It gives more and more benefits to the companies and it has its bad impacts on small business as well. It affects the local chains. Most of the time the local chains doest want any other company to be as a competitor because they want to rule in the market as a monopolist. There is only globalization which can give relief to the people and give better thing better opportunities and better understanding of the product. The world has become a global village now you can get anything anywhere in the world it is all charisma of globalisation. Globalisation made world so closer to each other and specially the telecom sector. We need every where to communicate in the world on different issues and different location. It is the required of modern world.

Telecom Industry in Pakistan or Background

Telecom department came into existence in Pakistan in 1962. It is too old now. PTCL was the first company which started the telecom sector in Pakistan. In start PTCL was only the company which provides all the telecommunication facilities to the whole population of the Pakistan. But with the passage of time many other cellular companies started their business in Pakistan. The first licence issues to Paktel and Pakcom in Pakistan in the category of cellular services in 1990 then second step took by PTCL to launch its subsidiary Ufone in Pakistan that was the first step in the telecom sector to attract people. PTCL launched Ufone in 1991.

Three years passed but no any cellular company started its business. What was the story behind this why any company did not pay attention to get into a big market? Because Ufone was the subsidiary PTCL and they didn’t let do any other company to come in to the market. They had the monopoly in the market. They didn’t issue any single licence to any company to get in to the market. After three years in 1994 they issued a licence to company called Mobilink. The founder of the company was Motorola USA. Mobilink was the first company which started its business to an Ufone holding market. It was a big challenge for Mobilink to get in to market and start its business and give hard time because Ufone had monopoly in the market and the home advantage as well. Now the Orascom telecom the Egyptian group is controlling the company. According to PTA (Pakistan Telecommunication Authority) Mobilink has nearly 30million subscribers and the leading cellular company in Pakistan.

After this the Govt of Pakistan realise that there is still room in the telecom industry and they issued 2 more licences in 2004 that was the real time when the telecom boom started in Pakistan. That was the time when we can say the globalization affected the Pakistan telecom sector. It was the ideal time and for the people when they get benefited from globalization. This time these two companies have to penetrate the market. When any company wants to penetrate the market? They give more incentive to the general public. General people get benefits from this development. There was competition in the market but there was space as well for the more cellular companies to come in and provide more and more benefits to the people. Initially when the telecom trend started in Pakistan it was unable to afford for the poor people but with the passage of time it became in the reach of poor people.

In 2008 the China mobile launched its services in Pakistan as well. As we know very well china mobile is a largest cellular company in the world. With the commencement of China Mobile in Pakistan the competition increased more but it all goes in the benefit of globalization in the telecom industry of Pakistan.

Rational and Significance

As we know very well the globalisation playing major role in developing countries on every type of industry and business. I want to look at the actual impacts of globalisation which are affecting the telecom industry of Pakistan. What types of advantage and disadvantages telecom industry achieved? What is the contribution of telecom industry in the economic growth? What are the impacts of all this advancement on the social and cultural factors of the company?

Literature Review

Many people wrote about the telecommunication and the impact of globalisation on telecommunication. They mentioned that what major changes came in the industry of telecommunication due to globalisation. With globalisation lots advancement came in Pakistan telecommunication sector. Now Pakistan is on the level off all countries in the region in the telecom sector. The telecom is giving more benefit to people more as compare to before.

B. Midhat M. Sana (2006) Business and Public Policy

Globalisation is breaking the gaps and epically its impact on telecommunication and information. Creating paradox between who have information and who have not. This revolution is providing chance to everyone to contribute as much as they can. Now a day’s information systems are plying major role in developments of countries and the telecommunication is one of them. In the current time of the world people don’t have many things like food, shelter and water etc but they should have the telecommunication facilities to communicate the others. Today, the telecommunication has become more dominant factor in the development of any country and it is playing a vital role as well. It is necessary to have better telecommunication faculties for every country.

