Rational and Dynamic Approaches to Strategic Management; It is not a new concept. It has defined as a management system that links strategic planning and decision making with the day-to-day business of operational management. Strategic management is not a simple, step-by-step process, but a complex and iterative process. Which needs hard work and dedication from many people in an organization to implement it toward the objective.
Evaluation of the Rational and Dynamic Approaches to Strategic Management
It is the process for the leading members of an organization to forecast its future and develop the necessary procedures and operations to achieve its future. Also, Strategic management is usually found in high levels of management to help organizations gather, analyze and organize useful information to keep up with the industry and competitive trends. The rational and dynamic approaches to strategic management are two different schools of thought. Furthermore, The rational approach is well-plan and more prescriptive in strategy selection. However, the dynamic approach is the opposite.
What is Strategic management?
SM is the formulation and implementation of the major goals and initiatives taken by a company’s top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes. Strategic management provides overall direction to the enterprise and involves specifying the organization’s objectives. Developing policies and plans designed to achieve these objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision-making in the context of complex environments and competitive dynamics. Strategic management is not static; the models often include a feedback loop to monitor execution and inform the next round of planning.
Michael Porter identifies three principles underlying strategy: creating a “unique and valuable [market] position”, making trade-offs by choosing “what not to do”, and creating “fit” by aligning company activities with one another to support the chosen strategy. The corporate strategy involves answering a key question from a portfolio perspective: “What business should we be in?” Business strategy involves answering the question: “How shall we compete in this business?” In management theory and practice, a further distinction is often made between strategic management and operational management. Operational management is concerned primarily with improving efficiency and controlling costs within the boundaries set by the organization’s strategy.
Evaluation of the Rational and Dynamic Approaches to Strategic Management
The choice for any of the two approaches can indirectly or directly link to the environment in which the organization operates or certain organizational factors that affect the application of the strategic management approach. The favor is inclining to the dynamic approach because of the changing factors in the external environment. It is two of the Disadvantages of the Rational Approach and the Advantages of the Dynamic Approach.
The thought of rational strategic management supposes the environment of the organization facing is stable, small changes, and expectant. So, the organization can look forward to the market and the future. But today, the environment of the organization facing is not only complex but also less and less expectant. If the organization emphasizes the rational model, it may only concern with management efficiency and form strategic management excessively. Which will create a kind of logjam of strategic management? The option of the dynamic approach advance with the times and takes. The whole situation into account and plan accordingly.
The disadvantage of the rational approach does not mean this approach is useless. No one can say the dynamic approach is useful to all strategies. The rational model promotes considering the available alternatives. Evaluate all of the consequences of every alternative and choose the appropriate alternative. The positive impact on organization performance exists, but the organization can not only rely on the rational approach for positive performance. Therefore, some researchers suggest an integrated approach – hanging the rational approach and the dynamic approach together. Mintzgerg (1987) argues that realized strategy is always a combination of the rational approach and the dynamic approach. As strategic management is a complex synergy of strategy, the integration may result in a remarkable performance.
Strategic management is a science that is closely related to social science. The methodology of strategy formulation requires adapting to the nature of the scientific discipline. Only the organization that practices some form of strategic making can survive, anticipating the unpredictability of external influences in an environment. What are the Components of a Strategy Statement?
The Rational and Dynamic Approaches to Strategic Management
It is never too much to point out the importance of HR strategy for the successful organization. Effective HR management is maximum utilization of capacity of work force within organization by appropriate allocating of employees and effective motivation for the all different types of employees. In order to do so, analysis of each employee’s nature, competence, stress endurance level and trait should prepare. What Are My Goals? It is important to know each employee’s character and motivation factor base on data base obtaining the daily working behavior of employees as well as their accomplishment from the macro perspective.
This kind of accurate, thorough and fair data base can be applying to the company’s redundancy management. Company can help employees to look for other jobs, which fit them better, by which company can have better productivity with same input resource. Which company can have the sustainable competitive advantage over the competitors.
The HR strategy is directly connected with the reward strategy as we have through so far, employees’ motivation is heavily rely on the total reward strategy of organization, which should design not only by HR department but senior managers who are directly involve in the whole organizational strategy, by which the total HR strategy can implement, support and review consistently. Components of a Strategy Statement!
Regardless of eastern, western, ancient time or modern time, the importance of HR strategy is always appreciates. This is because, even if any given organization has the best infrastructure in many ways. They are manipulate by human and this cannot be replace any other system that are available so far. Therefore the right people for the right place base on the total reward strategy development map is more important than any other factors or than ever to maintain the long lasting successful organization.
Align your Reward and Business Strategy
So you’ve done a market study on compensation, and you are Peggy pretty much at where you want to be against the market. You’ve design a cutting edge Pay-for-Performance program and even have some exciting stock options for your top management. And of course, you know better than to ignore the millennial – you have a flexible salary structure, complete with gym memberships and other such benefits. All you need to do now is wait for the motivation to kick in and reap the benefits right? Then why is your business not growing every year as you had plan? Or perhaps your margins are shrinking with every passing year, while your employee costs keep rising due to the war for talent? The Types of Kotter’s Eight Steps Change Model.
Why is your rewards strategy not delivering results?
One critical aspect that companies tend to overlook is alignment of rewards with business strategy. Reward programs work, if they are strongly link to business objectives and the employees know what is expects of them in their jobs. Employees must see the connection between their own work and the overall goals of the company. But, how do you ensure that your rewards and business strategy are align?
Identifying measurable business goals: The first step towards bringing this alignment is by breaking down the company’s vision into clear measurable goals. Identify your goals for the next three years and think about how you will achieve those goals – identify the levers you must pull, to create value for your company. Let’s say that lever is new products, then you must have metrics related to new product development on your company’s scorecard and also distributed across the scorecards of your CXOs – it could mean adding a new production line over the next three quarters, augmenting the R&D unit or hiring new technical specialists. This implies that you must add metrics to the scorecards of your Head of Production, Head of R&D and CHRO.
Driving alignment through all levels in the organization: The next step would be to align the larger employee population to these company goals. Stop and consider what are you are currently rewarding for vs. what you should be rewarding for? If it is planning sustain growth that you are after, instead of small incremental year-on-year growth. Make sure your employees understand how you plan to make that shift. Employees need to understand what they should be doing differently. It’s most likely that you won’t grow faster by just working harder and putting in more hours. You will have to innovate, and create more value from the same resources at your disposal. Hence, the KPIs should reflect this change in your thinking and approach.
Equity in target setting: Given the business strategy and goals, what is the acceptable level of performance now that your goals have defined? This definition must be the same for everyone in the organization. All too often, different departments rate their people differently, depending on their own perceptions of acceptable performance. Another reason for this is the perceive difference in the achieve-ability of targets. Incorporating a structured, data-based system for setting targets starting from the top will go a long way to establish equity in target setting. Equity in targets is an important factor for maintaining. The optimum degree of stretch across, an organization and keeping everyone focused on the goals.
Don’t underestimate the intangibles: Goals and metrics is only one aspect of executing a business strategy. Another equally important aspect is ‘employee will’ to execute the strategy. Reward has a key role to play in demonstrating an organization’s values, commitment to employees. The value it places on performance. The intangible, emotional part of rewards is far heavier than the tangible, monetary part. This is why it’s important to view rewards as Total Rewards rather than just a monetary pay-out at the end of the year. Total Rewards includes tangible rewards like basic salary, allowances, benefits, bonuses, stock options, retrials etc. Also intangible rewards like career development, work-life balance, safety and security, quality of work and an enabling environment.
Make sure that your intangible rewards speak the same language of performance and success as your tangible rewards. For example, if monetary rewards in your company are link to metrics that can achieve through innovation and collaboration. You cannot cultivate an environment that promotes bureaucracy and competition. You may need to make changes to your structure, systems. Processes in order to create an enabling environment. Perhaps reduce the number of layers in the organization to increase speed of decision making. Or create cross functional teams to encourage creativity and collaboration?
