Corporate Citizenship

Corporate Citizenship

The changing social and the economic terms have led to the rise of the idea of the corporate citizenship to be adopted by the well-known corporate brands across the globe. The corporate citizenship definition states the social and the economic responsibilities that are taken by the corporate organizations across the globe for improving the social and economic lives of their stakeholders and the society as a whole, slowness or damage to their growth both in terms of economy and reputation. It has been introduced with an ideology of improving the quality of living but at times it is seen that the corporates tend to maintain the same only over the papers while the reality speaks of some other truth, as well.

Qualities of Good Corporate Citizenship

The corporate establishments should not try to fool the customers and should provide them with the correct and accurate data about their products and facilities. They should not induce unfair means to reap more profit from their products and should comply with their social responsibilities.

They should donate to the social causes and should also try to organize cultural activities so as to improve the society as a whole.

The corporate organizations should try to donate their services and products to the needy and the deprived so that they can contribute to the social uplift. There are often many orphanages and the old age homes that are in need of proper funding that are at times becomes impossible for them to manage and often at the disposal of corporate funding. This will not only do value addition to the society but will also reflect their social attributes.

The corporates should not tend to deviate away from the promised quantity of the products and can even misguide the customers for their own marginal profits and which might hurt the customer sentiments towards the company, as well. Most of the consumers agree that while achieving business target, companies should do CSR at the same time (Epstein-Reeves, 2010).

Deviations from the Idea of Corporate Citizenship

They sometimes compromise with the quality and quantity of the products. Often they tend to provide their products to the customers with a reduced rate so as to keep at per with other rival market competitors. In this rat race, they often tend to compromise with the quality of their products, as well. This not only can impact the customer faith in their products but if found to be falsified can even lead to severe consequences and can draw severe penalizations, as well.

They at times exploit the customer sentiments and fool them with fake promises, as well. The at times comes up with schemes like promising of free assured prizes or coupons which in reality might not match with the promised items, as well. An environmental management system has a part in creating the image of a good corporate citizen (Sonja Petrovic-Lazarevic, 2010).

The organizations at times axe the jobs of certain employees from their organization in the process they call as cost cutting not being considered as a step to reduce their losses but often related to the cause of increasing company profits and maintaining their growth. This in turn increases the unemployment factors.

Experts believe that the corporate entities with higher profit margins which tend to deviate them from the moral and social outlook which should be prohibited by the.

Conclusion

All companies should pursue the governance structure that ensures the social values of the organization are aligned with those of the community; overall unique stakeholders’ understanding of a healthy working environment should support sustainability; equal implementation of occupational, health and safety regulations for each state ( Sonja Petrovic-Lazarevic,2010).

Environmental Hazards

Environmental hazards and issues are growing at an alarming rate on a daily basis due to the growing human activities that tend towards bending the delicate balance of nature. There are many factors that have led to the contribution of the environmental hazards but of them there are few for which concerns have been raised by the experts. We have tried to include some of them in this report and have tried to make a comparative analysis of the same for addressing such problems.

The four major environmental issues

Pollution: The growing problem of pollution is very disturbing in maintaining the proper ecological balance. Pollution in all the forms of air, water and land are becoming very problematic to handle each day. The non-availability of the waste lands and even the filling up off the wetlands for the different purposes are affecting the bio-diversity and are creating more biohazards. Pollution by air is becoming very difficult to control due to the emission of many unwanted and even poisonous gases by the various factories from the various industries like manufacturing and power. Even the water pollution has contributed much due to the dumping of the regular household and the daily waste in the mainstream rivers and oceans have made the problem of pollution very critical. “These undemocratic maneuvers do an end run around state legislators and should trouble advocates of open government.”(Organization Trends, April, 2008)

Non-biodegradable items: The uses of non-biodegradable items have been much of concern recently. Materials like plastic is considered to be nonbiodegradable and even the degradation rate are very high if considered to other similar items. The chemical combination of the compound makes it be very light weight and very easily available. Thus, plastic items are used for carrying out daily and regular tasks and also used in various sectors as often they are easily available and are pretty less priced compared to its other substitutes and counterparts. It comparatively reduces the price of the items, as well.

Global Warming: The global warming has much contributed to the hazard to the environment. Scientists and the experts have concluded that due to the rise in the carbon dioxide level in the atmosphere, the depletion of the ozone layers in the upper atmospheres have resulted in the much depletion of the ozone layer. Sources of ground level ozone include; vehicles, factories, industrial solvents, gas stations, and farm equipment, to name a few. (EPA, 1992). Photographs and herbarium specimens as tools to document phonological changes in response to global warming. (Miller-Rushing, Primack, Primack, & Mukunda, 2006).

Toxic materials: The use of toxic materials that are produced as by products from the various industries are causing many damage to the environment leading to drastic climatic changes as the acid rain and others and even leading to many unknown diseases, as well.

Corporate Citizenship
Corporate Citizenship

Addressing the issues

Use of renewable source of energy: More and more use of the renewable source of energy like the solar panels is used in now day’s vehicles that ensure zero pollution. Though the technology is at nascent stage but still evolving. Use of recycling and waste management techniques are introduced for reducing land and water pollution as well.

Use of degradable items replacing the non-degradable items: Use of other cheap fabrics and degradable materials like jute and other organic synthetic materials have been introduces to tackle the problem. Though much progress is needed to replace their use in the other sectors like automobile with efficiency.

Plant more trees and reduce the carbon footprint: More plants should be planted as they are the only living elements capable of releasing oxygen by taking in carbon dioxide through the process of photosynthesis. College officials agree to cut greenhouse gases. (2007, June 13).

Conclusion

Proper care should be taken by every participant in the society to curb the growing problem of the environment issues so as to keep the proper environmental balance.

References

Gore, A. (2006). An inconvenient truth: The planetary emergency of global warming and what we can do about it. Emmaus, PA: Rodale.

Galley. K. E. (Ed.). (2004). Global climate change and wildlife in North America. Bethesda, MD: Wildlife Society.

Environmental resource handbook. (2001). Millerton, NY: Grey House.

Michaels, P. J., & Balling, R. C., Jr. (2000). The satanic gases: Clearing the air about global warming. Washington, DC: Cato Institute.

 Shamir, Ronen (2011) Socially Responsible Private Regulation: World Culture or World- Capitalism? Law and Society Review

Knox, Simon, ″Corporate Social Responsibility and Business Decision Making″. InSpiritual Motivation: New Thinking for Business and Management (eds Ramsden, J.J., Aida, S. and Kakabadse, A.). Basingstoke: Palgrave Macmillan (2007

 Barney, J. (1991). “Firm resources and sustained competitive advantage”. Journal of Management

Oppewal, H.; Alexander, A. and Sulliwan, P. (2006). “Consumer Perceptions of Corporate Social Responsibility in town shopping centres and their influence on shopping evaluations”.

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Competitive Priorities

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.

Company Background

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.

Competitive Priorities

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).

Employing Competitive Priorities
Employing Competitive Priorities

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.

Bibliography

Berger, A. (2011). Case Study – FedEx Corporation: Strategic Management. New York: Grin Verlag.

