An Article Critique and Review: The Definitive Guide to Recruiting in Good Times and Bad

In Partial Fulfillment of the Course Requirements In Strategic Human Resource Management (HRM603M)

 

Summary, Critique and Opinion

The article (Fernandez-Araoz, Groysberg, & Nohria, May 2009) realizes the importance of an effective and structured hiring process of a company which can be advantageous to times of great opportunity like a recession. As observed that upon the turn of recession, there is a huge amount of potential and talented workforce that are looking for jobs. It is to the advantage of a company to filter and get the right employee that will be effective and can contribute to the realization of the goals of the company. In addition, the Article realizes the potential of recession in providing a large pool of manpower. As per Business Code of Ethics (Aquino, October 23, 1979), a company must provide an equal opportunity to applicants.

It is consistent that the recommendations of the Article highly focuses only on hiring top-executive or high ranking positions in a company because of the results of their research. The research focuses solely on 50 global companies by interviewing their CEOs and their respective HR managers. In addition, the research has surveyed executive-search consultants. From this, a majority of these CEOs does not follow a form of standard in terms of hiring a top executive position. But rather, these CEOs rely solely on their personal feel and preferences. These results can signify that HR is not effective in creating a hiring process and guidelines for the company, which could lead to a waste of time, resources and opportunity of the company. However, these can also signify that the CEO is also at fault for not realizing the needed improvement in the hiring process and for the deficiency of leading HR properly in creating a standard hiring process.

The Article, in turn has recommended a structured seven steps in hiring and keeping a top-executive position for the company.

The first step is by anticipating the need of manpower which should also be forecasted along with the projection and goal setting of the company. This step, gives HR management a huge responsibility in supporting and accomplishing the goal of the company, as in the concept of Value Chain (Robbins & Judge, 2009). In addition, HR can create strategies and properly schedule the career and skill development of the current and soon to be employees in the future. Given that the company will have an insight of the needed resources in hiring and keeping employees, HR must ensure that the future employees will perform effectively and efficiently. Hence, the first step is justifying the need for a proper hiring process of a company.

The second step is by specifying the job not only to specific job descriptions and specific skills, the job specification must also consider the management style needed in handling the current teams. In addition, the second step is considering the effect of the company culture to the job specification. By considering other factors in specifying the job, HR will hire an adaptive and job fit employees in the future. This step helps HR management in saving the company and not waste additional resources and time in training just in order for the new employees to be fit in the job and company.

The third step is by developing a pool of recommended candidates hence the company must have a diverse sources of manpower for recommendation. This step helps HR to save time in terms of looking for a set of candidates. The diverse source may come from recommendations of peers and/or employees that are a highly reliable source of nominations. Since the behavior and skill of a candidate can be confirmed easily by peers. In addition, HR can have a faster hiring process since HR can skip the background check of a candidate, saving time and resources of the company. This practice is currently being done by HR of Honda Cars Philippines, Inc.

The fourth step is by assessing the candidates properly in terms of a standard probing and questioning practices. It is highly recommended in the Article that in an interview, the best result can be gathered by asking behavioral event scenarios which will give the true personality of the candidates. Another method is by keeping a special set of interviewers that will ensure and recommend a quality set of candidates. Lastly, the involvement of stakeholders in the assessment process can eliminate the bias in every interview session. This fourth step also contributes to the company by savings in terms of additional meeting time for deliberations and recommendations. However, the company must invest in resources and especially in time in order to have the necessary capable interviewers. Hence, the full implementation of the entire Article recommendations and steps will only be ready for deployment or implementation once there are available and trained interviewers. In addition, this entire article will not be readily effective and implementable unless this fourth step is already being practiced by a Company.

The fifth step is by closing the deal to candidates while the hiring manager is present in the actual transaction and negotiation. The presence of the hiring manager gives an opportunity to further know the candidate while the step also helps the HR in terms of saving time for transition and adapting period of the new employee with the immediate superior. In addition, describing not only the opportunities of the job position but also the challenges that awaits in the company will give the candidate a set of expectations, directions and an insight of the culture of the Company. This step also makes a final screening process for the job fit of the candidate to the Company. Lastly, the Article is practicing the recommended Catholic Social Teachings (Zigarelli, 1993) by recommending the compensations being offered to the candidate be fair to other employees or the same set of compensations to the same position employees.

The sixth step is by integrating the newcomer in terms of assigning a mentor to the newcomer in order to ensure the tenure and effectively contribute to the company’s goals. The mentor will help speed up the transition process of the newcomer to the job position but also to the culture of the Company.

However, an observation to the Article is that the recommended hiring process is only applicable or biased toward large corporations and are not applicable to small or growing successful company. These bias can be clearly seen on Step4, 5 and 6 which describes that a set of top ranking officials be involved in the hiring process and transition process. These requirements can only be achieved by having a large pool of tenure employees which is likely the case in small and growing successful company. It is a fact that tenure officers have experience and knowledge of the processes in the Company. However, these tenure officers can back fire the hiring process by being threatened of their position and acquired power (Robbins & Judge, 2009). Hence, these challenges must be recognized by the HR management and make the necessary programs in order to prevent these possible scenarios.

Lastly, the seventh step is by auditing and reviewing the performance of the new hired employees. These performances can be measured and monitored by HR management by creating a control system and strategy against the job descriptions and targeted goals of the newcomer. It is recommended that a bad performing newcomer must be relieved within the first year and the recruiting process be reviewed and updated regularly in order to save the company from wasting time, resources and opportunities in the future.

The Article, however, fails to realize and mention the importance of Leadership as one of the traits needed in hiring a top-executive. As mentioned in an Organizational Behavior (Robbins & Judge, 2009), a leadership skill can be natural to an individual or can be learned through experiences. If a Company fails to measure the leadership skill of a candidate, the whole recommended hiring process can be compromised due to the required additional skills that need to be taught to the newcomer.

Aside to the equal opportunity that the Company must provide to applicants (Aquino, October 23, 1979), the Article recommends that it is better to hire top-executives than hire potential applicants which can be trained to be leaders and top-executives (Robbins & Judge, 2009). The Company can hire more employees rather than one top-executive compared to the opportunity of hiring two or more applicants of the same salary amount combined which in turn could deliver or contribute twice or  more. This way, the Company can be an ethical Company that gives more individuals the opportunity to perform their right to work as mentioned in Catholic Social Teachings (Abela, 2001).

The recommended seven steps in hiring, guides the HR management of the Company to realize the importance of having a structured and standard hiring process in order to achieve the goals of the Company and support the company in terms of saving time, resources and opportunities in the future. These factors could and should have been realized by CEOs in order to help HR in structuring a standard hiring process.

Bibliography

Abela, A. V. (2001). Profit and More: Catholic Social Teaching and the Purpose of the Firm. Journal of Business Ethics , 31: 107-116.

Aquino. (October 23, 1979). A Code of Ethis for Business. In B.-B. C. Development.

Fernandez-Araoz, C., Groysberg, B., & Nohria, N. (May 2009). The Definitive Guide to

Recruiting in Good Times and bad. Harvard Business Review , 74-84.

Robbins, & Judge. (2009). Essentials of Organizational Behaviour (13th ed.). Prentice-Hall.

Zigarelli, M. A. (1993). Catholic Social Teaching and the Employment Relationship: A Model for Managing Human Resources in Accordance with Vatican Doctrine. Journal of Business Ethics , 12: 75-82.

Reflections on “A Leader’s Values” by Pia Manalastas

The paper is about, the same as the Title; a leader’s values as key factor in doing CSR activities by a corporation. CSR is defined as a mandatory activity in the point of view of Ethics. In addition, CSR are executed in terms of proactive activities and not reactive activities to the society. The purpose of the author is to present ways in putting CSR as part of Philippine business and society.

The supporting arguments in the paper mainly revolves in the values of the leader as the leader dictates or influences the organization, in turn, changes the society. Although, limitations are placed in the argument that these leaders is the type that influences and inspires their subordinates in an organization or a “leader by example” type. In addition, the values mentioned are defined and categorized as dominant Filipino traits using the Schwartz’ Value Sphere. The author of the paper hopes that these Filipino values can be found in Open to Change & Self-transcendence Areas. These categories are values that are needed for a leader in order to execute CSR in the organization. However, most of the dominant Filipino values are found in the Conservative area while few values are under the Self-Transcendence. This finding does not mean that Filipinos are not capable of having the necessary values for integrating CSR in an organization. Rather, Schwartz’ Value Sphere is not enough alone to gauge the Filipino values.

The following support argument states that the necessary values of a leader can be taught in graduate business schools, as one of the many ways. These schools play a major role in educating and training future leaders of organizations. Thus, graduate business schools must have curriculums in terms of CSR and Ethics in business. These curriculums create awareness to students about their responsibility to their organization and society. One method recommended by the author in creating awareness for CSR is the Service Learning concept. This method is supported by the inspiring reactions of students in DLSU-GSB.

My personal view on the paper, CSR is indeed a necessary curriculum in graduate school in order to create awareness in the CSR activities as part of the organization.