Robustness of supporting environment and processes: Sometimes the factors that get in the way of alignment are the very processes that support and help deliver the reward strategy.
Some factors to watch out for are:
The Performance Management System – Is it fair, transparent and objective?
Organization Structure – Is it gear to deliver business strategy and performance?
Role definitions – Do people know what is expects of them in their job?
Behaviors – Are we encouraging the right behaviors needed to achieve our business goals?
Top management Involvement: Creating alignment is hard work and demands a lot of time and attention from the top management. Some of the ways in which the top management can support.
The alignment process are:
Communication: Reinforce the company’s business goals through on-going, public communication. This would ensure that all employees are aware of the future direction of the company. Be vocal about the reward strategy and how it links with business goals. Emphasize on the company’s commitment to high performance.
Role modelling: Every leader in the organization must be a role model for behaviours desired for business success. They should demonstrate company values through their actions on a day to day basis.
Drive the process: Aligning reward strategy with business strategy should not be seen as a purely ‘HR’ activity. It is critical for business success and should position in the same manner. The top management should drive the process with support from HR.
Gatekeepers to the process: Top management must ensure that the process is followed as intended. They must appropriately and visibly address any deviations or exceptions to the process.
It goes without saying that the top management’s inputs are crucial for articulating the business strategy. Ensuring its buy-in and also serving as gatekeepers to the process. Moreover, the effort has to be a consistent one, till the time it becomes a part of the organization’s culture. What are Effects of Goal Orientation on Student Achievement?
Lastly, I would not recommend trying to fix everything all at once. Take the time to study the data, listen to your employees and then address the aspects that matter the most. Know where to start to get maximum impact.
How to Make Reward Strategy with Developing System for Your Organization?
Reward is an important part of managing organization and the management of employees. It can define as an organization is ready to pay for to accomplish its strategic objectives. Therefore the review of reward system starts from understanding of organizational strategy and HR strategy supports this. Strategic reward objectives should be align with business objectives in the same way as other key business areas such as finance, marketing, administrating and IT.
In the broad way, there are two ways of reward such as tangible and intangible. The definition of these two rewards are in a way ambiguous as it could vary according to the viewers’ standpoints, but most of rewards can be classified as the tangible, which includes competitive salary, promotion, good benefits, incentive, better working environment, recognition awards and all other fringe benefits for higher performance. Whereas, intangible rewards is none monetary reward for high performance, not always requiring recognition of others in the workplace. Examples are when a sales manager gives the sales person recognition by a “pat on the back, send an appreciation e-mail and usage of bulletin board” to show appreciation for job well done.
In order to implement the reward system the most appropriate way, performance appraisal, evaluation, accomplishment rating should be done the most fair and objective way, but it is sometimes easier said than done. Due to the unfair or unreasonable evaluation, employees get depressed over the total reward system of the organization. In addition, the subjective appraisal is often taking place because of the managers’ personal preference or subjective views on some employees in particular.
However, to get this done the way it should, managers should have the most fair and objective views with regard to the evaluation of employees. By doing so, organization can reach to the final goal pertaining to the HR strategy such as retaining the indispensable, key employees or high performers, motivating average performers work harder and redundancy management for underachievers, who do not fit the organization, by which company can have the sustainable competitive advantage.
Reward Strategy
Reward strategy is the key step in the design of a reward system to keep high quality staff and motivate average level staff to work harder. And it is to set up the mechanisms help in recruitment, retention, engagement and development of employees so that they perform and deliver at their highest potential and therefore make the organization successful.
Such a competitive business environment of these days, it is very important to have the decent reward strategy initiatives by the maximum utilization of the organization’s financial and non-financial resources as the competitors are looking for the opportunities to scout the high quality employees all the times. The competitors’ better reward strategy initiative can be good reason for high quality employees to leave for the competitors.
People work because they gain an income to spend on their individual, family and community needs. Some people needs are the essentials of lives, what humans needs to survive physiologically. Maslow defined the hierarchy of needs with fundamental physiological needs at the base and rising through safety, social needs and culminating in the need for self-fulfilment. Herzberg distinguished between firstly hygiene extrinsic factors such as pay and organization policy and procedures that will cause dissatisfaction in the workplace if absent or insufficient.
Satisfiers, which are intrinsic responsibility and potential for growth which will positively motivate people. Since Maslow and Herzberg were published over 50 years ago, other like expectancy theory identifies two factors of value and probability. People value reward in terms of how well it satisfies their needs of security, social esteem, fulfilment and autonomy. Inevitably people value different elements differently, which suggests reward must include a mix. Expectancy is the probability that reward depends on effort like the more effort, the higher the reward. For that effort to be helpful to the organization, individual needs to have the appropriate ability and the correct perception of their role. This emphasizes the need for clear role definitions and understanding, effective development interventions and a link between performance and reward.
Strategic human resource management is different from traditional human resource management in its focus on organizational outcomes, its integration of the various functional areas of human resource management, and its concern with more macro perspective on the topic. The field has progress significantly, however, inadequate definitions and spare theoretical development continue to plague it. Extensive research and studies on reward strategy has shown that people are complicated and motivation is a complex process. What is clear is that while financial reward is important , for most people other factor are also, and can be more important.
These can brought together under three sections:
Equity – the perception of being treat fairly both in comparison to others and in terms of the effort and skills brought to the role.
Self-fulfillment – that people are recognize for what they do and encourage to reach their potential through effective learning land development processes and given feedback on their performance.
Organization culture – roles are clear and organizational and personal values are alignment so that employees engage and enjoy work.
Total reward strategy addresses this complexity in bringing together financial aspect of reward of basic pay, any bonuses. Additional financial benefits with the non-financial benefit at the personal and organizational level. This is a helpful concept, especially because it acknowledges the limits of purely financial reward. Identifies other areas that can address, in particular when salary budgets are limit for economic reason.
Reward is more than pay and benefits. Therefore a reward strategy must consider many aspects of the workplace in order to both attract. Keep high quality people doing the right things in the right way so that they flourish and the organization is successful.
Developing a Reward Strategy
The reward management system needs to support the business strategy. As such there are a number of different approaches. But they all break down into a small number of common overall methods. One of the key determinants in deciding which approach will work best is the extent to which the business wants integration between its reward system. The other HR systems and policies it utilized.
Arguably, the opportunities to leverage real competitive advantage comes from integrating the reward management, performance management, career management. Personal development systems into a cohesive whole, rather than seeing each as a separate and disjointed system in isolation.
The key step in redesigning the reward management system is to determine the reward strategy. The level of integration with other HR systems. This provides an overall framework for the reward system and must be closely link to the business strategy.
To develop a reward strategy, there are three underlying premises.
Firstly, in order to meet its strategy, the business must exhibit certain characteristics. It needs to behave in certain ways, for example treating its employees in an open. Honest fashion or creating co-operative relationships with its customers and suppliers.
Secondly, organizations are made up of people. And as such it is how the people behaves that will determine how the organization behaves.
Thirdly, the integrate approach to people management starts off with individual behavior expectations. Examines how these will measure (performance management), develop (personal development) and rewards (rewards and career management).
There are a few factors to be include in a reward strategy. With regard to underlying structure. There are number of ways in which a grading structure could be develop according to your business needs. Which include single structure, career families and job families.
Which provide a common grade framework that supports a drive for consistency. Common threads are the policies, systems and procedures that operate across the business.
For example, since pay rules, benefit allocation rules such as cars, pensions and private medical insurance. Procedures such as holiday or absence notification and promotion. They are there to make everyone’s life easier because there are clear rules and every one sticks to them. Include in this area would normally be decisions about flexible benefit schemes. Choice of carriers for insure benefits, and so on.