Chard, R., Jacobs, F., & Aquilas, N. J. (2004). Operations Management for Competitive Advantage. New York: McGraw- Hill.

Davis, M. M., Aquilano, N. J., Balakrishnan, J., & Chase, R. B. (2005). Fundamentals of Operations Management. New York: McGraw-Hill Ryerson.

FedEx. (2012). About FedEx. Retrieved May 21, 2012, from http://about.van.fedex.com/

Hayes, R. H., & Wheelwright, S. C. (1984). Restoring Our Competitive Edge: Competing Through Manufacturing. John Wiley: New York. .

Henry, A. (2008). Understanding Strategic Management. New York: Oxford University Press.

Porter, M. E. (1998). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.

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Collaboration within the Architecture Industry

Collaboration within the Architecture Industry

From the oxford dictionary, architecture is the science or art of designing and constructing buildings. Architecture involves a lot of this including the planning construction, designing structures by manipulation of materials so that they can meet a social environmental, functional, technical or aesthetic value. Estimation of construction costs, scheduling and the administration of construction of the buildings is also part of what architecture encompasses. In the past architectures conducted almost everything involving a construction, except the practically building work. As of today, for a building to be constructed, there is a lot of collaboration involved. Interior designers, engineers, electricians, construction managers, governing authority representative and owner’s representatives are only a few of the players that collaborate with architectures to ensure a structure is brought up successfully to meet the specifications and the requirements of the owner. It is therefore very evident that architecture is no longer a one man’s game. The collaborations have brought with them benefits and also a few challenges.

Research suggests that architecture is not a one man’s game. Architecture is old. The very first publication on the topic was in the 1st century AD. This publication was by a roman architect known as Vitruvius. According to this architect, a building had to poses three main principles for it to be considered satisfactory. The three principles were:

  1. Beauty- the building had to be of aesthetic value meaning it had to be appealing to the eye.
  2. Durability- for a building to be termed as satisfactory, it had to stand strong and in good condition for a very long time.
  3. Utility-the suitability of a building to the purpose it was meant for was also a major principle in determining the quality of a building. Over the years architecture evolved from construction of buildings to roads and even bridges.

An architecture industry requires an integrated approach for faster completion and desirable outcome. According to Collins (2011), different teams including the owner, project manager, interior designer and the architect are brought together to ensure that the project outcome is viable and efficient. Coming up with a workable team for delivering successful integrated project requires commitment. All the participants are supposed to: identify a mutually agreeable goal and objective; develop arrangements to define roles of each participant; and recognize the organization structure to avoid conflicting roles.

Every integrated project has stages in which each actor has a responsibility to carry out. From the conceptualization phase through construction, every actor has relevant role (Collins, 2011). Below is a description of each phase and the collaborating responsibility of each of the actors.

Conceptualization

The manager, interior designer, engineers and architect with other stakeholders must come together to define WHAT is to be built, WHO is to build, and HOW it is supposed to be done. The manager is expected to come up with goals that define the performance and function of the project to be executed (Lowe, 2009). He also determines the project procurement process, he gives out data regarding the physical factors of the area in which the project is to be constructed and provide policies and legislative framework affecting the project.

According to Yazici (2010), the prime designer must come up with the project schedule i.e. commencing time through the completion period; visualize the adjacency concerns of the project and its massing; and provide a sustainable design that has the least cost and least impacts on the surrounding. Together with the engineers and the architect, the designers must be involved in cost information, the procurement process and awarding of tender, and validation of the scope of work.

Criteria and Detailed Design

After decisions are made on the scope and schedule of work, the project commences. Each option and decision is analyzed and evaluated, tested and selection of best option is done. It should involve all the actors to finalize the scope of the project, design of the building systems such as the structure and skin, the schedule and cost estimates (Lowe, 2009).

The project manager facilitates site input and reviews of user group. He/she then gives a feedback to the team in regard to revision. Together with the project coordinator, the manager coordinates the overall schedule of performance of every actor, organize and direct the overall team (Collins, 2011). The designers also have a role to play; they integrated the design input, issue regulations required for the project, outline the specifications of the project and refine the design schedule.

In the detailed design concludes WHAT is to be done in the project. All design decisions are made here. All the project systems are defined. Engineers define and coordinate the project elements (Lowe, 2009). The quality levels of materials are established and the project commences after verification of schedule, cost, prefabrication decisions and tolerances by all actors.

Documentation of the Implementation of the Project

At this stage, everything shifts from WHAT to HOW the project is to be implemented. The actors come up with construction methods and means, the schedule, finalized costs, and a document defining and visualizing the final project (Lowe, 2009). The construction health and safety guidelines including control of noise, infection, vibration and injuries are all defined as per the owner and legal standards.

Construction Phase

This is the phase where each actor actualizes the project. Every person has his/her role to play as per the schedule and responsibility allocated. The manager ensures compliance in terms of obligations, organize the procurement required equipment and materials and also coordinates the team (Yazici, 2010). The interior designer is qualified to select and procure all accessories, furniture and materials of a project. At the early stages of construction, the architect can work together with the designer in making the floor plan and placement of artwork and furnishes. Interior designer can also give a helping hand in making the architectural details of cabinetry, lighting and carpentry design.

Use of BIM in the Collaborative Approach

An important model that illustrates the need for a collaborative approach is the Building Information Model (BIM). It is a digitized three dimensional representation of a project and its distinctive characteristics. A door, for instance, with its defined dimensions and material is hosted and related parametrically to the wall of the building. In addition, the BIM provides a consistent view of the representation which saves a lot of time to designers and engineers. According to the National BIM standard, 2010 (as quoted by Post, 2008), this model involves virtual designing and construction through the life cycle of the project.

Collaboration within the Architecture Industry
Collaboration within the Architecture Industry

There are two types of BIM:  the lonely and the social types (Vardo, 2009). “lonely” BIM excludes the construction manager while the “social” involves all actors. The most collaborative BIM is the “social” since it enables architect, engineer, construction manager and the designer to share the model. Moreover, the building information from the model can be shared among the whole team. After collaboration of all actors, the information generated can be used to prefabricate the required products.

According to Post (2008), there is another form of BIM known as “intimate” BIM. This model involves the team members and the owner sharing the project rewards and risks. A combination of “intimate” and “social” BIMs enhances efficiency through reduction of the cost and time in the project and also in production of high quality drawings.

Each project actor can use the Building Information Modelling through the planning, design, construction and operation stages (Kenley, 2010). BIM can be used during the design phase since it has an influence on the cost of the project. The entire team can come together and analyze the projected issues which would otherwise incur extra costs to the owner. This can be done through cost-benefit analysis (CBA).

Kenley (2010) stated that at the design phase, the project engineer and architect are involved in energy analysis and also in testing of their design knowledge. Through the model, the construction manager can come up with value, sequencing and engineering reports. If the team comes up with a 3-dimensional plan, the owner can decide whether he/she likes the design before construction commences.

BIM can also be used at the construction phase for accurate building purposes. BIM can generate survey points for the sight which would allow for accurate positioning of hangers; this eases the work of the contractors (Lowe, 2009). Managers must also plan for transportation, fabrication, installation and coordination during construction; this information can be updated on the model.