In the paper, the requirement for implementation of CSR to organization lies in the values of a leader being transformational and in that only leader’s value that dictates the company’s CSR implementation and execution. These are strict limitations and considered as golden rule or law, so that the solutions revolves around these laws, as graduate school as one of the avenue of influencing these values. But, I believe there are other avenues for security in implementation and execution of CSR in an organization aside the leader’s value.

In addition, CSR is presented in many ways in terms of government constitution, ethical values, and economic experiences in order to prove the necessity of CSR. But, CSR is only accepted by a number of organizations. These numbers are positively but slowly increasing. In a parallel scenario, graduate business schools are including CSR as part of the curriculum, but slowly increasing. CSR is relatively new for being accepted in graduate schools. But, constant vigilance will one day be a universal curriculum in graduate schools, not only in the Philippines but also worldwide.  It is an honor and a privilege to be studying in DLSU, as one of the pioneering schools that have CSR as a curriculum in graduate school.

Reflections on “Principles of Lasalian Social Development”

The paper summarizes the guiding principles that every Lasalian individual and group must have in order to have a successful and meaningful social development. The paper at first presents the current status of society in the Philippines and the responsibility lies to every institution for the improvement of society. Since schools are one of society’s institutions, Lasalian institutions must understand that social development is part of the school’s mission.

The principles are presented in three categories, namely: bring forth awareness and understanding of social realities, effect liberating actions and lastly, be in solidarity with progressive groups of a larger community.

In summary, the first category explains that a Lasalian must develop a skill in awareness to the current social status and to understand these social realities, Lasalians must be immersed or know a first hand understanding through interactions. The second category guides the Lasalians individuals and groups through necessary principles in order to be an effective social development. Lastly, the third category guides these Lasalians individuals and groups to help and coordinate with other groups that will help social development.

These three categories define and explain the ideal principles that each Lasalian individual and group must do in order to have a meaningful social development.

My personal point of view on the paper, the principles presented are defined and presented well in a whole in order to properly guide Lasalians and gives a measurement on what to expect from every Lasalian. The paper does say that a Lasalian means a member of Lasalian Institution, encompassing students, faculty, and employees. However, the paper does not say who is responsible for teaching these principles but rather expects these principles to every Lasalian.

The principles are presented in a sequential way, highlighting that change should start from oneself, then following to cooperate within the group and then outside the institution. Enlightenment and awareness is necessary in order to assess and guide every decision. Then, the second step of coordinating within the group should prove to be the best thing. Working along side with the same thought and motivation will ensure a successful endeavor. In addition, the second step is also a measurement in order to gauge an individual capability to cooperate as a group or team. If they can’t cooperate within the group of same ideals, then what more they expect to achieve if they are confronted to cooperate with individuals with different perspectives and motivations. The last step shows the growth of an individual and the group acting as one entity; having the same ideals, morals and motivations. The last step is their contribution to society, by sharing their knowledge and passion.

The limitations of these methods are time consuming. Knowing the necessary requirements and steps to take, time must be invested before an individual and group to go out in society. One must first pass a requirement in a step in order to move on. Hence, the training process should be underway in order not to loose more time. But, each must not be that in a hurry, for these guiding principles will ensure a productive individual of a group in society making sure of success instead of unnecessary mistakes at the cost of time and precious resources.

Reflections on “The Foundational Principles of Lasallian Formation”

The paper summarizes the principles made and used by Lasalian Educators in achieving a personal transformation they call the Lasalian formation. The paper starts the argument that the principles are based and guided by the teachings of God and inspired by the work of St John Baptist De La Sallle. The principles are under three categories, namely: The Spirit of Faith, Zeal for the Integral Salvation of All and lastly, Communion in Mission, Mission as Communion.

The first principle is about the characteristics coming from the guidance of God. The next principle is the power of faith in saving and helping others. These desires of helping will improve oneself. Lastly, the last principle is about the communion or better defined as communication or association with others. As compared to communion with God, the importance of association will be transpired in associating with others creating unity.

My personal point of view on the paper, the principles are mainly inspired by the teachings of the church and inspired by St John Baptist De La Salle. The principles mainly revolve in the good nature of oneself guided by God. Hence, achieving the ultimate mission of helping others and enlighten oneself.

These principles are steps needed in order to achieve enlightenment and to view the greater vision every Lasalian educator and also Lasalians.

A Case Analysis on Biscuits (Monde Nissin Corporation)

 

SYNTHESIS:

Monde Nissin Corporation is the country’s market leader in the dry bakery industry, having consistently making it since 2000 in the highest position a dry bakery product manufacturer can reach in the “Top 1000 Corporation in the Philippines”.

Since its first fast-selling biscuits, Nissan Butter Coconut and Nissin Waffer, rolled out of its Laguna Plant in 1980, Monde Nissin Corporation have embraced delivering excellence through its intensive market research and continuous product innovation lead by its talented pools of people.

Subsequently, it also ventured into instant noodles in 1989 and introduced wet, dry and no-cook noodles in its Lucky Me! brands.

To further expand its market share and complete its line of dry bakery products, Monde Nissin Corporation bought MY San Corporation, the leading manufacturer of famous cracker brands: SkyFlakes, Grahams, and Fita, and which have settled, too, in the “Top 1000 Corporation in the Philippines”.

Currently, Monde Nissin Corporation products are under the brand names: Monde, MY San, and Lucky Me!

POINT OF VIEWS:

The analysis, alternative courses of action, recommendations and action plans in this paper were proposed while under the point of view of a market researcher/practitioner and were approached under the given year 2003, 2004 and 2005.

STATEMENT OF THE PROBLEM:

This paper treats Monde NIssin Corporation and Monde MY San Corporation separately, and aims to answer the question: How can Monde Nissin Corporation increase their market share in the biscuit and cookie industry and other dry bakery products? for Monde Nissin Corporation only.

OBJECTIVES:

To be able to increase the market share of Monde Nissin Corporation, this case analysis is guided by the following objectives:

  1. To identify and to analyze the position of Monde Nissin Corporation in the biscuit and cookie industry in the Philippines for the year 2003, 2004 and 2005
  2. To propose courses of actions and to evaluate which among it can yield the highest market share for Monde Nissin Corporation for the year 2005

 

AREAS OF CONSIDERATION:

Terminologies:

  • Dry Bakery Products / Dry Bakery Market – refers to biscuits, cookies, pretzels, crackers, and similar other goods. Instant noodles not included.
  • Instant Noodle – will refer to noodles industry/market
  • Snack Foods – “in-between” hunger meals that quickly resolve a person’s starvation before or after regular meals took placed.
  • Substitutes – products or services that have different forms but offer the same functionality or core utility (Kim & Mauborgne, 2005)
  • Alternatives – products or services that have different functions and forms but offers the same purpose (Kim & Mauborgne, 2005)

Constraints of the Study:

  • Revenues for Monde Nissin Corporation and Universal Robina Corporation were not provided to properly identify their position among the selected players in the 2003-2004
  • A total of 40% market hold in the entire dry bakery industry were given to both Monde Nissin Corporation and Monde MY San Corporation, declaring both companies to be the highest player of all
  • Although Monde Nissin Corporation was declared to be the leading manufacturer of dry bakery products in 2005, having taken the number 50 slot of the “Top 1000 Corporation in the Philippines”, it is still unclear whether its revenues have been mostly from its dry bakery products or from its instant-noodle brand, Lucky Me! It is therefore unclear whether Monde Nissin Corporation is truly the market leader in the dry bakery industry.
  • SWOT Analysis can not properly be provided as the data for the company’s Strengths and Weaknesses are insufficient to actually make a good analysis, and whatever will be indicated will be by assumptions only.

Assumptions:

  • Monde M.Y. San Corporation contributed more in the 40% biscuit and cookie market share it holds with Monde Nissin Corporation
  • Manufacturing dry bakery products only, Monde MY San Corporation positioned at slot 260 last 2005 in the “Top 1000 Corporation in the Philippines” presents that solely manufacturing dry bakery products can go as far as it had reached back then; With Universal Robina Corporation following at slot 485.
  • The Lucky Me! products strongly pull up the revenue of Monde Nissin Corporation declaring it the market leader in both the instant noodle and the dry bakery categories.
  • Monde NIssin Corporation, Monde MY San Corporation, Universal Robina Corporation, Republic Biscuit Corporation, and First Choice Food Corporation are the country’s largest and leading dry bakery product manufacturers, having all the research and development facilities, strong advertising campaign and wide market reach.

Frameworks and Analysis:

  • Porter’s Five Forces Analysis:

Industry Competitors

The competition in the dry bakery market is divided into three groups: uthe Large Manufacturers, which produce the popular biscuit and cookie brands found in the supermarkets down to sari-sari stores; vthe Neighborhood Bakers, which often sell newly-baked dry bakery products on per piece basis, are within the neighbors’ reach and are available to the localities most of the time, and wthe Cottage or Backyard Producers, who make specialty biscuits and cookies using traditional or secret recipes and are personally sold either seasonally or on per request basis in much higher prices.

In summary, there is a high industry competition in the market because there is a high number of industry players.

