Crisis Communication Plan – Second Hour Response & Q&A

Success stories of the founder of Netflix

  1. What is the educational background of the founder of Netflix?
  2. The founder of Netflix, Reed Hasting, is someone whose education began in Bowdoin College, from where after graduating, he taught maths in Swaziland as a peace corp. After a stint as a maths teacher, he went back to college where he obtained a masters degree in Computer Science.
  3. What happened to the founder after graduating?
  4. After graduating in 1991, he founded Pure Software, a firm that dealt with providing solutions to computer software.
  5. How did Pure Software perform in the market?
  6. Pure Software performed tremendously in the market. It was able to offer very many solutions to clients and its growth over the years was rapid. In 1997, Rational Software acquired Pure Software for US $750million.
  7. After the acquisition of Pure Software, what happened to Hastings?
  8. After the acquisition of this firm, Hastings came up with the idea of coming up with a new firm that would be renting out videos to people at a fee.

A New Beginning for Hastings.

  1. Who did Hastings join hands with in his new venture and what was the venture?
  2. Hastings joined hands with Randolph to come up with an online version of renting DVDs. The firm that they would use to do this business was called Netflix. The new venture was meant to ensure that people could get their latest movies via online platforms and after watching the movies, they would return them to Netflix. By 1997, this firm had changed into a subscription service whereby it would now require its clients to subscribe to it to get the movies that they wanted.
  3. What went wrong at Netflix?
  4. As time went by, Netflix came up with an idea of having a branch that would deal solely with the delivery of the DVDs to clients. The name of this firm was Qwikster, which ironically was twitter handle that belonged to an individual by the name Jason Castilo. Castilo’s twitter profile was associated with bad things. Another thing that went wrong at Netflix was the rapid increase in their prices without doing any market surveys.
  5. What were some of the reactions of the clients?
  6. The clients were very angry at the decision by Netflix to split into two and its decision to increase its prices. The many clients felt that there was an increase of the price of renting the movies of about 60%. The clients felt that there was no justification in this rapid hiking of this fee. Some clients reacted by pulling out of the subscription program in very large numbers. In fact, by the end of the month after the increase in price, Netflix lost about a million clients.

Communication from Netflix

  1. Which strategy did Netflix use to communicate to its clients about price changes? Was it a good method?

Netflix chose to communicate to its clients through its blog. It meant that many people were not made aware immediately of the changes in prices. The strategy used by Netflix was not a good one since it had personal emails of the clients and it could have used them to communicate to the clients directly. Looking at what Ulmer, Sellnow and Seeger (2011) say, the mode of communication used by Netflix to pass its message to the clients was awrong. The reason is that some of the clients of this firm came to realize the price changes through social media.

  1. Did Netflix come forward to explain its position on the change in price?
  2. Netflix came out to give an explanation of why it had decided to increase its price. However, the manner in which it explained itself out was not pleasing to the clients. According to Athonissen (2008), whenever there is a crisis in a firm, the firm must communicate to its clients what is happening within the shortest time possible. Netflix did not do this and it meant that its clients were in the dark about what was happening since the official communication took a long time to come by.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Antonissen, P.F. (2008) Crisis Communication. London. Kogan Page.

Ulmer, R.R., Sellnow, T.L., Seeger, M.W. (2011)  Effective Crisis Communication. Thousand

Oaks, CA. Sage

 

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“Are garment workers’ deaths on our hands? No”

 

 

 

 

 

 

 

 

 

Are garment workers’ deaths on our hands? No”

 

 

 

 

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Essay Outline

  1. Article title and publication

The article under criticism is “Are garment workers’ deaths on our hands? No” by Doug Saunders. It was published on April 27, 2013, by the Globe and Mail Newspaper in Toronto, Canada. It was published in English and has a total of two pages.

  1. Introduction

The introductory part of the essay provides the thesis of the critical response to the article. I support the work of Doug Saunders by arguing that trade between Western countries does not cause poverty, rather it promotes economic empowerment.

  1. Article Summary

The article disclaims the notion that Western countries are responsible for the miseries that Bangladesh workers undergo because they are direct consumers of their products.

  1. Analysis of the article

Saundersuses valid and adequate evidence to explain the miseries of Bangladesh workers. The author also proves that developed countries do not cause misery in developing countries by citing examples of countries like China that benefited from global trade.

  1. Response to the article

I second Saunders on the opinion that developed countries are not to blame for the cases of misery and poverty because various countries that were considered underdeveloped are now among the developing nations due to theglobal market.

  1. Conclusion

I second Saunders opinion because developed countries play a huge role in strengthening the economy of developing countries.

Introduction

Doug Saunders’ article “Are garment workers’ deaths on our hands? No” was first published in Globe and Mail Newspaper on April 27, 2013. The article is about the miseries that the Bangladesh garment workers undergo in the effort of meeting consumer needs in Europe and North America. This paper provides a critical response to the article by supporting the claim that trade between Western countries and Bangladesh does not cause poverty, rather it promotes economic empowerment.

Summary

Saunders articulated the issue of the exploitation of Bangladesh garment factory labour workers by their owners. The article indicates that garment labor providers work long hours and receive low wages (Saunders, 2013). The factory owners focus on profitability from the Western market to an extent that they undervalue the safety of the workers by ignoring work safety warnings. As a result, tragic incidences such as theoutbreak of fire at Triangle Shirtwaist Factory and the collapse of an eight- storey garment manufacturing building led to the loss of over 400 lives (Saunders, 2013). Saunders further proceeds to state that Europe and North America are the main consumers of the Bangladesh Garments because they are cheap.Thus, Saunderswonders whether the West are to be blamedfor the death, poverty and misery in poor countries (Saunders, 2013). The author, however, believes thatWestern countries are not to blame for the death or misery of people in Bangladesh, rather their involvement with the West is a means of empowerment.

Analysis

According to the tone of the writer, this article presents an argument on ethical concern about the existing business relationship between the developing and the developed countries. Precisely, could it be possible that developed countries such as Europe and North America go for cheap markets in countries like Bangladesh but in the process they affect the welfare of such countries? The author clearly uses the incidences of tragic fire outbreak and collapsed eight storeys building related to garment business as evidence for the suffering of Bangladesh workers. However, Saunders claims that clothing bargains by developed countries do no cause poverty, misery, and death. To support the claim, Saunders started by pointing out that the owners of the factories had ignored safety warnings to imply that they were the main cause of the tragedies (Saunders, 2013). The author also uses the evidence of the Triangle fire in North America to imply that the Bangladesh tragedies could bring change regarding wage increment and safe working environments for the workers (Saunders, 2013).At this point, Saunders fails to acknowledge the economic disparity between the Western countries and Bangladesh by assuming that workers in Bangladesh can push for increment in salaries and better-working conditions.However, the article provides enough information that can be useful to policy makers, government bodies and organizations for both the producer and consumer countries.

Response

In response to the article, Isecond Saunders on the opinion that developed countries are not to blame for the cases of misery and poverty experienced in Bangladesh. In support of my opinion, most countries that were considered underdeveloped are now among the developing nations because of the global market. Thus, it is true that employment opportunities in garment industries empower workers. However, I disagree with Saunders support of the occurrence of tragic incidences as triggers for reforms in employment sectors because the severity of such incidences in low-income countries is higher as compared to developed countries.Countries such as Bangladesh need interventions that focus oneducating employees on their rights.

 

 

Conclusion

Saunders Dog articulates the challenges that Bangladesh labor workers in garment factories undergoin the effort of understanding the source and solutions to the problems. The garment workers work for long hours but receive low wages. They also work underdangerous working environment. The critical part of the situation is that they work hard to provide a cheap market for developed countries. Thus, the author wonders whether the West should be held accountable for the related deaths and miseries in Bangladesh. Saunders, however, claims that developed countries are creating opportunities for developing countries to grow economically. I second Saunders opinion because I believe that developed countries play a huge role in strengthening the economy of the developing countries.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference

Saunders, D. (2013, April 27). Are garment workers’ deaths on our hands? No. The Globe and Mail [Toronto], p. 2.

The Telephone Technology and ‘The Cycle’

Introduction

Communication technology has significantly evolved over the past 200 years (Raum, 2008). The world has consistently experienced the development and growth of various communication technologies. Some examples of how the communication technology has grown include the development of the telegram which was superseded by the telephone, then computers, then the internet and currently smart phones (Temin, 2013). The examples are not arranged in any specific order but they can be used to express the theory of disruptive technology as postulated by Clayton Christensen, a professor at Harvard business school (Temin, 2013). One considerable characteristic of the technology based on the example is that the introduction of new technology shifted the focus from previous technologies and focused on enhancing the present technology (Casson, 2013). This characteristic is part of what Tim who postulated as being ‘The Cycle’. In his work ‘The Master Switch: The Rise and Fall of Information Empires’ Wu articulates that technologies commonly undergo five major phases (Kuskey, 2016). According to the theorists, the stages that technologies undergo include: The invention and adoption phase; disruption of existing technologies; consolidation of a number of actors in the industry; the division of the media technology, resulting from development of newer technologies or regulatory action and finally the reorganization of the technology industry into a consolidated industry with limited key players (Fischer, 2012). These stages according to Coe (2011) can be summarized as including the rise of the technology, its consolidation, monopoly in the technologies market, capture governments, the minimizing the competitors, and finally the fragmentation of the market into a more open and innovative industry (Temin, 2013). This paper explores the telephone with regards to how it follows the pattern of what Wu terms as the cycle. The main attributes of the stages that are highlighted in the paper include the invention and adoption phase of the telephone, how it disrupted existing incumbent technologies, and also the division of the telephone technology industry due to the development of new technologies.