According to Yazici (2010), BIM can also be used to monitor and plan for the workforce. The Laser Scanners of the 3D model are used to monitor the location of workers at the site and also monitoring the daily activities. Using the same model, deviations from the original plan can be detected and changes made before any damage.

At the post construction stage, space and asset management, building maintenance, disaster planning and management and record modeling facilitates easy building maintenance through its operation phase (Post, 2008). The model can be used to build system analysis based on lighting, energy and mechanical analysis. Moreover, the BIM can be used to upgrade the components of the building. The table on the following page shows the uses of BIM at each stage of project development:

Planning

  • Examining existing conditions
  • Estimation of costs
  • Phase planning
  • Site analysis and programming

Design

  • Reviewing of design
  • Analysis of energy
  • Authoring of design
  • 3-D coordination

Construction

  • Site planning and utilization
  • 3-D control and planning
  • Record modeling

Operation

  • Maintenance and scheduling
  • Analysis of building systems

Opportunities and Challenges of the Collaborative Approach

Whenever all the actors work together, the intensity of work is reduced. Conflict of interest and duplication of work is also minimized. Through BIM, all work done during construction can be monitored and corrections made in case of divergence from the existing plan; this minimizes emerging issues that would interfere with the whole process. Furthermore, all actors are satisfied due to transparency as they are involved in the whole process. Although collaboration is encouraged, it is undebatable that factors such as culture and consumerism would hinder full participation. Some designers would not be willing to share their materials and knowledge with engineers or architects and vice versa. The upcoming technology has also hindered collaboration as most of the work has been mechanized.

Case Study: Gensler Company Architecture

History and background

Gensler architecture was founded in the year 1965 by Drue and art Gensler and their associate James Follett. At that time the company’s main focus was corporate interiors but with time it has ventured into other numerous areas. They include: architecture and design of retail center, airport, education and recreation centers, urban planning and design, environmental graphic design, sustainable design consultation and brand strategy. The company has its headquarters in San Francisco, United States. The company is responsible for construction of major buildings all over the world and in 2000 it received an award for the architecture firm of the year from the American institute of architects. Structures like the Shanghai Tower in China, Facebook in London and The Avenues in Kuwait are products of this firm. As of today the company is home to a population of more than three thousand three hundred employees.

SWOT Analysis

Strengths

The company’s location is one of its strength, since it is easily accessible by customers from all over the world.

The company has built a strong brand that is recognized by people all over especially because of the breathtaking structures that they are associated with all over the globe.

Manpower- with the large number of employees in the company, there is delegation of duties which ensures that everyone produces their very best in the company.

Due to the various collaborations the company has with businesses dealing with interior design, manufacturers of construction materials and engineering companies they are able to come up with structures that are simply exquisite.

The company has a focused team in management meaning that the daily running of the business is under scrutiny and supervision of a very able team.

The company’s position in the architecture industry is also a major strength, since it is involved in setting standards in the industry.

Diversity- the company offers a variety of services having lately ventured into the health and wellness sectors which means they have a large and diverse source of revenue.

Weaknesses

The company has not penetrated the markets in the world in the architecture industry. This means their market is not widespread and therefore there are parts in the world where no one has an idea that the company actually exists.

Dependence on material manufacturing companies- the firm does not produce is own material and therefore if anything goes wrong with the manufacture of materials, it could mean problems to the company.

Prices- the company charges prices that are considered expensive and hence some customers may prefer other companies to them.

Opportunities

The architectural industry is under rapid growth and being the best they can be able to maintain their standards and reap large profits.

Increased interest in real estate- all over the world, people have grown interest in the real estate business providing a booming market for architectural firms. This is a great opportunity for Gensler.

Developing countries- this is a great opportunity for Gensler since as a country develops, it requires lots of structures and infrastructure where the company comes in.

Interior design- this industry is growing rapidly and since Gensler also offers this services. It proves to be a great opportunity for the company.

Threats

The greatest threat for the company is competition. There is great competition in the architectural industry. The company’s main competitors are URS Corporation and HOK Groups Inc.

The other threat is government interference. Policies and regulations put in place by the government for construction of structures are a threat to the company.

Economic crisis- the current economic crisis that has hit the world is another major threat for the success and survival of the company.

Problems brought about by partnerships and collaborations with other businesses is another issue that poses a threat to the company’s success.

Technology- with the everyday of growth and change in technology, the company faces a challenge of keeping up with what’s new in technology.

Issues and challenges

Cultural variances are a challenge for the company since it has to meet a customer’s need despite differences in culture. The company also faces a great deal of problems when it comes to creating customer friendly costs and at the same time making enough profit to sustain the large task force. Managing the large number of staff and ensuring that every one delivers is another issue that is affecting the company.

Divided attention is also a problem though not a major one; it affects the company all the same. With the company venturing into different sectors, it become difficult to ensure every single one performs.

Economic crisis that has caused a recession recently is also a problem for Gensler.

Recommendations

The company should put up strategies that ensure that the company is not shaken by the economic crisis.

By ensuring that the staff is strictly professionally qualified in their area of work, the company will reduce the amount of supervision required and hence making employee management easier.

The company should also evaluate critically any business before getting into collaboration or partnerships with them.

Opinion

One of the main reasons why the company has made it big in the very competitive industry is because they have encouraged collaboration with other sectors such as interior design unlike others who ensure that all the work is done by the architects.

References

Collins, R. (2011). “BIM for Safety, Virtual Design and Construction VDC Application.” Intelibuild

Kenley, R. (2010). Location-Based Management for Construction. Spon: New York

Lowe, R. H. (2009). Construction Lawyer28.1. Associated General Contractors of America.

Post, N. M. (2008). “Building Team Views Technological Tools as Best Chance For Change.” Engineering News Record.

Vardaro, M. J. (2009). “Weighing the Issues on BIM Technology.” Interview by Calvin Lee. Zetlin & DeChiara LLP Review. Web. May 2010

Yazici, O. C. (2010). “BIM, Scheduling and RFID.” Personal interview

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Business Management in Grocery Stores

Business Management in Grocery Stores

The revenue of a grocery store depends on the number of products that customers will purchase. Although most customers have their predetermined item lists before shopping, thirty to fifty percent of sales are created by impulse purchases. From this fact, people can conclude that increasing the likelihood of impulse item purchase by customers also increases the revenue. Many scholars have studied the behaviour of buying impulse items and the way to best attract customers to buy impulse items by different marketing strategies for example, by changing layout shape, promotional sale, and discount. None of them, however, have considered the use of a systematic method to place the product so as to increase the likelihood that “impulse” items are purchased. The current topic addresses this research gap and provides a systematic method for item placement within a store to increase impulse purchase. Customers visiting a grocery store purchase items according to their needs and specific utility of the item. When a customer visits a grocery or convenience store, they typically purchase a basket of items that contains a predetermined item-list which people name as must have items, and are inclined to also buy impulse items which are purchased only if the customer  passes by them during his/her visit to the store. Many people define a customer category with reference to a set of must-have items and a set of impulse items, and assume that customer categories are known along with the sale price and potential purchase quantities for impulse items. In the model, there is a need to assume that a customer plans his/her route in the store using a nearest neighbour approach on his/her list of must-have items. The value of the layout is defined to be the total sales from impulse items. Therefore, all the issues and aspects related to Business Management of Grocery Story will be discussed in detail.