Potential Entrants

Since manufacturing dry bakery products, most specially biscuits, cookies, pretzels, and crackers, require low cost and by-volume-sold ingredients: flours, shortening, baking powder, sugar, milk, cheese and other dairy products; and are baked in large quantities, entering the industry is easy. As of the case was written, there were already sixteen (16) local and ten (10) foreign manufacturers competing in the dry bakery market share, all catering to introduce new products or to new customers through their own advertising campaigns based from the market studies done by their own research and development facilities.

In summary, there is a high potential that new entrants can join in the competition because of low capital requirements

 

Substitutes

Because of the high competition from the large manufacturers, neighborhood bakers and backyard producers, and the possibility of the rise of new entrants in the market, customers have numerous substitutes to meet their in-between regular meals hunger. Besides the substitutes, alternatives such as chips, chocolates, fruits and noodles are also roaming in the market.

In summary, there is a high threat of substitutes because of high competition between the minor and major industry players.

Buyer Power

Dry bakery products are distributed to groceries, supermarkets, convenience stores, and sari-sari stores, where priced are already printed and declared during purchases giving customers no other way to bargain. Besides these, the increases in number of supplies (including substitutes and alternatives) decreases the price making mostly dry bakery products available everywhere and to everyone, from class AB to CDE, so bargaining is really not applicable.

In summary, buyer power is low because availability of the dry bakery products is high everywhere and to everyone

Supplier Power

Ingredients in making dry bakery products are within reach of the manufacturers, who can either import or buy locally. And because manufacturers buy in volume, their bargaining power increases as their order, too, increases, getting a much lower price.

In summary, supplier power is low because there is a high availability of supplies in the country or outside the country.

  • Product-Market Expansion Grid:
Current Product New Product
Current Market Market Penetration

-Increase availability to international market

-Form alliances to companies that can compliment the Monde products

Product Development

 

-Introduce mini cakes, breads  and pretzels to compete with Rebisco’s and Universal Robina’s

-Introduce a product that could compliment the product of another company (Promotional Alliances)

New Market Market Development

-Form a new specific market segment that is everywhere in the country and that can people relate to such as: students / employees/taxi or jeepney drivers/ entrepreneurs

-Export the products to countries with still zero exposure about the brand

Diversification

 

-Moved the organization into manufacturing instant noodles alone.

- Manufacture chips and curls to compete with Rebisco’s and Universal Robina’s

  • Opportunity and Threat Matrices

Opportunity Matrix

Success Probability
High Low
Attractiveness High uForm alliances (product or pricing) to companies that can compliment the Monde products

v Increase availability to international market

wIntroduce a product that could compliment the product of another company (Promotional Alliance)

yForm a new specific market segment that is everywhere in the country and that can people relate to, such as: students / employees/taxi or jeepney drivers/ entrepreneurs

zIntroduce mini cakes, breads  and pretzels to compete with Rebisco’s and Universal Robina’s

Low xExport the products to countries with still zero exposure about the brand {Manufacture chips and curls to compete with Rebisco’s and Universal Robina’s

|Moved the organization into manufacturing instant noodles alone.

Threat Matrix

Probability of Occurrence
High Low
Seriousness High -Competitors strongly advertise to reach greater number of the market

-Increasing number of substitutes and alternatives

-Customers spending is not concentrated on food alone; communication (cellphone load) and transportation expenditures  and are eating up the customers allowances.
Low -New entrants can easily enter the market because the industry does not low capital requirements. -There is no room for buyers to bargain

- Supplier bargaining power is low

ALTERNATIVE COURSES OF ACTION

ACA #1: Form alliances (product or pricing) to companies that can compliment the Monde products

Example: Buy one Get One

 

Pro(s):

-Alliances between another companys’ products will uintroduce to customers complimentary goods that will best be suited when consuming Monde biscuits and cookies, vwhich will increase both products’ market share and wwhich will form strong lasting relationship between the products and the organizations as well. With this in line, xcommunication campaign expenditures will be diminished as it will be divided between partners.

Cons(s):

-The Monde brand and products will be affected when something went wrong with its complimentary good, and vice versa.

-There might be a exclusivity deal that would close any other opportunity for Monde for a specific period.

ACA #2: Increase availability to international market

Pro(s):

-The Monde brand and products will be known to a greater market outside the country and will be appreciated and embraced by other nationalities other than the Filipinos.

Cons(s):

-Expansion of man-power

-Restructuring of the organization

-Increase of equipments and warehousing facilities

ACA #3: Introduce a Monde product that could compliment the product of another company (Promotional Alliance)

Pro(s):

-Attract specific market segment depending on the complimentary goods chosen as partner

-Will create a niche market

-Increase revenue for a particular target line, product, and period.

Cons(s):

-Creation or remodification of a Monde product will affect production line

-Packaging will be changed from its usual to compliment the other product

-Inventory management will change and be affected

 

 

 

 

 

 

RECOMMENDATION

 

ACTION PLAN

 

 

 

 

 

 

 

 

 

 

 

REFERENCES

Top 1000 Corporation in the Philippines. (vol 21 2007). BusinessWorld, pp.70,78, 111,171.

Kim, W. C., & Mauborgne, R. (2005). Blue Ocean Strategy. Boston, Massachusetts: Havard Business School Press.

Omaña, R. M. (2006). A Bite of the Biscuits and Cookies Market in the Philippines. Retrieved from Agriculutre and Agri-Food Canada: http://www.ats-sea.agr.gc.ca/asean/4332_e.htm

Case Study Analysis Philippine Orient Airways

A Written Report Submitted in Partial Fulfilment of the Course Requirements in Marketing Management (MKT 511M)

Background of the Case

Philippine Orient Airways (POA) has been in operation since 1998, and one of the major players in the air transportation industry. Currently, a rumour has been circulating that POA’s going to fold up, this is mainly due to the recent event of scrapped merger with POA’s sister airline company; Pan Philippine Air (PPA). As a result of the rumour, POA was loosing passengers for the past three weeks, even though the start of Christmas season is at hand. In addition to the recent event, POA has announced for contract termination with travel agents. These travel agents are not recommending POA flights due to unstable situation of POA.

The CEO of POA has instructed the Marketing and Sales Director to prepare a comprehensive plan on immediate improvements of POA’s market share and passenger loads while in the middle of a crisis.

Statement of the Problem

What marketing plan should the Marketing and Sales Director implement in order to alleviate the current crisis on rumours of fold up and improve market share and passenger load?

Objective of the Case Analysis

To implement an effective and efficient short term marketing plan in order to the address the current crisis and improve the market share and passenger load of POA; and to implement a long term marketing plan in order to sustain or increase more the market share and passenger load of POA.

Assumptions

  • The decision making to be done in the point of view of the CEO of POA and the marketing plan to be conceptualized and implemented by the point of view of the Marketing & Sales Director of POA
  • Financial data and analysis are accounted in the marketing plan for their opportunity advantage and cost.

Facts / Data of the Case

Company Vision & Mission

POA Vision:

  • To be a chosen airline that surpasses world-class standards

POA Mission:

  • Deliver the first-rate customer service combining Filipino hospitality and world-class competence
  • Carry people and cargo at the least cost and earliest time
  • Provide its employees with an ideal working atmosphere
  • Provide its stockholders profitability and fair gain on their investments

Definition of Terms

Market Share:   the percentage of passengers has used POA in terms of the entire airline industry and an indicator on how competitive POA against POA’s competitors in the airline industry.

Passenger Load Factor:                 the percentage utilization of available seat capacity and an indicator of how efficient the airline is operating its resources.

 

 

Environmental / Industry Analysis

Michael Porter‘s Five Forces analysis – Industry Competition Analysis

The framework will determine and identify the current competitions in the airline industry.

Rivalry among Existing Competitors

The existing competitors of POA are the SAL & PPA. There exists a rivalry between the three major airlines in terms of market share.

Threat of New Entrants

Since the airline industry in capital intensive and labour intensive, there is little possibility that new entrants will join the airline industry

Threat of Substitute Services

The alternative transportations are by land travel and sea travel. There exists a threat in these substitutes since they are cheaper that airline travel.

Bargaining Power of Buyers

The Buyers of airline industry are the travellers; they can control the success and pressure the company when travellers want to patronize POA or not. Other Buyers are the companies that use the airlines for cargo deliveries

Bargaining Power of Suppliers

The airplanes have long service life, the suppliers of planes poses little threat. However, the supplier for maintenance is from a single company that also employs by POA’s sister company,  a bargaining power that the maintenance company may favour or give more priority to POA’s sister company.

In summary, POA have existing direct and indirect competitions in the airline industry. The Direct competitors are SAL & PPA. On the other hand, the indirect competitors of POA are the alternative modes of transportation through land and sea. However, this case will be focusing on the direct competitors of POA.

 

Consumer Analysis

Consumer Analysis for airline service is needed in order to determine and identify the target market for this case.

Airline industry has two services, transferring passengers and cargo. The passengers can be sub categorized to two, private and corporate passengers. Cargos are from courier companies and from goods and products business companies.

Private passengers are travelling for leisure and personal purposes, while corporate passengers are for business purposes.

Passengers can avail seat reservations via travel agencies or through direct transactions with POA offices.

For this case, the focus will be given to flight passengers since the objective is to improve market share and passenger load in terms of number of seats sold per flight.

