Deregulation of British Telecommunications

The Deregulation of British Telecommunications

Deregulation is the elimination or removal of government controls and restrictions in, for instance, a particular area of business with the aim of encouraging more competition. Deregulation in the telecommunication industry has ensured that there is a public policy that:

  1. Guarantees provision of quality service
  2. Allows for reasonable setting of prices
  3. Ensures the availability of advanced infrastructure

According to a survey done in the UK, there was an overwhelming feeling by many respondents that competition forces should determine the nature of the telecommunication industry instead of regulatory measures. Competition, ideally, spurs innovation which brings about new ideas and ways of doing things. Competition also allows prices do be determined naturally by the forces of demand and supply. The development of telecommunications market in UK has brought forth many new changes. The rise of BT (British Telecom), the first telecommunication company in UK, brought with it some issues worth to note in as far as deregulation is concerned. They include:

  1. The UK telecommunication market was the first market to benefit from deregulation measures in the 1980s. It was an area where ‘price cap regulation’ of commodities was first introduced in the UK
  2. British Telecom was the first major British telecommunications company to be deregulated and privatized in the 1980s
  3. Deregulation which brought in competition in the telecommunication industry was introduced a decade earlier when compared to many other European countries.

However, realizing meaningful competition in the telecommunication sector was a slow process for companies like British Telecom due to certain national dynamics.

Deregulation in UK

British Telecom was privatized in 1984 and it is also in this year that deregulation policies in the telecommunication industry were initiated. The 1980s saw the British government introduce a ‘duopoly policy’ in telecommunications which allowed the entrance of another market player, Mercury, into the industry. Despite this, British Telecom was still the dominant player as compared to Mercury. The UK government further allowed many other firms to enter the telecommunications industry mainly to enhance competition. Entrance of other players also meant that new innovations and infrastructure could be introduced in the industry unlike earlier when British Telecom was the only telecommunication service provider. Deregulation of the sector scrapped the price cap regulation on British Telecom which meant that the company had to depend on normal forces of demand and supply to determine the prices of their products and services.

Deregulation BT
Deregulation BT

The changes that the government was introducing in the 1980s were also aimed at making the British telecommunication industry an international standards leader. However, the industry was facing a competition crisis due to the existence of a duopoly policy in the provision of telecommunication infrastructure. The duopoly policy that mainly benefited British Telecom and Mercury was later abolished in 1991. New entrants in the provision of local access services such as Cable Television came into the market consequently increasing competition. It is from this move that major development on radio based telecommunication and mobile based systems such as PCS and radio access emerged. These new technological advancements brought about major influences in the telecommunications sector; something which had not been experienced before in the United Kingdom.

Initially, the privatization of British Telecom saw a price cap formula being introduced which meant that the company had to depend on rate rebalancing to determine prices. Further reforms in deregulation the industry have been deployed in recent years through, for instance, the announcement of the Chancellor of Exchequer, Gordon Brown, that as Better Regulation Action Plan was to be enforced as from May 2005. This new policy reduced the number of regulations from 29% to 7%, bringing about a 25% reduction in bureaucracies which also saw the Better Regulation Executive being transformed into the Regulation Commission.

Telecommunications in the UK

The duopoly policy was scrapped in 1991 following the publication of the White Paper. Earlier in 1989, further liberalization, deregulation and privatization had taken place. However, these changes were only of a domestic nature and not international per se. Until 1989, only two telecommunication services operators had been licensed, Vodafone and BT’s Cellnet. The White Paper which came into effect after duopoly policy, allowed CATV companies to start offering telecommunication services through their cable networks on their own rights. At the same time national public telecommunication companies were not permitted to offer any television services. Armstrong (1994) describes the first period of liberalization in UK telecommunication companies history as a period of opportunity loss due to ban on local service providers. The existence of only two licensed companies and very low competition were also a main feature of this period. Competition in the telecommunication market at that time was low. For example, it was until 1986, after four years of its licensed granted, that Mercury could get access to British Telecom’s local loop unbundled (LLU). Due to lack of competition, British Telecom wasn’t able to restructure itself ahead of a competition boom that was just about to hit the industry in the early 1990s. The essential developments in telecommunication companies are listed below:

  • Gradualness
  • Disambiguation
  • Regulating by negotiating
  • Expansion of the function of Regulation
  • Crimson selection
  • Rival mobile telecommunications
  • Sluggish reformation of BT

Today, competition is very high due to presence of many telecommunication companies that are periodically releasing of exciting and attractive offers to their customers. The most popular industry players among UK residents are BT Group, Virgin Media, BskyB and TalkTalk.

BT Group

British Telecom is a multinational telecommunication company whose headquarters are in London, United Kingdom. It is one of the largest telecommunication service companies in the world with presence in over 170 countries. Through its global service division, it supplies telecom services to corporate and government customers around the world. British Telecom Retail Division is a major supplier of telephone, broadband and subscription services in UK, having approximately 18 million customers. In 2012, British Telecom was unveiled as an official partner of London Olympics 2012 where it operated data network across 94 locations. The 2012 London Olympic Games were the first Olympic Games to completely rely upon VoIP (Voice over Internet Protocol) and Wi-Fi (Wireless) to relay information to the public.

The History of British Telecom by Years

1878-1969 January 1878: The First telephone was demonstrated to Queen VictoriaOct, 1969: The Post office ceased to be Government Department.
1969-1982 1977: CCR recommend further division of two main services1980: Renaming of the Post Office Telecommunications1981: Liberalization of the telecommunication industry starts

1982: License granted to run a public telecommunication network

1982-1991 1991: BT is privatized. The Government sold half of its remaining shares, reducing it to 21.8 %1993: All the government’s remaining shares are sold in a third flotation raises £5 billion for the Treasury. 750,000 new shareholders are introduced to company
1991-2001 1991: BT name was unveiled with a new organizational structure and corporate company
2000: Offered LLU (local loop unbundling)
2005: 105,055 lines had been unbundled
2001-2006 July, 2003: Office of Communications (Ofcom) introduced to replace Oftel.BT gets its Universal Service Obligation (USO) for UK, excluding the hull area. 
2006-present 1 April, 2009: BT Engage IT created14 May, 2009: 15,000 jobs are cut upJuly, 2009: offered workers a long holiday for an upfront sum of 25 % of their annual wedge or a one-off payment if they agree to go part time.

BT and Deregulation

Deregulation has seen British Telecom offer its consumers more pushy telephone packages. On the other hand, Ofcom has led to a decrease in pricing principles which has led to increased competition for all. Most communications companies are deregulating their retail services in the telecommunication market which is making British Telecom even more competitive. FTSE 100 group is also now offering some discounts in its packages (broadband, digital or 3G television) which include fixed-line calls for the very first time.

Ofcom has said that it had isolated the last bits of regulation after BT’s privatization 25 years. The reason raised was that it had no more market value to remain in UK telecommunications markets. Ofcom’s CEO, Ed Richards, said that it was an essential step in deregulating the telecom offers where competition is the main thing to just serve customers with better offers. Apart from BT customers, there are more than twelve million people residing in the UK who are using other telecommunication services. It is said that Virgin Media, BSkyB and TalkTalk are the most effective competitors for British Telecom.

According to estimates released recently, BT has fourteen million customers (fixed-line). Gavin Patterson, CEO of BT’s retail division, said about the new promotion that by this entire competing environment BT will be able to play the game on a better playing field as compared to previous one leading to more exciting offers. He also said that BT will announce new attractive offers in future for its valued consumers. UK residents are taking bundled offers at a large extent.

When we compared consumer’s choices by years, in 2008, UK customers have purchased two or more communication services from one service provider at the 46 % of total as compared to 2005 where 29 % did the same. This is according to Ofcom’s most recent counts. According to Ofcom, the actual competition uplift came into being when BT created Openreach in 2005. It has also provided services to BT’s competitors on equality basis. According to Kingham (2012), BT shares are one of the most popular shares with investors. BT is considered as a market leader operating in a safe and steady industry that is arguably well insulated from economic turmoil.

The following table demonstrates British Telecom’s increase in share prices in for the last ten years (Kingham, 2012). From the table, even if one can ignore the results of 2009, which was the time when most world major economies were experiencing economic downtown, it is suffice to say that, British Telecom has been experiencing a solid growth. Last year alone, despite falling sales and reduced spending by customers, British Telecom still returned a profit. The last quarter of 2012 saw an increased profit of 17% to 575 million Euros. The company also registered a quarterly decline in revenues of 5.8 billion Euros during the same period (Mike, 2012). All these can be attributed to the changes that this company has undergone in the last 20 years.

Conclusion

In conclusion, it is now a fact that BT Group is constantly deregulating which makes competition out there for other telecom companies a bit harder. It is also a fact that BT is enabling UK consumers to access reliable and cheap packages choosing options.

Hutchison 3G UK is currently allowing consumers to enjoy all calls on half prices as compared to other telecom operators. A wide range of bundles available in the market have enabled the consumer to choose according to his/her needs. This not only shows prosperity in the telecommunications industry, but also increases the chances of gaining benefits global wise in every aspect whether its country’s reputation or the company’s reputation.

As this is now the trend in UK, home based and business telecommunication consumers are now able to choose bundles (one or two or so on) according to their needs. Each market player is also offering exciting and attractive packages to its consumers with lots of offers such as free subscription, no initial charges or no line rent or any charges for six months. All these are exciting offers from telecommunication companies which attract consumers.

British Telecom is the first company in the UK to introduce public sector telecommunication service which has made BT has its own stage and own reputation. Apart from few drawbacks, BT is still the best choice of its consumers due to its services provided for its valued customers. Whether in Broad Band or fixed line, BT is a good choice of UK residents.

Bibliography

Mark Armstrong, Simon Cowan and John Vickers (1994) Regulatory Deregulation Reform: Economic Analysis and British Experience, London, Chapter 7 Telecommunications, pp. 195-244.

Mike D. (July 2012). BT profits despite slowdown in sales. European Deregulation Communications.

