Global operation and supply chain Essay Example | Topics and Well Written Essays - 500 words

Global operation and supply chain - Essay Example nventory can be referred to as the quantity of goods and materials on hand.   A stock includes finished products, goods undergoing production process, and raw materials. The main purpose of inventory management is to keep enough inventories to meet customer demand, maintain independence of operations, allow flexibility in product scheduling and be cost effective (Allen, 2008: 881).   Inventory management usually ensure the availability of raw materials in sufficient quality and quantity, thus it is of great importance to have a proper control and management inventory (Axs.ater, 2010: 1329). Inventory management is necessary as it prevents leakage, deterioration, spoilage and wastage of materials. Its aim is to improve material handling, saving in material cost, increase production and large profits (Allen, 2008: 883). First-In, First-Out method: this is a method of valuing the cost of goods sold that uses the cost of the oldest items in inventory first.   This is based on the assumption that goods that are sold or used first are those goods that are bought first (Axs.ater, 2010: 1330).   Last-In, First-Out method: This is an inventory valuing method that assumes that the last items placed in inventory are the first sold.   Therefore, when the Last in First Out method is applied, the year-end inventory consists of the goods placed in inventory at the beginning of the year, rather than at the end.   During inflation, when prices are rising, this method yields a lower ending inventory, lower gross profit, higher cost of goods sold and a lower taxable income (Anderson and Narus, 2011: 99).   This method is preferred because it reduces a company’s taxes and increases cash flow. Specific Identification method: this is the simplest method of valuing inventories.   The sale of inventory requires the inventory account to be credited or reduced, and cost of goods sold should be debited or increased for the amount paid for each inventory item.   This method works

What determinants affect remittance trends and patterns in Ethiopia

What determinants affect remittance trends and patterns in Ethiopia Migration by its nature has negative impacts to the emigrant countries through brain drain especially to the developing one. (HDR, 2009) states that mobility of skilled human power harms the economy of the origin country especially for small states and poor countries. Apart from the economic point, there are also other associated problems that cant be measured in terms monetary aspects. People move within their country or cross their borders with the hope of getting better opportunities benefiting the people migrating, their families as well as their areas of origin and destination (HDR, 2009). Though it is not an easy task to come through different challenges, there are many people who combine their efforts and talents to expand their opportunities by moving into other better areas. Successful immigrants keep connected with their home country and send what is usually expected from them. The benefits could be direct remittance sent to family or for other purposes and could also be in other multidimensional effects such as technology transfers, brain gain and help strengthen diplomatic efforts in their destination and international stages. (HDR, 2009) argued that moving generally brings benefits most directly in the form of remittance sent to immediate family members, thereby generating jobs for local workers as multiplier effect and behavioural changes in response to ideas from abroad. The benefits even go beyond this by increasing investment level of their origin. Further, the same report states that at the place of origin, impacts can be seen in income and consumption, education, health and broader cultural and social process. Moreover, the macro impact can be visibly seen in the countries foreign currency reserves. This is because foreign currency reserve is one of the most important components for economic growth of developing countries. Murinde, 1993 ac cited in Elsakka and Mcnabb (1999) argued that remittances are major sources of foreign exchange for man y developing countries where its limited availability acts as a major constraint on economic development programmes and stabilization policy. For countries like Ethiopia which witnessed shortage of foreign reserves for the last three years, it is so crucial to think about how national policy can be made favourable for remittance flow. The increase in remittance not only helps in solving the foreign reserve crunch but also contributes to poverty reduction programmes through the increase of consumption at household level, encouraging investment, creating additional savings to the economy and through other multiplier effects. However, too much remittance could make the economy dependent on it which will affect the diversification of the economy for export and production. McCormick and Wahba (2000) argued that one of the drawbacks of remittance for the receiving country could beDutch Diseaseas the economy of the home country can weaken as a result of receiving remittance. Further, the d ependency on remittance could make the economy susceptible to external shocks that could decline the flow of remittance as happened in 2009 global economic downturn. But still remittance has been less volatile to external shocks than other sources of capital such as export, FDI and foreign aid in the same period when there was decline in capital flows to developing countries in the global financial crises. Remittance could be more stable than private capital flows, and that they might even provide a stabilizing element during periods of financial instability (Buch and Kuckulenz, 2004). In anyway, for countries like Ethiopia which badly needs capital inflows, this shouldnt be a concern as the country is suffering from shortage of foreign currency reserve for importing basic and capital goods. Further, dependency on remittance wouldnt be a threat as the country is progressing economically by diversifying its exports and attracting more FDI ever. Recipients however should also consider the availability of these funds could develop a continuing trend of migration of working age population (ibid: 2004). Remittance therefore could be incentives for the working age population and for the educated ones to migrate which in turn affects the overall growth of the economy in the long run. The main focus of this study will be on matters associated with remittance and its determinants. International remittances refer to the money and goods that are transmitted to households by migrant workers outside their origin countries (World Bank). The Remittance industry is one of the multi-billion industries in the world which helps countries get foreign currency from different sources abroad. The volume of remittance flow is increasing in many folds from year to year especially starting from the 1990s. The amount has shown an increase of ____fold from __ in _____to 316 billion USD in 2009 (WB, 2009). Globalization, decreasing cost of transfers and the increase in technology usage in the business could contribute for the faster increase in the flow. Remittances have been identified as the third pillar of development as their volume is second to foreign direct investment and higher than overseas development assistance.  [1]  Remittance enables income redistribution between persons and across sectors, increases consumption in excess of locally generated income and is used as source of additional capital fund (Lucas and Stark, 1985). It is for this big reason that governments have been taking different initiatives for increasing the proportion of capital flows to their account and actually the business has increased tremendously for the last few years. Its importance is inevitable especially for those developing countries which often suffer due to short of hard currency. Since 2008, developing countries have experienced foreign currency crises which in some of them resulted in shutting down businesses, high inflation, increasing the poverty level which in turn led to clashes between government and ordinary people. The World Banks official data shows that remittance flows to developing countries reached $316 billion in 2009, down 6% from $336 billion in 2008 but is expected to increase by 6.2% to $335 billion in 2010 (World Bank, 2010). Unofficial remittances are believed to be large enough to underestimate the figure of the total remittance flow. Howe ver, Official Development Assistance was three times less than the above figure at the same period. This is not to underestimate the volume of ODA given to developing countries, but to show how much attention is given to ODA than to remittances as sources of capital flows. The same data sources (WB and ODA figures) reveal similar trends for Africa. Some studies on this issue show that remittances have direct implications for the development of developing countries both in household and national level. However, some countries are not giving that much emphasis for changing and increasing remittance flow to their country; if taken, the initiatives are not enough to bring change. Ethiopia like any other developing country needs remittance flow to its account so as to help the countrys overall development. It is one of the countries which passed critical times since 2008 due to hard currency crunch. Still there is no guarantee for this problem. For passing these hard times, the country has been dependent on foreign aid from the IMF to stabilize its economy.  [2]  Further the country has also been one of the main recipients of foreign aid from other sources. Ethiopia stands third next to Iraq and Afghanistan on the list of ODA recipient by taking 3% of the total Official Development Assistance given to developing countries in 2008 (ODA, 2010). This doesnt include the capital flow from China and India which they are becoming another source of capital for Ethiopia and other African countries. However, capital flows to Ethiopia through remittances is very low when compared with the ODA and other unofficial foreign assistance. Official data from the WB shows th at remittance flow was 387 and 383 million USD in 2008 and 2009 respectively. And this flow accounts 1.5% of the GDP as of 2008.  [3]  Even with simple comparison, the remittance flow is four times as low as the amount Kenya receives from the same business. The flow of remittance to Kenya was 1692 and 1572 billion USD in 2008 and 2009 respectively.  [4]  This comparison only shows the gross flow of remittance to Ethiopia and Kenya as my main intention is to look how low the flow to Ethiopia is. To the contrary, in 2005, Ethiopian stock of emigrants was 445,926 and that of Kenya was 427, 324 (WB factbook, 2008) which makes Ethiopia advantageous over the number of people living abroad. There can be other factors that determine remittance flow; however, Ethiopia at least should have benefited more from the gross remittance flow than Kenya depending on the stock of emigrants which the actual trend is the reverse. Even without comparison with any country, the remittance flow to E thiopia is very small. What triggered me to deal with this issue is that; first, the flow of remittance to Ethiopia is much lower than from what I expected. Second, as can be seen from the above comparison with Kenya which they lay in the same geographical, social, economical and political standard in many aspects, Kenya suppressed its East African competitor by four fold in the gross remittance flow and actually Ethiopia should have been benefited more. Third, what is the reason behind this? Where the difference does lays, from the Ethiopian Diaspora or from the national policy? My aim in this study is to look into what are the determinants that made remittance to Ethiopia so low by mainly focusing on the Ethiopian Diasporas patterns of remitting. Research questions: The research problem is already explained above. To deal with the research problem, this study will focuses on the following research questions: What are the determinants that affect remittance trends and patterns of the Ethiopian immigrants in Sweden? What are the factors that affect remittance flows to Ethiopia? What makes remittance flows to Ethiopia very small? Is it in the national policy related to remittance and capital flows or it is in Ethiopian immigrants? How can this business work better for Ethiopia as source of hard currency? Methodology: The study will apply qualitative method for investigating the research questions. This method is selected based on the appropriateness to the research issues considering the effectiveness of the method to investigate research questions in depth and suitability to the phenomenon. Controversies have raged over the appropriateness of research methods in the social science as whether to use qualitative or other methods (Mikkelsen, 2004:141). Flick, (2009:15) discussed that in scientific discipline; methods become the point of reference for checking the suitability of ideas and issues for empirical investigation and should be appropriately selected and applied. Moreover, the method helps in exploring the actual explanation of facts behind the research problem. However, making generalization based on the findings is difficult as the samples taken for the study are limited in proportion for the intended generalization. (Flick, 2009: 122) asserted that generalization is not in every case the goal of qualitative study. Qualitative study typically focuses on compiling a selection of micro-level case studies which are investigated using a combination of informal interviews, participant observation (Dessai and Potter, 2006:118). It could also include exploring policy documents and other material for complementary purposes. In order to facilitate these all, a case study will be used. This is because case study helps the study to be more specific on the key aspects and focus on the issue. Thus, the research will use Ethiopian immigrants in Stockholm, Sweden as a case study. The target group will be Ethiopians living in Sweden as the writer is also living in Sweden and at the same time Sweden is one of the top favorable destinations of Ethiopian immigrants (Sweden is within top 10 as a stock to Ethiopian immigrants). Interview with selected Ethiopian immigrants in Stockholm will be used for collecting data along with other secondary materials. Semi-structured and open ended q uestions will be prepared for the interviews so as to use the advantage of high degree of flexibility during the interview. Different themes will be created while preparing the interviews so as to structure the different issues and aspects on the remittance trends of the specific interviewee. Sampling Different sampling methods are combined depending on the particular dimension of the issue being considered: different purposive sampling techniques, identification of key informants who possess the particular knowledge sought and also random encounters to cross-check information or highlight yet more differing perspectives on the same problem (Dessai and Potter, 2006:118). By doing so, the researcher will select the appropriate people or target group which will enable the study in getting reliable information. The study will use purposive sampling and key informant selection for interview. The sample will include both male and female interviewees; it will also consider taking those who have investment in Ethiopia and those who dont have, this is because investment is one factor that could affect money flow. In addition to this, the sample will consist people of different backgrounds. Apart from these interviewees, one interview will be held with the head of the economic affairs of E thiopian embassy official if the embassy allows. This will give another perspective to the study. Theoretical framework Theory increases our awareness of interconnections and of the broader significance of data. Without making theory explicit, it is easy to fall into the trap of hazy thinking, faulty logic, and imprecise concepts (Mikkelsen, 2004:156). Indeed, theory helps us to have better understanding of the study prior to the start of the project and connect the findings of the research with the existing knowledge of the issue. It is also sound to link the theory with the empirics of the study