Impact of Counterfeit Products on Consumer Purchase Intention – A Study into the Chinese Mobile Phone Industry
This dissertation focuses on the on-going growth, nature and prevalence of counterfeit products in the global market. These products are attaining popularity at a higher rate due to several factors that form the focus of this research study. These attributes include pricing, durability and reliability. As such this dissertation aims at assessing the impact that these attributes have on the consumer purchase intentions. In the data collection phase, this research study employs survey as the research strategy and questionnaires as the preferred research instrument. The dissertation further utilizes IBM SPSS 20 in analysing the data collected. Descriptive statistics, specifically mean analysis, is the employed.
The study concludes that the pricing of counterfeit mobile phone devices is the attribute that affects the purchasing intentions of Chinese consumers. Precisely, Chinese consumers perceive counterfeit devices as affordable and accessible compared to their genuine counterparts. The other attributes considered in the study, reliability and durability, do not affect the purchase intentions of Chinese consumers as much. This research aims at outlining the various aspects of counterfeit products and their role in influencing consumer purchase intentions. These aspects are broadly categorized as pricing, reliability and durability. Among the three, previous research reaches to a consensus that pricing plays a significant role in influencing consumer purchase intention. Genuine mobile handsets, especially in the smartphone category, are pricey making them unattainable to majority of the Chinese populace. Chinese people are more inclined into purchasing counterfeit smartphones. In terms of reliability and durability, prior research concedes that counterfeit products are subpar in both aspects. However, this conclusion is applicable for luxury fashion and clothing items. Mobile phones, on the other hand, are not subject to the wear-and-tear dynamics of the aforementioned items. On this basis, this dissertation is justifiable as it presents an aspect that was previously disregarded by previous research.
This research study narrows down its focus to assess the impact that counterfeit products have on the purchasing intentions of Chinese consumers. The Chinese mobile phone industry is vast and provides conclusive insight on these impacts. Of note, this research analyzes the aspects of counterfeit products such as pricing, durability and reliability.
Dissertation Aims and Objectives
To examine impacts of counterfeits pricing differences on consumer purchase intention in Chinese mobile phone industry
To examine impacts of counterfeits reliability differences on consumer purchase intention in Chinese mobile phone industry
To examine impacts of counterfeits durability differences on consumer purchase intention in Chinese mobile phone industry
MBA Dissertation – Impact of CSR on Business Practice
CSR Corporate Social Responsibility – This MBA dissertation explores the importance of implementing sustainable standards and initiatives in the meeting industry sector. In order to succeed in its aim, the following key aspects have been evaluated: the theoretical framework of sustainability itself and the increasing relevance of sustainability in the meeting industry and the inherent gaps in this; the most commonly implemented sustainable standards in the meeting industry sector and companies’ motives for adopting sustainability standards as well as to find out which factors influence on the organisation’s decision to implementing those initiatives; to define which challenges companies face when they implement sustainable standards.
Finally, to analyse why some companies are not certified yet, which sustainability activities these organisations do and if they plan to get certified with sustainable standards in the future. In contrast to the previous literature, which is suffered from lack of empirical knowledge, this research contributes to existing knowledge by implementing the convergent parallel research design and focusing on motives of the companies for implementing the standards, benefits and challenges faced by companies while implementing those standards, and how the adoption of sustainable initiatives and standards influence on customer loyalty.
The research is based on an analysis of survey with 120 responses from small, medium and large meeting industry companies (13% response rate), and on six (6) semi-structured interviews. The results reveal that the notion of CSR is popular concern among different companies and organisations in the industry. The findings also show that the implementation of sustainable standards becomes a part of the company’s everyday activities. In particular, the results show the implementation of sustainable standards is driven by several motives, such as increasing customer loyalty and satisfaction, ability to access international markets and acknowledging Social Responsibility. In addition, the findings reveal the main benefits of adopting the standards: fewer resources used and cut waste have been defined, while the main challenges are time consuming and expensive prices for certification. Moreover, it is important to highlight that some companies face challenges while implementing the standards such as lack of internal expertise on sustainable standards. It can be concluded, that providing of better and clear guidelines for implementing sustainable standards are needed.
