Hofstede and Trompenaars

How Do Different Cultures Affect Consumer Behaviour and Organisational Structure: An Inquiry Using Hofstede and Trompenaars Models

This study will analyse the effect of different cultural practices on consumer behaviour belonging to different cultures. Utilizing Hofstede’s cultural framework and Trompenaars dimensions of cultural framework, this study will exhibit the cultural differences create differential impacts on organizations and structural changes associated with them. Furthermore, theoretical frameworks constructed by other behaviourists as well as psycho-sociologists will be discussed in brief to determine the stimulant triggering consumers to consumer goods. How far cultural orientations are effectively managing consumer behaviour and how much these orientations are making organisations to adapt to specific set of practices in local context will be studies Moreover, this study will argue that cultural differences affect not only the behaviour of consumer but lead the managers to change their decision making style and to make strategic decisions on the basis of consumers’ choice.

Culture: What It Holds for Consumers

Culture consists of collective elements and practices which provide a conduit for perception, judgment, calculation, correspondence, and action amongst those who share a historical period, a language, and a geographic location according to Arnolds and Thompson (2005). Culture is a prevailing power in regulating human behaviour and shaping their values in the formation of their collective actions. According to the authors, the culture is comprised of a commonly-accepted set of behaviour models that are transported and well-preserved by the members of a specific society through different means. Cultural values touch almost every facet of human life according to Mourali et al., (2005). The cultural value scheme includes cultural fundamentals that the people of a particular region have in common with the group to which they belong as observed by Luna and Gupta (2001). From the start of an individual’s actuality, the personal experiences the profits and restrictions of a particular culture, and those profits and limitations may become a leading stimulus upon consumers’ purchasing choices.

Hofstede’s Model of Cultural Dimensions: Analysis of Consumer Behaviour and Organisational Ethos

Hofstede’s (1984) study entitled as ‘Culture’s Consequences’ investigates into the field of studying multinational companies and international organizations. Hofstede collected and analysed data collected from different countries to formulate concrete theoretical framework for the analysis of culture on various aspects of organisation. Through that data analysis, he concluded that “organizations are culturally-bounded” implying that structure and functions of organisation are deeply affected by the culture in which it functions. Hofstede used the analysis to create different “dimensions of culture”, the consumer behaviour and organizational styles have been discussed below.


This cultural dimension developed by Hofstede expounds that the kind of relationship an individual has with him or herself and with others in every culture. In societies where idea of individualism is of paramount importance, most of the individuals are expected to take attention and upkeep of themselves and their immediate family. In this kind of culture the consumer behaviour is self-dependent, which implies that societal values are of less significance for their consuming habits. In these cultures the management style revolves around the self-efficiency which is driven by motives of promotions and development. However, in collectivistic-oriented societies which are, by and large traditional societies, focus has been on societal good and community’s welfare as observed by Yeniurt and Townsend (2003). In these cultures, consumers’ behaviour is largely dependent on societal approval for the consumption of goods and services being offered by various companies. Moreover, the organizational styles are deep rooted into efficiency, but they also take into consideration the cultural values. In these cultures, individuals are merely regarded as the members of groups who are expected to look after them in give-and-take for allegiance to organisation. Furthermore, Yeniurt and Townsend (2003) are of the view that in collectivistic culture, there has been greater chances of innovation as these cultures are better equipped to trap organizational energies.

Uncertainty Avoidance

According to Hofstede (1991), this dimension mainly deals with the necessity to formulate rules and regulation for prescribed and proscribed behaviour of people against their sense of uncertainty. Hofstede observes that countries marked with political stability and strong sense of cultural identity score low on this dimension as they feel usually secure. However, countries like those of Latin America score high on this dimension because people (consumers) feel insecure about political climate which adversely affect their collective psyche. In these states, organisations usually rely on ad hoc practices as they could change or wind up their business owing to uncertain prevailing conditions. Consumers in these states are quite inactive as they do not indulge into buying spree out of trust problems.

Power Distance

This dimension unravels the costs of discrimination found in the authority and power relations within a specific society according to Hofstede (1991). It adversely affects the hierarchy and reliance relationships in the outline of family and organisations. For example in patriarchal societies, power within a family rests on the male. His decisions will be regarded as the most influential with regard to what is to be bought. Applying similar analogy at organisational level, in such societies the organisational structure is predicated on gender relations which value more to male workers.


Hofstede (1991) through this dimension points the in masculine cultures the dominant values are success and achievement. The implication of this dimension at organisational level incorporates that in masculine societies organisations prefer to focus on success and achievement and its structural style is male-dominated which propels the values of competition, progress and organisational efficiency. However, contrary to this finding, the feminine cultures put a great of emphasis on the concern for others. In this situation, organisation mainly focuses on social responsibility which forms the part and parcel of their organisational ethos. At consumer level, it would certainly imply that countries which have concerns for other will pay less heed to consumer values; whereas culture which puts lot of significance to success and achievements in terms of their financial strength and professional success, these states (or cultures) will put more emphasis on consumption values.

Long-Term Orientation

This dimension in Hofstede Model envisages the bringing forth attributes which are oriented towards futuristic prospects by long term awards (Hofstede, 1991). Hofstede in his later studies proposed that long-term versus short term dichotomy is more useful for his theoretical construct. The societies having long-term collective vision usually rely on deferred gratification patterns. Their main thrust is on saving for the future; therefore consumer behaviour in those societies is usually tilted towards lower levels of consumptions. According to Hofstede (1991), this pattern is usually found in emerging economies like China and India. At organisational level, there is an increasing tendency towards competition in these cultures which focus on long-termism.

Hofstede Trompenaars
Hofstede Trompenaars

Trompenaars’ Dimensions of Culture Framework

The main dimensions of culture framework defined by Trompenaars and Hampden-Turner and summarized by Trompenaars and Woolliams (2003) are predicated on four cultural typologies which are as follow:

The Incubator Culture

According to Trompenaars and Woolliams (2003), this culture resembles like a leaderless and shudderless team. It implies that prevalence of informal relations and low level of centralisation at organisational level. In this culture, the role and responsibilities are not well defined and there can be serious infringes on the overall organisation’s motivations.

The Guided Missile Culture

This cultural typology is mainly task oriented with high level of centralisation and low level of authority (Trompenaars and Woolliams, 2003). The authors are of the view that ‘… rational culture is, in its ideal type, task and project oriented. ‘Getting the job done’ with ‘the right man in the right place’ are favourite expressions. Organisational relationships are very results oriented.’ It shows that Guided Missile cultures have strict sense of responsibility. In these cultures, the managerial style is based on problem solving solutions and managers are in full charge of authority. In these types of organisational culture, the level of adaptability is very high, therefore these organisations are best suited to work in multi-cultural framework.

Family Culture

Family culture is an inverse form of the Guided Missile culture—marked by high degree of authority consolidation and low level of formalisation according to Trompenaars and Woolliams (2003). The employees of organisations marked with such kind of cultural ethos revolve around the core of authority. But like family, there are little rules and therefore there is less room for bureaucratic style. All which matters most is the will of the authority, which is a rule unto itself. In these organisations, managers have little or no say. They remain at the mercy of top slots. There remains a permanent contest amongst organisation’s members to remain as close to authority as possible.

The Eiffel Tower Culture

According to Trompennars and Woolliams (2003), the Eiffel Tower Culture is marked with strict centralisation and high level of formalisation. This culture is highly oriented towards role fulfilment which makes employees of an organisation largely adhere to the organisation’s main motives and business slogans. The whole organisation and its energies are directed towards pre-defined sets of goals and ambitions.