The invention and adoption of the media technology

Many theorists have determined that the origin of the telephone technology is not effectively known (Temin, 2013). The main explanation offered is that there is existing evidence that different people from across the globe were attempting to develop the technology at the same time (Temin, 2013). Many inventors and individuals including Elisha Gray, Antonio Meucci, Innocenzo Manzetti, Charles Bourseul, Johann Philipp Reis, and Alexander Graham Bell all claim to be the main inventors of the telephone (Coe, 2011). However, Graham Bell was the first one to obtain a patent for the telephone as an instrument that can be used to transmit sounds telegraphically. Furthermore, there exists compelling evidence of Graham Bell developing and testing the first practical telephone. Due to these reasons, Graham is widely considered as the main inventor of the technology (Coe, 2011). It is however notable that the invention of the telephone would never have been a reality without the invention of a series of prior technologies (Coe, 2011).

Many researchers trace the roots of the modern day mobile phones back to 1667 when Robert Hooke created an acoustic string telephone (Kuskey, 2016). Raum (2008) explains that before the existence of electronic devices which have a direct link with the telephone invention, there existed mechanical devices which would later be rendered primitive and ineffective. However, the basic concept of the telephone which is to transmit sound over long distances was directly developed from the mechanical devices, particularly the acoustic string telephone. Hooke’s device worked through conveying sounds over a taut extended wire (Kuskey, 2016). The sound was transmitted from one end to another through mechanical vibrations. Some of the common uses of the acoustic devices included transmitting speech and music. One considerable factor that made the device a significant one is the fact that it was able to transmit speech and music over distances that were greater than the distance that normal direct sound could be transmitted (Fischer, 2012). This technology utilized the use of tin can telephones and it was commonly referred to as ‘lovers’ phone’ (Coe, 2011). The taut string wire was the main mode through which the sound was transmitted from one end to another. This is what limited the effectiveness of the acoustic devices. For instance, the devices did not depend on electronic current and thus the distance between the sender and receiver of the speech was significantly reduced what is more is that the link between the transmitter could easily be interfered with, the further apart the two were, the less effective the technology was (Casson, 2013).

The wake of 19th century was signified by considerable development of electricity. Advancements in the use of the electrical currents resulted in the development of the electric telegraph which was for sometime considered as the greatest communication of all times (Raum, 2008). The telegram revolutionized the manner in which people in the world communicated. It limited the use of mail services, especially with regards to communicating urgent information. The development of the electrical telegraph which the telephone succeeded as the predominant technology is attributed to Francisco Salva Campillo who was a Spanish polymath and scientist (Temin, 2013). Campillo in 1804 developed an electrochemical telegraph which was later enhanced by Francis Ronald an English inventor who is credited for building the first working telegraph in 1816 (Casson, 2013). Francis used static electricity in his telegraph; however Baron Schilling in 1832 developed an electriomagnetic telegraph. Graham built on the principle of the telegraph to develop the telephone (Casson, 2013). On the 10th of March 1876, Graham made transmitted his first speech over the telephone. This led to subsequent developments of the technology, for instance, in the same year, Thomas Edison developed and tested his first carbon microphone. In later years, carbon transmitters enhanced the efficiency of the telephone (Coe, 2011).

The technology’s disruption of an existing, incumbent technology

The incumbent technology before the introduction of the telephone was the electrical telegraph. Before the telegraph, post offices and railway stations were considered as the most effective communication approaches (Raum, 2008). Post deliveries over long distances were commonly made via rail or pony express. The telegraph was so successful to the extent that the Western Union, which was during the late 1800s the main monopoly in the telegraph industry, refused to purchase Bell’s patent to the telephone when he made them an offer (Casson, 2013).

The improvements of the electrical telegraph are what Bell capitalized on in his telephone. The result of his efforts was that he was able to transmit sound and speeches electronically (Raum, 2008). When expanding the operations of the telephone, Bell utilized the infrastructure of the telegraph (Casson, 2013). Within a short period of time, the telephone was able to become more successful than the telegraph. The success of the telephone was based on the fact that instead of transmitting limited number of text messages, it was able to transmit speech over long distances (Raum, 2008). Its effectiveness was enhanced by the fact that the sender of the transmission and the receiver were able to offer real time responses (Raum, 2008). This meant that the telephone was the first two way communication over long distance. Due to its effectiveness, the telephone became more commercialized than the telegraph. With time, the use of the telegraph as a means of communication slowly diminished, with its use being reserved for specific purposes such as communicating military information, for instance through the use of the Morse Code (Raum, 2008). The commercialization of the telephone fostered the increased development and use of the telephone and this is what eventually led to the emergence of wireless communication, then the mobile phones (Raum, 2008). This also meant the decline of the telegraph as well as the companies that focused on using the technology and did not diversify with the emergence of the telephone technology (Coe, 2011).

The division of the Telephone technology industry due to newer technology or regulatory action

According to WU, the communication industry is best regulated through ‘information morality’ (Raum, 2008). This is largely because the communication industry is a unique one and with rapid developments and high levels of volatility, it commonly fails without appropriate regulation. Ownership, concentration and structure in the industry constantly changes due to constant technological development (Coe, 2011). Wu also believes that the industry is best regulated by information freedom and openness as opposed to regulation by a government or a single regulatory agency because they can adversely impact on the level of innovation and flexibility in the industry (Raum, 2008).

Based on the principles that were proposed by Wu, it is evident that the telephone was developed as a free and open technology and this is what contributed to its growth and evolution into the current highly digitized technology industry (Casson, 2013). During its inception years, the telephone industry was highly divided, with different individuals and organizations developing different technological components that were used to enhance the efficiency of the telephone technology (Kuskey, 2016). With time, the industry experienced consolidation with only specific major players dominating the industry. For instance, during the 1990’s, the telephone industry was largely dominated by Motorola and Nokia. The dominance of such companies was however reduced by the emergence of new technologies such as mobile phones that were internet enabled, and then the development of the touch screen phones and the two combined resulted in the emergence of the highly competitive smart phone industry (Raum, 2008). Currently, the industry is highly fragmented with different organizations striving to develop new and innovative technologies that enhance the usability of the smart phones. With this division, there is no clear monopoly in the market; however there are some companies that can be considered as jointly dominating the market, for instance Apple and Samsung corporations (Casson, 2013).

Conclusion  

From a general perspective, it can be concluded that the telephone industry embodies what Wu termed as ‘The Cycle’. The constant evolution of the industry constantly represents what Wu postulated as steps that are involved in the cycle. The telephone was developed as a free and open technology and this facilitated its continuous development. However, its emergence led to the decline of the telegram technology which was previously regarded as the most effective communication technology. The constant evolution of the telephone technology shows that the development of new technologies divide the industry, before particular industry giants consolidate the industry, which is again divided by further technological development.


 

Reference

Casson, H. N. (2013). The history of the telephone. New York: Cosimo, Inc. (Casson, 2013)

Coe, L. (2011). The telephone and its several inventors: A history. Jefferson, NC [u.a.: McFarland.

Fischer, C. S. (2012). America calling: A social history of the telephone to 1940. Berkeley: University of California Press.

Kuskey, J. (2016). Listening to the Victorian Telephone: Class, Periodicals, and the Social Construction of Technology. Nineteenth-Century Contexts, 38(1), 3-22. doi:10.1080/08905495.2015.1105506

Raum, E. (2008). The history of the telephone. Chicago, Ill: Heinemann Library.

Temin, P., & Peters, G. (2013). Is History Stranger Than Theory? The Origin of Telephone Separation. American Economic Review, 75(2), 324

FINANCIAL INNOVATIONS AND THE MONETARY POLICY

FINANCIAL INNOVATIONS AND THE MONETARY POLICY

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Abstract

The evidenced decline in the decline in the use of physical cash and the innovation of the use of digital technologies to support payments and general business transactions highly support the possibility of reconfiguration of real business monetary transactions without any application of physical money. The introduction of electronic money (e-money), especially the development of the card base technologies and pre-loaded computer soft wares has promoted the optimism for a faster transition from a “physical cash society” to a “cashless society”. However, it is observed that the projections for the total elimination of physical cash in the economy has not so far proved worthwhile and essentially the usage of physical money in business activities has continued to dominate with the electronic money struggling to survive.

