McDonalds Global Expansion

McDonalds Global Expansion Companies all over the globe are looking for expansion and ways of entering new markets which are profitable through different entry modes (Deresky, 2006). Managers look at different strategies that can be used to expand internationally (Deresky, 2006). There are many reasons for companies to go global or expand overseas. There are reactive and proactive reasons for the same. Increased global competition, customer needs, potential opportunities, declining foreign trade barriers, increasing expenses in domestic markets are some of the reactive reasons for companies going global. To achieve economies of scale, expanding base for growth and profits, cost savings, access to different resources are some of the proactive reasons for companies going global (Deresky, 2006). An example of a company which looked to expand beyond its borders is McDonalds, one of the most successful companies in terms of implying international strategies successfully. 2.0 Company Overview McDonalds, the most renowned fast food chain of the world, started in 1955 by a visionary named Raymond Kroc (McDonalds : The Ray Kroc Story, 2010-2011). Kroc played a significant role in revolutionizing the fast food industry in America and currently Mc Donalds is serving over 60 million customers in over 117 countries on a daily basis (McDonalds : The Ray Kroc Story, 2010-2011). The company has a global brand value and worldwide recognition. It is one of the most widely recognized icons of the world in the fast food restaurant industry. By reaching saturation levels in the United States, McDonalds looked to expand internationally amidst increasing regulations. But they approached with a strategy by controlling standardized products, clean and green environments and American origin. With experience, localization started increasing and the entire model was redone to appeal the localites of the foreign country. This strategy has been a turnaround point for McDonalds but it has thed potential of losing brand equity in the future (McDonalds Fact File 2007, 2007). Inspite of an American base, McDonalds respects the markets, cultures, beliefs and likings of other nations. Customers identify with the brand name and the Golden Arches are recognized not only in America but in foreign countries as well (McDonalds Fact File 2007, 2007). 4.1 Franchise Model: McDonalds franchising process is that of a strategic network (Hitt, et.al 2007). Around 85% of the restaurants are operated by franchisees. McDonalds follows a standardized set of procedures across all its restaurants in terms of quality, service, cleanliness and value propositions. Basically, the central control is in its headquarters where different financial and strategic controls are used to create value for the entire network (Hitt, et.al 2007). 5.0 Expansion Strategies in Different countries 1. CHINA: The strategy used by McDonalds in China is quite different from the way the restaurants are otherwise managed in the United States. The prime reason for the success of McDonalds in China is the involvement of McDonalds to adapt to Chinese Culture. Local people manage the operations in McDonalds in China, thereby reaching out in an easier way to the locals of the country. Additionally, the managements ability in Europe slowly changed the taste of the Asian consumers towards fast food which is an unusual aspect of the Chinese culture. Locals in China responded positively to the fast food concept of McDonalds thereby making the investment in China a successful one. Some of the other ways the approach in China was different as compared to the United States was that McDonalds customized the menu by adding teriyaki burger which gave locals the flavour of their native food taste (McDonalds Fact File 2007, 2007). Customization of products to suit local needs is a key factor that sh ould be considered in the global expansion plan. 2. South Africa: A relatively unique strategy has been used by McDonalds to serve customers where they can enjoy their meal while shopping and playing. This approach is used in highly populated areas with busy lifestyles of South Africa. Additionally, the drive-through approach works well in the South African region. Therefore, there are superior number of drive-through as compared to Australia and United States. This particular facility gives McDonalds an upper hand in South Africa. The base of the approach is to provide comfort to the customers in shopping malls, towns and other areas. Different marketing strategies are used to attract people from different sections of the society. The returns for McDonalds in South Africa have surpassed the initial targets of turnover and profits. With over 90 branches in South Africa, employment opportunities are high for local people and are expected to rise. Furthermore, McDonalds is currently using the vertical integration approach to improve its productivity with efficient software packages. All these factors contribute to the high revenues and with advanced software systems; the aim is to enhance bottom line as well ((McDonalds Fact File 2007, 2007). 3. Brazil: McDonalds opened its first branch in Brazil in 1979. The franchise model has been successfully used in Brazil and the management team has been praised for consistent performance and high standards of quality. One of the accolades received by McDonalds in Brazil is the Hallmark of Quality. One of the challenges that exist for McDonalds in Brazil is bankruptcy because of which it is difficult to meet the expenses on a monthly basis. Inspite of the fast growth in Brazil, franchisees have difficulty in reducing costs ((McDonalds Fact File 2007, 2007). 4. Saudi Arabia: Another example of adaptation to the local culture is the way McDonalds has managed the business in Saudi Arabia. McDonalds closes five times in the day for prayers and they do not serve pork to respect the Islamic culture in Saudi Arabia. There are some exclusive outlets of McDonalds in the Holy City of Makkah which serve to Muslim customers only with only Muslim staff in every department ((McDonalds Fact File 2007, 2007). 5. India: The approach to adapt locally to the country has been a highlight for McDonalds success. In India, the menu is highly customized to suit the Indian tastes and this justifies the inclusion of aloo tikki and paneer burgers. The Big Mac becomes Maharaja Mac in India and another highlight of the menu is having separate vegetarian kitchens with separate utensils and cooks. This feature has been particularly taken care off for making sure that the needs and requirements of the vegetarian population are fulfilled ((McDonalds Fact File 2007, 2007). 6.0 Organizational capabilities Organizational capabilities look at a firms ability to manage resources in order to gain sustainable competitive advantage (Hitt, et.al 2007). The internal analysis of the firm are carried out to understand its strengths and weaknesses either which are existing or are potentially going to exist in the future as compared to its competitors (Deresky, 2006). 6.1 Strengths of McDonalds 1. Adaptability: It is one of the major strengths of McDonalds. Customization of activities and menu to suit local needs is the single most factor contributing to its success. This takes care of blending with the local culture and values of the foreign country. McDonalds is an example of a company which is centralized in its core but still customizes the menu and the operational activities for local needs. 2. Innovation: With wide variety of options available from snack wraps to coffee to burgers to McCafe, McDonalds is very innovative with reference to its products. Also, the processes or the way every country operations are managed are innovative in a way that they are suited to fulfill the local needs. 3. Corporate Social Responsibility: McDonalds has programmes for having a better society. Some of the programmes they have are the greener than ever programme; recycle, renew programme; animal welfare program to name a few. McDonalds believes in having sustainable supply chain consisting of 3 ES: Ethical Responsibility, Environmental Responsibility and Economic Responsibility (Sustainable Supply Chain, 2010-2011). 