SWOT Analysis

SWOT analysis is used in order to identify POA’s internal and external factors in order to conceptualize a marketing plan.

External Factors:

Opportunities

  • There are routes that are not covered by POA & SAL
  • Low cost fare compared to POA’s sister company PPA
  • Low cost rate that is comparable to alternative transportation

Threats

  • Direct competitor for low cost fare; SAL
  • SAL has routes that POA does not have.

Internal Factors:

Strengths

  • More competitive programs for frequent flyers compared to SAL
  • Covering the same routes as POA’s sister company at a low cost fare
  • POA have highly trained flight attendants and stewards.
  • POA has an 97% on-time performance from Oct 2003
  • Passenger load factors (efficiency) of POA is more by 2% compared to the 2% of SAL

Weaknesses

  • POA is operating on thin profit margins
  • POA only have a 52% passenger load factor, lowest compared to SAL & PPA on 2002
  • POA has decreased most passengers carried to 9% from 2001 to 2002
  • POA has decreased the most seat capacity offered by 25% from 2001 to 2002

Ethical Considerations

 

  • All employees of POA have regular position & have benefits.
  • POA work place is safe and comfortable to employees.
  • POA hubs are safe and comfortable to passengers
  • POA are working under safety and environment rules and regulations

Alternative Courses of Action

ACA 1: Increase POA hubs by accommodating the same routes of competitors; SAL

Pros:      Market share will increase for POA since POA will now compete with SAL for passengers on the new route.

Cons:     Passenger load for POA will decrease since the new routes have slim demand to accommodate the seat capacity of both POA & SAL.

POA will incur opportunity loss to low passenger load created by the new routes and operations of new hubs.

ACA 2: Seat sales for advanced booking of flights

Pros:      Market share and passenger load will increase for POA since the advance booking will secure seats in the future designated dates.

Cons:     POA will incur loss in profit since the sale rate is lower than regular rates.

ACA 3: Tie up with banks and travel agencies for deferred and instalment payments of fares for passengers; a fly now pay later campaign

Pros:      Market share and passenger load will increase for POA since passengers can pay later for the fares and the campaign will be enticing to passengers without considerations of their current budget
Cons:     POA will incur loss in terms of cash flow since the account receivables will increase and deferred payment from the banks, however yearend revenue and profit will increase

Recommendation

Recommendation of ACA 3 out of the three ACAs, a campaign for deferred and instalment payment for passenger fares.

Market share and passenger load will increase at the same time no profit loss will be experienced by POA since the campaign is not a seat sale or a reduction of fares, only a deferred of payments from the banks and travel agencies.

POA can guarantee that passengers will have seats for flights since passenger load factor of POA is only 52%.

Marketing Action Plan

Marketing Tactics

 

  • Conduct a press conference and press release clarifying that POA business is at its strong operations despite the recent events of cancelled merger with PAA. This event will eliminate the rumours that POA will fold up and will shown the stability of the company.
  • Conduct a campaign through above the line campaigns for a month with weekly intervals in order to strengthen the brand and company name. In addition to persistently remind the people of the presence of POA and its quality services. The campaign will feature the highlights of POA though quality equipments and amenities, credible manpower, accessibility, on time records and low rates.
  • Simultaneous with the brand and identity campaigns, POA will reconnect and strengthens the partnership with old and new travel agencies. This will ensure a stable market share and passenger load for POA.

Marketing & Sales Strategic Plans

  • Simultaneous to the month long brand and identity campaign, the marketing and sales division will conduct conceptualization activities for a week in alignment to the fly now pay later campaign.
  • Upon conceptualization of the marketing plan, organization of resources and marketing activities, the division shall conduct a week long negotiations with banks and travel agencies on the duration of the campaign.
  • Marketing division will adjust the marketing campaign for a week based on the results of the negotiations and will have the final approval of the plan to the CEO of POA
  • Marketing division will conduct a creative and advertising plan for a week, along side with production of collateral designs for above the line advertising.
  • Upon the last week of the brand and identity campaign, the new campaign will be introduced and will continue for a weekly duration. This will ensure the continuity of presence of POA in the media industry.


References

Websites

Five forces analysis

http://www.provenmodels.com/25/five-forces/michael-e.-porter

http://en.wikipedia.org/wiki/Porter_five_forces_analysis

SWOT analysis

http://www.provenmodels.com/37/swot-analysis/c.-roland-christensen–edmund-p.-learned–kenneth-r.-andrews–william-d.-guth

http://en.wikipedia.org/wiki/SWOT_analysis

Book

                Marketing Management             

Kotler/Keller, MARKETING MANAGEMENT, 12e. (Prentice-Hall, 2006).

A Case Analysis on Victoria Court’s Brand Image

Submitted In Partial Fulfilment of the Requirements for: MKT511M

  1. Case Background

A huge difference between the management’s and the consumer’s service and brand perception is hindering Victoria Court from fully operating as a unique hotel. As much as Victoria Court offers world-class luxurious rooms designed in different themes for good rest, private conversation and clandestine romance, its fast, efficient, and personalized services along with its well-trained customer-oriented staffs have been imprinted as nothing more but as a motel as its brand image to the consumers’ mind; a motel that can provide any couple extreme privacy and out-of-the-ordinary bedrooms of romance for few hours.  Quite the opposite from how its management perceives it to become, a drive-in hotel that caters not just to couples searching for few hours of private moments, but, too, for groups and individuals within and outside the metro who seek for a cheaper-than-a-hotel’s room rates but with ameneties, exclusivities and experiences far better than what any hotel can offer.

Armed with fabouluous amenities that would highly be priced by the popular hotels in the metro, Victoria Court aims to introduce and promote a unique hospitality company to groups and individuals (couples, families, officemates, travelers) searching for far less than the industry standard 24-hour stay and cheaper than any other hotel. Its communication efforts though appeared to be futile and without much success in changing the consumers’ mind. How it can managed to inform and to persuade consumers to believe that they can offer more than private bedrooms is the challenge.

  1. Statement of the Problem

Aiming to align the management’s and consumers’ service and brand perception, this paper is being guided by the question: How can Victoria Court change the consumers’ perception, its brand image, from being a motel company to being a unique drive-in hotel?

  • Objectives
  1. To change Victoria Court’s market image from being a motel company to being a unique drive-in hotel business.
  2. To enable Victoria Court to tap all its target market – couples, groups, families, travelers – and to penetrate the market using effective communication mixes and tools.
  1. Areas of Consideration

As Kotler and Keller stated, “the starting point of planning a marketing communication is an audit of all potential interactions that customers in the target market may have with the company and all its products and service.” To analyze then the possiblity of changing the consumers’ perception regarding Victoria Court’s image from being a motel to being a drive-in hotel as how management perceive it to be, the following areas are being considered to affect its branding:

  1. Industry Category (Product)

Drive-in Hotel Services: a niche industry categorized in between a high-priced hotel and cheap motel or loadges.  It offers variety of bedrooms depending on the size consumer needs. And just like a hotel’s room service, Victoria Court delivers cooked foods and special beverages to the room upon the guest’s request.

  1. Super Suites. This is Victoria Court’s top of the line rooms. It rivaled the rooms to 5-star hotels with their unique interior decor and amenities like a spa and a Jacuzzi. It is measured around 70 sqm making it convenient for group activities like parties and company functions. It is also equipped with a sound system to allow people with a craze for videoke and to vent to their singing urge.
  2. Mini Suites. These are the second line of special rooms. It had the same thematic design and amenities except for the sauna. These rooms are suitable for couples that just wanted private moments together.
  3. De Luxe Rooms. These rooms have their own garage to ensure the privacy of the guests. It is catered to the middle market where value for money determined their choice of accommodations. Each room was designed differently to conform to the Victoria Court policy that each room should be unique. All De Luxe rooms were equipped with ACU, cable TV, Karaoke, and mini ref complete with drinks.
  4. Standard Rooms. These are mostly occupied by taxi riding guests not needing space than what a good rest and their few belongings can be provided.
  1. Target Market (People)
  • Couples (married or not, same sex or not) that are looking for a private place to have a quality time together
  • Not below 18 years old unless accompanied by parents or a guardian
  • Travelers or foreigners that seek a place to rest that are affordable and easy on the budget
  • Car or vehicle riding couples that can park their automobile in a near and accessible area
  • Families seeking for quality time and dedicated place
  • Company / groups looking for places to conduct activities and events
  1. Location (Place)

Victoria Court locations are situated to areas branded and reputed as scandalous and shameless, besides famous cheap motels such as the flower group motels in Pasig.

  1. Availability / Reach / Affordability (Price)

Unlike any other hotel, Victoria Court offers less than the industry standard 24-hour stay at a much lower price depending on the room size and hours of stay the customers need.  Room rates are based per hour, per size. Number of occupants does not matter. Provincial travelers or business people who need only a place to leave their belonging for a couple of hours can confidently rent a room for a minimum of 2-hour stay at P215.00 only. While party people who perceived too dangerous to travel after midnight can stay four 3- to 4- hour stay at P995.00 to P1,595.00 only. Cost of renting decreases as per the number individuals sharing a room.