The mechanisms of store layouts

Store layout is an important issue in the success of a grocery store. The main objectives of a store layout are to guide the customer around the store and entice increased purchases to create balance between sales and shopping space to create effective merchandise presentation. Selling floor layouts are extremely important because they strongly influence the in-store traffic patterns, shopping behaviour, shopping atmosphere and operational efficiency. The three major types of store layouts are:

(a) Grid: The grid layout is a rectangular arrangement of displays and long aisles that generally run parallel to one another. It provides customers with flexibility and speed in identifying preselected items which appear on their shopping list.

(b) Freeform: The freeform layout is a free flowing and asymmetric arrangement of displays and aisles, employing a variety of different sizes, shapes and styles of display. It is mainly used by large department stores. The freeform layout has been shown to increase the time that customers are willing to spend in the store.

(c) Racetrack/Boutique: In the racetrack/boutique layout, the sales floor is organized into individual, semi-separate areas, each built around a particular shopping theme. It leads customer along the specific paths to visit as many store sections of the departments as possible, because the main aisle/corridor facilitates customer movement through the store (Chin, 1998, 617).

Past research on Grocery Stores

There has been a lot of research on and in grocery supermarkets to understand consumer behaviour. There are ongoing as well as completed studies focused on consumer buying behaviour, travel pattern, etc. A customer purchase can be categorized as a planned or unplanned purchase. A planned purchase is characterized by deliberate, thoughtful search and evaluation that normally results in rational, accurate and better decisions. Impulse buying results from spontaneous buying stimuli, prompted by physical proximity to desired product. Beyond spontaneity, impulse buying is an unexpected urge to buy without regard to the consequences of the purchase decision. Impulse buying could be categorized as (1) Pure Impulse Buying, (2) Reminder Impulse Buying, (3) Suggestion Impulse Buying, and (4) Planned Impulse Buying (Stern, 1962). Studies show that almost 90 percent of people make purchases on impulse occasionally and between 30-50 percent of all purchases were classified by the buyers themselves as impulse purchases. The choice of customer travel path has also received considerable attention. The researchers known as Farley and Ring in 1966 developed a model to predict area-to-area transition probabilities for traffic in supermarkets and proposed a stochastic model of supermarket traffic flow that provides a framework for predicting conditional probabilities of shopper’s traffic flow. The researcher known as Burke in 1996 studied consumer grocery shopping patterns using a virtual (simulated) store. The author known as Sorensen in 2003 tabulated purchase and time-of-stay statistics at different locations within an actual grocery store. The researcher known as Larson et al. in 2005 categorized grocery paths using a clustering algorithm, and identified 14 different canonical paths (Chopra, 2004, 154).

In a traditional retail channel structure, a retailer typically sells multiple differentiated products produced by multiple manufacturers. Manufacturers determine wholesale prices and the retailer selects order quantities, sets retail prices, conducts in-store promotions and manages the sales staff. We refer to this traditional structure as a retailer-managed retail (RMR) system because the retailer determines and manages the marketing environment faced by consumers. This structure may be advantageous because retailers typically have better information about consumer demand in the local market and possess core competencies in retailing activities such as merchandising and promotion planning. In addition, previous research has found that using a retailer as an intermediary may reduce competition between manufacturers and thereby may be preferable for manufacturers whose products are highly substitutable. However, RMR suffers from well-known channel coordination issues such as double marginalization and information distortion. These coordination challenges make it difficult for manufacturers and retailers to resolve their conflicting interests and maximize the total channel profits (Gainer, 1991, 602).

Manufacturing Related Steps

Recently, manufacturer-managed retailing (MMR) systems have become increasingly popular in select product categories and in Asian markets. In contrast to RMR systems, in MMR systems manufacturers set up selling counters and hire their own sales staff to sell their products inside the retail store. In return, the retailer is paid a percentage of the total sales revenue based on a revenue sharing contract. MMR is currently very common in department stores in China and Japan. A recent survey from 30 upscale department stores across major Chinese cities indicates that about 80 percent of product categories are manufacturer-managed. While less widely used in North America, MMR has been adopted in department stores in U.S. such as Macy’s, Neiman Marcus and Nordstrom, for categories such as jewellery, cosmetics and apparel. MMR is also a common practice for online retailers. For example, Motorola operates an online store within In Phonic websites, a leading online seller of wireless products and services. Amazon.com also provides marketplaces where individual sellers can list their items and decide selling prices. In exchange for the hosting services, Amazon receives a percentage of the sales price usually 10% – 15% if an item is sold. These channel innovations have attracted recent academic interest. In particular, the researchers known as Jerath and Zhang in 2009 study the economic incentives that make the store-within-a-store (SS) business model, which is very similar to the MMR system, attractive to both retailers and manufacturers (Gavirneni, 1999, 24).

Under MMR manufacturers have full autonomy in determining retail prices, setting inventory levels and managing their sales force. A possible consequence of direct competition between manufacturers within a store is aggressive pricing. However, because this system virtually allows vertical integration from manufacturers, MMR can resolve channel issues such as the double-marginalization problem, and reduce the frequency of stock-outs. Furthermore, manufacturers may have a strong incentive to provide better in-store service. The researchers known as Jerath and Zhang in 2009 argued that the SS (or MMR) business model is more useful for product categories (such as cosmetics and high-end apparels) for which inter-store substitutability is higher than inter-brand substitutability. A possible reason for the popularity of MMR in Asia is that retail stores in highly populated cities such as Shanghai and Tokyo are typically close to each other.  This may results in intense competition. If MMR mitigates these competitive forces it may provide benefits to both retailers and manufacturers. Jerath and Zhang also emphasize that in order to implement the SS business model retailers need to possess sufficient bargaining power to dictate terms to manufacturers (Halter, 2000, 94).

The Design of Supply Chain Methods for Grocery Stores

In addition to the analytical work, there is a growing body of research that empirically examines the vertical relationship between retailer and manufacturer. The researcher known as Kadiyali et al. in 2000 measure the power of channel members by looking at how channel profits are divided. They find that greater channel power results in greater shares of the total channel profit. The author known as Sudhir in 2001 studied competition among manufacturers under alternative assumptions of vertical interactions with one retailer. The researcher known as Villas-Boas in 2007 extends this work by allowing for multiple retailers. These studies typically use cross market or cross-store data and rely on structural assumptions of vertical strategic interactions between manufacturers and retailers. The study provides empirical testing of the economic consequences using a quasi-experiment within a retail store. Another stream of relevant research is the supply chain management literature (Jackson, 1996, 1121).