4. Marketing: The McDonalds logo is a popular one amongst children and adults all across the globe. This compliments the marketing efforts which are carried out through market analysis thereby giving positive returns to McDonalds. 6.2 Weaknesses: 1. Customer Service: Long queues, insufficient employees at the counters are frustrating for customers and many times the employees are rude in terms of their behaviour with customers. 2. Currency fluctuations: When companies go global, there is always a risk associated with currencies as they keep fluctuating based on the markets. This can cause difference in planned returns for McDonalds. 3. Franchisees Challenges: There is an increase in the fee that franchisees have to pay to McDonalds thus resulting in selling of the businesses and dissatisfied franchisees. Additionally, it is important to understand the opportunities and threats that potentially exist for McDonalds to consolidate its global position in the fast food industry. 6.3 Opportunities: 1. Expansion: Even though it serves over 60 Million people on a daily basis that accounts for just about 1% of the worlds total population. There are a lot of emerging markets particularly in the BRIC countries such as Brazil, Russia, India and China. 2. Increase in fast food category: Based on statistics from Euromonitor, there is a growing demand for fast food. For example: In Australia, sales of fast food grew by 7% in terms of value in 2008 to reach A$ 10,921 Million. This demand is increasing due to stressful lifestyles and constant time pressures (Consumer lifestyles- Australia, 2009). 3. Growing need for drive through facilities: Drive through facilities is highly visible in South Africa. They can look at expanding these facilities in other parts of the world with dense populations. 6.4 Threats 1. Competition: With globalisation and increased number of companies looking to expand internationally, it is a challenge for McDonalds to keep up to or enhance its already existing powerful status in the market. 2. Unexpected circumstances: Uncertainties such as natural calamities, unexpected diseases can affect the smooth flow of activities for McDonalds in terms of procurement of goods and food contents which can decline the sales drastically. 7.0 Organizational Structure to support the international Strategy While understanding the organizational capabilities and the external environment, it is crucial to understand the organizational structure of McDonalds. McDonalds sets an exemplary example of a company which implements global strategy and a centralized organizational structure. With operations in over 120 countries and a huge number of 31,000 restaurants, McDonalds procures its food and packaging from the same set of suppliers. It shows the uniformity of a branch in United States and India. The decision making takes place centrally in the United States (Hebert, 2011). In terms of the way McDonalds organizational structure is oriented, it is relatively organized in terms of how the growth and expansion takes place internationally. But to fulfill the ever changing customer demands and customization strategies in every country, the structure needs to be a combination of centralized and decentralized forms. It also means the structure is relatively a mix of formal and informal forms which is quite a challenge to manage successfully. 8.0 Recommendations As described in the above sections, McDonalds has huge potential in global markets to venture out in different areas specially the BRIC countries. As these cities are the centre of research and growth opportunities, McDonalds should focus their internationalization in these areas much more than they are currently doing. McDonalds should focus on high and low areas of population, reaching out to more and more sections of the society. Joint ventures can be taken up with established companies in foreign countries with inclusions of coffee shops, bakery, internet access add-ons in all high profile metropolitan cities McDonalds currently have restaurants. For example in Germany, McDonalds has a tie up with T mobile for hot spots. McDonalds should work on increasing these facilities in a lot of high profile, metropolitan cities across the world. McDonalds can look at diversifying into other areas of food industry for example; McDonalds Hotel in Zurich is a distinctive venture. The road ahead for McDonalds should be to increase the nutritive value of the burgers and look at certain health aspects to control the increasing waistlines among children because of high consumption of fast foods especially burgers (Consumer lifestyles- Australia, 2009). They should look at improving their customer services at the counters by avoiding long queues and providing high levels of customer satisfaction. 9.0 CONCLUSION McDonalds is the number one brand in the fast food industry. They have successfully implemented international strategies where in they have used localization and customization processes to adapt to the foreign countries along with maintaining its American origin by having centralized procedures as well. The organizational structure is in sync with the strategy used by McDonalds to be ahead of its competitors. It is challenging for managers to consistently keep in pace with the right balance of centralizing and decentralizing the operations. Even though weaknesses and threats exist, the strengths and opportunities make it a strong player in the market in the fast food industry.

Meaning and Importance of Physics :: essays research papers

What is Physics? The Meaning and Importance During the seventeenth century, the modern science of physics started to emerge and become a widespread tool used around the world. Many prominent people contributed to the build up of this fascinating field and managed to generally define it as the science of matter and energy and their interactions. However, as we know, physics is much more than that. It explains the world around us in every form imaginable. The study of physics is a fundamental science that helps the advancing knowledge of the natural world, technology and aids in the other sciences and in our economy. Without the field of physics, the world today would be a complete mystery, everything would be different because of the significance physics has on our life as individuals and as a society. In the natural world, physicists find new discoveries constantly. Some of these discoveries include the study of motion and forces. The well-known scientist, Isaac Newton, came up with the three laws of motion, which state rules and facts about the movement of an object. Our textbook states the laws of motion, as ?A body in motion will remain in motion at a constant speed and direction unless an outside force acts upon it. The net force acting upon an object is directly related to the mass and acceleration of the object resulting acceleration is in the direction of the net force, which is the vector sum of all forces acting upon the object. Finally, the third law of motion states that when one object applies a force to another, the other object applies the same amount of force back to the first object, but in opposite directions.? With these laws of motion, we can understand in detail how our world works. Also, that the movement of an object is more complex than a simple push. This discovery is taught to students all over the world because of its great importance and will continue to enhance the knowledge of the mystery of our earth. The importance of physics not only lies in the discoveries of the natural world, but in the technology in our modern lives. Today we use many gadgets in our everyday tasks, which act as convenient aids to all of our needs. Some of these little novelties are cell phones, radios, computers, lasers used in eye surgery, fiber optics used in phone lines, calculators, hearing aids, and even global positioning systems.

