Effective Leadership

Evaluate the philosophy of leadership within early years settings by critically analysing the characteristics and competencies of leadership. Ensure that you include why it is essential to have a leader who understands the importance of an effective and multi-disciplined team of staff

Title: Effective Leadership – Within this study, the topics being synthesized are the philosophy of leadership within the 20th and the 21st century. Furthermore, the skills and characteristics of a leader or manager are going to be synthesized, showing the reasoning behind having these certain skills.

Over the 20th and 21st century the term leadership has been changed several times and the perception of what a leader is has also changed. Extensive research has been taken under the topic of ‘leadership’, it has been discovered that through the 20th century there have been more than two hundred different meanings (Northouse, 2010). In the early 1900’s it has been seen that leadership was defined as the centre of power and domination and further down the line in the late early 1900’s the term was defined as persons having certain skills, values, motives and also being able to deal with conflicts (Northouse, 2010). However, Bonnici (2011) explains that leadership is about receiving praise, it is about being influential to teams and improving the student’s way of learning. Traditionally, leadership has been defined as a person having certain personality traits and qualities (Rodd, 2006). However, in recent research the definitions of a leader have been associated with shared ideas and working together (Dunlop, 2008)

Furthermore, Effective Leadership is perceived as inspirational, influential and charismatic, whereas management is about the organisational techniques and controlling things (Walker, 2011). Essentially, leadership is constructing and sustaining a vision and interpersonal relationships and management is monitoring activities and functioning (Davies & Burnham, 2003). There are many misconceptions of the term leadership and is usually mistaken as ‘Power’, this is down to the progression of influence (Northouse, 2010).

There are many general leadership theories and few well known. House and Mitchell devised the Path-Goal theory which is centralised on a model of motivation and is a part of the contingency approach (Burnes, 2004). The leader must provide the employees with support, confidence, and influential behaviour to feel able to attain their future goals (Burnes, 2004). There are two different situational contingencies within this approach; one being staff member’s individual characteristics and the second being the environment which they work in (Alanzi and Rasli, 2013). This theory involves around different situations and behaviour and how the leader’s motivation could lead to other staff being achievement-orientated (Alanzi & Rasli, 2013). However, there is a lot of debate whether path-goal theory is efficient within settings and Alanzi and Rasli (2013) explain further that good leaders will know and understand when and what approach to use when needed. Furthermore, Devader and Alliger (1986) discussed that using the Meta Analyst approach and self-report measures of 120 surveys and discovered that the evidence of its efficiency was infrequent. From the surveys that were conducted analysed, they discovered the environment and the task would not be adequate, it will not change the behaviourism (Devader and Alliger, 1986). Therefore this implicates that the behaviour of the leader will not affect the performance of the subordinates (Devader and Alliger, 1986). The weaknesses involved in the path-goal theory are lack of research and findings. However, Aubrey (2011) explain that the theory does not encourage the staff/team to act themselves as leaders when needed.

Psychologist Kurt Lewin formulated this style of effective leadership in the 1930s and many people followed his path. Lewin debated that there are three key aspects to the styles, these are Autocratic, Democratic and Lasseiz-Faire (Lussier & Achua, 2015). Lewin believed through his studies a leader is not solely based on personality traits but he moved towards different behavioural styles (Lussier & Achua, 2015). However, Lewin has also gained many criticisms of this three step approach and academic sources have noted that he has been progressively critiqued as only appropriate small scale alterations in stable environments and also stated that his model has issues of ignoring conflict and organizational politics (Burnes, 2004).

The autocratic style involves a leader who dictates methods of work and staff, struggles to involve staff in decisions of the setting and also limits the staff to doing different jobs (Khasawneh & Futa, 2013). This could be a leader is the owner of the business.). Therefore, this leader could be over-ruling to staff and lead parents/staff feeling under-valued (Johnston & Williams, 2012). Within an early years setting, it is vital that parents and staff feel welcome. If staff are not enjoying their job, this may lead to retention (Sadek & Sadek, 2004). Similarly, Sadek and Sadek (2004) explained that an autocratic leader is ‘like a spider in the middle of the web’, this could indicate that the leader is the only one with the control and power. Nonetheless, there are positives of the style such as the leader of the setting/business is the only one able to make decisions, also this could mean that the leader makes sure things run smoothly (Johnston & Williams, 2012).

The second of the style is democratic; this type of leader is able to welcome ideas and encourage staff to participate in all decision-making and closely watches/supervises (Lussier; Achua, 2015). A style like this could be welcoming, and staff may feel as though they are able to input their ideas as to what needs to be improved and sustained (Johnston & Williams, 2012). Lussier and Achua (2015) indicate that the democratic style increases the chances of staff feeling a valued member of the team, this will lead to present and future motivation and commitment. However, Johnston and Williams (2012) discuss that staff may misunderstand and feel as though the democratic leader may not have any true values or visions themselves. Furthermore, being a democratic leader in a setting will be more organised and have staff feeling valued to the leader (Johnston & Williams, 2012).

The third style is called ‘Laissez-faire’ which is also seen as non-directive and leaders who pursue this style may prefer to let the group of staff set their own goals. However, if problems arise within the setting, it is likely that they will be unable to get the staff back to being positive and motivated (Wood, 2012). However, leaders within an early years setting acting in the style of ‘laissez-faire’ could lead the other practitioners to become somewhat lazy and inefficient (Wood, 2012). In addition, Johnston and Williams (2012) state that a setting ran by a laissez-faire leader would come across and welcoming to children, parents and recruiting new staff. However, a setting ran by a leader who wants to work for an ‘easy life’ could also be seen as chaotic at times due to the lack of management (Lussier & Achua, 2015). Similarly, Wood (2012) adds on explaining that staff could lack in vision or no direction, also this could lead to future retention as the staff feel unsatisfied with the way the setting is.

Furthermore, Goleman’s research indicates that the visionary or effective leadership style is the most efficient and this is by making the vision everyone’s future goals (Burns, 2010). Leaders with this set style are able to connect with every individual in the workplace and know their capabilities and be able to give them time to grow and also how to achieve their goals (Mersino, 2013). Staff are able to benefit with this type of leader as they are able to tell them what they are doing right (Mersino, 2013). Visionary leaders heavily rely on the competencies, emotional intelligence, self-confidence, self-awareness and the ability to be empathetic to staff or others involved (Wood, 2012). In contrast, there are many issues with this style as Burns (2010) did not define how to be a visionary leader, this could come across as confusing. Furthermore, as this happened many researchers began to analyse the theory and show the cracks of it (Solan, 2008). Similarly, Bennis and Nanus (2003) searched further into the term ‘vision’ and researched into the behaviours of leaders with this style. They set out to do qualitative research and interviewed 90 different leaders. To add on Sashkin and Sashkin (2003) explained that Bennis and Nanus (2003) discovered that leaders have five different patterns of behaviour which were all down to trust, confidence attention and more.

One of the earliest leadership researches was based on characteristics of efficient leaders by Gregoire and Arendt (2004) who split these into a group of 5.

  • Surgency: – The traits being the individual characteristics and sociability.
  • Conscientiousness: – Dependability, the need to achieve and integrity.
  • Agreeableness: – Positivity, usefulness and connection.
  • Adjustment: – Emotional Intelligence, self-worth and strength of mind.
  • Intelligence: – Desire for knowledge, broad-mindedness and being learning orientated.

Since this approach based of characteristics, Jillian Rodd (2006) discussed personal assets of an early year’s leader. However, Jones and Pound (2008) indicate that characteristics, attitudes and skills are the base of an early year’s leader. Nowadays, researchers are following to think that the term effective leadership is now based solely about the interaction between leaders, staff, parents and agencies on the outside and also the emotional competencies between this (Jones & Pound, 2008).

Effective Leadership
Effective Leadership

Organisation is an important aspect of being a leader or a manager in a setting and this is because everything can be at hand. Practitioners that have a system in place for how they organize paperwork make it easier for inspections, to call people when in emergencies and also to look at different requirements for the children, for example, food requirements (Gabriel, 2005). Having paperwork at hand means that if anything goes wrong or they need to back themselves up by showing inspectorates that they have their filing systems up to date and showing that the staff are qualified up to standard (Gabriel, 2005).