M. Yousaf Haroon (2002) Digital Opportunity Initiative for Pakistan

In the recent business scenario the world is facing a great recession and every sector of economy going to downfall. Recession at-least hit the every sector of economies. The revenues are going down day by day only one sector which is a bit far away from recession. Pakistan Telecommunication Authority (PTA) considered telecom as a telecom industry. Pakistan telecommunication authority very easily liberalised the telecommunication industry in Pakistan. Pakistan telecommunication faced a bad time in term of revenue and getting more customer but now slowly and steadily on the top now. The tele density was 44.06% in 2005 -2006 and it increased to 58.06 in 2007-2008. The revenue generated to telecom sector grown 35% in 2008- 2009. There was bit short fall in profit as well because the prices rise in food sector. Inflation hits every sector of life. While the growth in telecom sector was incredible as well it was up to 39% in 2008. PTA till now issued 92 wireless local loop (WLL) licences. PTA also gave 14 licences to the companies for Long Distance and International services (LDI). Internet service is available most of the cities and villages of Pakistan mostly it nearly reached to 2339. Most of the companies now is focusing on the northern areas and Azad Jamu Kashmir (AJK) to increase their customers.

B. Asjad (2009) Telecom Industry

In the current cellular service providing in the USA the most of the company charge extra bill by mistake. When any company representative call to cellular company about the billing information they say it is mistake and approximately 80% of USA business are over charged on their bills. When you talk to any cellular company representative about all these issues they say they all r coming from day 1st.

K. Ben (Dec-11 2005)

Telecommunication is getting more and more popular in the modern time because before that was a charm in the field. But with the passage of time and more advancement in the IT sector, the devices which are being used in the technologies make it more attractive. This attraction made this industry more profitable and heart touching.

4.1 Globalisation

Globalisation is process through which the world becoming closer day by day to do business and gain their object. There is no brief definition to describe the globalisation through globalisation we can bring anything closer to anyone. Globalisation can bring many things closer to gain the competitive advantage.

According to business dictionary we can define globalisation, “ Worldwide movement toward economic, financial, trade, and communications integration. Globalization implies opening out beyond local and nationalistic perspectives to a broader outlook of an interconnected and inter-dependent world with free transfer of capital, goods, and services across national frontiers. However, it does not include unhindered movement of labour and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately”.

Globalisation is way to connect the people of one country to another. It is possible through globalisation only. Globalisation is becoming very major factor of economics. There are groups pro-globalisation and anti globalisation. They have their own reservation about globalisation.

4.2 Effects of Globalisation

According to economist there are the effects of globalisation in the whole world. These are factors which affect the economies of the world.

4.2.1 International Trade

There is big effect on the international trade. Globalisation is factor helping in international trade too much. With the help of globalisation any company can start its business outside the country. For example a company losing its consumer in once country, globalisation is best toll to go abroad and start its business in any international market.

4.2.2 Technological improvement

Globalisation is also effecting on the technological improvement. if any international company launch its product in any host country with lots of technological advancement. The host country also makes his way to improve its technologies.

4.2.3 Multinational companies and influences

Multinational companies have offices in the world. The companies had head office in the parent country. They control all their operation from the head office. Like most of the car companies have offices in Japan. They control its entire production requirement from the head office.

4.2.4 Human resource mobility

Globalisation is also mobilizing human resource all over the world. It is helping us to understand the global cultural environment which is helpful for any business. Like the labour is much cheaper in Asia as compare to Europe. This is a positive edge for the most multinational companies to produce its goods in any other country and sell anywhere where they want. Like manpower shortage in Japan, Malaysia are forcing them to import labour from other countries.

4.2.5 Outsourcing

Globalisation is helping a lot in the outsourcing of the countries. Many countries are using globalisation as an outsourcing tool. China and India are the main countries which are helping the whole world in field of outsourcing.

4.2.6 Civil Society

Globalisation is affecting the civil societies a lot. Most of NGO’s working worldwide to help the people especially in developing countries. Especially the NGO’s for women rights and child labour.

4.3 Advantage of Globalisation

There lots of advantages which are gaining from globalisation.

Globalisation is increasing the trade between nations.

Globalisation is a movement of capital from developed country to developing country.

An organisation can work anywhere where the environment is suitable for business.

Globalisation is also a toll to communicate the whole world individually and collectively as well.

Globalisation is a greater toll to move the things around the whole world.

Globalisation is also a toll to remove the cultural barriers.

4.4 Disadvantages of Globalisation

Exchange f labour from developed to developing and problem of labour cost.

Globalisation could cause economic disturbance that one country affecting all.

World media can give benefit one to over another.

Globalisation is violating the rule of cultural and religion.

There is a chance to transfer of diseases among nations.

There is a healthy chance that materialism can be generated.

There are chances of war between the developing countries.

There are no rules in the developing countries about child labour and environment like pollution.