The Philippine Party-List System: Absence of a Clear Seat Allocation Fo

The Party-List System of proportional representation is a relatively new addition to Philippine politics and specifically in the electoral system of the country. It was only introduced in 1987, by then, the new constitution and formalized by R.A. 7941 (The Party-list System Act) in 1995, to open the legislature to marginalized and underrepresented sectors or groups without a well-defined political constituencies but who could contribute to policy formulation beneficial to the nation. (R.A. 7941 1995, Sec. 2) Since then there had been various problems in implementing the statutory law and the principles of the constitutional provision on the party-list system. Rodriguez and Velasco (1998, 36-48) and Tangkia and Habaradas (2001) enumerated some of them: low voter turnout, COMELEC inefficiency in public information dissemination, and confusing instructions in explaining a new ballot structure. However, one of its longest standing issues is the seat allocation since R.A. 7941 does not provide a clear formula for translating votes into seats. (Rodriguez 2002, 25 and Rodriguez and Velasco 1998, 39) An allocation formula is one of the basic and most fundamental requisites of a party-list system. Yet ironically, the authors of the governing law seemed to have forgotten to include a clear allocation formula even though it was tackled during the deliberations of R.A. 7941’s origin bills. The effects of its absence were most evident during the 1998 and 2007 elections. In 1998, 14 party-list seats were already filled with finality using the â€Å"2-4-6 COMELEC formula.† The said formula apportioned a seat for every 2% a party garnered in the party-list votes. For example, APEC was given two seats with its 5.5% but ABA (second... .... 2007. â€Å"The Party-List System in the Philippines: Proportional Representation and Seat Allocation Errors.† Discussion Paper. QC: Center for People Empowerment in Governance/University of the Philippines. Republic Act 7941. 1995. â€Å"The Party-list System Act.† Rodriguez, Agustin Martin G. and Djorina Velasco. 1998. Democracy Rising? The Trials and Triumphs of the 1998 Party-List Elections. QC: Institute of Politics and Governance and Friedrich-Ebert-Stiftung. Rodriguez, Agustin Martin G. 2002. The Winding Road to Representation: The Philippine Party-List Experience. Makati: Ateneo School of Government and Friedrich-Ebert-Stiftung. Tangkia, Fritzie Palma and Ma.AraceliBascoHabaradas. 2001.â€Å"Party-List System: The Philippine Experience. Friedrich-Ebert-Stiftung Philippines.http://www.library.fes.de/pdffiles/bueros/philippinen/50076.pdf. (November 27, 2011).

Moral Relativism Essay

Moral relativism is the view that moral judgments are true or false only relative to some particular standpoint; for instance, that of a culture or a historical period, and that no standpoint is uniquely privileged over all others. It has often been associated with other claims about morality: notably, the thesis that different cultures often exhibit radically different moral values; the denial that there are universal moral values shared by every human society; and the insistence that we should refrain from passing moral judgments on beliefs and practices characteristic of cultures other than our own. Historical Background Even though moral relativism did not become a prominent topic in philosophy or elsewhere until the twentieth century, it has ancient origins. In the classical Greek world, both the historian Herodotus and the sophist Protagoras appeared to endorse some form of relativism the latter attracted the attention of Plato in the Theaetetus. It should also be noted that the ancient Chinese philosopher Zhuangzi (read as Chuang-Tzu) put forward a non-objectivist view that is sometimes interpreted as a kind of relativism. Among the ancient Greek philosophers, most people consider the ideas of Plato but I will explain about the ideas of historian Herodotus, because I found his arguments to be interesting and what we call thinking out of the box. The historian Herodotus tells the story of how the Persian king Darius asked some Greeks at his court if there was any price for which they would be willing to eat their dead father’s bodies the way the Callatiae did. The Greeks said nothing could induce them to do this. Darius then asked some Callatiae who were present if they would ever consider burning their fathers’ bodies, as was the custom among Greeks. The Callatiae were horrified at the suggestion. Herodotus sees this story as vindicating the poet Pindar’s dictum that â€Å"custom is lord of all†; people’s beliefs and practices are shaped by custom, and they typically assume that their own ways are the best. Herodotus’ anecdote is not an isolated moment of reflection on cultural diversity and the conventional basis for morality. In the early days, moral relativism was a concern of philosophy only but in modern times it began to shift into the concern of anthropology, and there was a need for somewhat a link or common ground between these two. An important early bridge from anthropology to philosophy was established by Edward Westermarck, a social scientist who wrote anthropological and philosophical works defending forms of empirical as well as meta-ethical moral relativism. He also ranks as one of the first to formulate a detailed theory of moral relativism. In the modern era the main push for such a position came from cultural anthropology. Anthropologists were fascinated with the diversity of cultures, and they produced detailed empirical studies of them. Early on anthropologists accepted the assumption of European or Western superiority. But this was challenged by the ideas of Franz Boas, Ruth Benedict, Melville J. Herskovits, and Margaret Mead all of which clearly expressed important forms of moral relativism in the twentieth century. The various views of Moral Relativism Defining moral relativism is difficult because different fields and also writers use the term in slightly different ways; in particular, supporters and antagonists of relativism often diverge considerably in their characterization of it. Therefore, it is important to first distinguish between some of the positions that have been identified or closely associated with moral relativism before setting out a definition that captures the main idea its adherents seek to put forward. a.Descriptive Moral Relativism Descriptive moral relativism is a theory about cultural diversity. It holds that, as a matter of fact, moral beliefs and practices vary between cultures and sometimes between groups within a single society. For instance, some societies condemn homosexuality, others accept it; in some cultures a student who corrects a teacher would be thought disrespectful; elsewhere such behavior might be encouraged. This particular view of moral relativism suggests that there are many different moral standards for moral judgments and we should just accept this differences. It denies that there are any moral universals, norms or values that every human culture accepts. None the less descriptive moral relativism only explains about the difference that exists, it does not tell us how we should base our judgments on these differences and does not necessarily support the tolerance of all behavior in light of such disagreement. b.Meta-ethical Moral Relativism Meta-ethical moral relativism holds that moral judgments are not true or false in any absolute sense, but only relative to particular