Effective Leadership

A leader needs plenty of skills to be able to both manage and lead a setting. This includes many aspects such as assertiveness. Being assertive without needing to be may put the staff off their work and this may lead to possible retention (Stein-Parbury, 2013). However, being assertive for the right to be heard, valued and respected. Gabriel (2005) found within their research that practitioners were a lot better at being assertive in optimistic situations and this led to staff feeling appreciated and respected themselves. However, most of the research that has been done showed that assertiveness is usually seen in conflict and negative situations (Stein-Parbury, 2013). Furthermore, if an early year’s practitioner spoken to a staff member and told them to do something that they didn’t want to do, they would have to act assertively and also bring in an empathetic tone and let them know how it would help them move up and development (Stein-Parbury, 2013). Similarly, Maravelas (2005) explains that with high assertiveness, staff can become intimidated and undermined. On the other hand, she discusses that there is a low and high assertiveness and the lower toned assertiveness is used less (Maravelas, 2005).

Ofsted highlight the significance of having a strong leader within an early years setting which can influence how they are marked out of good and outstanding operations. The report also states that the visited settings have had few strong leaders who have the ability to self-evaluate and each staff being able to reflect on their own work (OFSTED, 2013). Furthermore, in the inspections, the leaders explain that it is vital to have staffs that are able to interact with the children effectively as it has a profound effect on the children’s development and learning (OFSTED, 2013). Ofsted created a survey that they gave to their ‘strong leaders’ and the findings were that they were inspiration to their staff, they were persuasive and passionate (OFSTED, 2013). Furthermore, the leaders were able to explain to other staff within the setting what strategies could work and why and also how this may be effective for children’s learning and development (OFSTED, 2013). Furthermore, due to the demand of “outstanding” schools and settings, there are many criticisms that OFSTED are facing, such as a member of the think tank explaining that “you’d be better off flipping a coin” and this shows that OFSTED are possibly becoming unreliable due to the amount of inspections that they are facing (Flanagan, 2014). In light of this, the inspections that OFSTED give are reasonable guidelines for schools and other settings. However, staff within a school may become pressured to do everything before the inspection as it is only once a year that it is done (Flanagan, 2014).

Blatchford and Manni (2006) explain that communication is key for all leaders working within a setting. Communication involves many factors, these include: reflecting, empathising, verifying, acknowledging, consulting and listening. Being accessible is vital for communication. Similarly, communication in the work place is vital, working with children involves a lot of communication as the job is pressuring and demanding, Making sure that everyone knows their role is especially important as the leader does not want the staff to make decisions without them and without consent to do so (Moyles, 2006).

In the early months of 2004, the government had dedicated themselves to use the United Conventions on the Rights of the Child (UNCRC). Furthermore, in 2011 the government devised a new law which is called the Rights of Children and Young Persons (Wales) Measure which also helps to confirm that the principles within this are actively used (Welsh Assembly Government, 2012).

There are also policies put in place to make sure settings such as nursery settings, family centres and child-minders have quality standards, such as nappy changing facilities (Welsh Assembly Government, 2012). One of the biggest of the policies is health and safety, Record keeping is also one of the health and safety standards. Records will consist of the parent’s contact details, the child’s health records (if there are allergies), medical administration, and statements on procedures in emergency, records of accidents (Welsh Assembly Government, 2012).

Over more than several years policies and governments have been changing the way they are working, especially with child care. Problems have risen within the past 20 years with mothers having to work and having to pay for childcare. It has been found that working parents pay more than twice as much for childcare than they do for food and bills (Lyus, 1999). Rutter (2015) has also found that 25% of families can afford to pay for full-time child care, whereas the other 45% rely on unreliable sources of care such as relatives, babysitters and friends (Lyus, 1999). In 2015 the family and childcare trust sent out a childcare cost survey and the findings were that parents still have to find the money to fund such necessities. Child care has risen for children under the age of two by 33% by the parliament (Rutter, 2015)

There a several different approaches to define leadership theory, for example the trait approach. Devader and Alliger (1986) established that traits of the personality were intensely related with insights of leadership. Furthermore, Kirkpatrick and Locke (1991) claimed that efficient leaders are diverse types of individuals in several ways. However, Stogdill (1982) had conclusions and his findings were that individuals will not become leaders because of certain personality traits that they have, but because they are able to be a leader in certain situations and then not necessarily be a leader in a different situation. Emotional intelligence is an important factor of our leadership skills; Devader and Alliger (1986) suggests that emotional intelligence entails two competencies which are personal and social. These include self-awareness, confidence and motivation (Northouse, 2010). However, the trait approach has several recognizable positives and has been researched for a century with theorists to back it up; secondly this approach shows what type of personality would fit a leadership role (Northouse, 2010). Nevertheless, the trait approach also has several weaknesses which could be critical, firstly it doesn’t state a definite depiction of the approaches needed to become a leader (Northouse, 2010). Furthermore, Stogdill (1982) implies that it is problematic to separate traits when there has been no insight to situational factors which is equally important as the leader might not lead in certain situations.

Since leadership has become wide spread within settings raising achievement in children, this is called shared / distributed leadership. This term is where a team within a setting are all active leaders other than the head leader (Lindon & Lindon 2011). Other team members have a role to play and it is their responsibility and feeling as they are capable to act as a leader in their own enjoyment (Lindon & Lindon, 2011). Distributed leadership is a well-known democratic theory, also in the category for ‘transformational leadership’ (Rodd, 2006), Moreover, this kind of effective leadership focuses on practice rather than delegation based on an individual’s expertise and encourages staff and practitioners to excel further and motivate them to work harder towards their goals (Rodd, 2006).

Lindon and Lindon (2011) explain that there are many misconceptions of the term and can be problematic within a setting. Distributed and shared leadership have separate meanings, the difference is that shared is that the leader delegates different roles to practitioners (Rodd, 2006). This would lead to effective partnerships within the work place, especially communicating with each other. Communicating is important when being a distributed leader and being able to listen to views of others, understanding and empathising with them (Williams and McInnes, 2005). Listening means providing individuals with their time and privacy and may require constant appraisal so that the staff feel invaluable (Williams and McInnes, 2005). Entrusting staff may be problematic, but with plenty of team working and outings, this may be reduced over time and staff time needs to be used efficiently (Williams and McInnes, 2005).

An example of shared/distributed leadership is family centres, such as sure start family centres. Becoming a leader within a family centre involves the ethic of care and sustaining caring relationships (Blatchford, 2006). Family centres involve multi-agency teams which consist of professionals within health care systems and supporting parents and children holistically. With extensive research in to ‘Sure Start’ family centres there have been many noted challenges. The challenges consist of: maintaining high quality services, leading through change, maintaining morale and motivation, increasing vulnerability, managing outside agencies (Rodd, 2006). Furthermore, family centres need staff that are able to form strong relationships by partnering with children, staff, parents and multi-agencies (Rodd, 2006).

There are many successes in working with multi-agencies, however there are also challenges. The children’s act (2004) brought out a plan to improve children and family services and emphasized the importance of integrated teams of educational professionals, health professions, social workers, job advisers and support for vulnerable parents and young people (Aubrey, 2011). Since the Every Child Matters Green Paper (2003) was devised because of the Victoria Climbie died from negligence and reports were made that on 12 occasions integrated services could have been able to help. This Green Paper is also along with the Children Act 2004. Every Child Matters (2003) discuss that ‘integrated working focuses on encouraging and enabling all professionals to work together and to have common visions which they can deliver, building around the needs of the individual children’. The professionals involved in working in a multi-disciplinary team could be:

  • Police
  • School teacher
  • Early Years Practitioner
  • Midwife
  • GP
  • Social Worker
  • Speech and language therapist
  • Health Visitor
  • Educational psychologist

There are several key aspects of working with other professions, such as having an early intervention before problems become more of an emergency; The CAF which is Common Assessment Framework and is also consent based (NDNA, 2007). Furthermore, multi-agency working also involves record keeping, sharing information to the right people, working with the family and the leader (NDNA, 2007). There are also policies and legislation supporting multi-agency working such as EPPE Report (2003), local safeguarding children board (LSCB) and Children’s Act (2004-06).These legislations have strengthened the meaning of multi-agency working bringing all professionals together in sight of the child (NDNA, 2007). However, there are many potential barriers for integrating professions which can be parental consent. Parents can often feel judged and pressured by certain individuals. In comparison, Aubrey (2011) explain further that with a code of ethics within the setting and moving forward with strategies such as developing a mutual respect and trust, support the continuing development of the parents’ skills and help to develop them further. Furthermore, other publications such as the DCELLS (2005) explain that the challenges could include recruitment. Recruitment can be vital in a centre with such professionals due to new talent, and this could show more of a diverse work-force.