 When there is demand uncertainty, retailers may carry safety inventory to satisfy demand that exceeds the amount forecasted. This causes the bullwhip effect as demand fluctuations are more pronounced upstream (manufacturers) than downstream (retailers). Numerous channel structure changes have been proposed to mitigate the bullwhip effect, such as common data definitions, information sharing, electronic data exchanges, collaborative forecasting and planning, and reducing the number of intermediaries in a supply chain. Vendor-managed inventory (VMI) is an increasingly prevalent approach where retailers provide manufacturers with access to real-time inventory levels and let them decide inventory replenishments. Direct-Store-Delivery (DSD) is another approach in which upstream manufacturers are responsible for delivering product to retail stores, managing store shelf space and inventory, and planning and executing in-store merchandising. The author known as Chen et al. in 2007 empirically examined the economic efficiency of DSD systems using cross-market. In MMR manufacturers also have the autonomy in controlling inventory and product delivery but, in addition, they also set retail prices and manage product selling within stores (Lee, 2000, 643).

Pestle Analysis of Grocery Stores

Pestle analysis is one of the most important tools used by the business to assess their external environment. These days, every organisation makes use of Pestle Analysis because of the benefits it provides to various companies. The external factors such as political, economical, social, technological, legal and ecological create a strong impact on the businesses in different ways. The political factors are the biggest concern for the countries that operate in developing countries. The reason is due to unstable political environment, unrest and the riots that place at regular intervals. However, in the case of the current grocery store, they are operating in UK which does have these problems but there are other issues related to investment laws and taxation that needs to be taken seriously by any firm operating in the country. The investment laws and taxation requires businesses to follow some strict regulations. The economical factor also carries immense importance and is in fact the second biggest concern for the businesses. The economic factors such as a decline in the currency value, recession, high operating costs and rising unemployment leads to serious consequences for the businesses. The grocery stores are even facing the similar problems in UK and are affecting their business operations to a very large extent. However, once these problems would get resolved, then the Grocery store is going to experience a positive impact on their overall business operations. The best thing for the company is to prepare effective strategies to handle any situation faced by them (Louise, 2002, 617).

The social factor also has its own value. Though, it does not produce a strong impact on the overall business operations, but the grocery stores needs to take this impact seriously. Grocery Stores did not face many problems in this area because of the nature of their business but they need to be careful in the future to deal with this aspect in the best possible way. The fourth factor is the technological aspect that is important for those businesses that depends on the technological developments. The awareness of the latest technological tools is a key for most of the businesses that operates under a competitive environment. The application of E-commerce tools has increased rapidly over the last few years and most of the businesses are increasing the usage of e-commerce tools. This phenomenon is becoming common in those businesses that are highly dependent on Information Technology (Nicole, 2009, 713).

Business Management in Grocery Stores
Business Management in Grocery Stores

In the case of Grocery Stores, they even depend a lot on technological tools and are also increasing the usage of E-commerce applications in their business. This is the reason why this impact is certainly very useful for them. The fifth factor is the ecological issue in most of the businesses. The ecological issue deals with the environmental aspects of the businesses that have also gained lot of value in recent years. This is the reason why the concept of Corporate Social Responsibility has become quite popular these days and many businesses are investing huge amount of money to fulfil the requirements of Corporate Social Responsibility.  In the case of Grocery Store, they also need to give importance to this factor. Since they are having large operations and huge budget for various operations, they can afford to invest money to fulfil the requirements of environmental issues. This will produce a significant impact on the goodwill of Grocery Store and might even set as an example for other companies operating in the same industry. The last aspect is the legal issues that are there for every business. Legal issues carry lot of value in those countries that gives lot of importance to the rule of law and various principles that are created by the Government for the whole population. In the case of Grocery Store, they did not have any issue related to legal matters but it was important for them to comply with all the rules and regulations of the country (Phillips, 1997, 66).

Porter’s Five Forces Analysis

The model of Porter’s five analyses was developed for the sole purpose of assessing the business operations and then comparing it with their rivals. This model has succeeded for most of the businesses that operates in an industry that has lots of competitors. In the case of Grocery Shopping Store, the threat of entry in their industry was low because the involvement of any other business required huge amount of money for setting up the business. The threat of entry is the first component that is measured by the company. The second aspect was the power of buyers which was not very high. The reason was the strong market position of Grocery Store that had placed themselves well in the market and was even looking for diversification to further strengthen their overall market position. The power of suppliers was not even high because it measures the overall value which the business has and it keeps them in a position to negotiate with the suppliers. The fourth aspect is the threat of substitutes which was low because of the inability of many businesses to earn the same position which Grocery Shopping Store has. This aspect is only high in those businesses when there is an opportunity available for the competitors to enter the industry. The fifth and the last aspect is the existing rivalry which is operating in the industry. Grocery Shopping Stores have few competitors and they did not pose any threat to the because it was very tough for them to gain the same position which the other major super chain store has. However, the competitors can work hard and give tough time to Grocery Shopping Store because they would need lots of effort in achieving this position (Schutt, 2006, 114).

SWOT Analysis

SWOT Analysis is one of the very old techniques in measuring the value of the business. SWOT Analysis assist businesses in finding out their strengths, weaknesses, opportunities and threats. The reason because of SWOT Analysis is conducted to help the businesses in regularly assessing the value and then preparing appropriate strategies to deal with the problems that are affecting the business operations. This is the reason why Grocery Store needs to conduct SWOT Analysis to assess the overall value. Even though, they are having a good position but still the businesses do not ignore the importance of conducting SWOT Analysis because it helps them to identify crucial factors which are very useful for business (Sherry, 1998, 123).

The Importance of Shopping For the Consumers

Spaces of shopping are locales where consumers browse for, and purchase, goods and services. They have also been called service scapes or places where people, processes that shape the selection and acquisition of products and physical attributes of the location interact. A more colloquial term is retail venue. Throughout history, locales where people acquire items to satisfy their needs and wants have become increasingly elaborate, and different types of retail venues have waxed and waned. Popular shopping spaces around the world in the early twenty-first century include shopping malls, boutiques, open-air markets (e.g., farmers’ markets), themed venues, kiosks, mom-and-pop shops (e.g., family-owned businesses), franchised stores, supermarkets, discount stores, regional shopping centers (including factory outlets), and destination retailers. Of the spaces that have declined in popularity, department stores are noteworthy because they dominated the retail landscape in consumption-oriented countries throughout most of the twentieth century (Williams, 2006, 94).

Shopping also takes place in the home through home-shopping parties, where an organizer sponsors an event to demonstrate goods offered by a particular manufacturer. The norms of social obligation and reciprocity that these parties engender within social groups help these parties remain highly successful means of selling goods, even as some consumers resent being invited and being expected to buy. Moreover, Internet home shopping has revolutionized the retail landscape; indeed, it is now often the case that Internet sales outpace those at traditional brick-and-mortar outlets. For example, although most retailers suffered sharp declines during the 2008 Christmas shopping season, Amazon.com actually reported its busiest Christmas season ever. All of these forms of shopping demonstrate the relevance of the home as a key retail site, even as changes in the workforce and increased concerns over crime have diminished other home-shopping activities (e.g., door-to-door sales). Finally, the destination retail outlet typically features themed merchandise, aesthetics, and aspects of retail entertainment. Two attributes distinguish it from all other spaces of shopping: an exceptionally large retail space and a setting that is both stand-alone and typically outside the perimeter of a major urban area. The fact that consumers choose to sacrifice time, money, and effort above and beyond what they would normally expend on typical shopping activities to visit these sites makes them destinations in their own right. Such venues position themselves by offering unique assortments of merchandise and value-added amenities that are designed to surprise and delight customers. One highly successful global destination retailer is IKEA, which offers a unique self-serve line of mid-quality furniture with a high level of design, a Swedish restaurant, a grocery store featuring Swedish-heritage food and gift items, a game room for children, and a bargain level where consumers are literally overwhelmed by a huge assortment of low-priced choices for the home. Another destination retailer, Cabela’s on its website promotes one of its locations outside of Austin, Texas, as an 185,000 square foot facility that features a décor of museum-quality animals, a shooting gallery, and a large aquarium (Zukin, 1998, 839).

