Services Marketing Essays

Services Marketing Essays Services Marketing Essay Services Marketing Essay Australasian Marketing Journal 18 (2010) 41–47 Contents lists available at ScienceDirect Australasian Marketing Journal journal homepage: www. elsevier. com/locate/amj How the local competition defeated a global brand: The case of Starbucks Paul G. Patterson *, Jane Scott, Mark D. Uncles School of Marketing, Australian School of Business, University of NSW, Sydney, NSW 2052, Australia r t i c l e i n f o a b s t r a c t Americanised the coffee tradition. Keywords: Service brands Service quality Global branding International business Starbucks Coffee The astounding growth and expansion of Starbucks is outlined, both on a global scale and within Australia. The focus then shifts to the abrupt closure of three-quarters of the Australian stores in mid 2008. Several reasons for these closures are described and examined, including that: Starbucks overestimated their points of differentiation and the perceived value of their supplementary services; their service standards declined; they ignored some golden rules of international marketing; they expanded too quickly and forced themselves upon an unwilling public; they entered late into a highly competitive market; they failed to communicate the brand; and their business model was unsustainable. Key lessons that may go beyond the speci? cs of the Starbucks case are the importance of: undertaking market research and taking note of it; thinking globally but acting locally; establishing a differential advantage and then striving to sustain it; not losing sight of what makes a brand successful in the ? rst place; and the necessity of having a sustainable business model. O 2009 Australian and New Zealand Marketing Academy. Published by Elsevier Ltd. All rights reserved. 1. Introduction ‘‘Shunned Starbucks in Aussie exit† (BBC News, 4 August 2008) then shifts focus to describe the extent of the store closures in Australia, before offering several reasons for the failure and lessons that others might learn from the case. 2. Background ‘‘Weak coffee and large debt stir Starbucks’ troubles in Australia† (The Australian, 19 August 2008) ‘‘Memo Starbucks: next time try selling ice to Eskimos† (The Age, 3 August 2008) ‘‘Taste of defeat for the mugs from Starbucks† (Sydney Morning Herald, 31 July 2008) ‘‘Coffee culture grinds Starbucks’ Australian operation† (Yahoo News, 3 August 2008) When the announcement was made in mid 2008 that Starbucks would be closing nearly three-quarters of its 84 Australian stores there was mixed reaction. Some people were shocked, others were triumphant. Journalists used every pun in the book to create a sensational headline, and it seemed everyone had a theory as to what went wrong. This case outlines the astounding growth and expansion of the Starbucks brand worldwide, including to Australia. It * Corresponding author. Tel. : +61 2 9385 1105. E-mail addresses: p. [emailprotected] edu. au (P. G. Patterson), [emailprotected] com. au (J. Scott), m. [emailprotected] edu. au (M. D. Uncles). Founded in 1971, Starbucks’ ? rst store was in Seattle’s Pike Place Market. By the time it went public in 1992, it had 140 stores and was expanding at a breakneck pace, with a growing store count of an extra 40–60% a year. Whilst former CEO Jim Donald claimed that ‘‘we don’t want to take over the world†, during the 1990s and early 2000s, Starbucks were opening on average at least one store a day (Palmer, 2008). In 2008 it was claimed to be opening seven stores a day worldwide. Not surprisingly, Starbucks is now the largest coffee chain operator in the world, with more than 15,000 stores in 44 countries, and in 2007, accounted for 39% of the world’s total specialist offee house sales (Euromonitor, 2008a). In North America alone, it serves 50 million people a week, and is now an indelible part of the urban landscape. But just how did Starbucks become such a phenomenon? Firstly, it successfully Americanised the European coffee tradition – something no other coffee house had done previously. Before Starbucks, coffee in its current form (latte, frappacino, mocha, etc. ) was alien to most US consumers. Secondly, Starbucks did not just sell coffee – it sold an experience. As founding CEO Howard Schultz explained, ‘‘We are not in the coffee business serving people, we’re in the people business serving coffee† (Schultz and Yang, 1997). This epitomised the emphasis on customer service such as making eye contact and greeting each customer within 5 seconds, 1441-3582/$ see front matter O 2009 Australian and New Zealand Marketing Academy. Published by Elsevier Ltd. All rights reserved. doi:10. 