Introduction

A video interview was shown on YouTube, where Richard Lim was interviewed about a join clout between Tesco and Carrefour . Richard explained the purpose of this merger and the reason why this move is a ‘ Strategic alliance ‘ which would in turn strength both companies to be able to compete against other competitors in the market.

Learning objectives

1. What are the effects of strategic alliances?
2. What is the cause of food inflation?

Keywords

Suppliers, market share, food inflation, inorganic growth, theory of growth, theory of supply and demand

What are the effects of strategic alliances ?

Change is an inevitable occurrence in human history and in business wise it is quite very applicable . Change itself is remotely related to growth because it is the plan for most company to grow and that can not happen without change . For most companies , growth could be tough considering the challenges faced with their their competitors , some times they may not be able to meet the pace at which their competitors are going or the demands for their goods and service hence why some companies tend to form a strategic alliance .

In order to discuss further , first of what is ‘ Strategic alliance ‘ ? Strategic alliances are agreements between two or more independent companies to cooperate in the manufacturing, development, or sale of products and services or other business objectives.

The benefits of this alliance is great but then again before lamenting on these benefits there are also fear factors can comes before making any business alliance.

According to a survey made by Maria Martyak :

We’ve discussed with many of our members their fears and hesitations about being approached for an alliance. When considering entering into a strategic alliance, it can sometimes feel as if someone is trying to take over their business. They also find the operational and financial implications might seem hazy, and the work ahead too demanding.

Some of the concerns they expressed include:

• Loss of ownership in the business
• Loss of executive control over the project
• They associate a Strategic Alliance with M&A activity
• That a strategic alliance is too high level for their small business

Truthfully, strategic alliance can lead to growth for both parties. Slowly but surely, we are seeing these doubts erode as more business leaders become comfortable with the concept and the benefits of strategic alliances.

In addition ,

• Partners may misrepresent what they bring to the table (lie about competencies that they do not have).
• Partners may fail to commit resources and capabilities to the other partners.
• One partner may commit heavily to the alliance while the other partner does not.
• Partners may fail to use their complementary resources effectively.

Reasons for Strategic Alliances

For better comprehension for strategic alliances, three different product needs to be put into consideration , which are life cycles: Slow cycle, Standard cycle, and Fast cycle. The product life cycle is determined by the need to innovate and continually create new products in an industry . For instance, if we take into consideration the pharmaceutical industry, it operates a slow product life-cycle, while the software industry operates in a fast product life-cycle. For companies whose product falls in a different product life-cycle, the reasoning for strategic alliances are different:

1 Slow Cycle

In a slow cycle, the company’s competitive advantages are primarily focused on relatively long periods of time. The pharmaceutical industry operates in a slow product life cycle as the products are not developed yearly and patents last a long time.

Strategic alliances are formed to gain access to a restricted market, maintain market stability (setting product standards), and establishing a franchise in a new market.

2 Standard Cycle

In a standard cycle, the company are not concerned about the competitiveness of their product in the market lasting longer rather focused in launching a new product every few years

Strategic alliances are formed to gain market share, try to push out other companies, pool resources for large capital projects, establish economies of scale, and gain access to complementary resources.

3 Fast Cycle

In a fast cycle, the company’s competitive advantages are not protected and companies operating in a fast product life-cycle need to constantly develop new products/services to survive.

Strategic alliances are formed to speed up the development of new goods or services, share R&D expenses, streamline market penetration, and overcome uncertainty.

Below is a table by that shows market reactions to a strategic alliance.

AR = Abnormal returns

CARs = Cumulative Abnormal Returns

What is the cause of food inflation ?

Ordinarily we understand that, Inflation is a situation of a sustained increase in the general price level in an economy. Inflation means an increase in the cost of living as the price of goods and services rise .However , in correlation with food ,we need to know what is ‘ food inflation’ .?

Food inflation refers to the condition where by there exist increase in wholesale price index of essential food item (defined as food basket) relative to the general inflation or the consumer price index.

According to a journal written by Tejvan Pettinger :

When food prices rise in the developed world, it is an inconvenience, something to grumble about. But, when food prices rise in the developing world, it can make a difference between going hungry and getting enough to eat.

Food inflation is volatile. Agricultural prices tend to fluctuate because demand and supply are both inelastic and supply can vary due to the weather. However, despite the usual volatility, food prices seem to be showing a strong upward movement, reaching record highs in recent years.( Tejvan Pettinger 2016 )

What is Causing Food Inflation?

The diagrams below explains the trends to explain the causes of food inflation.

Diagram showing rising food prices:

• There have been short-term supply constraints such as bad weather. However, there is also evidence of increasing long-term supply constraints such as loss of farming land due to global warming.
• Increased use of bio-fuels. Growing crops for energy rather than food production.
• Rising Demand. Rapid economic growth in China and India is increasing demand for more resource intensive foods. As incomes rise, people tend to spend a higher % of While on meat and dairy products. These require more intensive land cultivation. e.g. crops are used to feed cattle. Therefore the supply of crops for food has decreased.

Cost-push inflation :

Cost-push inflation occurs when we experience rising prices due to higher costs of production and higher costs of raw materials. Cost-push inflation is determined by supply-side factors (cost-push inflation is different to demand-pull inflation which occurs due to aggregate demand growing faster than aggregate supply)

Cost-push inflation can lead to lower economic growth and often causes a fall in living standards, though it often proves to be temporary.

Causes of Cost-Push Inflation :

The diagram below shows the causes of Cost-Push Inflation

Demand-pull Inflation :

Demand-pull inflation is a period of inflation which arises from rapid growth in aggregate demand .

If aggregate demand (AD) rises faster than productive capacity (LRAS), then firms will respond by putting up prices, creating inflation.