To present the theoretical framework of sustainability and CSR and the increasing relevance of sustainability in the meeting industry and the inherent gaps in this.
To discuss the most commonly implemented sustainable standards in the meeting industry sector.
To conduct a primary research in order to determine the motives of the meeting industry companies to implementing sustainable standards.
To analyse benefits obtained from adopting sustainable standards as well as to find out which challenges the companies face while implement the standards.
To discover how certification with standards influences on customer loyalty and which reporting activities companies undertake or plan to undertake.
To analyse why some companies are not certified yet, which sustainability activities these organisations do and if they plan to get certified with sustainable standards in the future.
Business and management ethics encompasses numerous theories which provide adequate explanations on how moral and ethical issues in business can be addressed. They are important in management of businesses organizations because they set up the outline on which managers should monitor the distinctive operations in their organizations (Hasnas, 2013,112, p47-57). These theories are important in managing entities since they work towards establishing avenues that are important in guiding human beings in their daily activities. Theories like normative theory have been identified to be important in business management and organization control because it offers focus to managers and all other important stakeholders in the entity (Miles, 2012, 108, p285-98).
These theories attend to distinctive aspects in an organization which enables effective running of these entities. They have certain specifications which differentiate them from other theories and aid in outlining their purpose in a business setting. For instance, a theory like the normative theory is identified by its prescriptive nature and its ability to give direction on how certain actions should be done. It is known for its concerns about moral issues in an entity. This differentiates it from other theories like the philosophical ethics theory and many others. This paper therefore is focused towards establishing validity of stakeholder theory as an ethical theory which has been largely used in the business and organizational settings for long (Parmar, Freeman, Harrison, Wicks & Purnell, 2010, p10)
History of Stakeholder Theory
The stakeholder theory is an organization oriented as well as business focused theory which points out importance of shareholders in an entity, the rights that they deserve as well as benefits that they should get. These it explains based on the argument of maximizing shares of the shareholders their access to information as well as control on the issues of the organizations they are having shares in. the theory is said to have been established by Freeman in 1984 in order attend to ethical practices in business management (Purnell & Freeman, 2012, 108, p285-98.)
Understanding this theory it is significant to establish who these stakeholders are and what qualifications one have to be a stakeholder. This is important because it will help in ascertaining whether the arguments that the theory puts forth are valid or not. This in turn helps the study to identify the levels of ethics in this theory (Purnell & Freeman, 2012, 108, p285-98.)
.Stake holders are considered to be individuals or groups that have legal claims in the operation of an organization. These individuals or groups ranges from the local community where the business is situated to its suppliers, the people it employs, people possessing the organization`s stocks, its customers and all parties which plays important part in its existence (Wempe, 2008, 18, p549-53). The coordination of these groups is significant for development and growth of a company. Their interactions and coexistence will possibly determine the extent to which such a business entity can move in terms of prosperity, and it is due to exclusion that freeman noticed in his time that perpetuated development of stakeholder’s theory.
Stakeholder Theory Ethics
The theory can be considered ethical on different ground, first, ethics in the theory is identified by fact that it advocates for consideration of other parties which have important contribution in a firm. In this way it tries to disengage the ancient belief that operations in a business entity are directed towards increasing the profits of the stockholders while ignoring other groups like employees, customers and local community which have numerous parts to play in the well-being of the business. Stakeholder theory stipulates that apart from stockholders other parties should be given adequate attention and their priorities should not be neglected. In this way the theory advocates for selflessness, which is an ethical aspect in the society. It tries to decentralize benefits of businesses to everyone and ensure equity in gains of business outcomes (Parmar, Freeman, Harrison, Wicks & Purnell, 2010, p10). It also has an active campaign against high preferences on profits rather than on their stakeholders who ensure that these profits are generated. It does this by pointing out and explaining the values of every stakeholder in operation and sustenance of a business entity. Every constituency in a business has an important role they play to ensure that the objectives and goal of the firm are met. It is therefore not the efforts of the shareholders which generate quality outcomes in a business but a combination of different parties which serves different purposes. This makes ideas that business is a moral involvement where people who do not work benefit at the expense of those who bear larger part of responsibility to lack relevance (Purnell & Freeman, 2012, 108, p285-98.)