Consumer Behaviour: A Melting Pot for Cultural Effects

The study of the dealings and consumption involve the procedure when people choose, buy, utilize, or dispose of products, services, designs, or experiences to satisfy needs and desires is known as consumer behaviour according to Solomon et al, (2001). From the definition above, consumer behaviour can be viewed as a course that encompasses the issues that affect the consumer before, during and after a purchase. But cultural values operate at each level in imperceptible way. Culture is more than an environmental or collective influence. People were imagined within a culture. Culture is in the heads of people while consuming things which influences their behaviour. To comprehend culture’s effects on consumer behaviour, culture must be incorporated in different aspects of consumer behaviour theory. Preferably, different theories of consumer behaviour are proposed within cultures by studying people’s behaviour within each nation.

Cultural Differences and Consumer Behaviour

At psychological level, the mental approach and general mindset of a consumer which he has begotten towards a product for making rational choices is known as the consumer decision-making style. However, it is well understood by Bennet and Kassarjian (1972) long before the initialization of systematic study that consumer decision-making style hinges upon an unvarying configuration of operative and cognitive responses to their needs and societal approval of these decisions. Moreover, the culture has also been proven to have a greater impact on individual attitudes and values according to Hofstede and Hofstede (2005). Hofstede and Hofstede (2005) pioneered the study of culture and its impact on various aspects of management and business related management practice. The Hofstede Model, which has been elaborated in the following paragraphs has been regarded a mould to study the impact of culture on management practices as well on the consumer-oriented decisions regarding consumption.

Furthermore, Sproles and Kendall (1986) devised three different ways to approach consumer decision making process, which includes consumer typology approach, psychographic approach which is also known as lifestyle approach and, lastly, consumer characteristic approach. The authors elaborated the consumer typology approach categorises customers according to the retail investment and the types of consumers which usually get into particular type of consumption pattern. The consumer psychographic approach hinges upon the overall lifestyle of the consumer. For example, a consumer with middle class lifestyle will tend to emulate the life style of the elite within his or her specific income. In the same, vein consumer characteristic approach depends on the detailed study of different traits and characteristics of consumers, which involves the study what consumer is looking after. Moreover, characteristic approach also underlines the cognitive positioning of consumer towards buying the specific product through their motives as observed by Westbrook and Black (1985). The authors are of the view that pre-defined mental constructs are important stimulants of general human behaviour which, in turn, also affects consumers’ behaviour as they are of the view ‘hypothetical and unobservable psychological constructs postulated to explain both the energized and directive aspects of human behaviour.


The study shows that culture has deep effects on the consumer behaviour as well as organisations’ structure which, in turns, affect organisations’ efficiency. The prevalent mode of cultural values best describes what kind of consumer behaviour and what kind of organisational goals have been embedded into them. Moreover, the study further suggests that an organisation with flexible rules with an adaptive style of operations is best suited in today’s world of multi-cultural workplace when the role of employees especially managers is also becoming complex in the face of global assignments.


Arnould, E. J. and Thompson, C. J. (2005), Consumer Culture Theory (CCT): Twenty Years of Research, Journal of Consumer Research, 31:4, 868–882

Bennett, P. D., and Kassarjian, H. H., (1972), Consumer Behavior, Chicago: US, Prentice-Hall

Hofstede, G., and Hofstede, G.J., (2005), Cultures and Organizations: Software of the Mind. 2nd Edition, US, McGraw-Hill

Hofstede, G., (1984), Culture’s Consequences: International Differences in Work-Related Values, New York: US, Sage Publications

Luna, D. and Gupta, S.F., (2001), An Integrative Framework for Cross-Cultural Consumer Behaviour, International Marketing Review, 18:1, 45 – 69

Mourali, M., Laroche, M., and Pons, F., (2005), Individualistic Orientation and Consumer Susceptibility to Interpersonal Influence, Journal of Services Marketing, 19, 164-173

Solomon, M. R., Polegato, R and Zaichkowsky, J.G., (2001), Consumer Behaviour: Buying, Having, and Being, Toronto: Canada, Pearson Education Canada

Sproles, G.B. and Kendall, E.L., (1986), A Methodology for Profiling Consumers’ Decision-Making Styles, Journal of Consumer Affairs, 20:2, 267-279

Trompenaars, F. and Woolliams, P., (2003), A New Framework for Managing Change Across Cultures, Journal of Change Management, 3:4, 361–375

Westbrook, R.A. and Black, W.C., (1985), A Motivation-Based Shopper Typology, Journal of Retailing, 61, 78-103

Wong, N. Y., and Ahuvia, A. C., (1998), Personal Taste and Family Face: Luxury Consumption in Confucian and Western Societies, Psychology and Marketing, 15, 423-444

Yeniyurt, S., and Townsend, J.D., (2003), Does Culture Explain Acceptance of New Products in a Country?: An Empirical Investigation, International Marketing Review, 20:4, 377-396

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Corporate Governance

Corporate Governance

Corporate governance is a field in economics that investigates how to secure/motivate the efficient management of corporations by the use of incentive mechanisms, such as contracts, organizational designs, and legislation. This is often limited to the question of improving financial performance, for example, how the corporate owners can secure/motivate that the corporate managers will deliver a competitive rate of return.

It can also be defined as the combination of mechanisms, which ensure that the management (the agent) runs the firm for the benefit of one or several stakeholders (principals). Such stakeholders may cover shareholders, creditors, suppliers, clients, employees and other parties with whom the firm conducts its business.

It deals with the conflicts of interests between the providers of finance and the managers; the shareholders and the stakeholders; different types of shareholders (mainly the large shareholder and the minority shareholders); and the prevention or mitigation of these conflicts of interests. The principles of Corporate Governance are as follows:

  • Shareholder Recognition- it is a vital component in maintaining a company’s stock price. Good corporate governance seeks to ensure that all shareholders (both small and major shareholders) get the opportunity to participate and raise their opinions at the general meetings.
  • Stakeholder Interests- they should be recognized by the good corporate governance. This develops a positive relationship with the community.
  • Board responsibilities must be clearly outlined to the shareholders. All board members should be aware of the main vision and mission of the organization and should unite to achieve it efficiently and effectively.
  • Ethical behavior should be maintained and followed by all the board members, as the violations can negatively impact the company’s image and recognition.
  • Business transparency is an essential feature in promoting shareholder trust. All the financial records and reports should be clearly stated and exaggerations should be avoided.

The main purpose of these principles is primarily to clarify and explain the rights and responsibilities of the owners, the Board of Directors, the company’s management and other governing bodies, with reference to the company’s policies and rules, regulations and legislative framework. Thus, effective corporate governance is required by a business so that it is able to set and meet its strategic goals efficiently. A corporate governance structure combines controls, policies and guidelines that motivate the organization towards its objectives while satisfying the needs of the stakeholders.

It refers to a combination of various mechanisms. These mechanisms include: Internal and External Mechanisms.

Internal Mechanism

The internal mechanisms are the most important sets of controls that monitor the progress and activities of the organization and take corrective measures when required.  They tend to assist the internal objectives of the corporation and its internal stakeholders, such as the employees, managers, and the owners. These objectives primarily include the tasks to be performed and their reporting lines, along with the performance measurement systems.  So, the internal mechanisms include supervision of management, independent internal audits, structure of the board of directors into levels of responsibility, segregation of control and policy development.

External Mechanism

These mechanisms are controlled by the external or outside entities of the organizations, serving to their objectives. These external entities include regulators, governments, trade unions and financial institutions. Their objectives mainly refer to adequate debt management and legal compliance. The external stakeholders impose these mechanisms in the form of union contracts or regulatory guidelines. Finally, companies report the status and compliance of external corporate governance mechanisms to the external stakeholders.