throughout the research process. For this big reason the research will use a theoretical framework which suits with the study. The literature available on the subject, determinants of remittance flows from emigrants has almost developed into two thoughts viz. the micro-economic and the macro-economic factors which it meant that most studies have been made on micro-level and macro-level. (Lucas and Stark, 1985; Lucas and Stark, 1988 ; Agarwal and Horowitz, 2002; Adams, 2008; Dustmann and Mestres, 2008; Gupta and Hedge, 2009) could be studies that support the micro-economic thought and (El-sakka and Mcnabb, 1999; Buch and Kuckulenz 2004; Higgins et al, 2004 and Ratha, 2003 ) could be in support of the macro-economic factors. These two theories give their own explanations on what affects the migrants behavior in remitting. For instance, (Lucas and Stark, 1985) in giving the initial model for the micro-economic theory of remittance argued that emigrants are motivated for remitting due to many reasons ranging from pure altruism to self interest including mutual agreements between migrants and family. Moreover, th e models did show that migrants are said to be altruistic if the flow of remittance increased with a decline in family income back home; whilst, if remittance flows are directly related with the family income back home, then they are said to be self-motivated (ibid, 1985). Beyond these two pure factors of altruism and self-interest, (Lucas and Stark, 1985) have also discussed tempered altruism and enlightened self-interest to refer to the remittance motivated by a combination of altruism and self-interest. The combination is meant to show the possibility of remitting based on contractual agreements made between the migrant and the family back home so as to get mutual benefits. Independently after almost two decades of the above theory of Lucas and Stark, (Agarwal and Horowitz, 2002) pointed out that the two primary incentives explored in the remittance literature are altruism and risk sharing (some sort of self interest according to Lucas and Stark, 1985) which is similar concepts t o other literatures but slightly different. In the same theoretical explanation, however, (Quinn, 2005 as cited in Niimi et al, 2009) in contrast, suggested another model of remittance behavior whereby remittance are treated as both consumption transfer to households and as alternative saving mechanism for migrants. Many immigrants use the alternative saving mechanism when they think that they will be back to their country of origin some day in the future. Under such circumstances, immigrants want to own fixed assets that will help them live without any problem upon return. Though it is not usual to see immigrants returning to their country of origin; this increases the flow of remittance. (Dustmann and Mestres, 2008) contended that immigrants return policy increases the probability of remitting more motivated by holding assets and savings in home country for future purposes. Similarly, remittances are also attached with household consumption especially in the altruism concept so as to take care of family in origin country. Depending on these theoretical arguments, it can be said that income of both the household back home and the migrant determines how the remittance flow could be. Income of the migrants has many factors that could affect which otherwise would contribute the lion share in determining how to remit. Buch and Kuckulenz (2004) claimed that microeconomic factors such as education and income level of the migrant and his family are the main determinants of remittance. Briere et al (2002) and Agarwal, Buch and Kuckulenz (2004) also found that migrants destination, gender and household composition are the other factors that affect the flow of remittances. Adams, Guptaà ¢Ã¢â€š ¬Ã‚ ¦.. On the other hand, at the macro-level, factors operating in both the host and the country of origin will affect the flow of remittance (El-sakka and Mcnabb, 1999). However, for countries who would like to maximize the capital inflow it looks difficult to frame policies based on the different factors of the host country as it is out of their control. Indeed, the factors in the host country are important components behind the motivation of the remitter as these factors affect the remitters income status. These are related with economics nature of the host country which have direct impact upon wages earned by the migrants and this in turn will determine their won consumption and saving behavior and thus the potential amount to be remitted. This type of experience can be easily found from the 2009 global financial crises which affected the income of migrants and eventually decreased the capital inflow to developing countries. The decrease in remittance to developing countries in this per iod has bitterly affected those countries which depend on remittance for their national foreign currency reserve. This gave these countries a message to review their remittance related policies and diversify their source of capital funds. El-sakka and Mcnabb, (1999) suggested that macro-economic factors such as interest rates, exchange rates and political instability of the country of origin affects the behavior of remitters. Accordingly, they argue that macro-economic factors should be suitable enough so as to encourage remittance flows to the country of origin. For these reasons countries would like to make exchange rates competitive by depreciating their own currencies with the intention of attracting more capital inflows, but sometimes it is associated with risk of bringing high inflation rate for the country. El-sakka and Mcnabb, (1999) on their part argued that higher inflation could discourage the flow of remittance as higher inflation rate could be a sign of economic and pol itical instability. To curb such associated problems, therefore, different variables should be taken into consideration while framing remittance related policy. On the other hand, empirical analysis using data from Egypt shows that remittance flows are responsive to interest rate and exchange rate differentials (ibid, 1985). Attractive interest and exchange rates would eventually lead immigrants to think of investing their money in their home country. Ratha (2003) also suggested that macroeconomic policies of the country of origin matter a lot whether remittances are to be invested or not. If remittances are encouraged to be invested, there is better chance for the economy to get more than two benefits from the same source. Interest rate differential between country of origin and host country, government domestic policies, wages, political risk factors and the rate of inflation determines remittance flows (Buch and Kuckulenz 2004). Since the aim of the study is to find out the factors that determine the patterns and trends of remittance flow; the two approaches can contribute some from different perspectives in framing the better solution for the research question. Off course, both the micro and macro level factors focus on the individual behavior of the remitter from personal experience and from national policy perspective. The personal experiences are those factors that affect at the micro-level: whilst, the national policy factors are those at macro-level factors that contribute in determining the individuals behavior in remitting. However, in most literatures the advocates of each approach neither discussed nor ruled out the counter ideas. For instance, the micro-economic theorists didnt discuss the possibility of macro-economic factors and the same goes for the macro-level theorists. This makes difficult to uncover the exact relationship of each theory and what they actually think of each other. For instan ce, Buch and Kuckulenz (200) argued that the main problem of microeconomic case studies is that they tend to undervalue the macroeconomic impact of remittance by focusing on isolated communities. (reference for combined studies). Thus, this study will have the chance to investigate this problem by looking into both approaches at the same time and adding up other perspectives beyond the economic theorization. The two theories focuses on the economic determinants of remittance, however, this study will go beyond this and touches other aspects that affects the patterns and trends of remittance flow. The study will also add another perspective to the remittance literature by going deep using qualitative method of studies. This is because most studies on this business have been made using quantitative method. This means, this theoretical framework adds other variables such as cultural, social and political factors that affect the flow of remittance. In a different perspective, Elbadawi and Rocha (1992) discussed concerning motivations to remit as two broad approaches viz. the endogenous which is based on the social and human aspects that cause remittance and the exogenous which is based on only the economic aspects.

Power of the Medical Monks Essay -- Sharp Pain, Machine Gun

Sharp pain. You look down and see a spreading patch of red. You know the end is near as you drop to the ground. Your rifle landing next to you. BANG! The men around you fire and advanced. This land has been at war with itself for a year. In the distance you see the gray uniforms of the Confederates. Next its all black. You awaken to see a lull in the fighting as two men pick you up on a litter and carry you to the waiting Carriage. While Napoleon’s personal surgeon Dominique-Jean Larrey, invented the â€Å"flying ambulance† the worlds first modern version of a ambulance service.(5) True battlefield medicine, and in correlation to this true EMS, did not begin until Dr. Letterman established the three tier battlefield medical system(1). This comprised of an aid station, the patient would then be transferred to a field hospital, and finally a regular hospital. This system revolutionary at the time of design(civil war) increased survival rates, and started to promptly provide medical care. (3) At the beginning and before the civil war there was little in the way of Sanitary practices. There was also little in the way of an actual Medical corp. The surgeon general at the time, Thomas Lawson no M.D., thought that sanitary practices were â€Å"unnecessary† at that his methods were â€Å"adequate and effective†. Lawson attained this position through seniority before being impeached through public opinion. Following his impeachment then allowed for the creation of the Sanitary Commission(early form of the Red Cross), as well as the implementation of Dr. Letterman’s three tiered approach. If it wasn’t for innovations like these our entire medical practice would be years behind what it is.(1) Rat-a-tat-tat, Rat-a-tat-tat. The sharp crack of machine ... ...imited than that of non-military M.D‘s or D.O.’s. Most military doctors are trained in multiple disciplines. The main reason for this is due to the instability of there responsibilities. A M.D. in the military can be treating mal-nourishment one minute, and rapid hemorrhaging the next. Combat Medics skill set hasn’t changed much; however, now there trained in some psychology. Military Medicine has a long and noble history filled with twists, and turns. Today practicing medicine in the military has allowed us to bring more men and woman home from combat; A standard that, while sadly exists, is welcome. Military health professionals prove a vital and necessary service, one that goes unsung. Today military medical professionals are warrior monks on the battlefield, they practice a peaceful art in a dangerous area. Saving the lives of everyone regardless of creed.

Culture and Its Importance

Journal of Management Development Emerald Article: Do Cultural Differences Make a Business Difference? : Contextual Factors Affecting Cross-cultural Relationship Success Rosabeth Moss Kanter, Richard Ian Corn Article information: To cite this document: Rosabeth Moss Kanter, Richard Ian Corn, (1994),†Do Cultural Differences Make a Business Difference? : Contextual Factors Affecting Cross-cultural Relationship Success†, Journal of Management Development, Vol. 13 Iss: 2 pp. 5 – 23 Permanent link to this document: http://dx. oi. org/10. 1108/02621719410050219 Downloaded on: 26-10-2012 References: This document contains references to 30 other documents Citations: This document has been cited by 26 other documents To copy this document: [email  protected] com This document has been downloaded 3632 times since 2005. * Users who downloaded this Article also downloaded: * Rosabeth Moss Kanter, (2004),†The challenges of leadership: Interview with Rosabeth Moss Kanter †, Strategic Direction, Vol. 0 Iss: 6 pp. 7 – 10 http://dx. doi. org/10. 1108/02580540410533190 Rosabeth Moss Kanter, 1997†³Strategies for success in the new global economy: An interview with Rosabeth Moss Kanter†, Strategy & Leadership, Vol. 25 Iss: 6 pp. 20 – 26 http://dx. doi. org/10. 1108/eb054603 Martin E. Smith, (2003),†Changing an organisation's culture: correlates of success and failure†, Leadership & Organization Development Journal, Vol. 24 Iss: 5 pp. 249 – 261 http://dx. doi. org/10. 108/01437730310485752 Access to this document was granted through an Emerald subscription provided by UNIVERSITY OF GREENWICH For Authors: If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service. Information about how to choose which publication to write for and submission guidelines are available for all. Please visit www. emeraldinsight. com/authors for more information. About Em erald www. emeraldinsight. om With over forty years' experience, Emerald Group Publishing is a leading independent publisher of global research with impact in business, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, as well as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. Related content and download information correct at time of download. Do Cultural Differences Make a Busines s Difference? Contextual Factors Affecting Cros s-cultural Relationship Succes s Rosabeth Moss Kanter and Richard Ian Corn Harvard Business School, Boston, Massachusetts, U S A I think Turks are Turks, and they are very different from Canadians, or North Americans or Brits or whatever. But when I went to Turkey, I was dealing with some Turks who had been dealing with Canadians for 10-15 years; they understood us and had adapted to our ways.Yes, they were still Turks, but they knew what Canadians expected. And they knew Canadians very well, so they forgave us when we made faux pas, they understood that we like Christmas Day off. They were patient and gave us a year to understand them. Cultural Differences 5 Canadian executive, describing experiences in his company’s joint venture in Turkey Of course, initially there were apprehensions about being bought by foreigners. Foreigners to us is anyone outside the local community.American executive, describing his company’s acquisition by a British company In Search of Cultural Differences As economies globalize and organizations increasingly form cross-border relationships, there is a resurgence of interest in the management problems caused by national cultural differences – in values, ideologies, organizational assumptions, work practices, and behavioural styles – spawning research reminiscent of national character studies following the Second World War.Recent findings about the cultural propensities of major countries appear robust, replicated in surveys of the values of managers[1-3], as well as used to explain institutional patterns within countries[4]. Such findings are often consistent with stereotypes evoked by managers to explain others and themselves. Cultural generalizations roll easily off the tongues of people in our studies. For example: several Europeans predicted problems Volvo and Renault could have in combining Volvo’s Swedish egalitarianism with Renault’s French hierarchy.A German executive working in a French-American alliance commented that Germans and Americans had more values in common than either did with the French, invoking this as an Important contributions to the case studies and interviews for this paper by Kalman Applbaum, Pamela Yatsko, Madelyn Yucht, Paul Myers, Clau dia de Dominicis, Tom Hughes, Liska Ouellette, Saba Hapte-Selassie and Thuy Tranthi are gratefully acknowledged, as is the support of the Division of Research of the Harvard Business School. Copyright 1993 by R. M. Kanter and R. I. Corn. Used by permission. Journal of Management