Thus, the department store introduced the practice of selling by association. The excessive use of electric lights, modern ventilation systems, telephones, and pneumatic tubes for communication created a rationally managed and comfortable environment for both the public and employees. Technological novelties, such as escalators, not only facilitated mobility within the store but also functioned to stun the public as a kind of enchantment of modernity and rationality. The main public of the department store was the broadly defined middle class. An extensive range of goods was offered for prices accessible to a large public, and historians therefore often talk about the democratization of luxury, to use the words of nineteenth-century French author Émile Zola. The fact that department stores also offered a range of services, entertainment, and facilities that could be enjoyed by anyone for free supports this interpretation. On the other hand, new means of differentiation were introduced. Different departments were often hierarchically situated within the stores, with a bargain department, or bargain basement, on the lowest level. The more expensive the goods, the higher they were placed in the building. In addition, middle-class style and manner was not only shaped and sold by the stores but also expected from the customers (Nicole, 2009, 713).

The Role of Organization Theory for Grocery Shopping Stores

In the last few decades, a major theme of organizational theory has been the increased openness of the environment in which organizations operate. No matter how theorists and scholars try to answer the question of openness there is unanimity in the belief that organizations are now influenced by an increasing number of entities, and need to accommodate their specific demands. This extra burden on organizational resources, in an ever-changing environment, necessitates the need for businesses to have coalitions and engage in multifaceted and intricate transactions within their environment. The bottom line is that modern organizations are now facing a dynamic and an active intrusive environment. The new groups and entities, created by technology and several other conditions under globalization, are interested in what the firms do and how they conduct their business. These entities are not only affected by the firms but they can also influence firms. These changes, therefore, have altered the view that organizations are only answerable to their shareholders (Schutt, 2006, 114).

As already explained descriptive stakeholder theory tries to describe the firm as a centre of many converging and diverging interests representing numerous stakeholders. Descriptive theory also tries to show the impact of stakeholders on organizational decision-making. In short, it explains how organizational decisions are made and what affects them. On the other hand, instrumental stakeholder theory attempts to explain and establish a link between stakeholder management and firm performance. The researcher known as Dill in 1975 gives a broader concept of stakeholder management than the corporatist view, and covers both descriptive and instrumental aspects of the stakeholder theory. He argues that management must increase focus on strategic planning and, through kibitzing, bring stakeholders into the process of decision-making. Otherwise, the organization will be subject to increasing mistrust and loss of confidence. Dill not only talks about stakeholders that can influence the organizational decision-making processes but also mentions intermediaries like representative protestors, communicators, and opportunistic protestors, who intervene on behalf of the stakeholders, and aid them. He recommends that the management needs to deal with stakeholders by increasing the scope of their interactions and by making an effort to help the stakeholders understand the concerns and issues of the organization. The researcher known as Freeman in 1984 defined stakeholders as any entity that is affected or can affect the firm. He gives a long list of stakeholders and their possible interests. Freeman admitted that the list provided in his book is static and simplistic. In reality stakeholders have relations with other stakeholders, their interests change, and over time their salience can also vary. His model was basically a how to do guide for managers to assess the stakeholders’ interests, and formulate processes that will help them in dealing with these interests. Freeman’s model is instrumental and represents an enlightened self interest on the part of the managers aimed at creating a successful organization (Halter, 2000, 94).

The researchers known as Hosseini & Brenner in 1992 described organizations as having influence from a number of stakeholders, and give a descriptive stakeholder theory that focuses on stakeholder influence. Most of the scholarly works claim this aspect of multiple pressures on the decision-making process of the managers, but Hosseini & Brenner actually give a methodology to ascertain these pressures created by the stakeholders. They give a methodology to assess how ethical values are introduced, and subsequently influence managerial decision-making. They propose an Analytical Hierarchy Process (AHP), which they propose is a solution to the multi-attribute and multi-dimensional problem posed by stakeholder theory. The researchers known as Donaldson and Preston in 1995, as already discussed, give an instrumental, descriptive, and normative stakeholder theory. They move beyond Freeman’s enlightened self interest view and say that all stakeholders have interests with intrinsic value and are important irrespective of the fact that they add to the value created for the shareholders. Their work is normative as they consider norms to be at the core of the organization. It is descriptive as they describe organizations as centres of multiple interests. It is instrumental as they consider that there should be a link between stakeholder theory and performance. The researcher known as Jones in 1995 developed a formal instrumental stakeholder theory. The main assumptions are: firms have relationships with many groups, each with either power over the firm, or with a stake in the firm; relationships between firms and their stakeholders can be described with the term contracts; contracts can be of many types (forms of exchange, transaction, delegation of decision-making authority, and legal documents); firms are nexuses of contracts; top corporate management has a special strategic position, therefore, firms are recast as nexuses of contracts between its top managers and its stakeholders; finally, markets move towards equilibrium and that produces a tendency for efficient contracting (Gainer, 1991, 602).

Based on the above assumptions the contracting process gives rise to a number of issues like: agency problems, transaction cost problems, and problems related to opportunism and commitment. If the firm is able to solve these contracting issues it will have a competitive advantage. Finally, Jones gives his solution that firms that contract through their managers with their stakeholders on the basis of mutual trust and cooperation will have a competitive advantage over firms that do not. The researchers known as Wheeler & Silanpaa in 1997 argue that long term value of a company rests on: knowledge, ability, and commitment of its employees; and its relationship with investors, customers, and other stakeholders. The basis of this relationship is how the company adds value beyond commercial transactions. There are two types of values an organization can produce: social and commercial. Both these values are mutually reinforcing and lead to loyalty and corporate resilience. The scholars follow Freeman’s 1984 definition of stakeholders and divide stakeholders into primary and secondary. They argue that basically stakeholder management is a question of creating a balance, and they predict that stakeholder inclusive organizations will outperform stakeholder exclusive organizations in the 21st century. The researchers known as Preston & Donaldson in 1999 did not really give a detailed model but they described the basic ingredients of stakeholder theory. They state that the stakeholder view includes firms and their networks of stakeholders, involved in collaborative relationships and routines, to increase firm revenue and reduce risk and cost. The collaboration works through stakeholder linkages and implicit agreements based on trust, mutual control, and ownership of collaborative activities by the firm and the stakeholders. Finally, organizational wealth-that is the aggregate value of a going concern-can be enhanced by appropriate linkages, both formal and informal, with most, if not all, corporate stakeholders. Hence the pursuit of organizational wealth is an appropriate goal and justification of stakeholder management (Jackson, 1996, 1121).

