The time value of money is the value of money figuring in a given amount of interest earned over a given amount of time. It means the value of an amount of money is different in different time periods. The value of a sum of money received today is less many than its value received after some time. Conversely, the sum of money received in future is less valuable than it is today. The time value of money is the central concept of finance.
For example, USD 100 of today’s money invested for one year and earning 5% interest will be worth of USD 105 after one year. Therefore, USD 100 paid now or USD 105 paid exactly one year from now both have the same value to the recipient.
Importance of Time value of money
Time value of money is considered as the fundamental concept in financial management. It can be used to compare investment alternatives and to solve problems involving loans, mortgage, leases, savings and annuities.
Financial planning
How much fund is needed? It’s needed for what’s time? What’s the sources and to this source how much money is needed is detailed description is called financial planning.
Source Identification
After financial planning the most important work of finance is to identify sources from where that fund will be collected. It’s may be a person or organization that will be decided using time value of money.
Raising Fund
Another most important task of finance is to collect funds from identified sources. The question of how much money will be invested in a particular project that will be decided through TVM.
Repayment of loan
The process of repayment of a loan is evaluated through the process of TVM.
Definition of Present Value
Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return i.e. present value is the current value of a future amount. The amount is to be invested today at a given interest rate over a specified period to equal the future amount.
The present value formula has four variables. The formula is –
PV=FV/ (1+i) n
Definition of Future Value
Future value is the value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today. It measures the nominal future sum of money that a given sum of money is worth at a specified time in the future assuming a certain interest rate or more generally rate of return. It is the present value multiplied by the accumulation function.
Following is the future value formula-
FV=PV (1+r) t
Definition of Annuity
An annuity, in finance is a terminating streams of fixed payments i.e. a collection of payment to be periodically received over a specified period of time. The valuation of such a stream of payment s entails concepts such as the time value of money, interest rate and future value. For example- annuities are regular deposits to a savings account, monthly home mortgage payments and monthly insurance payments.
Annuity can be classified by the frequency of payment date. The payments may be made weekly, monthly, quarterly, yearly etc.
Finance Amortization
Amortization is the process of decreasing or accounting for an amount over a period. In the concept of finance amortization is the process by which loan principle decreases over the life of a loan. An amortization table shows this ratio of principle and interest and demonstrates how a loan’s principle amount decreases over time. Amortization is generally known as depreciation of intangible assets of a firm.
Amortization Schedule
It is a table detailing its periodic payment on an amortizing loan as generated by an amortization calculator. This amortization schedule is based on the following assumptions;
First, it should be known that rounding errors occur and depending how the lender accumulates this error, the blended payment may vary slightly some months to keep this error are adjusted for at the end of each year or at the final loan payment. There are a few crucial points worth noting when mortgaging a home with an amortized loan.
Second, understanding the first statement, the repetitive refinancing of an amortized mortgage loan even with decreasing interest rates and decreasing principle balance, can cause the borrower to pay over 500% of the value of the original loan amount.
Third, the payment on an amortized mortgage loan remains same for the entire loan term, regardless of principle balance owed but only for a fixed rate, fully amortizing loan.
Theories of Finance
Methods of Amortization
There are different methods in which to arrive at an amortization schedules. These are;
Straight line
Declining Balance
Annuity
Bullet
Balloon
Increasing Balance (Negative Amortization)
Capital Budgeting
Capital budgeting is the process of evaluating and selecting long term investments that are consistent with the goals of the shareholder’s profit maximization.
PBP
Payback period is defined as the number of years required to recover a project cost. The regular pay back method ignores cash flow beyond payback period and it does not consider the time value of money. The payback provides an indication on a project’s risk and liquidity, because it shows how long the invested capital is at risk.
NPV
The net present value method discounts all cash flows at the project’s cost of capital and then sums those cash flows:
Acceptance rule- Accept if NPV>0 Reject if NPV<0 Project may be accepted if NPV=0
Merits
Considers all cash flow
True measure of profitability.
Based on the concept of Time value of money.
Satisfies the value audibility principle.
Consistent with the wealth maximization principle.
Demerits
Requires estimates of all cash flows.
Requires computation of the opportunity cost of the capital that possesses practical difficulties.
Sensitive to discount rates.
IRR
The discount rate that equates the present values of an investment, the cash inflows and outflows is its Internal Rate of Return.
Acceptance rule- Accept if IRR>k, Reject if IRR<k, Project may be accepted if IRR=0.
Merits
Considers all cash flows.
True measure of profitability.
Based on the concept of time value of money.
Generally consistent with profit maximization principle.
Demerits
Requires estimates of cash flows.
Does not satisfy the value audibility concept.
At times, fails to indicate correct choice between mutually exclusive projects.
At times, yields multiple rates.
Relatively difficult to compute.
PI
The ratio between the present value of the net cash benefit to the net cash outlay is profitability index or benefit-cost ratio;
Acceptance rule- Accept if PI>1.0, Reject if PI<1.0, Project may be accepted if PI=1.0
Cost of Capital
Definition of cost of capital
It is the rate that a firm must earn on its project investments to maintain its market value and attract funds.
The cost of each source or component is called specific cost of capital. When these specific costs are combined to arrive at overall cost of capital, it is referred to as the weighted cost of capital.
Assumptions
A basic assumption of traditional cost of capital analysis is that the firm’s business and financial risks are unaffected by the acceptance and financing of projects.
Business risks
It is the risk to the firm of being unable to cover fixed operating costs.
Financial risks
It is the risk to the firm of being unable to cover required financial obligations such as interest and preference dividends.
Explicit Costs
Explicit cost of capital is the “rate of return of the cash flows of the financing opportunity”.
Implicit Cost
Implicit cost of capital of funds raised and invested by the firm may, therefore, be defined as the rate of return associated with the best investment opportunity for the form and its shareholders that would be foregone.
Cost of debts
Cost of debt is the after tax cost of long-term funds through borrowing.
Cost of preference stocks
It is the annual preference stock dividend divided by the net proceeds from the sale of preference stocks. Or it can be said as the dividend expected by the preference stockholder.
Finance and Working Capital Cycle
Definition of Working Capital
Working Capital refers to that part of the firm’s capital, which is required for financing short-term or current assets such a cash marketable securities, debtors and inventories. Funds thus, invested in current assets keep revolving fast and are constantly converted into cash and this cash flow out again in exchange for other current assets. Working Capital is also known as revolving or circulating capital or short-term capital.