Kingham (September 7th, 2012). 5 Things about deregulation you should know before you buy BT shares. UK Value Investor

Sylvia Chan-Olmsted and Mark Jamison (2001) .Rivalry Through Alliances: Competitive Strategy in the Global Telecommunications Market, European Management Journal, Vol 19, No. 3, pp. 317-331, 2001.

Peter Curwen (2001) .Rivalry Through Alliances: Competitive Strategy in the Global Telecommunications Market. A Rejoinder to Chan-Olmstedt and Jamison,

European Management Journal, Vol 19, No. 6, pp. 678-681, December 2001.

Peter Curwen (1997) Restructuring Telecommunications Through Deregulation Policy, A Study of Europe in a Global Context, MacMillan Press Ltd, London, Chapter 11 The UK: A Case Study, pp. 129-160.

Ernst & Young (2001) Business Redefined: Connecting Content, Applications, and Customers, Ernst & young LLP and Cap Gemini Ernst & Young Joint publication.

Federal Communications Commission (FCC) deregulation policies in the UK

Financial Times: www.ft.com deregulation policies

Arnoldo C. Hax and Dean L. Wilde II (1999) .The Delta Model: Adaptive Management for a Changing World., Sloan Management Review, 1999 40 (2), pp. 11-28.

Jean-Jacques Laffont and Jean Tirole (2000) Competition in telecommunications, Cambridge, Mass.; London: MIT Press, 2000.

David M. Newbery (1999) Privatization, Restructuring, and Deregulation of Network Utilities, The MIT Press, Cambridge Massachusetts, London, England, Chapter 7 Liberalizing Telecommunications Industry, pp. 291-340.

Michael E. Porter (1995) .Toward a dynamic theory of strategy. In Rumelt, Richard P., Schendel Dan E. and Teece David J. (Eds) Fundamental Deregulation Issues in Strategy. AResearch Agenda, Harvard University Press, pp. 423-461.

Bernard W. Wirtz (2001) Deregulation Reconfiguration of Value Chains in Converging Media and Communications Markets., Long Range Planning, 34 (2001), pp. 489-506.

OFTEL Statement, Deregulation Pricing of Telecommunications Services from 1997, June 1996, 6.54.

Principal Operating Units: BT Ignite; BT open world; BT Retail; BT Wholesale; BT exact Technologies

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Organizational Change Management

Organizational Change Management

The purpose of this report is to analyse the case study on D2 which is an auto-components manufacturer undergoing major structural changes to minimize costs and implement innovation and technology. While managing the change, the organisation had to face different kinds of issues. Thus, the report would be identifying the issues and proposing relevant solutions and their implementation to manage change effectively, by using the 5D-Framework which comprises of definition, discovery, dream, design and destiny.

Definition

When a company undergoes change, there are a series of opportunities and challenges that it has to face. Change is not a onetime occurrence but rather could take years to be implemented. When an organisation is undergoing strategic change, it needs to re-formulate its mission and strategies and thereafter align all its business operations with the overall strategy (Cummings and Vorley, 2009). While managing strategic change, implementation is more challenging than just designing the change.

Lack of Communication Alignment

Therefore, one of the primary issues witnessed in the D2 case was that the management would have difficulty in implementing the change due to improper communication channel used for communicating the strategy to the rest of the employees. Apart from this, having a balanced strategic change is also a significant challenge since in order to achieve the balance, the organisation needs to assure that its internal management and resources are aligned with each other and with the external opportunities (Bordum, 2010).

Environmental Pressures

Apart from this, environmental pressures are another reason why organisations undergo change. In order to be aligned with the environment, there is a certain organisational structure and a strategic positioning required. One of the key issues in the case was that there has been an outpaced growth of technology over the years and in order to meet that pace it needed to undergo significant innovation and get rid of the obsolete technology. This required greater strategic flexibility which then bore a cost to the organisation since the employees resisted the change and job insecurity arose (Skordoulis, 2013). Moreover, owing to the environmental pressures, it was significantly cutting costs and thus, had to face a trade-off between lowering costs and smooth flow of work. The smooth flow of work would be disrupted since to lower costs, it would have to shut down some of its manufacturing facilities that are not producing enough and would have to redeploy staff to other geographic regions which would require a lot of planning and control. According to Alessa and Kliskey (2012), responses to environmental change management is required which can be done through change agents. These agents can be of three types: the initiators, the supporters and the opportunists. These environmental change agents would assure that the company’s strategy is in correspondence with the changes in the external environment. In the case of D2, the changes in technology were an environmental pressure which required a change agent to manage it effectively and efficiently.

Leadership Issues and Resistance to Change Management

Change management can be of many types, varying from a change in structure to a change in culture, leadership style, operations, systems and strategy. At times one change may lead to another change and while doing so, organisations encounter a number of issues. Another key issue evident in the case was the autocratic leadership style and a centralized management as a result. In identifying the change management areas, the management itself first made decisions and formulated the strategy, and then later informed the employees. As the case stated that the decision was yet to be announced and the workers in UK might be shock to hear it since the firm had made heavy investments in the manufacturing plants. Moreover, while redeploying the employees from one geographic region to another, cultural issues might also be faced which would require heavy investments in training. Thus, a greater resistance might be expected from the employees since they were not part of the decision making process and the organisation’s interests might then be in conflict with the interest of the employees (Banutu and Shandra, 2007).

Trade-off between managing change management and maintaining core competency

Lastly, and most importantly, since the company’s operations are dispersed geographically and one of its core competencies is the pace and quality of its product development, in change management , the company might lose out its current strategic position or the core competency it has, thus, assuring that the pace and quality product development remains the same while re-structuring its manufacturing operations, would be very challenging for the company. Furthermore, change management is not following a planned approach. This might cause D2 to lose out its competitive position in the market which would then be difficult to re-obtain since by focusing on cost reduction rather than value addition, maintaining the sustainability of operations is less likely to happen.

Leadership Issues and Employee Resistance to Change

Discovery

The underlying problem chosen for in-depth discussion is the employee resistance to change and the leadership issues in bringing about the change. As stated in the case, D2 required an urgent need for change management therefore it cannot go slow in bringing about the change and would require major transformations in its structure and human resource. While deciding which operations to shut down and which ones to expand, it has been taking into account the external environment and the returns it would get out of it. However, in doing so, it has neglected the reaction that might be expected from the employees, and which could majorly impact and hinder any change management process that happens in the organisation. Resistance to change usually occurs when employee needs are not addressed; their goals and organisational goals are not aligned; there is communication gap between the different hierarchical levels as well as in horizontal communication; when there is downsizing and mistrust is created among employees; when there are major cultural issues to be faced as a result of change management ; and when employee participation in decision making is lacking (Bovey and Hede, 2001).

5D-Cycle Organizational Change Management
5D-Cycle Organizational Change Management

Furthermore, when the leader fails to apply a transformational leadership style where he articulates the vision and re-defines the strategy, the resistance increases further as employees are unclear about the goals and objectives they need to achieve as individuals as well as collectively (Eisenbach et al., 1999). The management needs to keep a balance between the organisational needs and the human needs since ultimately it is the human resource that needs to implement the change (Griffin and Moorhead, 2011). The key issue in the case of D2 was that a feeling of mistrust and insecurity was occurring not only in the U.K. region where it plans to close its facilities but also among the employees working in other subsidiaries located in Spain since the change management process is not communicated effectively and the decision making authority is vested in the hands of a few senior managers indicating that bureaucratic leadership style is more evident in the organisation which means that the increased level of formality between the management and the employees and the lack of communication would result in a decrease in employee morale, and hence, a decline in performance.

In order to address the issues, the leadership styles need to be changed. According to Bamford and Forrester (2003), using a middle-out approach would be of significant advantage in addressing the issue. This would involve giving the middle management the authority to lead the change under the supervision of the top management. In doing so, employee needs would be addressed in a better form since the line managers are more closely linked with the operational level staff and thus would be able to provide adequate feedback to the top management of how to create a link between the overall strategy and the needs addressed. Greater teamwork and participation of the workers would also be required to increase their motivational level and making the flow of communication more efficient. Leadership issues are also one of the reasons why organisations fail in managing the change. Uncertainty often accompanies change and as a leader, one needs to minimize the uncertainty levels and create an environment of greater employee commitment and trust. According to Ahn et al. (2004), globalization and change of technology at an accelerating pace requires that effectiveness in leadership has become immensely important, which is demonstrated through the leader’s adaptability to different management styles that involve greater coordination and engagement among all members of the organisation. According to Ashman (2012), ‘redundancies have become an unwelcome necessity across all sectors of the economy’, and while strategy and procedure in change management are important, the third element, psychology, is not given much attention which focuses on how employee emotions need to be dealt with to prevent any resistance to change management. Thus, this requires that to avoid such issues the message is communicated accurately while the sensitivity of such messages is taken into account adequately (Ashman, 2012).

Dream

One of the ways in managing the issues is to adopt a planned change management approach. The 3 step model of Lewin is applicable here which suggests that the organisation needs to plan change management in three stages: unfreezing, moving, and re-freezing (Burnes, 2013). In the case of D2, a sense of urgency was created and the change was seen more as an emergent one rather than a planned one. However, to make the change more sustainable, carrying out the planned approach would decrease employee resistance, since the unfreezing stage would first help in abandoning the old ways of doing work and preparing the employees for change. For instance, D2 could have addressed the issue of mistrust among its employees in other regions as well as in U.K. by defining the need for change and how it would benefit the organisation as a whole. It should then also point out the alternative employment opportunities available and how these would be a better platform for their growth. The moving stage then would involve applying the change process such as re-structuring, changing leadership styles, re-articulating the vision or changing the strategic position. This is when D2 should start shutting down its facilities and redeploying the staff where expansion is happening. The moving stage would then be followed by the re-freezing stage where the new practices would be adopted in a more permanent basis by providing training and aligning the new behaviors with the organisational strategy and culture (Bamford and Forrester, 2003).