• Inflation – a sustained increase in the price level.
• Demand-pull inflation – inflation caused by AD increasing faster than AS.

Demand-pull inflation means:

• Excess demand and ‘too much money chasing too few goods.’
• The economy is at full employment/full capacity.
• The economy will be growing at a rate faster than the long-run trend rate.
• A falling unemployment rate.

Causes of demand-pull inflation

• Lower interest rates. A cut in interest rates causes a rise in consumer spending and higher investment. This boost to demand causes a rise in AD and inflationary pressures.
• The rise in house prices. Rising house prices create a positive wealth effect and boost consumer spending. This leads to a rise in economic growth.
• Rising real wages. For example, unions bargaining for higher wage rates.
• Devaluation. Devaluation in the exchange rate increases domestic demand (exports cheaper, imports more expensive). Devaluation will also cause cost-push inflation (imports more

Other factors attributed to food inflation :

Supply Demand Equation : Since 1999, cereal production has risen very low , which has led to a fall in cereal stockpiles to historic lows. Growing population, changing diet habits and additional demand for the production of bio-fuels caused a rise in demand, while input factors like fuel, freight and fertilizer showed marked cost increases. Tight food markets have thus led to higher prices. Besides the physical supply and demand equation, part of the inflation was purely financial; the devaluation of the dollar made food inflation in this currency particularly pronounced.

Population Growth : Although the world population growth has been slowing from 1.26 percent (1996-2005) to 1.10 percent (projected 2006-2015) there will be a strong increase in absolute numbers. Annually 50 to 70 million people will be added to world population between now and 2030, most of them in Africa and Asia.

Change of Diets, Especially in Emerging Markets : It is not only the increasing number of people that has caused a surge in demand; the dramatic change in global diet patterns during the last four decades has also had an impact. The relative share of staple foods like cereals, roots and pulses has declined, while livestock products, fruit and vegetables with their higher needs of water and fertilizer have acquired increasing popularity because of rising living standards, urbanization and changes in relative prices. In recent years, this trend has been particularly pronounced in emerging markets like China and India, which in turn could lead to more imports and lesser exports by these countries in the future.

Conclusion

Strategic alliance would bolster the market presence of jointly formed company giving a better competitive advantage but may also create issues of hierarchy and devotion . There has been cases where both companies are expected to contribute to the success of the merger but then find one party contributing more than the other . It may often times create distrust but if these impediments can be overcome then the purpose of the merger will be achieved.

Supply and demand plays a huge role in food inflation as do other factors but then again if the government of every nation would dedicate resources to developing agricultural produce in high quantity to equate the demands , this can somewhat create a balance to reduce food inflation regardless of other factors.

References

In-text reference: (Martyak 2014)                                                                                    List of references: Martyak, M. 2014. Strategic alliance: How they can benefit your business.URL : https://www.powerlinx.com/blog/what-are-strategic-alliances/ Accessed 20.11.2019

In-text reference: (Marciukaityte, Rosekelley, Wang 2009)                                                List of references : Marciukaityte, D. , Rosekelley, K.& Wang,H. 2009. Strategic alliances by financial service firms. URL: https://www.deepdyve.com/lp/elsevier/strategic-alliances-by-financial-services-firms-L5FbH0YsNF?articleList=%2Fsearch%3Fquery%3DWhat%2Bare%2Bthe%2Beffects%2Bof%2Bstrategic%2Balliances Accessed 20.11.2019

In-text reference: ( Pettinger 2017) List of references : Pettinger, T. 2017. Food Inflation. URL : https://www.economicshelp.org/blog/2578/economics/food-inflation/. Accessed 20.11.2019

In-text reference 😦 Woertz ,Pradhan & Biberovic , Koch 2008) List of references : Woertz, E.,Pradhan,S.,Biberovic,N. & Koch,C. 2008. Food Inflation in the GCC Countries. URL: https://s3.amazonaws.com/academia.edu.documents/8465651/food_inflation_3609.pdf?response-content-disposition=inline%3B%20filename%3DFood_Inflation_in_the_GCC_Countries.pdf&X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=AKIAIWOWYYGZ2Y53UL3A%2F20191120%2Fus-east-1%2Fs3%2Faws4_request&X-Amz-Date=20191120T222607Z&X-Amz-Expires=3600&X-Amz-SignedHeaders=host&X-Amz-Signature=64ebb0f337f045bb9d204ccb72f7e49e623f51726836442da43c2e28db033143. Accessed 20.11.2019

Introduction

The task was based on a growing company which could not handle high volume of tasks and management of the company . This was a case of mismanagement and task sharing where staffs were unable to be given proper responsibilities or rather task not meeting up to the growing state of the company resulting to inefficiency of the company as a whole .

Keywords

Streamline, Value Chain, Internal Processes, Efficiency, Start-up, Value Stream Mapping, Organizational Structures

How to define Internal Business Processes in a Value Chain?

In order for a company to function more effectively internally from the management board to the staffs , it is imperative to create a system that would incorporate all member of the company and that is why the concept of implementing value chain is very vital .

First of , what is Value chain ?

According to Michael Porter : ‘ A value chain is the ultimate process of an organization. A value chain describes all of the activities that an organization undertakes to produce a product. The manager of the company can add all of the costs of producing the product, subtract those costs from the income received from the sale of the product, and determine the profitability of the product line’ (Michael Porter 1985 )

This process of organization enables the company to create a system to organize the fluidity and operations of the company which in return enhances the productivity of the company.