standpoints. This theory first states that people disagree about moral issues and it also adds that terms such as â€Å"good,† â€Å"bad,† â€Å"right† and â€Å"wrong† do not stand as universal truth, rather they are relative to the traditions, convictions, or practices of an individual or a group of people. Some meta-ethical moral relativists focus more on the justification of moral judgments rather than on their truth. They focus on how the moral judgments are made and to what cause. For example, most people would agree that lying in court to avoid a fine is wrong, while lying to a madman to protect his intended victim is justified. Saying that the truth of a moral claim is relative to some standpoint should not be confused with the idea that it is relative to the situation in which it is made. c.Normative Moral Relativism Normative moral relativism is the view that it is wrong to judge or interfere with the moral beliefs and practices of cultures that operate with a different moral framework to one’s own, that what goes on in a society should only be judged by the norms of that society. The motive behind it is to avoid arrogance and promote tolerance. Normative moral relativists can also argue that judging other cultures is misguided since there are no trans-cultural criteria to which one can refer in order to justify one’s judgment. Normative moral relativism is mostly considered as an additional idea to that of meta-ethical relativism. However, what makes this view standout on its own is its stances on tolerance. Let us see these statements â€Å"we think it is moral to tolerate behavior† and â€Å"other people think intolerance of certain behaviors is moral.† Philosopher Russell Blackford says,† We need not adopt a quietism about moral traditions that cause hardship and suffering. Nor need we passively accept the moral norms of our own respective societies, to the extent that they are ineffective or counterproductive or simply unnecessary.† So according to normative moral relativists it is perfectly reasonable for a person or group to defend their subjective values against others, even if there is no universal instruction on morality and we can also criticize other cultures for failing to follow even their own goals effectively. Pros and Cons of Moral Relativism One of the main advantaged of moral relativism is giving response to the perceived problems with moral objectivism. Moral objectivism is a concept advocating the necessity of a universal or some common standpoint for view and evaluating all moral issues, since this non-existent, according to moral objectivism there would have been a major blockade. Never the less thanks to moral relativism which states such standpoint is not necessary, because each situation or moral issue is judged according to its own context. The other clear benefit of moral relativism is that it promotes tolerance. As you all know the world has a never ending conflict of ideas, though most of this are simple ones which can be dealt with a little compromise, some are quite serious which there is simply no way for agreement. These ones call for a more developed and acceptable solution that is tolerance. If it wasn’t for tolerance quarrel, fights, dispute and even war would be a day-to-day scene. Unfortunately like all human spawned ideas, moral relativism is not without flows. Moral relativist exaggerate cultural diversity; this is mostly directed against descriptive moral relativism. Every human culture has some sort of moral code, and these overlap to a considerable extent. There is a common core of shared values such as trustworthiness, friendship, and courage, along with certain prohibitions, such as those against murder or incest. Some version of the golden rule—treat others as you would have them treat you—is also encountered in almost every society. The existence of these universal values is easy to explain as they enable societies to flourish, and their absence would jeopardize a society’s chances of survival. Moral relativism undermines the possibility of a society being self-critical. Based on the definition of moral relativism we must judge every action in reference to its context. But if the rightness or wrongness of actions, practices, or institutions can only be judged by reference to the norms of the culture in which they are found, then how can members of that society criticize those norms on moral grounds? This dilemma make moral relativism a main means of bias for self-criticism; as a result, resistance to change. Conclusion To sum up moral relativism should be taken as a useful tool although it has many criticisms. I think it is a purely advantageous idea, and the criticisms come from extremists who take each and every proposition to its furthest practicality to make seem faulty. If we were able to overlook this small defects it is my strong belief, we would finally end the long lasting quest for an all-encompassing and universally justifiable standard for evaluating moral issues.

Supplier Relationships: a Strategic Initiative

Supplier Relationships: A Strategic Initiative Jagdish N. Sheth Goizueta Business School Emory University Arun Sharma University of Miami Jagdish N. Sheth is Charles H. Kellstadt Professor of Marketing, Emory Business School, Emory University and Arun Sharma is Associate Professor of Marketing, University of Miami. This paper extends research published by the authors in Industrial Marketing Management (March 1997). Please address correspondence to Arun Sharma, Department of Marketing, University of Miami, P. O. Box 248147, Coral Gables FL 33124, Telephone: (305) 284 1770, FAX: (305) 284 5326.Supplier Relationships: A Strategic Initiative* Abstract In an increasing competitive marketplace, firms are seeking new methods of enhancing competitive advantage. Today, purchasing is becoming a strategic function and a key factor in competitive positioning. This paper suggests that effective relationship with suppliers will provide firms with next-generational competitive advantage. With conso lidation of firms within industries, continuos product evolution and constant pressure on costs, supplier relationships will become more critical in the future.This paper discusses the emergence of supplier relationships, and how this shift toward supplier relationships has and will change the role, processes and strategies of firms. Although purchasing has strategic importance within a firm, good relationships between customers and suppliers are elusive. Firms, therefore, need to emphasize aspects that will enhance supplier relationships. * This paper extends research published by the authors in Industrial Marketing Management (March 1997). Supplier Relationships: A Strategic InitiativeIntroduction Firms are facing increasingly competitive environments characterized by continuos pressure on costs, large global players, continuously evolving products, customer fragmentation and emerging technologies. To ensure success, firms realize that they cannot be experts in all businesses and are concentrating on their core competencies. As an example, Westinghouse is selling its power and defense lines to concentrate on the broadcasting business. To enhance their performance in non-core competency areas, companies are reevaluating business relationships so as to form closer relationships with strategic suppliers [1, 2, 3].Firms have realized that collaborative business relationships improve a firm's ability to respond to the new business environment by allowing them to focus on their core