Another potential solution of managing organisational change would be to conduct training programs and adopt situational leadership style. The situational leadership theory states that there is no one best style of management and the leader would have to either adopt a relationship-oriented style or a task-oriented style depending on the situation being faced (Griffin and Moorhead, 2011). Similarly, motivational levels of employees would also have to be taken into account and the purpose of the chosen leadership style would be to boost employee morale and assure that they have a positive attitude towards the change.

Also team building should be the ultimate focus of the organisation. This should involve self-managing teams, cross-regional/cross-cultural teams and cross-functional teams (Sisaye, 2005). The purpose of having such teams would mean greater diversity and flexibility among employees as well as greater coordination between different divisions and manufacturing facilities. By having cross-cultural teams, the employees would be more familiar with the cultural differences between Spain, France and U.K., thus, any issues arising as a result of change in culture could be better handled through cross-functional teams. The team performance model suggests that in order to create a team there needs to be orientation, trust building, goal clarification and commitment; and in order to sustain that team there needs to be implementation, high performance and renewal (Cooperrider and Dan Whitney, 2001).Therefore, the employees and the management should get involved in formulating the teams before the change management process and since this change is more about implementing new technology while cutting down the costs, the teams may focus on how the technology can be implemented. This would also be accompanied with extensive training to avoid any ambiguity among the employees.

The firm’s strategy of achieving cost leadership while maintaining the pace and quality of product development requires that it should, it focuses on value addition. This would mean cutting down costs by minimizing any wastage of resources and streamlining processes. At the same time, it would also be adding value through the innovative tools and technology used. This strategy would have to be defined by the leader after taking employee opinion and feedback using the bottom-up approach and would then have to be implemented across the organisation.

Design

In order to implement the proposed solutions, careful planning and formulation would be required. The use the planned change model can be implemented by having a leader who first identifies the potential areas that require change in terms of employee attitude and behavior Also, while addressing the need for change, the leaders should first conduct a field force analysis to identify the factors that are for and against the change (Schwering, 2003). The leader could then use the forces that can help in driving change as an advantage. This would include the consumer demand for more innovative auto components, availability of technology, upgraded technology in the other two manufacturing facilities and the identification of a new strategy. The drivers against change management would include employee resistance due to increased mistrust, decrease in morale in case of deployment and fear of exploring the new methods of working. Thus, once the forces are identified, in order to overcome any barriers, training programs should be conducted throughout the change process, that is, the unfreezing, moving and re-freezing stage. These training programs should involve two way communications which would mean delivering the new company strategy to the employees and also taking their feedback on what concerns they have and how they think it can be improved further (Hoag et al., 2002).

Apart from this, in helping leaders being aware of different leadership styles, leadership workshops should also be conducted. These might include assessment centres and activities where the management can be given different scenarios and asked to adopt an appropriate leadership style (Cummings and Vorley, 2009). The workshops would then be concluded with feedback and suggestions. Also while change management is being implemented, the performance should be monitored and measured more frequently in order to understand employee behavior and their progress. In case of teamwork as well, the leader would have to assure that there is no group think that could result in in-group conflicts, and the goals of the team are aligned with that of the organisation (Raza and Standing, 2011). The management would have to be more decentralized in its approach by practicing open door policies and being on the floor to address employee needs. The alternative employment opportunities available for the employees need to be clearly identified before the change process in order to conduct the implementation smoothly. Similarly, while communicating the new strategy to the employees, the opportunities available to them should be delivered first, which could act as a buffer to the disappointment they might have on hearing the shutting down of operations.

In order to cut down costs while maintaining the core competency, the organisation should align its operations with the new strategy. This would mean implementing change management simultaneously. The firm should first start expanding its operations in France by investing in new technology and setting up the production design, it should then plan out staffing requirements and communicate the strategy to the employees in the U.K. as well as Spain regarding how the expansion could help organisation grow and how the operations in U.K. might decline the overall progress of the organisation. Online video conferencing or virtual teams can also be formed where there could be cross-regional communication to assure that all its units are at the same pace and the goals of the organisation are communicated clearly across. Also by using internet as a platform for communication, organisation would be further saving on its time and costs in coordinating the teams.

Destiny

In implementing the proposed solutions, the possible limitations that might be faced include the heavy investment costs associated with training. This would conflict with the overall strategy of the firm of cutting down the costs. Therefore, in order to minimize the training costs, the management can focus on more informal ways of training such as in-house training where the costs of additional trainers and location can be saved. Similarly, the organisation could identify change agents who are trained and competent enough before the change takes place and then these agents could help other employees in carrying out the change (Griffin and Moorhead, 2011).

Furthermore, in identifying leadership styles, one of the factors that have been ignored is the number of cultural issues. For example, the effectiveness of relationship-oriented style is not only dependent upon the organisational situation but also on the culture where it is operational. There might be differences in terms of collectivism and individualism, and power distances (Kirsch et al., 2012). To overcome this limitation, the leader can identify the similarities in culture that can help employees adjust in the other two regions and make them aware of the differences to avoid any cultural shock.

While implementing the solutions, another possible limitation is the effectiveness of the feedback. Employees might be reluctant to speak up any negative feelings regarding the process or the feedback might be unstructured and more intuitive rather than formulized. To overcome this limitation, the management can take anonymous written feedbacks and then re-evaluate performance after the feedback is taken into account, in order to measure its effectiveness.

Thus, by strategizing the change process and aligning the structure, the culture and the processes with the overall strategy, implementing the change process would be more effective, reducing any potential resistance of the employees through greater involvement and empowerment in decision-making. Also by applying the three-step planned approach to change, the employee attitudes would be more positive towards change, removing any ambiguities that might exist regarding the strategic change.

References

Ahn, M.J., Adamson, J.S.A. and Dornbusch, D., 2004. From Leaders to Leadership: Change ManagementJournal of Leadership and Organisational Studies, 10(4), pp. 112-123.

Alessa, L. and Kliskey, A., 2012. The Role of Agent Types in Detecting and Responding to Environmental Change ManagementHuman organisation, 71(1), pp. 1-10.

Ashman, I., 2012. A New Role Emerges in Downsizing: Special Envoy. People Management and Change Management, pp. 32-35.

Bamford, D.R. and Forrester, P.L., 2003. Managing planned and emergent change within an operations management environment. International Journal of Operations and Production Change Management, 23(5), pp. 546-546.

Banutu, M.B. and Shandra, M.T.B., 2007. Leadership and Organisational Change Management in a Competitive Environment. Business Renaissance Quarterly, 2(2), pp. 69-90.

Bordum, A., 2010. The strategic balance in a change management perspective. Society and Business Review, 5(3), pp. 245-258.

Bovey, W.H. and Hede, A., 2001. Resistance to Organisational Change Management: The role of cognitive and affective processes. Leadership and Organisation Development Journal, 22(7), pp. 372-382.

Burnes, B., 2013. Kurt Lewin and the Planned Approach to Change: A Re-appraisal. Journal of Change Management Studies, 53(8), pp. 111-134.

Cooperrider, D.L. and dan Whitney D., 2001. Change Management A positive revolution in change: appreciative inquiry, on Robert T. Golembiewski (ed.), The handbook of organisational behavior.2nd ed., New York: Marcel Decker.

Cummings, T.G. and Vorley, C.G., 2009. Organisation Development and Change Management. 9th ed. Mason: Cengage Learning.

Eisenbach, R. et al., 1999. Transformational leadership in the context of organisational change.Journal of Organisational Change Management, 12(2), pp. 80-88.

Griffin, R.W. and Moorhead, G., 2011. Organisational Behavior: Managing People, Change Management and Organisations. Mason: Cengage Learning.

Hoag, B.G., Ritschard, H.V. and Cooper, C.L., 2002. Obstacles to effective organisational change: The underlying reasons. Leadership and Organisation Development Journal, 23(1), pp. 6-15.

Kirsch, C., Chelliah, J. and Parry, W., 2012. The impact of cross-cultural dynamics on change management. Cross Cultural Management, 19(2), pp. 166-195.

Raza, S.A. and Standing, C., 2011. A Systemic Model for Managing and Evaluating Conflicts in Organisational Management Change. Systemic Practice and Action Research, 24(3), pp. 187-210.

Schwering, R.E., 2003. Focusing leadership through force field analysis: new variations on a venerable planning tool. Leadership and Organisation Development Journal, 24(7), pp. 361-370.

Sisaye, S., 2005. Management control systems and organisational development: New directions for managing work teams – Change Management. Leadership and Organisation Development Journal, 26(1), pp. 51-61.

Skordoulis, R.T., 2013. Strategic flexibility and change: an aid to strategic thinking or another managerial abstraction? Strategic Change Management, 13(5), pp. 253-258.

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Pharmaceutical Industry Analysis

Analysis of The Pharmaceutical Industry

Title: Analysis of The Pharmaceutical Industry. The pharmaceutical sector comprises of drug manufacturers, distributors and wholesale companies that handle the production of healthcare products. This industry largely focuses on medical as well as veterinary products, such as vitamins, biological compounds and other chemicals. Moreover, various diagnostic substance and devices are also included in the list of the products produced by these companies. The leading companies on the pharmaceutical sector are called as ‘Big Pharma’ that are responsible to generate almost fifty percent of the total revenue of this industry. The headquarters of these pharmaceutical leaders are mainly located in the west, however with the passage of time, the demand of medications is increasing in the third world countries consequently this drug manufacturing has become fifth most profitable industry in the world that is continuously growing. The following paper will illuminate various spheres of activities in this industry. It will be seen how these companies are surviving in a competitive environment and what it actually takes to become a pharmaceutical manufacturer.

Introduction

The pharmaceutical industry, as the name indicates is associated with the development, production and marketing of products that are intended to be used as medications. This industry comprises of various pharmaceutical companies that are legally allowed by the government of a country to deal in brand or generic medicines. There are various rules and regulations all over the world that are considered useful to ensure efficacy and safety during the marketing of pharmaceutical products as they are directly associated with the human life. This industry also largely relies on research and development activities and is the largest employer of scientists. Many new medicines are being developed in the world and with the discovery and identification of new drugs the future of pharmaceutical industry is becoming brighter (Michael, 2012).