Why finance working capital cycle is calculated
Working capital is a common measure of a company’s liquidity, efficiency, and overall health. Because it includes cash, inventory, accounts receivable, accounts payable, the portion of debt due within one year, and other short-term accounts, a company’s working capital reflects the results of a host of company activities, including inventory management, debt management, revenue collection, and payments to suppliers.
Positive working capital generally indicates that a company is able to pay off its short-term liabilities almost immediately. Negative working capital generally indicates a company is unable to do so. This is why analysts are sensitive to decreases in working capital; they suggest a company is becoming over leveraged, is struggling to maintain or grow sales, is paying bills too quickly, or is collecting receivables too slowly. Increases in working capital, on the other hand, suggest the opposite. There are several ways to evaluate a company’s working capital further, including calculating the inventory-turnover ratio, the receivables ratio, days payable, the current ratio, and the quick ratio.
One of the most significant uses of working capital is inventory. The longer inventory sits on the shelf or in the warehouse, the longer the company’s working capital is tied up.
When not managed carefully, businesses can grow themselves out of cash by needing more working capital to fulfill expansion plans than they can generate in their current state. This usually occurs when a company has used cash to pay for everything, rather than seeking financing that would smooth out the payments and make cash available for other uses. As a result, working capital shortages cause many businesses to fail even though they may actually turn a profit. The most efficient companies invest wisely to avoid these situations.
Analysts commonly point out that the level and timing of a company’s cash flows are what really determine whether a company is able to pay its liabilities when due. The working-capital formula assumes that a company really would liquidate its current assets to pay current liabilities, which is not always realistic considering some cash is always needed to meet payroll obligations and maintain operations. Further, the working-capital formula assumes that accounts receivable are readily available for collection, which may not be the case for many companies.
It is also important to understand that the timing of asset purchases, payment and collection policies, the likelihood that a company will write off some past-due receivables and even capital-raising efforts can generate different working capital needs for similar companies. Equally important is that working capital needs vary from industry to industry, especially considering how different industries depend on expensive equipment, use different revenue accounting methods, and approach other industry-specific matters.
Finding ways to smooth out cash payments in order to keep working capital stable is particularly difficult for manufacturers and other companies that require a lot of up-front costs. For these reasons, comparison of working capital is generally most meaningful among companies within the same industry, and the definition of a “high” or “low” ratio should be made within this context.
Social structures are seen all forms of social interactions. These social interactions are the ones responsible for shaping social reality. Social structure can be broken down into five elements. These elements include social roles, statuses, groups, social institutions and social networks (Lamm & Schaefer, 1998). These elements form the foundation of social structure. According to social sciences, social structure can be defined as a social arrangement where actions of an individual person both and emerge and determine them (Schaefer, 2012). Social structure is more about macrosociology since the society is considered as an institution rather than individual entities. However, some sociologists have come up with several scales of a social structure such as macro scale which features social structure or a large social group. The meso scale is concerned with social network structure. This scale examines the ties between organizations or groups. The micro scale is concerned with how norms define the behaviors observed on individuals in a given social system (Lamm & Schaefer, 1998).
Social Structure Discussion
When one talks about status, many people usually think it has to do with influence, fame or wealth. However, talking about status in terms of sociology refers to a wide range of positions that are socially defined in a given society from the highest to the lowest. For instance, in a society like ours, someone can have the status of a teenager, doctor or even the president. It is also possible for someone to have two or more statuses at the same time since one can be a doctor as well as a neighbor and a resident of New York. There are also two types of statuses, achieved and ascribed. An ascribed status is a status that one is given by a society without considering the person’s talents or achievements. The assignment is usually done after birth (Schaefer, 2012). Many conflict theorists are concerned with ascribed statuses. In my society, my ascribed statuses include being a daughter, female, sister, and 27 years old among others. On the other hand achieved statuses are the ones one get after achieving something in a society. My achieved statutes include being a student, friend, classmate, teammate, and roommate.
In many cases, there is little one can do in order to change their ascribed statuses. However, one gets achieved statutes through one’s efforts. Being a computer expert is through one’s effort. In order for one to acquire an achieved status, one must work for it. As demonstrated earlier, one can have many statuses, but there is always a master status in one’s social life in a given society. A master status has many and conflicting statuses. The master status can elevate or lower someone’s status in the society. A master status dominates all others and is the one that is responsible for shaping someone’s position in the society (Luckmann & Berger 2011). In my case, my current master status is being a student. In my society, everybody knows that I am a student and everybody identifies me with schooling. Therefore, I can conclude that my master status is being a student.
Social Structure
Some roles associated with the statutes mentioned above include the fact that as a daughter I have to be answerable to may parents and elders in the society. As a student I have to attend and work hard in school. I also have to act as female is expected while at the same time ensuring that I am the best sister to my siblings. There are times when all or some of these roles come into direct conflict with each other. For instance, there was a time I was studying for a very important exam and my younger sister wanted me to take her to the park at the same time. The statuses of being a student and being a sister were in direct conflict and I had to make a tough decision whether to be a good student or be a good sister (Ebaugh, 1988). The final decision was to refuse my sister’s request.
I belong to several groups in our society’s social structure. My primary group is our study group at school which has six members. We meet everyday and share ideas. Most of the meetings are study oriented although we also talk about other things in general. My secondary group is our community’s welfare group. This group has more than 50 members and we usually meet once or twice per month. Most of the issues that we discuss are how we can improve our community.
My study group holds great value to attendance and respect among the members. The members of the group are supposed to be polite and should treat each other with respect. Looking down upon another member is frowned upon. The idea behind the group is not only to help each other academically, but also help each other socially. The community welfare group (social structure) is meant to create awareness among the members about problems that affects communities. Attendance is not mandatory although there are values and norms that one is expected to portray. They include respect among the members and respect for authority.
Status, mass media, roles and groups have played a big role in shaping my self-identity, behaviors and values. The statutes have helped me identify myself. These statutes play a big role in the way I behave and the way I present myself to the public. There are certain values that are expected of me in the society and I have to uphold them. The same goes for social media and social structures in general. Mass media has also played a big role in my life. Social networking has eased the way I communicate and exchange ideas with members of my groups. It has also eased the ways in which I can express myself.
Conclusion
Statutes and groups not only serve elements of a given social structure such as roles, they also play part in linking an individual to the larger society. Each and every person belongs to a particular unique group. The social network makes it possible for people from different groups to interact and form larger relationships. This is why social networks are considered as one of the key elements of the social structure alongside other like statutes.
References
Ebaugh, H (1988) Becoming an ex: The process of role exit. Chicago, IL: University of Chicago Press, Ltd.