The good corporate governance of an organization is depicted through the market share. So, the market share index is presented in the Financial Times Stock Exchange (FTSE). The FTSE 100 refers to a share index of the 100 companies listed on the London Stock Exchange, having the highest market capitalization. It serves the purpose of a tool for measuring the success and prosperity of the businesses regulated by the UK company law. From among the 100 companies, one of the companies that we will be analyzing is Unilever.

Unilever is a company, well known for the useful everyday products that it produces. Its vision is stated, as “Unilever is a unique company, with a proud history and a bright future. We have ambitious plans for sustainable growth and an intense sense of social purpose.” Their main purpose is to make a sustainable living. They aim to create a better future every day, with brands and services that help people feel good, look good and get more out of life. Most of the Unilever brands contain ethically and sustainable sourced ingredients that are independently certified. Around half of their raw materials are from agriculture and forestry, so they work towards making their key products 100% sustainable.

Unilever ensures good corporate governance and behavior. The Code of Business Principles represents the standard of conduct that each Unilever employee is expected to follow in their performance. A copy of this code has been presented in the document “Unilever’s Code of Business Principles.” The main components of this document includes: Ethical guidelines, Employees, Shareholders, Customers, Law and Regulations, Business Partners, Competition, Public activities, Compliance to the rules, monitoring them with the required and then reporting the final results. It also caters to the rights and responsibilities of the stakeholders. This document aids the employees in understanding what the organization expects from them and how they can all struggle towards achieving the organizational main goals and objectives.

Corporate Governance
Corporate Governance

Unilever focuses to corporate governance requirements in the Netherlands, the UK and as a foreign private issuer in the US. They constantly review their corporate governance arrangements and present it in the annual report. They conduct their operations according to the internationally accepted principles of good governance and best practice, also ensuring compliance with the corporate governance requirements applicable in the countries in which they operate, therefore catering to both national and international requirements.

The corporate governance of Unilever has been portrayed annually. Similarly, the Annual Report 2014 has been divided into two parts:

  • Strategic Report- it contains information about the organization, how the operations are conducted and how is the money earned. It includes the strategy, business model, markets and Key Performance Indicators as well as the approaches to sustainability and risk.
  • Governance and Financial Report– it contains detailed corporate governance information, how risk is mitigated, the committee reports and how hey remunerate the directors, also the financial statements and notes.

As mentioned earlier, the corporate governance includes two mechanisms- internal and external. Internally, a Board of Directors Committee is present to analyze and evaluate the performance of employees, to make organizational decisions and review the progress towards achieving those goals. The management of the company is committed to good corporate governance and complying with the best practices. The Directors are expected to present the financial statements, keeping in view the cash flows, analyzing the position and pattern of shareholders, discussing the annual board meetings and evaluating the results, further presenting it in the form of the report.

Unilever pays importance to their shareholders. It values open, constructive and effective communication with their shareholders. They are provided an opportunity to raise issues directly with the Chairman and, if required, the Vice-Chairman/Senior Independent Director. They are supported by the Investor Relations department, which organizes presentations for analysts and investors. The meetings and information processed in the meetings are announced via teleconferencing and can also be accessible by telephone or via their website. The company through a frequent dialogue welcomes feedback from shareholders. The Chairman, Executive Directors and Chairmen of the Committees answer the questions put forward by the shareholders at the Annual General Meetings (AGMs) each year. This depicts the idea that the company appreciates the interests and opinions of the shareholders, with fulfilling towards the accomplishment of the desirable opinions.

The Annual General Meetings (AGMs) are conducted each year, where the Chairman presents his thoughts on the governance aspects of the preceding year and the CEO of the company provides a detailed review of the Company’s performance throughout the year. Shareholders are encouraged to attend these meetings and ask questions at or in advance of the meeting. Indeed, the question and answer session forms an important part of each meeting. The external auditors are welcomed to the Annual General Meetings and are entitled to address them.

The external mechanism of Unilever includes the financial institutions that provide loans and financial assistance to the production and then marketing of the products produced.

Risk Management is an important aspect that provides support to the internal stakeholders by assuring a comfort zone in the company. Every business face risks at various levels, but effective management is what differentiates a successful company from the least successful one. Likewise in Unilever, the Boards, advised by the Committees, regularly review the significant risks and decisions that could have a material impact on Unilever. These reviews consider the level of risk that Unilever is prepared to take in pursuit of the business strategy and the effectiveness of the management controls in place to mitigate the risk exposure.

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Action Research Dissertation

Action Research

From the time when Kurt Lewin coined the term, action research has crossed boundary from its application in social and medical sciences to organizational development and information systems. Baskerville (1999) lists a variety of action research under different designations such as soft system methodology, prototyping, participant observation, field work, action science, and process consultation.

Action research is a class of methodologies based in the culture of its researcher-participant collaboration. It aims to provide practical solutions in an immediate problem context and contribute new knowledge to science at the same time. In essence, the approach focuses on both action and research concurrently. The action researcher participates in the context of the social or organization problem in conjunction with the practitioners to effect change and also develop knowledge. This means that there is a dual commitment in action research; the action researcher collaborates with the client system therefore highlighting co-learning as a significant part of the process.

Concept of Action Research

“Action research simultaneously assists in practical problem-solving and expands scientific knowledge, as well as enhances the competencies of the respective actors, being performed collaboratively in an immediate situation using data feedback in a cyclical process aiming at an increased understanding of a given social situation, primarily applicable for the understanding of change processes in social systems and undertaken within a mutually acceptable ethical framework” Hult and Lennung (1980).

This comprehensive definition of action research covers the contextual setting of research, the double expectations, and the ethical considerations of the methodology. Action research differs from other research methodologies in various ways. The most significant of these differential attributes is its aim of transforming all the participants into researchers, as everyone ‘learns by action’. Asides this, the research takes place in real-life situations where practical solutions are developed to the contextual problem. The primary role of the action researcher is to train local leaders to a level where they can be responsible for the process, that is, able to continue with the research when the action researcher discontinues. During the course of the action research, the researcher may oscillate between different roles which include planner, leader, facilitator, teacher, designer, observer, and catalyzer.

Common Characteristics of Action Research

According to Peters and Robinson (1984), action research authorities seem to agree on four common characteristics of the research paradigm, which are;

Firstly, action research has both action and change orientations. This emphasizes the dual outcomes of the methodology, action and research. Secondly, it focuses on problem; it targets to identify and implement actions on the problematic situation. In addition, action research involves collaboration between the action researchers and the client system. In this regard, all participants can be described as co-researchers. Lastly, it is a cyclic or spiral process consisting of steps which are repetitive.

Action Research
Action Research


The Action Research Processes and Methods

The process of action research is a sequence of events comprising of iterative cycles of stages. There are different models used to describe this processes. However, the most common action research paradigm is that described by Susman and Evered (1978), which consider five steps in each cycle. They are diagnosing, action planning, action taking, evaluating and specifying learning.

Diagnosing involves identifying the primary problem of the organization; action planning involves specifying actions that will change these primary problems; action taking implements the planned action; evaluating involves determining whether the action was successful or unsuccessful, while in ‘specifying learning’, generalized findings are made in an ongoing process.

The methods used in data collection during an action research project include surveys or questionnaires, keeping of journals, structures and unstructured interviews, observation recordings, taking photographs, and case studies. All these are tools are common with qualitative research paradigm.