This paper is orderly organized into the sections. The first section attempts to examine the specific evolutionary trends that have occurred in the real business payment system critically analyzing the steps towards the electronic money and the possibility of a cashless economy. The second section of the paper identifies and examines the impacts that electronic money imposes to the central banks’ activities with specific analysis on the application of monetary policies in the economy.

The evolution of the payments system

Definition

According to the European central bank, electronic money is the computerized store of monetary value on a technically developed device, and that can be globally used for making business payments to undertakings other than the issuer by not essentially incorporating bank accounts in the process but temporary as a prepaid carrier instrument.

With the revolutionalization in the information and communication technologies, scholars have as well revolutionized their way of thinking, ending up in innovating computerized payment systems for safer and convenient execution of business transactions (Freedman, 2000).. The organization of new types of payment instruments has also being developed. With the massive advancement in technologies, communication amongst persons in different locations of the world increasingly became not only easier, safer, faster but also became considerably less expensive (Goodhart, (2000).. Progressively, much more safer and convenient money transfer technologies emerged, greatly expanding direct debits and direct credit fund transfers. With the development of the electronic cards, card systems have been increasingly developed. the usage of the electronic cards in business transactions have highly added value services to clients, services that rely on the application of the computerized network knowledge. The latest offspring of the digital revolution is the development of the electronic money. The introduction of the electronic money into the economy enhanced the way of doing business, facilitated the emergence of e-commerce and overally led to reduction of the cost of doing business. Economically, a decrease in the cost of doing business leads to increase in the revenues generated by the business and to the end of individuals, the decrease increases the savings power and all these trends promotes the growth of the economy. Besides, the development of the electronic money is considered as a great challenge to the operations and applications of the physical money in doing business and thus suggested that it could be a foundation for the emergence of a cashless economy.

According to the recent innovations of Hoenig, (1995), with the notable increase in the competition from these different business transaction platforms, the use of real cash is observed to be constrained only to a small proportion of the total value of the monetary transactions. The development and enhancement of the diverse payment methods indicates a trend towards specialism in varied types of business undertakings. In actual fact, the development of these varied modes of transacting businesses at best initially developed as a response to a particular nature of specific kinds of business transactions. Different transactions requires different modes of payment and therefore, the best mode of payment that fully and sufficiently serves the unique attributes of a specific transaction is employed, and if not available, its innovation becomes necessary (Akhtar, 1983).

However, with increased urge for simplifying the way of doing business, electronic money was developed as measure to reduce the cost, and also offer better alternative mode of settling business payments to cash, regarding small value transactions and also as an efficient way of paying for the transactions via the internet without holding real cash. This is enhanced by the use of electronic cards and/or pre-loaded computer softwares.

Challenges that electronic money poses for central banking and monetary policy

The electronic money revolution comes with promises to simplify the way of business operations and to finally replace the usage of and existence of real money in the economy. However, introduction of electronic money to the economy imposes a very great challenge to the operations of the central bank of a country. Central banks are the key regulator of the market trends and especially the interest rates and hence the introduction of electronic money impedes the moves that these banks make in an attempt to regulate these interest rates. This challenge may consequently lead to an increase in the endogenous fiscal uncertainty (Goodhart, (2000). The effect of the electronic money in relation to the control mechanisms of the interest rates by the central bank may arise from the perspective that electronic money may lower the demand of borrowing from the central bank by the other financial giants and consequently cause a series of inefficiencies in the economic sector

Effects to monetary policies

By definition, monetary policies are the processes by which the central banks (monetary authorities) of countries employ so as to manage the supply of money into the economy by overally targeting inflation rates as a way to ensure price stability and instill trust to the strength of the currency.

The high demand for electronic money has significantly revolutionalised various studies concerning the effects this new mode of settling business transactions could have to the activities and the ability of the central bank in the control of the money supply in the economy (Hoenig, 1995). Various scholars have a very strong believe that this new mode of transaction would entirely replace the physical currency where as others believe that the effects of its adoption may not be that much drastic.

The central banks’ ability to manage the supply of money in the economy depends of the sole interpretation and definition of the term money. Presently, money comprises of demand deposits, currency and traveller’s checks. However, if the application of all these variables in the economy were to reduce as a result of increased usage of electronic money, then the physical money would be considered as an accurate measure of money in the economy (Goodhart, (2000). The reduction in the capability to measure monetary aggregates limits the ability of the central bank to conduct efficient open market operations to manage the money supply. Nonetheless, the fact that electronic money is fully backed by assets and other highly valued financial instruments. In this view the urge for the central bank to conduct open market activities will gradually decrease since the money supply for business activities should spontaneously change to demand (Freedman, 2000). Additionally, if the supply of the money is believed to be constant, when the weight of the cash money slowly decreases as the adoption of the electronic money raise, then the level of the banks’ liabilities and assets will be decreased and this may bring about the weakening of the overall money supply and the market interest rates through the open market operations.

However, the fact that electronic money is based on commodities may possibly create avenues for fraudulent deals and this could force the central bank to take measures to limit such changes to the real cash money and control the growth of the electronic money. In this way, the central bank may opt to;

Impose high minimum reserve requirements on the electronic money balances.

Absorb the excess liquidity generated through the suitable monetary operations.

Treat the electronic money balances in a similar manner as to which they treat the bank currency and issue electronic money products.

In this way, the central bank will be in a position to control the general movement of the monetary aggregates even though inadequate advancement in the technology may be a limiting factor.

On another perspective, the high adoption of electronic money can affect the velocity of money. Economists consider an increase in the velocity of money in the economy as something that occurs gradually, and at the same time requires a rewarding adjustment in the base money by the bank’s reserve. It is argued that the central bank should be in a position to adjust accordingly as the changes will be obvious and gradual, and that it is not easy to measure the eventual change in the velocity of the money since income circulation velocity is determined from the relationship of the national income and the money supplied in that same period. It is therefore hard for the flow velocity due from such establishment to depict the actual money supply from the perspective of electronic payments (Goodhart, (2000). Electronic money will inexorably decrease the space and time removal of costs of transactions, and in this way, raise the amount of transactions by enhancing the convenience of the transactions. The velocity of money can therefore be observed to rise, if the electronic money is taken as a chief system of money and again included to the economic combinations used to calculate the money velocity. Business undertakings occur in real time across the globe and the costs of the transactions are significantly lowered encouraging individuals to increase their volume of transactions. On the other end, as the high velocity of transactions is healthy, its failure to quantity when the electronic money is excluded in monetary combinations limits the central banks’ power to manage the monetary policy.

Besides, increased adoption and use of the electronic money in the place of convectional currency also directly affects the multiplier theory. the introduction of this new form of money into the economy, leads to a decrease in the amount of the conventional currency and raises the value of money deposits since in such a case, there is a reduction in the private propensity to hold money (Hoenig, 1995). In this perspective, the currency ratio is decreased, the value of the money multiplier increases and the aggregate amount of supply for money generated from the supply of fixed reserve improved. Essentially, this shows that the money multiplier is directly affected by the introduction of the electronic money through the currency ratio.

There are also expectations that electronic money can completely change the nature and operations of the global trade exchange rates. Since electronic money is associated with easy transfer of funds across the nations, electronic money depended on a relatively stronger currency would tend to be preferred for transactions and hence this would lead to exchange rate instability in the financial sector and also act as a component affecting the effectiveness of the monetary policies (Akhtar, 1983). Consequently this can cause the central banks to increase the urge to recognize foreign policies and currencies so as to maintain an effective control of its home monetary components.

Existence of electronic money in the economy can lead to a loss in the interest savings that the government of a country gets through the issuance of non-interest bearing security debts in the form of currency (“seignorage income”). This kind of income is used to run the affairs of the central bank and hence, its loss could possibly lead the central banks to get into financial difficulties (Freedman, 2000). The same money is also used in funding the budget shortfalls and other government oriented programs and therefore, its loss would once again draw the governments into trouble. However, if the central bank considers treating the electronic money in the same manner in which it treats money demand deposits as well as strictly enforcing reserve requirements, then the threat of losing this income could be eliminated.

Finally, the introduction of electronic money influences the reserve requirements for banks. If for instance the reserve requirements are imposed on electronic money balances, there may be no change since it is presumed that conventional currency decreases by a similar amount as the electronic money (Akhtar, 1983). Besides, the assumption that the reserve can be set on all electronic money balances, it may not be accurate when the remote sector is responsible for the electronic cards and network but if the central bank observes counteractive measures, then it can control the associated inflationary effects in the economy which signify increased supply of money.

Conclusions

In conclusion, this paper reviews the key aspects of electronic money and the major policy issues that arise. It is observed that there are a number of potential issues which are of significant concern to the central banks. Further, the paper establishes that the development of technology brought forth the issue of electronic money into business undertakings, creating an interesting concern for both the financial institutions and the decision makers. However, the paper argues that electronic money can possibly become a significant mode of payment in future and that with such developments; there would be great need for monetary authorities to effectively implement monetary policies.

References

Akhtar, M.A., 1983. Financial innovations and their implications for monetary policy: an international perspective. Bank for International Settlements, Monetary and Economic Department.