Lamm, R. & Schaefer, R (1998) Sociology: Instructor’s manual. New York, NY: McGraw-Hill Education.
Luckmann, T. & Berger, P (2011) The social construction of reality: A treatise in the sociology of knowledge. Boston, MA: Open Road Media.
Schaefer, R (2012) Sociology: A brief introduction. New York, NY: McGraw-Hill Education.
Virtualization is a constantly growing trend in the business organizations of large scale. The approach of virtualization allows the organizations the ability to perform more work with fewer computers as the computer systems are actually relying on the computing powers of the system server which is replicated through the individual systems throughout the organization. Each system represents a single instance of the server computer. Implementing the virtualization techniques help a company save big on resources while keeping the productivity high.
This report is aimed towards analysing the applicability of the virtualization in the real organization of Regional Gardens Ltd. An implementation plan of the virtualization system will be developed as per the requirement specification of the organization. The advantages of the virtualization systems in data centre and legacy systems will be evaluated against productivity and cost-effectiveness. Virtualization techniques are generally implemented with challenges like information security and recover in case of disaster; therefore, both the issues with be discussed here with respect to the selected organization.
Introduction
Virtual desktop infrastructure is the approach of using a virtual machine as a way of hosting a different operating system in a machine other than the original or installed operating system in the machine. It is also possible to run a specific OS on many systems using virtualization technique while the OS is originally running on a centralized server system only. The Virtualization technique of this fashion is a variant of the basic client-server model of computing and is generally adapted by the organizations to enable virtual OS systems in the organizational IT infrastructure without the client-server model in its original form.
This report focuses on the implementation of virtualization of computer systems in the Regional Gardens Ltd organization. The organizations operates through three different offices, which includes a garden that is open for public viewing couple of times every year, A Regional Garden’s Nursery which operates as a seller of plants, and Regional Garden Planners, which is a gardening consultation firm operating for the organization and provides consultation about gardening to the general public. The managerial board at Regional Gardens is seeking the option of adapting the virtualization technique as a way of allowing its old computers to run relatively new OS, and is also planning to adapt to a virtualization technique to ease the pressure on its data centre which is costing a lot in cooling mechanisms. The report will analyse the implementation plan of virtualization for the organization as well as assessing the advantages and disadvantages of it.
What is Virtualization?
Virtualization in the field of computing technology refers to the ability of a machine to run a virtual machine on it even though the machine is not installed on the system. Virtualization can be performed not just for the applications, but for Operating Systems, run time environment and hardware components as well.
Over time, most of the functions that computers perform have in some way benefited from virtualization (Kusnetzky 2011).
Desktop virtualization is the technique of providing a different desktop environment in a already running desktop environment without installing the virtualized environment physically on the system. On the physical device that is hosting the virtualization, this technique provides a in-between layer for the desktop environment and the application software programs running on it by providing a virtual desktop environment to run the applications. With the desktop environment virtualization, it is also possible to use virtual applications on the virtual desktop environment using virtualized applications. It is also possible to run the virtual OS in all the systems of an organization with the use of a centralized OS installed on the server, which makes it very easy to keep the backup of all the information as virtually all the employees are making use of the systems through a OS that is physically present on one device only which is well protected. In such a situation, if one virtualized system is lost or broken, it will be very easy to restore a new system with the same information as it had stored on it before, since all the information is actually stored on virtual data center and a virtual desktop environment that are hosted somewhere else physically.
Proposed Virtualization Technique and Infrastructure
Virtualization technique can be used with different variations of it such as by installing a virtual OS maker on the system itself or by a centralized virtualization model that works using remote systems. Regional Gardens Ltd organization has a staff of 150 people under its payroll with its operations spawned across three different offices and locations. As the company is wishing to make use of a virtualization for its data centre as well as for the old specification systems installed in company’s IT infrastructure, the company should rely on the services of remote desktop virtualization technique to provide the relatively new OS programs to its fleet of old computers.
Hardware virtualization offers several benefits, including consolidation of the infrastructure, ease of replication and relocation, normalization of systems and isolation of resources (Wolf & Halter 2005).
Infrastructure Virtualization
The remote virtualization technique for the computer systems of Regional Gardens Ltd will function as a client server model between the server hosting the OS originally and the computers systems which are relatively old in the organizational structure and are in need of virtualization to make use of new OS systems. In this infrastructure, the execution of different applications and OS features will take place on an OS system that is not installed on the individual systems, but will be installed physically on just the server system which is connected to the local clients using a remote connection mechanism. The interaction of the user with the applications running on the server system takes place through a remote virtual display that replicates the display of the server system on the local system of employees. In the environment of remote functioning, the data stored on the systems in only stored on the physically installed OS device which is the server and only the local hardware information are stored on the local machines. Due to this special properly, the IT infrastructure of the organization will get robustness and high reliability as the data stored is much more secure in this environment. The most common approach of implementing this kind of system architecture is by installing the OS on a server machine that is running hypervisor, and then host a number of different OS instances on the same server system to make use of them by local systems of employees working for Regional Gardens Ltd. This approach is known as the virtual desktop infrastructure technique and is generally abbreviated as VDI.
The remote virtualization technique to provide OS instances on the local computers using a OS instance installed on server side system is generally preferred in the following situations:
The virtualization technology is highly efficient in the organizations where the availability requirements for the OS systems are very high and the technical support is not readily available every time. This is true in cases of retail companies and the branch office environment. This is also true in case of Regional Gardens Ltd, and having the OS system installed on the server system only helps the company infrastructure reducing the cost of maintenance and fixing technical errors in individual systems.
The virtualization technique is also very helpful in situations where the high latency of the network reduces the performance and productivity of the general client-server module. In such cases, the remote desktop virtualization technique helps reducing the latency by using centralized system based on a variant of client-server model.
In the organizations, where the data must entertain the need of remote access as well as data security issues. Both aspects conflict with each other, but with the remote virtualization technique, the remote nature of services is retained while keeping all files stored on the centralized system only that ensures the high level of security.
As some devices in the Regional Gardens Ltd are running on operating systems other than windows, the virtualization technique will allow running a windows OS in such systems without having to install the OS in these systems physically. With the proper implementation of the virtualized technique, the employees can also work on the windows OS through their non-Windows tablets and Smartphones.
The remote virtualization technique for the OS virtualization is also a great way of sharing different kinds of resources in the organization. It will be difficult for the organization to provide every employee with a dedicated high-end specification computer or to replace the old computers with expensive modern technology computers.