Human beings are not means to an end but rather the end itself, groups` contributions towards prosperity of any entity cannot be considered means to an end. By addressing this fact stakeholder theory is justified as an ethical theory. This is because it tries to address issues of exploitation of human capacities, creativities and potentials in a way that will not be egalitarian (Miles, 2012, 108, p285-98). The theory argues that every stakeholder groups needs to be awarded its share of contribution in promoting future of the entity they are associated with. This becomes ethical since it tries to prevent instance of exploitation and greed which might be making some entities in a business better off while others are getting worse off.
By addressing how operations in modern organizations which do not take interests like basic needs of its stakeholders in accounts is a moral foundation on which this theory is built on. The theory identifies issues such as safety and health of the employees and other stakeholders to be equally important in the process of generating profits for the stakeholders. In this way an ethical working environment is facilitated where activities from economic entities which might be having adverse effects on those who contribute to growth of such an organization can be attended to and compensated adequately (Purnell & Freeman, 2012, 108, p285-98.)
In establishing fundamental moral principle in any business operation the theory advocates for equality in sharing of benefits of a business involvement. It is more directed to the universal moral attribution of human personality which Charles Taylor advocated for in his time. This means that everyone who is actively contributing to any process is bound to be considered relevant and significance participant in the process. Such parties have to receive shares of the outcome of the productive process that they took part in minus any form of exclusion. As a result of this the theory addresses need to ethical appreciation of human agents as important component in production. This he theory explains that it should be on an equal level without any form of inequality (Miles, 2012, 108, p285-98).
Pragmatism also emerges as another reason for the theory to be accepted as an ethical postulation. This is based on notion that, by managing stakeholders the entity is not only operating on ethical grounds but promotes its capacities to succeed since stakeholders are important people that an organization cannot operate without. In the same way world is controlled by principles of ethics and it is these principles that help to create order in all sought of interaction and engagement. This calls for need to establish explanation of the world, what is in it and how it operates. This creates the ethical basis of the theory, since it helps in creating order by establishing what constitutes business management and the expected relations in the business relations.
The theory also calls for coexistence and establishing of strong relationships between the participants of a business organization. This proves ethics in the theory since it implies that there is no business which cans operate in evacuee. In the same way the stakeholders depend on the business is the same way the business relies on the well-being of stakeholders. This makes these two parties to be inseparable hence the need to cordially coexist.
Summary of normative and stakeholder theory
Normative theories basically judges whether an action is moral or immoral based on two aspects and these are the consequences that an action causes as well as based on the characteristics of the actions themselves, their nature and manner in which they are carried out. The theory argues that an action can be right or wrong provide that it is promoting and individual`s long-term gain or it undermines it respectively. This argument is founded on the concept of egoism, these can be personal impersonal or psychological. All of these aspects have a common argument in that they advocates for taking particular decisions and courses in life that benefits one self.
On the contrary the utilitarian aspect argues differently, since it tries to address its concern a way from individualism. In this way it advocates for business decisions and activities to be done in a way that don’t benefit oneself but a greater number of people. Human actions should be directed towards creating the greatest welfare of human person in a universal way so as to ensure that people are at the same level and that others do not get disadvantaged while others are benefiting (Wempe, 2008, 18, p549-53).
Therefore according to normative theory net worth of happiness and well-being of human beings should be given first priority in enacting decisions. People should also be presented with equal opportunities to help them discover their full potentials and also to help the gain from whatever activity they are being involved in. in so doing greater degree of morality and ethics will be achieved.
The martin Friedman’s view that business entities do not have any form of moral obligation or social responsibility if not increasing the profits that they generate in their operations is what is being referred to as shareholder theory. The theory argues that the shareholders are the main drivers of any business entity this calls for needs to be socially responsible to the shareholders and not their exclusion as it happens in most cases. The theory stipulates that business organization will not adequately attend to the society if it starts to concern itself with it. In this way it advocates for a society where the businesses ensure that the only responsibility they have on the society is to ultimately utilize their profits in a way that it does not operate outside set regulations and standards.