Freedman, C., 2000. Monetary policy implementation: past, present and future-will electronic money lead to the eventual demise of central banking?. INTERNATIONAL FINANCE-OXFORD-, 3(2), pp.211-228.

Goodhart, C., (2000): “Can Central Banking Survive the IT Revolution?”, International Finance, Vol. 3 (Issue 2), 189-209.

Hoenig, T.M., 1995. The evolution of the payments system: A US perspective. Economic Review-Federal Reserve Bank of Kansas City, 80(3), p.5.

Advice to Smith and Anthony for Getting Into Business

Introduction

When starting a business, it is important to consider the type of business structure that one is going to invest in. As for Smith who is an industrial engineer and Anthony who is a fresh graduate with a background in computer science, and want to start on a business, it is important for them to understand the various business structures that they could invest in. in understanding the business structures it will help them in making a decision which is the right structure for them. The following is thus a presentation of the viable options, their pros and cons as well as legal requirements.

Types of Business Structures Available

Partnership

A partnership business is normally owned and operated by two or more individuals[1]. However, there are two categories of partnership structure. These are, general partnership where the business has unlimited liability and partners with their assets are directly affected if the business is involved in any form of debt or legal obligation[2]. The other is limited partnership where the partners are only investors and thus have limited liability in case of any event. However, limited liability partners do not have any control over the business unlike the general partners. Between the two forms, general partnership is the best choice for partners who have the intention of being actively involved[3].

A general partnership is characterized by tax exemption on its income and instead passes over any positive or negative returns to the individual partners[4]. However, there is the concern for personal liability since the partners are liable to any legal obligations and debts that the business may incur. If a partner acts on behalf of the business such as borrowing of money or making of critical decisions, the outcome affects and binds on all the members[5]. Also, partnership requires some degree of accounting and legal services.

Corporations

A corporate business structure is highly complex and even more expensive compared to other forms of business structures. A corporation is defined as a legal entity that is independent of its owners and therefore is characterized by complying with many regulations as well as tax requirements[6]. The main advantage of this kind of business to the owners is the liability protection that they receive[7]. Therefore, if Smith and Anthony are to form a corporation, in case of any debt of the business they will not be liable for it and as a result, none of their personal assets will be at risk. Another advantage is that a corporation has a large potential of raising money through selling of its stock either as common or preferred[8]. Also, in case one of the shareholder of the corporation defects or dies, the business does not dissolve.

However, despite these advantages, the business is characterized by several drawbacks which one is the high costs that are required to form the business. Also, there are many laws, statute and the corporation’s that have to be to be adhered to during its formation and therefore the need for guidance from an attorney. In addition, compared to partnership, a corporation’s rules are complex and requires more tax preparation and accounting services[9]. Another downsize is that a corporation is subject to double taxation on the earnings from the business[10]. The corporate has to pay tax on its corporate income as well as on the earnings that are distributed to its shareholders as dividends.

S Corporation

This form of business structure is more appealing to small entrepreneurs compared to the other regular corporation discussed above. The main reason is because, S corporation has attractive tax benefits and also gives its business owners a liability protection of the corporation[11]. Normally, any income or loses incurred are passed down to the shareholders and included in their personal tax returns. Consequently, the corporation pays tax only once at the federal level[12]. Also, the shareholders of an S corporation can use a cash policy of accounting if they do not have any inventory. Another positive feature of the business is that it has the capacity to attract more shareholders up to 100 thereby attracting more capital where the taxation expert is maintained[13].

However, the business structure has some drawbacks that come with it. One example is that S corporations are expected to follow the many rules that operate in other normal corporations[14]. Thus, high costs are incurred due many tax and legal services. Also, it is expected to follow procedures such as filing of articles of incorporation, and keeping corporate minutes after holding of meetings for directors and shareholders

Limited Liability Company (LLC)

An LLC business structure is considered as a hybrid of corporations and partnerships whereby it comprises the best features of the two[15]. For example, the owners of the business enjoy liability protection just like corporations without being subjected to double taxation. Issues related to earnings as well as losses are passed down to the shareholders where they are included on their individual tax returns. Compared to an S corporation, LLC offers its owners even more appealing features in that it does not limit the number of shareholders it can have[16]. Also, all members of the corporation are allowed to fully participate in the operations of the business. This is an advantage compared to a limited partnership where members do not have any power to control business operations.

However, in setting up an LLC, members are expected to file articles of organization with the agent of state[17]. Also, the company does not have a perpetual life and therefore could get dissolved after sometime due to death of a member, their retirement or withdrawal. There is also the need to have an accountant who is experienced and familiar with all the rules and regulations that govern LLCs.

Recommendation

From the above analysis of existing business structures, I would recommend for Smith and Anthony to embark on starting up a Limited Liability Company (LLC). The main reason is due to the appealing features of the business that are a combination of both partnerships and corporations. If they embark on starting an LLC, they will have liability protection just like corporations but will not be subjected to double taxation[18]. Instead, their earnings and losses will be passed down to them and get included in their individual tax returns. Also, when the company grows, they could have more investors come in thereby creating a large pool of resources[19]. In addition, they will also be directly involved in decision making thus providing a wide array of ideas. Concerning on how to raise starting capital, Smith and Anthony will have an easy time since they can get it from money lending institutions.

However, compared to partnership, Smith and Anthony will have to file articles of organization with the agent of Australia where they will be operating. Another likely drawback they may face is the dissolution of the company if one of them withdraws, retires, or meets death. Nonetheless, despite these perceived drawbacks, an LLC is the best option for Smith and Anthony because it’s a form of partnership that enjoys the privileges of a corporation.

Options on Developing a Logo, Trade Mark, and an Online Presence

A logo is said to be a visual representation of all that a business stands for[20]. Therefore, Smith and Anthony have to ensure that the kind of logo they develop enhances the first impression of their potential customers. Among the types of logos that Smith and Anthony could choose to develop from are font based logos which are mainly made of a kind of treatment that make the company distinctive. An example is like that of Microsoft Corporation[21]. The second type is an illustrative logo that indicates what the company will be specialized in a manner like the use of a brush on a logo of a house-painting company[22]. The last kind is that with abstract graphic signs like that used by Nike.

Trademarks

In developing a trademark, it is important for Smith and Anthony to ensure that it complies with the Trade Marks Act[23]. They can use it to determine how their brand will communicate of the company’s attributes and values, creating clarity on what they offer and what they don’t[24]. Secondly, they should name the services they will be offering. The trademark’s typography should be legible as well as scalable. Also, the color of the trademark should match the product and services offered[25]. Lastly, it is important to have a trademark that will distinguish them from their competitors. Available name registrations are such as Smith and Anthony, S and A, or Sam and Bonds but they should have a unique name that will avoid conflict with other companies. There is a link between a business name, its trade mark, and domain name in that, use of an existing business name and a trademark is infringement of IP rights[26]. Also, the domain name helps in distinguishing the business from its competitors.

On the other hand, to stand out from the increasing online businesses, it is important that Smith and Anthony find a distinct way to make their business unique. For example, they could develop a custom-designed webpage that has a search engine customization[27]. Other options for creating an online presence are such sharing of content, cross-promotion, blogging, and use of social media such as Facebook.

Converting Ideas into Property and the Intellectual Property Law that recognizes them

For Smith and Anthony to turn their ideas into property, they will have to fulfill three necessary conditions which are; the idea have to be great, they should be the sole owners of it, and it should be legally protectable[28]. In this case, they both have a background knowledge of the business they wish to run and therefore it makes it a good idea. The other issue is that of being the sole owners of the idea since it may involve legal issues resulting from disputes. Therefore, it will be important for Smith and Anthony to overcome the obstacle that the idea originated while Smith is still working in the small firm[29]. The invention of the idea by Smith while he is still working is a challenge because he may have signed an agreement on invention assignment. The assignment states that the firm has the right to claim ownership of the idea developed by an employee while they are still working for them. The other obstacle is that of the idea originating from a university[30]. This poses as a challenge because Anthony who is Smith’s partner just graduated from the university and therefore the school may claim ownership of the idea if it involves a research that was conducted by the graduate student.

The other step is to ensure that the idea is legally protectable. There are two main types of legal protection which are; trade secrets and patents. Smith and Anthony can opt to have either of the two. The substantive provisions of the legislation that is concerned with Smith and Anthony’s idea is that of patents. According to IP Australia, a patent is a right that is granted for any method, process, device, or substance which is fresh, innovative, and useful[31]. Therefore, Smith and Anthony should apply for an innovation or standard patent to protect their idea. Also, they should have an intellectual property (IP). In obtaining an IP, it will help them from infringing the ownership of IPs belonging to other people and alert them concerning products already in the market. Due to the complex nature of IP, it is advisable that Smith and Anthony seek advice from The Institute of patent and Trade Mark Attorneys of Australia[32].

The following are the approximated costs that Smith and Anthony are likely to incur for the whole procedure until their business is running.