Criticisms of Action Research

Some researchers have criticized action research as a rigorous research approach, maintaining that it is just a bit more than consultancy. Such set of academics point to weaknesses of the methodology such as bias and impartiality of the action researcher, difficulty of generalizing results from the study, lack of validity of data, and the assumed absence of key attributes of rigor and discipline associated with normative scientific research methods (McKay and Marshall, 2001). In spite of these criticisms, action research has proven successful in some case studies across different disciplines.

Action Research in Practice

Action research is a powerful tool that can be employed by Information System researchers for investigating the interaction between humans, information systems and social community.

Lau and Hayward (2000) in their study, Building a Virtual Network in a Community Health Research Training Program, applied action research paradigm to explore the effect of IT on the transition of health workers into a collaborative work group. The study evolved following a seven-week training course of about 25 health representatives from various regions. Each participant was presented with a notebook computer, internet connection, and technical support, and were directed to apply the knowledge acquired from the training in their domains, The action researchers discovered that individuals who used the system interactively tend to undertake collaborative projects, and that the dearth of quality community healthcare information online was a shortcoming. Overall, the participants attested to learning a lot from the experience. The research outcome is the provision of a descriptive model involved in creating virtual networks which can serve as groundwork for future research.

It is evident that action research is a valid methodology that bridges the gap between traditional research paradigms and socio-cultural research approaches.


Baskerville, R. L. (1999). Investigating information systems with action research. Communications of the Association for Information Systems, 2(19), 1-32.

Hult, M., & Lennung, S. Å. (1980). Towards a definition of action research: a note and bibliography. Journal of Management Studies, 17(2), 241-250.

Lau, F., & Hayward, R. (2000). Building a virtual network in a community Action Research research training program. Journal of the American Medical Informatics Association, 7(4), 361-377.

McKay, J., & Marshall, P. (2001). The dual imperatives of action research. Information Technology & People, 14(1), 46-59.

Peters, M., & Robinson, V. (1984). The origins and status of action research. The Journal of Applied Behavioral Science, 20(2), 113-124.

Susman, G. I., & Evered, R. D. (1978). An assessment of the scientific merits of action research. Administrative Science Quarterly, 23, 582-603.

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Leadership Assignment

Leadership Assignment

Leadership: It is the process in which an individual leads a group of people or an organization by influencing them with the same notion to attain a common goal. We can also define leadership as defined by Theo Haimann as “Leadership is the process by which an executive imaginatively directs, guides and influences the work of others in attaining specified goals”.  The leader is at center of the group’s power structure and responsible for keeping the group together along with infusing life into it so that it can move towards its goal. Inside each every one of us there is a leader who is waiting for an opportunity to come out and lead it in an effective manner. A good leader is fully aware of his/her strengths and weaknesses. I would like to list down some of my strengths related to my personal leadership effectiveness –

  • Optimistic: I am highly optimistic person. I have the ability to think positive and look after the bright side of everything. It’s really important for the leader to lift the people of his/her group to the clouds instead of dragging them into mud. I seek out the positives in people and help them overcome their feelings of self-doubt which helps them keep motivated.
  • Confidence: Highly effective leaders know deep down inside their minds that they and their team can accomplish the work they set themselves for. Confident makes you motivated and helps you strive even in difficult times. In a group if the leader is confident about something, his followers will be too. I also possess this trait of confidence in me. I am always optimistic and confident about any work that I have to do because it helps me complete the work easily.
  • Self-Assessment: I believe I know my areas of strengths and weaknesses and it helps me to self-assess myself which is really important. A Leader should always be good self-judging himself and also others so that at every point of time, the leader has an idea that whatever he is doing is not wrong which would allow delegating to others who have those abilities.
  • Decisive: Basic duty of a leader is to make decisions. I personally believe I have that decision making quality in me. I am not afraid to make decisions and quick calls when circumstances require it. Once I make a decision I stick with it unless there is some strong particular compelling reasons for me to change it.
  • Supporting my Team/Group: I have worked in various teams as a leader. Be it in school or during my work term, I have always supported my team/group by making it safe to take risks, speak up or to tell the truth. Supporting your group by making this kind of environment always facilitate the group’s progress towards attaining the desired aim or goal.

Some of weaknesses include procrastination due to which sometimes I pay a lot attention to non-urgent work rather than concentrating on the urgent work.  Also the compulsiveness to complete one task while having the stress of all the other tasks at the same time has led me to think unkindly about the person or the circumstance. Sometimes I get too much occupied with work that I even don’t think about my personal life. This is due to the inability to say “No” to people who ask me for any kind of help or work. I also have this problem of overthinking sometimes. I care way too much about things than normally required.

Too leverage my strengths and to develop my weaknesses the best thing can be asking people around for the input and then deciding- what areas to work on. Asking people to give genuine feedback on what they feel about my abilities and weaknesses will help move forward in the right direction. I have always listened carefully whenever someone has given me feedback and I try to work on my weaknesses. I have to stop being procrastinating which will allow me to take on urgent tasks rather than taking on something I like. This will help me complete those urgent tasks first and then proceed on to other tasks. To do this I will make a task plan stating which tasks need first attention. The issue of compulsiveness can be solved by managing equally between the tasks. Even if I have multiple tasks to work on, I will not limit myself onto solving one task first; rather I will aim on completing each of them side by side which will eliminate any kind of compulsion and the effects after. Talking about overthinking, the best way to overcome this is self-satisfaction. I usually don’t get satisfied easily with anything which creates this problem of overthinking and over looking into matters which do not even require that attention. I believe all of the action plan discussed above will help me overcome my weaknesses. To grip on my strengths I will keep on working in the same leadership style and manner. To improve and gain new skills I will set specific life goals with timelines. The goals can be designed by moving backwards in time of your life to the present month. After setting up goals and deadlines next thing is to formulate the action plan so I can commit to that and it will help me achieve those skills. I will keep on educating and improving myself in every possible way. The person who thinks he is an expert in something, has a lot more to learn. Learning never stops. I aim to be receptive to others perceptions and information I get from people I meet daily. I am keeping my self-updated with any kinds of development in my field. As John F Kennedy once said “Leadership and learning are indispensable to each other.” So always learn and grow.

There are different barriers that can come up while implementing the plan we discussed above. We always fear of overstepping our boundaries and think that the response to our initiatives will be “Mind your own business”. Some of us are even afraid to get evaluated by others because of uncertainty about what people think of us. There are challenges that come from different sources, some being external and some internal (ctb.ku.edu).  External challenges usually include public criticism, financial issues, and hostility from powerful forces etc. whereas internal challenges come up from within the (leader) person. Internal challenges can include emotional intelligence which is defined as the ability to understand and manage one’s own emotions. If someone has a high degree of emotional intelligence then that personal know what their emotions are, what their emotions mean to themselves and to others, and how their emotions can affect themselves and others. To be an effective leader one should has strong understanding of his/her emotions so that emotions does not create any kind of barrier while leading a group. There are some other internal factors like impatience, lack of decision making ability etc. that can result in hampering the growth of the leader.