International bodies like WTO can break the confidence of nation.

Aims

Globalisation has broader range of positive and negative effects. My aim is to find out what are benefits or losses the Pakistan gaining from the globalisation. Globalisation has most probably positive effects on the developing countries and Pakistan comes under developed country. And find out what special effects on the telecom industry of Pakistan. Is the globalisation taking the telecommunication industry of Pakistan on boom or going down. As we know very well globalisation effecting a lot all over the world. I need to find out all those issues.

Objectives

What positive changes globalisation brought.

What particular benefits the people took from this globalisation revolution.

What are the benefits for Pakistan economy?

How much improvement came in the standard of living?

How much this industry contributing in the economy of Pakistan.

How many people think that this revolution brought positive changes in the country?

What negative factors globalisation cause in the economy.

Research Question

Is globalisation is good thing or bad?

Is globalisation is good for developing countries.

What losses face the by the small business due to globalisation.

Is globalisation effective for the telecommunication industry?

Research Methods

The research method is very important to make any further research or to make dissertation. The most appropriate research which I thought would be the exploratory. Exploratory research is the combination of Qualitative and Quantitative research. I would try to use all the methods of this research. My research would rely most of the descriptive method of research. In descriptive method research we collect, organise and summarise all the data and use for our research purposes. We manage data classify data according to our related needs and the compilation is also a very big process to do a proper research.

The most effective for me would be to at the journal which is related to telecommunication industry. I have done already emails to the concerned departments. Punch (2000) Dane’s (1999)

I can take mostly data from the official websites of the organisation. Most of the organisations publish all their market research and profit and loss statements. These websites would help me out a lot to handle all my relevant research. Sometimes there is not enough information in that case I know some of my friends in Pakistan in telecom sectors. They would provide me lot of information which is too beneficial for me. It easy to find out the data but the problem is to manage all the data and do the according to your need. I would use both qualitative and quantitative methods to make my research more real and knowledge able.

Time Line

No

Activity

Dates

1.

Final submission of proposal

20th April 2010

2.

Collect relevant data for chosen industry for proposed research

15th June 2010

3.

Arrangements for primary & Secondary data (emails, phone calls) will ready on

28th June 2010

4.

Compiling all the related research for further research.

5th July 2010

5.

First analysis of acquired data information

20th July 2010

6.

Start making report on basis of available knowledge

3rd Aug 2010

7.

First layout of research work

17th Aug 2010

8.

Final compilation of all progressed work

7th Sep 2010

9.

Checking & ready for submission final dissertation

15th Sep 2010

References

O. Mayeuri and C Gunthar (1995), Info. Tech. Globalisation Implication for Developing Countries, Commonwealth secretariat 1st Edition Pp 46 to 54

L. Frank J (2009), Globalisation Making of the World Society, Utopia Press Ltd. 1st Edition Pp 79 to 85

Punch, K.F. (2000), Developing Effective Research Proposals. London: Sage Publications

Dane, F.C. (1990), Research Methods. Cambridge: Thomas brooks.

Isabelle Paradis November-2006

http://www.thefreelibrary.com/Telenor+Pakistan+becomes+first+cellular+operator+to+complete+USF+…-a0208658564 site visited at 13.10, 09/04/2010

http://www.pakistaneconomist.com/pagesearch/Search-Engine2003/S.E112.asp site visited at 23.29, 11/04/2010

http://news.bbc.co.uk/1/hi/business/1790941.stm site visited 15.20, 11/04/2010

http://en.wikipedia.org/wiki/Mobilink site visited at 12.15, 14/04/2010

http://www.waridtel.com/about/index.phpsite visited 13.25, 14/04/2010

http://www.zong.com.pk/about_us.htmlsite visited at 14.20, 14/04/2010

http://www.businessdictionary.com/definition/globalization.htmlsite visited at 00.24, 15/04/2010

http://www.investorwords.com/2182/globalization.html site visited at 01.35, 15/04/2010

Supplier Relationship Importance And Supply Chain Management

In today’s increasing economic environment, organisations are looking for new techniques to improve their competitive advantage. The focus of my research is in the area of purchasing which have now become a strategic function and a key reason in positioning competitively among all other competitors. The paper discusses that in recent years, the relationships between buyers and suppliers have been continuously receiving a considerable attention for effective operations within organisations. Traditionally, supplier-buyer relationships were regarded as adversarial, arm’s length transactions. However, the approach towards managing this relationship is changing and moving towards a more collaborative approach due to the fact that now suppliers are important sources to gain competitive advantage to operate in global markets in terms of their expertise, knowledge and ability of sharing risks. [Research paper – Journal]

The research aims to provide an understanding of supplier relationship management, factors of supplier evaluation and selection process, and the elements that contribute to the establishment of a productive customer/vendor relationships.