When it comes to base pay structure, there are three decisions that need to made such as market alignment, number. Shape of the salary scales and access to and use of market data. Which recognize the market value of rules and nay role-specific needs. Variable pay takes three main forms.
Firstly, annual schemes which are normally bonus arrangements where there is some link to underlying business performance.
Secondly, commission type arrangements where the main link is to individual performance.
Thirdly, long-term schemes that might be cash or shares base. And are typically using for the more senior employees, although all-employee profit related schemes sometimes fall into this category.
Recognition schemes are either non-cash or low-value cash equivalent schemes that recognize behavior that reinforces the organization’s values. They tend to “award” base with some form of nomination process, either from other employees or line managers. When it comes to non-financial reward, from an individual’s perspective.
The total reward of working for a particular organization is made up of four elements such as cash, benefits, personal development, growth and environment. Finally integration is about creating a common theme throughout the people management processes.
For example, it may be about ensuring performance management. Performance-pay processes are consistent, using common factors for measuring job size. Determining employee development needs, creating a common language which is use consistently throughout. All people management processes, developing structures that manage more than one people management process at a time. For example, the career families approach discuss above attempts to integrate job grading and career tracks.
Do you Understand Meaning of Pricing Strategy and Price Perception
A company will begins a good pricing with a complete understanding of the value and price of the products or services from the price setting to capture the customers’ perception on value and price. For example, if a customer decides to buy a product but he or she find that the price that set is higher the value which is from a products, this will make the customer making decision that does not buy this product. Definition of Price Perception.
A company can make the decision on pricing based on two types of value basing pricing which are good-value pricing and value-added pricing. A good-value pricing means a company will sets a fair price by offering the right combination of quality and good service. Besides that, value-added pricing means a company will sets the prices based on customers’ perceptions of product value rather than the manufacture’s cost.
The customers’ perception on value and price will set the ceiling of price; costs also will set the floor for the price that a company can set. A company needs to know the costs that spend on products before they can decide the pricing decision by using cost-based pricing. Cost-based pricing is a stage that a company set prices that including the producing expenses, distributing expenses. Selling expenses and the value of return on effort and risk. A company should consider the cost-based pricing as the important stage in pricing strategies. The costs that spend on products can be two forms which are fixed costs and variable costs.
Fixed costs are the costs that do not easily vary with production level while variable costs are the costs that vary directly with the production level. Examples of fixed costs are bills for rent, interest or executive salaries while the examples of variable costs are bills of electricity, packaging expenses and so on. The company must calculate the costs of products carefully. Role of Price Perception in Consumer Buying Process.
If the company costs are higher than other competitor’s costs during the producing and selling the products, this will make the company set the higher prices to earn some profits. The effects of charging the higher prices of products, the customers will buy the products from other competitors because the price that offers by the competitor is cheaper than the company. Therefore, a company should consider the customers’ perception on value and prices as important elements because customers can determine company performances.
Consumers’ perceptions of products rely heavily on the pricing strategy that is chosen by the marketing manager. Price will impact not only consumer perception but also profit and speed of product adoption.
Cheap or a Good Deal?
It is Valentine’s Day, and you are waiting to unwrap a gift from your significant other. The box is opened to reveal a beautiful gold necklace, that you can’t wait to wear. A week later, you stumble upon the receipt for the necklace and find out it only cost $99. The beautiful gold necklace that you once loved now seems cheap and ugly. Why? The price has altered your perception of the necklace.
Marketing managers must be careful of the pricing strategy they use to sell their products and services. Consumers’ perceptions of products, and services are drastically affected by different pricing strategies. For example, the staff of the local business called Heart Attack on a Plate Bakery is revamping their products’ prices. They are researching the best pricing strategy to implement for all of their baked goods. They want their prices to reflect a premium image but not be so costly that their consumers perceive their products as unaffordable.
Pricing Strategy: Everyday Low Price
One of the most popular pricing strategies in marketing is EDLP (everyday low price). The theory behind using this pricing strategy is that it provides value to the consumer by eliminating. The need to search for better deals elsewhere. It helps the retailer because it offers one price and avoids constant sales, discounts and price changes. Heart Attack on a Plate Bakery does not want to use an EDLP strategy as its products are premium. And area competitors can’t match its quality. Walmart is the leader in EDLP pricing. They stress that the overall price of consumer purchases will be less than the competition.
Most stores that adopt this type of strategy also use odd pricing in order to further increase. Their consumers’ perception of a good pricing deal. For example, if Heart Attack on a Plate was going to use EDLP pricing. Then its cupcakes would be priced at $1.99 each. The thought is that consumers will ignore the 99 cents and view the cupcakes as costing only $1. Sometimes, the use of odd pricing can backfire and cause the consumer to perceive the product as cheap. For example, if a bride wanted to order a wedding cake from the bakery. And was quote a price of $99.99, there could be a negative price connotation or a lower-quality image.
Pricing Strategy: High/Low Pricing
Another pricing strategy that firms can use is called high/low. In this instance, the retailer depends on promotions and sales to temporarily reduce prices. This type of pricing strategy allows consumers to perceive that they’re getting a deal during a sale. It also allows another segment of consumers who are not price-sensitive to pay full price. Which in turn brings in more profits for the company.
A high/low strategy also makes the consumer perceive excitement. Or that a deadline exists for getting the sale price during a limited-time period. A retailer does provide a reference point. Which is the price against which buyers compare the sales price of the product to the actual price.
For example, Heart Attack on a Plate Bakery creates signs with the original sales price of its cakes. And then slashes through the price with the sales price revealed: ‘Cookies on sale for $7.99 a pound!’ vs. $9.99. The bakery is going to try to use this type of pricing to create excitement for its baked goods. In the past, it has criticized for higher prices. The staff hopes this new pricing strategy will bring in new customers.
New Product Pricing Strategies
There are two additional types of pricing strategies that companies can use to introduce new products. The bakery is introducing a new line of cheesecakes. It can implement a market penetration or price skimming strategy for the cheesecake line. A market penetration strategy is setting an introductory price low to build sales, market share and profits quickly. For example, the bakery could offer its cheesecakes for a low price of $9.99 to gain customer purchases immediately. As time passes, the bakery could increase the price in small increments, if needed, to secure more profits.
The bakery could also use price skimming as the pricing strategy for its cheesecake line. This strategy appeals to customers who are willing to pay. A premium price for the chance to try the product first. The bakery could price the cheesecakes at $19.99, and describe the rich. Imported ingredients that are used to justify the higher price. In the end, the bakery has decided to pursue a market penetration strategy because it wants a large sales volume. The bakery will offer the cheesecakes at a low price of $9.99.
Pricing strategies ultimately affect consumers’ perceptions of products and services. Marketing managers must take into consideration the type of product, profit and consumer perception that will fuel sales. High/low, EDLP, penetration or skimming all offer marketing managers a choice in how they price their product and produce sales. Heart Attack on a Plate Bakery has decided to pursue a high/low pricing strategy. They want to offer five different bakery products a week on sale to bring in customers. And get them to try a new product. In the end, pricing is the most flexible. Way to alter the 4Ps of the marketing mix (product, price, promotion and place). Pricing can and will adjusted throughout. The life cycle of any product in order to react to the environmental changes and consumer demands.
Starbucks Case Study; It is the world’s largest and most popular coffee company. Case Study; Since the beginning, this premier café has aimed to deliver the world’s finest fresh-roasted coffee. Corporate Social Responsibility of Starbucks Coffee, Case Study; Today the company dominates the industry and has created a brand that is tantamount to loyalty, integrity, and proven longevity. Starbucks is not just a name, but a culture.
Case Study in Corporate Social Responsibility of Coffee Starbucks!