Methods of communication are also important within the early year’s sector with staff. For example, communicating face to face now and again is essential and gives the member of staff time to feel listened to and a valued member (Daly & Byres, 2009). However, Lussier and Achua (2015) explain that communicating one on one could also have negative effects from being unable to record informal discussions and make other team members worried that they haven’t been in a meeting and therefore they may feel less valued. Group meetings are also an easy form of communicating; this would consist of staff being able to make their opinions known and to share views on certain aspects. Employee handbooks can also be an official way of communicating with the leader and other staff, this could be important when a job role has changed (Daly & Byres, 2009) However, this could also have a negative effect as all written information needs to be up to date and this could apply with the National Minimum Standards (Daly & Byres, 2009).

Parents are as much a part of their child’s education as the practitioners and Bowlby (1969) stated that parents are the child’s first source of learning and need to be in close contact with the work that is provided to the children (Daly and Byres, 2009). In successfully managed settings, the leader will have to keep the parents up to date and communicate about the development of their child. Parents being able to feel welcome, valuable and able to trust the practitioners are a key aspect (OFSTED, 2013). Childcare providers can assure the parents that the information that they give them about the child is with them and that they will take care of every child’s needs (OFSTED 2013). It is important that parents feel that they can confide in the manager/practitioner so that they can give them the information that they need and so they can be used to organise activities for particular needs (OFSTED, 2013). There are many ways of keeping parents frequently updated on the development of their children. For example, there are systematic approaches which enable the parents to be updated every six weeks. The ways that communication can be easier for parents/practitioners are regular text messages through mobile phones, emailing via the internet and also the settings website page (OFSTED, 2013). However, systematic approaches to the means of communication can also be hard due to parents having lack of technology to enable them to contact the settings (Bryant & Oliver, 2009). In sight of challenges, many parents feel as though they are being judged by their children’s practitioners and back away from having face to face contact with them weekly (Moyles, 2006).

Challenges that are faced within the workplace need to be underpinned by the leader for some form of conflict resolution. For a good leader, being able to notice staff that are not getting on for some reason should be easy, however sometimes this may be challenging as staff do not want to go through problems that they are facing (Moyles, 2006). There many general ways of how a conflict is, competition, accommodation, avoidance, collaboration and compromise (Rodd, 2006). Leaders with a certain amount of emotional intelligence will be able to understand strategies how to resolve conflicts between staff members. Generally, solving problems such as conflict are able to gather information and evidence to what has possibly happened, and after the time it has taken to get the information, they may get staff in separately and speak to them (Rodd, 2006). However, Sadek and Sadek (2004) explains that many colleagues suffer from conflicts between each other now and again and this may hinder their ability to be efficient to children or other adults within the setting.

ACAS (2015) provide conflict resolution for managers and leaders to show them effective ways of problem solving through times like this. ACAS (2015) also offer information and case studies for leaders and managers to help them with these possible challenges. The government sees wider benefits to improve ‘leader and employee relationships’ which will lead to the ‘high trust relationships’. They have come up with a method of how to manage and avoid conflict within the workplace. Developing strategies which may help manage conflict before it may become a problem is essential within the workplace, such as developing handbooks for staff before they enter the place of work (ACAS, 2014). A democratic leader would be needed in such situations, as this would be an empathetic situation in many cases and they will not presume the problem, they are able to communicate informally (ACAS, 2015). The steps which can be taken are 1. Informally asking an individual to come and talk to you about the problem. Furthermore, if the informal stage isn’t as effective as it is needed then the issue would need to be investigated informally. 3. If stage 2 doesn’t work, then internal procedures need to be used (ACAS, 2015). Finally, making diagrams which could also be designated to the staffroom wall could be used for staff to understand policies and procedures which may be used when a conflict arises (ACAS, 2015). Adults need as much support during team building exercises as much as children need help when they have conflict with peers. Team building is vital within any daily job or setting as colleagues need to get to know each other and get to know how to work together on a daily basis (Williams and McInnes, 2005).

To conclude, this discussion shows leadership in positive and difficult situations. Distributed leadership is seen as one of the most important factors of a setting and partnerships with parents are also significant. The organisation ACAS (2015) has given leaders and managers information and procedures on many challenges that will be faced through working with parents, staff and children. Overall, the most efficient style is Goleman’s visionary leadership, where all staff are aimed towards the same outcome and goal.


ACAS (2015) Mediation and Early Resolution.

ACAS (2015) Conflict Management.

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Penetration Pricing Strategy

Penetration Pricing Strategy

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


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

Penetration Pricing Strategy

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

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

Understanding Environmental Factors

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

Setting Pricing Objectives

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

Applying Pricing Methods

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

Efficiency of the Penetration Pricing Strategy

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

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

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

Penetration Pricing Strategy
Penetration Pricing Strategy

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

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

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

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

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

Reaching Target Markets

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

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

Positioning In Relation To Competitors

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


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

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

Forming Customer Expectations of the Services Offered

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

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

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

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

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


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

Referencing List

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Socio-Technical System

The Advantages and Disadvantages of Conceptualising the Organisation as a Socio-Technical System

What Is A Socio-Technical System?

Before discussing advantages and disadvantages of applying socio-technical approach in companies, it is necessary to define it in a few words. Socio-technical system is a system which has both a material technology and a social organization (Buchanan & Huczynski, 2010). The former consist of the equipment and methods of operations used to transform raw materials into products or services; the latter includes the work structure that relates people to the technology and to each other. (Cummings, 1978) These definitions are pretty scarce and do not give us much information about the concept itself, but they are something to begin with. All other, more specific, aspects of socio-technical systems will be presented further in this essay.

Historical Background of the Idea of the Socio-Technical Systems

This concept was developed by Eric Trist and Kenneth Bamforth in mid-twentieth century. Why not earlier? Because at the beginning of the twentieth century there was no need for that kind of approach to organizational design. Ford’s assembly line and Taylor’s scientific management triggered off a chain of changes, some of which are still present in today’s business world. Unfortunately, they did not bring only new formula for gaining much bigger profit, but also a lot of problems and undesirable side effects. Meaningless simple tasks were not much of an inspiration for workers. Strict rules, clearly defined roles and relationships inside organization killed every spur of joy and enthusiasm in employees. On the other side, technology developed at a great speed and it was not possible any more to operate in relaxed, cosy atmosphere where everyone worked as a big happy family. Companies expanded, they needed more complex organization, but bureaucracy just did not seem as the right answer to every problem. Socio-technical design offered new solutions. This concept was not developed only to assure that employees earn their living in a more pleasant environment, but also because researchers, such as Elton Mayo, discovered human factor and became aware of its importance in the race for profit. (Ropohl, 1999)  Has the socio-technical system managed to fulfil both its purposes or failed to do it?

The Advantages of Socio-Technical Systems

This brief historical introduction implies that just the inventing of the socio-technical system was a radical and constructive move. The social aspect of this system brought many positive changes. Work is now based on collaboration of employees, not on fulfilling segmented assignments. The feeling of joint effort in achieving goals creates more pleasant working environment. Employees find themselves doing meaningful work in an interaction with their colleagues. As the impact of formalization and standardization has been reduced, it is expected from workers to show greater knowledge and deeper understanding of what they are doing. This leads to greater number of opportunities for enhancing skills and professional improvement. Of course, it is not something that each employee sees as an advantage. Trist himself (1981) wrote about his observations that there are individual differences in motivation pattern.

Socio-Technical System
Socio-Technical System

Some people need strict orders and defined place in company’s hierarchy or otherwise they will feel insecure and frustrated. The socio-technical design managed to overcome this problem, as members of each group occupy certain positions and have tasks to complete, but have greater freedom to do so and also have better insight in their own contribution.  Not just that there is an increase in the degree of satisfaction among employees, but also in the amount of productivity. These groups mentioned above are one of the most famous ‘products’ of socio-technical theory. They are called autonomous groups. They have not be widely accepted and applied, but they have proved to be efficient. One of the most famous cases – The Mannley Innovation is an explicit example that socio-technical systems functions well in reality, not just in theory.

Another plus for the socio-technical system is that the number of managers who occupy higher positions in hierarchy can be reduced, as focus of the control is partially in the groups themselves. This means that less money is needed for highly-educated managers whose skills must be well paid. Also, leaders of the groups are in better position to detect problems during production process, as they have the technical knowledge that most external controllers do not have. This means that less money and time will be spent on dealing with the unexpected situations.

In my opinion, the greatest value of this system lies in the fact that it is concerned both with those who gain profit and those who create it. It is designed to meet the social and psychological needs of employees in order to increase the profitability of the work and make it all compatible with the technology in use.