businesses and reduce costs in business processes. In an earlier paper, we had suggested that the source of next-generational competitive advantage will be collaborative relationships that firms have with their suppliers [4]. We suggested four reasons for this phenomena. First, marketers or sellers are driving this change as firms have started identifying and catering to the needs of specific customers.Thus, having a relationship with suppliers will enable firms to receive better servi ce and therefore be more efficient in procurement. Second, firms recognize that supplier relationships will allow them to be more effective. It is easier to implement strategies such as quality platforms, if firms have relationships with their suppliers. Third, there are enabling technologies that allow firms to select their best customers and suppliers. Computer programs allow firms to calculate profitability Page 2 associated with each customer or supplier.Finally, competition and the growth of alliances are forcing firms to develop better supplier relationships to maintain a competitive edge. The purpose of this paper is to emphasize that supplier partnerships will provide a strategic advantage to firms. This paper identifies the benefits of supplier partnerships and provides guidelines for future supplier partnering. Shift in Organizational Strategy The reason for the emerging emphasis on supplier relationships is the shift in organizational buying strategies [4]. Organizational purchasing strategies have been dramatically changing for four reasons (please see Figure 1).First, global competitiveness had made firms realize the competitive advantages of creating and managing supply chain relationships. Second, emergence of the Total Quality Management philosophy has encouraged â€Å"reverse marketing† starting with external customers and moving backward into procurement processes. For example, Demand Driven Manufacturing or flexible manufacturing and operations have been instituted in order to serve the diversity of demand with respect to form, place and time value to customers. The role of suppliers is critical in this regard.Third, industry restructuring through mergers, acquisitions and alliances on a global basis has reorganized the procurement function from a decentralized administrative function to a centralized strategic function. This is further intensified by outsourcing many support functions such as data processing, and human resources. Fin ally, uses of information technologies have restructured the buying philosophy, processes and platforms by allowing firms to share market information and use market information to schedule design and manufacturing of products better. Page 3Fundamentally, the consequence of changing paradigms of organizational strategy is likely to result in a two dimensional shift as shown in Figure 2. Organizational purchasing strategy shifts from a transaction oriented to a relational oriented philosophy, and from a decentralized domestic sourcing to a centralized global sourcing process. Relationship with Suppliers As stated earlier, we suggest that developing relationship with suppliers will be critical for the effective functioning of firms. This trend is reflected in Table 1 that shows that large firms have substantially reduced their number of suppliers.This trend also suggests that some suppliers would be exclusive to firms. The primary reasons are that corporations are becoming leaner. The procurement function is becoming more centralized while the profit-and-loss (P) responsibility of firms is becoming less centralized. Business-unit heads are raising more questions about the way things are bought. And as vertically integrated companies – those that have complete internal capabilities and are self-sufficient – become relics and outsourcing of operations become a reality, more opportunities to partner with suppliers will arise.Taking advantage of these opportunities is increasingly important for several reasons: †¢ Declining market prices. Nobody expects prices to rise anymore. There is going to be a tighter squeeze on the margins of customer companies. They would like to get that margin reestablished by working with suppliers. †¢ Rising competitive intensity. With the restructuring of the world economy, the formation of the World Trade Organization, and greater economic integration within and between regions, global and regional consolidation is clearly taking place and resulting in greater Page 4 competition. Advanced technology enablers. Electronic commerce and networked computing are here. Dramatically reduced cycle times are becoming an ordinary achievement. These require partnering with suppliers. †¢ Reverse marketing strategies. The traditional process flow – from R and sourcing to manufacturing, sales and service – is becoming a thing of the past. Today, market-focused organizations are organizing into reverse marketing – starting with the end users. Partnering with suppliers is critical to this strategy. †¢ Strategic positioning. In the past, companies partnered primarily for operational efficiency (i. . , just-in-time procedures or zero-inventory models). Today, intense competition is coming from existing rivals, new entrants and the threat of substitutes. Partnering with suppliers is an increasingly important way of minimizing the competition’s negative impact on an industr y. Example of Companies Benefitting from Supplier Relationships The major research regarding the advantage of supplier relationships comes from a study of the Japanese automotive component industry [5]. They found that the average length of the relationship between suppliers and buyers was 22 years.In addition, the major customer bought about half the output of the supplier firm. About 26% of the supplier’s development effort was devoted to a single customer. Competition was restricted to 2-4 other suppliers. Finally, the quality of delivered product was very good. The data would suggest that supplier relationship enhanced the design efforts of the buying company and reduced uncertainty and costs for the Page 5 supplier company. Eastman Kodak, Ford Motor Company, Levi Strauss, DuPont , McKesson and Bose corporation demonstrate that some savings can be achieved by supplier relationships [2].These firms as well as examples of other firms using specific tactics to benefit from s uccessful relationships are discussed next: Eastman Kodak Company: Eastman Kodak Company has outsourced its data and information processing system to IBM. Kodak has achieved substantial cost savings through reducing personnel, assets and capital expenditures in an area that is not its area of core competency. This shift toward asking data processing and systems management consultants to manage the information and data processing of a firm has accelerated as major firms such as Xerox and Ryder have outsourced their internal data processing systems.Ford Motor Company: Ford formed a relationship with one of their own clutch suppliers. Ford examined the production process of their supplier and was able to reduce the cost of the clutch by 20% benefitting both Ford and the clutch supplier. Similarly, based on their past experience with Donnelly, Honda picked Donnelly as an exterior mirror supplier, although Donnelly had no experience in the area [3]. Honda sent its engineers into Donnelly ’s plant, and Honda and Donnelly engineers reorganized the plant and re engineered the product process.Sales are expected to be $60 million in 1997 and costs are expected