A company should be inn the state of collection of activities that are performed to design, produce, market, deliver and support its product (or service). It’s objective is to produce the products in such a way that they have a greater value (to customers) than the original cost of creating these products. These added value can be considered the profits and is often indicated as ‘margin’. A systematic way of examining all of these internal activities and how they interact is necessary when analyzing the sources of competitive advantage. A company assumes competitive advantage by performing strategically important activities more cheaply or better than its competitors. Michael Porter’s value chain helps dis-aggregating a company into its strategically relevant activities, thereby creating a clear overview of the internal organization. Based on this overview managers are better able to assess where true value is created and where improvements can be made.

The diagram below showcases these levels ;

The overall goal of value chain analysis it to identify areas and activities that will benefit from change in order to improve profitability and efficiency

In addition , identifying the mismanagement of the work process of a company is essential and also the implementation of the Value chain helps to cut costs and save more.

According to a journal by Smartsheet : ” The Cost advantage results from a reduction in costs associated with activities in a value chain. After the value chain has been defined, it’s important to associate costs to the activities and then make adjustments for efficiency. Porter’s 10 cost drivers are factors that can impact the cost of an activity. An organization can aim to control these cost drivers in order to improve efficiency, add value, and differentiate ”.

1. Economies of scale
2. Learning and spillovers
3. Pattern of capacity utilization
4. Linkages
5. Interrelationships
6. Integration
7. Timing
8. Organization policies
9. Location
10. Institutional factors

Value chain analysis is more than a straightforward cost-to-profit model. It expands on the principles of economies of scale and capacity. There are limits to lowering costs and increasing capacity that can inhibit business growth. Value chain analysis stresses that competitive differentiation can also focus on the perceived value to the customer that justifies a product’s price tag. Finding these perceived values could mean the difference between getting a consumer to spend three euros on a cup of Starbucks’s coffee rather than one euro on a competitor’s discount brand.

The diagram below explains explicitly the flow chart of the Value chain analysis :

How to implement an efficient Internal Business Process?

Creating a working process for a company to be efficient may be deemed important but implementing it is the major task. This entails a total overhaul of the previous working system , modify or change then create a new system and then implementing it and most importantly get all staffs and members of the company to be acquainted with the new process .

According to an article written by Riita Smeds , ‘ The competitive environment of leading industrial enterprises is already truly global. Global markets require high quality products and services more and more flexibly and rapidly , according to changing customer demands, and lower prices. Management has to answered these challenges with greater efficiency and speed in operations : short time-to-market in product development , shorter lead in times in production and logistics, and cost-efficiency, quality and flexibility throughout the streamlined business.(Riita Smeds 1994).

The importance of efficient Internal business process

In order to implement an efficient internal business process , the process of innovation needs to be taken into consideration. This entails new and more efficient methodology which are often IT-oriented solutions in the division of labour along the customer oriented value chains. These different kinds of processes have one thing in common: they’re all designed to streamline the way that you and your team work.

When everyone follows a well-tested set of steps, there are fewer errors and delays, there is less duplicated effort, and staff and customers feel more satisfied.

Processes that don’t work can lead to numerous problems. For example:

• Customers may complain about poor product quality or bad service.
• Colleagues get frustrated.
• Work may be duplicated, or not done.
• Costs increase.
• Resources are wasted.
• Bottlenecks can develop, causing you to miss deadlines.

According to a survey by mind tools on ‘ improving business process

Implementation steps to consider for an effective business process

Step 1: Map the Process

When the process to implement has been , document each step using a flowchart or swim lane diagram ) . These tools show the steps in the process visually. (Swim lane diagrams are slightly more complex than flowcharts, but they’re great for processes that involve several people or groups.)

It’s very important to check each step in detail, as some processes may contain sub-steps that you’re not aware of. Consult people who use the process regularly to ensure that you don’t overlook anything important.

Step 2: Analyze the Process

Use your flow chart or swim lane diagram to investigate the problems within the process. Consider the following questions:

• Where do team members or customers get frustrated?
• Which of these steps creates a bottleneck ?
• Where do costs go up and/or quality go down?
• Which of these steps requires the most time, or causes the most delays?

Step 3: Redesign the Process

Process redesign will be implemented to eliminate the problems you have identified.

It’s best to work with the people who are directly involved in the process. Their ideas may reveal new approaches, and, also, they’re more likely to buy into change if they’ve been involved at an early stage.

First, make sure that everyone understands what the process is meant to do. Then, explore how you can address the problems you identified in step 2 (Brainstorm can help here). Note down everyone’s ideas for change, regardless of the costs involved.

Then, narrow your list of possible solutions by considering how your team’s ideas would translate to a real-life context.

Start by conducting an Impact analysis to understand the full effects of your team’s ideas. Then, carry out a risk analysis and a failure mode effect spot possible risks and points of failure within your redesigned process. Depending on your organization’s focus, you may also want to consider customer experience mapping at this stage.

These tests will help you to understand the full consequences of each proposed idea, and allow you to make the right decision for everyone.

Once you and your team agree on a process, create new diagrams to document each step.

Step 4: Acquire Resources

You now need to secure the resources you need to implement the new process. List everything that you’ll need to do this.

This could include guidance from senior managers or from colleagues in other departments, such as IT or HR. Communicate with each of these groups, and make sure that they understand how this new process will benefit the organization as a whole. You may need to prepare a business case to demonstrate this.

Step 5: Implement and Communicate Change

It’s likely that improving your business process will involve changing existing systems, teams, or processes. For example, you may need to acquire new software, hire a new team member, or organize training for colleagues.

Rolling out your new process could be a project in itself, so plan and manage this carefully. Allocate time for dealing with teething troubles, and consider running a pilot first, to check for potential problems.

Keep in mind that change is not always easy. People can be resistant to it, especially when it involves a process that they’ve been using for some time.

Step 6: Review the Process

Few things work perfectly, right from the start. So, after you roll out the new process, closely monitor how things are going in the weeks and months that follow, to ensure that the process is performing to expectations. This monitoring will also allow you to fix problems as they occur.