The aim of this paper is to increase understanding about the global pharmaceutical industry and its role in the healthcare system of a country. It will also be seen how this industry contributes to the economy and what major players are there in the global pharmaceutical industry.

Background and History

The origin and development of pharmaceutical industry dates back to the early days when Greeks, Egyptians, Chinese and Indian people tried plant derived medicines. Morphine, codeine and pilocarpine are some primitive drugs. In 1940’s insulin, antibiotics and psychoactive medicines were brought into the market that received remarkable response from the users. The US first   introduced its food and drug administration act in 1906 and the UK drug regulatory rules were developed after World War I, since then these rules have faced various amendments regarding the marketing and distribution of drugs in these countries. Despite various conflicts between retailers, marketers, consumers and drug inspectors, this industry quickly thrived all over the world (Anderson, 2005).

Literature Review

Henske 2009 sheds light on the current situation of the pharmaceutical industry. He demonstrates that this industry is passing through some major structural changes. A lot of mergers, acquisitions (M&A) are underway in order to ascertain stability and success in the long run. Some major pharmaceutical companies are trying to generate higher revenues with these M&As. Although, bigger size of a company is not the sole reasons for its success but even then some important advantages can be achieved with such joint ventures, because bigger drug manufacturing companies invest more in their research and development procedure that finally allow them to diversify their portfolio (Henske, 2009).

For Instance, in 2003 a prominent acquisition took place between Pfizer and Pharmacia soon after which Guidant bought Johnson & Johnson in $25 billion. These acquisitions greatly helped both of the newly developed companies to enhance their market share in the US market. These companies further elaborated their research and development process.

These joint ventures are also not very uncommon in the UK, for example major companies in various states of the UK have developed after mergers and acquisition amongst two or more than two companies. For example:

  • Merger between SmithKline Beecham and GlaxoWellcome results in GlaxoSmithKline
  • Merger between Aventis and Sanoffi Synthelabo creates Sanoffi Aventis

Grieder undergoes the analysis of the major pharmaceutical players and shows that these are not diversified rather major source of revenue generation for these companies is their pharmaceutical products. Although some companies, such as Johnson and Johnson’s is involved in the production of other goods as well but in majority of the cases pharmaceutical industries have their focus on the manufacturing of consumer’s healthcare products and nutritional products (Grieder, 2007).

Statistical Analysis

Grieder 2007 demonstrates that there are some major players in the pharmaceutical manufacturing that actually dominate this industry globally. Following table shows the position of these industries in terms of sale and revenue generation. The financial data has been gathered from the annual reports of these companies to ease accurate comparison between all these companies; moreover, the data related to pharmaceutical manufacturers working outside the US has been converted into dollars using average currency rates in 2004.

Company Name Headquarter Annual Revenue Total Sales
Johnson and Johnson US                           22,190                              47,230
GlaxoSmithKline US                           23,434                              37,897
Pfizer US                           46,133                              52,506
Sanofi Aventis France                           17,861                              18,711
Novartis Switzerland                           18,497                              28,244
AstraZeneca UK                           21,426                              21,426
Abbott U.S.                           13,600                              19,680
Wyeth U.S.                           13,965                              17,684
Bayer Germany                             5,458                              37,013

Table courtesy: (Grieder, 2007).

The above data also reveals that the headquarters of major pharmaceutical companies lie in the US or other Western countries, such as France and Germany. Only a few international drug manufactures are there in Asia (Grieder, 2007). Following chart shows how these companies rely largely on Western markets for maximum profit generation.

Research and Development

Research and development activities are essential for the success of pharmaceutical companies and major players in this area put great focus on the development of new products. This phenomenon is not very simple because it needs a lot of hard work and investment from Big Pharma companies. Sometimes research process involving one or two drugs needs many years, moreover the investment of resources remains unclear until the end of the process that also involves the approval of newly synthesized drug for marketing, therefore, it can be said that rate of success is highly unpredictable in the pharmaceutical industry (Noack, 2007).

According to a report, it takes almost fifteen to twenty years for a company to develop a new pharmaceutical product and only one out of thousands of pharmaceutical products discovered by research teams become medically useful. Moreover, the introduction of these products into the market involves many legal issues (National Science Foundation, 2001).

Growth Perspectives

The drug manufacturing industry promises appropriate healthcare for the citizens of a country and in turn, these people directly or indirectly aid in the growth and development of pharmaceutical industry. The life expectancy is increasing in some developed countries of the world after which the population of these countries is becoming older and grayer. All these elderly people are buyers of life maintaining drugs and continuously demand the healthcare products sold by these Big Phrama companies.

Along with that, some countries of the world including various states of the US are going to introduce their new drug sale act (Drug improvement and modernization act) after which elderly people of these states will be able to have their access to some medicines that were previously unavailable for them. As a result their drug coverage will increase and the sale of relevant pharmaceutical products will also enhance (Aronovitz, 2005).

Situation in developing countries

The above literature review suggests that major pharmaceutical companies have their headquarters in developed countries of the world, but recently some pharmaceutical companies in developing countries have also shown prominent improvements in their research and development activities, after which it can be said that these companies have significant potential for future growth. Increasing solvency of population in Asian, South American and East European economies is making these countries very attractive for investment. However, further reformations in the rules and regulations regarding drug sale and patent protection are required in order to ensure safe and trial free business (Blumberg, 1999).

Pharmaceutical Industry
Pharmaceutical Industry

Despite being an attractive business, the pharmaceutical sector needs a lot of efforts from individuals who are involved in it. Opportunities are limitless but issues are also there that should be taken into account by the management before planning final strategies of their companies. In this regard the management needs to consider some key challenges that are there for them before taking the plunge into this sector, these challenges will be discussed one by one the following paragraphs:

Price Control Issue

The pharmaceutical sector needs to work in a highly regulated culture, although details are different but this culture is almost same all over the world. One important aspect of these rules is price control issue. For example in the U.S. Medication Protection and Modernization Act has resulted in severe price reduction pressure over this industry after which it becomes difficult for companies to support their research and development activities. This downwards pressure on prices is also very prominent in other countries such as Japan, France and Germany. Drug prices are subjected to strict review and they are solely controlled by the government (Lott, 2007).

Competition

The pharmaceutical industry currently operates in a very competitive environment. New rivals are merging for Big Pharma companies and this competition covers almost all segments of pharmaceutical marketing. Moreover, research oriented pharmaceutical companies also face severe competition from generic manufacturing companies. The price of generic manufacturers is much lower than that of their research oriented counterparts; finally they successfully achieve greater market shares (Roth, 2009).

Patent Protection

Research oriented companies can only be saved in a highly competitive environment by the introduction of patent protection rules and regulations because generic drug manufacturers start production of a patent protected analogue before a patent expires, consequently R&D companies face enormous financial loss.

Conclusion

The pharmaceutical industry has been an attractive business place for entrepreneurs and also for people involved in research and development activities, however, now the situation is changing fast. Immense competition is there for Maga Pharmas from generic manufactures and other healthcare companies that are involved in the production of pharmaceuticals. Therefore it must be stated that this industry sounds easy and attractive but must be difficult involving great risks. Companies that want to survive should keep a strong eye on the current market scenario in order to avoid loss and ensure maximum growth, moreover, mergers and acquisitions also turn out to be helpful for some companies because they augment their growth opportunities in the global pharmaceutical industry.

References

Anderson S., 2005, Making Medicines, Pharmaceutical Press.

Aronovitz G. L., 2005, Medicare Contracting Reform, DIANE Publishing.

Blumberg, 1999, Pharmaceutical Industry in developing countries, Conference Summary.

CPPR, Pharmaceutical Research centre, National science foundation.

Grieder K., 2007, Big Fix, Public Affairs.

Harper, 2002, Patent protection in pharmaceutical Industry, Forbes.com

Henske P., 2009, Mega Mergers cannot cure pharmaceutical industry, Business Week.

Lott R. J., 2007, Freedomnomics, Regnery Publications.

Michael J., 2012, The pharmaceutical industry, Michigan State University.

Noack A., 2007, Research and Development in pharmaceutical Industry, GRIN.

Roth T., 2009, Drug makers paying off to competitors, TPM Links.

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Managing Team Performance

Managing Team Performance

Explain organisational policies, procedures, values and expectations to team members

Before your team can begin to work, they have to know what the internal structure of their company is. The most effective teams are built on a strong foundation of knowledge comprised of the following elements:

Organisational Policies – No matter what organisation you work for, there will be behind-the-scenes policies in place to make sure that the company runs smoothly and that the actions of the company are both legally compliant and representative of the company’s attitude.  These policies may include things such as:

  • Hiring policies
  • Policies regarding accessibility for persons with disabilities
  • Policies regarding ecological impact reduction
  • Confidentiality policies
  • Community outreach and impact policies
  • Quality and service policies

By learning and teaching your company’s organisational policies, you can learn exactly what makes your company tick, and will be able to explain to your team what the rules are, and why you are directing them to make certain choices. Make sure these policies are available to all team members who may want to read them, and that you are available to answer any questions that they might have relating to managing team performance.

Procedures – No matter who you are, it is important that you follow your company’s procedures, and that you teach your team-mates and co-workers to do the same. Not only have these procedures been designed and refined to make the job work safely and effectively, they have also been crafted with the input of legal consultants, human resources advisors, and other people in different fields to ensure that everything works smoothly for all parties involved. When the opportunity to discuss specific procedures arises, make sure to supplement your explanation with information about why the procedures are set up the way they are.

Values – When working with a team, conveying to them your personal values, as well as the values of the company overall, is vital to keeping everyone on track towards the goal, and to encouraging a personal connection to the work. A clear system of values will include core concepts, such as:

  • Leadership
  • Diversity
  • Integrity
  • Humility
  • Simplicity
  • Success

Posting your list of values somewhere visible, or including these concepts in your daily talks, can ensure that everyone is focusing on what is really important in their work.

Expectations – A clear set of expectations is the most basic piece of structure that you can provide for members of your team. Knowing exactly what you are asking of them means that they can sort out their priorities and do their best work without being confused or feeling lost. Furthermore, opening the line of communication regarding projects and expectations can make team-members feel more comfortable initiating conversations about goals, techniques, and other details.