Different Aspects Related To Shopping

In many papers, the researchers found evidence of peer effects among retail cosmetic salespeople. The peer effects are not simply productivity spill over’s, as people also identify likely strategic responses by workers to the ability of their peers. The direction and magnitude of these effects depend on the compensation system used by the brand. When faced with high ability peers within the counter, workers under individual-based compensation employ two strategic responses. First, they discount the prices offered to customers. Second, they focus on retaining high-value repeat customers, who likely are more loyal to specific brands. Still, they lose (especially low-value) customers since they are unable to compete with high-ability peers in selling ability. Yet high-ability workers do not appear to benefit much from the losses of their peers. The reason is that workers at IC counters are less able to compete with outside peers, especially those from TC counters. Focusing on competing against each other, workers at IC counters can only devote limited effort to outside competition and are therefore greatly hurt by high-ability outside peers. The results show how the relationship between worker heterogeneity and team performance depends critically on compensation system under individual-based compensation, heterogeneity can lead to internal customer and price competition, and loss of sales to outside competition (Phillips, 1997, 66).

In contrast, heterogeneity enhances team performance under team-based compensation. Many researchers find that high-ability workers significantly improve the sales productivity of their peers. Workers appear to coordinate on which customers they serve: low-ability workers may focus more on loyal high-value customers while high-ability workers compete for the casual walkthrough customers who are most difficult to gain. Workers at these counters, finding it unnecessary to exert effort toward within-counter competition, can focus all effort toward outside competitors, and may also benefit from the help of high-ability peers. Consequently, these workers lose fewer customers to outside peers and offer less discounting to customers, hence suffering less revenue loss. High-ability workers at TC counters, on the other hand, have much larger negative effects on outside peers than do their IC counter peers. The peer effects identified in this study are conditional on the compensation system and workers chosen by firms. We test the treatment effects of two brands that changed the compensation system in a later period. The consistency of these results with the broader sample suggests that a large part of the relationship between compensation systems and peer effects is indeed causal. Similarly, the observation that compensation changes do not coincide with personnel turnover indicates that whatever endogenous hiring processes exist do not explain the compensation-specific peer effects (Williams, 2006, 94).

Conclusion

It can be concluded that the proper business strategies in any business can lead towards better operations for their whole business. The same case was with the current grocery store that needs a proper business management to run their operations in the best possible way. There are certain elements which are very crucial for any grocery store which they need to consider before conducting their operations. The same case happened with the present grocery store that also required a suitable strategy for running the business. In the future, the grocery store will be able to run its business operations in the best way that will satisfy the stakeholders and customers as well. Therefore, all the issued and aspects related to the Business Management of Grocery Store have been discussed in detail.

References

Chin, E, (1998), Social Inequality and the Context of Consumption: Local Groceries and Downtown Stores, Service scapes: The Concept of Place in Contemporary Markets, Chicago: NTC Business Books, pp. 591–617.

Chopra, S, (2004), Supply Chain Management (2nd edition), Upper Saddle River, NJ: Prentice-Hall, pp. 133-154.

Gainer, B, (1991), To Buy or Not to Buy? That Is the Question: Female Ritual in Home Shopping Parties, Advances in Consumer Research vol. 18, pp. 597–602.

Gavirneni, S, (1999), Value of Information in Capacitated Supply Chains, Management Science, pp. 16-24.

Halter, M, (2000), Shopping for Identity: The Marketing of Ethnicity, New York: Schocken Books, pp. 55-94.

Jackson, K, (1996), All the World’s a Mall: Reflections on the Social and Economic Consequences of the American Shopping Center, American Historical Review, vol. 101, pp 1111–1121.

Lee, H, (2000), The Value of Information Sharing in a Two- Level Supply Chain, Management Science, pp. 626-643.

Louise, C, (2002), Shopping, Space and Practice, Environment and Planning vol. 20, p. 597–617.

Nicole, T, (2009), Consumer Mourning and Coping with the Loss of Strategic Rituals: The Case of Marshall Field & Co, Advances in Consumer Research vol. 36, p. 688-713.

Phillips, R, (1997), Stakeholder Theory and the Principle of Fairness, Business Ethics Quarterly, Vol. 7, Issue, pp. 51-66.

Schutt, R, (2006) Investigating the Social World: The Process and Practice of Research, 5th Edition Sage Publications, pp. 91-114.

Sherry, J, (1998), Service scapes: The Concept of Place in Contemporary Markets, Chicago: NTC Business Books, pp. 68-123.

Williams, C, (2006), Inside Toyland: Working, Shopping, and Social Inequality, Berkeley: University of California Press, pp. 70-94.

Zukin, S, (1998), Urban Lifestyles: Diversity and Standardization in Spaces of Consumption, Journal of Urban Studies vol. 35, pp. 825–839.

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Budgeting Methods

Budgeting Methods

Net Present Value (NPV)

The Net Present Value in finance is the summation of present values of the individual cash flows in one entity. It is a time series of cash flows which are both incoming and outgoing. NPV is an important tool in discounted cash flow analysis since it is a standard method for the appraisal of long term projects using time value of money. It is also used for capital budgeting throughout finance, economics and accounting. NPV measures the shortfall or excess of cash flows in terms of the present value and above the cost of funds. Therefore, the method is appropriate since it makes proper use of all cash flows and tries to incorporate the time value of money. However, some companies find this method not applicable since it requires an appropriate rate of discount, which is difficult to obtain. The rate used to discount present value to future cash flows should be appropriate since it is an important variable in this process. NPV is relatively more difficult to explain. This is because the method has many computations, which some organizations may find to be more difficult to apply (Capital, 2012).

The Net Present Value method represents the dynamic investment appraisal and a cash flow method that is discounted. The basis for this method is the assumption that today’s euro is worth that tomorrow’s. The reason being that, today’s euro can be invested somewhere to generate interest. NPV method is appropriate for assessing new investments and comparing investment alternatives. The investment with the highest net present value is a more favorable alternative. Since it is an additive process, the investments net profit value can be summed up with the discount rates that are mutually unexclusive. The Net Present Value is obtained by adding up all discounted cash flows less expenditure on investments (Economic Feasibility Studies , 2010).

In a real world situation, an organization must decide on whether to introduce a new product in the market. The product will have various expenditures on the operations and start up and will have associated the incoming disbursements and cash receipts. Therefore, the project will have an initial cash outflow, which includes cash paid to machinery, transportation costs and disbursements on training employees. The project is estimated to cover the startup expenditures and step to a break-even point at the end of ten years. The present cash is therefore important since it would be better for an organization to invest in a project that will generate revenue in the future rather than do nothing with the money (Volkman, 2012).

Internal Rate of Return (IRR)

The Internal Rate of Return (IRR) is a rate of return that is applied in capital budgeting for measuring and comparing the investments’ profitability. The calculation does not incorporate the environmental factors such as inflation and interest rate. This method is a capital budgeting technique that is mostly used by many organizations.  Business people prefer the method because they like to see their results from the calculation in annual rates rather than actual dollar returns. This enables them to make comparisons of different projects for ranking. The ranking enables them to see the project that is going to provide more bang for the buck. The project with the highest rate of return on investments is the most advantageous for the organization. However, the method is more complicated to calculate by hand. Therefore, it requires the use of a scientific calculator or application of a spreadsheet (Research and Library Services:Northern Ireland Assembly, 2010).