Make it a priority to ask the people involved with the new process how it’s working, and what – if any – frustrations they’re experiencing.

Conclusion :

Planning an internal process for effective management goes beyond admitting there is a problem with the management system of a company or just planning rather it entails systematic strategic approach which revolves around a complete dissection of the company top-down to go deep into the internal process , dissolve , recreate and implement an effective way which would become a process every single staffs and members of a company would follow and adhere to.

References

In-text reference : (Michael Porter 1985) List of references : Competitive advantage: Creating and sustaining superior performance.URL : https://www.ifm.eng.cam.ac.uk/research/dstools/value-chain-/. Accessed 12.11,2019

In-text reference : ( Mind tools 2019) List of references : Improving Business Processes streamlining tasks to improve Efficiency. URL : https://www.mindtools.com/pages/article/improving-business-processes.htm Accessed 12.11.2019

In-text reference : (Paul Harmon 2011) List of references : How Do Processes Create Value . URL : https://www.bptrends.com/publicationfiles/02-01-11-ART-How%20do%20Processes%20Create%20Value-Harmon-Final.pdf . Accessed 12.11,2019

In-text reference : ( Riita Smeds 1994) List of references : Implementation of business process innovations: an agenda for research and action. URL : https://www.deepdyve.com/lp/inderscience-publishers/implementation-of-business-process-innovations-an-agenda-for-research-x5i0v8xoXc?articleList=%2Fsearch%3Fquery%3DImplementation%2Bof%2Bbusiness%2Bprocess%2Binnovations Accessed 12.11,2019

Introduction

The short documentary showed the rise of Fuji-film which was on the brink of extinction like it’s fellow counterpart and competition Kodak . The documentary relayed the interesting impact of the CEO who made drastic changes and intelligent decisions in making use of the company’s resources to branch into various business lines like health care etc rather than picture production. This brilliant idea led to the resurgence of Fuji-film to becoming a global brand.

How can businesses research and identify new market trends?

Market research is the process of collecting data about a market, service or product. It’s used to analyze the current situation and pave the way for a product launch or increased sales ( Yaroslav Lehenchuck ). In modern day business it is quite very vital for market research to be done either before starting a new business or existing business . By the definition above market research should relate to the understanding habits and needs, the economic shape of the industry and the competitors’ state of affairs.

Market research should never be underestimated. Many successful new businesses enjoy longevity because their owners conduct regular market research to understand their target market, identify consumer problems and pinpoint realistic competitors.

It’s the simplest way for entrepreneurs to keep up with market trends and maintain a competitive edge by sizing up your business opportunity.

Market research can be carried out at various stages of a business life cycle, from pre-launch and beyond. Having a greater understanding of your marketplace from the very start will enable you to create a sound business strategy to establish and grow your brand into one that’s better than the competition.

However , in order to launch a successful business , one needs to put into critical account the business model. At a conceptual level, a business model includes all aspects of a company’s approach to developing a profitable offering and delivering it to its target customers ( Joseph V. Sinfield, Edward Calder, Bernard McConnell and Steve Colson 2011).

Creating a business model can be quite challenging as to meet the demands of the target consumers in relation with the profit required , most times people who start businesses often end up having difficulties to knowing how or what to narrow their search . Business model innovation and improvement were run by Osterwalder and Pigneur (2010) who used an interactive process, or rather a systematic, receptive and recursive process approach. The iterative business model development process provides an agile opportunity to investigate customer’s problems and needs and react early enough to find new solutions to changed customer requirements.

The following are questions that needs to be asked to forge ahead to creating a business model :

• Who is the target customer?
• What need is met for the customer?
• What offering will we provide to address that need?
• How does the customer gain access to that offering?
• What role will our business play in providing the offering?
• How will our business earn a profit?

Although the above stated questions are not fixed because they would be instances of ‘ what if ‘ hence variables. In order to come to a resolution to balance between variables and fix , a template should be created to look at all possibilities to arrive at a conclusion .

Lack of making a business model or at least market research can be attributed to the fall of Nokia . Nokia had dismissed touchscreens as a gimmick that used too much battery. After which they were playing catchup and they didn’t ever manage it. Their market share eroded and Nokia’s mobile phone business was bought by Microsoft in 2014. (Sam Wollaston 2018)

When a business model is formed which is focused on target market and consumers then in-depth market research needs to be carried out and the following process can be assessed :

• Identify the target audience;
• Recognize the peculiarities of local customers’ buying habits;
• Explore competitors’ marketing research opportunities and strategies;
• Shape the product or service’s identity;
• Understand what clients like most/least about the existing product;
• Define the true unique selling proposition
• Investigate whether similar research has previously been carried out
• If so, analyze the existing relevant data that meets your objectives – providing it meets your budget
• How will the existing data be used and by whom?
• Do you need to conduct your own primary market research too? If so, with whom?

How can companies adapt to market changes?

In every business development , sustainability and future stability in the market ,’ adaptation ‘ is quintessential . In order to confront the rapidly-evolving world around us, you need to have a system in place to adapt with the changes. ( Maria Matarelli,2018 )

Change is a constant conspicuous factor in the world and just as man evolves to the climate and every other things in the environment , the business world changes as well and that way it is important for companies to have a solid plan to adapt to market changes.

In a constantly evolving world every industry is experiencing change in a devastating state which can be seen in various forms. For example, Airbnb in hospitality industry or Uber in transportation or Amazon in Logistics etc.