Communicate work objectives, priorities and plans in line with operational requirements

Once you have set down the most basic foundation of your team, you need to convey to them what actually needs to get done, and how important each task is. The easiest way to do this is to follow this structure:

  • Clarify the overarching goals of your company as it relates to this project. If your company is striving to increase its reach, emphasize how your team can affect this outcome.
  • Lay out your individual objectives as a team, clearly defining the steps that you will be taking together to achieve the goal. Let your team know which objectives are of the highest priority, and if there are stretch goals or incentives. Encourage them to meet the most important goals, and then go above and beyond.
  • Share your plan to reach your goals, and discuss the procedural requirements that will be involved in the process. Make sure your team knows how to go about the tasks you are asking of them, and why you are asking them to do things in a certain way.
  • If possible, invite discussion from your team. Do they have any ideas on how to best accomplish a certain task? Does anyone have a unique passion or skill-set that could be used to achieve a goal? Your team is composed of unique individuals, and acknowledging their personal strengths can help enhance work ethic and effectiveness.

Setting out a clear plan of action, as well as clarifying the goals of your team, is the best way to start out a strong when beginning a new project. Confidence comes from knowing what is coming next, and the team that knows what they have to do is much more likely to exceed expectations.

Explain the benefits of encouraging suggestions for improvements to work practices

Because your team members are working directly on projects, they may come up with clever improvements for work practices that could enhance the working experience for your team, and possibly for your company. Encouraging suggestions from your team means that you are actively working towards a better situation for your co-workers and team members, and employees will take more pride in their work if they know that they have a chance to make a real difference in the company.

Provide practical support to team members facing difficulties

If one or more of your team members is not meeting expectations, or needs to improve a certain aspect of their performance, it is important to let them know about these issues as soon as possible, and to share with them practical advice and support for improving.

Not all workers come by every task naturally, and some people need a little more coaching than others to achieve their potential. Once these workers overcome their issues, they often make the best team workers and future leaders, as they are experienced with overcoming the difficulties that lead to success, and they will remember their own errors and be able to help others with similar situations in the future.

Managing Team Performance
Managing Team Performance

Explain the use of leadership techniques in different circumstances

Not every circumstance calls for the same leadership techniques, and not every technique may work for you. Here are some examples of different techniques, and when they are most effective:

  • Democratic Leadership – In situations where you need your team to feel enthusiastic and connected to the project, asking questions such as, “What do you think?” and, “What are your ideas?” is a great way to lead the team by serving as the proctor for discussion. This fosters creativity and increases the flow of ideas, and will increase the likelihood of developing a new technique or approach to a situation.
  • Coaching Leadership – If your team members are new, or if they are learning a new skill, you may need to step in as the leader who can show them how things are done, and make suggestions as to how to improve. Providing positive feedback and constructive criticism may be time consuming, but it can also help to strengthen the team and show that you are involved.
  • Caring Leadership – Building a team and fostering the relationships among your team members is an important part of being a leader. If you have the time and the flexibility, being a leader who is involved and considerate can be a great way to build the team and create strong, lasting connections.
  • Pace-Setting Leadership – If the pressure is mounting, a great way to get the team moving is to take charge and set the pace. This leadership style involves stepping in front of the team and working at the task, saying, “Watch me and do what I do,” which is a great way to motivate team members, if you don’t have other commitments that would keep you from doing the work at the best of your abilities.
  • Authoritative Leadership – Taking authority without being demanding is important if you have other projects that you need to work on, but still want your team to follow your directions implicitly. Projecting an air of confidence when asking your team to trust you is vital to your success, and remember that this style of leadership will not work if you do not already have your team’s respect.
  • Commanding Leadership – For emergency situations or rush projects, you may have to bluntly tell your team what to do and expect them to meet your expectations. This technique will not be taken well by your team if it seems unnecessary, but if time is tight and tension is high, your team will appreciate clear and concise direction.

Knowing when and how to mix and match these techniques can be the difference between an unpleasant working relationship and a leader that makes a real difference for the team, so consider your approach carefully, and be sure to gauge the responses that you receive from your co-workers.

Give recognition for achievements, in line with organisation policies

Positive reinforcement is a psychological tool that has been used for over a century to encourage good behaviors through rewards and positive attention. As long as you are not infringing on your company’s policies, rewarding your workers for a going above and beyond is the best way to keep them working hard, and to encourage other workers to step up their game.

Explain different ways of motivating people to achieve business performance targets

Motivating your team to reach their business goals can be difficult. While some of your employees may self-motivate, you may need to use other methods to get your entire team working at their best. Techniques to motivate your employees include:

  • Perks and Rewards – Some people will be best motivated by rewards like bonus pay or extra time off, while others will be more enthusiastic about things like tickets to sports games or being taken out to lunch.
  • Public Recognition – For others, being promoted or publicly congratulated in front of their group can be a great motivation. This also serves to encourage other team members to perform better so that they, too, can receive recognition.
  • Increased Responsibility – Even if you don’t promote a team member for doing a good job, you can give them different or increased responsibilities that they might enjoy, and that will make them feel more ownership towards their work.
  • Consistent Feedback – Feedback as simple and heartfelt as a “well done” can really mean a lot to an employee, especially if they feel as though they work hard but may not be being appreciated. This kind of positive motivation is free and easy to give, and should be used liberally.
  • Personal Analysis – If your team member really seems to be struggling to get motivated, having a private and personal conversation with them can do wonders to help them sort out their goals. No matter how much an employee might say that they want to succeed at work, if their perceived cost is less than their perceived benefit, they will always struggle to focus. Figure out how to convince them that the results will be worth the effort, and they will be much more likely to work effectively.

If you’re not sure what will motivate a member of your team, there’s nothing wrong with asking him or her specifically. Each person has their own specific needs and desires, and figuring out the way each member of your team works is vital to being a good leader.

Managing Team Performance

Allocating responsibilities making best use of the expertise within the team

Your team is composed of unique workers, which means that you have access to an arsenal of different talents. Learning what these talents are and putting them to the best use can make all the difference when it comes to reaching your business goals, so you should look for employees who demonstrate:

  • Good Interpersonal Skills – If you have a team member that is good with other people, make sure to put these skills to use. Let them out in the field, have them communicate with clients, and let them represent the group in meetings, if needed.
  • Creative or Critical Thinking – If you have workers who are better at problem solving and innovation, make sure that they are allowed to exercise these skills as much as possible. Putting all of the brain power that you have available to work solving problems and developing new ideas is important, and your team will be more successful as a result.
  • Detail-Oriented Nature – Workers who have a good grasp on details are just as important as the rest of their co-workers. Use these workers to filter the ideas and products developed by the team and make sure that no errors make it through to your customers.
  • Patience Under Pressure – For the worker who has the patience needed to repeat tedious tasks, even under the shadow of looming deadlines, the rest of the team should be infinitely grateful. This is the teammate who gets the work done, no matter how slow or arduous, and who is calm and steady enough to keep the team together in times of stress.
  • Specialized Knowledge – Some tasks require different expertise than others, so keep an eye on the skills and passions of all of your team members. It does not matter if their knowledge has been learned through the pursuit of a hobby or an advanced degree program; there is a chance that this specific information will be useful in the future, and you will want to have the most experienced team member on the task.
  • Quick Learning Abilities – In the event that no one on your team is proficient in a certain task, you should know which of your workers is versatile and quick to learn. Knowing which of your team members can be put to any task can help you to quickly adjust and compensate for unusual situations, and can make your team more adaptable and fluid.

Consider the responsibilities of each position within your team, and think about how each of your workers fits into those roles. Fitting people to the right roles for them will increase your team’s productivity, and it will make your team happier in the long run and improve managing team performance.

Agree SMART objectives with team members in line with business needs

By spending time and effort to develop SMART objectives and sharing them with your team, you ensure that everyone involved with the project has the knowledge and understanding needed to contribute effectively and comfortably. Specific, Measurable, Achievable, Realistic, and Time-bound goals allow the team to work toward one common goal, and give them the support they need to help your team to succeed

For more on the benefits of SMART objectives, refer to Unit 1.

Provide individuals with resources to achieve the agreed objectives

Of course, if your team does not have the resources to achieve their goals, they will be unable to do what they need to do. It is your job as a team leader to ensure that everyone has the tools, information, and support that they need to meet their goals. Communicate frequently with your team and explicitly ask them if they need anything to increase productivity or meet their goals, and you may find that there are ways to speed up the working process that you have not yet addressed.

Monitoring individuals’ progress, providing support and feedback to help them achieve their objectives

A worker cannot make positive change if he or she does not know that there is a problem in the first place. It is your responsibility to make sure that every worker is taken care of and directed towards excellence by following these steps:

  • Monitor Individual Performance – The easiest way to make sure that a worker is not having issues is to watch them work and examine their success. If a worker is having issues, you will most likely be able to see them, and that is the first step to identifying any possible problems. We will discuss techniques for monitoring performance in the next section.
  • Listen to Comments from Co-workers – If a worker is having problems cooperating with other members of their team, or if they are slacking or falling behind, other members of the team may come forward to discuss this issue with you. Because this sort of information is hard to acquire from a management standpoint, you should strengthen this line of communication or arrange for peer reviews to foster feedback from your team.
  • Provide Feedback – Once you have identified a weakness in a worker, you should discuss this issue with them privately. Make sure to have clear examples of the problems, and to avoid an accusatory tone. If a member of the team feels attacked, they are less likely to improve, and distrust may form within the group.
  • Offer Support – After discussing the issue with your team member, make sure to offer continued support to them. Simply revealing the problem to them may not be enough to make them change it. Instead, provide more feedback and assistance as needed, helping them to improve and avoid backsliding.

As the leader of the team, your workers should look up to you for advice and instruction. It is important that you provide these things and encourage them to improve.