1016/j. ausmj. 2009. 10. 001 42 P. G. Patterson et al. / Australasian Marketing Journal 18 (2010) 41–47 leaning tables promptly and remembering the names of regular customers. From inception, Starbucks’ purpose was to reinvent a commodity with a sense of romance, atmosphere, sophistication and sense of community (Schultz and Yang, 1997). Next, Starbucks created a ‘third place’ in people’s lives – somewhere between home and work where they could sit and relax. This was a novelty in the US where in many small towns cafe culture consisted of ? lter coffee on a hot plate. In this way, Starbucks positioned itself to not only sell coffee, but also offer an experience. It was conceived as a lifestyle cafe. The establishment of the cafe as a social hub, with comfortable chairs and music has been just as important a part of the Starbucks brand as its coffee. All this came with a premium price. While people were aware that the beverages at Starbucks were more expensive than at many cafes, they still frequented the outlets as it was a place ‘to see and be seen’. In this way, the brand was widely accepted and became, to an extent, a symbol of status, and everyone’s must-have accessory on their way to work. So, not only did Starbucks revolutionise how Americans drank coffee, it also revolutionised how much people were prepared to pay. Consistency of product across stores, and even national boundaries, has been a hallmark of Starbucks. Like McDonald’s, Starbucks claims that a customer should be able to visit a store anywhere in the world and buy a coffee exactly to speci? cation. This sentiment is echoed by Mark Ring, CEO of Starbucks Australia who stated ‘‘consistency is really important to our customers . . . a consistency in the product . . . the overall experience when you walk into a cafe . . the music . . . the lighting . . . the furniture . . . the person who is working the bar†. So, whilst there might be slight differences between Starbucks in different countries, they all generally look the same and offer the same product assortment. One way this is ensured is by insisting that all managers and partners (employees) undergo 13 weeks of training – not just to learn how to make a coffee, but to understand the nuances of the Starbucks brand (Karolefski, 2002) and how to deliver on its promise of a service experience. The Starbucks formula also depends on location and convenience. Starbucks have worked under the assumption that people are not going to visit unless it’s convenient, and it is this assumption that underlies their highly concentrated store coverage in many cities. Typically, clusters of outlets are opened, which has the effect of saturating a neighbourhood with the Starbucks brand. Interestingly, until recently, they have not engaged in traditional advertising, believing their large store presence and word-ofmouth to be all the advertising and promotion they need. Starbucks’ management believed that a distinctive and memorable brand, a product that made people ‘feel good’ and an enjoyable delivery channel would create repeat business and customer loyalty. Faced with near-saturation conditions in the US – by 2007 it commanded 62% of the specialist coffee shop market in North America (Table 1) – the company has increasingly looked overseas for growth opportunities. As part of this strategy, Starbucks opened its ? rst Australian store in Sydney in 2000, before expanding elsewhere within New South Wales and then nationwide (albeit with 0% of stores concentrated in just three states: NSW, Victoria and Queensland). By the end of 2007 Starbucks had 87 stores, enabling it to control 7% of the specialist coffee shop market in Australasia (Table 1). By 2008, consumer awareness of Starbucks in Australia was 90% (Shoebridge, 2008), with each outlet selling, on average, double the number of coffees (270 a day) than the res t of Australia’s coffee shops (Lindhe, 2008). 