In order to adapt, a company must have its antennae tuned to signals of change from the external environment, decode them, and quickly act to refine or reinvent its business model and even reshape the information landscape of its industry. ( Martin Reeves & Mike Deimler 2011)

However in as much as it is vital to understand adaptation in market change there always doubts and uncertain as to what direction or how to propel a company to adapt into market change . Below are few procedures to take to take in order to be certain to adapt to change in market ;

The Ability to Read and Act on Signals

The nonparallel movement and change in market these days requires tentative read and study of market change. Companies need to adapt to the use to technological approach to study , recognize and act n changes related to their business or other business in the industry . These read span to how demands are in the market , how consumers reacting to their business and services , how many consumers has been gained or lost . There are various software that can be implemented to study the analytics of these change. Google is another example. It uses algorithms to update the position of an ad on the basis of the ad’s relevance to an individual search or website as well as the advertiser’s bids on key words. The more relevant an ad, the higher the click-through rate—and because advertisers pay per click, this means more revenue for Google. By linking its advertising data directly to its operations, Google can respond to changing ad conditions on a split-second basis, without the intervention of human decision makers.

The Ability to Experiment

There are no certain to predict the future of market outcome but then again in order for companies to familiarize itself in the increasing rate of change in the business world, experimentation is most applicable . However , using the old method of proving products and services for test in the market seem applicable but the cost is high and time consuming .

Modern companies use technological approach to experiment their services before launching it . For instance , Procter & Gamble is a case in point. Through its Connect + Develop model, it leverages InnoCentive and other open-innovation networks to solve technical design problems. It uses a walk-in, 3-D virtual store to run experiments that are quicker and cheaper than traditional market tests. And by employing Vocalpoint and other online user communities, it can introduce and test products with friendly audiences before a full launch ( Martin Reeves & Mike Deimler 2011)

The Ability to Manage Complex Multi-company Systems

Signal detection and experimentation require a company to think beyond its own boundaries and perhaps to work more closely and smartly with customers and suppliers. This flies somewhat in the face of the unspoken assumption that the unit of analysis for strategy is a single company or business unit.

With the increase and high level of activities happening in the economy , it is tentative for companies to involve other means to achieve information and work done via outsourcing, offshoring, value nets, value ecosystems, peer production etc to create dynamism in their business system.

An adaptive company should be able to create an ecosystem , managed with common standards with other companies with low barriers , generate trust and enabling people to share ratings of service performances for the purpose of transparency . As Stephen Elop, Nokia’s CEO, wrote in a memo to his staff, “Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem.”

Conclusion

It is noticeable in modern day business the advancement and diversity in approach to run and manage business as the competition gets stiffer by the day and companies that need to strive in modern day business need to implement a narrow methodology to find how to stand out in the combative business world.

• Doing extensive research on business model is very important and this business model should be built based on a concluding research that it meets the demands in the market
• Deep research on business market should be focused carefully and analytically to ascertain how to weight options on implementing a new business or existing company . Analysis done should not be based on traditional approach of meeting customers face to face but implementing technological approach to analyze trends and flow of market using various software at disposal.
• Adaptation is an important factor because regardless of research done on market , how to adapt to trends are most vital because the business world changes rapidly at a very high rate and companies need to have a system created which can help a company to adapt to changes in the market.

References

In-text reference: ( Maria Matarelli 2018 ) List of references: How Can Businesses Adapt To A Rapidly Changing World? URL : https://www.forbes.com/sites/quora/2018/01/05/how-can-businesses-adapt-to-a-rapidly-changing-world/ . Accessed 06.11.2019

In-text reference: ( Martin Reeves & Mike Deimler 2011 ) List of references : Adaptability: The New Competitive Advantage. URL : https://hbr.org/2011/07/adaptability-the-new-competitive-advantage . Accessed 06.11.2019

In-text reference: ( Joseph V. Sinfield, Edward Calder, Bernard McConnell and Steve Colson 2011) List of references. URL: http://www.cs.cmu.edu/~jhm/Readings/How%20to%20Identify%20New%20Business%20Models.pdf . Accessed 06.11.2019

In-text reference: (Sam Wollaston 2018) List of references : The Rise and Fall of Nokia review – fascinating insight into the Finnish, and now finished, tech firm. URL: https://www.theguardian.com/tv-and-radio/2018/jul/10/the-rise-and-fall-of-nokia-review-fascinating-insight-into-the-finnish-and-now-finished-tech-firm . Accessed 06.11.2019

In-text reference : ( Yaroslav Lehenchuck) List of references : How To Research The Market And Identify Opportunities. URL : https://producttribe.com/marketing-amp-partnerships/market-research-guide . Accessed 06.11.2019

Learning objectives

1. What are the effects of political environment to management system?
2. How does culture influence leadership styles?
3. How to benefit from different cultural work ethics?

Keywords

Human/worker rights, human capital, human value, new market in new country, law & regulations, balance between cultures, trust (employee, employer), communication, safety, automatization

What are the effects of political environment to management system?

Every country has had to deal with the effects of politics on business management systems either adverse or slight but nevertheless Political support is an important environmental factor in management system and in addition over the past few decades the implementation of results-orientated reforms has been highly productive .

However in order to have a managerial system in balance , two factors were put into perspective , hence Political support and result-oriented reforms :

Political support in perspective

Political support is an important environmental factor in public management, and over the past few decades, the implementation of results-oriented reforms has become highly influential as well. However, few studies have examined the impact of these two factors on employee attitudes and behaviors. This article proposes that the extent of results-oriented reforms and political support from elected officials—as perceived by managers—has a significant influence on managerial practice and normative commitment to the organization (Kaifeng Yang & Sanjay k .Pandey 2006)

Political support in political environment

In order to understand effects of political environment to management system two distinctive factors are placed into microscope hence political supports and result-oriented reforms.

First of what is Political Support ? Political support is defined as the level to which elected officials grants support and support to a company or agency. As a context of discussion , political support is discussed further.