Development, Vol. 13 No. 2, 1994 pp. 5-23. MCB University Press, 0262-1711 Journal of Management Development 13,2 6 explanation for why an American sent to London to lead the integration team was viewed as incompetent by the French partner for failing to make authoritative decisions[5]. Furthermore, people often assume cultural heterogeneity creates tensions for organizations.Managers, even within a single country, often prefer homogeneity to heterogeneity, because shared experiences and culture are a basis for trust[6]. Yet, while national cultural differences clearly exist at some level of generality, it is more difficult to specify how the presence of such differences affects organizational and managerial effectiveness. Evidence and observations in a range of situations raise questions about the usefulness of the â€Å"cultural differences† approach for managers. For example: ?When people of different national cultures interact, they can be remarkably adaptable, as in the Japanese history of borrowing practices from other countries[7]. And even though it is supposedly more difficult for managers to operate outside their home culture, multinational companies have long succeeded even when expatriate managers make mistakes. Many industrial firms have operated successfully in foreign countries while showing insensitivity towards local values or treating host-country personnel less well than home-country personnel[8]. Technical orientation can override national orientation. There is evidence that similar educational experiences – e. g. for managers or technical professionals – erase ideological differences; those within the same profession tend to espouse similar val ues regardless of nationality[9,10]. At Inmarsat, an international satellite consortium owned by companies from over 60 countries and staffed at its London headquarters by 55 nationalities, differences between functions were a greater source of conflict than differences between nationalities.Although stereotypes abounded (â€Å"Spaniards are often late†; â€Å"Indians like to talk†), engineers who shared a technical orientation quickly adjusted to each other’s foibles – easily enough that a training programme on cross-cultural management was poorly attended[11]. ? Tensions between organizations which seem to be caused by cultural differences often turn out, on closer examination, to have more significant structural causes. A Scottish construction company had difficulty in its first international partnership with a French company.The failure was widely explained by employees as caused by differences between a â€Å"beer culture† and a â€Å"wine cu lture†. Its next partnership with a Dutch company was more effective, supposedly because of the greater compatibility with the Dutch. But in the first partnership, the companies set up many â€Å"dealbusters†[12], from letting lawyers negotiate for executives, to ignoring assumptions about future business strategy. In the second case, they learned from their mistakes and changed the way they worked with their partner. National cultures had little to do with failure in the first instance and success in the second. Cultural value issues – and issues of â€Å"difference† in general – are more apparent at early stages of relationships than later, before people came to know each other more holistically. And outsiders of any kind, even from the next neighbourhood, can seem different. But once people get to know each other beyond first impressions, relationship dynamics are often determined by power rather than culture. Resistance to the new American chief executive of a British retailer was resistance to change, not to culture differences.National culture issues were simply one more piece of learning as he moved from outsider to insider; they did not affect his ability to do his work of managing a fast and successful turnaround[13]. ? Central country value tendencies are often reported at a very high level of generality, as on average over large populations themselves far from homogeneous. Thus, they fail to apply to many groups and individuals within those countries. There are strong individual, regional, and ethnic differences within countries that are masked by the attempt to find country patterns.For example, an American who had served in Japan during the Second World War liked the docile women he saw there. He decided to marry a Japanese woman, only to discover after the marriage that she came from the one part of Japan that encouraged assertive, dominant women. And not only are there individual as well as ethnic differences wi thin countries, but individuals themselves derive their behaviour from many influences and can hold multiple identities. The chairman of Matra Hachette in Paris calls himself â€Å"a Gascon, a Frenchman, and a European†. Finally, group cultural tendencies are always more apparent from outside than inside the group. Indeed, people often only become aware of their own value or culture in contrast to someone perceived as an outsider[6]. The British writer George Orwell observed that national identity and cultural similarity is salient only for those returning from abroad or when the country is threatened; otherwise, people hold firmly to their individuality and are more aware of differences among those within the same nation.For these reasons, then, we wondered about the circumstances under which cross-cultural interaction would affect business performance. The Foreign Acquisitions Study To learn more about managerial issues provoked by cultural differences, we looked for situat ions in which cross-cultural interactions might produce organizational tensions. Kanter’s studies of international strategic alliances and joint ventures, reported in a series of Harvard case studies and articles[14], had uncovered a large number of strains between cross-border partners, but most of Cultural Differences 7Journal of Management Development 13,2 8 these involved strategic, organizational, political, or financial issues. But perhaps that was because the relationship between venture or alliance partners is assumed to be one of relative equality and independence; each partner retains its own cultural identity as well as control over its own operations, co-operating with the other for limited purposes while insulating core activities from the relationship. We looked for another test in the realm of foreign acquisitions, in which cultural differences would perhaps play a greater role.Foreign acquisitions of US companies increased over the last decade. In 1990, 446 su ch deals, valued at $46. 2 billion, were completed, compared with only 126 deals valued at $4. 6 billion in 1982. Foreign acquisitions of US companies accounted for 28. 1 per cent of the total value of merger and acquisition activity involving at least one company in 1990, compared with only 7. 6 per cent in 1982[15]. This acquisition situation, we proposed, would heighten American managers’ awareness of their own culture and its contrast to the acquirer’s culture, as they merged operations or shifted control over decisions.Since American companies were more accustomed to acquiring foreign operations than being acquired, the â€Å"reversal of roles† experienced when being acquired would perhaps exaggerate tensions enough to bring cultural issues to the surface. Therefore, we developed a pilot project with eight companies. T he Companies Approximately 75 interviews with senior and middle managers were conducted by Harvard Business School teams in 1992 and 1993 at eight mid-sized New England-based American companies which had been acquired by foreign companies in the period between mid-1987 and 1990 (with one exception acquired in 1984).All companies had enough experience with the foreign parent to provide time for cross-cultural contact to occur and any problems to surface; but the acquisition was also recent enough for managers to have fresh memories. The circumstances surrounding the acquisitions differed in some respects. One was a strictly arms-length financial investment in which a well-known sporting goods manufacturer was acquired by a Venezuelan financial group as its only US holding in a leveraged buyout from investors who had acquired it two years earlier; as long as profits were high, there was minimal contact with the parent.In two other cases, there was a history of relationships between the foreign parent and the acquired company prior to the acquisition: a familyowned retailer had developed a business partnership with a large r but also family-owned British chain four years before the acquisition as part of a succession plan; and a metals manufacturer had formed a number of joint ventures with a Japanese conglomerate beginning seven years before the acquisition, turning to its Japanese partner as a defensive tactic against a hostile takeover threat.Other acquisitions also stemmed from financial distress: an armaments manufacturer was bought by a British conglomerate after the US company faltered under a sequence of four different American owners; an abrasives manufacturer was bought by a French company as a â€Å"white knight† in a takeover battle with a British company; and a US retailer was sold to a Japanese retailer when it no longer fit its US manufacturing company parent’s strategy. In many of the cases, then, foreign acquirers were sought by the US companies to solve a problem.Two of the companies, given the pseudonyms Metalfab and Hydrotech, were observed by the second author in par ticular depth. Both were engineeringoriented manufacturing companies with operations primarily in the US and annual sales between $100 and $200 million. Both were previously owned by financially-troubled US parents whose core business was in a different industry, and both were bought by well-respected, internationally-experienced companies in the same industry.Corn conducted 30 interviews at Metalfab, a manufacturer of fabricated metal products acquired about five years earlier by Fabritek, pseudonym for a Swedish manufacturer in the same business. He also conducted 21 interviews at Hydrotech, a designer and manufacturer of hydraulic systems acquired about three years earlier by Gruetzi, pseudonym for a German-Swiss manufacturer of industrial energy systems.But while Metalfab was acquired by a company of similar size and was operating at a pretax profit, Hydrotech’s new parent was much larger and more diversified geographically and technologically, and Hydrotech was accumulat ing significant losses. Cultural Differences 9 Overview of the Findings The interviews at all eight companies focused on the history of the companies’ relationships, their business situations and business strategies, the amount and kind of cross-cultural contact between managers, difficulties and how they had been resolved, and any organizational changes which had come about as a result of the merger.We expected cultural differences to play a prominent role in the dynamics of the integration, especially because so many questions probed these issues specifically – from asking for characterizations of â€Å"typical† American and parent country managers to comparing managerial styles in concrete situations. (The study was thus â€Å"biased† towards finding cultural differences and tensions because of them. ) We expected many difficulties to arise, necessitating many organizational changes, and we expected American companies to resist learning from their fore ign company parents.We also expected some combinations to be more volatile than others, such as the Japanese-American interactions, either because of prejudice or because of values and style differences. We found, instead, that nationality-based culture was one of the less significant variables affecting the integration of the companies and their organizational effectiveness. We found that relatively few issues or problems arose which could be labelled â€Å"cultural†, even though managers were able to identify style differences easily that fit common cultural patterns.We also found that very few measures were taken to facilitate cultural integration. Only a moderate number of difficulties were encountered or organizational changes Journal of Management Development 13,2 10 necessitated, and US companies learned from their foreign parents. Furthermore, there was no discernable pattern of cultural compatibility; all nationalities worked well with their American acquisitions. In general, mergers and acquisitions create significant stress on organizational members, as separate organizational cultures and strategies are blended, ven within one country[12]. Differences in national cultures are assumed to add another layer of complexity to the merger process. But our findings suggest that contextual factors play the dominant role in determining the smoothness of the integration, the success of the relationship, and whether or not cultural differences become problematic. These findings lead us to conclude that the significance of cultural differences between employees or managers of different nationalities has been overstated.Cultural values or national differences are used as a convenient explanation for other problems, both interpersonal and organizational, such as a failure to respect people, group power and politics, resentment at subordination, poor strategic fit, limited organizational communication, or the absence of problem-solving forums. Such differen ces are invoked as explanations for the uncomfortable behaviour of others when people have limited contact or knowledge of the context behind the behaviour.Culture versus Context as an Explanatory Factor Most interviewees were able to identify a number of ways in which they differed â€Å"culturally† from their foreign colleagues in values, interpersonal style, and organizational approach. Many of these â€Å"fit† the position of countries on dimensions Hofstede[1] identified, especially power distance and individualism/ collectivism. The first difference issue mentioned, however, was an objective one: Language problems. A majority of Americans found the difficulty in overcoming language differences with all but the British acquirers to be the biggest â€Å"negative† surprise of their respective mergers.One American at Metalfab stated that â€Å"during initial meetings, we assumed that when we spoke English to the Swedes and they nodded their heads, they unders tood what we were saying. Now we realize the nods only meant that they heard the words†. Employees at Metalfab and Hydrotech also recalled meetings in which their foreign colleagues would agree to adopt some new procedure, â€Å"only to go right back to doing things the same old way as soon as they left the meeting†. American employees noted cultural differences in decision-making styles.Many argued that their foreign parents’ management team took a longer-term view. Americans at Hydrotech and Metalfab routinely expressed frustration with the unwillingness of German-Swiss and Swedish managers to make decisions without a great deal of analysis. Europeans noted the American reputation for fast, less thoughtful decisions. A British manager involved in the armaments company acquisition said, â€Å"Unlike American companies which manage by quarterly numbers, we at UK headquarters base our strategy and business policies on long-term positioning†.American intervi ewees also identified a number of differences in interpersonal style between themselves and their foreign colleagues which they attributed to national culture. The Swiss were described as â€Å"very orderly and efficient†, the Swedes were universally described as being very serious. British managers were described as less emotional, less community-oriented, more deliberate, and much less likely to â€Å"shoot from the hip† than Americans. Europeans were described by nearly all American employees as being more formal, less open and outgoing, and slower to form friendships than are Americans.Japanese managers were described as very courteous and polite. Several Metalfab employees stated that the Swedes were much more likely to argue with each other publicly than were Americans. One American official recalled that in the early days of the merger, he and an American colleague would stare at each other in board meetings while the Swedes argued among themselves. The American manager claimed that his American colleagues would have been much more likely to discuss such differences privately.The Swedes were also described as having less respect