In the organizational structure of Regional Gardens Ltd, the virtualization technique will help the company with the accommodation of legacy systems as well as enhancing the security of the entire system architecture.
Data Center Virtualization
The Regional Gardens Ltd has a data centre where all the data information related to the organization and its three different offices is stored. The organization is currently facing the issue of high costing for the cooling of the data centre. The objective is to get the cost low for the data centre maintenance and cooling by using the virtualization techniques. For this purpose, the data centre can make use of the a virtual data centre which appears to be present physically within the organization, but is actually stored in a cloud and is replicated on the Regional Gardens Ltd systems through the use of virtualization. The systems need to be connected to the network in order to use this data centre technique. As the data is basically stored in the cloud networks and there is no physical data stored on the industry systems, the maintenance and cooling expenses can be saved. For security and restore purposes, a continuous backup of the data centre can be produced by the IT department of the organization which will keep a latest copy of the data stored.
Given the state of virtual and cloud-based infrastructure, it’s almost impossible not to think about end-to-end data environments residing in abstract software layers atop physical infrastructure (Cole 2014).
Introducing cloud computing involves moving computing outside this firewall, in effect dismantling the firewall and enabling much richer collaboration with various stakeholders (Willcocks, Venters & Whitley 2013).
In this digital age of networking systems, a large pool of business entities is looking forward to the cloud networks as the ideal solution of handling the responsibility of a network system. There is a big trend of implementing the cloud based networks in the business organizations and a large number of organizations have already implemented such a system. Most of the businesses adapting to the cloud networks are the once which are in need of upgrading their outdated network systems. The cost-effectiveness and flexibility present in the cloud networks is making such networks the ideal solutions to the problem of implementing a new network system.
Cloud Computing is the paradigm where computing resources are available when needed, and you pay for their use in much the same way as for household utilities (Harding 2011).
The character of the internet forces cloud providers and application builders to compromise, often in the form of eventual consistency (Waschke 2012).
Cloud technology in networking helps the organizations in keeping the infrastructure for the future changes in the network as well as keeps the development and maintenance of the system cost-effective for the company. The planning of infrastructure is very simply in this technology and it is also a dynamic approach that makes it very easy to make scalable to develop the cloud applications, for data storage, etc. There are various type of could networks that can be implemented and these types include clouds like Public, private, hybrid network or the latest technology in this field, Community cloud.
All of the different networking technologies in the cloud services are significantly different from one another and have own advantages and disadvantages. Based on the advantages of each cloud technology, the Regional Gardens Ltd can decide which kind of cloud solution to implement on the network. As the organization is having a network of 150 employees and only these employees have the access to the system, a private cloud network virtualization will be suitable for the needs of Regional Gardens Ltd.
In the business organizations where privacy is a big concern, private cloud networks are mostly used to keep the access to the network limited to the staff members. Such a private cloud allows a business entity to host a specialized application on the cloud and it is also possible for the organization to focus on security concerns with this approach which is component missing in the public kind of networks. This kind of network is not shared among a large pool of people or with other organizations. Such kind of a network can be hosted internally or externally.
There are two different types of private network based on the configuration
On-premise private cloud: This is a cost effective method of developing a private cloud network for the organization. The cost for this and the operational costs of such a model will then be attached with the IT department of the company as the network will essentially become responsibility of the IT department. On premise private cloud networks are highly suitable for the applications that are hosted within organizations and offer high level of control or configuration ability to the management as well as high security to the whole network.
Third party private cloud: These are also known as the externally hosted private cloud networks. Such cloud networks are designed by a specialist firm functioning in the networking industry for the exclusive use of one company only. In such a case, the cloud services are organized by the help of a third party network solution which also hosts the service. The service provider then develops a network that is managed for the purpose of that specific organization only and it is also ensured that the network developed is highly secure for use in organizational scenario.
For Regional Gardens Ltd, as the organization is not having an IT department, hiring services of a third party cloud company will be highly beneficial and recommended to keep the cloud secure and functional. Implementation of a cloud based virtual data centre will reduce the cost of maintaining a physical data centre.
The advantages of Virtualization for Regional Gardens Ltd
In the IT infrastructure of the Regional Gardens Ltd, the virtualization technique will provide great benefits. Some of these advantages are listed below:
Consolidation: The technique of virtualization in the organization will reduce the workload on the non-efficient systems or the legacy systems by means of consolidation. The approach combines the workload of a number of machines on a single computer. Through the use of this technique, the employees can run more application on fewer hardware components. This is a cost-effective feature of virtualization in Regional Gardens Ltd as it does not require all systems to be of top-notch specification.
A full data centre: In the present infrastructure of the organization’s data centre, the data centre is almost full and cannot handle more workload or adding more computers. Additionally, the cooling and maintenance of data centers are also running on their full limits and are costing a lot as well. Virtualization makes it easy on the datacenter by allowing adding as many computers as required to the datacenter without physically combining them. Virtualization of cloud based data center is the perfect solution for the datacenters. In this manner, the data is stored on a cloud network and the maintenance and cooling cost is significantly reduced.
Hardware isolation: There are new hardware components coming out every other month with faster and better performance than the previously available components. However, shifting from one server hardware to another is a tough task and requires long configuration. There is also a risk that the new hardware component architecture may not work for the existing applications. In case of virtualized systems, this issue is not present as the systems are virtual and not physically present. Every machine in the network is actually replicating the server machine only hence, this issue is minimized heavily.
Legacy operating systems: Regional Gardens Ltd is also facing issue of the legacy systems in its IT infrastructure. The organization wants these legacy systems to run the modern operating system just like the rest of the computers in the company structure. However, it is not natively possible as the hardware specifications of legacy systems are not adequate to hold the modern OS. Using the virtualization, such legacy systems can make use of virtually installed modern OS which are actually physically installed on the server system. This process will allow Regional Gardens Ltd to make use of its legacy systems.
Disaster Recovery in Virtualized Infrastructure
In the virtualized technique of data centre and the company systems, the computers run an OS that is physically installed on the server machine only. All the information that is stored on any of the computers in the organization is actually stored on the server system only. This approach reduces the risk of losing data or information through the individual device or computer damage. However, at the same time, it increases the dependability of the organization on a single server machine which is actually virtually providing its own OS instances to different computers in the network as all the data is stored on this machine only.
As the data is stored on the server only, the organization becomes prone to disastrous situations if the server machine is compromised or damaged. To overcome from this issue and to perform a disaster recovery in the virtualized infrastructure, the organization must take out backups of the data stored in the server machine in a periodic manner. For maximum security and protection of data against a disaster situation, multiple instances of recovery backup files should be stored in locations which are not close in proximity. Storing one of the backup instances in a cloud network is also a good option for the organization.