As much as this system comes with it’s benefits to the elected official and the company in question the adverse effect it creates for the economy is high. Having a government official largely in favour of a certain company or enterprise creates imbalance and lack of competition which in turn emanates to bureaucratic problems.

” According to a Journal of Public Administration Research and Theory published by Oxford University Press 2008 ” In recent decades, public organizations have had to operate in increasingly anti bureaucratic political environments (King & Stivers 1998, Yang 2006), which have led to the increasing pressure to adopt results-oriented reforms” ( Barzelay 1992, Brudney & Wright 2002).

Effects of elected official support for companies and management system

It is a common thing for elected officials to engage in issues that resonates lack of trust and support of the government , such as bureaucracy bashing and cutback management system (Garrett et al 2006 & Levine 1978). Actions of these nature results to an unhealthy environment tainted with distrust and excess of it can be problematic for governance.

Trust between the government and agencies is very crucial for easy of management system but when it becomes unwary often compels agencies to be unwilling to follow any bureaucratic precedence :

The level of trust and support offered by elected officials constantly fluctuates . In periods of decline, government-is-the-problem ideology often leads elected officials to distrust the bureaucracy’s willingness to faithfully follow legislative intent and/or the executive’s agenda (Rourke 1992 & Wilson 1989).

In a political inclined country , when changes in power occur a lot of circular effects occurs to agencies which are associated to elected officials hence affecting management system of an organization .

According to Moe , ” When changes occur in group power, committee composition,administration agenda, or coalition stability , distrust often translates into tangible action such as restriction of mandates, budget cutbacks, and curtailment of discretion ( Moe 1989 )

2. How does culture influence leadership styles

There are multiple ways in making a business successful and it solely relies on one fundamental factor, leadership style. It is a know fact that the status of every business solely depends on the leader. A leader can propel his business to the next level or can crumble it , a leader can make a business very competitive and lucrative and a leader can run down a business to bankruptcy. Regardless , leadership style standout to be very crucial in a business environment

Analysis on leadership style will be focused on China, Germany and Russia .

Chinese Leadership style and culture

China has been one of the dominating nations in the world and now plays a huge role in global economy . Chinese businesses are trending in modern society , penetrating market and generate huge revenues yearly .

In order to understand the concept behind this global business presence ,a look at how Chinese managers and leaders will be discussed.

However, in order to understand how the Chinese leaders and managers perform then the history and culture of the Chinese people will be put into perspective which in no doubts gives direct understanding of their concept of leadership.

The Chinese people are deeply very traditional and that is why their culture or way of life will be termed ‘ traditional ‘which in turn correlates with how they run their businesses: One’s culture can act as a handbook about how people operate, which stem off of the values and norms (Littrell,2002). China is known to be a deeply traditional country full with culture which can be traced back to past ancestral era that transcends to modern society. It is quite conspicuous in Chinese society how they portray their culture in the society and their values

According to Chinese historians, traditional Chinese values are essentially Confucian Values, which can be represented by four major virtues: the class system, obedience. the doctrine of the mean, and renqing (kindness/reciprocity) ( Tsui et al. 2004, p.6).

The Confucian ideology values have created the framework controlling almost all areas of Chinese lives and behaviours (Littrell,2002)

In order to understand the leadership system in China the above perspective will be discussed in category :

• The class system : This aspect entails hierarchy
• The obedience : In this category you have people who of of course have to obey or are the in subordinate positions and those who are subordinates are expected to be obedient to their leaders
• The requin correlates with a general perception of , ‘ treat others as you would want others to treat you ‘. These above stated values and virtues describes how Chinese people view and treat themselves and also in relation with people.

There has been previous research done driving leadership behaviour into 6 dimensions of:

• being creative and risk taking;
• relative and communicating;
• articulating vision;
• showing benevolence;
• monitoring operations and
• being authoritative

These dimensions are then further separated into their task-orientated behaviours or people management -oriented behaviours (Tsui et al 2004)

The most dominant system of leadership style in the china is the Authoritarian also known as Paternalistic Leadership (PL) style. As discussed above about the history of the Chinese culture and values , this system of leadership equates with it as well. Their culture is completely traditional and revolves around placement and directive that an Authoritarian style makes sense (Du & Choi 2013). In retrospect of the hierarchical relationships, in China there is always a dominant Figure which in turn relates with their businesses relationships.

According to Sheng, who did a study on authoritarian style in political representations , he describes that authoritarian rulers do not band against each other, but instead respect each other and stick together to stay in rule (Sheng 2009)

German Leadership style

As a result of the fall of the communist era, Germany has had to adapt to new changes and work in various conditions as as opposed to what they were used to.

Nevertheless , its leadership style has not changed rather slowly adapting to changes in business . Since the ending of the soviet communist system, Germany has brought its east side and west side back together (Brodbeck et al.2002). As a result of this merge,changes in creating businesses changed and both sides would need to work in coexisting path yet nevertheless both sides style share partial differences in business perceptions.

Just as do other countries , Germany as well is rich in culture which are quite distinctive and they uphold. Germany has a relatively high individualistic culture value along with participative value ( Brodbeck et al. 2002). Germans generally look out for themselves,they have seek for their own interests and profoundly most dedicated to seek what is best for their individual achievements. One notable thing about the Germans is that they have a voice and for them what they say matters and holds weight with it. Although things may have changed after the communist era and the merging of the east and west yet leadership styles still remains the same.

According to a study done on Germany : Germany has clearly revealed itself as an industrial nation who managers have failed to adapt to changing times and who have lost the affinity to the global market which they dominated for so long ( Schneider & Littrell 2003, p. 133 ).

Individualist and perfectionist culture is describable with the Germans. In Germany, there is an order in which people live , everyone tend to live their lives striving to be perfect and looking out for themselves yet still have a voice. These values transcends to their leadership styles.