Leadership Dissertations
Leadership Dissertations

Values guide human actions and they are really important in understanding leadership as they explain the focus and directions of people’s actions (Katherine D, 2015). They may vary with culture but some of the values are fundamental like honesty, credibility etc. which fits all human beings uniformly. Demonstrating the values through appropriate actions enables leaders to build network and connection with their followers which helps in building the bond of trust and commitment. To satisfy followers, a leader has to connect with them and then values come into the play as values are the primary way in which that connection is made. Our values certainly influence every decision we make in our daily life. As values play such an important role, so it becomes critical to recognize, understand and evaluate these values in sound decision making. Some of the personal values driven by leadership are:

  • Perception of Decision: The personal value associated with a decision is the perception of considering it as successful or ineffective. As an example let’s consider a leader who thinks more about the people and environment will consider a decision to invest in community and environment in contrast to the leader who thinks about company’s annual profit will make decision that favors statistical performance. The thing that matters is value associated with the decision making.
  • Loyalty and Trust: If someone is loyal and trustworthy then this personal value of that person helps to remain committed and loyal with anyone that persons works for. If a group is made of members who are loyal to each other and trustworthy then that group is effective in terms of achieving the final common goal. I personally think being loyal and trustworthy has helped me get many lead roles in the organization I work. Being someone whom your management can trust can surely help that person attain leadership roles.
  • Vision stimulation and inspiration: If a leader has a vision setup in his mind regarding the goal of his team/group, the personal value is inspiration and motivation to others. In order to get employees passionate about what they are doing, leaders have to possess great energy so that they can spark excitement and achieve results. (Katherine D, 2015). According to Peter Ernest, CEO of Values Journey, “when a truly values-based leader ensures that his organization has an engaging process for the people to explore their personal values, as well as their teams’ and the organizations’ values, there are benefits on many levels”.

To understand the behavior of people there are few variables such as attitudes, motivations, personality, skills, knowledge, confidence, perceptions etc. The importance of a value system is that once internalized it becomes, a standard or criterion for guiding one’s action. Thus the study of leaders’ values is extremely important to the study of leadership (Bruno F.C, 2006). Personal values impact leaders in at least two ways one out of which is it acts as a perceptual filter that shapes decisions and behavior, and personal values act as a driver of leader’s methods of creating these values.

Heroic Management versus Engaged Leadership

After reading the article by Mintzberg, I have a clear understanding of the differentiation between a heroic manager and an engaged manager. Let’s first start off talking about heroic managers. To manage is to make decisions and allocate resources and it often involves analyzing and calculating. In heroic management, the managers are considered important people which are quite apart from all those who develop the products or deliver services. As these managers go higher up, they become more important part of the organization and at the “top” of the organization is the chief executive. They have a clear, deliberate and bold strategy and the chief is the one who takes the dramatic steps that drive up the share price. Everyone else implements the same. But this is the time when the problem comes because although chief embraces change, most of the other people resist it. This is the reason to favor contractors or consultants over the insiders. The rewards for increase in the share price go largely to leader and the risk taker who pays no penalty for drops in the share price. According to a recent survey, “Executive Excess 2001,” conducted during the 1990s by the Institute of Policy Studies, CEO pay rose by 570%, while profits rose by 114%, and average worker pay rose by 37%, barely ahead of inflation (Anderson S. 2001). Real leadership is often more quiet than heroic. It is about teamwork and long term goals, which builds an organization slowly and collectively.

Let us talk about Engaging Management and leadership. According to Mintzberg, in this type of leadership managers are important to the extent that they help other people be important as well. Managers understand the importance of other employees in an organization and they create engaged teams. An organization is not a vertical hierarchy rather an interacting network where effective leaders work throughout and not sit on the top. People who develop the product or deliver the services solve little problems using strategies that later merge into new initiatives. In this type of management formulation and implementation go side by side and cannot be separated. The managers involved in this type of leadership style believe in bringing out the energy that exists naturally within the people thus making it more engaging and inspiring. According to a study conducted by Gallup, just 35% of the US managers are themselves engaged while 51% are not engaged. The not engaged group costs US $77 billion to $96 billion every year through their impact on those they manage (Gallup, 2015).

I work for a multinational oil and gas company. My organization has both types of managers and the management style. I will talk about my department and the managers I deal with. My manager use engaged type of management. They provide intensive feedback and training to new employees and proactively manage the onboarding process making a positive first impression. They communicate with their staff in a clear manner. Many of us prefer on having informal conversation with our supervisors regarding performance reviews or feedback which not only helps us keep involved with the team but also helps in performing the job better and easily. The engaged managers know that they are held accountable for the performance management of their employees. When employees are not meeting expectations, these managers listen to their employees and make suggestions from the vantage point of their professional capacity that will help them overcome their problems and difficulties (Insightlink.com, 2015). Being a part of the organization and led by such managers gives me chance to be effective during my work and it keeps me motivated and confident. Engaged employees are builders of an organization.

The two types of leadership styles impact on employee morale and performance. When an employee joins an organization he/she wants to know the role and their expectations which are desired by the supervisor/manager. It helps them meet their objectives and exceed them. Engaged management with the employees help them perform at consistently high rates. This also helps them use their talents and skills in the right direction. Hence the employees work with passion and drive innovation to move the organization forward (Govleaders.org, 2015). This different leadership styles sometimes also lead to participative approaches during projects. In this the employees working on a project in a team take part in decision making which gives them a chance to develop their leadership skills as well. Managers also have to challenge employees within their areas of talent and help them to acquire the required skills and knowledge which later can be turned to their strengths.

The strategic leadership of an ethical behavior in business practices cannot be ignored. To be considered a leader in ethical business practices I believe my organization can follow the points below –

  • The goals of creating and sustaining ethical climates within which employees act ethically as a matter of routine should be included in the strategic leadership responsibility for business executives.
  • Secondary stakeholders may be viewed with more urgency by executives than primary stakeholders. The government can shut down a business in a matter of hours; it takes much longer for disgruntled customers to have such a drastic effect (Terry Thomas, 2004).
  • Special attention should be paid in finding and developing the best people as it involves taking ethics and character into account in the selection process.
  • There should be a conversation across all levels of the business where the basics of value creation, stakeholder principles and societal expectations were routinely discussed and debated.

I think organizations should start establishing new standards and best practices that everyone can enjoy, learn from and improve along the way. The new workplace is less about the business defining the individual and more about the individual defining the business. The point noted above should also be taken into account towards an ethical behavior in the business practices.

Organizational Ethics

 “The Corporation” movie revolves around the notion of limited liability and corporate social responsibility. It also shows the development of corporation as a legal entity and is an attempt to assess the “personality” of the corporate person. The film is based on the argument that – since the corporation has been given the rights of a legal person, we can evaluate what type of person it is. I work for an oil and gas corporation. My organization has its own culture where everything related to health, safety, environment and production growth is taken care of. The corporation movie revolves around the concept of corporate social responsibility and I will discuss what my organization has done for the same. My organization is committed to partnering with community members and other stakeholders in the areas it operates. A long term trust is built by sharing information, consulting with stakeholders about business decisions and working collaboratively to understand their needs and expectations. Now limited liability is the type on investment in which the investor/partner of any organization cannot lose more than invested amount. Even my organization has the same notion in which there is limited liability benefit that is given to all the organization’s partners or investors. So they are not afraid to suffer with any kind of loss.