for authority and greater willingness to confront their superiors publicly than are Americans – signs of low power distance in Hofstede’s terms. Other employees stated that Swedish managers are not as â€Å"results-oriented† as Americans when it comes to running meetings, ending meetings without a resolution or an understanding of the next steps. Swedes were described by several American employees as very critical, both of themselves and others.One American manager stated that â€Å"Americans are taught that it is more constructive to give pats on the back than to focus entirely on shortcomings as the Swedes are inclined to do†. In short, most of those interviewed found differences between themselves and their foreign colleagues to be clearly identifiable and immediately noticeable follo wing their respective mergers. Employees attributed a majority of these differences to national culture. But a closer analysis of these responses reveals a tendency for employees to attribute to culture differences which are more situationally-driven.For example, several employees stated the Swedes were unwilling or incapable of adjusting their planning and forecasting assumptions in light of changes in the environment, that the Swedes were more determined than are Americans, to meet old budget targets. This may reflect the fact that as parent, the Swedes and German-Swiss have the ultimate responsibility for financial results. Similarly, slower decision making may reflect the fact that the Swedish parent involves more people in the decision-making process than does its American subsidiary.Of course, the use of greater participation may itself reflect differences in values between Americans and Swedes, but it may also reflect differences in the organizational culture of parent and su bsidiary or in country-specific industry practices. Senior managers generally had more direct contact with the foreign parent and thus more contextual information. They were much more likely to identify differences in business context that explained apparent differences in â€Å"cultural values†. Senior executives at the American retailer acquired by a British company attributed differences in management practices to differences inCultural Differences 11 Journal of Management Development 13,2 12 business environments in the US and UK. For example, the British company appeared to be less interested in people and more interested in facilities. But this was because its operating expenses tended to be weighted more towards rent than to labour, because British supermarkets were typically located in expensive urban areas, whereas in the US supermarkets were generally found outside the commercial core of the city, and US chains had unions which drove up labour costs.There was also a tendency for American employees to attribute interpersonal difficulties with foreign colleagues to cultural differences without recognizing that Americans act in much the same way. There are recent public examples of American board meetings interrupted by public bickering. The popularity of the view that committees rarely accomplish anything similarly attests to the fact that Europeans are not the only ones who have difficulty establishing clear agendas in their meetings.Finally, in the US, American employees frequently complain about superiors who rarely hand out constructive criticism. In sum, Americans were routinely able to identify a number of differences between themselves and their foreign colleagues, but the attribution of these differences to nationality often seemed to be misdirected. Additionally, in many cases, these differences are more suggestive of perception than of reality. Perhaps it was more convenient to attribute differences to culture than to context because o f the popularity of national character stereotypes.The role of national stereotypes was made clear in contrasting what American managers said about their own foreign acquirers (whom they knew well) compared with other nationalities (which they knew less well). An American senior executive at the sporting goods manufacturer had highly positive things to say about his Venezuelan parent, calling Venezuelans â€Å"lovable, amiable, showing a high degree of concern for people†. In contrast, he said, â€Å"The companies you do not want to have take you over are the Germans and the Japanese. They feel they know how to do it better and just come in and take over†.But the companies in our study acquired by Japanese and German-Swiss parents reported just the opposite – that the Japanese, for example, were eager to learn from the American companies they acquired. In short, the greater the experience with managers from another country, the less reliance on negative stereoty pes. Furthermore, while many interviewees were able to identify behavioural style differences between American managers and their foreign parents, they also spoke of cultural compatibilities in values, business strategies, and organizational approach. Such similarities overrode style differences.Both retailers in the pilot study, for example, spoke of the common concerns and philosophies they shared with their foreign parent – one Japanese, one British. Finally, just because people could point to differences, that did not mean that the differences had operational consequences. Interviewees were asked to assess the extent to which cross-cultural differences created difficulties in the relationship between parent and subsidiary. Interestingly, many employees felt that although differences exist between their cultures, such differences did not create significant problems for employees.This finding cuts to the heart of this study’s central question: if cultural differences between a parent and subsidiary do not necessarily lead to significant inter-organizational conflict, what factors moderate the relationship between cultural heterogeneity and organizational conflict? Why do American employees of foreign companies feel that cultural differences between their own firm and their foreign parent have not been particularly problematic? Here, our findings suggest that a number of contextual factors act as mediators in determining whether or not these differences will be problematic.Contextual Factors as Key Determinants of Cros s-cultural Relationship Succes s Six factors emerged in the pilot study that accounted for the ease with which the merger was implemented and the relatively few difficulties attributed to national cultural differences: (1) the desirability of the relationship, especially in contrast to recent experiences of the acquired companies; (2) business compatibility between the two companies, especially in terms of industry and organizatio n; (3) the willingness of the acquirer to invest in the continued performance of the acquiree and to allow operational autonomy while performance improved; (4) mutual respect and communication based on that respect; (5) business success; and (6) the passage of time. Cultural Differences 13 Relationship Desirability The first issue sets the stage for whether the relationship begins with a positive orientation. When people are in distress, poorly-treated in previous relationships, have had positive experiences with their foreign rescuer, and play a role in initiating relationship discussions, they are much more likely to view the relationship as desirable and work hard to accommodate to any differences in cultural style so that the relationship succeeds. First, almost all of the companies in the pilot study were acquired by foreigners after a period of financial distress.A Hydrotech employee said, â€Å"Everyone here was aware of the firm’s financial problems at the time of th e acquisition. News of the purchase was viewed favourably. Gruetzi kept our doors from being padlocked. Everyone recognized that without Gruetzi, Hydrotech might not have made it†. While Metalfab did not have Hydrotech’s financial problems at the time of its acquisition, its employees took comfort from Fabritek’s strong financial condition at the time of the takeover. The abrasives company was rescued by its French acquirer as a â€Å"white knight in a takeover battle†. In all these cases, people were thus more likely to view their Journal of Management Development 13,2 14 acquirers as saviours than villains. Cultural problems were therefore not problematic.When asked to describe their initial reaction to the acquisitions, interviewees in several companies began with a description of how difficult life had been under its former parent. Several foreign parents in our study therefore compared favourably with each subsidiary’s former US parents. Hydrot ech and Metalfab’s former parents had neither understood the business of its subsidiary nor shown any desire to invest in their subsidiary’s long-term growth. The armaments company had four recent owners, several of whom stripped corporate assets and art collections, an experience one manager referred to as being â€Å"raped†. Under new owners who cared about them, employees were therefore more inclined to tolerate and adapt to cultural differences.In other cases, national differences were not a problem because the US and non-US companies had spent several years getting to know each other through joint ventures. The British retailer and the Japanese conglomerate had long worked closely with the American companies they eventually bought. Nearly every respondent at Metalfab and Hydrotech spoke with high regard for their parent’s technical expertise, manufacturing skill, knowledge of the international marketplace, and reputation for quality. As one employee commented, â€Å"Our concerns about the takeover were quickly put to rest. After all, Gruetzi was not an unknown quantity. They were an industry leader and we had worked with them on several projects in the past†.In contrast, respondents who were less familiar with the operations of their acquirer appear to have been the most concerned and apprehensive about the news of the merger when it was first announced. As one employee recalled, â€Å"At first I was sickened by the announcement, but when I saw Fabritek’s product line and the obvious potential for synergy, I became extremely excited†. Several respondents also mentioned that if the acquirer had a reputation for dismantling its acquisitions, they would have been far less sanguine about the takeover and the possibilities for success. Reputation was based not only on past direct experience but also on assumptions about how â€Å"companies like that† behaved. One Metalfab employee claimed that compared wi th other countries, â€Å"the Swedes are just like us†.The conventional wisdom at Metalfab was that Scandinavian firms had a history of keeping their acquisitions intact. Finally, the ability to choose made a difference. In several cases, the companies themselves initiated the search for a foreign partner. The element of surprise that creates anxiety and uncertainty was missing. A Hydrotech employee stated: â€Å"We wanted to be sold; I viewed the announcement as a real positive – someone wanted to buy us! † Business Compatibility Organizational similarities were more important to most companies than national cultural differences. At the time of their respective mergers, employees of Metalfab, Hydrotech, and both retailers in the study took immediate comfort rom the fact that their new acquirers were in the same industry as they, especially the retailer sold by an American manufacturer to a Japanese retailer. As one Hydrotech employee stated: â€Å"Our former p arent showed no commitment to, or interest in, our business. Now, there is a much better fit†. Another employee stated: â€Å"Everyone was initially apprehensive about the takeover but at least we were bought by a company which understands and cares about our business. This turned our initial apprehension into excitement†. Along similar lines, Metalfab employees reacted very favourably to the news that â€Å"a metal company was purchasing a metal company†.Organizational similarity meant that employees could feel that they play important roles in carrying out their parent’s strategy and believe that their parent values their contribution. As one Hydrotech employee stated: â€Å"Despite the fact that Gruetzi is a much larger company than our former parent was, it is easier to see how we fit into their plans†. Thus, at both Hydrotech and Metalfab, the benefits of the merger were transparent to employees. As one manager stated, â€Å"This was an easy a nnouncement to make; the merger spoke for itself†. Employees at Hydrotech and Metalfab felt that sharing a common technical orientation with their parent allowed both rganizations to more easily overcome national differences. Several employees emphasized what a pleasure it was to work with a parent organization that understands the business they are in. As one engineer stated, â€Å"our two firms are like twins that were separated at birth†. Employees at both Hydrotech and Metalfab also feel that their parents’ expertise and credibility in the industry has made it easier to accept them in the role of acquirer. One Metalfab employee’s comment captured the attitude of the firm’s employees towards foreign ownership when he claimed: â€Å"It doesn’t bother me in the least that our parent is a foreign company because we speak the same language, Metal! A majority of those interviewed concluded that they would now prefer being taken over by a forei gn company in the same business than by an American firm in a different industry. Cultural Differences 15 Investment without Interference Of all the actions taken by a foreign partner, none seems to have a more positive impact on morale and on attitudes towards foreigners than a foreign owner’s decision to invest capital in its subsidiaries. Fabritek spent $11 to 12 million upgrading the production facilities of its US subsidiary during each of the first two years following the acquisition and has invested an additional $6 to 8 million annually ever since.Gruetzi has similarly invested in new equipment for Hydrotech’s Ohio production facility. To most American employees, such investment demonstrated that its new parent was committed to the company’s long-term health. When investment was accompanied by operational autonomy, the relationship was viewed very favourably and cross-cultural tensions minimized. In three cases – sporting goods manufacturer acquir ed by a Venezuelan company and both the retailer and the manufacturer acquired by Japanese companies – feeling lack of cultural tensions was a function of the Journal of Management Development 13,2 16 minimal interference of the foreign company in its new US operations. â€Å"They et us do what we are good at†, said an executive at the sporting goods firm, â€Å"which is make money†. Employees at Hydrotech and Metalfab were surprised by the extent to which their parents allowed them to manage their own operations. As one Hydrotech employee stated: â€Å"Things have turned out much better than I originally expected. Gruetzi has not overmanaged us, they kept our management team intact, and we have not been forced to spend a lot of our time defending ourselves†. Metalfab employees were similarly pleased that their parent has allowed the firm to retain day-to-day control: â€Å"While our parent provides us with suggestions, they have allowed us to run the sh ow here†.We argue that American employees are less likely to view cultural heterogeneity as a problem when foreign management allows such autonomy along with adding resources. It should be pointed out that complete autonomy was not welcomed by all employees; a minority of employees (those dissatisfied with their firm’s policies) mentioned that they would be happier if the parent took a more active role in managing its subsidiary. At least one Hydrotech engineer wished that Gruetzi would force the company to standardize its designs and acquire better tools for its engineers to work with. At Metalfab, several employees expressed disappointment that its parent had not prevented the company from moving operations to Mexico.Furthermore, that high degrees of autonomy have possibly slowed down the speed with which the merged organizations develop a common culture. Several Metalfab employees reported that it has been difficult to â€Å"pull our two families together and get th e message out to customers that we are one firm†. Still, for the Americans autonomy generally meant that they did not feel foreigners were imposing â€Å"foreign