All leadership styles can be categorized into two:

• Transformational
• Transactional

In Germany with a very high score of uncertainty avoidance, most of their styles fall into the transsactional leadership style (Rohmann & Rowold 2009) . The former is the type of leader who motivates his people , share wisdom and knowledge, shows compassion and care for them while the latter is indicates a distinctive difference inn character who the leader and follower is. Rules and regulations are put in place which must be adhered to. For instance :

Germans espouse a world governed by [order], where everything and everyone has a place in a grand design. Order is achievable when sufficient and effective rules, regulations, and procedures are provided. It is essential that the leader monitor,and, if necessary enforce rules and thus create this order (Littrell & Valentin, p. 432).

Germany can be describes as directive. Although they have a voice and their opinions matter yet they are not treated warmly as imagined. In the rankings, Germany has a very low ranking on humane orientation, and their social interactions could be described as more unpleasant than what other countries exhibit (Brodbeck et al. 2002). With the Germans,interactions are deemed forceful and aggressive by nature. They are quite the direct opposite of compassion and consideration on how they portray their relationships. A behavior that is appreciated is one can handle conflicting demands and reduce disorder (Littrell and Valentin 2005).

As a result of lack of compassion and aggressive communication skills, chances of conflicts are quite most certain.They are all about putting time and efforts to getting job done to reduce risk as best as possible with no room error or feelings or relationships resulting to having so many rules and regulations created to adhere to.

In Germany, there are Five leadership types which includes charismatic,humble collaborator,individualistic,bureaucrat and oppressive (Brodbeck et al. 2002)

Russian Leadership style

The Russian culture has changed a lot over the past decades but up until the 1980s the Russian culture comprises of communism under the Soviet Communist control. They maintained a collectivist mentality with only power delegated and focused at the top (Kets De Vries 2000).

Russian people are happy with this system of rule , they feel some sense of security and know exactly what to do , just same as with the Germans. In the communist regime, everyone was treat as equals with no special treatment to anyone outside the chosen few. Back in those days, leaders were chosen based on how aligned you were to higher power in the communist party.

The death of Stalin was a huge shock to Russia during the fall of the regime in 1980s. With regards to Stalin, ” Russians feel a certain nostalgia for the kind of leadership be provided. Many people in Russia see the cure for every crisis as autocratic leadership ” (Kets De Vries 2000),p.75)

Russians in general like the idea of a leader with authority and delegates assigned to give orders and also they enjoy the sense of equality and feeling no one is better than the other . In the modern age, Russian is adapting to a new form communism and into the business world and global economy. Russia has lost sense of meaning and morale in sense. It has been labeled as a raging and hot-tempered country now (McCarthy et al.2010). There is nationwide confusion among the people finding it hard to live under a rule without an authoritarian figure in power to lead. To increase the difficulty of transition, Russia is now dealing with the emergence of the Russian Mafia (Kets De Vires 2000).

As a result of these changes and difficulties affecting the Russian people it also affects their leadership Styles and to them the most relevant style of leadership is dominance and authority. Transanctional leadership style is the most dominant style of leadership in Russia . The relationship between the leader and subordinate are formed around the concept of strict arrangements and dealings (Elenkov 2002)

This form of leadership was in existence during the communist era and it is still noticeable till date. Leadership styles expected to be autocratic in nature as well as having a sense of paternalism as well (Ardichvili 2001)

How to benefit from different cultural work ethics?

Work ethics often relates with attributes with which employees put together to doing their tasks. Work ethics can be referred to as a cultural norm that advocates people to hold accountable and responsible for the work they done based on the belief that work has intrinsic value to the individual (Cherington, 1980; Yankelovich & Immerwahr, 1984).

According to Quynh Vu,work ethics is a system of moral principles. The term is derived from the Greek word ‘ethos’ which indicates custom, habit, character, or disposition. Ethics indicates various types of moral decisions such as living an ethical life, using the right and wrong language, distinguishing between good and bad and so on (Quynh Vu ,2019)

These concept of work ethics varies based on how a company is governed and how the works of every employee is monitored and evaluated.

Work ethics in relation to culture as well varies in every country .These cultural differences could be seen in how managers tend to keep close eye on the work of employees or watch their screen when they work or constantly have to monitor every thing each employee is doing while in other countries when employees are tasked to do a work they are expected to give results with no obligation of the manager keeping close eye on them.

According to a research by ethusiasimsuitsyou on Cultural differences, work ethic and remote monitoring in Singapore ,

I once heard a project manager tell us about an experience in Singapore. He had a team of Scandinavian engineers with him for starting up a project that would be continued by the Singapore branch. They all met for a kick-off and had a great time. The next day, the teams started doing their part of the presentation. After a couple of days the Singaporean project manager started to worry that the Scandinavians left after 8 hours each day, sometimes even after 3pmon a Friday (though, staying later another day maybe.) He told the Scandinavian team leader that he should really look after his employees, he was afraid they were not working properly! The Scandinavian said he had full faith in them that there was no need to worry. The Singaporean continued to walk around his employees, looking over their shoulders and making sure they were always on time.

Time passed and it was show-time. It turned out that the Nordic team had delivered what was expected and surpassed the expectations, even better than the Singaporean team had. The local project manager simply could not understand this as he had seen the Scandinavians “slacking off” as he called it, taking breaks and seeming, to him, “irresponsible”. The Scandinavian team leader had to explain that in our culture, we have this “freedom with responsibility” principle. He told his employers what they needed to accomplish by the end of this time period and they were all expected to reach this target. If one day wasn’t productive, that’s ok, just be more productive the next. At the end of the time period, it’s the results that matter. ( 2017,Cultural differences, work ethic and remote monitoring URL : https://www.enthusiasmsuitsyou.com/cultural-differences-work-ethic-and-remote-monitoring/)

Based on the research stated above it is clearly seen that cultural differences and ethics were noticeable and the benefits for the Singaporean manager to understand how to implement a new methodological approach to working with his employees.