Startup capital – 47, 265 Australian Dollars

Hiring an accountant – 675 Australian Dollars

Legal procedures – 3, 376 Australian Dollars

Accessing an IP Protection – 1800 Australian Dollars[33]

 

 

 

Bibliography

Australian Government. “IP Australia, Patent Fees.” Accessed May 7, 2016.

https://www.ipaustralia.gov.au/patents/time-and-costs/patent-fees.

Cohn, Chuck. “A Beginner’s Guide to Establishing an Online Presence on a Budget.” Forbes,

March 13, 2015.

http://www.forbes.com/sites/chuckcohn/2015/03/13/a-beginners-guide-to-establishing-an-online-presence-on-a-budget/#3f661f03683a.

Cross, F. B., and Miller, R. L. The Legal Environment of Business: Text and Cases: Ethical,

Regulatory, Global, and Corporate Issues. Cengage Learning., 2011.

Dummies, Consumers. Starting a Business All-In-One for Dummies. John Wiley & Sons, 2015.

Entreprenuer Staff. “How to Create a Logo.” Entreprenuer. Accessed May 7, 2016.

https://www.entrepreneur.com/article/71902.

Fontana, P. K. Choosing the Right Legal Form of Business: The Complete Guide to Becoming a

Sole Proprietor, Partnership, LLC, or Corporation. Atlantic Publishing Company, 2010.

Idris, Kamil. “An Introduction to Trademarks for Small and Medium-Sized Enterprises.”

Intellectual Property for Business Series 1 (2006): 3.

Jamison, Robert W. S Corporation Taxation 2009. CCH, 2008.

Jentz, Gaylord A., Miller, Roger LeRoy, and Cross, Frank B. Business Law, Alternate Edition.

Cengage Learning, 2008.

Kasznik, Efrat. “3 Steps for Turning Your Idea into Valuable Intellectual Property.” The Business

Journals, December 16, 2014. http://www.bizjournals.com/bizjournals/how-to/growth

strategies/2014/12/steps-for-turning-your-idea-into-ip.html.

Lindberg, Van. Intellectual Property and Open Source: A Practical Guide to Protecting Code.

O’Reilly Media, Inc., 2008.

Mancuso, A. LLC or Corporation?: How to Choose the Right Form for Your Business. Nolo, 2010.

Mancuso, Anthony. How to Form Your Own California Corporation. Nolo, 2015.

Miller, Roger L., and Jentz, Gaylord A. Business Law Today: Comprehensive: Text and Cases.

Cengage Learning, 2011.

Piotrowski, Christine M. Professional Practice for Interior Designers. John Wiley & Sons, 2011.

Pride, William, Hughes, Robert, and Kapoor, Jack. Business. Cengage Learning, 2009.

Puri, Rachna S., and Viswanathan, A. Practical Approach to Intellectual Property Rights. I. K.

International Pvt Ltd, 2009.

Queensland Governement. “Business and Industry Portal.” Website, n.d.

https://www.business.qld.gov.au/business/starting/before-you-start/business-idea/protect-idea.

Roger, Miller, L., and Jentz, G. A. Cengage Advantage Books: Fundamentals of Business Law:

Excerpted Cases. Cengage Learning, 2009.

Trade Marks Act. 1995. Cth,

 

[1] Pride, Hughes, Robert, and Kapoor, Jack, Business. (Cengage Learning, 2009 )3

[2] Fontana, P. K., Choosing the Right Legal Form of Business: The Complete Guide to Becoming a Sole Proprietor, Partnership, LLC, Or Corporation, (Atlantic Publishing Company, 2010) 189.

[3] Ibid.189

[4] Pride, Hughes, Robert, and Kapoor, Jack, Business. (Cengage Learning, 2009)129

[5] Ibid.129

[6] Mancuso, Anthony, How to Form Your Own California Corporation, (Nolo, 2015.)14.

[7] Ibid. 15.

[8] Ibid. 16.

[9] Mancuso, A., LLC or Corporation?: How to Choose the Right Form for Your Business, (Nolo, 2010.) 249.

[10] Ibid.249

[11] Piotrowski, Christine M., Professional Practice for Interior Designers.(John Wiley & Sons, 2011.)

[12] Jamison, Robert W., S Corporation Taxation 2009, (CCH, 2008.) 1093.

[13] Ibid.1093

[14] Dummies, Consumers, Starting a Business All-In-One For Dummies,( John Wiley & Sons, 2015.) 232.

[15] Jentz, Gaylord A., Miller, Roger LeRoy, and Cross, Frank B., Business Law, Alternate Edition, (Cengage Learning, 2008) 703.

[16] Roger and Jentz, G. A., Cengage Advantage Books: Fundamentals of Business Law: Excerpted Cases,( Cengage Learning, 2009.) 541.

[17] Cross, F. B. and Miller, R. L., The Legal Environment of Business: Text and Cases: Ethical, Regulatory, Global, and Corporate Issues,( Cengage Learning., 2011.) 407.

[18] Miller, Roger L. and Jentz, Gaylord A., Business Law Today: Comprehensive: Text and Cases, (Cengage Learning, 2011.) 717.

[19] Ibid. 719.

[20] Entrepreneur Staff, “How to Create a Logo.” (Entrepreneur. Accessed May 7, 2016. https://www.entrepreneur.com/article/71902.)

[21] Ibid.1

[22] Ibid.

[23] Trade Marks Act. 1995 (Cth)

[24] Idris, “An Introduction to Trademarks for Small and Medium-Sized Enterprises.” Intellectual Property for Business Series 1 (2006): 3.

[25] Ibid.3

[26] Lindberg, Van, Intellectual Property and Open Source: A Practical Guide to Protecting Code, (O’Reilly Media, Inc., 2008.) 103.

[27] Cohn, Chuck, “A Beginner’s Guide to Establishing an Online Presence on a Budget,” (Forbes, March 13, 2015) 1.

[28] Kasznik, “3 Steps for Turning Your Idea into Valuable Intellectual Property,” (The Business Journals, December 16, 2014. http://www.bizjournals.com/bizjournals/how-to/growth-strategies/2014/12/steps-for-turning-your-idea-into-ip.html.)1.

[29] Puri, Rachna S. and Viswanathan, A., Practical Approach to Intellectual Property Rights, (I. K. International Pvt Ltd, 2009.)84.

[30] Ibid.84

[31] Queensland Government, “Business and Industry Portal.” (Website, n.d. https://www.business.qld.gov.au/business/starting/before-you-start/business-idea/protect-idea)

[32] Queensland Government, “Business and Industry,” (Website, n.d. https://www.business.qld.gov.au/business/starting/before-you-start/business-idea/protect-idea.)

1.

[33] Australian Government, “IP Australia, Patent Fees,” (n.d. https://www.ipaustralia.gov.au/patents/time-and-costs/patent-fees.) 1.

Strategic Management

Name:

Institution:

Course:

Tutor:

Date:

Strategic Management

Google Case Study: “Strategy Development Processes” – Who drives the strategy?

Strategic management

Strategic management involves the implementation and formulation of major initiatives and goals taken by the top management of the organization on behalf of the owners, based on consideration of resources and a valuation of the external and internal environments where the organization thrives. Strategic management offers a direction which the organization takes and there must be an analysis of the objectives of the company, development of plans and policies that serve the purpose of achieving these objectives. Resources are then allocated so that the plans can be implemented (Johnson, Whittington, Scholes, 2011).

Emergent strategy (trial and error)

Google’s success can be attributed to its strategy. Unlike other companies Google does not have a defined organizational strategy based on its unstructured style of leadership. Google applies the trial and error strategy according to the CEO, which has culminated into the success of the company. The theory or trial and error involves an organization making various attempts in a continuous mode until the desired results are achieved. Google has become very successful by learning from their mistakes to form a perfect solution to its strategy. Google is organized from the bottom up and the employees in the organization are given a free role to do what they view is best for the company. The company does not have a defined time plan for their strategies like it does not have a five year plan of what the company is supposed to do and what is supposed to be achieved. In addition, Google is known to launch half-finished products into the market without the control of the flow of information as they do not advertise the products. Hence, when Google fanatics find the product, work with it and check for errors and then debug it. This is a significant release of control and making good use of the end users.

Leadership style

The leadership style used in an organization has a major impact of the success that is achieved by that organization (Johnson, Whittington, Scholes, 2011). Google was started by two people, Sergey Brin and Larry Page after they completed their University education. When Google undertook its IPO, it did not follow the normal channels followed by other companies. The two founders launched an open IPO instead of using the investment banks as determinants of the initial share price. The buyers decided what the share price would be and the investment banks were not involved. Google then set up a two-tier board of directors which is not common in the U.S like in the U.K. The advantage of this system is the gap it places between Brin and Page and their shareholders, and also the augmented freedom for managers for them to run the organization their way. Therefore, the kind of leadership style witnessed in the Google Company is Laissez-Faire. This is because of the lack of direct supervision of employees. In addition, the employees do not have to provide regular feedback and all that is required from them is output. This is the reason why Google hires highly trained and experienced employees, who require minimum supervision. For instance Google hires Engineers who must have either a Doctorate or Masters from a prominent University. In addition, these applicants must pass through a sequence of interviews and assessment tests. Therefore this kind of leadership style has culminated into augmented innovation among the employees leading to the success of the Company.