Code of ethics is a kind of policy statement or a properly framed code in which the organization forms and issues a set of guidelines to its employees to help them conduct their actions properly. My organization also has an integrity work guide stating its code of ethics. Some of them are:

  • Respecting each other and Environment: As my organization deals with the production of oil and gas, special concern is given to the environmental safety. My organization believes in respecting its employees, stakeholders, customers and most importantly the environment. In respect of this, the organization ensures that emergency response capability is in place and is tested for all company operations and facilities. Everyone is open to different points of view and approaches while doing things and seek to understand and value each other’s perspectives.
  • Confidentiality and Privacy: As any other organization, mine also respects confidentiality and safeguards intellectual property. Sensitive information outside of organization is shared only with authorized parties who have signed an appropriate confidentiality agreement.
  • Accuracy: Ensuring accuracy and completeness of business records helps us make informed business decisions and allows us to meet our responsibilities to our stakeholders. There is proper disposal of business records according to policy and legal requirements; no undisclosed or unrecorded amount is maintained.
  • Secure Work Environment: My organization believes in protecting the assets and maintaining a secure work environment. All the movement of company’s equipment, its materials and inventory is tracked and reported accordingly. The organization is responsible for the security of all its employees and workers.
  • Avoiding Conflicts of Interests: Trust is important to every successful business relationship. To manage the conflicts of interests my organization discloses any situation that could be perceived as potential interest conflict.
  • No Bribes: A direct or indirect offer of anything of value like money, gifts or advantage of any kind is prohibited. My organization complies with international anti-corruption laws even when bribery may appear to be an accepted part of local business practice. Reasonable steps are taken to avoid making indirect payments to government officials, other employees and also customers.

The code of ethics reflects about an organization and if there is any failure in code of ethics it means that there is a failure in leadership as well. An organization always tries to create and define a logical and defensible code of ethics but it’s not easy to cover all the possible scenarios. The process of identifying an ethical problem and defining the facts and resolving organizational, interpersonal and professional conflicts that arise are instrumental in giving organizations ethical leadership credibility. When a system fails to adequately address legitimate employee concerns whistleblowing may occur (ispub.com, 2015). Leaders and employees adhering to a code of ethics create an ethical organizational culture. When leaders have high ethical standards, it encourages workers in the organization to meet that same level. Ethical leadership also enhances the company’s reputation in the financial market and community (smallbusiness.chron, 2015).

Sometimes organizations face some challenges while shifting or enhancing the social responsibility. One main problem that usually comes up is growing consumer skepticism. Consumers now recognize that for many organizations, social responsibility is simply a public relations campaign in disguise. They are skeptical about the true motivation behind corporate social responsibility and are not easily convinced that a business is acting in the best interests of the community and environment (toolkit, 2015).

After filling the survey on code of ethics, I came to know about a noticeable fact that 51% of the people say their organization currently does not have a code of ethics. And 62% people lack of know-how which they feel to be a barrier in creating code of ethics. An implication for my role in my organization is to have an ethical behavior among workers in the organization that ensures that employees complete work with honesty and integrity. I use ethics to guide my behavior, also referring to the organization’s work guide that adheres to employee policies and rules while striving to meet the goals of the organization. Ethical employees also meet standards for quality in their work, which can enhance the company’s reputation and also helps in responsible development.


There is a conventional wisdom that management and leadership go hand in hand, that every manager is (or at least should be) a good leader, thus leadership in management has been taken up as a cause to be promoted, and leadership as a word has become a mantra chanted by all. One should understand his/her own strengths and weaknesses to become a successful leader. The strengths should be changed to skills and the weaknesses should become strengths. I have learnt that to be a successful leader, one should have the ability to delegate and it’s also important to trust your team with sane vision and goal which will eventually help to take progress to the next stage. I have also learnt to be optimistic, confident and decisive. Personal values and ethics guide leadership and human actions and they are really important in understanding leadership as they explain the focus and directions of people’s actions. Talking about Heroic and Engaged management I learnt that a proper blend of both kinds of leadership and management style can help in getting out the best from the employees. They have an impact on employee’s morale and performance; implementing these styles properly can not only help employees give their best but also help them exceed their objectives. Heroic leaders set an example of discipline whereas the engaged keeps the morals of the team high and keeps the team members cohesive. While working in a team, one should listen to the ideas or point of views of the other team members. Although different arguments might lead towards conflict, but a real team leader listens to all the members unbiased and then makes a final decision which is favorable for the whole team. I have learnt that emotions also control the style of leadership. That is why it is worthy to keep a happy environment and a positive attitude in the team as well as in personal life.

Talking about the code of ethics, it is really important for every business as it guides all managerial decisions and is common framework upon which all decisions are taken. It also helps in creating a cohesive understanding within an organization and also with stakeholders and customers. Code of ethics is used by many companies to prohibit any inappropriate employee behavior which compromises company’s policies and standards. Code of ethics can help employees understand what inappropriate actions are and what they are accountable for.  Not only this, code of ethics build trust between the organization and its employees. Let’s now discuss the barriers towards more corporate socially responsible behavior. The common one being Lack of stakeholder awareness which is due to the lack of ethical awareness that keeps the stakeholders uninformed about CSR implementation. Also sometimes there are financial constraints due to lack of financial support from the upper level management. Due to this organizational managers find that implementing CSR does not fit their budget. Sometimes company culture also becomes the barrier as some organizations rely on old company culture and are resistant to new strategies (Duarte F, 2015).


Ctb.ku.edu,. ‘Chapter 13. Orienting Ideas In Leadership Section 6. Recognizing The Challenges Of Leadership Main Section  Community Tool Box’. N.p., 2015. Web. Sept. 2015

Katherine D. (2015). Values Based Leadership – Valparaiso University’. N.p., 2015. Web. Sept. 2015.

Bruno F.C (2006). Personal Values and Leadership Effectiveness.

Anderson, J. Cavanagh, C. Hartman and B. Leondar-Wright, “Executive Excess 2001” (Washington, D.C: Institute for Policy Studies, 2001), 1

Gallup (2015). Gallup, Inc. ‘Only 35% Of U.S. Managers Are Engaged In Their Jobs’. Gallup.com. N.p., 2015. Web. 2015.

Insightlink.com, ‘The Nine Habits Of Highly Engaged Managers Insightlink Communications’. N.p., 2015. Web. 2015.

Duarte, F.P.; Rahman, S. Perceptions of corporate social responsibility by Bangladeshi managers: An exploratory study. Int. Rev. Bus. Res. Pap. 2010, 6, 119–136.

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Penetration Pricing Strategy

Penetration Pricing Strategy

To create and develop a sound pricing strategy in line with the demands of the target market segment, it requires proper market analysis before segmentation and positioning takes course. As a perquisite to their pricing strategy, distribution and promotion tactics development insured the success of the promotion bid as a security factor to the entire marketing process. Managers have the opportunity to design innovative pricing models that meet the needs of both the firm and its customers in an efficient manner. To achieve this, the organization sets a product price to levels adequate to achieve a target return-on-investment. Therefore, to market their shipping services to potential customers in the competitive Maritime Industry in UK, London and Overseas Freighters marketing executives invoke a penetration pricing strategy designed to gain a larger marker share greater than the rest of their competitors.


Pricing a product or service is among the four key elements of marketing. It is an important strategic issue because it relates to the entire process of positioning a product in a target market segment. The other three marketing elements namely product features, channel decisions, and promotion utilized in positioning a product depend on the pricing strategy. To create and develop a sound pricing strategy in line with the demands of the target market segment, it requires proper market analysis before segmentation and positioning takes course. Since the introduction of this aspect of marketing into the corporate business sector, 12 pricing strategies offer marketing executives an efficient way of marketing products and services as they appeal to potential consumers (Longenecker & Petty, 2005:338). These strategies are namely premium, penetration, economy, price skimming, psychological, product line, optional product, captive product, product bundle, promotional, geographical, and value pricing respectively. The aim of this essay is to explain the pricing strategy that London and Overseas Freighters uses to market their products to potential customers and their overall effectiveness.

Penetration Pricing Strategy

As a perquisite to their pricing strategy, distribution and promotion tactics development insured the success of the promotion bid as a security factor to the entire marketing process. While there is no single recipe to determine pricing of services offered, the management board of the organization commissioned a team of 11 competent market analysts to perform an in-depth market analysis (MvGrath, 2001:196). Their major role revolved around segmenting the target market to initialize the process for positioning their products in the market.