ways† on them, which made them more tolerant of differences rather than resistant to them. Open Communication and Mutual Respect Nearly all interviewees agreed that open communication and showing mutual respect are critical to developing trust and ensuring a successful partnership.One retailer, for example, felt that its new Japanese parent wanted to learn from American practice, which made them feel valued and made rapport with the Japanese easy to develop. Tensions occurred, in contrast, when foreign colleagues did not show respect for American technology and expertise. At Fabritek, Swedish engineers and marketing personnel initially viewed Metalfab’s traditional, composite products as inferior to their own, all-metal product, which required tighter engineering and manufacturing tolerances in order to ensure a perfect seal. As a result, Americans said that the Swedes saw themselves as â€Å"the real engineers† in the company. But note here that the tensions were caused by technical differences, not cultural ones. ) Similarly, Hydrotech engineers described their German-Swiss colleagues as very arrogant and protective about Gruetzi’s products; there was a feeling that Hydrotech engineers should not â€Å"tamper† with their parent’s designs. Employee sensitivity to possible cultural differences played a significant role in reducing outbreaks of cross-cultural tension. One Hydrotech employee reasoned that cultural clashes had been avoided mainly because employees had been so concerned that such tensions could occur that they put more effort into trying to understand one another.Similar concerns led executives at Fabritek and Metalfab to schedule frequent meetings with each other soon after the merger; these meetings improved understanding and lessened tens ion between the two firms. Ironically, one senior American official recalled that he had rarely met with executives from the firm’s former US parent â€Å"even though they were located right down the road from the company†. Though formal cross-cultural training programmes were rare, open communication helped build relationships. Sensitivity to cultural differences and willingness to deal with problems directly minimized organizational tension. Cultural Differences 17 Business Success Nothing succeeds like success. People are willing to overlook cultural differences in relationships which bring clear benefits.But unsuccessful ventures produce squabbling even among people who are culturally similar. Creating opportunities for joint success between parent and subsidiary promotes acceptance of cross-cultural differences and creates support for the relationship. Several months before Hydrotech’s acquisition by Gruetzi, a company project had â€Å"gone sour† du e to a technical malfunction. After the merger, Hydrotech used Gruetzi’s technology to solve the problem. For the many employees who had suffered through the project’s difficulties, this single act sold the virtue of the partnership. Another Hydrotech employee stated: â€Å"We had not realized how quickly Gruetzi’s technology could be put to use.In only one year, our department was able to bid on two projects and win a $45 million contract†. Nothing could possibly send a more positive message about the benefits of partnership than winning business because of it. Ongoing financial performance affects the quality and nature of communications between parent and subsidiary, and thus plays a role in determining whether or not cultural differences are viewed as problematic. If success reduces tensions, deteriorating performance increases them. Employees noted that travel budgets came under increasing pressure during periods of poor performance, and thus, fewer meetings take place between American and foreign employees.In difficult times, communication between parent and subsidiary may deteriorate as employees in each organization focus on their own problems. Finally, poor performance leads to frustration, fingerpointing, and reduced trust. One Hydrotech manager noticed that as Gruetzi has encountered more financial difficulties, they became increasingly demanding of Hydrotech and focused more on the company’s short-term operating results than in the past. The Pas sage of Time Does time heal all wounds? Time, at least, reduces anxieties and replaces stereotypes with a more varied view of other people. The levels of cross-cultural Journal of Management Development 13,2 18 tension vary as a function of the stage in the relationship-building process.Anxieties at Hydrotech and Metalfab were highest during the days immediately following the announcement of each takeover. This initial anxiety declined as the merger entered a transition ph ase in which management showed reluctance to create conflict. Employees of both subsidiaries also reacted positively to foreign management’s willingness to discuss issues and listen to their concerns at that time. According to one employee, â€Å"these meetings made us feel good about the changes and made us realize how alike our philosophies were†. But during the transition phase, employees also underestimated the degree of cultural heterogeneity and the potential for conflict to erupt.As management began to focus on more substantive issues and the amount of communications between American and foreign employees grew, a new realization set in that the cultural differences between the two firms were greater than initially realized, which required more awareness and sensitivity to avoid conflict. It appears likely then, that employee perceptions of cross-cultural tension are affected by the passage of time and by the merger process itself. One might also expect that empl oyee attitudes towards cultural heterogeneity will change as Americans and foreign employees work together and become more familiar with each others’ customs and values. Mistrust is always more likely at early stages of relationships.People at Hydrotech and Metalfab felt their new foreign parents were particularly guarded in discussing their technology during the first months together. As one employee mentioned: â€Å"It was like playing poker during the first year. You always got an answer to your question but the question was answered as narrowly as possible – even when, by withholding information, the answer was misleading†. But another engineer recognized the significance of sharing technology noting that â€Å"when our parent provides us with technology, they are giving us their life’s work†. T he Negative Side of Cross-cultural Interaction: T hreat and Prejudice Positive views of the relationship between US company and foreign parent predomin ated, but they were not universal in the companies studied.Top management and those with the greatest day-to-day contact were most likely to be favourable. Those at lower ranks anxious about the implications for their careers were more likely to express negative views, including prejudice and resentment, reacting the most nationalistically to the news of a foreign takeover. One American reported how â€Å"sick† he was over the fact that â€Å"this country is gradually being sold off to foreigners†. Some higher level managers commented that they would have been more comfortable if their acquirer had been American, but this preference did not seem to affect the relationship. A manager at the armaments company reported: â€Å"We would rather have been bought by a US company.There is an element of national pride, especially in our industry. We are very patriotic. There is no one in the company that would say we are a British firm. We all wear and buy ‘made in USAâ⠂¬â„¢ products†. Still, nationalist sentiments did not prevent this manager from declaring the relationship a success and identifying very few crosscultural problems. The most significant factor in determining employee reactions to acquisition was self-interest: how the change would affect their own standing in the firm. Virtually all interviewees reacted to news of the acquisition with the same question: â€Å"How will this impact on my career in this organization? †.Those employees who were most likely to suffer a loss of prestige or power, or who had reason to feel threatened by the mergers were most likely to react unfavourably to it. However, the fact that the vast majority of employees in both companies did not react in this way attests to just how apparent the benefits of these mergers were to most employees. Therefore threat could work both ways; if the foreign company improved performance, jobs would be saved. A manager at the armaments company observed,  "The community and employees understand there are differences between us and the British. But for them, having good jobs is more valuable. When corporate survival is at stake, people cannot afford to have culture become an issue†.Attitudes were shaped by symbolic acts taken by the foreign parents as much as by more substantive actions. One Metalfab employee recalled the day that Fabritek’s president arranged to have group photographs taken of all employees in the US so that they could be shown to people back in Sweden. â€Å"Fabritek immediately impressed me as a very people-oriented company†. The Attribution of Organizational Problems to National Culture Our findings suggest, then, that contextual factors act to either fan the flames of intergroup conflict and cross-cultural polarization or encourage organizational members to accept these differences. In the pilot study, organizational and technical compatibilities overwhelm cultural differences.Cultural differe nces thus seem to be a residual category to which people attribute problems in the absence of a supportive context. Cultural differences do not automatically cause tensions. But when tensions do arise – often due to situational factors such as lack of communication or poor performance – people blame many of the organizational difficulties they encounter on cultural heterogeneity – on the presence of others who seem different – rather than to the context within which these problems took place. This view is consistent with Chris Argyris’s perspective on defensive routines in organizations[16]. Why do people blame culture for problems and scribe differences between their own behaviour and that of their foreign colleagues to dispositional factors (the kind of people they are) rather than to situational factors (the organizational context)? First, cultural heterogeneity presents a conspicuous target for employees to point at when looking for an explanat ion for their problems. Such differences are readily apparent in early stages of contact between people who differ in a visible way, such as race, gender, or language, especially when there are only a few â€Å"tokens† such as expatriate managers among many â€Å"locals†[6]. Pre- Cultural Differences 19 Journal of Management Development 13,2 20 onceived notions and prejudices which employees bring into the evaluative process increase the likelihood that people will attribute behaviour to nationality. In-group favouritism is evoked in situations of cross-cultural contact. Research has shown that people want to favour members of their own group (the in-group) over others. Motivational theorists hold that self-esteem is enhanced if people value their own group and devalue other groups[17,18]. Such favouritism leads to a set of cognitive biases which reinforce the distinction between in-group and out-group members. People expect in-group members to display more desirable a nd fewer undesirable behaviours than out-group members[19].As a result, people are more likely to infer negative dispositions from undesirable and out-group behaviours than from undesirable in-group behaviours, and are less likely to infer positive dispositions from desirable outgroup behaviours than from desirable in-group behaviours[20-23]. Furthermore, people tend to remember behaviour which is congruent with their expectations over behaviour which is inconsistent with their views[24,25]. Thus, memories reinforce in-group favouritism as well. In-group biases are especially likely to form when individuals identify strongly with their group and when in-group members view other groups as a threat[17]. During an acquisition process, employees who work for, and identify with their company for many years suddenly find that another firm, with its own culture vision, values, and ways of doing things is responsible for their future.Cross-border mergers offer a particularly favourable envi ronment for such biases to develop because group membership is clearly defined by national as well as organizational boundaries. At both Hydrotech and Metalfab, in-group favouritism and cognitive biases may have been the driving forces behind the tendency among Americans to attribute wrongfully â€Å"bad news† to their foreign parent (i. e. out-group members). In one case, Hydrotech management had frozen salaries and extended the required working week from 40 to 44 hours after the merger in an effort to â€Å"impress Gruetzi by showing a willingness to make a few difficult decisions†. Many Hydrotech junior employees attributed this unpopular policy to Gruetzi’s management.Ironically, according to one middlelevel manager, when Gruetzi found out about these changes, they gave Hydrotech’s president one month to reverse the policy. In another example, soon after Metalfab announced plans to transfer some of its manufacturing operations to Mexico, rumours began circulating on the factory floor that the Swedes were behind the decision. When senior management in the US found out about the rumours, the company’s president called a meeting with all employees and took full responsibility for the decision. But many blue-collar workers continued to blame the Swedes for this unpopular move. They also attributed the decision to downsize the American workforce to the company’s foreign parent.A second explanation for why cultural differences are inappropriately invoked is called the â€Å"fundamental attribution error†[26] – a tendency to attribute one’s own behaviour to the situation but others’ behaviour to their â€Å"character†. People attribute negative behaviour of foreign colleagues to their nationality or culture (dispositional factors) rather than to situational or contextual factors which are operating behind the scenes[27]. For example, Metalfab interviewees initially viewed their Swedish c olleagues as fractious (i. e. â€Å"the Swedes are a stubborn people†) before it occurred to them that language problems had caused many early misunderstandings.They attributed the fact that their Swedish colleagues were more engineering oriented and less marketing oriented to national biases (â€Å"Swedes design bulldozers for the kind of work a garden shovel could do†) rather than to differences in product features and to the requirements of the European market. For example, rigid engineering standards for Fabritek’s all-metal products required engineers in Sweden to play a more central role in the parent’s operations, whereas the competitiveness of the US market demanded that marketing personnel play a more critical role in US decision making. But those who had more direct contact with the foreign parent, such as senior managers, also had more contextual information and were less likely to make the â€Å"fundamental attribution error†.If in-grou p biases and the fundamental attribution error are behind the tendency to view cultural heterogeneity as problematic, what steps might management take to promote inter-organizational co-operation in cross-border mergers? Our findings suggest that actions which make the relationship desirable, reduce uncertainty, show respect for the other group, create communication channels, and ensure business success will encourage employees to identify with their foreign colleagues and view the company as one organization. Creating an atmosphere of mutual respect, promoting open communication, investing in the future, maximizing opportunities to experience joint success, and taking steps to familiarize employees with their counterpart’s products and markets reduce the likelihood that cultural differences will be viewed as a source of organizational tension.Conclusion These pilot study findings are only suggestive, of course. We have a small number of cases from one region. While none of t hem can yet be called a longterm success, they have survived a period of integration during which other companies which perhaps did experience debilitating cultural problems could have called off the marriage. We could be looking only at the â€Å"winners† that managed cultural differences well. Indeed, those companies experiencing problems were more likely to turn down our request to participate in the pilot study. But if tilted towards successes, then this research points to some of the circumstances that contribute to successful cross-cultural relationships.And since we â€Å"biased† the interviews towards identification of cultural differences and cultural tensions, the relative absence of tension gives additional weight to our argument that contextual and situational factors, such as technical fit, business performance, and abundant communication, are more significant determinants of relationship effectiveness. Cultural Differences 21 Journal of Management Develop ment 13,2 22 Employees at each of the companies studied were able to identify a number of cultural differences between their own organization and that of their parent. Nevertheless, few employees viewed cultural heterogeneity as a significant source of tension in their firm. Such findings lend support to the notion that national cultural differences do not necessarily increase the amount of tension between organizations or make partnerships among companies from different countries untenable.This article proposes that there are a number of factors which help to determine how employees react to foreign ownership. It calls into question the assumption that the larger the social distance or cultural gap between the national cultures of two merged organizations, the greater will be the potential for strain in the relationship between employees. The findings from our pilot study suggest contextual factors are extremely important mediators in crosscultural relationships. These factors infl uence how cultural differences are interpreted and whether they are viewed by employees as problematic. Indeed, they may even determine whether â€Å"cultural differences† are identified at all. References 1. Hofstede, G. Cultures and Organization, McGraw-Hill, New York, NY, 1991. 