Critical analysis of both the normative and the shareholders theories provides imperical evidence can be established the shareholders theory is part of normative theory. This is because normative theory explains the importance of moral action to undertake when making certain decision. In the same way shareholder theory seems to be stressing on the same issue based on what should an organization do so that it does not make profit only but increase welfare of those who contributes to its growth.
Issues identified in the literature
There is issues of diversity in the stakeholder theory, the study realized that more than one variety of stakeholder theory do exist this is clearly presented by Goodpaster in his stakeholder analysis and stake holder synthesis. Therefore goes ahead to refute the idea of using stakeholders issues to introduce ethics in business management activities (Purnell & Freeman, 2012, 108, p285-98.). This issue can be resolved by identifying ethical practices which business institutions are supposed to incorporate in their operations so as to avoid contradictions which arise due to dualism in the theory. The other issue that the study has presented is absence of justifications for certain claims in the theory, this can be seen in Donaldson and Preston`s study which argues that the theory cannot be depended upon since it lacks proper justification for claim and postulations it makes. The other reason that the two give for inability to justify stakeholder theory is fact that the theory itself is a prescription of what is expected in an organizational setting and not description of what should be done to attain the expected ethical standards.
The theory is also divided between instrumental and normative theories. This makes its classification difficult undertaking since it bares characteristics of the two types of theories. It also deals with importance of managers and their contributions in a business. The theory points out reasons as to why stakeholders has to be given attention in an organization due to their financial contributions they make to business as well as other significant contributions. The work also focused on conflict within the stakeholder theory which makes it contradicts itself hence giving validation to the critics’ perspectives on why the theory should be applied as basis of ethics evaluation in an organization (Purnell & Freeman, 2012, 108, p285-98.)
Application of Stakeholder Theory
The theory was widely practiced in Australia in the period after the post-war, this practices was associated with increase and escalation of entities which called for managerial controls. Growth of huge corporations owned by the Americans as well as the increased bureaucracies in these periods to a large extent facilitated the development of this theory and its application. The need for its use was voiced by vast number of stakeholders in Australia at that time that seemed to possess limited influence on issues of management of entities where they were stakeholders (Wempe, 2008, 18, p549-53).
When establishing a theory it is significant to address all the aspects it is advocating for in a clear and precise way. This is to help avoid contradictions an inability to establish ethics in such postulations. Despite this collective inclusion of people who are an important part of a process is significant. This is because it promotes the sense of ownership and ethical values in the operations of such entities.
Hasnas, J 2013, Whither stakeholder theory? A guide for the perplexed Revisited. Journal of Business Ethics, 112, p47-57.
Miles, S 2012, Stakeholder: Essentially contested or just confused? Journal of Business Ethics, Prentice Hall, New York.
Parmar, B, Freeman, R, Harrison, J, Wicks, A &Purnell, 2010, Stakeholder theory: The state of the art. Academy ofManagement Annals, Prentice Hall, New York.
Purnell, L & Freeman, R, 2012, Stakeholder theory, fact/value Dichotomy, and the normative core: How Wall Street stops the ethics Conversation. Journal of Business Ethics, 108, p285-98.
Wempe, B 2008, Understanding the Teparation thesis: Precision after the Decimal point? Business Ethics Quarterly, 18, p549-53.
I hope you enjoyed reading this post on Stakeholder Theory and how it affects business. There are many other titles available in the business management and MBA dissertation collection that should be of interest to MBA students and academic professionals. There are many dissertation titles that relate to other aspects of business such as strategy, leadership, international business, mergers and acquisitions to name a few. It took a lot of effort to write this post and I would be grateful if you could share this post via Facebook and Twitter. Feel free to add your thoughts in the comments section. Thank you.
Many management students studying at university often ask me what constitutes towards a quality management dissertation topic. There are many factors that contribute towards an outstanding management dissertation but it is always advantageous to examine important factors that underpin a dissertation. Firstly, a management dissertation provides the opportunity to research a particular business management topic that is relevant to your studies. Therefore, it is essential to base your management dissertation topic in this field of study. Your business management dissertation involves writing a significant piece of research, and provides hands-on experience in research design, data collection and data analysis all of which will be summarized in a concise conclusion section.