Systems & routines structures

The systems of a company highlights how a company undertakes its business. The routines portray the daily undertakings of a business organizations. It shows the steps that must be taken by a company on a daily basis to enhance the smooth flow of business activities (Johnson, Whittington, Scholes, 2011). Google is the most dominant player in internet search and has a market share of 67.5%. The company’s system is highly diversified as a result of its highly acquisitive strategy of business. The company is guided by the acquisition principle that if they cannot innovate, they buy it. In this way Google takes over the fan base, the technical expertise and the product of the early adopters. Between 2001 and 2009, Google had acquired around 50 companies.

In terms of routine, Google is a light-managed organization, where the managers to employee ratio is 1:20 unlike in contemporary organizations where the ratio is 1:10. There is no defined routine of what employees should do and engineers are even given 20% of their work time to work on projects which stimulate innovation as they work on personal projects. However, this has often worked to the disadvantage of the company since employees spend over 30% of their time undertaking labor of their choice, which has led to chaos in the organization.

Strategy drifts

This is a concept of strategic management that deals with the response that an organization takes when undergoing a dynamic environment. Diverse challenges and situations are common aspects that may occur during a strategic drift. The strategic drift can then be regarded as those situations that organization fails to meet the desired outcomes (Johnson, Whittington, Scholes, 2011). In the case of Google, the strategic drift occurred when the image of a disorganized organization manifested itself. This is because the organization could not distinguish between the various responsibilities of the employees. For instance, in Germany, Google failed to renew its domain name in 2007. In addition, there was an incident when Google failed to provide its legal representation at a Belgian law suit. Therefore, the unorthodox way of how Google strategizes has not always paid off like in the mentioned examples.

The attention-based view

In the field of strategy, determining how organizations behave is very imperative. By analyzing how firms behave, enables the understanding of whether firms are in a position to adapt to the changing environment, whether their respond adequately to their competitors and whether they successfully alter their capabilities and strategies (Johnson, Whittington, Scholes, 2011). In regards to Google, its attention-based view has been viable. This is because, the company operates in a disorganized manner and issues are dealt with as they arise. There is no strategic plan for the future which indicates that when issues which require the management’s attention they are handled at this stage.

Hurricane Katrina Case Study: “Organizing for Success” – Human-made disaster?

The aftermath of the hurricane Katrina was marred with confusion. There was so much destruction, death, damaged property and lives that needed rescuing. However, the suffering and damage was augmented by organizational failure. In addition, the organizational design was also responsible for the catastrophe.

Organisational structures

Organization structure refers to the hierarchical arrangement of communication, lines of authority, duties and rights of an organization. Organizational structure determines how the responsibilities, power and roles are coordinated, controlled, assigned and the mode of flow of information between different managerial levels (Daft, 2007).

After the 9/11 attack, there was the reorganization of the various departments that was undertaken. There was the amalgamation of various departments to form one department. The new department was the homeland security which was headed by Tom Ridge, the Vietnam veteran and the Governor of Pennsylvania. The new organization structure had 22 departments under one department. Firstly the organization structure did not favor the Federal Emergency Management Agency. The reason behind this is that the one who headed the Homeland Security did not have the viable knowledge which related to disaster management. The organization structure of any department should ensure that the head of the department is competent enough to handle any matters arising in that department. For instance, in the onset of the Hurricane Katrina, Tom Ridge should have possessed the knowhow of how to handle such a disaster. Nevertheless, due to his competence in war issues, he was destined to work well with terrorism issues. In the forefront of this department, the terrorism docket was given more priority. The department had over 180,000 employees which is a very large department which makes the organizational structure of such a department to be very complex. Hence, when dealing with an emergency like the Hurricane Katrina, chances are that the results would not have been viable like when FEMA would have been an independent department.

(2) Organisational culture

Organization culture refers to a system of shared beliefs, values, assumptions, which direct how people behave in an organization. The shared values have a vibrant influence on the individuals in the organization in regards to how they undertake their duties, how they dress and how they act when undertaking their jobs. Each organization maintains and develops a distinct culture. There are seven characteristics of organization culture which are innovation, attention to detail, emphasis on outcome, teamwork, aggressiveness, and emphasis on people (Daft, 2007). In regards to the case study, the repercussions of the Hurricane Katrina were escalated as a result of failed organization culture. This is because the department of Homeland Security was not focused on the attention to detail. The degree of accuracy of how the department depicted the effects of the catastrophe was shocking. The reason is that the response to natural disasters was given a low priority in comparison to other dockets. A FEMA watch officer had forwarded the warning that there was a looming threat of a hurricane in New Orleans and it would have caused thousands of fatalities. Nevertheless, the seriousness with which the evacuation process was undertaken was absurd despite the looming threat. This is what led to the death of thousands of people. Organization culture also stresses on teamwork. Organizations that dwell in teams instead of individual’s work portray a high value of organizational culture. In the case of the catastrophe, team work was not portrayed because in the state of Louisiana, there was supposed to be 400 buses and 800 drivers who were destined to ferry people to the shelters. Nevertheless, there were no buses when the need arose because of the poor teamwork portrayed by the department. In addition the people required 34 truckloads of food, 69 truckloads of ice and 69 truckloads of water. However, FEMA just delivered 15 truckloads of meals, 17 truckloads of ice and 30 truckloads of water. The discrepancy was as a result of the poor teamwork shown by the department. In addition, the risk orientation in this department was low because of there was not innovation applied to mitigate the effects of the disaster. There were no extraordinary measures undertaken after the disaster occurred to mitigate the damage.

(3) Organizational configurations

According to organization Henry Mintzberg, organizational configurations are defined as the generally occurring cluster elements of organizational processes, structures and strategies. At the center of configurational perspective is the assumption that augmented understanding of organizational phenomena can be achieved better by identifying internally, distinct consistent sets of firms, instead of uncovering relationships that bind across all organization (Mintzberg and Westley, 2007). In the case study, FEMA is linked up with unrelated departments like immigration. Such a department would not be of any assistance when it came to a disaster like the Hurricane Katrina. This was witnessed after the disaster in that the only the FEMA department was concerned with disaster management without the mention of other departments. A coordination between various departments would have therefore ensured that the repercussions of the catastrophe was mitigated.

(4) Bureaucracy

Bureaucracy refers to the system of governance distinguished by its rigid division of labor, clear hierarchy of authority, written inflexible procedures, regulations, rules and impersonal relationships. After its institution, bureaucracy is difficult to change or dislodge (Sadler & Craig, 2003). FEMA used to be represented directly in the cabinet of the president. However, following the formation of the Homeland Security, FEMA was just a mere internal division that did not have Cabinet-level representation. Hence, in the event of a disaster, the immediate response that was initially witnessed when FEMA was an independent body was marred by bureaucracies in the department of Homeland security. This can be witnessed when there was a breakdown in communication after the looting of communication devices. The incident was reported by the officer on the ground, but due to the bureaucracy in the department, there needed to be a second source collaborating the story, but the source was not available hence the information was not relayed up the chain of command. Hence, no action was taken.

(5) Control systems

This refers to the way an organization is controlled. They include quality systems, financial systems and rewards and how they are distributed and measured within the organization. In the case study there was the failure of the control system (Sadler & Craig, 2003). This is because the resources that were used to protect the organization against disasters had been squeezed. In addition, some functions of FEMA were relocated to other parts of the organization. From the initial budget of $550m FEMA lost $80m. The department’s efforts to secure more funds were unsuccessful since the funds were not approved, hence FEMA could not rehearse of a disaster response management. This is why the disaster management after hurricane Katrina was a failure.

Sergio Marchionne Case Study: “Leadership & Strategic Change” – Leading Change in Fiat and Chrysler

1) Types of change

There are various changes that can be undertaken in organization. A CEO may make changes in terms of organizational strategy and structure. Another manager may view changes in terms of processes. When an organization changes its strategy and mission, it means changing the entire belief of the organization. However changes are usually grouped into three categories which are transformation change, transitional change, and developmental change. The developmental change occurs when there is the need to improve the existing situation. This involves the refining of the workflow without entirely changing it. The transitional change takes place when there is the need to implement a completely new course of action. Transformation change refers to a situation which occurs as a result of the failure of another (Sadler & Craig, 2003). The situation molds itself and it takes a new shape. The type of change that took place in Fiat was the transformation change. This is because Sergio Marchionne was adamant in totally eradicating the bureaucratic nature of management in the company. This is because the management style was challenging for the organization and it led to the company being unprofitable, unsuccessful in its launching of new cars, having a reputation of poor quality, and poor relationships with unions. The executives used to communicate via their secretaries hence they avoided problems and spend their time firefighting. Since the level of bureaucracy was highly integrated in the company, 2000 managers and staff were forced into early retirement to completely eradicate the bureaucracy.