Such a study is important for buyers to build and maintain effective relationships with their suppliers for consistent cost reductions while working together to mutually create revenues and other benefits. The paper recommends that this information may work as a reference guideline for buyers when initiating cooperative relationships with their supply sources resulting in advanced purchasing and strategic supply chain management in their organisation.

The research method adopted in this dissertation is secondary exploring various business journals, business websites, textbooks and articles. Due to continuous new product developments, product innovations and increase in costs, managing supplier relationships will further become crucial in the near future. Due to this reason, therefore, this paper discusses the requirement of supplier relationships and how this shift in organisational strategy towards building relations has and will going to change the employee’s role, company’s processes and organisational goals.

The findings from this research provides an evidence of how companies have improved their supply chain operations through understanding the importance to develop effective supplier relationships as part of their core business activity for not only to achieve success within procurement department but also to successfully complete other supply chain cycle such as maintaining production flow at all times, planning accurately, inventory handling, logistical issues and achieving financial benefits. Examples included findings from large organisations of Hong Kong, Rolls Royce, GE, and Japanese firm Toyota.

The main conclusion that can be drawn from this research is that every organisation must emphasise the need to actually develop world class suppliers that helps in building long-term relationships, reduction in costs, improved QCDS (quality, cost, delivery and service) criteria, improved customer service, mutual information sharing, reducing the NPI (new product inspection) costs and becoming world class organisation in the market.

Introduction

Nowadays, the majority of Organisations believe that their company’s real assets are embedded in the quality of the relationships shared between the business and their stakeholders such as clients or customers, employees and suppliers. Developing and managing supplier relationship will be the main subject throughout this project.

The objective of this research is to investigate the importance of the need to focus more on building collaborative relationships with their strategic suppliers by large manufacturing companies. With increase in globalisation and restructuring of several organisations, procurement’s role has changed focusing more towards costs, quality, flexibility and technology. [Herbig and O’Hara, 1995; Goh and Lau, 1999]

In the previous years (traditionally), purchasing was considered as a secretarial function in which the buyer-supplier relationships were viewed as being adversarial and unsurprisingly results in a win/lose outcome. Before, business operations from manufacturing to assembling the finished goods were prepared in-house but now many organisations have moved towards a more combined approach where manufacturing firms have started concentrating more on their core competencies only and rest outsourcing nationally and internationally to satisfy their customer expectations. Organisations are going lean i.e. working towards continuous improvement, adopting just-in time and total quality management and eliminating wastes.

This highlighted the requirement for most of the lean organisations to grow cooperative supplier-buyer relationships to achieve real productivity, improved design and quality that are unattainable unless the supplying partners assist in product innovation. Hence, several manufacturers have recognized their ability to become world class competitors based on establishing high levels of trust and cooperation among their suppliers. [They and Briggs (1994)]

For example, highlighting the case of Rolls Royce, the engine manufacturer, that outsources 70% of their material from external supply chain and that’s the reason Rolls Royce try to encourage their suppliers to work openly and jointly contributing to their performance. Rolls Royce belief in building good supplier relationships assures quality and competitiveness to their product offerings and helps to achieve customer standards.

The growing face of domestic and global competition has led to understand the manufacturing companies to practise global sourcing which is a strategy to improve companies competitiveness in the international market through reducing costs, improving quality, increased exposure to universal technology, and improving delivery and reliability.

A ‘connection or association’ is known as a relationship. Relationships are said to be when individuals, organisations and internal or external groups to an enterprise interact. At recent times, relationship marketing describes long-term marketing strategy that emphasise on building and maintaining long-term relationships with customers rather than just focusing on ‘one-time’ sale approach. At business level, relationship marketing is applied to variety of purchasing – supplier relationships in the context of a broader network of interconnected purchasing, supplier and competitor organisations.

Supplier relationship is defined as a systematic approach to supplier evaluation, selection and ongoing relationship management with the goal of cutting the costs of goods and services & boosting profits?