There are two common research approaches you will need to explore when starting your management dissertation. You may wish to undertake a quantitative study that may involve statistical analysis of survey data. You may opt for a qualitative study involving interviews and observation in organisations. Ultimately, you will naturally develop an enhanced understanding of management theory. When you undertake your management dissertation topic you will examine literature in order to identify potential research gaps, evaluate and reflect upon existing research. You will have the opportunity to critique management theory if deemed appropriate. Try to engage your dissertation supervisor and audience by clearly defining the vision, mission, aims and objectives of your management dissertation topic from the outset.
Management Dissertation Ideas
How will you kick start your management dissertation topic? I recommend that you examine previous research you have conducted in this field. Are you specialized in any business management theory? If so, look at expanding on this and incorporating it into your management dissertation topic. You will feel confident and more assured writing a dissertation in an area of research you are familiar with. I have a profound interest in entrepreneurship and submitted a handful of projects and an undergraduate dissertation in this field. When I began my MBA degree, I knew straightaway that I would expand on my knowledge of entrepreneurship and I am likely to submit my MBA management dissertation topic in this field. I must add that it was fulfilling when building upon my existing knowledge and it proved less stressful.
Furthermore, you will need to give an explanation of why you chose this particular management dissertation topic? You will need to expand on 2 – 3 research questions within your chosen management dissertation topic. A brief synopsis of approximately 300 words describing your field of study is advisable. It is recommended to include key literature resources used in the dissertation abstract or synopsis section of your management dissertation. Discuss the sample size disposition and a brief explanation of the methodology framework for collecting the data in your management dissertation. These important factors need to be discussed at the beginning of your research and need to be highlighted in your management dissertation topic.
Writing the Perfect Management Dissertation Topic
What will you gain from writing an engaging management dissertation topic? There is no doubt that you will enhance your writing and analytical skills. You will become more critical (within reason) of existing literature and research. You will not take everything you read and hear at face value, you will start to challenge existing knowledge within the business management field and you will become more commercially aware.
It is safe to say that once you have completed your management dissertation topic you will appreciate the range of methodologies in management research. You will demonstrate the ability of identifying, analyzing and integrating an existing body of literature into your management dissertation topic. You will be able to set out the principles of designing a viable research study and apply these in formulating a research study to investigate a management issue. Ultimately, you will demonstrate the ability of writing a quality management dissertation within demanding time constraints.
Sample Business Management Dissertation Topics
Choosing the best management dissertation topic from the outset is important but sometimes a student can experience a writing block or loss of enthusiasm, there are many factors that can cause this. It happens to many writers. It is inevitable and many academic writers struggle with writer’s block at some point. Below is a list of sample management dissertation topics that will inspire you to write your own management dissertation. The sample management dissertations below are supplied as a reference guide and should not be plagiarized. You should not fall into the trap of plagiarism – always refer to your university’s guide on referencing material, I cannot stress this enough. Be mindful that you will fail your degree if you plagiarize material. The management dissertation topics below have been submitted by undergraduate and postgraduate business management students.
Whether you choose to write your management dissertation on the topics above or if you developed your own management dissertation topic, you need to ensure that you write your research on something you are interested in and knowledgeable on – do not conduct research in a field you have no genuine interest in. As previously mentioned you can reduce a lot of pressure on yourself when writing research on a field of management you are comfortable and familiar with.
Employing Competitive Priorities in Business: The Case of FedEx
The courier industry is one of the most integral parts in the American economy. It is involved in the transportation of a variety of products like drugs, packages, bulk materials and documents to businesses within USA and outside its borders without which the whole economy would come to a standstill. The same day delivery service is also a vital part of the just in time nature of the economy of the US. This multi billion industry has more than seven thousand businesses in it in direct competition with the big four courier firms, (DHL, UPS, FedEx and USPS) and with each other.
In the recent past, competition between FedEx and UPS, two of the largest courier a company, has intensified as their core business increasingly overlap. UPS traditionally dominated the overnight delivery market while FedEx dominated ground delivery. With each moving to its rival opponent’s domain, the need to create competitive priories is even stronger because this is the only way for the companies to retain their businesses and deliver value to their shareholders. FedEx’ relies on technology to drive its competitive strategies and maintain their business operations. FedEx business model is highly dependent on data between the businesses and its customers. FedEx thus invests more than $1 billion each year to maintain its technology and building a wireless infrastructure to relay timely information on possible problems in the delivery route, enhance efficiency and cut business costs. I will use FedEx as a study case to analyse how a business can gain competitive advantage using competitive priorities.