(2) Levers of change

Project management possess a set of identifiable tools that support its execution: statement of wok, project charter, schedule, work breakdown structure among others. Likewise, change management also has a set of tools that support the side of change that is associated with people. Change is most effective when it is undertaken under a holistic set of tools. This has led to formulation of the five levers of change which are resistance management plan, training plan, coaching plan, sponsorship roadmap, and communication plan. The word ‘lever’ is used as these plans help in the implementation of change and steering the organization in one direction. Sergio Marchionne undertook a training plan for young managers who initially did not have the chance to move up the ladder in terms of their career. In addition, he undertook the coaching plan of giving the employees more responsibilities and hold them accountable. This was in that a leader who failed to meet the defined objectives were to suffer some consequences. However, he made the employees believe that the failure to meet the objectives was not the end of the world. However, as growing leaders, they were destined to mitigate excuses and explanations and instead show results.

(3) Styles of managing change

Effective leadership is imperative in any organization. Strategic leadership involves the ability to prepare, anticipate and get positioned for the future. The key elements in managing strategic change are diagnosis, levers for change, managing change programs, and leading and managing change. Therefore the different styles of management are education/delegation, participation, direction, coercion, and collaboration (Hill & Jones, 2012). Sergio Marchionne managed change through participation. He made all the employees feel part of the organization by involving them in delivering the desired changes. This translated in the spread of support and ownership of change, making it easier to make decisions in the organization. He also adopted the education and delegation style where he selected 26 young leaders and train them so as to easily manage change in the organization.

(4) Flat and tall organizations

The development of a company’s structure often falls under two categories which are the flat (horizontal structures) and tall or vertical structures. Tall structures is more like the organizational chart where the CEO is at the top of the structure, followed by the various levels of management. On the other hand, the flat structures differ in that employees have more autonomy and there are few levels of management (Hill & Jones, 2012). Sergio Marchionne challenged the tall hierarchy at the company. He undertook the initiative to flatten the organization structure due to the redundancies associated with the old structure. The flattening of the organization structure was meant to drive innovation, improve production quality and also help the business to be more agile. Sergio Marchionne undertook this strategy by crashing the old culture. He moved the CEO’s office from the penthouse to the middle of the engineering department. He also streamlined the senior leadership to yield faster decision making though it increased the workload. He also eradicated the bureaucratic barriers by giving his team full authority.

(5) Kotter & Schlesinger model

Not all employees are usually comfortable with change and they are therefore resistant to change. According to Kotter & Schlesinger, there are various reasons why people struggle with change and the solutions that managers can adopt to help individuals deal with change. People resist change as a result of low tolerance of change, different assessments, lack of trust and misunderstanding, and parochial self-interest. Managers therefore have to devise ways on how to mitigate this resistance (Rao & Krishna, 2005). Sergio Marchionne did not undertake the closure of the two plants and commence the re-aggregating of assets elsewhere, in an effort to do away with dispirited and inefficient who worked in manufacturing units. This was because such a move would culminate into a disgruntled workforce. Instead the company opened grocery stores and kindergartens next to the plant to make it easier for the employees balance their domestic obligations and work. All the bathrooms and dressing rooms were also redecorated. All these measures were undertaken for the employees to cope with the changes that took place in the company.

Bibliography:

Daft, R. L. (2007). Organization theory and design. Mason, OH: Thomson South-Western.

Hill, C. W. L., & Jones, G. R. (2012). Essentials of strategic management. Australia: South-Western/Cengage Learning.

Johnson, G., Whittington, R., Scholes, K. (2011) Exploring Strategy: Text & Cases, 9th Edition, FT Prentice Hall.

Mintzberg, H. and Westley, F. (2007). Strategic Management Journal. Volume 13, Issue S2, pages 39–59, Winter 1992

Rao, V. S. P., & Krishna, H. V. (2005). Management: Text and Cases. New Delhi: Excel Books.

Sadler, P., & Craig, J. C. (2003). Strategic management. London: Kogan Page.

Kings Café Marketing Strategy

Kings Café Marketing Strategy

Name

Institution of Affiliation

 

Table of Contents

 

 

EXECUTIVE SUMMARY

The Kings Café is a full- service café that features a full menu for beverages and food products from all cultures influenced by the different traditions. The café haves one section with a single partition and features, newspapers, magazines and five plasma screens that mainly show news and sports.

I and my friend Ravi own and operate the Kings Café with the assistance of a manager and departmental supervisors. The business has been in operation for over ten years, a period through which, it has established itself in the market and created a competitive advantage. The good service provided by the staff and the good end products have earned the business several tenders to provide various offices with lunch.

The Kings Café allows customers to eat in comfort and sample their traditional meals based upon time honoring recipes from a facility containing enough space for eat-in and take-away currently having 50 spacing for eating in. The Kings Cafe’s aim is simple; it is to provide the world’s best café experience with the highest quality foods drinks and customer service as well as great value of one’s money. The marketing strategy focuses on increasing the profits by increasing the sales.

 

COMPANY DESCRIPTION

The Kings Café is a partnership between two friends, Ravi and I, whom we have been business partners for a period of ten years. The café provides breakfast, lunch and dinner to the customers and is managed by a hotel manager who is in charge of the supervisors. Kings Café is a fifty sitter that provides the customers with breakfast, lunch, as well as dinner. It specializes in all manner of foods from various countries thanks to the work of the able staff that work tirelessly to ensure customer satisfaction. The business has been in operation for over ten years, a period through which, it has established itself in the market and created a competitive advantage. The good service provided by the staff and the good end products have earned the business several tenders to provide various offices with lunch.

STRATEGIC FOCUS AND PLAN

Mission/Vision Statements

Mission statement

The Kings Café mission is to provide the world’s best café experience with the highest quality foods drinks and customer service as well as great value of one’s money.

Vision statement

Kings Café’s vision is to provide a unique food experience through an intimate, professional and culture oriented atmosphere to all its customers.

Goals

In order to ensure that the business remains in operation in future, some goals have been set that keeps track of the progress. The objectives of the café are:

  1. Increase the number of customers by 30% in the next three months. This is based on the fact that the business has been having around 1700 customers per week. This means that the business will increase the number of customers to 2210 within a period of three months.
  2. Create a competitive advantage over the neighboring cafés in terms of service delivery. This will be measured if there is an increase in the number of customers visiting the restaurant.
  3. Increase in profit by having customers buy the foods at a faster rate. This concept can be measured with the amount of profit that the company earns from now on compared to the profit that the company was earning before the marketing plan.

Core Competency and Sustainable Competitive Advantage

During the ten years of operation, Kings Café has been able to monitor all the tastes and preferences possessed by its customers. In addition, the staff have been able to adapt to the time schedules for their customers. Operating in a cultural diverse environment, the café’s major competitive advantage lies on the fact the possession of staff who can be able to prepare different cultural food perfectly (Boldt, 1989).

SITUATION ANALYSIS

SWOT analysis

The SWOT analysis captures on the key strengths and weaknesses of the Kings Café business, and also outlines the opportunities and threats that may be facing the business.

Strengths

  • Highly qualified staff from the diverse cultural backgrounds who are skilled at beverages and food preparation.
  • The café is strategically located near offices making it possible to supply some of the offices with lunch and some workers being able to come for lunch on time.
  • The café enjoys a high degree of customer loyalty mainly during the lunch hour from the large number of working customers.
  • Beverages and food offered is of high quality than the one offered by the competitors at a high speed.

Weaknesses

  • Kings Café has a limited budget that can be used for developing brand awareness.
  • The café has a limited capacity and space to serve large number of customers during the peak hours and some of the customers are forced to move to other cafes due to lack of sitting spaces.
  • There is a relatively high cost of sales which is associated with the choice to offer a fair trade and diverse cultural foods and drinks.

Opportunities

  • There exist a strong market potential as a significant section of the café’s target market do not visit on a daily basis.
  • Kings café has the ability to expand and franchise in order to accommodate more customers.
  • Extension of business hours to cater for the customers who work at night and the early risers.
  • Kings café can also venture in corporate catering during ceremonies and also apply food supply tenders in more companies and institutions.

Threats

  • High level of competition from the local food suppliers and cafes.
  • There are potential shifts in population in case the streets or buildings are redeveloped.
  • Uncertainties in the region food supplies.

INDUSTRY ANALYSIS

The food industry in the area is well developed with each food provider trying to outdo the other. There exist a number of cafes and even food hawking individuals who take the food to the people who work in the informal sectors and places of work (Mullin, 2006).

Competitor Analysis

Due to the large number of cafes, hotels and individuals aiming to reach the same customers, the Kings Café working environment is highly competitive. Each business tries to outdo the other in terms of speed of service, quality of food, diversity of food and the prices (Boldt, 1989). With the mushrooming of other food providers who are ready to take the food to the places of work, the level of competition is very high. Business that thrive are the ones that are able to acquire and retain their customers. Some of the competitors in the industry are Rintos Café, Ambana café, Bahar café and Exotic café. The chart below shows the market share for the competitors.