Ideas of socio-technical design are not applicable only in the mining industry, oil refineries, but also in completely different segments of industry, such as textile (Trist, 1981) and even in hospitals. This can be considered as a great advantage, as this approach is broad enough to offer a suitable framework for organizing a whole range of different types of organizations.

The Disadvantages of Socio-Technical Systems

The broad framework of socio-technical system can also have a negative side. Some authors, such as Dillon (2000), claim that this system is not good enough for implementation in companies whose area of work is technology and that applying it can even cause a communication breakdown! This sounds as a paradox, but Dillon gives a quite reasonable explanation: technology companies are changing fast, becoming more and more customer-oriented and need a usable system, so in order to achieve that they need defined sequence of steps in solving specific problems they face. Socio-technical system cannot offer something like that. In its strongest spot lies its greatest weakness – the freedom of choice and responsibility. Not all the organizations can rely on the sound mind and decisions of their employees, sometimes the consequences are too serious and no risk is allowed.

Apart from not being applicable to all kinds of organization, there are some other negative sides of socio-technical system. One of them is the fact that it is far from being easy to create autonomous groups which will fulfil their purpose. Some of their characteristics previously mentioned as advantages can be perceived in a different way. Task differentiation lies in the core of the autonomous groups. It refers to the extent to which the group’s task is itself autonomous forming a self-completing whole. The more autonomous the group’s task, the more differentiated its task boundary from other organizational units (Cummings, 1978). It is easy to define, but hard to accomplish. For some managers it is a great source of trouble to form groups which characteristics distinguish them from others, but not too much, as they are still part of a wider context. If there is no balanced differentiation, socio-technical system can be not just ineffective, but also damaging for the organization. The problem lies in the fact that there are no strict rules how to form autonomous groups, because it is up to members to build their structure and up to managers to find them place in the organization. If there are no clear boundaries and connections with others groups, its members will not experience the benefit of meaningful work, as they will not be able to perceive the whole picture of the process, which is the purpose of this system.

Another problem also stems from the concept of autonomous group: task control, as defined by Cummings (1981), refers to the extent to which employees can regulate their behaviour to convert raw materials into finished products. Simply, this means that group members choose on their own work methods and sequence of work activities. If the groups consist of specialists, this is an excellent method for dealing with the unexpected and stressful situations, because there is no need for permission for changing the working routine when the time is of great importance. But on the other hand, too much freedom cannot be given to all groups and reasons can be different. Managers may believe that the staff is qualified enough to take that responsibility, but then in the in the end it can turn out that they were wrong. Same as with the task differentiation – it is quite challenging to find the balance between too much and too little freedom. Both ends of that continuum lead to inefficiency. Also, managers who control these groups have to be aware of the fact that too much interference is not desirable. They have to keep the distance and be more of guides than controllers in a usual sense. If the manager’s impact is too strong on the group then we can no more talk about the group’s autonomy.

The last, but not least important disadvantage of this system that will be mentioned here is the lack of individuality. Almost every individual strives to develop to their fullest potentials and there is less possibility for something like that when one operates as a team member. On the one hand, teamwork contributes to the high spirit of employees, but on the other it can cause a decrease in motivation of individual members. Some of them can even feel frustrated because they cannot show their potentials. This could be a problem especially with above-average talented people who would be more helpful if they acted on their own. Also, when socio-technical system is implemented, the hierarchy is flatter, which implies that there are fewer opportunities for climbing the career ladder and it is widely known that this serves as the motivation for many of us.


Before giving the final thought on this subject I would like to present the summarized table from Trist’s work that shows what socio-technical system brought with it:

Old Paradigm New Paradigm
Man as the extension of the machine Man as complementary to the machine
Tall organization chart, autocratic style Flat organization chart, participative style
Competition, gamesmanship Collaboration, collegiality
Organization’s purposes only Members’ and society’s purposes also
Alienation Commitment
Low risk-taking Innovation

(Trist, 1981, Table 2-3)

This table shows that socio-technical system is more human-oriented than others. As I advocate the humanistic approach to management and organizing, I believe that it is much better than bureaucratic or scientific approach. People are not machines and although they are able to adapt to new situations, their power to do so has a limit. Once that limit is reached, consequences can be catastrophic. Even from the profit-makers’ point of view it is not desirable to have demotivated employees who would have ran as far as they could from their work place just if they could. Socio-technical system balances needs and strivings of both. It is true that it takes a lot of effort to build this system successfully. It largely depends on effective communication channels, qualified staff and appropriate use of technology in each sector. But before completely rejecting this organizational design one should take into consideration the fact that the socio-technical system frees the organization from restraints of bureaucracy to the content of both employees and managers. Whatever approach you decide to pursue, there will be difficulties. Socio-technical system has changed since it was developed. Of course, it is still far from perfect, but its adaptability allows managers to customize it for their company’s needs and take the best from it. As Charles Caleb Colton said: Where we cannot invent, we might at least improve.


Buchanan, D. A., & Huczynski, A. (2010). Organizational Behaviour, Harlow. Financial Times Prentice Hall.

Ropohl, G. (1999). Philosophy of socio-technical systems. Techné: Research in Philosophy and Technology, 4(3), 186-194.

Trist, E. (1981). The evolution of socio-technical systems. Occasional paper, 2, 1981.

Dillon, A. (2000). Group dynamics meet cognition: combining socio-technical concepts and usability engineering in the design of information systems. In The New SocioTech (pp. 119-125). Springer London.

Cummings, T. G. (1978). Self-regulating work groups: A socio-technical synthesis. Academy of management Review, 3(3), 625-634.

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Effective Team and Performance Management

Effective Team and Performance Management

This article is intended to evaluate the case study on Electron Corporation and highlights main key points pertaining to team building as well as enhancing the effectiveness of team productivity, established team environment and performance. Building of teams and effectiveness of team performance can be derived from various primary attributes (Zaccaro & Klimoski, in press). Teams are firstly needed to successfully contribute their individual efforts because their certain needs and responsibilities will form the basis of the collective success of the team. Secondly, since teams need to operate in complicated and ever changing organizational environments, they need to tackle multiple organizational team characteristics such as conflicting agendas, load of greater information, swift changes in the situations as well as enhanced dynamic changes (Zaccaro, Rittman & Marks 2001).

A small overview of the company includes; Electron is a small manufacturing organization established in 1997 in North of England. It manufactures components for telecommunication division. It employs 150 people along with 90 people in the manufacturing division. It was originally a department of a huge telecommunication organization and the Electron’s team bought the component manufacturing section as a portion of an outsourcing plan presented by the parent company in 2007. Electron has acquired both full time and part-time employees. In 1990s, its management realized that the company was striving for increasing competition and innovation in the industry. So in order to enhance their competition in the market, they have found the need of a more proficient and effective production procedures while emphasizing on enhancing organization’s culture, customer services, improved performance and responsibility and loyalty towards teamwork.

However, the subsequent sections of the assignment involve literature review which will cover the benefits and dysfunctions of teamwork. The Tuckman’s (1965) model of team building is also been employed in relation to the case study which demonstrates how teams must be efficiently formed. Whereas, the last sections will demonstrate the conclusion of the study as well recommendations on how to enhance the team performance more effectively and the steps that need to be taken for creating a subtle team environment.

Literature Review

The use of teams seems to provide several advantages; they may not be the most appropriate tactic for all types of organizations and not all of the organizations face similar and all challenges imposed by the teams. The influence of teamwork (both optimistic and pessimistic) is dependent upon several features such as company’s culture and environment, efficiency of team leadership, company’s efforts etc. Primarily, a team can be described as a small group of people along with a set of performance objectives, who are responsible to a common goal and the attitude they carry themselves mutually responsible (Katzenbach & Smith 1993). This definition explains that organizational teams should be of a manageable size and all of the team members should be accountable to achieve the shared team objectives. Moreover, all of the team members should be mutually responsible towards their activities and the results of those activities.

The Enticement of Working with Teams

The power of team work roots from several factors particularly when teams are employed. Various researchers demonstrated that teams are increasingly being employed as a response to ever increasingly global marketing competition (Heap 1996; Roufaiel & Meissner 1995; Sundstrom, De Meuse & Futrell 1990). Because of this increase in competition, it is also viewed that catering niche markets is also a growing concern. Since, electron emphasizes on enhancing organization’s culture, customer services and improved productivity; as a result, Electron manufacturers not only need to compete on cost but also strive to compete on innovation by establishing distinctive goods and services that could not be countered by the other rivals in the market. However, this will originate a problem where the company is not supposed to rely on mass production as well as economies of scale in the industry.