ROOM TYPE HOURS RATE OVERTIME 12 HOURS 24 HOURS
Standard          
Mabuhay 2 215 N/A N/A N/A
Regular 3 555 195 945 1,385
De luxe          
Mabuhay 3 435 N/A N/A N/A
Regular 3 895 295 1,485 2,235
Super de luxe 3 1,075 355 1,785 2,685
Suite          
Mini 3 995 N/A N/A N/A
Regular 4 1,595 525 2,645 3,190
Super 1 5 2,830 705 3,885 4,245
Super 2 5 3,395 845 4,665 5,095
  1. Analysis of the Case
  2. Porter Five Forces Analysis

Threat of New Entrants (new competitors)

There is a low barrier and high threat in putting up new facilities due to low capital investments compared to cost of building first class hotels

Threat of Substitute Products

There is a high barrier and low threat of substitutes since hotels are more expensive in terms of facility cost. However, a low barrier and high threat to motels and lodgings due to lower rates at the same time of stay offered by Victoria Court

Bargaining Power of Customers (buyers)

There is a low barrier and high threat of customers due to price sensitivity and number of existing competitors. The customers can easily be influenced by the low of price of motels and lodgings since the limited time will not utilize the entire services of the room and establishments.

Bargaining Power of Suppliers (raw materials, labor, services)

There is a high barrier and low threat of suppliers in terms of maintenance manpower services since most are in-house or employed especially the cooks and orderlies.

Intensity of Competitive Rivalry

There is a low barrier due to high Competition of existing number of competitors in motels and lodging facilities in every area.

  1. SWOT Analysis

Strengths

  • Well-known brand; high brand image & equity for offering a unique and private place to rest and spend time with the accompanied individuals
  • Can accommodate groups or individuals (couples, travelers, families, etc.)
  • Good and fast services in terms of accommodations, food preparations, cleaning and billing
  • Clean & quality facilities that are on par with high class hotels and above the standards of motels and lodgings
  • Good place & location for privacy, drive in garage (no walk in services)
  • Price is low compared to high class hotels offering the same quality of facilities and services

Weaknesses

  • High price compared to competitors like motels and lodgings
  • Brand identity and equity is defined on a niche market for clandestine services only
  • The brand equity is closely related to the rooms with bed
  • Limited number of rooms per place and area
  • Locations are situated in scandalous, shameless areas besides cheap motels

Opportunities

  • Untapped market for group’s/company’s/family’s activities and events
  • To offer a conference and activity area for companies
  • Party events and meeting accommodations for groups

Threats

  • High number of competition and many substitutes in terms of hotels, motels and lodgings nearby
  • Hotels offer lots of room functions other than bedrooms such as meeting rooms, ballrooms, and halls.
  • Customer’s price sensitivity in terms of facilities and services
  • Reputation of the areas where Victoria Courts are located is reputed by many as indecent and scandalous; consumers seen roaming in such areas are bound to be taunted or mocked at.

 

  1. SWOT Matrix
Strength Weakness
Opportunities 1.Market Development
Highlight the facilities, amenities and services at par with high-end hotels through event and experience promotions, public relation, and publicity
2.Brand Association
Link right association to the brand through endorsement or testimonials to persuade the target makets how its facilities and amenities is at par with high-end hotels.
5. Product Development
Bring-in new product offerings such as function rooms, karaoke, cinema, bar, restaurant, and spas that the target markets would enjoy while occupying a room alone or with the families, friends, or acquiantances, and highlight the new offerings through  event and experience promotions, public relation, and publicity
Threat 3. Market Penetration
Create brand awareness through aggressive promotion of the facilities, amenities and services at par with high-end hotels in events, television shows and movies to minimize and alter the indecent reputation of the areas to a much favorable impression.
4. Pricing Strategy
Highlight benefits of Victoria Court’s facilities and amenieties to high-end hotels and cheap motels
*Using the New Brand, Same Locations (Short Term)
Using the Same Brand, New Locations
(Long-Term)

6. Diversification
Create new facilities and functions that a hotel can offer such as function rooms(short term plan) and relocate to new areas of business (long-term plan) under a new brand name and logo: VC and build its brand awareness through aggressive promotions in events, television shows and movies

 

Marketing communication contributes to brand equity by establishing the brand in memory and creating a brand image (Kotler and Keller). Looking at the areas of consideration and the analysis, Victoria Court could have gotten its reputation as a motel in the minds of the consumers despite its world-class luxurious rooms because of the way it has communicated its operation, namely:

  1. Place: Victoria Court’s areas of business contribute to the consumer’s perception, branding Victoria Court as a motel instead of a drive-in hotel. The location pushed away other target markets except the couples, who in turn has strengthened its image as a motel.
  2. Product: Victoria Court’s lack of function rooms other than the bedrooms communicate little use to target markets not searching for a good rest and definitely not interested in a clandestine romance.
  3. Promotion: Victoria Court’s lack of brand association other than its private and exclusive out-of-the-ordinary bedrooms and its strong promotion of the bedrooms enabled consumers’ mind to link the brand to one purpose only: private clandestine romance.
  4. Price: Its specified hourly rate enabled couples to steal some time away from their day’s activities.

 

 

 

 

 

 

 

 

 

 

  1. Communication Matrix
Creative Strategies Type of Communication Channels
Personal Channels Non-Personal Channels
Informational Appeal Brand Association (Expert Channel)

Product Development (Expert Channel)

Market Development

Product Development

Transformational Appeal Market Penetration (Positive Appeals) Diversification

 

  1. Alternative Courses of Action

ACA 1: Market: Penetration: Use transformational appeal tactics through personal channels to penetration the market on a multi-channel, multi-vehicle campaign

Victoria Court could opt to capitalize on their existing strengths such as their high brand image and equity, clean and quality facilities and good and fast services. They can use these to encourage the existing customers to further patronize their drive-in hotels and at the same time, maintain their dominant market share in the drive-in hotel industry.

Aggressive marketing promotions through events specifically made for the existing target market can be implemented. A pricing strategy, aimed at highlighting the value for money of Victoria Court facilities  can be implented simultaneously.  These two strategies can aid in repositioning the brand and at the same time broaden brand equity.

Advantages:

  • Transformational Appeal Tactic makes consumers relate feelings, images, or belief to their when they experience the Victoria Court service and facilities.
  • Personal Channel thtrough the use of an expert or a reliable endorser to convince consumers about the high quality of service and facilities that Victoria Court has to offer.
  • Market penetration will maintain Victoria Court’s market share.
  • Since the target market is already defined, the company can use all resources to persuade these customers to further patronize Victoria Court facilities.
  • This can potentially attract the competitor’s customers if the strategy is effective.
  • Market penetration can also encourage non-customers to experience the services Victoria Court has to offer.

Disadvantages:

  • Extensive marketing advertising and promotions is needed in implementing transformational appeal through personal channel.
  • Advertising and promotions will be very costly for Victoria Court.
  • If the market penetration strategy is effective, Victoria Court might have a hard time coping with the increase in customer check-ins. Unavailability of rooms might arise because of the sudden influx of customers.
  • In line with the influx of customers, current customers might think twice about revisiting Victoria Court branches because of the sudden surge of new customers. Privacy is sacrificed.
  • Market saturation. If Victoria Court has exhausted all avenues for market penetration, customers might opt to look for alternatives such as rival motels nearby.

 

ACA 2. Product Development: Use informational appeal tactic through non-personal channels to promote new developed product offerings on a multi-channel, multi-vehicle campaign

Since Victoria Court has several clean and quality facilities, they could renovate some of these facilities and convert them into function rooms. They could also expand the operation of its restaurants to serve buffets, gourmet lunch and dinners similar to what most of the popular hotels offer. The objective here is to align the services of Victoria Court to the hotel industry services.

Advantages:

  • Informational appeal tactic through non-personal channels will help build new brand knowledge among consumers.
  • Non-personal channels will reach a wider market, hence, will greatly contribute to building brand knowledge.
  • This strategy is aligned to the objective of the case which is to change the image of Victoria Court from being a motel to being a full service hotel facility.
  • Regular customers can experience the change in Victoria Court services and spread the news through word of mouth.

Disadvantages:

  • Non-personal channels will be costly for the company because of advertisements in broadcast and print media.
  • There is a need to continously advertise through different marketing tools to sustain the company’s objectives which to promote and highlight the new product offerings of Victoria Court.
  • Renovation will be costly for the company since it will entail renovation of all branches of Victoria Court.
  • Customers can be hesitant to try the new facilities given the location of all Victoria Court branches.

 

ACA 3. Market: Development: Use informational appeal tactic through non-personal channels to inform and persuade new target markets on a multi-channel, multi-vehicle campaign

            The objective of this strategy is to convince non-customers to try Victoria Court’s facilities. The company can hold events targeted at non-customers, wherein these events will showcase the company’s core competencies which are: clean and quality facilities and good and fast services.

In addition, management can opt to hire an endorser who will help them tap the non-customers market. Advertising and promotional materials through broadcast media and the internet can be implemented to highlight the company’s competencies.