It is obvious that Starbucks and its CEO Howard Shultz are aware of the importance of corporate social responsibility. We try to explain the case study of Corporate Social Responsibility of Starbucks Coffee; Every company has problems they can work on and improve in and so does Starbucks. As of recent, Starbucks has done a great job showing their employees how important they are to the company. Along with committing to every employee, they have gone to great lengths to improve the environment for everyone.
Ethical and unethical behavior is always a hot topic for the media, and Starbucks has to be careful with the decisions they make and how they affect their public persona. The corporate social responsibility of the Starbucks Corporation addresses the following issues: Starbucks’ commitment to the environment, Starbucks’ commitment to the employees, Starbucks’ commitment to consumers, discussions of ethical and unethical business behavior, and Starbucks ‘ commitment and response to shareholders. The following Corporate Social Responsibility of Starbucks Coffee few explain below are;
Commitment to the Environment.
The first way Starbucks has shown corporate social responsibility is through its commitment to the environment. To improve the environment, with a little push from the NGO, Starbucks’ first main goal was to provide more Fair Trade Coffee. What this means is that Starbucks will aim to only buy 100 percent responsibly grown and traded coffee. Not only does responsibly grown coffee help the environment, but it also benefits the farmers as well. Responsibly grown coffee means preserving energy and water at the farms.
In turn, this costs more for the company overall, but the environmental improvements are worth it. Starbucks and the environment benefit from this decision because it helps continue to portray a clean image. Another way to improve the environment directly through their stores is by “going green”. Their first attempt to produce a green store was in Manhattan. Starbucks made that decision to renovate a 15-year-old store. This renovation included replacing old equipment with more energy-efficient ones.
To educate the community, they placed plaques throughout the store explaining their new green elements and how they work. This new Manhattan store now conserves energy, water, materials, and uses recycled/recyclable products. Twelve stores total plan to be renovated and Starbucks has promised to make each new store LEED, meaning a Leader in Energy and Environmental Design.
LEED improves performance regarding energy savings, water efficiency, and emission reduction. Many people don’t look into environmentally friendly appliances because the upfront cost is always more. According to Starbucks, going green over time outweighs the upfront cost by a long shot. Hopefully, these new design elements will help the environment and get Starbucks ahead of their market.
Commitment to Consumers.
The second way Starbucks has shown corporate social responsibility is through their commitment to consumers. The best way to get the customers what they want is to understand their demographic groups. By doing research on Starbucks’ consumer demographics, they realized that people with disabilities are very important. The company is trying to turn stores into a more adequate environment for customers with disabilities.
A few changes include: lowering counter height to improve ease of ordering for people in wheelchairs, adding at least one handicap accessible entrance, adding disability etiquette to employee handbooks, training employees to educate them on disabilities, and by joining the National Business Disability Council. By joining the National Business Disability Council, Starbucks gains access to resumes of people with disabilities.
Another way Starbucks has shown a commitment to the consumers is by cutting costs and retaining loyal customers. For frequent, loyal customers, Starbucks decided to provide a loyalty card. Once a customer has obtained this card, they are given incentives and promotions for continuing to frequent their stores. Promotions include discounted drinks and free flavor shots to repeat visitors.
Economy talk:
Also, with the economy being at an all-time low, Starbucks realized that cheaper prices were a necessity. By simplifying their business practices, they were able to provide lower prices for their customers. For example, they use only one recipe for banana bread, rather than eleven!
It doesn’t end there either! Starbucks recognized that health is part of social responsibility. To promote healthier living, they introduced “skinny” versions of most drinks, while keeping the delicious flavor. For example, the skinny vanilla latte has 90 calories compared to the original with 190 calories. Since Starbucks doesn’t just sell beverages now, they introduced low-calorie snacks. Along with the snacks and beverages, nutrition facts were available for each item.
Also, one big way to cut costs was outsourcing payroll and Human Resources administration. By creating a global platform for its administration system, Starbucks is able to provide more employees with benefits. Plus, they are able to spend more money on pleasing customers, rather than on a benefits system.
Commitment and Response to Shareholders.
One way Starbucks has demonstrated its commitment and response to shareholder needs is by giving them large portions. By large portions, Starbucks is implying that they plan to pay dividends equal to 35% or higher of net income. For the shareholders, paying high dividends means certainty about the company’s financial well-being. Along with that, they plan to purchase 15 million more shares of stock, and hopefully, this will attract investors who focus on stocks with good results.
Starbucks made its commitment to shareholders obvious by speaking directly to the media about it. In 2004, Starbucks won a great tax break, but unfortunately, the media saw them as “money-grubbing”. Their CEO, Howard Shultz, made the decision to get into politics and speak to Washington about expanding health care and the importance of this to the company. Not only does he want his shareholders to see his commitment, but he wants all of America to be able to reap these benefits.
In order to compete with McDonald’s and keeping payout to its shareholders high, Starbucks needed a serious turnaround. They did decide to halt growth in North America but not in Japan. Shultz found that drinking coffee is becoming extremely popular for the Japanese. To show shareholders there is a silver lining, he announced they plan to open “thousands of stores” in Japan and Vietnamese markets.
Commitment to Employees.
The first and biggest way Starbucks shows their commitment to employees is by just taking care of their workers. For example, they know how important health care, stock options, and compensation are to people in this economy. The Starbucks policy states that as long as you work 20 hours a week you get benefits and stock options. These benefits include health insurance and contributions to the employee’s 401k plan.
Starbucks doesn’t exclude part-time workers, because they feel they are just as valuable as full-time workers. Since Starbucks doesn’t have typical business hours like an office job, the part-time workers help to work the odd shifts. Another way Starbucks shows its commitment to employees is by treating them like individuals, not just number 500 out of 26,000 employees. Howard Shultz, a CEO, always tries to keep humanity and compassion in mind.
When he first started at Starbucks, he remembered how much he liked it that people cared about him, so he decided to continue this consideration for employees. Shultz feels that the first impression is very important. On an employee’s first day, he lets each new employee know how happy he is to have them as part of their business, whether it is in person or through a video.
His theory is that making a good first impression on a new hire is similar to teaching a child good values. Through their growth, he feels each employee will keep in mind that the company does care about them. Shultz wants people to know what he and the company stand for, and what they are trying to accomplish.
Ethical/Unethical Business Behavior.
The last way Starbucks demonstrates corporate social responsibility is through ethical behavior and occasional unethical behavior. The first ethically positive thing Starbucks involves itself in is the NGO and Fair Trade coffee. Even though purchasing mostly Fair Trade coffee seriously affected their profits, Starbucks knew it was the right thing to do. They also knew that if they did it the right way, everyone would benefit, from farmers to the environment, to their public image.
In the fall of 2010, Starbucks chose to team up with Jumpstart, a program that gives children a head start on their education. By donating to literacy organizations and volunteering with Jumpstart, Starbucks has made an impact on the children in America, in a very positive way.
Of course, some negatives come along with the positives. Starbucks isn’t the “perfect” company like it may seem. In 2008, the Starbucks mobile app decided to close 616 stores because they were not performing very well. For Starbucks to close this many stores in one year, they had to battle many landlords due to the chain breaking lease agreements. Starbucks tried pushing for rent cuts but some stores did have to break their agreements.
Other thing:
On top of breaching lease agreements, Starbucks was not able to grow as much as planned, resulting in their future landlords were hurting as well. To fix these problems, tenants typically will offer a buyout or find a replacement tenant, but landlords are in no way forced to go with any of these options. These efforts became extremely time-consuming and costly, causing Starbucks to give up on many lease agreements.
As for Starbucks ethical behavior is a different story when forced into the media light. In 2008, a big media uproar arose due to them wanting to re-release their old logo for their 35th anniversary. The old coffee cup logo was basically a topless mermaid, which is Starbucks’ opinion is just a mythological creature, not a sex symbol.