Explain techniques to monitor individuals’ performance

There are many strategies for monitoring your team’s performance, which is an important aspect of being a team leader. You can decide how intensive you want to be when monitoring your employees, as there is a wide range of techniques, including:

  • Physical Drop-Ins – The most basic of all monitoring techniques is simply getting up and checking in on your team members. Although anyone who has bad habits may stop as soon as they realise you are approaching, this method can be used to catch a majority of workplace issues.
  • Results Monitoring – Looking at the results of your team’s work, be they sales numbers or product reviews, can be an easy way to identify problem members. Anyone whose performance seems unusually low-quality should either be monitored further or called in for a discussion.
  • Video Surveillance – In some cases, video surveillance of the working area may be necessary. Employees’ actions can be directly viewed at any moment, and even the presence of the cameras can decrease the tendency to slack on shift. This, however, may come at the price of the trust of your team.
  • Call Monitoring – Especially for phone-based sales or customer service teams, call monitoring can be an invaluable tool for change. Recorded calls can be played back for training purposes, and can be used in the case of customer complaints.
  • Computer Monitoring – Similarly to call monitoring, computer monitoring can be used to track internet correspondence for sales and customer service teams. This can also curtail the use of business computers for personal reasons, such as internet browsing and social media.

When you are developing a monitoring system, you should be careful to consider your employees’ rights, and make sure that they are aware that they may be monitored.  You should also consider the legal rulings on monitoring and privacy in your area.

Report on team performance in line with organisational requirements

You should make frequent and detailed reports to your managers or other company officials regarding the performance of your team. Not only will this allow them to evaluate you as a team leader, but it will also provide them with important documentation on your team members, which will be invaluable if one of your team members is to be promoted, or needs to be subjected to disciplinary action. Make sure to use your company or organisation’s approved channels for making these reports so that the higher-ups can deal with them in the appropriate manner.

Be able to deal with problems within a team

Assess actual and potential problems and their consequences

To make sure that your team works smoothly and cooperatively as a group, you will need to be prepared to address inter-group problems. These problems, or the potential for problems, can present in many ways, such as:

  • In-office dating
  • Racial, sexual, religious, or other discrimination
  • Incompatible personality types or beliefs
  • Uneven distribution of effort
  • Fights
  • Harassment

If any of these situations arise, you will need to address the conflict as soon as possible. For things as simple as arguments or workers who are not pulling their weight, you will most likely be able to address the issues on your own. If deeper issues such as harassment, discrimination, or inappropriate relationships arise, however, you may have to report these problems to Human Resources or higher management.

Report problems beyond the limits of your own competence and authority to the right person

In the case of an issue that you feel you cannot address, you should compile a comprehensive report and bring it to your direct manager, or whichever authority is dictated by your organisational policies. Include details from your observations, as well as any observations from other employees or customers. If you have photo, video, or audio evidence, bring this along as well.

Bringing in the proper authorities at the earliest possible stage will help you to avoid further conflict and risk of lawsuit. There are people in your organisation who are specially trained to handle situations in a professional and legally secure manner, and trusting your team into their expert hands is the best recourse in situations where the security and comfort of the group has been violated.

Take action within own limits of authority to resolve or reduce conflict

If an issue arises that you do feel comfortable handling, you should take immediate action to isolate the conflict and address the issues with the parties involved.  Separate the parties and get their individual accounts of what is going wrong, and then work with them together to find the best solution for everyone.

In some cases, one or more parties may be unwilling to change or remedy the situation. If you find that you may need to use more drastic measures than simple mediation, be careful not to exceed your authority or make any firing decisions without consulting with your manager.

Adapt practices and processes as circumstances change

As your team grows and develops, your circumstances may change. It is necessary for you to keep up with this change by adapting your practices and processes to fit with the times, and to be open to change from both within and outside of your group. If a fight breaks out between two team members, be prepared to rearrange your teams to separate the two. If an important team member leaves, be willing to change your process to account for his or her absence.

An inability to change is the most damaging factor a team can face, and as the team leader, it is your responsibility to lead the group in adapting to your situation and improving yourselves. If you can succeed in evolving your team, you will be able to succeed in business.

If you enjoyed reading this post on Managing Team Performance, I would be very grateful if you could help spread this knowledge by emailing this post to a friend, or sharing it on Twitter or Facebook. Thank you.

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Corporate Strategy Sony Corporation

Corporate Strategy Sony Corporation

Sony is a multinational corporation comprising of other corporations engaged in different businesses that fall under one corporate structure. According to Cooper and Glazer (2010) it involves a parent company and subsidiaries, the parent company in this case was started in Konan, Minato, Tokyo, Japan, it’s considered to the largest media conglomerate with revenues estimated to be more than $ 267.1 in 2011 fiscal year. The company’s business corporation include Sony corporations (electronics), Sony financial services, Sony pictures (movies& music) and Sony computer entertainment. Sony also produces communication items and video games for it customers and professional market (Byars 1991). This report is written on Corporate Strategy Sony Corporation.

Vision

To create exciting new digital entertainment experiences for consumers by bringing together cutting-edge products with latest generation content and services.

Mission

To develop a wide range of innovative products and multimedia services that challenge the way consumer’s access and enjoy digital entertainment. The level of saturation within the electronics industry is placing huge difficulties and pressures on Sony in achieving long term competitive advantage. However, The Sony Corporation appears to be striving, achieving record growth to the point where analysts have said it could become the world’s largest electronics industry with time. The purpose of this paper is to understand what origins have driven the success of the Sony organisation. Incorporated within this document: first the paper delves into a brief history of Sony Corporation and then into the description and application of strategic analytical tools. Finally it will provide conclusion to the findings.

Background to Sony Corporation

Sony Company was started by two electrical engineers geniuses Masaru Ibuka and Akio Morita in Japan the year 1946.they were concerned with what the company was to make and how it would be made (McCurry 2008). Their advice was used in production of transistors which they pioneered in its invention. Sony research and development is different from those of other companies with its great flexibility in its essence. Sony is still a Japanese company traditionally. Employment is lifetime with strategy creating values being observed strongly through employee actions. Instead of fringe benefits and bonuses for superior achievements, employees are given status through awards (crystal award). There is also the strong seniority system such as the mentor and apprentice relationship that’s typical of Japanese firm. Strategy formation is considered a collective behaviour.

Competitive Advantage

Competitive advantage is a description of how an organization is able to achieve success over her competitors. This strategy aims at giving customers quality services unlike the ones offered by the competitors that enable the given organization to earn a high average return in terms of profits (Byars 1991).  The competitive strategy should be in line with the organization’s goals and a true reflection of the market where the given organization is situated. It is defined as “delivering superior value to customers and in doing so earning an above average return for the company and its stakeholders”. Potters (1998) states ‘Competitive advantage is achieved whenever you do something better than the competition’ (Capron & Glazer 1987).  Porter goes on to suggest in his work that competitive advantage “grows out of the value a firm is able to create for its buyers that exceeds the firms cost of creating it”. (Kotler 1998). Competitive advantage should support organisational strategy and reflect key market capabilities

Internal analysis

This is the internal organization of the business and how it operates including the factors that affect its smooth operation (Kotler & Schlesinger 1991). Sony being the world largest electronic manufacture since 1946 it engages in research and development for it to maintain its leading position in the market. Sony global (2010) states that the electronic business sector is currently Sony’s cash cow representing 65% of the total revenues. In this segment, two products are vital: TVs (25% of the electronics revenues) and digital and video cameras (21% of the revenue). According to Data monitor, the global consumer electronics market grew by 4% in 2008 to reach a value of $267.2 billion. In 2013, the global consumer electronics market is forecast to have a value of $306.1 billion; therefore research on this area will be pivotal in market share command. This business sector employs world class marketing tactics and skills thus making Sony an international mega brand. At this stage to answer what make the electronics sector such a successful world class business unit in the selected market of China we will look at:

Accounting ratio analysis

Accounting ration analysis is the ratio that is mostly used to evaluate the relationships that exist among the financial statement items. These ratios are used to come up with the trends within a given period of time for a given company and to compare the performance of two or more companies. With theses ratios one would be able to know the success of an organization. Financial statement analysis looks into the liquidity of a business, the profitability, and its solvency (Capron & Glazer 1987).

Corporate Strategy Sony
Corporate Strategy Sony

In the year 2011 Sony electronics operating profit margin accounting ratio in China market was 0.018 (0.045 in the year 2010), return to shareholder equity was 0.006 (0.007 in 2010) while total asset return was 0.002(0.002 in 2010).the high investment rate does not correspond to the business sectors profitability. These poor results show that aspects of the electronic sector had not been managed well in China thus making it hard to achieve average even returns.

Financial resources

Financial resources are concerned with the operations of an organization that make it realize the profits and its strategic goals (Johnson & Scholes 1993). Sony electronic net sales in China for 2011were $21 billion (3% higher than in 2010).however $0.49 billion earned in 2011 as operating income represents a 40% decrease compared to 2010.this is an indication that Sony electronics in China has been eroded significantly.

Organization design and structure

Organizational structure is a form of management in an organization that aims at bringing together the people in the given organization, information and technology. This integration is aimed at making the organization achieve its goals. Through the designing process, most organizations are able to work towards the profitability of the organization. Nevertheless, the design process is an internal change with the facilitation of an external person (Johnson & Scholes 1993).  The management and the employees need to work together to understand the organization’s needs and creating systems to meet those needs in the most effective manner.

With immense and increasing growth in China, Sony electronics employed the Strategic Business Unit way of the multi-division structure to institutionalize and implement its diversification structure. The electronic sector is divided into four SBU (cameras & camcorders, TV, Stereos &radios and VCR & DVD) which are further divided into smaller functional units known as divisions. This functional division are sub related yet different in commonality. This SBU financial and strategic controlled are exercised at the headquarters of Sony electronics in China.

Physical resources

Physical resources are skills such as in the buildings, technology, and other skills that enable the organization’s work to be simple (Cooper 2000). Sony electronics despite its infrastructure in china it still continues to invest heavily in the same infrastructure so as to meet its ever growing customer needs and demand in china. Like in 2009 Sony electronics acquired Chinese based companies Xing Electricals and Guangzhou Electricals Appliances Company in 2010.by 2011 Sony electronics owned 14 manufacturing plants in china, this was after seeing the closure of 3 in the northern part of the country.