FedEx Corporation, NYSE:FDX is a Memphis based logistics services company which offers courier services, logistics solutions. FedEx is one of the largest logistics companies in the world delivering small packages to the US and to more than 220 companies in the world. FDX Corporation was founded in 1998 after, FedEx Corporation, which had been incorporated the previous year acquired Caliber systems Inc and its subsidiaries like RPS, a small package ground transportation company, Roberts Express which offered expedited shipping, Viking Freight, a less than truck load freight courier and Caliber Technology, provider of logistics and technology solutions (FedEx, 2012).
After this acquisition, FDX started offering other courier services apart from express shipping. FDX, later rebranded as FedEx Corporation was formed to oversee the operation of all the acquired subsidiaries including Federal express, its air division. It also rebranded the subsidiaries to have the FedEx brand in all divisions with federal express being renamed FedEx Express, RPS renamed FedEx ground, and Roberts Express renamed FedEx Custom critical, Caliber Logistics and technology were combined to make up FedEx Global Logistics.
In 2012, the company’s annual revenue was 40 billion which a 13% increase from the revenues was for the previous year. The earnings per share on the other hand for 2011 grew 20%. In the same year, the company increased its fleet of electric and hybrid electric vehicles by 20% to 408 to curb air pollution (FedEx, 2012).
During the first quarter of 2010, the company spent an estimated %4.9 million in campaigns lobbying against the government’s move to sign the Federal Aviation Administration reauthorisation bill which would make it easier for some of its employees to unionise terming it a bailout on UPS, FedEx’s main competitor in the US market (FedEx, 2012). To survive in these kinds of competitive markets, companies have to adopt strategies to survive. Managers can only take advantage of the changes in the wider environment by using appropriate strategies. Effective strategies allow the firms to use their resources for the best outcomes. The next part of the paper looks at what strategy is.
What is Strategy?
Strategy is an outline of how an organisation intends to achieve its goals. The goals of an organisation are the objectives the owners set for the business while the strategy sets out the route to achieve these objectives. In the early years of the businesses, the strategy taken by the business is fairly simple: to survive and achieve growth targets. However, as the firm increases in size, it must select narrower set of strategies referred to as competitive strategies to survive in the face of strong competitors. According to Porter (1996), competitive strategy is about being different. It refers to choosing a different set of activities to deliver the company’s mix of value to the customers. Markides (1999) argues that the essence of developing a strategy for the organisation is to select one strategic position that a company can claim as its own and pursue it. A strategic position represents a company’s answer to the following three questions: who should the company target as its customer? What products/services should the company offer to the target customers? And, how can the company deliver these products efficiently? These three questions help a company to choose a success strategy that is different from that of its competitors (Henry, 2008).
Another view of strategy is that given by Kay (1993). According to Kay (1993), strategy is a match between the organisation’s internal capabilities and the relationship with stakeholders. Strategy is therefore concerned with the firm’s use of analytical techniques to understand and hence influence its position in the market.
Since the environment within which the company operates is constantly changing and the needs of its customers shifting, a company must ensure that its internal resources and capabilities are more than sufficient to meet these needs since companies do not exist to survive but to grow and prosper in the competitive environment (Henry, 2008).
An effective strategy gives a firm three benefits. The first benefit is a strategy as a source of economic gains. Secondly, it provides the firm with a basis for resource allocation. And thirdly, guides the firm’s decisions regarding management and organisation. One main strategy that companies use is the development of consistent set of objectives which are known as Competitive priorities. These priorities are: Cost, Quality, Time and Flexibility.
The first competitive priority that a company can choose is cost leadership. This is a strategy whereby the cost of a given product in a company is relatively low compared to that of competing products from other companies. This strategy does not jeopardize the quality of products. It rather focuses on high profit margin based on competitive price (Chard, Jacobs and Aquilas, 2004, p.35). In order to ensure effectiveness of cost as a competitive priority, companies operations should be guided by economies of scale. They should also minimise all other operational costs, which include cost of labour and materials. The employees should also be well trained so as to maximise their productivity.