By using the method of periodic backups, the organization can protect its virtualized systems against any kind of disaster. In case of a disaster, if the server loses all of its information stored, then the latest backup file can be used to restore information in the server system which will be replicated to all the other computers in the system as well. As the network is virtualized, there is no need to restore the backup for individual computers and only restoring it on the server system would be enough to gain back the same functionality.
Information Security Changes Required
Use of a virtual network where all the employees of the company who are working on different computes are actually working on the same server machine system, the security issues are to be entertained differently. In this system all the employees of the company are making use of the same server therefore there needs to be some security constraints regarding the information stored on the server. Some security changes required are listed below:
Using different OS instances: Instead of providing same OS instances to all the employees, the virtual server should run different OS instances for different computers.
Using employee user-accounts with set privileges: Every employee of the Regional Gardens Ltd should be given a separate OS account to login to the computer and each account should have its own access privileges based on the position of the employee in company.
Restricted access to stored files: The server system should have logics applies to restrict the access to the files created by other users. This approach will ensure that the information confidentiality is maintained even in the shared resource and storage scenario.
Encrypting the system: For added protection, the files stored on the system should be kept encrypted.
Conclusion
The Regional Gardens Ltd is facing issues like legacy systems in the organization and high cost of maintaining the datacenters which are getting used up to their highest limits. The idea suggested by the management to make use of virtualization technique in order to reduce the cost of cooling the datacenter as well as making use of legacy systems has been analyzed through different perspectives. The implementation of virtual systems in the company infrastructure will assist the origination in better managing its resources and legacy systems as well as reducing the cost of maintenance for datacenter.
The issues of information security and recovery processes are also discussed in the report and it is found that the mentioned approaches will not create an overhead on the organization.
References
Cole, A 2014, Is the Virtual Data Center Inevitable?, IT Business edge, viewed 15 May 2014.
Harding, C 2011, Cloud Computing for Business: The Open Group Guide, Van Haren Publishing.
Kusnetzky, D 2011, Virtualization: A Manager’s Guide, O’Reilly Media, Inc.
Portnoy, M 2012, Virtualization Essentials, John Wiley & Sons.
Waschke, M 2012, Cloud Standards: Agreements That Hold Together Clouds, Apress.
Willcocks, L, Venters, W & Whitley, E 2013, Moving to the Cloud Corporation: How to Face the Challenges and Harness the Potential of Cloud Computing, Palgrave Macmillan.
Wolf, C & Halter, E 2005, Virtualization: From the Desktop to the Enterprise, Apress.
Management of Organizational Culture and Structure In Pursuit Of Generics Business Strategy – A Case Study of Apple
Organizational Culture and Strategic management is concerned with the activities of various domain of the organization, which encompasses the creation and management of business strategy, values, and various organizational constitutions. Through proper management of strategy, firms are able to translate its vision and sustain a competitive positioning in the industry. Therefore, strategic management involves the dedication of organizational resources to meet its various challenges associated with its internal and external environment.
With a vision to make great products, Apple Inc. represents one of the most successful organizations in these days. Apple has revolutionized personal computer, computer software and mobile and portable device market through integrating innovation with design and functionality to bring performance and sophisticated user experience and has manifested itself as the most notable iconic designer in the consumer electronic market. Apple has achieved numerous awards for its innovation and design and was Fortune Magazine’s most admirable company several times. Due to this outstanding achievement in innovation and creativity, Apple has become one of the most valuable company with a market value equivalent to US$623 billion by the year 2012 (Heracleous, 2013).
The aim of the current study is to determine what business strategy the organization has adopted in order to achieve this rank and to assess the implications of its business strategy with its corporate culture and structure. The research will also investigate the effects of organizational structure on its communication and decision making processes.
Review of Relevant Literature
Generic Business Strategy
Firms’ profitability depends upon industry structure and the firms’ competitive positioning within the industry. Professor Michel Porter (1985) devised two theories to explain firms’ profitability–i) five forces theory to determine the industry structure or attractiveness and ii) a generic competitive strategy to determine firms’ positioning within the industry. Porter (1985) distinguished three successful generic strategies to outperform competitors in an industry: overall cost leadership, differentiation, and focus.
Overall cost leadership: According to Porter (1985), if a firm can achieve a sustainable cost leadership, it will perform above average in the industry, assuming that the firm has the ability to command an industry average price. In order to achieve an overall cost leadership, firms need to adopt a number of low cost production strategies, such as cheap suppliers, special R&D efforts, appropriate inventory management, enhanced distribution channels, reduced advertising and promotional costs, etc. (Porter, 1985).
Differentiation: Through differentiation, firms create products and services with special values to the customers and position themselves uniquely in the industry. Through successful differentiation, technology firms can gain customers’ loyalty and can command a premium price for the products (Porter, 1985).
Differentiation strategy is peculiar to the industry type and structure, and based on this peculiarity, firms can undertake a product differentiation strategy (such as new features, enhanced values, etc.), a marketing differentiation strategy (such as launching special campaign to target particular class of buyers from a mass market), etc. or a combination of both. Through differentiation strategy, firms can mostly target price insensitive buyers. However, differentiated products are vulnerable to low cost competitors offering similar products. So in order to make differentiation sustainable, strong R&D outcomes, innovation, and creativity are tied with the products so that it becomes difficult to emulate by the competitors (Porter, 1985).
Focus: Focus strategy allows firms to narrow the competitive scope to gain advantages. In this strategy, firms select a segment of the industry that can facilitate them to pursue either a low cost strategy or a differentiation strategy. The selection of one of these strategies solely depends upon the nature of the customers in relation to the product within the segment (Porter, 1985).
Organizational Culture
Organizational Culture
Organizational culture can be defined as a set of value, assumption, beliefs, artifacts, rituals, and ceremonies that help organizations to accomplish various goals and to coordinate with internal and external environment (Schein, 2010). Deshpande and Farley (1999) recognized four types of corporate culture: consensual, entrepreneurial, bureaucratic, and competitive. This classification of culture is very similar to the widely accepted classification of organizational culture described by Cameron & Quinn (2006): hierarchy culture, clan culture, market culture, and adhocracy culture.