to decline 2% annually benefitting both Honda and Donnelly. JC Penny and Levi Strauss: JC Penny and Levi Strauss are linked with an electronic Data Page 6 interchange (EDI) that allows Levi Strauss to obtain sales data. Levi Strauss obtains data on the exact size of jeans sold in individual stores. This data allows Levi Strauss to better plan the production process as well as better control inventory and delivery. This saving leads to a reduction in costs and prices benefitting both JC Penny and Levi Strauss.DuPont: Dupont has reduced the costs of each purchase transaction in the maintenance and repair supplies division from $120 to $16 by working with a smaller number of suppliers. DuPont selected one distributor in each region for a supplier relationship. They then implemented a paperless order, receipt an d payment process. In addition to decreased costs of transaction, inventory at the maintenance and repair facilities were reduced by 50%. McKesson Drug Company: McKesson a major drug distributor, developed a relationship with Johnson and Johnson, one of their major suppliers.Through a joint computer system development effort, both firms receive data on inventory, point of sale, demand, and customer information. This has led to Johnson and Johnson providing better service to McKesson increasing the level of service that McKesson provides to its customers. Due to the success of the relationship, Johnson and Johnson has turned over a million dollars worth of business to McKesson. Bose Corporation: Bose corporation has attempted to eliminate both purchasers and salespeople by bringing suppliers into the manufacturing process.Suppliers have access to Bose’s data, employees and processes. They work with Bose’s engineers on present and future products. The Page 7 reduction in personnel reduces costs for both sides, and a direct contact between the user and producer enhances quality and innovation. Establishing and Maintaining Supplier Relationships Wilson [6] suggests that the majority of alliances fail. We feel that most of the problems are associated with the selection and maintaining of supplier relationships. We present research finding from academic research, USGAO [2] and our own experiences.In order to establish relationships, we suggest that firms be very selective in their criteria. In addition to the normal criteria of competency and quality, we suggest the following additional factors be taken into consideration: †¢ Trust and Commitment to Long-term Goals. Both suppliers and buyers need to demonstrate trust and commitment toward a long-term vision. Trust and commitment have been shown to be the major predictors of successful relationships. †¢ Mutual Benefit. The relationship should be of benefit to both the buyer and the seller.If t he relationship has one-sided benefits, the relationship will not last. †¢ Top Management Support. Most successful relationships are associated with support from the top managers of a firm. As examples, the success of Walmart and Corning in forming relationships is because their CEOs have supported supplier relationships. Also, DuPont and Roadway Express have formed an Executive Board that meets at both companies to enhance their relationship [2]. †¢ Compatible Organizational Culture. The culture of firms should be compatible. This Page 8 uggests that they share common values and share common reward systems. A major relationship initiative between two telecommunication firms did not work because they did not share a common work philosophy. One firm was very intense, whereas the other firm was laid back. The relationship dissolved in six months. †¢ Sharing of Information. Relationships require sharing of information. The benefits of relationships arise from reducing th e uncertainty associated with transaction oriented exchanges. Information increases certainty and reduces needless interaction.As an example, Bailey Controls, a manufacturer of control systems shares data with two of its main electronic distributors that has allowed Bailey to reduce inventory and costs [3]. †¢ Strong and Open Communications. Strong and open communications reduces misunderstanding and enhances the quality of relationships. Maintaining Successful Relationships The following aspects are regarded as important for the successful maintenance of relationships. †¢ Simple and Flexible Contract. Simple and flexible contracts enhance relationships as they are used as guides rather than specifying all contingencies.For example, when Kodak outsourced their computer support services to IBM, they used an eleven-page contract [2]. In contrast, typically simple business contracts run to about 30 pages. †¢ Intensive Management Involvement. Cross functional teams from b oth the supplier and buyer organizations that meet periodically to enhance their relationships. For example, Ford uses salespeople to provide suppliers with consumer feedback [2]. Page 9 †¢ Periodic Performance Monitoring. We have found that performance monitoring is critical for relationships. Suppliers also appreciate a formal performance evaluation method.As an example, Motorola evaluates and generates a score card for all of its suppliers [3]. The supplier’s next order is based on the supplier’s previous performance. Suppliers appreciate this knowledge and compete better. †¢ Internal Controls. It is intuitive but companies need to protect access and distribution of confidential information with rigorous internal controls. †¢ Problem Solving Procedures. Companies need to establish problem solving procedures that reduce conflicts or prevent conflicts. One of the simplest forms is frequent communication at all levels of the customer and supplier organiz ation.Organizational Changes Need to Establish Supplier Relationships As stated earlier, as we traverse from a transaction and domestic orientation to a relationship and global orientation, firms will need to emphasize the development of relationship with suppliers. This emphasis of a relationship orientation toward suppliers will lead to an expertise in many aspects of business buying. These areas are highlighted in Figure 3, raised in our earlier paper [4] and discussed next. 1. Supplier as a Customer. As discussed earlier, there will be a thrust toward developing and maintaining relationship with customers.However, firms’ understanding in this area is very limited. Firms will need to develop commitment, trust and cooperation with their suppliers. Firms will need to invest in mutual goals, interdependence, structural bonds, adaptation, non Page 10 retrievable assets, shared technology and social bonds to ensure successful relationships [6]. 2. Cross-Functional Supplier Team s. Marketers have used interdisciplinary teams to contact and maintain relationships with their customers. As individual suppliers relationships become more important we expect a similar thrust toward cross-functional teams that are dedicated or focused on their key suppliers.The importance of individual suppliers is expected to increase because of the emergence of sourcing on a global and relational basis with a few key suppliers. Firms will need to change goals, reward structure and group norms of the purchasing function. 3. Does Partnering Pay? Firms will need to monitor the return on investment in establishing relationships with suppliers. Therefore, firms will need to develop a performance metric that analytically quantifies supplier relationship equity. We feel that supplier partnering with smaller share suppliers will not be economical.The cost-benefit analysis of supplier relationships should result in increased supplier selectivity. 