Technological resources

Technological resources are the resources that use technology that is applied by an organization to ensure that the delivery of its services is effective and make it gain a competitive advantage. Sony electronic was first in areas such as camcorders, Trinitron, walkman and robot dog in china. The company is advanced technologically than its competitors in china e.g. its DVD offer high performance with new features like record and play making possible complex effects such as viewing oneself while seeing on TV from the DVD in 3 D form. Sony TV also has new features. Above this Sony electronics is capable of leveraging its competitor’s ability well and ahead to create high quality electrical appliances for china’s customer base and it market at large.

Human resource management

Human resource management is the function within the organization that is concerned with the recruitment, management and giving the directions for the employees. It moreover deals with issues such as compensation of employees, hiring, performance management, organizational development administration and training. All these functions relate to the smooth functioning of the organization in service delivery and hence need to be managed in the most efficient manner (Kolter & Schlesinger 1991).

Sony electrical china website stresses that the development and vitality of Sony employees in china drives dynamic growth for Sony electrical. At the moment Sony electrical offers training to it employees for them to be superior in quality production of electrical appliances. Curriculums tailored to local Chinese managers are being provided by Sony electrical in the china region. Sony electronics in china has the ability to identify high calibre managers to take managerial posts for the company sector in china to continue being well managed and innovative culture proliferated business sector.

For these Sony electronics employees in china are recognized and awarded for their outstanding and good performance. This makes Sony electronics human resource management in the china market capable of motivating it employees thus improving productivity of its staff.

Reputation resources

Reputation of resources is one of the strategies in an organization. Public relations are important in the ever changing world and that the way the organization engages with the public is important. This can be through the use of social media that is finding its way into the market.  Reputation resource management makes it possible that the information about an organization is accessible by the public in the most efficient manner such as the use of media and online resources (Johnson & Scholes 1993).

Sony electronics china has the reputation as the best managed company in the region. In 2011 it was proclaimed as china’s largest consumer electronic company a significant media industry player and the fast growing TV maker in china. In short Sony electrical china is one of china’s most recognizable and trusted brands.

Risk management

Risk management is an important tool in the planning of most business organizations. This process reduces the occurrence of certain kinds of events that might affect the organization. This process involves identifying, assessing and giving more priorities to a variety of risks. Once the risks are known, then the risk manager has to minimize its occurrence.  Depending on the type of risk identified, there are a variety of strategies to be applied. Risk standards can be developed by an organization or the organization can use the International Organization for Standardization (ISO).

The risk here includes pure risk and price risk.fpr pure risk, for Sony electronics to be successful in the China market then it must be able to take into consideration the various measures of risk management and standards. They need to purchase insurance policies to mitigate them. Price risk will be mitigated by the use of foreign exchange forward contracts and currency swap agreements.

Summary

The internal analysis of the Sony organization has been important in establishing the internal problems within the organization and trying to solve them with an intention of the smooth running of the organization.

Value Chain Analysis

Customer Value Chain Analysis is concerned with the customers and the stakeholders, taking into view their value “propositions” and their relationship to the development of the automobile industry products. Research shows that the definition of a product is vital to providing quality products for the customers. Understanding the various stakeholders involved in the product chain too is vital in the successful production of a product (McCurry 2008).

Together they form value chain analysis. Cost and assets are attached to each activity in the value chain. The cost behaviour depends on a number of causal factors known as cost drivers.

Inbound logistics

In this case Sony electronics in the china market will engage third parties in the production of complex in bound logistics. Sony electronics engaged Ziang a china company in the production of its products components so that Sony electronics will continue being a leading and challenging player in the china market. Sony electronics will have to transfer its production to china to make use of the available cheap labour cost thus making managing complex and regionally spread inbound logistics activities of Sony electrical strengths.

Operations

Sony electronics business will range in china will range to different provinces in Chinese market. Sony electronics production spreads from Europe, Asia and ameerica.teh details can be summarized as: 1) Total annual production for 2011 in electronics, 30% was sold in the Chinese market, 2) Asia excluding china and Japan was responsible for 20% of total annual production, and 3) U.S, Africa and Europe accounted for the rest. Sony electrical though will face and still faces  duplication off products thus making it unable to address inter-operative linked issues which is a cause of alarm which create the company’s sector weakness.

Outbound logistics

Sony electronics in the china market will have to be well connected to the channels of distribution that every country has. Outbound logistics will have to be automated to track movements of finished electronics and the payments made for such electrical products in the Chinese markets. A prominent magazine in china reported that in the year 2011 Sony electronics were rated among the best in china and worldwide as well, and that their staffs are well equipped with the knowledge to any operation. The ability to train employees and outsource outbound logistics is Sony’s Electronics strengths.

Marketing and Sales

Sony electronics strategy for the china market is to make itself a leading provider of electronics in the region and brand itself as a manufacturer of high quality electronics which enables it to sell it products at a higher premium than its competitors. Massive marketing is done and will continue being done for these electrical products which has helped to create several successful sub brands in electronic products such as Trinitron and WEGA. This success strengthens the Sony brand. Due to sensitivity to its competitors actions and reactions the company has no qualms of incurring unwanted expenses, so by doing this  it solidifies the company’s reputation and image. Sony electronics market shrewdness took the first spot on china according to Yao Xing (2011). Due to this Sony electronics marketing is a strength that’s hard to copy and of great value.

Services

Sony electronics sector will have to establish service related activity in the Chinese market that will promote customer satisfaction which will make the customers feel that the product has met the expected required customer qualities. The support activities for Sony electrical in china will be as:

Human Resource Management

This will involve how the company will recruit, train, develop and compensate all personnel (Kotler 1998). At the moment Sony electrical offers training to it employees for them to be superior in quality production of electrical appliances. Curriculums tailored to local Chinese managers are being provided by Sony electrical in the china region. Sony electronics in china has the ability to identify high calibre managers to take managerial posts for the company sector in china to continue being well managed and innovative culture proliferated business sector.  For this Sony electronics employees in china are recognized and awarded for their outstanding and good performance. This makes Sony electronics human resource management in the china market capable of motivating it employees thus improving productivity of its staff.

Technological development

This will include how the company which is Sony in this case in engaged in process design ,products design and how it research and development in carried out to production of better products for the consumers. The company is advanced technologically than its competitors in china e.g. its DVD offer high performance with new features like record and play making possible complex effects such as viewing oneself while seeing on TV from the DVD in 3 D form. Sony TV also has new features. Above this Sony electronics is capable of leveraging its competitor’s ability well and ahead to create high quality electrical appliances for china’s customer base and it market at large.

Procurement

Sony electrical should be keen on how purchase its raw materials that’s it should be having a strong and working procurement system for this to happen. Their suppliers should be acting and supplying the required supplies in time. Highest quality goods should be obtained here in low prices for materials necessary for the company’s operations.

Firm infrastructure

This includes planning and control systems, such as finance, accounting, and corporate strategy etc. (Lynch, 2003). Sony electronics despite its infrastructure in china it still continues to invest heavily in the same infrastructure so as to meet its ever growing customer needs and demand in china. Like in 2009 Sony electronics acquired Chinese based companies Xing Electricals and Guangzhou Electricals Appliances Company in 2010.by 2011 Sony electronics owned 14 manufacturing plants in china, this was after seeing the closure of 3 in the northern part of the country.

To understand Sony electronics activities in china through which competitive advantage is created while observing and maximizing shareholder value, series of value generating activities known as value chain will divide the business system. Transforming input into output looked to have problems and required immediate response from Sony electronics to fix it. If not fixed and solve urgently they might affect the effectiveness and efficiency of operations of the primary activities of sonny electronics business sector downwardly. Though electronics has witnessed a significant increase in internal cooperation between hardware and software managers more work and effort need to be put. The nature of good and fine networking sought to become the habit of Sony electronics sector for it to enjoy a commanding competitive advantage in the Chinese market.

Summary of Sony’s Electrical Sector strength and weaknesses

Strengths Weaknesses
  • Able to motivate and improve employees productivity
  • Positive Sony reputation contributes to increase in sales and revenues
  • World class marketing tool which makes Sony’s mega brands
  • Innovation ability which mesmerizes customers to buy them.
  • Ability to leverage on technology well ahead of competitors
  • High debt ratio put the company in danger in case debtors demand their money.
  • Weakness of divisional structure that include duplication of activities leading to high cost
  • Competing business unit engage in office politic instead strategy formulation and implementation

Resource competency use on Sony’s Electronic models primary and support activities

Functional Activity Capabilities Bundle of Resources Available
Inbound logistics Able to conduct complex inbound logistics for smooth organization operations Technology, human, financial, innovation and infrastructure
operations Capable to innovate and build mesmerising products to customers Technology, human, financial, innovation and infrastructure
Outbound operation Capable of training employees to perform vast complex outbound logistics activities Technology, human, financial, innovation and infrastructure
Marketing and sales World class marketing tools for making Sony mega brands human, financial, innovation
services Able to integrate various resources and functional activities to meet customer need in china Technology, human, financial, innovation and infrastructure
Finance and infrastructure Possess various physical resources to help create competitive advantage human, financial, innovation and infrastructure
Human resource Provision of numerous packages and training that help motivate employees human, financial
technology Able to leverage on technology well and ahead of it competitors Technology, human, financial, innovation and physical
procurement Possess procurement know how that leads to high quality at low costs Technology, human, financial, innovation

Environmental PESTEL Analysis

Environmental analysis is the study of the company’s competitiveness and the whole

Environment where it operates, this will have an impact on the decisions the organization makes in regard to the strategies the organization is to employ in order to achieve profits. (Kotler 1998). PESTEL is one tool used to identify primary factors for consideration in the general environment. When applying a PESTEL analysis it should be recognised that the categories are not ‘mutually exclusive’ (Byars 1991). This section will analyze the companies PESTEL and it consists of political, economic, social cultural, environmental and legal forces impacting Sony electronics in the Chinese market.