The hierarchy (or bureaucratic) culture: German sociologist Max Weber found seven attributes in bureaucracy culture in government organizations–rules, specialization, meritocracy, hierarchy, separate ownership, impersonality, accountability (Cameron & Quinn, 2006). Cameron & Quinn (2006) determined hierarchy organization as a formalized and structured place to work leading to stable, efficient, highly consistent products and services. Hence, organizations that require efficient, reliable, smooth-flowing and predictable output seem to adopt this culture. Other principle characteristic of hierarchy culture are– clear lines of decision making authority; standardized rules and procedures; and strong control and accountability (Cameron & Quinn, 2006).
The clan culture: The typical values of clan culture are shared goals, cohesion, participation, individuality, and a sense of togetherness. This type of organization is largely managed through employee empowerment, employee commitment, and loyalty. In a clan organization, customers are treated as partners (Cameron & Quinn, 2006).
The market culture: Market culture is the typical to an organization that functions as a market. The foundation of market culture is the strong emphasis on various external constituencies, such as suppliers, customers, contractors, and other market regulators to achieve competitiveness and productivity (Cameron & Quinn, 2006). In a market culture, organizational effectiveness is determined by transaction costs, i.e., exchanges, sales, and contracts, and other market dynamics, instead of internally defined rules and controls. The core values of a market culture oriented organization are competitiveness and productivity which are opposed to the complacent, hierarchy and arrogance observed in a hierarchy organization.
The adhocracy culture: Adhocracy culture represents an organizational culture that is typical to the modern high-tech firms where the organizations have to face the ever challenging and ever changing landscape. The assumption in an adhocracy culture is that the innovation and entrepreneurial initiative is the central to the organizational success or profitability, and the organizational activities are product and service oriented. The organizational configuration is temporary and takes the shape around project and product based structure such as teams, taskforce and committee.
The major characteristics of the adhocracy culture are the absence of organizational chart, lack of centralized power and authority relationship, temporary role of employees, creativity, and innovation. Leadership applied to the adhocracy culture is visionary, innovative and risk oriented, and the power flows from person to person on the need basis.
Formal Organizational Structure
Organizational structure can be determined through both formal and informal contexts. While informal organizational structure relates the social structure of the organization, such as culture, behaviors, interactions and social connections within the organizational context, formal structure can be understood as the abstract form of structure that is comprehended more easily through management structure, hierarchical relationship, leadership type, etc. (Meyer & Rowan, 1977 ).
As organizational structure determines the relationship within various elements of an organization, it has profound impact on the behavior of employees, various organizational units, and the whole organization (DeCanio, Dibble & Amir-Atefi, 2000). Dissanayake & Takahashi (2006) recognized that the development of organizational structure is typically the result of two constructs–i) a “system organization” which is formed through the sharing of perception of their actors and ii) a “structural configuration” based on the first one. Csaszar (2012) noted that organizational structure can be conceptualized as the decision making structure among the people within the organization and argued that this structure substantially affect different initiative taken by the organization.
Chen (2006) noted four different types of leadership style, such as transactional, charismatic, transformational, and servant, and then identified interrelationship between the leadership style and organizational structure. Mintzberg (1989) demonstrated seven forms of organization in the effort to demonstrate organizational structure: entrepreneurial, machine, diversified, professional, innovative, missionary, and political organization.
Research Methodology
The aim of the current research is to assess the business strategy, organizational structure, and culture of Apple Inc. The research evaluated Apple’s business strategy through Porter’s theory of generic business strategy and investigated various cultural elements through the cultural classification (Section 2.2) of Cameron & Quinn (2006). The structural aspects of the organization were analyzed on the light of generally perceived organizational constructs and conventional leadership concepts. Due to the nature of theoretical implications with the research, a qualitative research approach in the form of case study was adopted, which fulfilled the purpose of the research as well as revealed important insights on the subject.
The method of investigation was both descriptive and explanatory (Baxter & Jack, 2008). An explanatory approach was adopted on contextual investigations, where a descriptive approach was taken to document facts and figures (Yin, 2003). Data used in the research was secondary in nature that comprises of case studies, peer reviewed journals, and blog articles collected through internet research.
Results and Discussion
Apple’s Generic Business Strategy
Porter (1985) demonstrated that an organization will be able to sustain profits and perform above average if it adopts a differentiation strategy that can incorporate substantial values for what users are willing to pay a premium price. Apple successfully integrated differentiation strategy through serial innovation with its various product lines (Heracleous, 2013). The organization can successfully command a premium price which is the principle sources of revenue growth, highest profit margin, and substantial market share.
Apple’s Mac computer was the onset of the masterful combination of innovation and design in hardware and software in computer industry. Mac particularly targeted K-12 education, graphic artists, and high-end users, which is a unique indictor to differentiation (Gamble & Marino, 2011). Mac was unique from other computers, and the added values were realized by customer classes who were willing to pay high. The campaign that the Mac computers are immune (relatively) to viruses also attracted creative workers who need a very stable and consistent work environment (Bhatnagar, Gupta & Chauhan, 2012).
The most notable differentiation strategy of Apple’s iPhone was its 3.5 inch scratch resistance gorilla glass display–a unique attribute that carry substantial value for the product (Mickalowski, Mickelson & Keltgen, 2008). But this is one of the many features that the product offered, including the ease of use, simplicity, faster performance, and overall users’ experience.
Apple implemented differentiation in iPad through, among others, incorporating attractive design, introducing its own line of applications, and a built-in App store. Apple introduced focused differentiation by introducing sleeker and lighter second generation iPad. Apple added more value to the third generation iPad through incorporating processing speed. In both cases, Apple targeted high-end customers who are willing to buy the new products with extra price for its added value. Brand image, customer loyalty, etc. served to quickly reach differentiated products to the customers. Mac also gained a boost in sale after the success of iPad and iPhone, which indicates the effect of image and customer loyalty significantly created opportunity for Apple (Porter, 1985; Gamble & Marino, 2011).
Strategic route in differentiation: In order to successfully differentiate a product, firms may adopt extra means, such as outsourcing and strategic partnership (Porter, 1985; Hill & Jones, 2011). Apple successfully utilized both in its operation, for example, conducting high value added functions in California and outsourcing manufacturing activities to the cheapest locations (Heracleous, 2013).
Strategic partnership of Apple with AT&T helped the organization distribute their iPhone quickly first time to the US market (Yoffie & Kim, 2011). Apple also was able to command cost substantially over other players. When Apple launched its first iPhone, the major rival Nokia was selling their N95 at $749 in the US market (Mickalowski, Mickelson & Keltgen, 2008).