Media critics fought that someone needed to protect the creature’s modesty. Starbucks found this outrageous. To end the drama and please the critics, they chose to make the image more modest by lengthening her hair to cover her body and soften her facial expression. Rather than ignoring the media concerns, Starbucks met in the middle to celebrate its 35th anniversary. Maybe you definitely understand above the information and case study of Corporate Social Responsibility of Starbucks Coffee.
Case Study in Corporate Social Responsibility of Coffee Starbucks!
Starbucks’ Entry into China: How to Starbucks Corporation is an American coffee company and coffeehouse chain? Market Research Coffee of Starbucks‘ Entry into China, Starbucks was founded in Seattle, Washington in 1971. As of November 2016, it operates 23,768 locations worldwide. Also, Starbucks considers the main representative of “second wave coffee”, initially distinguishing itself from other coffee-serving venues in the US by taste, quality, and customer experience while popularizing darkly roasted coffee. Since the 2000s, third-wave coffee makers have targeted quality-minded coffee drinkers with hand-made coffee based on lighter roasts, while Starbucks nowadays uses automated espresso machines for efficiency and safety reasons.
Here is the article to explain, Market Research Coffee of Starbucks’ Entry into China!
Starbucks locations serve hot and cold drinks, whole-bean coffee, Micro ground instant coffee known as VIA, espresso, caffe latte, full- and loose-leaf teas including Teavana tea products, Evolution Fresh juices, Frappuccino beverages, La Boulange pastries, and snacks including items such as chips and crackers, the article defines how to Entry into China; some offerings (including their annual fall launch of the Pumpkin Spice Latte) are seasonal or specific to the locality of the store. Also, many stores sell pre-packaged food items, hot and cold sandwiches, and drinkware including mugs and tumblers; select “Starbucks Evenings” locations offer beer, wine, and appetizers. Starbucks-brand coffee, ice cream, and bottled cold coffee drinks also sold at grocery stores, Market Research.
Starbucks first became profitable in Seattle in the early 1980s. Despite an initial economic downturn with its expansion into the Midwest and British Columbia in the late 1980s, the company experienced revitalized prosperity with its entry into California in the early 1990s. The first Starbucks location outside North America opened in Tokyo in 1996; overseas properties now constitute almost one-third of its stores. The company opened an average of two new locations daily between 1987 and 2007. On December 1, 2016, Howard Schultz announced he would resign as CEO effective in April 2017 and will replace by Kevin Johnson. Johnson assumed the role of CEO on April 3, 2017.
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Starbucks has developed an internationalization strategy to enable the company to open stores and franchises in countries across the globe. Market research is at the core of many of the market entry strategies Starbucks is employing. Also, This case study will consider how market research has strengthened Starbucks ‘ entry into the Chinese markets.
Market Research: Starbucks International Business Strategy.
Starbucks entry into emerging and developed markets inform by market research.
Starbucks conducted market research to enable a deeper understanding of the Chinese markets, and the way that capitalism functions in the People’s Republic of China (PRC). Also, China contains a number of distinct regionally-based markets, a factor that makes market research crucial to launching new stores and franchises in China. A deep understanding of intellectual property right laws is critical to successful market entry in emerging markets.
Starbucks articulate an entry strategy that would address the dominant Chinese markets and that was design to as inoffensive concerning the Chinese culture as possible. Instead of taking the conventional approach with advertising and promotions — which could have seen by potential Chinese consumers as attacking their culture of drinking tea –, they position stores in high-traffic and high visibility locations.
Moreover, Starbucks very deliberately began to bridge the gap between the tea-drinking culture and the coffee drinking culture by introducing beverages in the Chinese stores that included local tea-based ingredients. Also, Market research supports the development of Starbucks’ competitive internationalization strategy. The overarching competitive strategy was to create an aspirational brand. Prospective Starbucks customers in China could look forward to what Starbucks refers to as The Third Place experience.
The Starbucks experience conveys status that is highly appealing to those aspiring to Western standards or to climbing the ladder in their own culture. Also, Market research indicates that brand consistency is important to Starbucks’ customers. When Starbucks opens a new store in an emerging market like China, the best baristas are sent for the launch and to conduct training of the baristas who will carry on when once the launch has completed.
Market Research Addresses the Emerging Market Political Environment.
Market research help to identify the attributes of capitalism in the Peoples’ Republic of China (PRC). Also, The middle class in China has rapidly accepted Western standards as an acceptable standard of the bourgeois class. Moreover, Chinese consumers accept purchases of luxury goods as a means of pursuing quality lifestyles. Under the influence of Communism, the Chinese considered conspicuous consumption to be decadent or indicative of a lack of a nationalistic orientation.
Capitalism in The Peoples’ Republic of China supports the status-conscious population that manifests its interest in keeping up with the Jones’ through excessive luxury consumption. The Chinese government’s support of luxury consumption is particularly apparent in certain cities in China. The second-tier city of Chengdu serves as a market research case study in Chinese governmental support of capitalism.
Chengdu promotes capitalism at a level evidenced by the presence of stores like Louis Vuitton and Cartier in its downtown. According to the Chengdu Retail Industry Association. Also, The stores selling 80 percent of international luxury brands are located in Chengdu. And the city ranks just third in luxury sales after Beijing and Shanghai. It is easy to see how this national orientation toward luxury goods extends to the Starbucks mobile app brand. Which is characterized by a certain degree of exclusivity.
Market Research Reveals Attributes of Emerging Market Legal Environment.
It is essential to understand the intellectual property rights laws and licensing issues when planning market entry in an emerging market. Also, Starbucks has used intellectual protection laws to prevent its business model and brand from being illegally copied in China.
Four years after opening its first café in China – in 1999 – Starbucks had registered all its major trademarks in China. A number of Chinese businesses have overstepped legal bounds in their efforts to mimic the successful Starbucks model.
The organization and structure of Starbucks’ global operations were informed by market research. The organizational strategies employ by Starbucks were derive from Starbucks’ experiences in other emerging markets support an early recognition that China is not one homogeneous market. Also, The organizational strategies employed by Starbucks addressed many Chinese markets.
The culture dominant in northern China differs radically from the culture in the eastern parts of China. As reflected in the differences in consumer spending power inland which is considerably lower than the spending power in coastal cities.
Starbucks market area:
The complexity of the Chinese markets led to regional partnerships to aid in Starbucks’ plans for expansion in China; the partnerships provided consumer insight into Chinese tastes and preferences that helped Starbucks localize to the diverse markets.
Northern China: Joint venture with Beijing Mei Da coffee company
Eastern China: Partnered with Taiwan-based Uni-President
Southern China: Worked with Maxim’s Caterers in Hong Kong
Starbucks’ competitive advantage is built on product, service, and brand attributes. Many of these have shown through market research to important to Starbucks’ customers. Western brands have an advantage over local Chinese brands. Because of a commonly accepted reputation for consistently higher quality products and services. A factor that establishes the Western brands as premium brands in the minds of consumers.
When Western brands attempt to increase market share by cutting prices. They erode the very competitive strategy that gives them an edge in consumer perceptions. Moreover, Western brands cannot effectively maintain a lower pricing strategy than local Chinese brands. Maintain brand integrity in new markets. Also, Starbucks’ global brand is valuable, and maintaining brand integrity is a fundamental focus in Starbucks’ internationalization efforts.
Starbucks brand ambassadors:
The baristas in China acted as brand ambassadors to help embed the Starbucks culture in the new market. Ensure, that high standards for customer service and product quality maintain at each new and established local store. Also, Starbucks’ ability to address changing markets hone by effective and ongoing market research. Establishing and maintaining a global Starbucks brand does not mean having a global platform or uniform global products.