The second priority is quality. Customers always intend to purchase products which they consider being of high quality. For this reason, companies should ensure that they avail high quality goods and services to customers. Care should be taken in pursuing quality as a competitive priority because there are differences in what customers term as high quality. For instance, there are customers who search for products that possess superior features.
There are two dimensions of quality; namely, high performance design and goods and services consistency (Chard, Jacobs and Aquilas, 2004, p.35). High quality design involves the production of goods which address the quality demands of the customers. On the other hand, consistency involves building confidence among clients by ensuring availability of goods and services upon demand.
The third competitive advantage is differentiation as regards to time in delivery speed and reliability. As much as a company pursues production of high quality products, production should not take too long. This is because delays in production and delivery upset customers. Chard, Jacobs and Aquilas (2004) outlined two dimensions of effective delivery. These are rapid delivery and on- time delivery. Rapid delivery involves quick reception of customers’ orders while delivery on- time involves high frequency of on-time delivery of goods and services. In order to utilize time as a competitive priority, companies should make use of technology and employ effective work force.
Therefore, in the process of delivery, companies should ensure that deliveries are “in accordance with the promises made to customers”. This is referred to as dependability (Hayes and Wheelwright, 1984, p. 24).
The fourth priority is flexibility of product mix and adaptation to changing markets. Competition always leads to change of products in the market by different companies. Therefore, as the market changes and customers’ needs and expectations shift, the company should device ways of accommodating these changes. This should be geared towards winning the confident of customers. Chard, Jacobs and Aquilas (2004) categorises flexibility into product and volume flexibility (p. 36). Product flexibility is the ability of the company to offer goods and service that suits the customers’ needs. With this, a product may be dropped out or introduced to the market depending on the market trend. Volume flexibility is the strategy of increasing or decreasing the production of a given product in order to accommodate changes in its demand.
Hayes and Wheelwright (1984) expound aspects of flexibility as the ability to change volume of production, time taken to produce, mix of different products or services produced. Flexibility also involves the ability to innovate and introduce new products and services (p.24).
Flexibility enhances healthy competition as competition is not based on speed of production but customized products. In addition, it helps to reduce competition based on cost. This is so because production of customized products may require extra resources for production. Companies which employ this strategy ensure that its products are varied, and its workers are skilled and competent enough.
Scholars hold divergent views regarding the criteria for utilization of the four competitive priorities. For instance, Hayes and Wheelwright (1984) companies cannot simultaneously succeed when they pursue all the priorities simultaneously. This is because there is the likelihood that such companies have to allow different operators to implement priorities at different times. The resultant lack of coordination leads to inability to achieve objects. The two, therefore, advocate for trade-offs whereby companies pursue one competitive priority to greater levels than the other priorities. On the other hand, there are other scholars who argue that companies can still succeed while pursue the four competitive priorities simultaneously (p. 25). In the next part of the paper, an analysis of FedEx competitive priorities will be done.
FedEx Competitive Priorities
The environment in which FedEx operates is quickly changing due to the financial crisis and globalisation which has resulted into an increase in the number of competitors in the courier business. During the crisis, the quantity of global trade was severely affected which in turn affected the revenues of logistics companies, including FedEx. Although the financial position of the company for last year looked promising, the future is too vague to predict for FedEx. This means that the company must look for ways to strengthen its position in the market. One of the ways that company can do this is by exploiting competitive priorities (Porter, 1998).
The main competitive priority for FedEx is time. In the same day delivery business, delivery on schedule is a vital component in winning customers trust. According to Chase, Jacobs, et al 2006, a company can differentiate itself using time as its competitive priority in two ways: First, is through speed delivery speed and secondary through reliability and ability to deliver the goods when promised. Some of the packages that FedEx is in charge of delivering like medical supplies are extremely time sensitive and hence the businesses is always on the lookout for ways to reduce delays in the supply chain to ensure that packages arrive on time. One of the ways that FedEx achieves this is by controlling every part of the delivery chain. The company owns aircrafts, delivery vans and sorting facilities to ensure reliable on time delivery.