4. Supply Experience Curves. Managing sup plier relationships will not be an easy task. The task of managing relationships on a global basis will be more complex and not analogous to domestic supplier management as most business customers have realized. Therefore, in industries where supply function is a key strategic advantage, companies need to focus on creating core competency in supply side management and develop sharper experience curves. Page 11 5. Hub and Spokes Organization. We expect organizations to reduce the number of uppliers in each product or service category. In addition, re engineering has forced firms to out source internal activities. We expect the results of these two trends to lead to a hub and spoke organization in which one or two suppliers in each product or service category are the spokes and the procurement organization becomes the hub on a global basis. 6. Bonding with Suppliers. Marketers, specifically those that practice relationship marketing have learned to bond with their customers. Bonding r elates to the empathy that the marketing organizations feel toward their customer groups.With an increasing trend toward creating, managing, and enhancing ongoing relationships with suppliers on a global basis, organizations will have to invest in supplier bonding processes and philosophies. 7. Global Sourcing. We expect global sourcing to be a source of strategic advantage. While several global enterprises, especially in the automotive, high technology and the aerospace industries are establishing processes and platforms, it is still at an infancy stage of practice in other industries. Firms will have to develop expertise in global sourcing strategies as well as global logistics. . Cross-Culture Values. Firms will need to be more aware of cross-cultural values. These values may be in conflict with the firm’s present value system. As an example, firms in the US are accused of focusing on short-term profitability whereas firms in Japan are concerned about long-term positioning . Similarly, in some cultures, reciprocity is declared illegal and unethical Page 12 whereas in other cultures it is the preferred way of doing business. What is considered as an agency fee in one country is recognized as a bribe, subject to prosecution under the anticorruption laws.Similarly, doing business with family members and politically connected individuals are presumed to provide a sense of trust and commitment in some cultures whereas it is considered as nepotism and unethical behavior in others. 9. Cross-National Rules. Firms will also have to learn about cross national rules. Specifically, the two tier regulations (one for domestic and the other for foreign enterprises) are common with respect to ownership, management control, and co-production practices in countries such as China.With the rise of nationalism in recent years, this has become a key issue for global enterprises such as McDonald's, Coca-Cola, General Electric, and Enron, especially as they expand their mark et scope and supply scope in large emerging nations such as India, China, and Indonesia. 10. Services Procurement. As organizations out source more and more internal services, and as suppliers engage in providing value-added services to their customers, firms need to better understand and research services procurement. Additionally, as most advanced countries are services economies, services procurement will rise in prominence.Conclusions The paper examined the reasons for the emergence supplier relations as source of Page 13 competitive advantage. The paper discusses successful relationships, rules for developing relationships and concludes with organizational strategies that will enhance supplier relationships. Page 14 References 1. Napolitano, Lisa, Customer-Supplier Partnering; A Strategy Whose Time has Come, Journal of Personal Selling and Sales Management, 4 (Fall), 1-8 (1997). United States General Accounting Office, Partnerships: Customer-Supplier Relationships can be Improv ed through Partnering, Report Number 94-173, Washington, D.C. (1994). Magnet, Myron, The New Golden Rule of Business, Fortune, February 21, 60-64 (1994). Sheth, Jagdish N. , and Arun Sharma, Supplier Relationships: Emerging Issues and Challenges, Industrial Marketing Management, 26 (2), 91-100 (1997). Wasti, S Nazli, Jeffrey K. Liker, Risky business or competitive power? Supplier involvement in Japanese product design, Journal of Product Innovation Management, 14 (September), 337-55 (1997). Wilson, David T. , An Integrated Model of Buyer Seller Relationships, Journal of the Academy of Marketing Science, 23, 4, 335-45, (1995). Emshwiller, John R. Suppliers Struggle to Improve Quality as Big Firms Slash their Vendor Roles, Wall Street Journal, August 16, B1, (1991). 2. 3. 4. 5. 6. 7. Page 15 Table 1 Reduction in the Number of Suppliers Company Number of Suppliers Current Previous 5,000 10,000 9,000 10,000 1,800 22,000 520 7,500 Percentage Change 90. 00% 70. 00% 66. 66% 45. 00% 44. 44% 36. 36% 26. 92% 20. 00% Xerox Motorola Digital Equipment General Motors Ford Motor Texas Instruments Rainbird Allied-Signal Aerospace 500 3,000 3,000 5,500 1,000 14,000 380 6,000 Source: Emshwiller [7]. Page 16 Figure 1 Changing Paradigm of Organizational Purchasing StrategyGlobal Competitiveness Technology Enablers Changing Paradigms of Procurement TQM Philosophy Industry Restructuring Page 17 Figure 2 Shift in Organizational Purchasing Strategy Global Sourcing Changing Paradigms of Procurement Transaction Oriented Relationship Oriented Industry Restructuring Domestic Sourcing Page 18 Figure 3 Emerging Areas of Expertise in Supplier Relationships Service Procurement Supplier as a Customer Cross Functional Supplier Teams Cross-National Rules Partnering Cross Cultural Values Supply Experience Curve Global Sourcing Bonding with Suppliers Hub and Spoke Organization Page 19

Organizations Become More Global

To some the word â€Å"Globalization† may seem a clichà ©. To others, it may appear an end in itself. Competitive pressures are creating the need for most companies to become Global.Globalization is one means for  becoming and remaining a world-class competitor — a goal encased in the mission statements of most corporations.When developing a globalization strategy, it is clear that the emerging markets present the greatest opportunity. The growth projections for Europe, Japan and the United States pale in comparison to some of the emerging markets.Emerging MarketsThroughout the emerging markets an unprecedented consumer market boom is driving up demand for western-style goods and services. The largest segment of consumers in these markets is a decade short of its peak spending years. In India alone, sales of consumer goods are rising at 14% per year, while China is growing at almost 20% per year. Couple the consumer-spending boom with the still burgeoning need for in frastructure improvements and you’ll have a range of opportunities that extends into the trillions of dollars. Projects are planned or underway in many of these countries to upgrade transportation and  telecommunication systems, explore energy resources, build power generation facilities and provide health care facilities.In addition, the privatization efforts are presenting an incredible range of opportunities for investors, lending institutions, service providers and manufacturers.Four key trend influence emerging market potentialThere are four key trends that are influencing the emerging market potential:1. Demographics: Overall world population growth is now concentrated in the  developing world. Where industrial nations are facing an  increasingly older population, the emerging markets remain  young. The developed world comprises only 11% of the world’s population.2. Governments: Many countries that once relied on centrally planned economies are becoming m arket-driven. Industries that governments  previously restricted to foreign companies are now opening to foreign investment.3. Communications: Access to the emerging markets is increasing due to huge  developments in communications technology such as the Internet and electronic commerce. Cyberspace represents a profound shift in the nature of communications as well as our perception of distance.4. Urbanization: As infrastructure improvements are made, urban growth in the emerging markets will continue to explode.  