2. Kanter, R. M. , â€Å"Transcending Business Boundaries: 12,000 World Managers View Change†, Harvard Business Review, Vol. 69, May-June 1991. 3. Hampden-Turner, C. , â€Å"The Boundaries of Business: Commentaries from the Experts†, Harvard Business Review, Vol. 69, September-October 1991. 4. Lodge, G. C. and Vogel, E. F. (Eds), Ideology and National Competitiveness: An Analysis of Nine Countries, Harvard Business School Press, Boston, MA, 1987. 5. Kanter, R. M. , Applbaum, K. and Yatsko, P. , FCB and Publicis ( A ): Forming the Alliance, Harvard Business School Case Records, Boston, MA, 1993. 6. Kanter, R. M. Men and Women of the Corporation, Basic Books, New York, NY, 1977. 7. Westn ey, E. , Imitation and Innovation: T he Transfer of Western Organizational Patterns to Meiji, Japan, Harvard University Press, Cambridge, MA, 1987. 8. Starbuck, W. H. , â€Å"Learning by Knowledge-intensive Firms†, Journal of M anagement Studies, Vol. 29 No. 6, 1992, pp. 713-40. 9. Haire, M. , Ghiselli, E. E. and Porter, L. W. , Managerial T hinking, Wiley, New York, NY, 1966. 10. Wuthnow, R. and Shrum, W. , â€Å"Knowledge Workers as a ‘New Class’: Structural and Ideological Convergence among Professional-Technical Workers and Managers†, Work and Occupations, Vol. 10, 1983, pp. 471-87. 11. Myers, P. and Kanter, R. M. Inmarsat 1991 , Harvard Business School Case Records, Boston, MA, 1992. 12. Kanter, R. M. , When Giants Lea r n to Dance: M aster ing the Challenges of S trategy, Management, and Careers in the 1990s, Simon and Schuster, New York, NY, 1989. 13. Kanter, R. M. and Gabriel, L. , BhS ( A ): Opening Boundaries, Harvard Business School Case Records , Boston, MA, 1992. 14. Kanter, R. M. , â€Å"Competing on Relationships: How Companies Build Collaborative Advantage†, Harvard Business Review, May-June 1994. 15. M& A Almanac, Vol. 26 No. 6, 1992, p. 54. 16. Argyris, C. , Overcoming Organizational Defenses: Facilitating Organizational Learning, Allyn & Bacon, Boston, MA, 1990. 17. Tajfel, H. and Turner, J. C. â€Å"An Integrative Theory of Intergroup Conflict†, in Austin, W. S. and Worchel, S. (Eds), T he S ocial Psychology of Intergroup Relations , Brooks/Cole, Monterey, CA, 1979, pp. 33-47. 18. Turner, J. C. , Rediscovering the Social Group: A S elf-categorization T heory, Blackwell, Oxford, 1987. 19. Howard, J. W. and Rothbart, M. , â€Å"Social Categorization and Memory for In-group and Outgroup Behavior, Jour nal of Personal ity and S ocial Psychology , Vol. 38 No. 2, 1980, pp. 301-10. 20. Taylor, D. M. and Jaggi, V. , â€Å"Ethnocentrism and Causal Attribution in a South Indian Context†, Journal of Cros s Cultural Psychology, Vol. 5 No. 2, 1974, pp. 162-71. 21. Allen, V. L. and Wilder, D. A. â€Å"Categorization, Belief Similarity, and Intergroup Discrimination†, Jour nal of Personal ity and S ocial Psychology , Vol. 32 No. 6, 1975, pp. 971-7. 22. Allen, V. L. and Wilder, D. A. , â€Å"Group Categorization and Attribution of Belief Similarity†, Small Group Behavior, Vol. 10 No. 1, 1979, pp. 73-80. 23. Pettigrew, T. F. , â€Å"The Ultimate Attribution Error: Extending Allport’s Cognitive Analysis of Prejudice†, Personality and Social Psychology Bulletin, Vol. 5 No. 4, 1979, pp. 461-76. 24. Hastie, R. and Kumar, P. A. , â€Å"Person Memory: Personality Traits as Organizing Principles in Memory for Behavior†, Journal of Personality and Social Psychology, Vol. 37 No. 1, 1979, pp. 25-38. 25. Srull, T. D. Lichtenstein, M. and Rothbart, M. , â€Å"Associative Storage and Retrieval Processes in Person Memory†, Jour nal of E xper imental Psychology: L ea r ning, M emor y and Cognition, Vol. 11 No. 2, 1985, pp. 316-45. 26. Ross, L. , â€Å"The Intuitive Psychologist and His Shortcomings: Distortions in the Attribution Process†, in Berkowitz, L. (Ed. ), Advances in Experimental Social Psychology, Vol. 10, Academic Press, New York, NY, 1977, pp. 173-220. 27. Jones, E. E. and Nisbett, R. E. , â€Å"The Actor and the Observer: Divergent Perceptions of the Causes of Behavior†, in Jones, E. E. , Kanouse, D. E. , Kelley, H. H. , Nisbett, R. E. , Valins, S. and Weiner, B. Eds), Perceiving the Causes of Behavior , General Learning Press, Morristown, NJ, 1971, pp. 79-94. Further Reading Locksley, A. , Ortiz, V. and Hepburn, C. , â€Å"Social Categorization and Discriminatory Behavior: Extinguishing the Minimal Intergroup Discrimination Effect†, Journal of Personality and Social Psychology, Vol. 39 No. 5, 1980, pp. 773-83. Maass, A. , Salvi, D. , Arcuri, L. and Semin, G. , â€Å"Language Use in Intergroup Contexts: T he Linguistic Intergroup Bias†, Journal of Personality and Social Psychology, Vol. 57 No. 6, 1989, pp. 981-93. Tajfel, H. , â€Å"Social Psychology of Intergroup Relations†, Annual Review of Psychology, Annual Reviews, Stanford, CA, 1982, pp. 1-39. Cultural Differences 23

Sustainable Customer Relationships

Running Head: PROBLEM SOLUTION: CLASSIC AIRLINES Problem Solution: Classic Airlines Cecily Cornish University of Phoenix MBA 570/Sustainable Customer Relationships December 8, 2008 Instructor Sandra Payne, MBA Problem Solution: Classic Airlines Classic Airlines (CA) is the world’s fifth largest airlines that must balance its marketing program while coping with a mandated across-the board cost reduction by the board of directors. This calls for a of 15% cost reduction over the next 18 months while negotiating labor costs through the airline’s union employees and improving customer service. Facing low employee morale, decreasing customer satisfaction, rising fuel costs, high union wages, a nonfunctional CRM system, negotiations with union officials and future airline alliances and partners, CA has elected to implement a new analytical Customer Service Management (aCRM) product development (University of Phoenix,2008,Classic Airlines,p. 1). The core problems stem around CA losing customer confidence in its Classic Rewards Program (CRP) and losing Wall Street and media confidence. CA must focus on a marketing program to connect it the customer’s needs and sustain and attract loyal customers. The current executive team values are divided, with CEO Amanda Miller and CFO Catherine Simpson valuing the financial numbers which is in sharp contrast to the values of the customer, employees and shareholders held by CMO Keith Bolye and VP Renee Epson over customer service. The union senior VP Doug Sheflin knows that without a compromise between union and airlines the status quo will not be able to meet the current and future wage costs. Senior VP John Hartman over human resources has trained the employees with the necessary skills and sees the employees as valuable assets in the customer and marketing effectiveness. Marketing in the form of environmental scanning can identify the factors of social, economic, technological and competitors that CA faces. Until CEO and the board establish a mission which will guide its organization, there may be organization resistance and delay in reaching its overall business strategies. Customer relationship management (CRM) is a broad term that involves people, processes, and technology to improve relationships and existing customers who will result in improved customer retention and profitability (Kerin, 2006, p. 8). Using environmental scanning, identifying the marketing strategy and establishing a marketing relationship will direct and guide CA in meeting customer needs , identify the resources needed, the competitors they face and future trends in the Customer Relationship Management system. Incorporating Enterprise Risk Management, profitability index with interactive marketing will allow the marketing program to address customer needs and sustain customer relationships to reflect the changing trends in customer purchasing behavior. Describe the Situation Issue and Opportunity Identification Classic Airlines is the fifth largest airlines in the world. In the business for 25 years, CA has 375 jets that service 240 cities with more than 2300 daily flights. Classic Airlines earned $8. 7 billion in sales. CA made $10 billion profit which means that most of the revenue went to operating the company. With 32,000 union employees CA retains their top salary that is above industry’s average. In addition the board has voted for a 15% reduction over the next 18 months. The company is threatening bankruptcy, decreasing value on Wall Street, unfavorable media, decreasing customer satisfaction and low employee morale. The current CRM system is not fully functional and the Classic Reward frequent flier program has been losing loyal customers. Other challenges include continual high fuel costs and high wages paid to the union employees. CA’s challenge is to find a way to improve customer satisfaction within their Classic Rewards Loyalty Program by identifying and meeting customer’s needs and, therefore, improve the return on investment (ROI) (University of Phoenix,2008,Scenario Two,2008). Several opportunities exist for Classic Airlines which includes a forecasting of sales, a marketing mix and a situation analysis to determine the feasibility of a new analytical Customer Relationship Management program. CA may need for the present to just update the current CRM to a functional capacity to meet customer’s needs. Establishing the short-term of finding the solutions to update the current CRM might save costs and establish a long-term aCRM portfolio as a long-term goal .According to Seget (2008), the aCRM model uses analytical models and databases to integrate information that will enhance the customer desire for functionality as well as provide time sensitive information for prompt decision making by pharmacists, managers and others that rely on the CRM processes. It will definitely allow CA to focus on negotiating with the high wages of its current union employees who are above the industry standards. The CMO Boyle can begin to devise marketing strategies on focusing on marketing segmentation, marketing-mix and focus on the needs of the customers who are loyal and attempt to retain them as well as attract new ones. To obtain customer feedback without alienating them CA may consider, online surveying, telephone surveying and other interactive marketing. Interactive marketing creates customer value, customer relationship and customer experience. Kerin (2006) agrees, â€Å"Interactive marketing creates customer value by providing time, place, form and possession utility for consumers† (p. 6). Interactive marketing, marketing segmentation marketing-mix and forecasting can help identify customer needs and increase customer relationships. Stakeholder Perspectives/Ethical Dilemmas The ethical dilemmas in the Classic Airlines scenario are the conflict interests and values of the CEO Miller and CFO Simpson versus the rest of the leadership team. A dilemma also exists between the values and interests of the CA management and leadership team and the stakeholders. While the CEO and CFO are driven by numbers and a â€Å"pragmatic approach† these interests conflict with the overall business strategies and that is to increase customer satisfaction by reducing costs (University of Phoenix, Scenario Two, 2008, p. 1). The company is trying to improve the return on investment (ROI) and at the same time improve the frequent flier program, pay the union employees high wages and implement a new aCRM product. In fact, according to Seget (2004), â€Å"Wisdom prevails in conducting project feasibility, forecasting and marketing-mix and marketing-mix research before considering a new aCRM product . implementation† (p. 25). Classic Airlines must reach a balance through stakeholder’s involvements at all levels in attempting to balance the interests and value of all the individuals, departments and organizations. CA must focus on being a â€Å"best service† benchmarking company as a goal because providing the lowest price while utting costs and remaining competitive in the marketplace, is unrealistic thinking. â€Å"For example, it is not possible to simultaneously provide the lowest-priced and highest-quality products to customers and pay the highest prices to suppliers, highest wages to employees, and maximum dividends to shareholders† (Kerin,2006, p. 3). That is why an environmental scanning, a product analysis or four p's, and a situation analysis will clarify wh ere the company product or service has been, its status and where it wants to be. The marketing program will identify where CA is, the competitor’s trends, and the customer current and prospective customers (Kerin, 2006, p. 12). Developing a marketing mix, an environmental scanning will identify the need of the stakeholders to be involved in every level of the decision making process and the development of an aCRM product implementation. The marketing program is a method of bringing an exchange between all the stakeholders to sustain valuable customer relationships. Frame the â€Å"Right† Problem Classic Airlines will remain competitive in its industry and expand its global influence and brand loyalty by including its stakeholder’s voice and valuing its customer voice. Other opportunities for CA to achieve its goals of restructuring and implementing new initiatives such as its upgrade of its current CRM and a new aCRM product development will help sustain customer loyalty, increase customer satisfaction and provide the employees with the skills and automated technology that can meet the customers’ needs. In order to meet the changing environmental factors such as regulatory and fierce competitors and reduce labor costs, CA will use marketing strategies such as environmental scanning, sales forecasting, segmentation are opportunities to increases return on investment (ROI) by identifying and meeting customer’s needs. According to Kerin (2006),: â€Å"The American Marketing Association, representing marketing professionals, states that ‘marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders† (p. 1). CA will ensure that the ROI will be accomplished through accountability and leadership of the CEO, board members and senior executives. Valuing the voices all stakeholders will ensure that the values, thics and interests are filtered through a corporate decision making and implementation process. CA will ensure that its new initiative will be defined in its corporate governance, mission statement, employee booklet, union booklet and risk management policies. CA will remain a leading worldwide airline organization that focuses on marketing strategies