As early as 1980 during the initial years of the company, FedEx had a fully integrated system to monitor the location of vans, track packages and communicate with customers to ensure that all packages were picked and delivered on time. In the last few years, the company has been replacing the old wireless system with Wi-Fi, Bluetooth and cellular networks, GPS which enables customers to track their packages in real time using their WAP enabled phones and PDAs. In addition to this, the company has over the years build a seamless international and domestic network linked by air and ground delivery channels which ensures that customers needs are well met (Berger, 2011).
The second competitive priority for the company is flexibility. According to Chase, Jacobs, et al 2006, flexibility involves the ability to provide a wide range of products or services without delay to meet the needs of the client. The company has always been a leader in adaptation of new technology to better meet the expectations of its clients. For instance, the company was the first to start offering delivery at 10.30 am after identifying a need within the market to have their goods delivered early so that they have enough time during the day to work on them. The company also formed a strategic alliance with U.S. Postal Service to offer its customers more flexibility in drop-off points for their parcels (Porter, 1998).
The third competitive strategy that FedEx pursue is cost leadership. According to Porter (1998), cost leadership is concerned with producing high volumes of standardised products to take advantage of economies of scale. FedEx offers its customers a range of flat rate fees and delivery options to ensure that all customers well satisfied. To reduce costs, FedEx uses technology to gather data and through outsourcing some of its operations such as delivery.
The fourth competitive strategy for FedEx is quality. According to Porter (1998), quality is concerned with excellence in operations, product based quality and value based quality where the organisation offers excellence at an acceptable price. To maintain quality, FedEx trains all its employees the importance of correcting a mistake before it goes further on since the mistake becomes more costly to fix once it is allowed to go on. For instance, sorting goods before shipping helps the company avoid wrong shipping. The company also maintains its quality by offering timely delivery which has earned it more satisfaction among its customers than its rival UPS. Quality at FedEx is also maintained by the use of information technology, such as Wi-Fi and iPhone apps, at every point of its delivery channel which enables the company to gain important information about picking up its customers’ parcels and relying information to the customers about where the package is at every step of delivery. The use of technology helps to communicate with the customers in case of delays to maintain their loyalty.
In conclusion, a company should seek to exploit its competitive priorities to ensure survival in times of competition. Competition is normal in every industry and so is the case in US courier industry in which FedEx operates. In the recent years, intense competition over the US market has increased for FedEx both from its main rival UPS and also smaller courier companies which fill the gaps that larger courier companies like UPS, FedEx and DHL are unable to fill due to their large size. In such competitive markets, a company has to come up with a strategy not only to survive but grow in the face of competition. Formation of a competitive strategy involves matching the internal capabilities of the firm with needs of its stakeholders to tap into the changing needs of the market. One of the best strategies that a firm can use is called competitive priority.
Competitive priorities that affirm can utilise to gain competitive advantage are cost leadership, flexibility, quality of products and timely delivery. The first competitive priority, cost leadership, is concerned with producing a high volume of standardised products to gain economies of scale. FedEx offers to its customers a wide range of services at acceptable prices due to its large market size which has enabled the company from a distribution network in the US and other countries which allows it to pick and deliver parcels more conveniently and cheaply. It has also reduced its operating cost by use of technology to gather data which is vital in logistics.
The second competitive priority that a firm can utilise is quality. This is concerned with a company attaining excellence in its products and offering these products at a competitive price. One of the ways that FedEx maintains its quality is through the use of IT to ensure that its customer’s packages are delivered on time. Timely delivery is enhanced by its already established efficient delivery channel which allows it to collect and deliver packages as per customer’s demands. The other competitive priority a firm can pursue to gain a competitive advantage is flexibility in the mix of products and in offering new products. FedEx achieves this by observing the changes in demands for customers to offer new services like late night delivery and linking up with online sellers, like Amazon, to provide online shoppers with convenient transport of their shopping. The last competitive priority is timely delivery and reliability which FedEx does by ensuring that customers receive all their packages in time by integrating IT in their delivery system to rely information about possible delays to help take corrective action and help customers track their packages to avoid uncertainty.
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