Supplier relationship management is a proactive approach of an ongoing business links to secure a competitive advantage within the organisation, focusing more on overall relationships between the supplier and the customer (buying organisation) rather than focusing on specific contracts. The idea is to develop trust and understanding of each other’s requirements and interests while providing assistance to each other. For example, Rolls Royce sends their experts to their sub-contract suppliers to improve their technology and performance standards. Such relationships bring profit and provide competitive advantage. [http://www.ogc.gov.uk/process_supplier_performance_and_contract_management_6368.asp]

Today, most of the companies have realised that doing business jointly with their strategic suppliers will enhance their organisational ability to respond quickly to demand changes, focus on core business only and hence, results in implementing best practises.

For example, Rolls Royce believes their supplier make very essential contribution to their business performance as over 70% of their manufacturing costs comes from external supply sources.

focus more on their core competencies such as encouraging suppliers to work with transparency, openly and together to enhance continuous improvements. rather than

Small to Medium size Enterprises and many local businesses use Transactional Purchasing whereas Large Enterprises use Relationship Purchasing to compete strongly in this economic climate.

Transactional Purchasing

Relationship purchasing

Focus on short, discrete purchasing

Focus on supplier retention

Short-term orientation

Long-term orientation

Arm’s length

Closeness

Simple buyer-seller relationship

Complicated, including internal relationships

Emphasis on price, quality and delivery in the offered product &No Innovation

Emphasis on price, quality, delivery &other factors, like innovative design as a collaborative exercise b/w purchaser and supplier

Moderate supplier contacts

High level of supplier contact with each contact being used to gain information &strengthen the relationship

Little sharing of information

Significant sharing of information, including cost information and transparency

Introducing Supply chain management

The project is focused on process for choosing world class suppliers, importance of building supplier relationships, various supplier development approaches and process of negotiation required in purchasing that plays a vital role in today’s supply chain management. Explaining what is supply chain management and its various elements that are necessary for the movement of goods and services within the business.

‘Supply chain management consists of the intra – and inter-organisational co-ordination of business functions that act as both transformative and support functions’. This emphasises managing supply chain effectively must be a key activity within the businesses. [Mentzer et al. (2001)]

Supply chain combines flow of materials, goods, and information (includes money) that floats within and between organisations linking with a variety of tangible and intangible facilitators, e.g. relationships, processes, activities and integrated information systems. Different views of supply chains are implemented in terms of a process when operations are emphasised, a logistical channel when emphasises marketing, a value chain whey looking at value added activities, and a demand chain when considering customer satisfaction. [Peck H. (2006)]

Key elements of supply chain

The key elements of supply chain are that links with each other by the movement of products. The following explains that supply chain starts and ends with the customer: [http://logistics.about.com/od/supplychainintroduction/a/into_scm.htm]

Customer – This is the customer that starts the value chain by deciding to make a purchase of a particular product for example, in an aviation industry procuring turbine blades or a fan shaft which is offered for sale by an organisation. At this stage, the customer contacts the sales team and places purchase order with a right quantity and delivered on a right date. If in case, this product needs manufacturing then the purchase order includes a requirement that must be fulfilling by the production facility.

Planning – The requirement for planning occurs when customer’s purchase order is received and processed with other existing orders. Production plans are created by the planning department to generate products to accomplish the customer’s order. If manufacturing requires, then raw materials are purchased to complete the process.

Purchasing – The list of materials e.g. raw materials and services is obtained which is required by the production department to complete the purchase order. Then purchasing team issues purchase orders to procure raw material from selected suppliers on their manufacturing site on a requisite date.

Inventory – The raw materials that are received from suppliers are checked for quality and moved into the warehouse. The invoice is received for the parts that are delivered by the supplier and then materials are stored until there is a demand from a production area.

Production – According to the production plan, the raw materials from the inventory are moved into the production area where product manufacturing takes place and creates the finished product. Once the parts are completed, they are again sent back to the warehouse and stored prior to delivery to the ultimate customer.

Transportation – Logistics department then finds the most efficient shipping method in order to achieve on-time delivery at the right date mentioned by the customer. After goods are received by the customer, an invoice is sent by the organisation (supplier) for delivered products.

Outlining Case study: GE-Aviation

In this project, there will be discussion on relationship purchasing within aviation industry considering GE Aviation as a case study. Suggesting methods of procurement and ways of maintaining GE’s existing and new relationships with suppliers.