This process entailed defining various shipping service packages that the company wanted to introduce into the UK maritime industry. As a way of estimating their demand for shipping services in UK and its neighboring countries, the marketing executives estimated a demand curve that indicated a high surge in demand for automated shipping services that other competitors did not have (Smith, 2011:71). From the analysis, price seemed to dictate the quantity of demand for their electronic-simulated shipping services that were more efficient than manual handling of cargo.

Understanding Environmental Factors

As a way regulating overhead operation costs for the entire organization, market analysts enlisted by the company derived fixed and variable costs associated with each product line they hoped to introduce into the selected market segment. In the UK, the maritime industry is highly monitored by the government as a means of eliminating unhealthy competition among players in this economic sector (Shen, 2008:41). Furthermore, evaluation of likely competitor actions served as a way of understanding the demand and supply of shipping services in UK to all the major destinations in the world.

Setting Pricing Objectives

The main objective set for the pricing strategy was to maximize revenue collected by the company from its shipping operations. To achieve this, London and Overseas Freighters management team decided to lower their shipping prices to levels 10-15% lower than their rivals (Shen, 2008:45). This marketing strategy aimed at attracting potential customers with bulk shipping needs as well as to poach customers from their rivals with low prices for large cargo shipments. Price reduction as a marketing tool served to attract a large clientele base for the organization before restoring the prices to normal to maximize on profit generated. Using the information collected by market analysts, the organization marketing committee selected the penetration pricing method by developing a coherent pricing structure that was inclusive of attractive discount rates offered to meet different client needs.

Applying Pricing Methods

Pricing methods assist managers of organizations to set specific price levels designed to achieve certain pricing objectives. In this, London and Overseas Freighters lowered their shipping prices for large cargo shipments to capitalize on ensuing large economies of scale. This period lasted for three consecutive months before the company restored their prices back to normal. This gave them a large clientele captured by their pricing strategy three months prior to price restoration. It is a complex way of marketing hence the company had to plough back their 2005/2006 fiscal year profits prior to initializing the marketing (Atienz, 2002:80). In addition, plans to purchase new and more efficient automated loading machines siphoned much of the company’s capital set aside for asset development that could have acted as another financial back-up resource.

Efficiency of the Penetration Pricing Strategy

By aiming at building a large clientele before profit maximization, London and Overseas Freighters managed to market their products to many local and international customers within a very short period. Immediately after running their first commercial outlining their low-priced shipping services, customers started walking into their premises inquiring of the advertised offers (Burton & Holden, 2008:53). Within twelve weeks after launching the pricing strategy, the company registered a 30% percent increase in revenue collection before tax. This remarkable achievement signaled the beginning of the next phase of the pricing strategy that involved restoring prices back to normal to capitalize on the captured clientele.

Though harshly criticized by their rivals for implementing price cuts and discounts below normal market standards, the company capitalized on the opportunities they curved for themselves in the target market segment (Bojanic & Reid, 2009:96). Shipments headed to Middle East and China received a 10 percent price reduction as a way of forging permanent business relations with these fast growing economies. In conclusion, by reinvesting back profits to finance the pricing strategy, the company did not strain its reserves as projected in the initial master plan. This pricing strategy formed the foundation for all other marketing strategies that the company has implemented since 2007.  Several other companies have also created and developed similar pricing strategies in a bid to catch up with London and Overseas Freighters.

As outlined by Berry and Yadav, flat rate pricing boosts a company’s competitiveness of a service by minimizing the imminent threat of escalating costs. Satisfaction-based pricing application to marketing shipping services offered by London and Overseas Freighters could have increased the company’s profit margins as the penetration pricing strategy. In addition, introducing product guarantee could have increased customers loyalty to the company as well as attract potential customers. The main reason why customers become loyal to a business is the measure of satisfaction they receive from the service or product they purchase from the company. Therefore, London and Overseas Freighters could have ensured this by providing shipping services that meet the needs of each individual customer. By modeling their service products according to the shipping needs of each customer is hard but the rewards are great. A company capable of implementing a satisfaction-focused pricing strategy needs to understand individual needs of each customer before suggesting a price for the services they promise to offer to ensure they include all the costs they are to incur whilst offering the service.

Penetration Pricing Strategy
Penetration Pricing Strategy

A company offering satisfaction-prices prioritizes customer’s needs over the organization objectives of the company. Therefore, satisfaction pricing is not suitable for marketing service-based products in a competitive market such as UK.  According to Berry and Yadav, Relationship pricing could have helped the company to base its pricing parameters on issues that define their individual relationship to their each customer (Berry & Yadav, 1996:160). Some of these factors include how long the customer has been loyal to the company, the total volume of business transacted, and the type of transaction they use regularly. This helps a company to identify profitable and not-so profitable customers. By having such a deep understanding of the needs of each customer, the company can comfortably develop products aimed at different classes of customers in the same market segment (McDaniel & Gitman, 2008:309). Moreover, it is easier to monitor their transactions to assist them derive appropriate discounts for each product line offering.

Relationship-based pricing would assist the company to streamline its product-centric pricing practices across the enterprise as well as to switch to a customer-centric pricing policy (Bateson & Hoffman, 2010:160). RBP solutions assist product managers at London and Overseas Freighters to define price lists for various product lines at a global level as well as define expectations at regional, customer, and account levels. This assists them to personalize the product to fit the needs of the client. Thus, it would be the most appropriate pricing for marketing shipping services offered by London and Overseas freighters in the UK maritime industry.

As a cushion to unexpected over-head costs, Relationship-based pricing would assist the company to take care of the pricing and billing functions of any product. In addition, Relationship-based pricing assists companies to retain loyal clients, sell more to the existing customers, as well as have a 360-degree view of the customer-base to prevent revenue leakage (Ryals, 2009:303). Relationship-based pricing is an economically sound strategy that does not require the replacement of the existing core system to function properly. Furthermore, it is low-risk inclined in that it would enable a company to achieve its business vision successfully.

To achieve true customer-centricity, company could utilize Relationship-based pricing to assist them to leverage and reinforce their individual relationships with each customer the transact business with (Phillips, 2005:24). To improve on the profitability of the each product line, Relationship-based pricing assists a company to facilitate innovative approaches to manage existing customer relationships. It is the easiest way of empowering companies to reward clients for their loyalty by introducing specific pricing and reward scheme aimed at fulfilling the organizational goals and objectives. In addition, Relationship-based pricing helps to minimize the overall maintenance and set-up time for individual customer accounts as well as improve customer communication aimed at reducing misuse of the collected revenue (Berry & Yadav, 1996:159). Therefore, relationship pricing is more suitable for marketing shipping services offered by London and Overseas Freighters.

Efficiency pricing serves to appeal to economically minded customers who are looking for the best priced products or services. Therefore, if implemented by London and Overseas freighters, it would help them to market their shipping services o economically minded customers who are looking for the lowest price possible to ship their products to China and the Middle East. To achieve this, the company would need to redesign their current shipping products to offer discounts for loyal customer every time they ship with them. This would increase customer’s loyalty and increase their annual revenue collection. However, it would cost the company a lot to implement this pricing strategy as getting customers who ship regularly in a competitive market like UK is hard. Therefore, Efficiency pricing is not an appropriate pricing strategy to market shipping service products currently being offered by London and Overseas Freighters.