that include direct forecasting, linear trend extrapolation, market segmen tation, product differentiation, sales force surveys, survey of buyers intentions and usage rate strategies that will keep CA a leader among the airline industry. Identifying customer changing needs via profitability index, customer audits will allow CA remain profitable as well as efficient in delivering the best practices in airline services to it loyal customers and future one. Fuel hedging, smaller planes, business partnerships and alliances will be strategies that will be analyzed and implemented to allow costs to be transferred into customer value benefits. Describe the â€Å"End-State† Vision Classic Airlines(CA) will be restructured in its philosophy, mission and goals to be a cost-effective and efficient company by focusing on the â€Å" stakeholders voice† in implementing a new analytical Customer Relationship Management (aCRM ) and a Enterprise Relationship Management (ERM) ) product development. Customer and employees as well as top executives who ethics values the customers, the employee and the shareholders will be valued within all levels of the stakeholders communication. The core competencies includes values of the aCRM that will align with the overall organizational goals of valuing the customer’s voice , sustaining customer relationships, and providing utilities that will create efficient and effective services. Thus the goal of profitability will be achieved through the values of profitability and social accountability and responsibility of the CEO and board members of CA (University of Phoenix Scenario 2, 2008, p. ). Achieving US and globalization as a benchmarking organization stems from an aggressive and proactive marketing program that will operate through an updated CRM system and a future aCRM system that is designed to compensate future environmental changes and thus customer changing needs. An effective marketing program will benefit the customer and stakeholders by assessing the needs of the customer and satisfying those needs (Kerin, 2006, p. 5). Remaining a competitor in the airlines industry means continuing open negotiations and compromise with the airlines union to keep pilots and employees competitive wages with the industry, while reducing costs and retaining loyal customer, increasing customer service and retaining skilled employees and sustaining the Classic reward program that is both efficient and effective in customer service. Recommended measures to determine if the CRM and marketing strategies are effective include profitability index, customer value benefits, and the measurement of rate and customer satisfaction surveys. Identify the Alternatives and Benchmarking Validation Alaska Airlines began in 1932 in Anchorage, Alaska with 17 million passengers annually with flights to over 60 cities and 3 countries. Alaska Airlines is familiar with marketing strategies to remain competitive in the airline industry. Alaska Airlines faced a financial crisis similar to Classic Airlines who faces possible bankruptcy, a 10% decrease in stock market shares and negativity on Wall Street (University of Phoenix, 2008). In 1972 Alaska Airlines was in the then Ron Cosgrave and Bruce Kennedy came on board in 1972, the airlines was in a financial fight for its existence. Led by quality leadership, the management restructured the goal of the organization and began bringing people together to save the failing company (Alaska Airlines, 2008). Leadership conducted a â€Å"differentiating marketing† in providing superior customer service as the key. Using a differentiating marketing allowed Alaska Airlines to survive more tumultuous times during the deregulation of airline industry and the recent rising fuel costs. Kerin (2006) agrees that, â€Å"The existence of different market segments has caused firms to use a marketing strategy of product differentiation. The strategy involves a firm’s using differentiation mix and advertising to help consumers perceive activities such as product (service) activities as being better than the other competing products â€Å"(p2). Classic Airlines can begin improving its profits and market shares by focusing on marketing strategies such as â€Å"best services† in its industry by aligning a customer-centric focus and include the stakeholders in the new restructuring of the company. Classic Airlines can follow AKL’s lead in forming partnerships and alliances to expand its international market. Both parties view the partnership as a pairing of their expansive international networks and allowing ALK an opportunity to build a platform for international growth from the West (Global airlines, 2008, p. 2). This means double benefits for their customers allowing them the additional options offering by the two companies and a chance to redeem mileage points from either of the two airlines. The Disney logo and brand name was built in 1923 on the foundation of The Walt Disney Company. Disney was founded by Walter Elias Disney and cofounded by his brother Roy Disney. The Walt Disney Company has an estimated $35 million in annual revenues (Wikipedia, 2008,p. 1). Disney works includes his alter ego Mickey Mouse, Disneyland, records, movies and the Walt Disney World Resort. What is noteworthy of this entertainment, movie empire is the extent of its marketing strategies to communicate with their customers. Using a marketing mix, Disney’s business strategy encompasses the integrated marketing communications (IMC) that communicates a brand loyalty and consistent messages across all audiences. The IMC is used by Disney via its management team and its internet customers. Disney takes many types of promotional mix as a direct marketing tool to communicate in an exchange with brand loyal customers and with potential customers. This allowed Disney to combine advertising, direct marketing, personal sales, sales promotion and public relations to inform customers of their products, persuade them to use them and remind them of the benefits after they have used them(Kerin,2006,p. ). Having targeted their population segmentation, Disney’s IMC and direct- marketing techniques via large mass mailings, an internet websites and internet-linked kiosks allow loyal customers and potential customers to inquire about their products and services. The IMC, direct marketing, marketing-mix and promotional-mix allows Disney to exchange information with consumers and keep updated of consumers changing purchasing behaviors. As Classic Airlines works on updating the functionality of its current CRM and prepares for the aCRM product development, the company can benefit from a direct marketing approach. Therefore, Classic Airlines must streamline its operations in reducing staff, eliminating aircraft with high maintenance, negotiate wage salaries to match the industry market, focus on smaller planes and improve its rewards program. Once the costs have been reduce, investments can made towards the CRM system that will allow for targeting its marketing population segmentation. Kerin (2006) states, â€Å"Like personal selling, direct marketing often consists of interactive communication. It also has the advantage of being customized to match the needs of specific target markets. Messages can be developed and adapted quickly to facilitate one-to-one relationships with customers â€Å"(p. 7). With a well developed functional CRM and aCRM data warehouse, Classic Airlines can focus on communication exchanges through direct marketing and other forms of IMC to attract new customers and maintain loyal customers. Evaluate the Alternatives In Table 3, all the goals were ranked 5 because the aCRM is a software highly integrated system of providing massive information and data on a time-sensitive arena, there will take many stakeholders and business processes to make this new product development and implementation successful. The best features of the original alternatives were combined to create a short list of second –tier solutions because it was imperative that Classic Airlines created a change management by clearly defining its mission, objectives and align them with their aCRM objectives. Once this has been accomplished it was in the best interests of the stakeholders that a culture of change be established internally before commissioning the aid of external CRM consultants. Due to the amount of organizational resistance due to Classic Airlines original exclusion of the stakeholders in particular the employees, it was best to incorporate any outside help only after internal organizational change and a culture of customer-centric, product-centric and employee rewards for performance were in place. Identify and Assess Risks Many risks can be identified with the implementation of the new product development. Beginning with the risk of organizational resistance, CA will achieve more by including all the stakeholders, especially the customers in a buy-in or adoption of the new product initiative. If CEO and Board fail to incorporate a culture or organizational change by aligning the new aCRM product objective with the overall objectives of the company, the new product development and completion may be in jeopardy. As most benchmarking companies have found that an evaluation of product feasibility s the first research before adopting the new product initiative. The project feasibility will detail costs, risks, labor costs and other assessments needed to make an informed decision about proceeding with the idea. A more profound tangible risk is if enough skilled employees have. A more profound tangible risk is if enough skilled employees have the technical skills to make the new product development a success. Other risks include costs, going pass projected timeframes, and other external risks, such as the vendors failing to supply financial backing. Other risks include software compatibility risks, decrease in profitability and returns. Risks can be mitigated by planning a risk analysis and risk management to align with every department decision making in investments and other decisions that impact the overall value of the firm. According to Seget (2008), key findings includes a risk management WBS plan is needed for CA to implement risk management principles and incorporate them in their job functions. Risks can be tracked and contingency plans in place in case they fail. Implementing risk management in every phase of the aCRM process will ensure that â€Å"potential risks† are identified early on in the product development. A solid risk management plan can help CA face the â€Å"unknowns†; deal with â€Å"unfavorable outcomes† and â€Å"unexpected uncertainties. † Just as the profitability analysis makes good business sense in considering any aCRM and marketing-mix program, conducting a profitability index makes good business sense to determine if the business objectives have been met. Make the Decision The final decision is to develop and implement a new aCRM to remain competitive within the industry. However, to do that a project feasibility and project analysis will be conducted first. Both authors, Kerin (2004) and Segat (2006) agrees to results of a project analysis and market research be completed before any new CRM initiative. These finding will be placed into the new aCRM portfolio that will detail the labor costs, financial investments and workforce needed to complete the product. A management change and organizational culture will be adopted through the mission statements, governance policies, code of ethics and risk management policies. An internal marketing approach will allow an exchange between all stakeholders. Marketing segmentation will allow CA to indentify the customers who will increase the return of investments (ROI) by conducting marketing-mix programs to identify their needs. Customer surveys will allow CA to not only identify those needs but to satisfy unmet needs and identify changing consumer behavior. The challenge for CA is not measuring the ROI or measuring the effectiveness of its total business strategies but determining the effectiveness of the customer-focused strategies. Klenke (2003) suggests that, â€Å"It makes good business sense to bring the project to a final conclusion by determining if the projected results actually were delivered as suggested in the business plan that management approved†¦ A decision must be made whether or to return to the pre-project situation if that is still an option† (para. 139). Develop and Implement the Solution The biggest opposition to any CRM new initiative is organizational resistance to organizational change. The goals it to focus on the greatest resource of Classic Airlines and that is the employees, management and departments and divisions that will be equipped through communication, two-way feedback, employee communication surveys, and an organization culture that values the communication, feedback and decision making of the employees. CA will create an organizational culture within four weeks by communication, mentoring, modeling the new aCRM product project by allowing the employees to engage two way communication, decision making and two way feedback. CA will resolve its unclear objectives by clearly stating them in their employee handbook. Once a feasibility report is conducted and the return on investment (ROI), market ratios and profitability ratios are concluded, CA will proceed to forecasting, internal marketing and environmental scanning. Employee surveys as well as feedback surveys and employee questionnaire will be distributed. The employees, customers and stakeholders will be engaged throughout the product development and implementation. The senior management, change champion, financial officer and human resources departments will be responsible in gathering the research and reporting back to the CEO and board members. At that point information will be disseminated at all levels from the CEO and board through face to face meetings, employee internet, meetings, corporate magazine and other informational channels. Evaluate the Results The success of the current CRM and implementation of the new aCRM will be measured with ongoing forecasting and marketing-mix research. Since these approaches allow for prediction of future trends of customers and organizational buying behaviors it can also predict the possible increase of revenues and profits that a certain product might generate. Measures such as productivity increase, cost reduction and increase in revenues are more reliable metrics in measuring and evaluating the benefits of the CRM implementation. (University of Phoenix, 2008) Many benchmarking companies like PeopleSoft, according to Seget (2004), may fail in its first product CRM attempt. PeopleSoft adopted a PeopleSoft CRM that failed to deliver in terms of functionality for the end-user, the consumer. PeopleSoft developed another system called Peoplesoft8 that address the issues of functionality that their former system failed to deliver. Metrics such as productivity, increases in revenues were some of the measures used by PeopleSoft8. Like Classic Airlines they were facing criticisms of lack of functionality for their customers and had a problem with vendor, supplier and human resources staffing. They became successful in adopting a new â€Å"PeopleSoft 8 CRM† that focuses on employees, targeting customers, supplier relationships and vendor relationships. Seget (2004) agrees that the success of PeopleSoft 8 CRM (PS8) was due to the focus on human resources centric or –HR-centric. Functionality was also a major concern for PS until their adoption of the PS8-CRM. Although Classic Airlines’ new aCRM is not up and running, CA can learn from PS8 by acting quickly by fully integrating the PS8 CRM system and forming a business alliances and partnerships to maximize their aCRM efforts. PeopleSoft has been successful enough to use profits to acquire and merge with other companies and partners (Seget, 2004, p. 80). Other measures include SWOT analysis, gap analysis, and profitability index and churn rates to determine if the objective has been met. Evaluations and customer surveys must be ongoing to allow management to adjust and change their focus as customer behavior and trends change. Conclusion Classic Airlines like most industries are embarking on a fairly new concept, the CRM. Although CRM is a computer based software that provides integrated on demand information for customers, physicians, vendors and ther stakeholders, the