On-line procurement is one of the major processes that I will be focusing in my project which GE adopts within their business that not only reduces the cost and saves time but also provides the right amount of communication with its suppliers at the right time. For example, GE-Aviation has its own department for RB211 jumbo jet engine where there are teams responsible for engineering, operations, purchasing and billing. The engine gets repaired and maintained on site. For RB211 engine type, GE’s biggest supplier is Rolls Royce who is the OEM’s and can provide material many times.

Using SAP software within the whole organisation saves a huge amount of time for purchasing transactions and also makes easy for GE purchasing team to analyse demand raised and provide forecasting to their suppliers for each product by just looking into the system and working through its historical past. GE uses Relationship Purchasing in which they believe to maximise their revenue it is very important to have good supplier relationships. Some of the key approaches/strategies required before working towards building relationships are as follows:

Selecting a world class supplier

Companies that outsources internationally their materials opens the opportunity to identify potential suppliers, evaluate and reasonably short list them that result with the best supplier. This is considered as one of the most important process to perform by the procurement team that aims to choose the best supplier that ensures reliable supplies with low risk involved and maximises the overall value to the buyer.

The following are the seven key steps involved in supplier evaluation and selection process: (Fig 7.5 Supplier evaluation and selection process [pg 163])

Recognise the need for supplier selection

The first step is to recognise the actual need for selection of supplier. Purchasing team must work with new product development department in order to recognise future buying behaviours. Purchasing groups proactively select suppliers and anticipate demands rather than wait until a demand rises. The process to start this evaluation arises due to the following scenarios:

Through new product development

Poor performance received from existing internal and external suppliers

Closure of the contract

Procuring new tools and equipments

Thinking to expand business into new markets or products

Due to inadequate capacity of existing suppliers

Throughout outsourcing and re-engineering analyses

Deciding to reduce the size of the supply base

Identifying the main sourcing requirements

All the way through evaluation process, procurement team must keep an eye on what they are intended to do. Acquiring materials is not just important but also focus to meet specific requirements set by the other internal customer and indirectly by other supply chain members. For example, an aviation company like GE that makes engines has to buy all the machinery and spare parts along with buyers taking care to ensure a perfect quality products are delivered on time.

Establishing sourcing strategy

Developing purchasing strategies results in long term alliances that buyers look each time to compete in today’s growing competition. Several vital strategic decisions that affect the selection of suppliers are:

Picking single or multiple suppliers

Creating short-term or long-term contracts

Supplier’s wish to develop working partnerships rather than arm’s length relations

Working with suppliers that can provide support with product designs rather than those who cannot modify designs

Having choice of local, domestic, foreign or global suppliers

Therefore, sourcing strategies and policies must be carefully re-evaluated during supplier selection as requirements changes frequently in shorter times because of changing market conditions, changing consumer preferences and accustomed corporate goals.

Identifying potential suppliers

This stage identifies a list of suppliers that can actually have the capability to deliver of what is required by the customer. Buyers can use various numbers of sources to develop the preliminary list of supply sources by a quick search of company websites as well as long and detailed search for companies that can support with design and make specialised products. A rule of thumb must take place to determine the effort to be used into supplier selection by comparing the existing supplier’s efficiency and strategic importance of an item because too much effort and expensive resources are wasted; too little effort and potential suppliers might be missed in this initial search criteria. Following are the sources of information widely-used to identify potential suppliers:

Current suppliers – Using existing suppliers who are already on the preferred list which are consistently meeting buyer’s requirements that reduces the purchasers time and effort in evaluation of supplier capabilities. But at the same time, existing supplier may not always provide the world class long term results and that is the reason why organisations scan information continuously to recognize potential new sources.

Sales representatives and agents – Marketing information received from these individuals can become a valuable source of information for new product offerings. Buyers keep this information in their file for future reference even if there is no urgent requirement for a supplier service.

Internet searches – Nowadays suppliers launch customer websites as part of their marketing approach and help the buyers with detailed information from a simple search of possible suppliers. Various other websites can also help in discovering and assessing important information like reviews, comparisons, comments, analyses and case studies of potential suppliers.

Experience – Experienced individuals working within purchasing team generally carries a wide knowledge about various capable suppliers as experienced buyers have already worked in a particular industry for many years and familiar with the main suppliers and their features.