Estimates indicate that the emerging markets' share of world imports will double by the year 2010, rising to over 38%. Companies dazzled by the magnitude of these numbers must be equipped with the appropriate knowledge, information, and strategy to make its market forays successful.MACRO LEVEL Industry Globalization is due to such factors as :†¢ Level of international trade †¢ Intensity of international competition †¢ Worldwide product standardization †¢ Presence of key competitors in all key international markets. †¢ Intra-firm trade †¢ Technological intensity †¢ International linkages of value-added activities among countries †¢International integration of value-added activities among countries †¢ WORLDWIDE FREETRADE AGREEMENTS †¢ WORLDWIDE ECONOMIC REFORMS †¢ WORLWIDE FINANCIAL REFORMS †¢ REMOVAL TARIFF BARRIERS BY COUNTRIES †¢ REMOVAL OF SUBSIDIES COUNTRIES †¢ ETC ETC ====================================================THE PUSH FACTORS OF GLOBALIZATIONMarket Drivers†¢ Per capita income converging among industrial nations †¢ Convergence of lifestyles and taste †¢ Growth of global and regional channels †¢ Establishment of world brands †¢ Spread of global and regional mediaCost Drivers†¢ Continuing push for economies of scale ( but offset by flexible manufacturing) †¢ Accelerating technological innovation †¢ Advances in transportation (e.g., use of FedEx to deliver urgent supplies from one continent to another) †¢ Emergence of newly industrializing countries with productive capability and low labor costs (e.g., China, India and Indonesia)

Junior Officers Essay

This result appeared to be the same with the statistical results for the data set of all samples combined. The deviation was the item Human Resource Focus, Item 5, which appeared to be not correlated with Leadership, Item 1. There could be logical reasons why such a result, but we cannot at this stage, extrapolate without first conducting the same test for the Leaders Group. A. 3. The Pearson Correlation Matrix for the Leaders Group For the Leaders Group, Leadership, Item 1, is not correlated at all, ALL from Strategic Planning, Item 2 to Business Results, Item 7 as shown by Table 3. Table 3. Excerpt from the Correlation Matrix for the Leaders Group Leadership, Item 1 Strategic Planning, Item 2 0. 371 0. 413 Customer And Market Focus, Item 3 0. 164 0. 726 Measurement, Analysis, and Knowledge Management, Item 4 0. 753 0. 051 Human Resource Focus, Item 5 0. 715 0. 071 Process Management, Item 6 0. 247 0. 594 Business Results, Item 7 0. 524 0. 227 Cell Contents: Pearson correlation p-Value The results were revealing on two counts. First, it told us that the correlation trend shown by the Combined Data Samples of the Others Group and the Leaders Group was mainly due to the effect of the Others Group given its bigger sample size, 37 respondents compared to the Leaders Group, 7 respondents. This is manifest in that the correlation test for the Others Group showed correlation between Leadership, Item 1, and other items except in Customer and Market Focus, Item 3, which was possibly influenced by the results of the Leaders Group which showed no correlation between Leadership, Item 1, and the other items. Second, the results pointed to the contrast between the two groups being compared. There was a significant difference in perception between the Others Group and the Leaders Group. It should be noted that the Leaders Group, comprising, take note, the Senior Leaders, or specifically, the Senior Officers in the surveyed organization occupied the higher hierarchy and when we mentioned the Others Group, we are referring to leaders still, but leaders occupying the lower hierarchy, the Others Group comprising, take note, the Junior Leaders, or specifically the Junior Officers. It may argued that based on their respective position in the surveyed organization, ESGR there may be strong factors which create opposing views or that their perceptions could be affected by the imperatives, necessities, and the like and the nature of their respective positions being held in the organization. Whereas, for the Others Group, wherein Leadership, Item 1, was correlated with all the other items: Strategic Planning, Item 2; Measurement, Analysis, and Knowledge Management, Item 4; Human Resource Focus, Item 5; Process Management, Item 6; and Business Results, Item 7; however, in the Leaders Group, its Leadership, Item 1, had NO significant correlation established with ALL the other items from Item 2 to Item 7. It could mean that the Others Group, mainly Junior Officers were more concerned with function which required them to be aware of all the aspects and details of the organization. It could be contended that Junior Officers were the implementers of the details of projects and operations hence, with Strategic Planning, Item 2 of the Baldrige Criteria, the Junior Officers were more concerned with examining how organizations develop objectives and action plans and how flexible the organization should be in case of situational changes in circumstance. Junior Officers are expected to be familiar with stock knowledge on the planning step and deployment to achieve objectives at the various stages of implementation. Chances are, they are the ones evaluating data from various reports and they are the ones making the progress reports and updates for the higher echelon officers. In other words it is possible that Junior Officers differed with the Senior Leaders in terms of data/details exposure, requiring the Junior Officers to pay more particular attention to the different aspects of the organization at the field or at the ground level. Other items such as Measurement, Analysis and Knowledge Management, Item 4, could be interpreted as part of the functions of Junior Leadership and Junior Officers were more conscious of the procedures involved in handling voluminous data and information which needed sorting and which may require immediate and appropriate response. In Question 26, under the sub-category, Information and Knowledge Management, for example, in dealing with hardware and software reliability, we can expect that senior leadership not to be doing the actual testing of new software or hardware for that matter. It would thus be more the function of Junior Officers to test such new innovations. Due to the difference in focus and priorities between the Others Group and the Leaders Group as suggested by their diverging trend in the correlation test outcome, further tests had to be conducted to enable deeper probe into why such results occurred. How come?