system is only as useful if designed around the customer’s needs, wants and expectations. According to Seget (2004), the aCRM model uses analytical models and databases to integrate information that will enhance the customer desire for functionality as well as provide time sensitive information for prompt decision making by pharmacis ts, managers and others that rely on the CRM processes. While Classic Airlines is in its infancy, CEO Amanda Miller must present a project analysis and project feasibility before undertaking the new aCRM product development (Kerin, 2006). According to Kerin (2006) environment scanning and must be conducted not only on its customers but on its competitors as well. Marketing target segmentation, internal marketing, aCRM initiatives, customer surveys and customer audit all work together in reaching an overall business strategy, satisfying the needs of the customer. Classis needs to reduce costs, maximize ROI, match union pay with the industry and restructure the organization with a product-centric and customer-centric focus. Achieving US and globalization as a benchmarking organization stems from an aggressive and proactive marketing program that will operate through an updated CRM system and a future aCRM system that is designed to compensate future environmental changes and thus customer changing needs. An effective marketing program will benefit the customer and stakeholders by assessing the needs of the customer and satisfying those needs (Kerin, 2006, p. 5). Classic must remain competitive by promoting value for all vendors, supply chain and stakeholders. To measure the effectiveness of the aCRM project and current CRM and marketing program must use customer surveys, profitability index and customer audits to determine if the objectives of CRM and marketing strat4egies are being met. Measurements must be conducted on a continual basis to allow management to make adjustments and decisions to align the CRM with the business overall business strategies. References Alaska Airlines. (2008). Retrieved November 26, 2008 from the Web site: http://www. Alaskaair. com/ Band, J. (2003). The CRM Outlook: Maturing to the next level. Computer Wire. Retrieved November 9, 2008 from the University of Phoenix Library Business Insights Technology Web site: http://www. globalbusinessinsights. com. exproxy. |Global airlines face daunting challenges- more mergers and partnerships? (2008). Retrieved November 25,2008 from the University of | |Phoenix, Plunkett Research database. | |Kerin, R. A. , et. al. (2006). Marketing, 8e. Customer relationship and value through marketing. | |New York: McGraw- Hill. | |Klenke, M. , Reynolds, P. , Trickey, P. (2003). Leveraging Customer Relationships, 1e. Tactics to leverage customer relationship. Leyh | |Publishing Company. | Seget, S. (2004). The Pharmaceutical CRM Outlook. Optimizing returns from operational and analytical crm. Retrieved November 5, 2008 from the University of Phoenix Library Business Insights database. University of Phoenix. (2008). Automating a Support System. Retrieved November 16, 2008, from the University of Phoenix, resource, Simulation. MBA570-Sustainable Customer Relationships Course Web site. University of Phoenix. (2008). Classic Airlines, Scenario Two. Retrieved November 21, 2008, from the University of Phoenix, resource, Scenario. MBA570-Sustainable Customer Relationships Course Web site. Walt Disney. (2008). Retrieved November 26,2008 from the Website: http;//en. wikipedia. org/wiki/Walt Disney Table 1 Issues and Opportunities Identification | | | | | |Concept |Application of Concept in Scenario |Reference to Specific |Personal Experience at your| | |or Simulation |Course Concept Organization | | | |(Include citation) | | | | | | | |Classic Airlines has a lack of|To develop value added channels of |â€Å"Just as important is the communication |As a newly hired sheriff | |stakeholder alignment that |communication aligning key |between and within levels. Gone are the days |deputy, jail division I had| |will hinder their ability to |stakeholders under a common vision. |when departments could stand as silos, |grew so fast and the funds | |implement new products and |This is an opportunity to increase |isolated from the rest of the organization by |to run the new facility had| |services/solutions. |organizational comprehension and |impenetrable barriers. Intra-national and |ran over its budget. Rumors| | |employee involvement that results |international competition is now so fierce |were running rampant | | |in the garnering of trust and |that everyone (stakeholders) in the |throughout the organization| | |loyalty among stakeholders. |organization needs to collaborate closely on |that resulted in low | | | |solving organizational challenges and on |morale. The problem for the| | | |achieving agreed strategic objectives. † |Sheriff department was that| | | |(Wyatt,2008,para. 9) |they noticed a rise in | | | | |officer and inmate | | | | |conflicts. The officer’s | | | | |union began to disseminate | | | | |information via brochures, | | | | |newsletters and roll call | | | | |meetings. |Classic Airlines lacks |Classic Airlines has an opportunity|Classic Airlines can select a marketing |My company focuses on brand| |marketing mix and environment |to conduct a marketing mix to focus|strategy such as, best price, best service or |electronics and brand | |scanning strategies to |on the price, product, promotion |best product from conducting a marketing mix |appliances at the â€Å"best | |identify the internal and |and place. These are controllable |and environmental scanning. â€Å"Four elements in |price†. They also offer a | |external factors that will |factors. Environmental scanning are|a marketing program designed to satisfy |price match. Environmental | |meet customers changing needs |uncontrollable factors such as |customer needs are product, price, promotion, |scanning is conducted by | |and improve customer |social, economic, technological, |and place. Kerin,et. al,2006,para. 3) These five|physically going to each | |satisfaction. |competitive and regulatory factors |forces environmental)may serve as accelerators|competitor store and | | |that will impact CA’s overall |or brakes on marketing sometimes expanding or |retrieving information. | | |marketing strategies. |restricting. (Kerin,2006,p. 1) | | |Classic Airlines lacks |Classic Airlines has an opportunity|â€Å"If the objective is to increase customer |As a rehabilitation case | |measurable methods to |to develop and implemen t risk |loyalty, then measurement of churn rate |management, ongoing surveys| |determine if their aCRM, |analysis, gap analysis, and SWOT |(profitability index)and customer satisfaction|and targeted objectives and| |marketing segments, and |analysis and churn rate analysis |will be key in determining how well objectives|compares it to the achieved| |customer surveys to determine |and profitability index to |is being met†(Klenke,2003,para. ) |targets were completed by | |is their overall business |determine if the objectives of | |an automated computer case | |strategies are effective. |loyal customers focus are | |management program. | | |successful. | | | Table 2 Stakeholder Perspectives and Ethical Dilemmas | |Stakeholder Perspectives and Ethical Dilemmas | | | | | |Stakeholder Groups with Competing | | | |Values |The Interests, Rights, and |Course Concept | | |Values of Each Group | | |List: Group X | | | |versus Group Y | | | |CEO Amanda Miller and CFO Catherine|Inter ests include credibility on Wall Street, |â€Å"The American Marketing Association, representing | |Simpson vs. senior management team |stock prices and the media. Values remaining as a |marketing professionals, states that ‘marketing is an | | |viable competitor in the industry. Interests |organizational function and a set of processes for | | |include â€Å"operational excellence† and â€Å"driven by |creating, communicating, and delivering value to | | |numbers† Failing to look to the exchange and |customers and for managing customer relationships in | | |communications will not develop a marketing |ways that benefit the organization and its | | |program to include stakeholders and meet customer |stakeholders. †(Kerin,et. al,2006,p. 12 | | |needs. | |CMO Kevin Boyle, Senior VP of |Interests include the CRM program, â€Å"voice of the |The hallmark of developing and maintaining effective | |Customer Service Renee Epson Senior|customers† employee wage obligations, shareholders|customer relationships is today called relationship | |VP of General Counsel Ben Sutcliffe|and marketing and customer services functions. The|marketing, linking the organization to its individual | |and Senior VP of Human Resources |conflict is that there ne eds to be a decision |customers, employees, suppliers, and other partners for| |vs. CEO Miller and CFO Simpson |making process that includes all stakeholders. |their mutual long-term | | | |benefits. †(Kerin,et. al. ,2006,p. 5) | |Classic Airlines vs. Vendors, |Communities, media and competitors and other |â€Å"The process of (marketing) segmenting a market and | |Distributors, Suppliers, Contact |stakeholders expect that Classic Airlines |selecting specific segments as targets is the link | |Centers, Communities, Media, |management maintain accountability and social |between the various buyers' needs and the | |Competitors, Investors. |responsibility in the new product development via |organization's marketing | | |a market segmentation to meet customer needs. |program†(Kerin,2006,et. al,2006,p. | Table 3Analysis of Alternative Solutions[pic] Table 4 Risk Assessment and Mitigation |Risk Assessment and Mitigation | |Alternative |Risks and Probability |Consequence and Severity |Mitigation Techniques and Strategies | |Engaging stakeholders at all |Organizational resistance. |; Clash between middle management |Establish company culture that values | |levels of the new aCRM product |Increase costs |and employees. |employees a nd stakeholders. | |development. Delay in time projections |;Clash between different |Align marketing goals of aCRM with | | | |divisions. |overall business strategy. | | | | |Establish clear objectives, business | | | | |goals and mission statements. | |Business Alliance with Zurich |Organizational resistance. | ;Clash between external and |Establish company culture that values | |Airlines |Increase costs |internal teams |customers and products. | |Delay in time projections. |; Loss of skilled management and |Communicate, model and lead by example | | | |employees |from CEO, board and senior management. | | | |;Evaluation of team may result in |Establish clear objectives, business | | | |more costs to finance new aCRM |goals and mission statements. | | | |project. | | | | | | | | | | | |Environmental scanning and |Costly |;Research may find that current |Project scope and aCRM portfolio | |marketing-mix research and |Timely |aCRM product is not profitable. |Marketing-mix portfolio. | |profitability index, |More workforce | | | Table 5 Pros and Cons of Alternative Solutions |Alternative |Pros |Cons | |Engaging stakeholders in all levels of the new |Increase employee motivation and morale. Employees may feel over tasked vie new product,| |aCRM product development. |Increase productivity. |training new skills and training new hires. | | |Improve customer services |Increase resistance from some employees. | | | |Deliverables of goals require more time | |Develop business alliances with Zurich Airlines|Add to customer value and increase customer |Increase employee resistance. | |and form other partnerships to remain |benefits. |Time consuming. | |competitive. |Speed up production. Increase costs | | |May reduce overall cost |Organizational resistance | | | |Employees may see | | | |Jobs as being threatened | | | | | | | | | |Environmental scanning, marketing-mix research |May speed up production and implementation |Time consuming. | |and developing ongoing custome r audits, |Aid in developing an overall software synergy |Increase costs. | |profitability indexes to measure overall |fit. |Delay overall time projections. | |effectiveness of the aCRM. |Increase profitability ratios, and return on | | | |investment(ROI) ratios, | | Table 6 Optimal Solution Implementation Plan Action Item Deliverable |Timeline |Who is Responsible | |Initiate a CRM project feasibility, forecasting and | |CEO, Board of Directors and Senior | |marketing-mix before developing and implementing new|4 weeks |Management Team, Financial Manager | |CRM product. | | | | Align new aCRM product objectives with overall | 4 weeks |CEO, Board of Directors and Senior | |business objectives and provide update for current | |Management Team, Project Leadership Team| |CRM. | | |Analyze a profitability analysis, return on | 4 weeks |CEO, Board of Directors, Senior | |investments (ROI) and market ratios to determine | |Management, Marketing, research and | |competitors and competitors prices. | |development and financial manager. | |Adopt marketing-mix strategies that will retain | |CEO, Board of directors, senior team, | |customer loyalty and identify value added incentives|Ongoing |champion leaders, cross functional team | |and rewards for loyal customers. |leaders, employees and customers. | |Train, mentor and lead the employees in the adoption| |Senior management, human resource | |of the aCRM product development by providing them | |management, champion leaders, | |with the highly technical skills, self- paced |20 weeks |cross-functional team leaders and | |training, | |technical skilled leaders, | |e-performance evaluation. | | |Attention to increase funding and workforce addition| |Senior managers, cross-functional team | |to the product support, administrative support, call|24 weeks |leaders, technical skilled leaders, call| |centers, e-business websites for customers and other| |center leaders, information technology | |product development customer enha ncement support | |leaders and customer support leaders. | |systems. | | |Hiring new employees and training them with the | |Middle managers, team leaders, human | |needed KSA’s to provide excellent customer service. |24 weeks |resource manager and management team. | |Business alliances with Zurich Airlines and other | 48 weeks |CEO, Board of Directors and Senior | |business partners. | |Management Team, Financial Manager | |Conduct SWOT analysis, profitability index. | Quarterly/Annually |Team leaders and senior leaders. | Table 7 Evaluation of Results |End-State Goals |Metrics |Target | |Forecasting and marketing-mix will identify |Forecasting results from social economic and |Business customers and regular customers | |market synergies that will keep Classic |technical factors as well as market-mix results| | |Airlines a viable competitor and ahead in the |to identify trends and future trend of | | |CRM market industry. |consumers buying behaviors. | |Classic Airlines will adopt business |Using benchmarking examples from Microsoft, |Target is benchmarking and best practices CRM | |intelligence and align with business partners |PeopleSoft and other leading aCRM and eCRM |service providers. | |to enhance its new CRM product. |service providers, Classic will adopt the | | | |synergy fit for its CRM. | | |Classic Airlines will provide employees with |Providing skills assessments, skills training |Target is employees and stakeholders involve in| |the high technology skills to face a fast |and career advancement, Classic will retain and|customer relations and customer contact. | |changing technical environment. attract those with the technical skills to | | | |remain a viable contender in the CRM industry. | | |Classis Airlines will enhance the functionality|Providing internet and on line information so |Classic Airlines frequent flyer program, | |of the aCRM new product development by adopting|that feedback, information, and decision making|business customers, regular customers and | |personalized websites, target marketing via |can be conducted with more available |potential customers. | |e-business, customer email and other channels |information and time sensitive data. | |to market and sustain customer relations. | | | |Conduct SWOT analysis, profitability index and |Accomplished via multi-channeling, e-marketing,|All stakeholders | |customer surveys to measure the effectiveness |e-commerce and other web bases to measure and | | |of the CRM. |evaluate | | | |Customer loyalty retention. | |