Reaching Target Markets

Well-articulated marketing strategies assist marketing executives to build adequate awareness of a business, its products, and the service they offer. Communication methods such as company websites, press releases, brochures, and trade show presentations assist an organization to communicate its business offerings to potential customers. To reach its target market easily, London and Overseas Freighters designed an attractive website where customers can view all the product prices that they are currently offering (Goldszmidt, 2003:73). This way, potential customers get a chance to learn of the various shipping services that London and Overseas Freighters offers. Before deciding on which marketing communications strategies to adopt, marketing executives at London and Overseas Freighters carried out a substantial research in the target market. The aim was to identify individual customer’s needs in order to develop appropriate marketing strategies that could ensure every customer is well versed with the shipping services offered by London and Overseas Freighters.

An in-depth analysis of the target market segment assisted marketing executives at London and Overseas Freighters to understand the processes involved in buying and selling shipping services products in order to develop pricing strategies that could march these needs sought by the clients. By the time London and Overseas Freighters introduced low-price cuts to shipments destined to the Middle East and china, no other company in the UK had implemented such a pricing strategy (Vargo & Lusch, 2006:376). Therefore, the company developed and implemented a promotional mix aimed at stimulating potential clients to buy the shipment service packages that the London and Overseas Freighters had introduced into the UK maritime industry.

Positioning In Relation To Competitors

Operating a shipping company in UK is tough a business especially considering the large number of competitors and the current economic downturn. To meet this challenge, the company’s market analysts selected the right combination of promotion tools aimed at squashing the competition and giving the company a competitive edge over their rivals (Vargo & Lusch, 2006:378). The promotion mix depended solely on the shipment needs expressed by potential customers as well as the current pricing standards prevailing in the market segment.


Through promotional advertisements, the company was able to market its products and services to potential customers describing to them how their shipping services could benefit their businesses. Their aim of advertising new product lines was to promote the company as a whole entity rather than single products and services. This served as an efficient way of popularizing the company to all potential clients in UK and its neighboring countries. Moreover, advertising helped London and Overseas Freighters to keep their existing customers updated on new developments in the industry (Bekkum, 2001:129).

To increase on their profit margin after implementing the penetration pricing strategy, London and Overseas Freighters invoked an advisement drive aimed at reducing per unit cost of each product line as well as increasing the sale of their services to their existing customers. This enabled them to communicate their product changes to their customers directly rather than depending on intermediaries to educate potential customers of their new service offerings. Therefore, through advertising they were able to increase their market share formerly commanded by major competitors in the maritime industry in UK.

Forming Customer Expectations of the Services Offered

Introducing new products into a highly competitive maritime industry in the UK necessitated London and Overseas Freighters to develop appropriate ways of forming customer expectations for the Services Offered by the company. This entailed sales promotions, public relations, and personal selling which helped the company to communicate to potential customers of the low-priced shipping services that the company had introduced to all shipments destined to Middle East and china (Jones, 2008:144). Given that the company based its pricing strategies on market analysis derived by professional marketing executives, the new prices were designed to cover almost every hipping need raised by potential customers during the process of analyzing the target market segment.

To reach more customers through direct marketing, the company employed 2,000 sales agents who were responsible of marketing their new price-cuts to potential customers in the streets of London and all major towns in the UK. Moreover, they hired billboards strategically located on all major highways in the UK to post their advertisement targeted at motorists plying these routes (Jones, 2008:143). These advisements outlined the benefits that customers would gain by shipping their products with London and Overseas Freighters. These included assured security for their shipments, full compensation in case shipments were lot before reaching their destination as well as automated methods of handling cargo to prevent breakage and damages commonly associated with manually handling of cargo from a ship. Finally but yet importantly, the company streamlined its electronic cash transfer systems to accommodate clients transacting business with internally recognized credit cards such as American Express, MasterCard, and Maestro inclusive of visa cards too. This enabled customers to transact their businesses in real-time as well as reduce the need of carrying cash to pay for shipping services.

The Impact of Marketing Communication Strategies on the Employee’s Behavior

The marketing communication strategies implemented by London and Overseas Freighters motivated employees to work harder to achieve the set marketing goals and objectives. As a way of motivating them, the company introduced commissions to be earned every time a sales agent convinces a customer to use their shipping serves. This was beside their basic pay that was inclusive of entertainment, housing, and travel allowances. Costs incurred by sales executives travelling abroad to meet with potential customers in Middle East and china were covered under the company’s marketing campaign budget (Gradus & Dijkgraaf, 2008:125). To meet high employee job satisfaction and retention rates, the company introduced a training program that equipped each employee with the relevant knowledge and skills concerning its operations in each department. This gave employees a chance to develop their career in the field they felt suited them most as a way of motivating them to achieve the set organizational goals and objectives.

Equipping employees with the relevant information regarding the core operations of the company gave employees a feeling of belonging to the organization. Finally yet importantly, employees received awards for their achievements as a way of appreciating their commitment to ensuring the realization of the company’s organizational goals and objectives. In some cases, promotions and pay rises were given to employees who showed exemplary marketing skills as well as adequate knowledge in new product management.


In summary, the pricing strategy had to take into account all the legal constraints expected to pose a challenge to the marketing plan endorsed by the organization’s management committee. Lastly, the main objective set for the pricing strategy was to maximize revenue collected by the company from its shipping operations.

Referencing List

Atienz, T. A. (2002). Shrewd Business Tactics. Chicago: universe

Bateson, E. G., & Hoffman, D. K. (2010). Services Marketing Concepts, Strategies, & Cases. New York: Cengage Learning.

Bekkum, v. O.-F. (2001). Cooperative models and farm policy reform: exploring patterns in structure-strategy matches of dairy cooperatives in regulated vs. liberalized markets. Armsterdam: Uitgeverij Van Gorcum.

Berry, L. L., & Yadav, S. M. (1996). Capture and communicate values in the Pricing of services. New York: Cengage Learning.

Bojanic, C. D., & Reid, D. R. (2009). Hospitality Marketing Management. London: John Wiley and Sons.

Burton, M., & Holden, K. R. (2008). Pricing with Confidence: 10 Ways to Stop Leaving Money on the Table. London: John Wiley and Sons.

Goldszmidt, G. (2003). Integrated network management VIII: managing it all : IFIP/IEEE Eighth International Symposium on Integrated Network Management (IM 2003), March 24-28, 2003, Colorado Springs, USA. Oxford: Springer.

Gradus, R. H., & Dijkgraaf, E. (2008). The Waste Market: Institutional Developments in Europe. Oxford: Springer.

Jones, C. (2008). Financial Economics Penetration Pricing Strategy. Oxford: Taylor & Francis.

Longenecker, G. J., & Petty, W. J. (2005). Small business management Penetration Pricing Strategy: an entrepreneurial emphasis. New York: Cengage Learning.

McDaniel, C., & Gitman, J. L. (2008). The Future of Business Penetration Pricing Strategy: The Essentials. New York: Cengage Learning.

MvGrath, E. M. (2001). Product strategy for high technology companies: accelerating your business to web speed. New York: McGraw-Hill Professional.

Phillips, L. R. (2005). Penetration Pricing Strategy and revenue optimization. Stanford: Stanford University Press.

Ryals, L. (2009). Managing Customers Profitably Penetration Pricing Strategy. London: John Wiley and Sons.

Shen, W. (2008). Three essays on dynamic production and Penetration Pricing Strategy decisions for new products. Michigan: ProQuest.

Smith, T. (2011). Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures. New York: Cengage Learning.

Vargo, L. S., & Lusch, F. R. (2006). The service-dominant logic of marketing Penetration Pricing Strategy: dialog, debate, and directions. Amsterdam: M.E. Sharpe.

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