Their marketing strategy in China was base on customization in response to diverse Chinese consumer target segmentation. Also, Starbucks created extensive consumer taste profile analyses that are sufficiently agile to enable them to change with the market. And to create an attractive East meets West product mix. Moreover, the localization effort is sufficiently flexible to permit each store, the flexibility to choose from a wide beverage portfolio.
Market Research Coffee of Starbucks’ Entry into China!
The Starbucks Entry to China; Starbucks is one of the largest coffee chains in the World. A Case Study of Starbucks Entry to China, so, the company has a unique style and atmosphere in its coffee houses. We chose China because it is the world’s most populous country with over 1.3 billion people live there and the second-largest country by land area. After 1978, the country’s economy underwent dramatic changes which involved such relief as permission for entrepreneurs to start up. Their own business and opening the country for foreign investment. Starbucks managers decided to take advantage of such an opportunity to expand their business into the new region. To evaluate the Chinese market the company used several steps of analysis. Also learn, What is the Growth Strategy for Case Study Starbucks? Case Study of Starbucks Entry to China with Marketing Strategy!
Case Study on Starbucks Entry to China with Marketing Strategy!
The following case study explain below are;
Who might be interested in buying coffee in China?
To introduce the Starbucks brand the company begun to distribute coffee for free to guests in several Beijing’s hotels in 1994. This initiative indicated that there was a strong demand for their products, particularly among foreigners in China. Local people, who strived to imitate the Western lifestyle. Also showed interest in coffee drinking. Also, the young generation was enchantment by brands and products from the West. These factors led Starbuck’s managers to learn and understand more about the business climate in that Asia country.
Next step for Starbucks:
Starbucks was to determine the financial and economic conditions of China. The company’s managers were aware that the Chinese Gross Domestic Product (GDP) continuously grew approximately 9 % on average and a GDP per capita was US$3.800. All these factors led to the rising income of the middle class. That was an undoubted advantage for entering the Chinese market for Starbucks.
Third level of screening:
At the third level of screening, Starbucks faced political restrictions. China is a highly bureaucratic country with difficult processes of getting permissions and sanctions to start and run the business. To avoid these challenges the company built and maintain. The firm relationship with Chinese local partners as well as government officials. Also, Starbucks Soong Ching-Ling Foundation received $5 million donations from Starbucks to support education in the country’s poorest regions.
Fourth level of screening:
The fourth level of screening involved socio-cultural forces. It showed the biggest challenges for Starbucks, because of the old tradition of tea drinking in China. In the beginning, managers didn’t know how to accustomed Chinese to drink and appreciate coffee. To acquaint employees and Chinese executives with coffee drinking experience Starbucks provided different training programs for them in which they learned more about coffee and Starbucks’ culture. The same way the company taught customers about different flavors and types of coffee. Another aspect was Chinese shopping behavior which was different from the US market. People in China spent the main slice of their monthly budget on food. This also led to success for the company.
Fifth level of screening:
The fifth level of China screening was focused on competitive forces. As we mentioned before China is a tea country and the share of coffee was low. Little or no competition for Starbucks was considered as an advantage. Chinese people were familiar only with one international brand which was Nestlé’s Nescafe. However, Nescafe is not a coffee house like Starbucks. As regards local competitions, it was a well-known Chinese brand Li Shen and Japanese brand Zhen Gou Coffee.
Starbucks Entry to Chinese Market!
“Starbucks Entry to China” Although Starbucks encountered several challenges in the process of entering the Chinese market, with their case study. They had successfully expanded its business in over 20 large or medium-sized cities of China and opened about 560 storefronts in these cities by 2012. The astonishing achievement owes to its careful marketing assessment and various marketing strategies in different periods. These strategies mainly refer to 2 different modes of entering foreign markets: licensing agreement and joint venture.
Licensed agreement of Starbucks!
In 1998, Starbucks adopted the mode of licensing agreement to license its Chinese partner (Beijing Mei Da), a wholesale distribution company to supply coffee beans to some selected hotels and restaurants. Starbucks realized that local partners can have the best understanding of local cultures customers and some related laws. and they have already established a good relationship with the local government. So it was easy to obtain the permissions and sanctions required to start and operate the business in a bureaucratic country like China. Moreover, Starbucks could also maintain a high standard on the control of production, and achieve an ideal revenue in the Chinese market. So licensing agreement was an optimal option for Starbucks to enter into a booming China’s market in the mid-1990s.
A joint venture of Company!
Starbucks formed a joint venture with different partners at different times when it entered the Chinese market. Starbucks achieved considerable knowledge about the Chinese market conditions and then began to open Starbucks stores in China. The company adopted a strategy of having three different partners to enter different regions in the Chinese market. In September 1998, Starbucks entered China under a licensing agreement with Beijing Mei Da Coffee Co.Ltd; which was their first partner. In 1999, Starbucks formed a joint venture with the Taiwan-based Uni-President Group and opened stores in Shanghai. In 2000, Starbucks entered into a joint venture with Mei-Xin International Ltd, also called “Coffee Concepts Ltd”. It managed the operations in the region of Hong Kong, Shenzhen, Macau, Guangzhou, and other parts of southern China.
There are some advantages for Starbucks with a joint venture to enter the Chinese market. First of all, Starbucks choose a good local partner to form a joint venture which can help it better understand the local laws and negotiate better with the authorities. It is beneficial for Starbucks to obtain the required permissions and sanctions so that it can be opened easily. Secondly, local partners know the Chinese market condition better than Starbucks; therefore, it is an effective and efficient method for Starbucks to adopt a few localization strategies to satisfy different regions of customers. Last but not least, the joint venture is a good way for Starbucks to reduce operation expenditure, and it also helps to reduce risks in the Chinese market.
Marketing and Pricing Strategies!
“We want our customers to recognize that we’re not coming to China just to make money, we are coming to China to build an enduring company that they can trust and they can view as one of their own”. – Howard Schultz.
“Starbucks Entry to China” Starbucks modified its menu and tried to localize its brand name by selling some food items. According to the choice of the Chinese people and selling a different kind of tea. They also changed their marketing and pricing strategies based on the needs of the Chinese market.
When Starbucks started in China, one of the biggest challenges it faced was to make the consumers accustomed to drinking and appreciating coffee. According to analysts, compared to other countries in which Starbucks operated this task was more difficult in China because of the age-old tradition of tea drinking in the country, where coffee was seen as nothing less than a kind of Western invasion.
Other Strategies:
Starbucks, like any other multinational company, had to go through the dilemma of choosing whether to follow Chinese traditional tea or take a big risk of following Starbucks’ culture of promoting premium coffee. The company chose to opt for its own culture and sell the idea of the ‘Coffee drinking experience’. Starbucks started by projecting the stores as a place for social gathering. The stores were also larger in area than the ones in the US, as the idea was to make the customers feel at home, relax and spend more time there.
Similarly, the company took initiatives to teach the customers about the different types of coffees and how to distinguish between flavors. The customers were given some samples to smell as well as sip and then describe their experience. At times if the customers did not enjoy the sample, the store employees asked them to come back again later for another ‘tasting’ session or they offered them some other drink that they enjoyed. They also spoke to the customers about the positive effects of drinking coffee. For example, they spoke about how drinking coffee helped to change their mood and how it was good to have coffee in the morning.
Localization Strategies of Starbucks!
Normally Starbucks follows a high standard technique to maintain its stores worldwide. But in the case of China, it adopted some strategies influenced by local culture and market conditions to gain Chinese people’s trust and confidence. Small changes were made in the texture, menu, and store layout just to match with Chinese culture and food preferences. Within a few months of opening the coffee stores.
The company started observing that coffee culture is different for Chinese people than in the US. Where people are very busy in their daily lives and they just grab their coffee and leave. But in China coffee stores were more like a place for social gathering. Where they can sit and talk for hours with their friends and families. Therefore, according to the market needs they had to square bigger stores. In the US the normal size of Starbucks store is about 1,200 to 1,500 square feet whereas in China. They started opening stores bigger than 2,000 square feet.