Figure 1: Competitor market share

Customer Analysis

The company does not have specific target clients, as most of the customers who visit the restaurant are diverse in terms of age. However, lunch is mainly cooked for the working class. Most of the people who visit the café come from their jobs, which show that lunch is mainly for a largely diverse background. Most of the customers who visit the café are office workers, students, drivers, others.

Customer Analysis

Name Average number per week Percentage
Office workers 984 57.9%
Students 397 22.8%
Drivers 204 12%
Others 115 6.7%

 

Table 1: Consumer Analysis

MARKET-PRODUCT FOCUS

Marketing and Product Objectives

It is paramount to note that there is a lot of analysis that is required before making a decision on the next move that the business should take. This requires a careful planning to consider where the company or business wants to be in the near future. The following are the objectives for the business.

  1. Increase the number of customers by 30% in the next three months. This is based on the fact that the business has been having around 1700 customers per week. This means that the business will increase the number of customers to 2210 within a period of three months.
  2. Create a competitive advantage over the neighboring cafés in terms of service delivery. This will be measured if there is an increase in the number of customers visiting the restaurant.
  3. Increase in profit by having customers buy the foods at a faster rate. This concept can be measured with the amount of profit that the company earns from now on compared to the profit that the company was earning before the marketing plan.

Target Markets

Kings café targets to reach more customers from the working population during lunchtime. Most of the customers take their food within the café. Hence the sitting spaces have to be enough. Regular commuters are also a target as they undertake their chores within the town. Kings Café also seeks to acquire more tenders to supply not only food during lunch hour but also tea in the offices and other places of work like construction sites.

Points of Difference

Kings Café stands out from the competitors on many scenarios. First, the café has been able to brand most of its beverages like coffee and tea by liaising with roasting houses who supply it with high quality products. As a result, their process also have a significant difference from the one offered in other cafés. Second, the café possesses a large number of staff who are from different cultural backgrounds. Thus, they are able to gain the confidence of their customers on the quality of the indigenous food products. Finally, Kings Café has large and strategically placed television sets that allow their customer to catch up on the news as they eat and charge their phones through the large number of charging ports.

Positioning

Kings Café is a competitively priced, gourmet food and beverage supplier. The customers always appreciate their high quality products and recognize the uniqueness and value of the offers.

  • Product and price: There is provision of high quality beverages, pastries for breakfast and main course dishes during lunch and dinner. Prices are competitive despite being slightly higher than their competitors in order to signify the high quality.
  • Service: There is a consistent friendly and fast service provided by experienced and skilled staff which is a key differentiator in the food industry.
  • Ethics: Kings Café uses fair trade food ingredients that are always fresh and of high quality. The business always tries to use environmentally friendly and recyclable packaging.

 

MARKETING PROGRAM

Product Strategy

Ravi and I created the name “Kings Café” because we wanted the café to be a source of high quality food products that will be attract all the culturally diverse customers. Kings Café has a very unique logo that bears the name of the company and some fancy food products that are offered. The logo is placed on all the menus, mugs, plates and all staff aprons. It is possible for a person to know a little about the kind of services that are offered just by having a glance on the logo design (Cant & Machado, 2008).

Kings Café offers two major products: its beverages and its food. The café is the only unique place where different specialty drinks are offered in the area. Raging from coffee, tea, milk, hot chocolate and juices. Kings Café has its menu separated on the list of the items offered on breakfast and the dishes for lunch and dinner. Food products are very diverse because of the different cultures.

Price Strategy

The prices of Kings Café are competitive but slightly higher than the ones offered by their competitors signifying the high quality of foods offered. Since the main goal of the café is to increase the number of sale and also the profits, the prices favorable to most of their target customers. On the other hand, they enjoy high quality products and services.

Breakeven Analysis

The breakeven point for Kings Café is determined by the ability to pay all the bills that include rent, employees, taxes, ingredients that are taken on credit, utility bills and other miscellaneous expenses (Boldt, 1989). For a café, the breakeven point is acquired by multiplying the number of customers with the average gross margin sale. The answer gives out the cost of doing the business. Numbers to be used for the calculation are generated from the cash register and income statements that show if Kings Café is able to settle all its bills.

Figure 2: Break-even point for Kings Café

Promotion Strategy

Improving the Kings Café promotion is crucial to the achievement of the new goal. Due to the fact that the company reserves very little amount of money for advertising, only a limited number of people are aware of the existence of the café. Some of the ways of promotion that may be used to reach more people in the small town include offering drinking and food specials and samples the prospective customers, developing a website and use of social media sites. In addition, new menus and posters can be designed and put on strategic positions within the café’s locality (Mullin, 2006). The posters should also be posted on the website and social media pages.

Place (Distribution) Strategy

The current distribution at Kings Café is very limited. Except to the areas where the café has tenders, the only way for customers to acquire food or drinks is to physically go to the café. In addition, the café’s physical location is on the back street which make it inaccessible by some people. The new strategy that is to be used for distribution is to get the food to the working locations of the customers. Having food is crucial but convenience and time are if high importance to the customers. There are a high number of small business in the town and the owners cannot close tem during the lunch hour to go and buy food from the café. Consequently, Kings Café will be taking the food to their locations using disposable wrappers and utensils. On rare occasions, Kings Café will have to make food deliveries to the local business premises except when large orders are made (Boldt, 1989).

FINANCIAL DATA AND PROJECTIONS

The following sections state the Kings Café financial plan and data.

Important assumptions

  • All meal prices fall in the $ 8.00 -$15.00 range.
  • Average price for lunch is $8.79.
  • Average price for dinner is $13.74.
  • The dining room has a sitting capacity of fifty people at a time.
  • There are 20 employees.
  • Annual inflation rate of 3%.
  • Annual revenue increase of 5%.
  • The tenders to supply food during lunch time will have a 1% increase.

Past Sales Revenues

Kings Café has been in operation for the last 10 years. However the past sales revenue will be shown for the past five years.

Year 6 Year 7 Year 8 Year 9 Year 10
Total sales/revenues $ 876,353 $895,245 $856,436 $968,132 $1,037,557
Total profit $32,432 $54,456 53,345 $77,678 $83,589

Table 2: Kings Café past sales

Five-Year Projections

The table below shows the projected cash flow in Kings Café.

Cash flow

Year 1 Year 2 Year 3 Year 4 Year 5
Cash received
From operations $148,100 $40,456 $22,456 $34,643 $20,345
Cash sales $1,345,456 $1,156,678 $1,267,432 $1,145,567 $1,294,577
Total cash received $1,493,556 $1,197,134 $1,289,888 $1,180,210 $1,314,922
Expenditures
From operations $578,432 $434,677 $512,789 $672,352 $452,087
Cash spent $756,567 $523,567 $456,898 $467,787 $543,913
Loan repayment $35,567 $35,567 $35,567 $35,567 $35,567
Total expenditure $1,370,566 $1,156,169 $1,240943 $1,141,764 $1,258,277
Profit $22,990 $40,965 $48,945 $38,476 $56,675

Table 3: Kings Café sales forecast

ORGANIZATIONAL STRUCTURE

This business is a partnership between two friends, Ravi and I, whom we have been business partners for a long time. In terms of management, we have appointed a manager who manages all the activities in the business and reports to us. Joseph, the manager has delegated some of the duties to supervisors who head each department in order to ensure that there is an effective running of the business. As owners, we have equal shares, which mean that we have equal say in matters pertaining to the organization. Consequently, we both share profits equally.

IMPLEMENTATION

The strategy for Kings Café is expected to succeend by giving the customrs an excellent combination of interesting food substances in an environment that is appealing. As the owners of the company, we will focus on ensuring and maintaining that the food and beverages are of high quality and it establishes a close relation with the customer’s cultural affiliation. In addition, our major focus will be to cultivate on increasing the awareness of customers in the locality. All the programs and tactics of the company will be geared to achieve the marketing goals keeping our standards as high as possible (Cant & Machado, 2008).

In the long run, we will create an enetertaining and appealing environment which will be possessing unbeatable quality at affordable but exceptional prices. Kings Café will be an friendly and exciting restaurant and at the end of the implementation process it will be the sole talk of the town. Consequently, excecution of the marketing strategy concepts is the most critical element of our plan.

EVALUATION AND CONTROL

After the implementation of the marketing strategy, the whole process will be evaluated in relation to the set objectives. The role of evaluation will be on the company manage who will ensure that all the activities go as planned and that customer satisfaction is ensured to the maximum. However, we as the owners will have the role of controlling the process after analyzing the output during and after implementation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Boldt, J. (1989). Organizational strategy and marketing evaluation for the golden gate brewery and cafe. Berkeley: University of California.

Cant, M. & Machado, R. (2008). Marketing success stories. Cape Town: Oxford University Press Southern Africa.

Mullin, R. (2006). Creating a marketing strategy [marketing development]. Engineering Management,16(6), 40-41. http://dx.doi.org/10.1049/em:20060609