Advantages:

  • Informational appeal tactic through non-personal channels is an effective tool to inform the new target market about the product offerings of Victoria Court.
  • Informational appeal tactic through non-personal channels will spark the interest of new customers to research further regarding the product offerings of Victoria Court. The information will be unbiased and free from opinions of other people so consumers can they for themselves how they would perceive the brand and the services it offers.
  • If effectively implemented, market share will incresase which means more profit for the company.
  • Victoria Court brand will be recognized by a larger market and thus introduce non-customers to other services offered by the hotel.

Disadvantages:

  • Since promotion will be through non-personal channels, the new target market will be unguided and will be left to come up with their own judgement.
  • Decision can be delayed because of the new target market’s hesitation to avail the products and services of Victoria Court.
  • This might have a negative effect on regular customers because the privacy setting of the branches will be compromised.

 

ACA 4. Market Diversification: Use transformational appeal tactics through non-personal channels to successful divert to new functions a multi-channel, multi-vehicle campaign

            Since the Victoria Court brand image is well known to be a popular chain of motels, management can opt to diversify it operations by creating new full service hotel under a totally different brand name.

Advantages:

  • Transformational appeal tactics through non-personal channels enables simultaneous advertising and promotion, thus reaching a wider target market at a shorter period.
  • This strategy will instill an emotional bond between the consumer and the product and services of the company. If consumers decide to avail the product and services and find out themselves that the experience is real, the credibility of the product and services and the company will increase along with satisfaction of the customer.
  • This strategy could give to word of mouth marketing through the experiences of highly satisfied customers.
  • This alternative course of action satisfies the problem of reinventing the image of Victoria Court.
  • Target market is broadened because the services offered is that of a full service hotel already.

Disadvantages:

  • If a consumer decides to avail of the product and services and is dissatisfied, he or she could spread negative publicity fo r the company.
  • This strategy puts the new brand image at high risk because of possibility of dissatisfaction among consumers.
  • The company will incur enormous costs with acquisition and construction of a full service hotel.
  • There is strong competition in the hotel industry in the Philippines.

VII. Conclusion and Recommendation

The group recommends implementation of ACA #4,  Market Diversifcation using transformational appeal tactics through non-personal channels. This alternative course of action will solve the problem of how to change the consumer’s perception of the Victoria Court brand. Furthermore, implementation of this ACA will not sacrifice the existing core competencies of the company which are good and fast services and clean and quality facilities.

Market diversification will also address the objectives of the case which is to change the image of the company from being a motel to being a full service hotel to e able to reach a wider target market.

Transformational appeal tactics will be a very effective tool to connect with the target market because the company will be building a bond with the customer. The tactic will relate the new brand image to a positive experience and this will encourage the customers to patronize the company’s products and services. In addition, if the consumer decides to avail of the product and services of Victoria Court, and is highly satisfied, it can result to word of mouth marketing which will contributely greatly to the objective of the company.

Advertising and promotions through non-personal channels will reach the target market simultaneously thus objectives will be achieved in a shorter span of time. Brand visibility will also be the result of this strategy which will build brand knowledge among consumers.

The only disadvantage of this alternative course of action is that it requires extensive preparation in the part of the Victoria Court management. In addition, market diversification will be very costly, hence, careful preparation is needed to make sure that money is well spent.

VIII. Action Plan

  1. Victoria Court’s Operation (Internal Tactic)
  1. Change facilities to introduce new brand image, service and functions and to accommodate the additional target market
  2. Rearranged/ categorize rooms according to functions
  3. Train staffs regarding the new brand image and services to properly communicate to customers
  4. Retain pricing tactic. Company will focus highlighting the value for money when avail of the Victoria Court products and services.
  5. In the future relocate to a place with a much decent reputation so as not to push away new customers

 

  1. Making the Communication Plan (External Tactic)
  1. Identify the target audience
  2. Determine the communication objectives
  3. Design the communication strategy
  4. Select the communication channels
  5. Establish the total marketing communiction budget
  6. Decide on the marketing communication mix
  7. Measure result
  8. Manages integrated marketing communication (IMC)

 

Rate of implementation and execution

Strategy                                                            Rate of execution        Reason

Market Penetration (present M & present P)                Fast                     Promotion

Market Development (new M & present P)                  Fast                     Promotion

Diversification (new M & new P)                                Slow                   Construction

Pricing strategy                                                                        Fast                     Advertising

 

  1. References

A Case Analysis on “Wal-Mart’s World”

SYNTHESIS:

Wal-Mart is the world’s largest retailer. It maintains its corporate culture across all of its 4, 000 stores. Further, it promotes and preserves its image as a small-town store where the customer is king. Wal-Mart maintains its culture by conducting the “Saturday Morning Meeting,” “Merchandising Meeting,” and “15-minute shift-change meeting.” Frugality is also one other aspect of Wal-Mart’s culture.

In the course of Wal-Mart’s growth and success, it was having problems in maintaining its culture. In the late 1980s and early 1990s, attendance at Saturday Morning Meetings grew, which made it impossible for everyone to speak and caused failure to address important concerns regarding the business. Further, there was an increased public scrutiny. It was said that in the past, when Walton and Glass ran Wal-Mart, the company had more tolerance for employee mistakes. Today, in the era of CEO Scott, the company adheres to a stricter policy.

Negative publicity also affected Wal-Mart. Controversies regarding the company’s anti-union position, hiring and promotion practices, and treatment of employees adversely affected its image.

POINT OF VIEWS:

This paper will be studied under the point of view of Lee Scott, the CEO of Wal-Mart as the case was written

STATEMENT OF THE PROBLEM:

What should Lee Scott do, to preserve Wal-Mart culture or to alter it in order to bring back its once positive image?

 

OBJECTIVES:

  1. To identify whether Lee Scott needs to preserve or to alter the organizational culture of WalMart (recommendation)
  2. To identify what the type of organizational culture does Wal-Mart operates (analysis)
  3. To find courses of action that will solve the controversies hovering Wal-Mart and threatening its public image (Action Plan)
  4. To solve the negative publicity fired at WalMart (Action Plan)

 

AREAS OF CONSIDERATION:
Assumptions:

  • Wal-Mart is customer-focused, goal-oriented, and competitive. This can be seen through its culture of retail fanaticism, continuous improvement of efficiency, frugality, and being customer-friendly, which have been developed through its regular meeting-practices.
  • As the current CEO, Lee Scott’s main aims for Wal-Mart are: to drive sales up and to preserve the friendly and affordable small-town store image Wal-Mart carries; anything that hinders his goals is intolerable for him.
  • Because Lee Scott focuses on the company’s status only – its growth and its public image – employees’ welfare is not in his priorities, making him unaware that the constant barrage of negatives he eliminates brought the bad publicities and controversies lately appearing in the news. He asks their people, “What are we doing that allows people to perpetuate these kind of negative discussions about Wal-Mart?”
  • Employees’ treatments, conditions, and concerns are not being discussed in the meetings, causing outpours of grievances outside the company’s walls.
  • As much as the meetings are declared to keep the employees closeknit and participative, it is being done so as a strategy to quickly response to the market competition and to know the stores’ performance numbers.

Analysis:

The case pointed our group to a number of problems, such as the controversies regarding Wal-Mart’s treatment to their employees, its policies and procedures on hiring, promotion and termination, and its practices (ie: meetings). Going over the case, we have agreed that the best way to understand Wal-Mart and to properly address its problems is to first understand how it operates its 4,000 stores in the United States, Mexico, Canada, South America, Korea, China, and Europe despite the differences not just in its area of operation but also the diverse culture of its employees.

With the combination of Robert Quinn and John Rohrbaugh’s Competing Values Frameworks (Organic or Mechanistic Processes and Internally- or Externally-focused) to Kim Cameron and Robert Quinn’s Four Quadrant Model of Company’s Features (Collaborate, Control, Create and Compete) comes the Four Organizational Culture Types, namely: Clan, Hierarchy, Adhocracy and Market (see appendix A). Out of the four, through the definitions, we have identified that Wal-Mart falls under the Market Type.

Like a Hierarchy-company, a Market-company values order, stability and control over flexibility, spontaneity, and discretion. This explains the so many meetings Wal-Mart practices, and as such, Wal-Mart operates effectively under a stable, predictable and mechanistic process than under an adaptating, changing, and organic process.  However, instead of an inward focus like a Hierarchy-company, a Market-company has an external orientation and values competition and differentiation over unity and integration. This means that Wal-Mart is customer-focused; it excel not mainly on its internal processes but on what they can offer differently to their customers.

Understanding the quadrants delivered us to the realization of how and why Wal-Mart operates the way it is, and how and why Lee Scott’s goals, by assumption, excluded its employees, putting the company as a consequence in the bad light. Giving the benefit of the doubt, Scott may not have any clue that his decision and action “to eliminate the constant barrage of negatives” are the causes of it all. As it happen, the company focuses its efforts towards the benefits of the customers, and its culture of retail fanaticism, continuous improvement of efficiency, frugality, and being customer-friendly are all molded to quickly respond to competition.

As a result, little or no attention is being given to the employees, causing outpour of grievances outside the company wall.

 

ALTERNATIVE COURSES OF ACTIONS:

ACA #1: Sustain the organization culture introduced.