Most organizations still believe that working with teams is the only answer to this problem (just as Electron did). In their view teams are the source to optimize company’s innovation as employees have increased self-sufficiency, increased involvement and autonomy for making decisions (Harvey, Millet & Smith 1998). The employees no longer need to be guided about what is required to be done. In fact, they are provided with the objectives or develop objectives along with their team leader and then give autonomy to choose the best way in order to accomplish those objectives. Additionally, organizational innovation can also be optimized if teams are able to provide other enticements to the organization the situation in which they operate.

For instance, firstly, teams can optimally utilize human resources since they permit companies to achieve access to a person’s knowledge and capabilities (IRS Employment Review 1995). Albeit, the enhanced intricacy of the companies means that not all the managers know everything regarding each and every facet of the company’s operations. In this circumstance, it is important to utilize knowledge and capabilities of the employees/teams. Secondly, teams can be utilized to optimize company’s learning as employees are capable to design best strategies being suited to their work objectives (Wageman 1997). Thirdly, Teams are also capable to enhance individual’s performance levels and his/her efficiency, thereby establishing a synergy (Katzenbach & Smith 1993). Finally, team work is greatly associated with various numbers of objectives, tasks and additional accountability for each member of the team, which in turn resulted in enhanced job satisfaction, employee motivation and more work commitment. This will also result in lower employee turnover and absenteeism, thus, decreasing company’s costs and enhancing company’s knowledge base (Kirkman & Shapiro 1997).

Dysfunctions or Challenges Accompanied Teamwork

The employment of teams is primarily a change to an organization as well as a developmental procedure. Thus, teams can be easily affected to any challenge that might emerge during an organizational change. Particularly, resistance among employees may occur when they are needed to work along with other employees who are unfamiliar to them. In this way, teams are more likely to have broken established social relationships. This has already done in the Electron when huge number of new employees was hired and was integrated into one of the Electron’s teams. Those workers were new to their team’s values and consensus where they exerted greater challenge to the already existed relationships among the older employees.

In accordance to Bettenhausen (1991), one way to cope this problem is by forming teams. Building of teams will enhance group productivity by enhancing communication, minimizing conflicts and establishing greater bonds and commitment among all the working team members. Resistance among employee can also occur as a result of other factors. For instance, teamwork may need job enlargement where each team member is required to perform his/her conventional role along with his/her team role (IRS Employment Review 1995). In this circumstance, it is essential to minimize their certain responsibilities or to change the structure of their rewards or compensation.

Besides job enlargement, team work is also coherent with autonomy, ownership and additional commitments. Managers frequently perceive that employees must participate in decision making instead of simply being directed of what needs to be done. However, this might be true for certain situations but not for all situations. This will, in turn, may resulted in employee job dissatisfaction, increased employee turnover and/or reduced work productivity. The similar case is also viewed in Electron, when it hired new employees on temporary basis and let the managers to decide who must be hired on as full-time employee. Those workers initially were also unfamiliar with the team procedures and were expected by the managers to know the team’s values and conform and act accordingly to their team’s norms. Teams at Electron started exerting their concertive control over the new individuals which as a result new employees began controlling themselves and those norms and values become rationalized rules for the new members. There is no simple solution for catering such problem; however, training or changing positions can be probable within the company.

Other associated problems with “empowered teams” originate when there is a lack of trust in the team when they are no longer trusted enough to participate in decision making. This will result in teams and organizations losing full potential to accomplish their desired objectives. The situations in which teams are needed to seek consent before executing any idea or timeliness, ownership is likely to reduce. Organizational innovation will also decrease as teams are compelled to suggest ideas that will be likely to accept (Nahavandi & Aranda 1994). Moreover, team members may also perceive that their management is paying insincere respect to their proposed ideas of teamwork which will certainly result in reduced employee morale.

It is also viewed that when teams are involved in making decisions, they take more time than the system they reinstate. This is also needed where team coordination is required and where team members are independent. This issue can be partly cope by the formation of the team, but this also requires continuous training and development of groups teams. Such kind of training can be specifically appropriate for the new hired staff as there may be no established procedures for them to follow. Also, for effective teams, there must be strong coordination among them (Harvey, Millet & Smith 1998). Similarly, the lack of participation in decision making and coordination among employees for building of more strengthened team culture is seen in Electron’s eight teams (red, blue, white, green, silver, aqua, purple and yellow). This is due the fact that the older and long tenured employees have tried to impose strict concertive rules and procedures to conform to the group norms.

In case of organizational environmental changes and developmental initiatives, culture of the organization and environment must also be considered. It must not be perceived that the objectives and values of the individuals are similar to those of their management or congruent even across the entire organization. The attitude of individuals towards teams will demonstrate the success of those teams. If teams need to be executed more successfully, the extension of already existed values must be there (Carr 1992). Therefore, Electron when working with teams also demand shift in attitudes that a company may turn to it when it wants to accomplish a cultural shift, for instance, when it becomes more quality or customer oriented (IRS Employment Review 1995).

Five Team Development Phases as Proposed by Bruce Tuckman

This model as proposed by Bruce Tuckman (1965) tends to highlight and guides the areas where teams can be successful and/or become failure to achieve desired team goals. For forty years, Tuckman’s classical model of team development delivers ease and new perceptions to managers to either charge to run a team or attempt to function within a team while assuring each member that they are not alone and that the uneasiness is a normal part of the team journey towards an efficient and pleasant unit. Tuckman speculates that these stages are essential and unavoidable. In order for the Electron teams to grow, to face the hurdles, to cope up with the problems, to search for solutions, to organize work and to deliver desired outcomes; these five phases can be elaborated as follows.

Phase One: Forming

In this first phase of team building, Electron teams must be formed. Where the attitude of the individual is driven by the desires which are likely to be accepted by the other individuals and prevent any controversy or conflict. Solemn problems and attitudes are prevented and people are required to concentrate on their busy work routines. Individual members also try to gather knowledge regarding each other, regarding the scope of the task and how to reach it. This phase is considered to be an easy stage but prevention of controversies and conflicts mean that not much objective is actually accomplished. The teams will together meet and learn about various opportunities and confront and then agree on objectives and start to tackle the tasks and objectives. Members of the team will quite behave autonomously.

Each team member must concentrate on his/her team leader by accepting the leader’s guidance and authority while maintaining a respectful distant association with other individuals. At this phase, the leader must open two way communications and be ready to reply any of the queries that may come on his/her way; limitations, potency and vulnerabilities must also be tested including those related to the leader.

Phase Two: Storming

Each Electron group then will enter into the next stage where different ideas for competition are considered. The teams address distinct issues such as what kind of problems they need to solve, how they must function autonomously as well as mutually with each other and which leadership model they must accept to follow. Each team member will have the privilege to confront others’ ideas and perceptions. In most cases storming is solved more quickly while in others, most of the teams never leave this phase (this depends on the maturity of the team). Most team members concentrate on the ins and outs to dodge the problems. This second phase is essential for the teams to grow which could be controversial, distasteful and often excruciating to the team members who are opposed to the conflicts. Tolerance of each team member must also be emphasized because without patience, teams will likely to fail.

This stage can be proved destructive for the teams if they are permitted to go out of control. Managers/supervisors of the teams might be more accessible but need to be directive in their professional and decision making attitudes. The teams therefore, will solve the problems and differences and contribute more comfortably with one another. In this way, they cannot be judged and can share their stand points and ideas easily with each other.

Phase Three: Norming

At this phase of team building, Electron managers will set one objective and one mutual plan for the team to accomplish. Some of the members will be motivated to give up their certain ideas in order for the team to effectively function. At this phase, each team member feels his/her commitment to the team and has the aspiration to work towards the success of the team’s objectives.

Phase Four: Performing

It is probable for certain teams to reach to this stage. The high performing teams can be able to work as one unit as they able to identify best approaches to get their job done mutually, comfortably and without irrelevant controversy or the requirement of any external management because they become motivated and knowledgeable by this stage. When the members of the Electron teams are now skilled, independent and experienced, they can tackle the process of decision making without the burden of any supervision (however, supervisors are also directive and participative at this stage but team make more appropriate decisions). The Electron teams must pass through this stage several times because of the global and organizational dynamic changes.

Phase Five: Adjourning (and Transforming)

This stage involves un-forming the groups which sometimes create a sense of loss often feel by the team members. This stage will include ‘dissolution’ which leads to the end of the Electron team members’ roles and responsibilities, the accomplishment of objectives and minimization of reliance. This procedure can be traumatic specifically when the dissolution is not planned. Thus, team members must be acknowledged at this phase that at the successful achievement of the productivity levels and outcomes, teams will be dissolved and that new teams will emerge for new targets.