Starbucks Offer:
It was observed that the Chinese also like to have some food along with their drink. In response to that Starbucks started offering some popular Chinese foods like curry puffs, moon cakes, and traditional cookies. Starbucks incorporates another localize strategy in every country they go, by modifying the name of Starbucks to suit the local language.
Like in China they Change the name to ‘Xing Bake’ where ‘Xing’ represents ‘Star’ and ‘Bake’ was pronounce as ‘bucks’. Starbucks accepted the reality that maximum people in China like tea more than coffee though the young generation is more likely to go for coffee. So they decided the different menu for different stores in China. In Shanghai and westernized, the stores a standard menu where they served coffee. And in Beijing stores, they introduced different tea-based drinks like coffee-flavored milk tea, green tea-flavored frappuccino, etc. to attract more people.
Starbucks Entry to China; Promotional and Pricing Strategies!
To promote themselves in China the company chose a different way. It mostly depended on the people to spread goodwill through word of mouth than commercial advertisements and media products. Their knowledge, organized way of business left a good impression on customers’ mind. The customers were willing to pay a higher price for the brand name. As a result young, urban Chinese, who solely start to associate visiting Starbucks or being seen with a Starbucks cup, as a symbol of social status.
The tire to build their reputation in terms of, product quality, customer service, employee relationship, etc. To enhance the name of “Starbucks” they had different strategies. From professional to students they had different ways to attract them. They started selling the latest DVD’s, free access to the Internet. And, also use to provide different wireless services so people can feel it like their 3rd home.
Highest quality coffee:
Starbucks uses the highest quality coffee beans from ideal coffee-producing climates. They helped Chinese farmers, made good relationships with their workers. They also made a good reputation in the supply market. As a result of good reputation, good quality, and high price. They were able to attract people and also maintain their luxury appeal. The company price its coffees at around US$ 6 for a cup. Which was considering analysts as too costly? Even though it was too costly by Chinese standards but they decide to continue with it because in China. A high price was directly associating with quality.
Case Study of Starbucks Entry to China with Marketing Strategy.
Goal Commitment? What affects the strength of commitment to goals? How does this affect goal attainment? Goal commitment is our determination to pursue a course of action that will lead to the goal we aspire to achieve (Bandura, 1986). The strength of goal commitment will affect how hard one will try to attain the goal. Goal commitment affects by the properties described thus far: difficulty and specificity. For example, when goals are too difficult, commitment declines, followed by a drop-off in performance (Locke & Latham, 1990).
What is Goal Commitment?
“Degree to which a person determine in achieving a desired (or required) goal.”
Goals are central to current treatments of work motivation, and goal commitment is a critical construct in understanding the relationship between goals and task performance. Despite this importance, there is confusion about the role of goal commitment, and only recently has this key construct received the empirical attention it warrants. This meta-analysis, based on 83 independent samples, updates the goal commitment literature by summarizing the accumulated evidence on the antecedents and consequences of goal commitment. Using this aggregate empirical evidence, the role of goal commitment in the goal-setting process is clarified and key areas for future research identifies.
Commitment also affect by goal intensity, goal participation, and peer influence.
Goal Intensity:
Commitment is related to goal intensity, or the amount of thought or mental effort that goes into formulating a goal and how it will be attained (Locke & Latham, 1990). This is similar to goal clarification because when we clarify a goal; we involve in a conscious process of collecting information about the goal and task and our ability to attain it (Schutz, 1989).
In a study of fifth graders, Henderson (cited in Locke & Latham, 1990) found that students who formulated a greater number of reading purposes with more detail and elaboration attained their goals to a greater extent than did students with superficial purposes. Although there was no difference in IQ scores of the groups; the students who set more goals with elaboration were better readers. It stands to reason that the more thought that gives to developing a goal; the more likely one will commit to the goal.
Goal Participation:
How important, motivationally, is it for people to participate in goal setting? This is an important question because goals are often assigned by others at home, school, and work. The state imparts curriculum standards or goals to teachers, who in turn impose them on students. A sales manager may assign quotas to individual salespersons. Letting individuals participate in setting goals can lead to greater satisfaction. Nevertheless, telling people to achieve a goal can influence self-efficacy; because it suggests they are capable of achieving the goal (Locke & Latham, 1990).
To investigate the effects of assigned and self-set goals; Schunk (1985) conducted a study of sixth-grade students with LD who were learning subtraction. One group was assigned goals (e.g., “Why don’t you try to do seven pages today”). A second group set goals themselves (e.g., “Decide how many pages you can do today”). A third group worked without goals. Students who self-set goals had the highest self-efficacy and math scores. Both goal groups demonstrated higher levels of self-regulation than the control group without any goals.
Nevertheless, Locke and Latham (1990) concluded that self-set goals are not consistently more effective than assigned goals in increasing performance. The crucial factor in assigned goals is acceptance. Once individuals become involved in a goal, the goal itself becomes more important than how it was set or whether it was imposed. Because, at work and in schools, goals are often assigned by others; the assigned goals must accept by participants. Joint participation in goal setting by teachers and students may increase the acceptance of goals.
Peer Influence:
One factor where teachers might be influential in promoting goal acceptance and commitment is peer influence. Strong group pressures are likely to increase commitment to goals (Locke & Latham, 1990). This group cohesiveness is more often found on athletic teams. Obviously, the coach wants a strong commitment to the team goals. In the classroom, group goals may aid the commitment of students working in cooperative learning groups and thus lead to a higher quality of work.
An Entrepreneur will need to do if you want to commit towards achievement:
The following achievement below are;
Make sure that your business goals are achievable.
The biggest enemy of achieving business goals is setting up unrealistic goals. For example, if you set the goal to increase sales by 500%; although the growth of the industry is lower than 10%, surely, 500% would be unrealistic.
If you notice that some goal cannot be achieved, simply adjust it in the line with reality. For example, use a 15% increasing in sales instead of 500%. The goal of 15% would be much more realistic, and certainly; it will be as imperative for you and your business to achieve it because it is above-average in the industry.
Use specific sentences in your business goals.
Imagine the goal from our example above: increasing sales in the future. For how much we will need to increase the sales? At which time we will need to increase the sales? This is a really confusing and undetermined goal. If you don’t know what to achieve and when to achieve it, you will probably not even try to achieve it.
Write your business goals on the paper.
Different scientific researches prove that if you put something on a paper; your commitment to that something is will be higher. In his book Influence; The Psychology of Persuasion, Dr. Robert Cialdini gives an example from the Korean war in which the Chinese soldiers in the camps where he held prisoners (soldiers) were looking for written statements that communism is better than the US system to write on the paper. Thus a long time they were committed to his own statement in which basically they did not believe. If your business goal writes on paper they will be in a group with a higher commitment than the goals that remain only in our head.
Determine the activities that must accomplish.
Knowing the activities that must implement to achieve your business goals in advance will increase the level of commitment to the goal. Therefore, once you have the goal of the paper, list the activities.
Assign responsible for each activity.
At the end of each activity assign responsibility for implementations. In such a way, the commitment will transfer to the employees or your team members; and, at the same time will assure achievement.
The strategy statement of a firm sets the firm’s long-term strategic direction and broad policy directions. It gives the firm a clear sense of direction and a blueprint for the firm’s activities for the upcoming years. The main constituents of a strategic statement are as follows:
Strategic Intent
An organization’s strategic intent is the purpose that it exists and why it will continue to exist, providing it maintains a competitive advantage. Strategic intent gives a picture of what an organization must get into immediately in order to achieve the company’s vision. It motivates the people. It clarifies the vision of the vision of the company.