Political Factors

Political influence has been particularly evident in recent times. Extreme security measures have been established since rise of the terrorist threat. Government of china policies obviously are of value in running the country successful. Since Sony electronic headquarters in Minato Japan, the corporations policy differ with those in Chinese market. Here marketing strategies and decision activities are restrained and controlled by various laws and regulations established by political institutions in the People’s Republic of China. China will enact laws to preserve a competitive atmosphere or it consumers who in this case are the china people. The extent of the impacts on these laws on the marketing mix variable will depend on Sony electronics sector will interpret such provision that they might be subjected to heavy regulations.

Some political changes in china might make Sony electrical activities difficult and they may encounter political risks during their operations e.g. times of war, political unrest, terrorist activities. The concerns of Sony electronics strategist in this scenario is to understand china’s political system or policies, the government of china’s commitment to the rule of the game ,expectation of change in government and the expected change in business practices.

Economic Factors

The economic status of any country plays a vital role to the success of the industries located in that country. These factors affect the consumers’ decision on the purchase of the products because the economy of a country includes exchange rates, inflation and the income of the individuals. Globalization led to emergence o international production markets. It also led to access of foreign goods and services; due to this the demand for products went high. Strategists at Sony electronics sector should be able to understand the economic variables present in the china market. The economic forces can affect the market either positively or negatively.

Sony electronics sector should be aware of china’s inflation rates which in 2011 was at 1.0003%.the knowledge of this would lead to strategies to counter this economic menace. Sony Electronics should know china’s level of economic condition, is it boom, recovery, recession or depression. The availability of natural resources that can be used by Sony corporation in china to aide it operations in the country. Sony corporation should also know of china business atmosphere is it friendly or otherwise.

Sony corporation should understands china’s purchasing power of the market as this will dictate the levels of income, prices, savings, debts and credit availability. By understanding china’s industrial structure of the economy Sony corporations will determine the level and distribution of income and this will in turn impact on the business organization performance. Some of the important factors to be considered by Sony electrical corporation in the Chinese market are: 1) Economic stage of china, 2) Economic structure adopted by china which in this case is Socialism, 3) Economic policies by china e.g. industrial, monitoring and physical. Nevertheless, Chinas national indices like; National income, distribution of income, rate and growth of GNP, per capita income, disposable income rate, rate of savings, and balance of payment. Infrastructural factors in china like communication, transportation and insurance facilities.

Social Cultural Factors

The socio-cultural factors include demand and the tastes of the consumers. These factors on the other hand vary depending on the fashion, the disposable income, and the general changes that provide the opportunities and threats for given companies. In several cases, products for a given industry have to change depending on the market situation and here prices and the strategies involved in promotion have to change. The society in which people live shapes up their beliefs, values and norms. People of china will absorb a world view that defines their relationship to themselves, others, to nature and to the universe at large. Sony corporation electronics sector should be aware of china’s people core beliefs and values that tend to persist. The knowledge of this factor will ease the penetration of Sony electronics into china’s market.

Technological Environment

Technology is vital on strategic management of any company (Camp 2007). Technology creates a strategic advantage. However, other external factors such as the government support and encouragement affect the use of technology by an organization. This involves the rate and level of change which affects the people of china lifestyle. Technology is seen in electronics through camcorders, computing mobile phones.

This will influence how Sony electronics will produce its products, advertise them, personal selling, market research and pricing. The technological advancement of china will lead to how Sony electronic will invent new electrical products and new methods of production for the Chinese market in China.

The total output of Sony electronics in china market can increase through increased productivity, reduced cost and new type of products.

Sony should be aware that other Chinese companies are able to copy its technologies in a shorter period of time and sell them at throw away prices. Due to this the technological margin is diminishing and Sony corporations through it electronics sector should be cognisant with that.

Effect of Technology

This can be evidenced in the types of products made and sold by Sony electronics. Therefore technology will lead to home working in China, service manufacturing in China and database marketing through the website in China.

Legal Factors

Sony corporation electronic sector should analyze China’s intellectual property and property right which they are capable of applying for their electronics as well commercialization. This will offer Sony in the china market a significant source of comparative merit of enterprise. The PESTEL analysis has proven to be important for the market analysis for the Sony Corporation. It has assisted in identifying vital external factors that affect the operation of the organization and its expansion.

Porter’s Five Forces Model

Porter (1998) suggests that Five forces will look at; threat of substitute products, bargaining power of suppliers, bargaining power of buyers, threat of new entrants and the intensity of rivalry in the Chinese market. From porter five forces model the competition in the electronics industry is fierce thus any company making an entry into the industry in the china market will experience difficulties in profit making. This does not imply that the company will get the same profitability result it got in the previous fiscal period; if Sony applies its business competencies well in china it will still get profits above the industry level.

Porters Five Force Model
Porters Five Force Model

Threat of substitute goods

For the china market the threat of substitute goods is high since substitutes from other industries are a lot and most of them seem to be current and innovative. Although the threat is high Sony corporations through its electronics sector has established and positioned itself by building good reputation and customer loyalty in the Chinese market. This positions Sony electronics effectively against any product from substitutes in the china market.

9.2 Bargaining power of buyer

The buyers bargaining power in china is high since they can swiftly change from one product to another. The access of interest in china has led to consumers finding information on prices charged by various manufacturers thus making the change form one from one manufacturer to another who offers cheaper prices for the same goods as those offered by Sony electrical. Bargaining power in the Chinese market has also increased due to online shopping.

Bargaining power of suppliers

Supplier bargaining power in china is lower due to the fact that a large number of suppliers and customers exist. Sony electronics operate in global chains thus making its supplies less concentrated and above all they are small in size thus commanding a weak supplier bargaining power in china. Due to its direct negotiations with its suppliers they normally cheaper prices though reliable.

Threat of new entrants

The threat of new entrants in the china market is too low due to the fact that they will incur high costs, economies of scale, product differentiation as well as high technology and innovation knowledge. This market in china is regulated by requiring every new entrant to have approval from the relevant authorities being eligible to operate.

Competitive Rivalries

Competitive rivalry in china as a market is high due to intense competition and high exit cost. This rivalry characterized by numerous and equally balanced competition in china due to high research and development, fixed and storage costs, intensity of competition in this market is further heightened by slow growth in the industry.

Summary

Porter’s five analyses has been used by Sony Corporation to gain a clear understanding of the market and enable the organization build a competitive advantage over her rivals in the industry.

Competitive strategies

Competition represent a major determinant of corporate success and if Sony  corporation through its electronic sector fails to take detailed consideration of competitors strength and weaknesses in the Chinese market may lead to poor performance and greater exposure to competitive disadvantage which may lead to make Sony a follower instead of a leader in that market. Cooper and Glazer ( 2006, P.10-21). In this case Sony Corporation should:

Identify its competitors in the Chinese market.

Who they are and how many. This will enable Sony to understand competitors’ moves and monitor them easily and appropriately prepare a marketing defence. The danger though is from emerging competitors and their numbers. In china Sony electronic competitors include; Philips, Toshiba, sharp, Samsung, LG, Kodak & Fuji, Matsushita.

What are the competitors’ goals and objective?

This involves determining the competitors’ goal and objectives. Sony should try to answer what each competitor is seeking in the Chinese market and what drives the competitors aim in the market. Sony should also know how a competitor weighs each objective as this can help them know how they are likely to react to different types of attack.

What are the competitors’ strategies?

 Sony should try to identify competitors’ strategy amongst those competitors within the same market with the same strategy.

What are the competitors’ strength and weaknesses?

Sony electronics sector in the Chinese market should try t identify competitors strength and weaknesses by gathering information on each competitive business. The information will help Sony Corporation on who to attack and how to attack.

What’s the competitors’ reaction and response towards competition?

 Sony predicts this about its Chinese competitors from the competitors’ philosophy of doing business. Sony here will need a deep understanding of the competitors’ mind set so as to anticipate their likely reactions. Strategies that can be adopted by Sony electrical in the Chinese market are;

Cost leadership

 Sony can try to control the Chinese market by being the low cost producer. For this strategy the product is typically undifferentiated. In case of discounts in this stage they shouldn’t be too high so as to offset cost advantages.

Differentiation

In this strategy Sony Corporation will offer products regarded as unique in areas which are high valued by customers. The product uniqueness will protect Sony from competition. However the price premium received should not outweigh the cost of providing differentiated product for this strategy to be successful.

Focus

Sony can use this strategy whereby it either uses cost or differentiation but rather than serving the entire Chinese market it decides to operate in particular attractive segments of that same market.

Recommendations

For Sony electronics to continue enjoying the leader position in the Chinese market it should reduce the cost of its products to increase profit margins. They should also create project based work teams that report to top management, this will reduce office politics and encourage strategic thinking. The employees in the sector should improve interaction and communication, by this team spirit will be high. Sony should incorporate customer oriented features; this will make customers feel they they’re part of the company thus increase customer loyalty. Sony should maintain it leader position in the Chinese market as this will make it outshine it competitors in the market. They should also encourage dreams as this will inspire employees to strive and achieve their dreams thus leading to innovations. Above all Sony should work with the people’s republic of china government.

Conclusion

The Chinese market is a harbour with many business potentials, if Sony Corporation through it electronic sector focus on it seriously it will reap hugely. This is so since Sony is considered as a market leader in the region with strong financial resources, obsession with innovation culture visionary leadership and the pioneer advantage. It should continue marketing it products to stay in touch with its Chinese customer (McCurry 2008). Clearly, despite the increased competition in this industry, Sony Corporation has succeeded in becoming one of the world’s most successful operators. It has recorded highest levels of growth. In contradiction to Porters belief that an industry’s structural characteristics determine the attractiveness and profitability of a market or industry Sony Corporation has excelled. Clearly, the factors that have contributed to the success of this organization come for three distinct areas: financial backing and investment into rapid growth and capital, holistic corporate dedication to its vision of quality and customer service, and vast Branding coverage of noteworthy promotional medium.

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