In order to execute and sustain teams to operate effectively within the organization, sufficient organizational changes are required to be considered as well as various issues required to be catered. Those changes not only influence team members but also the responsibilities and commitments of the supervisors and managers, the organizational framework, work procedures and techniques and employees’ social bonds. That’s why due to the dynamic environmental changes, Electron manufacturers also face multiple challenges which occur as a result of teams’ implementation. However, it is also evident that in case of teams’ implementation, various organizations will not opt for going back to their prior organizational frameworks (IRS Employment Review 1995). Consequently, it is also seen that teams, in spite of the emerging challenges, are capable enough to offer several advantages to firms in the long run.

In case of Electron manufacturers, new hired team members were unknown of the team’s values, norms and consensus that proved greater challenge to the already existed relationships among the older employees. Moreover, managers were also expecting that each new member must be familiar with the procedures and norms of the groups to act accordingly and conform themselves to those groups. However, besides the implementation of their concertive procedures and motivating employees (by providing them rewards), Electron teams still lacking certain key aspects which formed the basis of a strengthened team. Such as two way communication, participation of employees in decision making, lack of trust among team members, sharing of opinions and ideas among each other to resolve any critical issue regarding production and enhancement of work performances and employees’ morale.

Thus, as a result of this, Bruce Tuckman’s (1965) model of team building is employed in the context of Electron manufacturers. According to his model, teams are to be developed step by step by ensuring performance effectiveness in each team building phase. This model consists of five stages i.e. forming, storming, norming, performing and adjourning. This can be concluded as Electron must forge its eight teams in a manner such that each individual must know his/her accountability, change his/her attitude according to the organizational culture so that teams will effectively function with minimum conflicts and controversies (forming). Second, teams must be encouraged to share their wide scope ideas and opinions and can confront the other’s ideas for making better decisions and improved productivity (storming).

Third, Electron managers must establish one objective and direct the team to mutually accomplish the objective which enhances the members’ sense of responsibility towards the team success (norming). Forth, when Electron’s team members become more experienced and capable enough, they will be able to make decisions without any supervisor which in turn, gives employees more autonomy, understanding of each other’s roles, increase employee social relationships, enhance their morale as well as enhance work productivity (performing). Finally, when the production target is successfully achieved, teams will be terminated at the final stage so that new teams will be developed to achieve new production targets with the passage of time and make the organization subtle to dynamic industrial changes with the help of new teams’ formation.


Following are some of the recommendations that can be further considered for making organizational teams more strengthened and intensified.

  • In accordance to Tuckman’s strength deployment inventory (SDI) model, employees must be nurtured with the help of managers without directing rewards in return. They must be motivated to enhance their self-worth by accomplishing tasks and other significant orders.
  • Fulk, Bell & Bodie (2011) also employed Tuckman’s five stages of team development to enhance team performance. According to them, the first stage ‘forming’ must also involve hiring and selecting right individuals at the right time who also possess the qualities of solving critical problems, controversies, communication gaps, decision making, setting of plans and goals and organizing tasks within teams.
  • At the second stage ‘storming’, managers must anticipate to unexpected events that are likely to lead the whole team to the conflicts which are likely to arise as a result of differences in opinions, styles of working and priorities. The managers must be vigilant to take all those conflicts into consideration and encourage teams to take appropriate and productive actions towards mitigating those conflicts.
  • The third stage ‘norming’ must involve working with teams with specific as well challenging goals and those goals must be present in writing. Here team performance can be enhanced if teams revisit their initial goals, clarification of the goals and the commitments towards those goals.
  • At the fourth stage ‘performing’, managers must monitor their teams ‘objectives and their feedback on a regular basis in order to enhance teamwork. That feedback must be timely basis as well as concrete to be acted upon.
  • At the final stage ‘adjourning’ the team members instead of felling a sense of loss, team members must be expected to enjoy their success resulted in successful completion of the task.


Bettenhausen, K.L. (1991) ‘Five Years of Group Research: What Have We Learned and What Needs to be Addressed’, Journal of Management, vol. 17, no. 2, pp. 345-381.

Carr, C. (1992) ‘Planning Priorities for Empowered Teams’, Journal of Business Strategy, vol. 13, no. 5, p. 43-47.

Fulk, H.K. (2011) Team Management by Objectives: Enhancing Developing Teams’ Performance. Journal of Management Policy and Practice, 12(3), 17-26.

Heap, N. (1996) ‘Building the Organisational Team’, Industrial and Commercial Training, vol. 28, no. 3, pp.3-7.

IRS Employment Review (1995) ‘Key Issues in Effective Teamworking’, no. 592, pp. 5-16.

Katzenbach, J.R. & Smith, D.K. 1993, The Wisdom of Teams, McKinsey & Company, New York.

Kirkman, B.L. & Shapiro, D.L. (1997) ‘The Impact of Cultural Values on Employee Resistance to Teams: Toward a Model of Globalised Self-Managing Work Team Effectiveness’, Academy of Management Review, vol. 22, no. 3, pp. 730-757.

Nahavandi, A. & Aranda, E. (1994) ‘Restructuring Teams for the Re-engineering Organization’, Academy of Management Executive, vol. 8. no. 4, pp. 58-68.

Performance Coaching Training (2010) Bruce Tuckman’s Forming, Storming, Norming & Performing Team Development Model.

Roufaiel, N.S. & Meissner, M. (1995) ‘Self-Managing Teams: A Pipeline to Quality and Technology Management, Benchmarking for Quality, vol. 2, no. 1, pp. 21-37.

Sundstrom, E., De Meuse, K.P. & Futrell, D. (1990) ‘Work Teams: Applications and Effectiveness’, American Psychologist, vol. 45, no. 2, pp. 120-133.

Teambuilding Solutions (2011) Strength Deployment Inventory (SDI).

Wageman, R. (1997) ‘Critical Success Factors for Creating Superb Self-managing Teams, Organisational Dynamics, vol. 26, no. 1, pp. 49-60.

Zaccaro, S. J, Rittman, A.L & Marks, M.A (2001) Team Leadership. The Leadership Quarterly, 12, 451-483.

Appendix A

Performance Management
Performance Management
Effective Team
Effective Team

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MBA Corporate Culture

Managing Corporate Culture In Nando Fast-Food Company

This post discusses corporate culture in great length. The operation of business on a global scale requires that firms should cultivate their international business by respecting the national differences in the countries where they expand to. This is what Nando had failed to observe. It has rigidly and excessively stuck to its corporate culture exhibited in South Africa. It failed to note that South African’s national culture is not the same thing as what applies in countries in European and Asian states.

Also, the Nando’s management in the South African headquarter had given no room for the management of its firms in other countries to operate freely; this has given them no room for innovative strategic marketing planning in observance to the environment in which they operate in. the national culture of South Africa has greatly influenced the corporate culture of the Nando’s organization and it thus constituted a negative impact when its adherence and transfer to other national culture that is not compatible, led to the unprofitable business operations in these countries.

The level of competition in the fast food industry in contemporary times is getting tense, with expansion in big firms and new entrants to the business. Thus for organization like Nando the need to observe people’s custom, taste, national culture in carrying out its strategic marketing this is germane for their effective and successful operations as they expand the business.


The dynamic environment where modern businesses operate pose challenges for them to maintain effective management of innovation. These environments are also characterized by uncertainties. The managements of contemporary business and their resources are becoming ever tasking because of changes in management, which emanates from the introduction of new strategies, keen competition, and improvement in technology, inter-alia. Change is a constant phenomenon that is bound to occur, but in a situation where its vicissitudes become a frequent occurrence managers of business are put in a tight corner to adequately strategize in order to follow the trend in the industry and the environment where they operate. The external environment in which an organization operates goes a long way in influencing its strategic management. Hence, changes in these environmental segments- the demographical segment, economic segment, political/ legal segment, technological segment, socio-cultural segment, and global segment- these need to be inculcated in the organization strategic management for the organization to compete adequately with its rivals. In this view Peter (2005:7), argue, “Dynamic in nature, the strategic management process is the full set of commitments, decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns”.

As an organization continues to expand in its operational base, it is a noticeable fact that these expansion tend to affect the pattern of existing corporate culture the organization had hitherto operated on. This becomes more prominent when the organization is venturing into a different environment or country with different corporate culture from the exhibited national culture.