Strategic intent helps management to emphasize and concentrate on the priorities. Strategic intent is, nothing but, the influencing of an organization’s resource potential and core competencies to achieve what at first may seem to be unachievable goals in the competitive environment. A well expressed strategic intent should guide/steer the development of strategic intent or the setting of goals and objectives that require that all of the organization’s competencies be controlled to a maximum value.
Strategic intent includes directing organization’s attention on the need of winning; inspiring people by telling them that the targets are valuable; encouraging individual and team participation as well as the contribution, and utilizing intent to direct allocation of resources.
Strategic intent differs from strategic fit in a way that while strategic fit deals with harmonizing available resources and potentials to the external environment, strategic intent emphasizes on building new resources and potentials so as to create and exploit future opportunities.
Vision Statement
A vision statement identifies where the organization wants or intends to be in future or where it should be to best meet the needs of the stakeholders. It describes dreams and aspirations for future. For instance, Microsoft’s vision is “to empower people through great software, any time, any place, or any device.” Wal-Mart’s vision is to become the worldwide leader in retailing.
A vision is the potential to view things ahead of themselves. It answers the question “where we want to be”. It gives us a reminder about what we attempt to develop. A vision statement is for the organization and its members, unlike the mission statement which is for the customers/clients. It contributes to effective decision-making as well as effective business planning. It incorporates a shared understanding about the nature and aim of the organization and utilizes this understanding to direct and guide the organization towards a better purpose. It describes that on achieving the mission, how the organizational future would appear to be.
Mission Statement
The mission statement is the statement of the role by which an organization intends to serve its stakeholders. It describes why an organization is operating and thus provides a framework within which strategies are formulated. It describes what the organization does (i.e., present capabilities), who all it serves (i.e., stakeholders) and what makes an organization unique (i.e., the reason for existence).
A mission statement differentiates an organization from others by explaining its broad scope of activities, its products, and technologies it uses to achieve its goals and objectives. It talks about an organization’s present (i.e., “about where we are”). For instance, Microsoft’s mission is to help people and businesses throughout the world to realize their full potential. Wal-Mart’s mission is “To give ordinary folk the chance to buy the same thing as rich people.” Mission statements always exist at the top level of an organization, but may also be made at various organizational levels. Chief executive plays a significant role in the formulation of a mission statement. Once the mission statement is formulated, it serves the organization in long run, but it may become ambiguous with organizational growth and innovations.
In today’s dynamic and competitive environment, the mission may need to be redefined. However, care must be taken that the redefined mission statement should have original fundamentals/components. The mission statement has three main components a statement of mission or vision of the company, a statement of the core values that shape the acts and behavior of the employees, and a statement of the goals and objectives.
Goals and Objectives
A goal is a desired future state or objective that an organization tries to achieve. Goals specify in particular what must be done if an organization is to attain mission or vision. Goals make the mission more prominent and concrete. They coordinate and integrate various functional and departmental areas in an organization.
Objectives: Objective, in general, indicates a place where you want to reach. In organizational literature, it means the aim which an organization tries to achieve. Objectives are generally in plural form. Objectives are predetermined; they provide clear direction to the activities and results to be obtained from the planning process. Objectives must be SMART (Specific, measurable, achievable, realistic and timely). Objectives must be clearly defined so that the works become goal-oriented and the unproductive and unsystematic tasks can be avoided.
Goals: A Goal is simply something that somebody wants to achieve. The synonyms of goal are aim, ambition, purpose, target and objective. Simply speaking, goal refers to the purpose towards which the efforts are made or endeavors are directed. A goal has a time-frame which is generally long term. So, it’s a long term plan.
At this stage, it is important to differentiate between the terms objective and goal, because the words, objective and goals seem to be synonymous, but, in fact, they are not. It does not matter much which word you call goal and which word you call objective if you are consistent in your own use and understand its relevance or applicability. However, if there are words in English that are confusing, especially to the students, objective and goal are the ones among them. It’s, therefore, important to understand them so as to avoid the confusion.
When you have something you want to accomplish, it is important to set both goals and objectives. Once you learn the difference between goals and objectives, you will realize that how important it is that you have both of them. Goals without objectives can never be accomplished while objectives without goals will never get you to where you want to be. The two concepts are separate but related and will help you to be who you want to be.
What is Strategic Management? Strategic management involves the formulation and implementation of the major goals and initiatives taken by a company’s top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes. Strategic management can also define as a bundle of decisions and acts which a manager undertakes and which decides the result of the firm’s performance.
Here explains read and learn; What is Strategic Management? Meaning and Definition.
Strategic management provides overall direction to the enterprise and involves specifying the organization’s objectives, developing policies and plans designed to achieve these objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision making in the context of complex environments and competitive dynamics. Strategic management is not static; the models often include a feedback loop to monitor execution and inform the next round of planning.
Michael Porter identifies three principles underlying strategy: creating a “unique and valuable market position”, making trade-offs by choosing “what not to do”, and creating “fit” by aligning company activities with one another to support the chosen strategy. Dr. Vladimir Kvint defines strategy as “a system of finding, formulating, and developing a doctrine that will ensure long-term success if followed faithfully.”
The corporate strategy involves answering a key question from a portfolio perspective: “What business should we be in?” Business strategy involves answering the question: “How shall we compete in this business?” In management theory and practice, a further distinction is often made between strategic management and operational management. Operational management is concerned primarily with improving efficiency and controlling costs within the boundaries set by the organization’s strategy.
Definition of Strategic Management:
Strategic management involves the formulation and implementation of the major goals and initiatives taken by a company’s top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes.
The strategy is defined as;
“The determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.”
Strategies are established to set direction, focus effort, define or clarify the organization, and provide consistency or guidance in response to the environment. As well as, Strategic management involves the related concepts of strategic planning and strategic thinking. It is analytical and refers to formalized procedures to produce the data and analyses used as inputs for strategic thinking; which synthesizes the data resulting in the strategy. Strategic planning may also refer to control mechanisms used to implement the strategy once it determines.
In other words, strategic planning happens around strategic thinking or strategy making activity. Strategic management often describes as involving two major processes: formulation and implementation of a strategy. While described sequentially below, in practice the two processes are iterative and each provides input for the other. Also, Strategic Management is all about identification and description of the strategies; that managers can carry to achieve better performance and a competitive advantage for their organization. An organization is said to have a competitive advantage if its profitability is higher than the average profitability of all companies in its industry.
Explanation;
The manager must have a thorough knowledge and analysis of the general and competitive organizational environment to make the right decisions. They should conduct a SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they should make the best possible utilization of strengths, minimize the organizational weaknesses, make use of arising opportunities from the business environment and shouldn’t ignore the threats.
Strategic management is nothing but planning for both predictable as well as unfeasible contingencies. It applies to both small as well as large organizations as even the smallest organization faces competition; and, by formulating and implementing appropriate strategies; they can attain sustainable competitive advantage.
It is a way in which strategists set the objectives and proceed about attaining them. It deals with making and implementing decisions about the future direction of an organization. They help us to identify the direction in which an organization is moving.
Strategic management is a continuous process that evaluates and controls the business and the industries in which an organization involve; evaluates its competitors and sets goals and strategies to meet all existing and potential competitors; and then reevaluates strategies regularly to determine how it has been implemented and whether it was successful or does it needs replacement.
What is Strategic Management? Meaning and Definition.
More things;
Strategic Management gives a broader perspective to the employees of an organization; and, they can better understand how their job fits into the entire organizational plan; how it co-relate to other organizational members. It is nothing but the art of managing employees in a manner that maximizes the ability to achieve business objectives. The employees become more trustworthy, more committed and satisfied; as they can co-relate themselves very well with each organizational task.
They can understand the reaction of environmental changes in the organization; and, the probable response of the organization with the help of strategic management. Thus the employees can judge the impact of such changes on their job and can effectively face the changes. Also, the managers and employees must appropriately do appropriate things. They need to be both effective as well as efficient.