PROS

·         The company will be able to maintain and keep their traditions and values

·         Management would not need to put in extra effort and resources in trying to introduce a new culture

·         The company will be able to keep their small family spirit which they have been known for.

CONS

·         The company would not really be able to address the problems that a growing company like them is presenting.

·         Sustaining the organization’s current culture might hinder the organization’s possible growth.

ACA#2: Change the organizational culture

PROS

·         Changing the culture would help them deal with the issues posed by their growing organization.

·         It would make them better equipped and apt for the current times

·         This might give the company a better image more suited to their current stature as a corporation

 

CONS

·         The values and traditions instilled by past leaders might be modified

·         Management would have to put in a lot of time and resources to meet their goal of changing the culture

·         Some members of the organization might be reluctant to change

·         The public image of the company might also be altered.

 

RECOMMENDATION:

The group recommends that ACA #2: Change the organizational culture, be implemented. Lee Scott as a third generation leader is diligently and desperately trying to preserve the friendly small-town store image and atmosphere Wal-Mart carries. However, his methods in preserving and strengthening the organizational culture of Wal-Mart thru a category called “Selection and Socialization” have led to employment and employee complaints that in turn is giving a negative feedback to the Wal-Mart image. It is the analysis of this group that Lee Scott has been doing a great and difficult job in preserving the Wal-Mart image at the same time improving sales, given the fact that the Wal-Mart network is growing at an increasing pace and size. It is this group’s analysis that the organizational culture that the founder of Wal-Mart have made is still effective up to this time and generation, however, this group’s analysis on the organizational culture at that time was made for a small and starting company and have not considered the effectiveness of the organizational culture of Wal-Mart in an expanding large company, not locally but also internationally. Hence, the recommendation to change in the organizational culture does not necessarily means that the current organizational culture of Wal-Mart be stopped and create an entirely new organizational culture to the core but rather to change the organizational culture by adjusting the necessary rituals and workflow in order to cope up and adapt with the current generation and size of the company, while keeping the core values that ensured and made Wal-Mart well known to its customers and the entire world.

 

ACTION PLAN:

Action Plan for changing the culture and addressing the root cause of negative public perception:

“Unfair Labor Practice”

In the case presented, the underlying cause of the negative public perception towards Wal-Mart is the alleged unfair labor practice of the company.  Efforts at improving this image may have been undertaken, (noted in the case that there Lee has been spending time talking about all the negative publicity) but these do not address the root cause directly.  These attempts, at the most, are only temporary solutions to the increasing outrage by most people in the communities where Wal-Mart operates.

To be more competitive, and to ensure the long-term profitability of the enterprise, Wal-Mart should employ a more ethical approach to solving the issues confronting it. Addressing the root cause may not have an immediate effect on the public perception, but it will positively affect the employees, which in turn will make them more productive. This will then translate to better earning for the company.

It is thus recommended that Wal-Mart will adjust the necessary rituals and workflow in order to cope up and adapt with the current generation and size of the company, while keeping the core values.

Improving their image will then be only a by-product of the company’s ethical treatment of their partners in doing business—their workers (employee oriented).

The following are the recommended activities to implement this course of action, and the time corresponding timeframes within which the same should be implemented.

Planned Activities Time Frame
Townhall Meeting to replace Saturday Morning Meeting Immediately
(Townhall Meeting is not always to voice employees opinions, but to hear responses from
officers and public officials. If the
turnout is large, and in particular case
the objective is to give as many people
as possible an opportunity to speak,
then the group can be broken down
into smaller discussion groups. Each
group in the case appoints someone to
summarize discussion of their group)
Discontinue the practice of hiring illegal immigrants as these are worker groups that are most vulnerable to exploitation. Immediately
Formulate and implement a policy that will avoid discrimination in terms of salary increases, promotions, career advancement, and opportunity for further education. Immediately
Implement an improved salary scheme, which at the minimum complies with labor regulations and industry standards. Adjustments to be done over the next
12 months to give the company enough
time to comply with the financial
requirements, without having significant
effect on its operations.
Offer more generous benefits
(e.g. overtime pay, medical
benefits, incentives, housing,
retirement packages,
scholarships, etc.).
Adjustments to be done over the next
12 months to give the company enough
time to comply with the financial
requirements, without having significant
effect on its operations.
Provide better working
environment.
Adjustments to be done over the next
12 months to give the company enough
time to comply with the financial
requirements, without having significant
effect on its operations.
(human right to rest and relax) – working
7 days a week is no no
Sponsor training programs for employees. After a year, priority should be given to
addressing the issues on wages, benefits,
and working conditions.
Organize outreach programs / community work involving employees After a year, priority should be given to
addressing the issues on wages, benefits,
and working conditions.
Open the factories to “unannounced
” audits by independent groups.
After 18 months, to ensure that reforms
undertaken by the company are already
in place.

Should the amount that is being spent for the cost-cutting or pay cuts on the company’s key executives and top management be not sufficient for implementing the activities listed above, slight price adjustments to the merchandise sold may also be made to cover for the cost of implementing the steps outlines. The said increase will be negligible to customers but will have a great impact on the workers that will be benefited by this course of action.

If public perception does not improve despite the company’s efforts aimed at improving the employees’ welfare, press releases and advertisements showing what the company has done may be published or broadcasted. Simultaneously, internal and external feedback mechanisms should be implemented to better meet the objective.

 

 

LEARNING POINTS:

Organizational Culture plays a major role in the life of a company for enduring time. Organizational culture dictates how the employees are connected as a whole and ensures a holistic pace and direction. This sole responsibility of creating and retaining an organizational culture lies in the executives and president of the company. The CEO must envision on how the company should achieve its goals efficiently, and one of the best methods is by making the employees work together harmoniously. In order to achieve such harmony and togetherness in a company, an organizational culture acts as a guide and connection between these employees in which this organizational culture gives a unique persona and identity compared to others. However, creating and implementing an organizational culture is completely different. The CEO, in order to implement an organization culture must execute some actions and frameworks in order to make sure that the envisioned organizational culture be accepted and implemented by the employees. Moreover, upon implementation of an organizational culture, the CEO must take feedbacks from time to time in order to decide whether the said organizational culture can be maintained or change. Maintaining an organizational culture is as tasking as implementing one. At the same time, changing an organizational culture is like implementing a new one. The decision must be from the analysis of the CEO on how the company performs in accordance to its vision and mission.

 

APPENDIXES:

  1. Deshpandé, Farley and Webster Model of     Strengthening Organizational Model

Organizational Culture Types (Racelis, 2005)

 

  1. Formation of an Organization’s Cultures Cultural Change Model (Robbins & Coutler)

 

 

 

REFERENCES:

Organizational Behavior Book

Robbins/Judge, ESSENTIALS OF ORGANIZATIONAL BEHAVIOR, 13e, (Prentice-Hall, 2009)

Racelis, A. D. (2005). AN EXPLORATORY STUDY OF ORGANIZATIONAL CULTURE IN THE PHILIPPINE FIRMS. Retrieved from UP Diliman JOurnals Online: http://journals.upd.edu.ph/index.php/pmr/article/viewFile/1830/1736

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A Case Analysis on “The Big Promotion”

SYNTHESIS:

Paul McAllister, a CEO of a large software company, is in need to fill the company’s senior executive position vacated due to retirement. Two candidates who are both responsible for managing one of the company’s largest divisions are being considered and evaluated: Devon, a traditional and straightforward leader who motivates people through a reward-punishment managing style and provides skills and resources whenever the needs arise to ensure that his goals appropriately sets are accomplished on time or even ahead of time; and Isabella, a person with unconventional ideas that in many cases saved the company and who challenges the employees to think out of the box and treat the company more than their means to paychecks.

Although both are good and seemingly credible to handle the position, McAllister needs to weigh which between the two can most effectively handle the position and bring him less worry in the long run: a man who lacks the creative talent and vision that the position needs to have most or a woman who has a somewhat egoistical personality that may be amplified in a much higher position.

POINT OF VIEWS:

This paper will be taken under the keen eye of a Paul McAllister, the CEO, who will be working directly with the senior executives.

STATEMENT OF THE PROBLEM:

Guided by the synthesis above, this paper answers the question: Who will be better to fill a large software company’s senior executive position between Devon and Isabella?

OBJECTIVES:

  1. To describe a large software company and to define the required characteristics and leadership style for a senior executive position in a large software company
  2. To choose the right person who will fill up the senior executive position between Devon and Isabella

 

AREAS OF CONSIDERATION:

Assumptions:

  • On the Software Company
  • Process is well-defined but operating processes are generally less efficient as changes in the industry is very fast
  • Development cycles are generally longer and the company has a long-term turnover roadmap, going out 5 years or more
  • Many employees will never meet the CEO or president.
  • Employees might specialized in one technology for years
  • On Devon
  • Determined; Pushes the boundaries and performs beyond the status quo to achieve an entirely new set of organizational goals
  • Can easily detect what is most important to individuals and to the organization as a whole.
  • Has a good business sense and is able to see what decisions will positively affect the organization
  • On Isabella
  • Articulates an appealing vision
  • Communicates high performance expectations and expressesconfidence that followers can attain them.
  • Engages in behavior that is perceived asnovel and counter to norms
  • Both Devon & Isabella we’re managing one of the company’s large divisions, and each one manages a different division effectively
  • Both Devon’s & Isabella’s leadership style arises from the unique situation they are operating/working.