Strategic marketing is thus, faced with high challenges in the aspect of cultural harmonization of an organization operating with several units and outlets in trans-nationals and across borders operations. In an ever increasing competitive global business arena, the need to strategies and be in tune with current trends in an industry, this is very germane to the success level the organization would attain.

This study looks at Nando a medium scale business enterprise with its problem in operations of its franchised business, as a result of the difference in environmental corporate culture where the firm plans to extend its operations.

Background of Nando

Nando is a South African fast-food firm with restaurants that operate in many outlets in the country. The restaurants have over the years operated an organizational and corporate culture that depicts the South African environment in which it operates. The local South African dishes are widely served. Nando’s corporate culture is built around preparing chicken delicacy with a corporate culture that reflects the ‘Nandocas’ (Nando’s people) attitude, values, pride, passion and their courage. Nando believes in 100 percent satisfactions of its customers. Thus, as an organization, it has embraced the phrase that “100 percent” and “GEES’ which means ‘spirit’ in Afrikaans language, to build a corporate culture in giving satisfaction to its numerous clients.

Nando started operating in South Africa since 1987, and has used its marketing strategy to effectively ensure growth for the firm, thereby making the firm to begin franchising its operation to other countries, outside South Africa.

Nando’s Corporate Culture and Failure to Franchise to International Markets

The Nando’s organization has sought for drive for its expansion into the international fast-food market. Thus, it has embraced the plan to expand its operation through franchising to other international countries. From the Rothwell’s five generations of innovation, Nando is currently applying the second-generation Innovation process (Rothwell 1994, pg 8). The firm wants to diversify its operations by making its appearance in new international market. However, it has placed more emphasize on static scale of economies by holding tight to its corporate culture. Thus, the pattern of Nando organizing new restaurants operations in the same old South African fashion and technology has made the organization fail in its franchising and plan to gain market share in international market.

The expansion of Nando organization to other countries, this has adopted strategy of management the organization in a way where it focused greatly and concentrated on its national organization’s corporate culture. The marketing strategy introduced into its operation in European and Asian countries have towed the culture in South Africa. Hence, the over concentration on the existing South African culture, with little or a little (insufficient) focus on existing cultures in countries where the Nando’s expansion operations are directed to, this has being a major reason why the attempt at the franchising the organization’s concept failed. The sticking to past way of conducting business in South Africa, is not enough to see its foreign operations to success; there is the need to carry out a thorough research and analysis on the corporate culture existing within a country where the organization intend to expand its operation to. In this view, Oden (1997:3) argues that “many of today’s most successful organizations continue to survive because many years ago they offered the right product at the right time. Most product, market and process venture decisions of the past were made without the benefit of strategic thinking or planning. However, present-day managers increasingly recognize that venture decisions must be made in the context of a venture strategy. As they find themselves in ever more complex and turbulent environments, their past internally oriented, reactive approach to decision making is giving way to an externally oriented proactive approach that requires more analysis”.

The need for Nando to analyze both its internal and external environments is a needed strategic framework for the organization to thrive in international corporate venture and strategy. Hence, this long-range strategic and proactive orientation to decision making is an important element of the innovation culture (ibid). The need for an organization to adapt to the corporate culture in the environment where it operates goes a long way to show how successful it would be. The strategy in place should take into cognizance those cultural variables that would blend with the environment and people’s life style and taste. This is where the management of Nando International has missed the mark. There is the intention to transfer the Nando’s South African corporate culture to countries that has no cultural similarities; such as Israel, England, Australia, Japan, and Canada. The reason why Zimbabwe could thrive is adduced to the fact that it shares the same cultural similarities with South Africa; Nando’s home country.

To buttress this argument Ulijn et al (2000), illustrated that, “when a multinational firm, such as Philips, operates in the United States, it is accepted almost as a U.S. firm since it is loosely related to the individualistic U.S. society where interaction is explicit, low context, and monochromic. On the other hand, to be successful in Japan, Philips should behaves as a Japanese firm, where national culture and corporate culture overlap in a tight, collectivistic society where interaction is implicit, high context, and polychromic”. The above illustration shows that every country has its own cultural characteristics and variables that would compact with the environment in which business operation is done.

Also, the head office of Nando in South Africa has no flexible guide on the operation of its international businesses outlets, setting rules and guidelines for their operations. This has prevented the management in the different international countries from considering the variables and existing corporate culture where they operate, and strategize towards this line for effective operation. These tend to constitute hindrance to a successful implementation of Nando’s franchising attempt of its concept internationally.

The Role of National Culture in Nando’s Expansion

National culture is a great reckoning force which the Nando’s organizations have greatly imbibed in. the emphasis on maintaining the South African culture, in the organization, this is shown in every aspect of the business. To make this national corporate culture to be retain every new staff are adequately orientated on the existing cultures they are recruited., and it is expected they keep to this culture. The adaptation to national culture by the Nando outlets and operation in South Africa, this can be say to be a major factor that has resulted in the success story recorded in the country. As the organization’s activities are built round the national culture, this is reflected in the management style, relationship between staff and management, selection of partners. The inherent national culture in Nando is a factor that has made its Zimbabwe operations to succeed. This is adduce to the fact that South Africa and Zimbabwe have similar national culture

Corporate identity is an important factor to enable an organization competes favorably in an industry. “Based on this notion the effective management of an organization’s identity result in the acquisition of a favorable corporate image and, over time, of a favorable corporate reputation which leads an organization’s key stakeholders and stakeholder groups to be favorably disposed towards it” (Balmer & Wilson, 1998). According to Balmer (1997), cited in Balmer & Wilson (1998), an important pre-requisite for a corporate reputation to contribute to business survival and success is that it offers a distinct advantage in relation to the organization’s external environment”. For Nando South African operations, it has greatly utilized its corporate identity and culture in building a favorable reputation for itself. And this has led to the success and expansion of the business. It can be said here that the corporate identity exhibited by the organization operations in South Africa, this is very conformable to the national culture of the country’s environment in which the organization operates. To show the level in which national culture plays in the success of Nando’s operations in South Africa, when the expansion of the organization gets to European and Asian countries, with the dogged move of the management to inculcate the same corporate culture in a different environment made the operation there unprofitable and unsuccessful.

As earlier stated corporate culture is a reflection of the national culture and the environment in which the organization operates. The national culture of a state should be adapted onto by the corporate culture for the organization to thrive in its operation.

The role of national culture in Nando’s expansion can be said to be effective and successful at the national level, i.e. in South Africa. But internationally, the excessive emphasis place on the national culture in the expansion operation in Europe and Asian countries, this is a negative aspect that has affected the successful outcome of operations in these countries. The Nando’s have concluded that the Nando’s national culture could be transferred to international operation; hence, there is the disregard for the inherent cultures existing in these international countries. Thus, this incompatible corporate culture and the existing national cultures in the international countries is a factor responsible for the unprofitable operations at this level.

Hence, as a way out of this, it becomes a difficult challenge for the Nando to blend its South African corporate-cum-national culture with what operates internationally. The advertisement of Nando’s product, services, and organization’s operations, this also goes to buttress the role of national culture on the organization’s operations; adverts done for the South African outlets cannot adequately be utilize for operations in European and Asian countries. This also goes to show that the Nando organization’s success in South Africa is greatly tied to its ability to compact with its national culture and the effective utilization of this for the organization’s advantage.

Industrial Analysis and How It Affected the Corporate Culture of Firms like Nando

The level of global competition in the fast food industry is always on the increase. This is adduced to the in flock of new entrants, the expansion of existing firms to other countries. Big name in the industry such as McDonald, which has over 23,000 restaurants in 110 countries, a close rival to MacDonald is Burger King which operates a total of 9,644 restaurants in 110 countries, followed by Wendy; second largest rival to MacDonald, with a total of 6776 restaurants in 32 countries, Hardee operates 3080 restaurants in 20 countries (McDonald. ca, 2005). With this high level of expansion of major players in the fast food industry, coupled with the springing up of new firms entering the industry, these have led to the increase in the competition level in the industry. An organization operating in this industry need to adequately strategize in its marketing activities for it to curve a niche for itself.

The high competition level in the industry can be analyzed using Porter’s five forces. The threat of new entrants in the fast food industry is significantly high, as there are new entrants springing up every moment. This is due to low capital outlay required in setting a small fast food business, also the basic skills required to run a fast food restaurant is basically not to high that would require long term training. And there are abundant of skill labour that can be recruited to man the fast food joint when created. These f actors are responsible for the ease at which new entrants flock the industry and this has helped in increasing the level of competition in the industry. According to Porter (1985), the intensity of rivalry among existing competitors depends on the balance of competitors, industry growth, the size of fixed or storage costs, the amount of differentiation or switching costs, the minimum size of investment, the types of competitors, the strategic stakes, and the size and type of exit barriers.