IRR method is time consuming since it is more difficult to calculate by hand. The financial analysts spend extra time to identify and solve problems with the IRR. This may be due to the complications that may arise out of the method utilization when there is no pattern on the conventional cash flow. However, due to the intuitive appeal of the method, it becomes the most preferred in practical application of the techniques in capital budgeting.

One disadvantage of using IRR method is that it does not account for the size of projects when doing comparison. Cash flows are compared to the outlay capital, which generate them. This can bring trouble when different projects require different amounts of capital outlay, but the smaller project brings a higher IRR.  The method also ignores future costs and concerns itself with the projected cash flows, which are generated by a capital injection. Although IRR allows one to make calculations on future cash flows, it makes a wrong assumption that the cash flows can be invested again at the IRR rate. This assumption is not real since the IRR is a high number and the opportunities, which yield the return, are significantly limited or not available at all. Therefore, the Internal Rate of Return is not suitable for making comparisons of several investment projects that vary in amounts, timing and length. It is quite possible that the investment with a lower internal rate of return has a higher net present value than an investment with a higher internal rate of return (mary, 2011).

Budgeting Methods Dissertations
Budgeting Methods Dissertations

In a real world situation, a project with high internal rate of return should have a high net present value and the vice versa is also true. Organizations should therefore consider investing in big projects, which have high internal rate of return since it would be more advantageous for the organization.

Profitability Index

Profitability index is the investment ratio to the payoff of a suggested project. The method is a useful technique in budgeting in the grading of projects. This is because it measures the value recorded by every unit of investment that is made by the investor. The profitability index of a company’s investment indicates the benefits and costs of investing in a particular capital project by the firm. It is a cost-benefit ratio used in the financial analysis of capital budgeting. The method is useful in telling whether an investment increases the value of the firm or not. If the investment increases the value of the firm, more concentration and efforts are employed on it. On the other hand, if the investment does not increase the value, the firm may be tempted to withdraw its capital from the investment. The method considers all cash flows of the project and the time value of money. It is also useful in considering the risk of future cash flows through the cost of capital. Ranking and selecting of projects is also enhanced when capital is rationed. This allows the organization know the projects, which increases the value of the firm, and revenue generating projects. The method is important as it direct organizations on the areas where they should invest their capital and the risks involved (Dra, 2013).

One of the drawbacks of this method is that it requires an estimate of the capital costs for calculating the profitability index. The method may not give a clear decision when comparing projects, which are mutually exclusive. Therefore, it is not the appropriate method to measure the investment decisions of an organization since it lacks efficiency.

Many organizations direct their profits to investments with the target of getting extra revenues from those projects. The profitability index method is crucial in identifying the projects, which add value to the organization, as well as the dormant projects. Through the application of this budgeting method, an organization is able to focus on the highest revenue generating projects and to identify areas where more capital should be employed (Economic Feasibility Studies , 2010).

Modified Internal Rate of Return (MIRR)

Modified Internal Rate of Returns (MIRR) is a financial measure of the attractiveness in an investment. It is a useful measure in capital budgeting to rank various investments of equal size. Also, the method is a discount rate that equates the present value of outflows to the future inflows value. This is a modified method of Internal Rate of Returns, and as such, its aim is to resolve the problems of the IRR. While the Internal Rate of Return assumes the projects’ cash flows are invested again at the IRR, the Modified Internal Rate of Returns assumes that positive cash flows are invested again at the cost of capital for the organization and the firm’s financial cost finances the initial outlays. Therefore, MIRR is a more accurate measure that reflects the costs and profitability of an organization’s project (Capital, 2012).

One of the advantages of this method is that it tells whether an investment increases the value of the firm. This is important for organizations to focus on the weaknesses of its investments. MIRR considers all cash flows in the project and puts in consideration the money time value. Just like other methods of budgeting, MIRR considers the future cash flows riskiness through the capital cost in the rule of decision. The Modified internal rate of return cannot be used for ranking order projects with different sizes. This is because a project with a larger modified internal rate of return may have a lower present value and vice versa. However, there are some variants, which exist for the modified internal rate of return that can be used to compare such projects (Research and Library Services:Northern Ireland Assembly, 2010).

One of the drawbacks of the Modified Internal rate of returns is that it requires the cost of capital estimates in order to make a decision. This may not be practical in an organization. The method may also not give the value maximizing decision when comparing projects, which are mutually exclusive. Lastly, the method may not give a decision when used to select projects in case of capital rationing.

Discounted Payback Period (DPP)

Discounted Payback Period is a procedure for determining the profitability of a project in a certain organization. In comparison to NPV analysis, which gives the project’s overall value, a discounted payback period indicates the length of time in years an organization would take to break even from the initial expenditure undertaken. Future cash flows are assumed to be discounted to time zero. This method has many similarities to payback period. However, the payback period is a measure of how long the initial cash flow would take to be paid back without taking into account the money time value. Discounted payback period is the time taken for the cash flows present value to recover the initial investment (Rogers, 2011).

This method is important since it puts into consideration the time value of money. Also discounted payback period considers the riskiness of cash flows of organization’s projects through the cost of capital employed. However,  there are no concrete criteria of making a decision which would indicate whether the investments increases the value of the firm. This means that the firm cannot identify the projects which adds value to the organization and might end up funding all projects including the dormant ones. The method also requires the capital costs to make payback calculations, which may not be available. Discounted Payback Period method ignores the cash flows that are beyond the payback period (Dra, 2013).

Projects with a negative net present value will lack a discounted payback period because the initial outlay will never be repaid fully. This is unlike the payback period the inflow from future cash flows could exceed the initial outflow. However, when inflows are discounted, a negative NPV is recorded.

Conclusion

NPV is a better and popular theoretical approach to capital budgeting based on several factors. Most important is that the Net Present Value use assumed that any cash flows that are intermediate generated by an investment are reinvested at the cost of capital for the firm. Due to the reasonable estimate of the cost of capital, at which the firm could invest its cash inflows, the use of NPV becomes a more realistic and conservative reinvestment rate in the preferred theory. In addition, certain properties of mathematics may cause a project with zero conventional cash inflow to have more than one IRR. The NPV approach does not have this problem (Capital, 2012).

References

Capital. (2012). Comparing Budgeting, 1-50.

Dra, P. P. (2013). budgetary methods. Advantage and disadvantages of, 1-2.

Economic Feasibility Studies . (2010). Capital Budgeting Techniques . Capital Budgeting Techniques , 1-8.

Mary, s. m. (2011). worklife resource ministry. budgeting methods, 1-3.

Research and Library Services:Northern Ireland Assembly. (2010). Research and Library Services. Northern Ireland Assembly, Research and Library Service, 1-30.

Rogers, M. (2011). Comparing Budgeting. Comparing Budgeting, 1-7.

Volkman, D. A. (2012). Journal Of Financial And Strategic Decisions. A Consistent Yield-Based Capital Budgeting Method, 1-88.

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