Frameworks

  • Transformational Leadership

In transformational leadership the emphasis is on people of vision, who are creative, innovative, and capable of getting others to share their dreams while playing down self-interest and who are able to co-operate with others in reshaping the strategies and tactics of the organization.  To these qualities could be added the pursuit of high standards, taking calculated risks, challenging and changing the existing company structure, with even the potential for the display (when considered appropriate) of directive tendencies.

Characteristics of a Transformational Leader

Idealized Influence: Provides vision and sense of mission, instills pride, gains respect and trust.

Inspirational Motivation: Communicates high expectations, uses symbols to focus efforts, expresses important purposes in simple ways.

Intellectual Stimulation: Promotes intelligence, rationality, and careful problem solving.

Individualized Consideration: Gives personal attention, treats each employee individually, coaches, advises.

  • Charismatic Leadership

Charisma is believed to be the fundamental factor in the transformational process and is described as the leader’s ability to generate great symbolic power. Weber (1947) first described the concept of charismatic leadership as stemming from subordinates’ (or followers’) perceptions that the leader is endowed with exceptional skills or talents. In its origins, charismatic leadership was a focus in studying political and world leaders (Bums, 1978; House, Spangler & Woycke, 1991). Research of charismatic leadership has consistently found significant relationships with follower trust, effort, and commitment (Howell & Frost, 1989; Lowe et al., 1996).

Characteristics of a Charismatic Leader

Vision and articulation: Has a vision – expressed as an idealized goal – that proposes a future better that the status quo; and is able to clarify the importance of the vision in terms that are understandable to others.

Personal risk: Willing to take on high personal risk, incur high costs, and engage in self-sacrifice to achieve the vision.

Sensitivity to follower needs: Perceptive of others’ abilities and responsive to their needs and feelings.

Unconventional behavior: Engages in behaviors that are perceived as novel and counter to norms.

  • Transactional Leadership

In transactional leadership, it is believed that punishment and reward motivate people. This leadership also assumes that when people agree to do a particular assignment, a part of that agreement is that they give up all authority to their boss. The leader holds control and power over the subordinates. The main goal of the employee is to obey the orders of their managers. The idea is that when a subordinate takes up a job, he or she agrees to obey their manager totally. Transactional leadership makes clear that what is required and expected from their subordinates. It also mentions that subordinates will get award if they follow the orders seriously. Sometimes punishments are not mentioned but they are understood.

Characteristics of a Transactional Leader

Contingent Reward: Contracts exchange of rewards for effort, promises rewards for good performance, recognizes accomplishments.

Management by Exception (active): Watches and searches for deviations from rules and standards, takes correct action.

Management by Exception (passive): Intervenes only if standards are not met.

Laissez-Faire: Abdicates responsibilities, avoids making decisions.

Analysis

  • Transformational Leadership

Pros: This effective leadership model will create an enthusiastic work atmosphere and it will drive the organization with innovations. The fact that people are working through self-motivation, will certainly guarantee higher output and efficiency. It will naturally develop future leaders from the lot of followers. People will work for the leader, even if the monetary and other benefits offered are lesser, as they will be inspired by his vision.

Cons: This theory is totally based on the ability of the leader, to inspire the work force to put their best in. Leaders of organizations may not have the force of character to achieve that.

  • Charismatic Leadership

Pros: Work usually done well; Workers inspired to perform; Workers valued.

Cons: Can be spectacular failures; Create a personality cult; Can wear out the workers.

  • Transactional Leadership

Pros: Sets clear goals with rewards for making them (however, it causes problems if they are not met)

Cons: Can be seen as a reward/punishment system; Leader is concerned with their own status quo and will put themselves before the followers; Management for exception is a poor example of a supervisor; Offers few advantages to followers and can be very unhappy work environment.

 

ALTERNATIVE COURSES OF ACTIONS:

ACA1 – Choose Devon

Although Devon may lack the creative talent and vision Paul needed for his senior executive, Devon, being a traditional and straightforward, demonstrates his determination to achieve the company’s goals by setting appropriate goals, providing skills and resources to employees whenever it’s needed and motivates people through reward-punishment system, which both recognizes or corrects employees’ action, boosting their spirit to do their job better the next time whether they have done something good or not with their jobs as the sense of achievement gained through rewards inspired them to work much better; the same thing happens for employees who earned punishment as they are  challenged to do their job better to gain a reward. Devon’s lack of creativity and vision would be gained in time through new challenging goals and training. The time though to earn such skill is unmeasured. The good thing is, Devon has people under him who he can delegate the work to and who he will empower and motivate in return. And being in a large software company, he do indeed need more than his skills and knowledge. He needs people to help him up.

ACA2 – Choose Isabella

Isabella has indeed the creative skill and vision Paul is looking for in his senior executive. No need to train her much as she is naturally born with creativity in her blood. Besides this, Isabella motivates people to treat the company as their own, opening a sense of belongingness to them. Yet, her egoistic personality is frightening in a sense that the CEO can not always look out or observe when will be the times that her ego will rise. And since no one knows exactly when will her ego rise, she might unconsciously hurt the people around her. Being egoistic, she might take the credit more often instead of crediting the team or individual who really did the tasks or, worst, work by herself when a group work is very much necessary. Doing either one will have negative effect for the company and the people in it, some of which might remain unidentified.

 

RECOMMENDATION:

The group recommends that Paul choose Devon. Devon is what one would consider as a transactional leader. He motivates and influences people through rewards and punishments; he also set clear goals for his followers to attain. This way is tried and tested and would garner expected outcomes. Another good thing about this is given that Devon is goal oriented; management would not be hard pressed to train him to achieve some of the traits such as charisma that would equip him to be a better leader.

Given that he still lack the necessary skill Paul requires as a senior executive, Devon would have time to know the people below him who he could trust and build as a group.

ACTION PLAN:

In order for Devon to achieve the necessary traits for a senior executive of the company like being a visionary, Devon will undergo a series of professional trainings and seminars alongside management courses.

  1. Devon will be briefed and oriented to the responsibilities expected of a senior executive.
  2. Devon will have a turn-over of materials and files that was from the previous senior executive
  3. Devon will be assessed for his management knowledge and skills
  4. Devon will be given a knowledge and skill enhancement plan, based from the assessment results, in order to fully competent and efficient being a senior executive
  5. Devon will undergo a series of seminars and workshops for skill enhancements (ie: diploma seminars held in DLSU)
  6. Devon will take courses for management decision making, operations, finance, organizational behavior, marketing, etc. (ie: MBA course in DLSU)

LEARNING POINTS:

The entire process that organizations go through to fill management positions is essentially an exercise in trying to identify individuals who will be effected leaders. Search might begin by reviewing the specific requirements for the position filled. What knowledge, skills, and abilities are needed to do the job effectively? In this case, we try to analyze the situation to find candidates who will make a proper match.

There are several ways that we can use in identifying and selecting leaders.

  1. Testing- e.g. Personality test, look for traits associated with leadership; testing to find a leadership-candidate’s score on self-monitoring also makes sense. High self-monitors are likely to outperform their low-scoring counterparts because the former are better at reading situations and adjusting their behavior accordingly; access for emotional intelligence, high EI should have an advantage, especially in situations requiring transformational leadership.
  2. Interviews-also provide an opportunity to evaluate leadership candidates. For instance, know that experience is a poor predictor of leader effectiveness, but situation-specific experience is relevant. One can use interview to determine if a candidate’s prior experience fits with the situation you’re trying to fill. In addition, interview is a reasonably good vehicle for identifying the degree to which a candidate has leadership traits such as extraversion, self confidence, a vision, and verbal skills to frame issues or a charismatic physical presence.
  3. Situational Factors-use this knowledge to match leaders to situations. Does the situation require a change-focused leader? If so, look for transformational qualities. If not, look for transactional qualities. One might also ask: Is leadership actually important in this specific position? There may be situational factors that substitute for or neutralize leadership. If there are, then the leader essentially performs a figurehead or symbolic role, and the importance of selecting the “right” person is not particularly vital.

 

 

REFERENCES:

Organizational Behavior Book

Robbins/Judge, ESSENTIALS OF ORGANIZATIONAL BEHAVIOR, 13e, (Prentice-Hall, 2009)

 

Characteristics of Software Company Size. (2009, December). Retrieved from The Software Purist: http://www.softwarepurist.com/blog/index.php/characteristics-of-sw-co-size/

 

Defining Transformational Leadership. (2007-2010). Retrieved from Leadership Training Tutorials & Articles.: http://leadershiptrainingtutorials.com/index.php?q=Transformational_Leadership

RAO, V. S. (2008, June ). Key Characteristics of Charismatic leaders. Retrieved from Cite Man Network: http://www.citeman.com/3500-key-characteristics-of-charismatic-leaders.html

Problems With Transformational Leadership | eHow.com http://www.ehow.com/info_8241960_problems-transformational-leadership.html#ixzz1bUYNgsCK

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