A company built on the concept of monitoring its employees tend to have multiple problems creating mistrust and lack of proficiency when employees feel they are constantly watched with no freedom to work regardless of their credibility and efficiency . My own values and beliefs of work ethics have to match the company’s in order for me to be a happy worker and develop in my role.(Sandoff & Widell, 2009, pp.201, Chan, Gee and Steiner, 2000, pp.47-52)

There are differences in culture and work ethics in various countries. While some countries are more inclined to efficiency of duty , others tend to monitor their employees yet in some countries neither is placed first rather bribery is in place.

According to a research in India posted by Harvard Business Review ,2016 on Talking About Ethics Across Cultures , ” First, it’s critical to acknowledge the reality of the context. My Indian entrepreneurs needed me to demonstrate that I understood the pressures they confronted on a daily basis. And my audiences in other regions — notably in parts of Asia — need recognition of the strong emphasis placed on respect for authority. Without this acknowledgment, any discussion of values in the workplace seems irrelevant at best and hypocritical at worst. However, just as we acknowledge those realities, we also recognize that this does not mean that individuals in a particular region are necessarily happy to pay the bribe, for example, or content to mute their own concerns, for another.(Mary C. Gentile 2016)

Significance of Work Ethics and how benefits to different cultures

When the gap in differences in work ethics and culture is bridged then the following are the benefits :

• Aids productivity
• Cooperation is enhanced and promoted

For stability and work efficiency in a working environment, it is important that :

• All employees are treated with respect and fairly regardless or race, culture and status
• Transparency is voiced clearly on rules and regulations of the company
• Employees are well informed in details about salary and promotion policies
• Equality is practiced and maintained with no preferential treatments to one staff over another

Referencing

Ardichvili, A. (2001), ” Leadership styles of Russian entrepreneurs and
managers”, Journal of Development Entrepreneurship, Vol 6 No.2 pp.169-188,URL: https://www.deepdyve.com/lp/emerald-publishing/the-effects-of-culture-on-leadership-styles-in-china-germany-and-XILGmYEKjP?articleList=%2Fsearch%3Fquery%3Dculture%2Band%2Bleadership%2Bstyle

Ardichvili, A . and Kuchinke, K.P (2002), ”Leadership styles and cultural
values among managers and subordinates: a comparative study of four countries
of the former soviet union, Germany, and the US”, Human Resource Development
International, Vol. 5 No. 1, pp. 99-117. URL: https://login.libproxy.utdallas.edu/login?qurl=http://web.ebscohost.com%2fehost%2fpdfviewer%2fpdfviewer%3fvid%3d27%26sid%3d7f1e13a1-13a5-4722-bb80-bb1819f500e0%2540sessionmgr111%26hid%3d117.

Brodbeck,F.C, Frese, M. and Javidan, M (2002), ” Leadership made in Germany: low on
compassion, high on performance”, Academy of Management Executive, Vol 16 No.
1, pp. 16-28, URL: https://login.libproxy.utdallas.edu/login?qurl=http://web.ebscohost.com%2fehost%2fpdfviewer%2fpdfviewer%3fvid%3d34%26sid%3d7f1e13a1-13a5-4722-bb80-bb1819f500e0%2540sessionmgr111%26hid%3d117.

Cherrington, D. J. 1980. The work ethic: Working values and values that work. New York: AMACOM

Kaifeng Yang, Sanjay K. Pandey. How Do Perceived Political Environment and Administrative Reform Affect Employee
Commitment?, Journal of Public Administration Research and Theory,
Volume 19, Issue 2, April 2009, Pages 335–360, URL: https://www.deepdyve.com/lp/oxford-university-press/how-do-perceived-political-environment-and-administrative-reform-33J60apsGO?

Kets De Vires, M.F.R. (2002), ” A journey into the ” Wild East”: leadership style and organizational practice in Russia”. Organizational Dynamics, Vol. 28 No. 4,pp.67-81, : https://login.libproxy.utdallas.edu/login?qurl=http://web.ebscohost.com%2fehost%2fpdfviewer%2fpdfviewer%3fsid%3d7f1e13a1-13a5-4722-bb80-bb1819f500e0%2540sessionmgr111%26vid%3d83%26hid%3d1.

Littrell, R.F. (2002) ” Desirable leadership behaviors of multi-cultural managers in China”, journal of Management Development, Vol. 21. 1,pp.5-74

Littrell, R.F and Valentin, L.N.(2005), ” Preferred leadership behaviors: explanatory results from Romania, Germany, and the UK” , Journal of management Development, Vol. 24 No. 5, pp. 421-442, URL: https://login.libproxy.utdallas.edu/login?qurl=http://web.ebscohost.com%2fehost%2fdetail%3fsid%3d7f1e13a1-13a5-4722-bb80-bb1819f500e0%2540sessionmgr111%26vid%3d44%26hid%3d1.

Mary C. Gentile 2016. Talking About Ethics Across Cultures. URL : https://hbr.org/2016/12/talking-about-ethics-across-cultures

Sandoff, M. and Widell, G. 2009 ‘Freedom or docility at work – is there a choice?’, International Journal of Sociology
& Social Policy, 29 (5), pp.201.

Quynh Vu 2019,
Developing A Culture of Strong Work Ethics ,URL :https://www.employeeconnect.com/blog/developing-a-culture-of-strong-work-ethics/
 Accessed 29.10.2019

 

 

‘ Change does not happen in comfort zones ‘

— John Samuel