Apple’s differentiation strategy in marketing and sells: Porter (1985) argued that organizations can adopt more than one differentiation strategy to successfully pursue the strategy. Apart from great innovation and product design, Apple incorporated differentiation in its marketing strategy. Apple seems to create all sort of marketing buzz and creative marketing ploy before product launch, which adds substantially to the product success (Anderson et al., 2013).
Apple dedicates substantial resources and multiple subsidiaries in marketing and sells. Each retail points are organized with trained employees. In the retail outlets, customers have the opportunity to test and experiment with the products (Wooten, 2010). Apple indeed trained employees to interact creative ways to teach customers about the product, such as through one-on-one or workshop training, so that the customers can enjoy the best buying experience (Wooten, 2010).
The Nature of Apple’s Corporate Culture
Apple has a highly unique organizational culture that serves its vision and innovation. The principle characteristics of Apple’s organizational culture are–innovation, confidentiality, compliance, and self-responsibility.
An innovative culture: Innovation is the cornerstone of a successful differentiation strategy. Apple’s CEO Steve Jobs created an innovative culture that sustains enthusiasm and hard work (Anderson et al., 2013). Jobs and his leadership team put substantial efforts to recruit employees and socialize employees into its innovative culture (Wooten, 2010). The most emphasis Jobs would give was on intelligence and passion. To cultivate true entrepreneurship and innovation, Jobs established “Apple University” that teaches employees the fundamentals of Apple’s corporate DNA and creative culture.
A secretive culture: According to Porter (1985), an organization’s differentiation strategy will be sustainable if the product cannot be easily imitated. In today’s competitive landscape, corporate information is vulnerable to leakage and exploitation. Apple maintains a very secretive culture to protect its intellectual property. Each project or product development initiative takes a team-based structure, where teams work individually, tasks are micromanaged, and one unit is physically separated from other units (Anderson et al., 2013). Apple does not encourage people to discuss projects and share ideas. Instead, ideas are directly incorporated within the products. Team coordinates under the direction of CEO or top executives and on the need basis (Anderson et al., 2013). Despite this secretive nature of the organization, Apple has been able to manage seamless co-ordination of projects through clear direction, self-accountability, and constant feedback.
A culture of responsibility: Another feature of Apple culture is a strong sense of self-responsibility. Jobs would instill responsibility through clear and directive instruction to demonstrate employees’ positions and tasks. The term DRI is an integrated jargon in Apple’s culture which points to the “Directly Responsible Individual”, particularly at the executive level, for various agendas (Barry M. P., 2013).
Employee motivation: The employee perks in Apple are not similar to that of other high-tech companies, and in this regard, employee motivation comes from other sources, which is the product itself. Despite being a big multinational company, employees’ salaries in Apple are not better than the other places (Anderson et al., 2013). Apple believes that a great product development opportunity will retain people who are motivated (Anderson et al., 2013). So, Apple sustains a culture with people having some kind of passion for the organization. Nonetheless, employees are able to choose a customizable benefit package to suit their individual needs under the program called FlexBenefits (Anderson et al., 2013).
Apple’s Formal Organizational Structure
The structure has profound impact on an organizational management. Apple has a very unique and flat organizational structure. Before returning of Jobs in Apple (in 1997), the organization maintained a large number of middle managers. Jobs fired 4000 middle managers and rebuilt a flat structure composed of only the executive team and vice presidents. The executive team would directly pass Jobs decisions onto the employees (Anderson et al., 2013). This would facilitate direct and more personal level interactions. This flat organizational structure and considerable authority to the executive team successfully managed a large organization with approximately 60,000 full time employees along with 364 retail outlets situated in fifteen countries (Anon, n. d.).
Organizational Communication and Decision Making in Apple
Organizational communication and decision making is very unique in Apple. Apple’s flat organizational structure typically serves to reduce the layers of bureaucracy and creates a fast paced and collaborative environment (Sawayda, 2011; Anderson et al., 2013).
Before Jobs’ returning to Apple, the projects were discussed openly. Jobs created a patchy, segmented and team-based structure where team interactions were absent. Despite this secretive nature in its culture, the flat organizational structure increases communication and faster implementation of decisions (Heracleous, 2013). The co-ordination is done on need basis with the direct supervision of CEO and the executive team (Anderson et al., 2013).
Apple conducts a series of weekly meetings, which is the central strength of its organizational communication. The purpose of the meetings is to bring clarity, unity, and simplicity of the message, keep everyone at the same page, and to set the right tone for its upcoming journey (Barry, 2013).
Decision making at Apple is very unique and unusual. During the time of Steve Jobs, most decision would come from Jobs without any analysis, focus group or thorough consultations (Morrison, 2009). This style of decision making imply the fact of authoritative rather than autocratic, which was one of the Jobs leadership skills who had exceptional ability to provide clear and powerful message (Chaffin, n. d.). In many cases, Jobs would directly interact with the employees.
Conclusion
In the core of Apple’s success, there remains innovation, performance, and reliability, where a combination of differentiation in product design, marketing and customer services has been adopted. Apparently, two most important factors driving these successes–Jobs’ leadership skills, and the right set of people. Organizations’ culture and structure have profound impacts on people and their behavior, which is important for the success of any business strategy. The successful composition of various structural and cultural components in organizations is achieved through appropriate directions and a competent leadership. The paper discussed how leadership of Jobs applied to simplify the organizational structure and processes, such as to enhance communication and decision making.
From the study of this paper, it can be concluded that the organizational culture of Apple is that of adhocracy category where all challenges and tasks circle around the product success. This product oriented culture can be attributed to the reflection of Jobs’ leadership vision to make great products that customers will fall in love with, which is a significant proposition for its differentiation strategy. Jobs successfully diffused his passion and motivation in Apple’s culture and instilled accountability, self-responsibility, innovation, and creativity. To sustain innovation and entrepreneurship, which is the central to an adhocracy culture, Jobs surrounded his workplace with creative people through recruiting right talent and rewarding the creativity.
Adhocracy organizations lack of centralized power and authority relationship, which may apparently seem contradictory in Apple’s case. However, it is notable that Jobs reduced the bureaucracy of the organization to support a more flattened organization where authority can do more interactions on the need basis. Jobs’ visionary, innovative and risk-oriented leadership style is the perfect match to that of an adhocracy organization culture. Apple’s project or product based business units and team oriented structure also reflect the nature of the adhocracy culture.
References
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“With reference to relevant IHRM theoretical and research material, critically analyse ways in which IHRM is shaped by institutional and cultural/societal factors. How can firms balance the need for global integration of HR strategies, policies and practices with the pressures to adapt to host country requirements?”