Internal sources – Operating different business units within large organisations, each may have their own procurement department. Therefore, other units in the same organisation becomes a valuable source of information exchange to buyers through informal meetings, formal team sessions, an internal database, purchasing newsletters, etc.

Limit suppliers in the selection pool

At this stage, the procurement team must consolidate and analyse the information gathered on potential supply sources that helps them to make informed decisions. Getting a long list of suppliers is just the initial task but buyers then have to eliminate the weakest suppliers until they attain the strong shortlist. Therefore, the final supplier is then selected from this list. The following are the entry qualifiers features that influence buyer’s final decision [Howard (1998)]:

Financial strength

Appropriate business strategy

Strong supportive management

Proven manufacturing capability

Design capability

There are also many reasons that influence buyer’s decision to procure material on the following basis:

Buying directly from the original manufacturer or distributor – Original equipment manufacturers mostly offer lower prices that avoid the costs of wholesalers and retailers along with profit margins. The final choice must be considered on the basis of four factors including the size of the purchase, the manufacturer’s policies of direct sales, availability of storage at buyer’s facility, and the required additional services.

Local, national, international and global suppliers – Choosing international suppliers are more favourable as they usually offers the best price along with technical support but these have to be balanced by higher shipping costs, stocks, communication problems and common risks involved. Also, choosing local suppliers are considered more responsive to fluctuating demands, small deliveries and regular changes in purchase orders using Just-in-time method that not only supports local suppliers and allows the buyer’s to enhance local economy but also helps in building community goodwill.

Large or small suppliers – Usually buyers focus on supplier’s capability to do the work rather than selecting on the basis of its size. But a buyer must keep in mind the unexpected increase in demands that can only be dealt by larger firms providing extra capacity to overcome these fluctuations. At the same time, in order to create a diversified supply base, buyers intentionally deal with smaller suppliers.

Multiple or single sourcing – When there are numerous different suppliers available then it becomes very difficult to make a decision of how many to use? Most of the organisations have chosen a trend to reduce the supply base that will benefit them accordingly.

Determining method to select supplier

This is the last stage where buyers are left with four to five suppliers in their shortlist and decide to evaluate these remaining organisations by looking at the alternatives in more detail for example, using supplier-provided information, supplier/customer visits, preferred list of suppliers and third-party information.

Supplier-provided information – Detailed information can be acquired through requesting price quotations. Information received from quotations are then used to understand the product description and supply which is then followed by another requests of a detailed cost breakdown of the price quoted by suppliers initially that must include the costs of labour, materials, overheads and profit as buyers also require operational details to finally evaluate them.

Supplier visits – One of the most efficient ways of getting an overall view of supplier’s capabilities and performance is to visit supplier’s facilities by a cross-functional team. Generally, these visits are expensive and time consuming so a buyer must balance their desire to gather as much information as possible confidentially. The following table shows important information points that a buyer must collect during its visit:

Management capability

Quality management

Technology levels

Planning and scheduling effectiveness

Financial strength

Personnel relations

E-business capabilities

Sophistication and efficiency of operations

ISO certifications

Skills, knowledge and experience of workforce

Evidence of good management and housekeeping

Types of inventory

Nature of the goods inwards, stores and outwards areas

Environmental practices

Employee employment contracts

Any significant changes planned or expected

Contact details of key decision makers

Use of preferred suppliers – This is a list of suppliers created by the purchasers to reward their best suppliers that consistently meets their strict performance criteria. The list can also be used as an incentive to improve the existing supplier’s performance and assessed accordingly.

External or third-party information – This consists of all the other information available about a potential supplier. For example, Total quality management is a system that insists suppliers to meet the quality standards as similar to buyers and generates a flow of related information throughout the supply chain.

Selecting supplier and signing agreement

This is the final step to choose the supplier followed by signing a contract. This includes different purchasing orders required for routine and major items, i.e. using standard purchase orders for routine items whereas, detailed negotiation is required to agree on specific details for major items that increases the complexity in the purchase order.

Supplier evaluation criteria

After considering various steps in selecting suppliers, the buying organisation must analyse the following questions with the supply organisation in order to progress outside their traditional purchasing relationships and possibilities for long term relationships with them: [Spekman (1988)]

Has the supplier signified a dedication or willingness for a longer term relationship?

Is the supplier enthusiastic to perform resources to develop this relationship?

Is the supplier willing or able to participate at the early stage or throughout the stage of product design?

Has supplier brought any unique service to the business?