Another threat in the industry is the threat of substitute product or services. In recent times, most fast food restaurants have come up with innovative pattern of preparing there food and service delivery; some have developed services for a targeted group in the society such as busy workers. This innovative way of operating leaves the customers, and those who patronize fast foods, many room to choose from the available substitutes. The treat of substitute product and services tend to reduce the level of profit that is available for the organization operating in the industry. In this industry there are firms that produce similar products; this also tends to constitute a threat to the operations of firms in the industry.

The bargaining power of suppliers, who supply raw materials for processing the food in this fast food industry, is very high, since there are many firms operating in the industry they would have many buyers wanting to buy from them; thus increasing the demand level. Many big firms like McDonald, have engage on their own backward linkages programme, whereby they produce most of the food stuff and livestock use in operating their fast food restaurants. Buyers also may have high bargaining power in this industry, since there are different substitutes and operators in the industry; thus forcing the price down for buyers.

The strategic challenges thus facing firms in the industry has to do with how they ca n strategize and carry out their marketing function in a way to make them have competitive advantage in the mist of the high competition in the industry. And profit maximization tend to be low if the marketing strategy is not effective enough to increase the level of sales made available to a firm operating in this industry.

Recommended Ways Nando Could Develop Its Business Operation

As earlier stated the competitive level in fast food industry is very tense; thus, for a firm to operate adequately in this industry there is the need that an effective marketing strategy is put in place; which would be goal oriented and enthusiastically pursued. For firms like Nando that is expanding, its operation to foreign countries there is the need that the issue of environment where the expanded business is position, this is critically considered in line with the organization existing corporate culture. “…a number of theoretical perspectives related to the role of firm-specific knowledge in competitive strategy-resource-based view of the firm, dynamic capabilities knowledge-based view of the firm, organizational learning-have began contributing to our understanding of international strategic alliances” (Simonin, 1999). And it is germane that modification to existing corporate culture is made to be in tune with the features of the environment that are on g round. The importance associated with paying attention to a country’s culture and environment in the management of business operation, especially as applicable to fast food business, this is for the organization to operate effectively and adequately apply its resources in order to adapt to the environment and also to meet set objectives at the most efficient manner. “Given the global strategic perspective, the corollary that it should be accompanied by a universal standardization is difficult to sustain as such a stance is product oriented and in defiance of the marketing concept. It is also apparent that different nationalities buy similar products for different reasons and different versions of a product for reasons of values, custom and preference as well as price” (McCall & Stone, 2004:5).

From the fore going, organization such as Nando as should strategize in a way where the custom in a country, that the national culture is respected. It is not as if one is saying that they should lose their cooperate corporate culture and concepts, due to expansion, but people’s custom, taste, preferences, reasons for patronizing a firm’s product and service, all these are different. So it becomes germane that for the firm to operate adequately well in the international arena, these considerations need be put in place for proper marketing strategy.

The model below is modified to shows a full recognition to the external context environment and how it should Nando’s business units are coordinated to operate; and it identifies a two- way rather than a one – way relationship with organisational strategy. There is also important recognition of the impact of the role of the personnel function on the human resource strategy content.

Corporate Culture MBA
Corporate Culture MBA

Source: Original by Henry and Pettigrew, (1992:139) “Model of strategic change and human resource management” in ‘Patterns of strategic change in the development of Human Resource management’ in British Journal of Management.

The model above diagram shows the effects of Nando’s corporate culture on its outlets, in other international countries where the business is franchising. It shows that franchised business should be allowed to operate uniquely, but not totally out of the parent organization’s corporate culture. Certain environmental influences from political, economic and cultural and social segments of the environment should be recognised for the Nando’s outlet to operate adequately in the country there are established.

Suggested Innovation Approach for Nando

Scenario Building

Having looked at the failed bid of Nando to actually succeed in its expansion and franchising bids, it is recommended that the organization embrace a scenario building approach in studying the environment in which it wants to expand it business to before implementing the plans. This would enable the organization to be able to build up the right corporate culture and curtail challenges and uncertainties.

One way of managing the uncertainties associated in frequent change is through scenario planning. According to Ringland (1998), scenario planning is a tool for business to cop with the unpredictability of constant change and help them find better solutions for the future. Scenario are often thought of as a management development tool, which is use for creating shared vision, as well as better plans, in organization. Thus, it is utilized in facilitating strategic planning and helps in influencing people’s attitude towards questioning assumptions and accepting change (ibid). Scenario planning tends to be a better tool than other traditional management tools for the tackling high uncertainties and complexity in modern business management. Shoemaker (1991) defines scenario planning as a script- like characterization of a possible future presented in considerable detail, with special emphasis on causal connections, internal consistency, and concreteness. According to him, the focus is not on forecasting the future, or fully characterizing its uncertainty, but rather on bounding the uncertainty.

Thus, for Nando scenario building is a germane tool that would ensure cultural uncertainties from environments where it want to expand its fast-food operations are taken care of before the firm’s outlets are established.

Modelling as a way of improving innovation management for Nando

Corporate Culture Dissertation
Corporate Culture Dissertation

The above diagram shows the circular flow of innovative modelling. A model formulation is ensured through the desire to come up with a better model so as to gain more competitive advantage over rivals, and this need for improvement brings about the better allocation of resources that would result in the derivation of vital information for the effective operation of the organization. The derivation of better information would make Nando to see its previous innovative model as asymmetric and the desire to future improve this lead to another circle of innovative turn around and the engagement on new modelling session.

Two key aspects underlying this information innovation cycle are transparency and accountability. The transparency of information is in fact closely tied to accountability. Transparency can be defined as the ability of the public and of external regulatory bodies to view the actions, procedures, and outcomes of a particular business entity (or department within). Public access to information concerning the operations of a business or an entire industry facilitates independent evaluation (Ceres, 2003). Transparency translates to accountability when these independent evaluators have a significant influence over the fate of the company or industry in question. This influence might come in the form of policy making or buying power. When inferences made by the public have the ability to affect its welfare, such an entity becomes more than just morally or ethically accountable to that public. It also becomes incumbent upon that business or industry to perform in ways that are favorable and fair. Without transparency, therefore, there can be no accountability and without accountability, modelers will not have the motivation or incentive to take ownership of the models and therefore the cycle. However, with accountability and transparency working in tandem, model validation will foster an information innovation cycle, which in turn will lead to a lasting competitive advantage.


Corporate culture has a great effect on way an organization operates. It gives the organization its uniqueness, i.e., in other words corporate culture of an organization gives it corporate identity. The corporate culture may constitute a hindrance to the successful operation of the organization when the organization is operating a rigid corporate culture with no room for modification or change; this is more specially noticed when the organization is operating and expanding its business to different countries. As each country has its unique national culture, it then requires that when the organization is carrying out its strategic marketing planning this should be adequately taken into cognizance. Modification to existing corporate culture should be made so as to make the organization operates effectively and profitably well.


Balmer, J.M.T. & Wilson, Alan (1998) “Corporate Identity: There Is More To It Than Meets the Eye” in International Studies of Management & Organization. Vol.28, No 3

Ceres (2006) “Information transparency and corporate accountability” Ceres Benchmarking Electric Cost

McCall, J.B. & Stone, M.A. (2004) International Strategic Marketing: A (N) European Perspective. New York: Routledge

Oden, Howard W. (1997) Managing Corporate Culture, Innovation and Entrepreneurship Westport, CT: Quorum Books pp. 51

Porter, Michael E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance. New York

Proctor, Tony (2000) Strategic Marketing: An Introduction London: Routledge

Ringland, Gill (1998), Scenario Planning: Managing For the Future. John Wiley & Sons Limited

Rothwell, Roy (1994) “Towards the Fifth-generation Innovation Process” International Marketing Review, Vol. 11 No. 1

Shoemaker, Paul J.H. (1991) “When and How to Use Scenario Planning: A Heuristic Approach with Illustration” in Journal of Forecasting. Vol. 10

Simmonin, Bernard L. (1999) “Transfer of marketing Know-How in International Strategic Alliance: An Empirical Investigation of the Role and Antecedents of Knowledge Ambiguity” in Journal of International Business Studies Vol. 30, No 3

Ulijn, Jan et al (2000) “Innovation, Corporate Culture and Strategy. What is the Mission for International Business Communication?” in The Journal of Business Communication .Vol. 37, No 3. pp. 293

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