The rise of globalization has brought in many changes across the world and has significantly impacted how businesses operate on a global level. Globalization is the process for achieving international integration that results from sharing of ideas, products, services and other such areas of culture. With globalization arises many other concepts touching upon various spheres of life and there are no hard and fast rules with regard to globalization. The process of globalization involves economic integration, the sharing of knowledge and information between countries, power discourse and cultural strength. It is looked upon as a platform for global free market that is devoid of any socio-political influence and brings about exchange of cultural and national resources across boundaries (Al-Rodhan, 2006, p. 1).
Globalization has attained its peak over the past few years as it promotes free trade. Exchange of goods and services have been leveraged in many ways and the transportation cost is low. Corporations functioning in developed nations across the world are able to get cheap as well as efficient labours from developing nations. On the other hand, the developing nations are benefitted with the huge surge in job opportunities and infrastructural development. Proponents of globalized business strongly believe that it is a mutually beneficial arrangement and leads to the upliftment of both sides on many fronts (Robertson, 1992).
While the concept of Globalization has turned out to be the best option for organization in many ways, it struggles when it comes to the most important internal function, human resource management. However, globalization has got its pros and cons. Organizations are struggling to create and implements Human Resource Management policies that fits into the global as well as domestic market. Corporations also need to face the pressure of integrating various HR strategies, processes and practices with that of the host country. This paper will analyse the impact that societal, cultural and institutional aspects have over International Human Resource Management and how the firm balances the whole integration process.
As provided in the website Business Dictionary, an Organization can be defined as,
“A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks.”
In order for a smooth functioning, the different members belonging from different cultural, societal and political background should come together and needs to work towards the common goal of the company. This is possible only with the help of well integrated international human resource strategies.
Institutional impact on IHRM
The institutional factor has a huge impact on the International Human Resource Management and it needs to be understood that the impact can be both external and internal. External institutional sources include the political set up of a country, legislation, national culture and local custom. Internal institutional impact is at the managerial level, corporate culture and strategies. The organization which is doing business with a host country company needs to comply with the rules, laws and regulations region and should set up a HR policy based on this factor. The distinction in the laws could amount to an altogether different approach on rules related to human resource and the main organization located in a different country should set up a code of conduct that is in sync with the host country. By taking an institutional perspective, the organizations need to adapt to HRM rules of the country in which they are doing business with. By standardizing the HR policy and practices according to the host country requirements, organizations are able to operate businesses smoothly (Svendsen, 2011, pg. 3-8).
IHRM
The political set up of a particular country has got a significant impact on organization and its principles related to human resource management. There are various levels of operation and those countries that support liberal economics are the ones that derive maximum benefit out of it (Crouch and Streeck, 1997). Organizations would go for countries that supports liberal economics as they have the freedom to manage, provided with the option to bring about short term competition, training is considered important, payment could be made as per the performance of the individual and there will be flexibility as to the employment and deployment of staffs. In such an economic set up, the organizations are provided with complete freedom as to the business operation (Scullion, 2007, pg. 309-319).
This is a completely different scenario when it comes to CME countries as such countries give importance to long term performance rather than short term strategies. It ensures to develop product and service innovation and development of skills. Employees are placed in regular training and skill development program so that they achieve the necessary skill sets to meet up with the current day requirements. The Human resource principles are created in such a way that it provides for job security, invests on training the employees and other such areas.
Cultural and Societal impact on IHRM
The cultural impact on IHRM is considerably high. It needs to be understood that both the countries doing business with each other comes with a completely different cultural background and it is important for countries to understand the cultural difference and work towards setting up an IHRM policy that does not disturb the present cultural set up. The ways one dresses to the work ethics they follow are completely different in the two countries and it is necessary that companies be well aware of this before doing business. The cultural impact on an organization can never be ignored and it needs to be looked upon in the initial stage itself in order to prevent any sort of issues in the future. A proper code of conduct developed between the two countries will enable the smooth operation of business (Scholte, 2005).
There are certain practices of an organization are known to be derived heavily based on the culture of the country. The organizational structure that a company goes for is based on the culture of both the countries. It could be consultative set up or that of an authoritative set up and it could be some other structure that is new to the field. The next important area that culture comes into IHRM is recruitment. Recruitment could be done based on recommendations or a series of test, interview process. Gender difference is yet another important area that is touched upon when it comes to cultural impact. Certain countries may restrict certain terms of work condition when it comes to woman and the company needs to go by it. There could be restrictions as to time and the nature of work they carry on.
Based on the culture of a country, individual or collective group, the remuneration part is finalized. From this, it could very well be understood that cultural differences have a significant impact on the International Human Resource Policy and this aspect should never be taken slightly. There need to be a clear distinction with regard to the cultural variations of the two countries so that it becomes easy and simple to form regulated and balanced human resource management principles (Hofstede, 2001).
Having understood the kind of impact that culture has over the framing of human resource principles, the kind of impact that the societal setup of a country has over the IHRM policy should never be underestimated. Society is a collection of people from diverse backgrounds and it is regulated by way of rules and regulations in order to maintain order. The societal set up of the organizational country and host country turns out to be different altogether and it is imperative for the countries to develop an understanding over this area. The societal needs and differences should be brought together and a streamlined human resource management policy should come up. There are some activities and behaviour that accepted in one society whereas it is not taken easy in the case of another society. IHRM areas like long term orientation and continuous skill development is possible in countries that provides for a stable and streamlined society (Jing, 2010, pg. 43).
It is applicable to various areas of life including dress code, working hours and so on. The societal differences touches upon some of the most crucial areas which includes employment training and development, appraisal, working conditions, the right and regulations followed by people who are working in the different country set up. This same principle needs to be followed when it comes to developing an organization human resource policy for the two different countries with different societal set up.
Conclusion
To conclude, we can understand that the institutional, societal and cultural differences has a significant impact on the International Human Resource Management policy developed and practiced by an organization. It needs to be understood that every society has got its own culture which leads to the development of a particular institutional set up. These three main aspects are interlinked and can never be ignored when setting or framing a human resource management policy that works perfectly for the countries. Both the host company and the company that is giving business should be able to work in coordination with each other in order to balance any sort of pressure that may arise from the venture.
Reference
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Scullion H (2007) International Human Resource Management IHRM in the 21st Century: Emerging themes and Contemporary Debates, Human Resource Management Journal, 17(4), pg. 309-319.
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Crouch, C. and Streeck, W. (1997) Political Economy of Modern Capitalism, London: Sage Publications.