Is the supplier showed their interests or commitment towards customer’s problems and effectively solving them together?

Is the supplier is interested in improvements and innovations in the operations?

Is there any openness of sharing and exchanging information between both companies?

How much knowledgeable is the supplier about the customer’s industry and business?

Is the need for confidentially exchanged information taken seriously?

Supplier management and development

In today’s time, the need to improve supplier performance is open in large or small organisations and for this reason; the purchasing teams must introduce a supplier relationship management (SRM) approach to achieve their organisational goals and success in global purchases of technology. Therefore, this calls for managing resources efficiently throughout supply chain collaborations, dedication required from supply managers, creating standardised best practices effectively and tools required for tracking and evaluating the results. The process must begin with effective supplier performance measures required to undertake strategic supply or procurement decisions for the organisation. [Minahan T. And Vigorose M. (2002)]

Effective supplier performance measurements

What to measure – The factors important to assess the performance includes:

Delivery performance – The purchase orders that are sent to suppliers involves all the appropriate information on deliveries, with quantities, lead times and due dates. Therefore, it is buyer’s responsibility to check regularly that how well a supplier actually meets their expected conditions.

Cost performance – There are many ways that can measure cost performances for example, monitoring real price delivered by the supplier after adjusting increase in the prices (inflation).

Quality performance – In order to measure quality, the best criteria for buyers is to check that products are delivered in 100% perfect condition with no defects. This also includes comparing previous performances, latest performance with mutually agreed standards and various other figures.

Other qualitative factors in supplier performance

Factor

Explanation

Problem solving

Supplier’s attention to provide solutions to the problem

Technical skills

Comparing supplier’s manufacturing capacity with other business suppliers

Reporting progress

Supplier’s incomplete reporting of existing problems and identifying and communicating other potential problems

Corrective action

Supplier’s timely response to requests for corrective actions and requests for changes

Cost-reduction plans

Supplier’s enthusiasm to find techniques that helps to reduce the total purchase cost

New-product development support

Supplier’s capability to reduce time and cost required for new product development

Buyer/seller compatibility

Rating subjectively how well a purchasing firm and a supplier work together

Therefore, the above are various other factors that help the buyers to measure the supplier’s technical ability and closeness of both parties’ relationships.

Reporting frequency – This includes preparing reports to provide a clear feedback to supplier on their performance. Purchasing management must communicate with their buyers to send these reports by reviewing them weekly, monthly, quarterly or annually which is then followed with more face-to-face team meeting that reviews their actual performance, discussion on targets, identify potential improvements, examine changes, and so on. Any problems (for example, supplier fails to meet the required standard) occurred during crucial time must be addressed with special reports and meetings to avoid any financial and operational problems.

Use of measurement data – Procurement staff can make use of data collected from its measurement systems in many ways including:

Identifying suppliers which are not meeting the performance goals and highlighting areas that calls for improvements, followed by corrective actions taken to raise the performance to acceptable levels or else finding new suppliers.

It helps in discovering excellent performances achieved from supplier which then helps identify preferred suppliers that qualify for long term alliances.

It also recognises the worst performing suppliers that are continuously not improving and needs to be removed from supply base whereas offering more work to superior suppliers.

Supplier measurement techniques – There are three techniques discussed for evaluating performance of suppliers, each differs in their use, level of subjectivity, resources required and implementing cost.

Categorical techniques – These techniques considers a particular aspect of performance, for example lead time and classifies a set of categories for performance rating as excellent, good, fair or poor and therefore, helps buyers in deciding which supplier is good or bad. This is an easiest system of measurement, easy to use, comparatively inexpensive and also the most subjective.

There are some drawbacks of using this technique as they do not provide a clear analysis of performance, slower than automated systems and regarded as the lowest of the three techniques in terms of reliability.

Scoring model – This method overcomes the subjectivity of categorical technique by calculating a weighted score for different performance categories. This is more reliable and requires reasonable implementation cost providing flexibility for buyers to change the categories included as well as weights allocated to each.

Cost-based techniques -This technique is the most comprehensive that can help the buying organisation to look for the total cost required for doing business with a particular supplier by identifying the lowest purchase price is not always the lowest cost of acquisition. Hence, this technique works through collecting data from the purchasing firm’s information system, analysing the total cost including the additional occurring costs whenever a supplier fails to perform as per expected by the buyer. This can be calculated using formula of supplier performance index (SPI)