3. Expansion into Asia Starbucks currently operates in 44 markets and even has a small presence in Paris – birthplace and stronghold of European cafe culture. Beyond North America, it has a very signi? ant share of the specialist coffee shop market in Western Europe, Asia Paci? c and Latin America (Table 1) and these regions make strong revenue contributions (Table 2). It is in Asia that they see the most potential for growth as they face increasing competitive pressure in their more traditional markets. Half the international stores Starbucks plans to operate in the next decade will be in Asia (Euromonitor, 2006; Browning, 2008). Indeed, Starbucks has done well in international markets where there has not traditionally been a coffee drinking culture, namely Japan, Thailand, Indonesia and China. In effect it has been responsible for growing the category in these markets. The ? rst Starbucks outside the US opened in Tokyo in 1996, and since then, Starbucks’ Japanese stores have become twice as profitable as the US stores. Unsurprisingly then, Japan is Starbucks’ best performing overseas market outside North America. More than 100 new stores open each year in Japan, and coffee is now more popular than tea in terms of both volume and value (Lee, 2003; see also Uncles, 2008). As opposed to their entry into the Australian market, Starbucks made small changes to its formula for the Japanese market; for example, the invention of a green tea frappucino, and the provision of smaller drinks and pastries to conform to local tastes. Starbucks arrived in China in 1998 and by 2002 had 50 outlets, and 165 outlets by 2006 (BBC News, 2006), quickly becoming the nation’s leading coffee chain. Starbucks now sees China as its key growth market due to the size and preferences of the emerging middle class. In the Asia–Paci? region, Starbucks command of the specialist coffee shop market grew from 15% in 2002 to 19% in 2007 (refer to Table 2). The total market for cafes in China grew by over 135% between 1999 and 2004 to reach US$2. 6 billion. It is projected to grow another 144% by 2008 to reach US$6. 4 billion in sales. More specialty coffee shops are opening across China as a middle class with strong purchasing power emerges, although this rise in coffee con sumption is highly concentrated in large cities such as Beijing, Shanghai and Guangzhou. Starbucks has said that it xpects China to become its biggest market after the US and the plan is to open 100 stores a year (Euromonitor, 2006). Signi? cantly, certain Western brands are valued by Chinese consumers and Starbucks appears to be one of them. A growing number of China’s 500 million urbanites favour Starbucks for its ambience, which is seen as an important signal of service quality, Table 2 Starbucks’ regional sales performance by outlets and value 2006. Region North America Asia Paci? c Western Europe Australasia World % of company sales (outlets) 79. 0 13. 6. 7 1. 1 100. 0 % of company sales (revenue in $US) 80. 5 10. 8 7. 7 1. 0 100. 0 Table 1 Starbucks’ share of the specialist coffee shop market in each major region. Region North America Western Europe Asia Paci? c Australasia Latin America Source: Euromonitor (2008b). 2002 (%) 44 17 15 6 0 2007 (%) 62 21 19 7 18 Source: Percentage of company sales in each region is calculated from retail sales within this market in 2006, with sales data drawn from Euromonitor (2007). P. G. Patterson et al. / Australasian Marketing Journal 18 (2010) 41–47 43 nd Starbucks’ design concept rests easily with China’s consumers, who tend to lounge with friends while sipping coffee. Its outlets in China frequently maintain larger seating areas than average outlets in other countries, and plush chairs and davenports are provided to accommodate crowds that linger. However, success for Starbucks in China is not a given, and they will face several challenges in the coming years. China’s accession to the WTO has led to the gradual relaxation of the policy governing foreign-owned retail outlets, and this will lead to more foreign investment and thereby competition (Lee, 2004). Several multinationals are engaged in selling coffee (including KFC, McDonald’s, Yoshinoya, and Manabe), and a number of local brands have recently emerged, some even imitating Starbucks’ distinctive green and white logo and its in-store ambience (notably Xingbake in Shanghai). Furthermore, the reduction of import tariffs on coffee will also encourage foreign investment in coffee. 4. The Australian retail coffee industry Australia’s taste for coffee is a by-product of the waves of immigrants arriving on the country’s shores following World War II. European migrants, predominantly Greeks and Italians, were the ? st to establish the coffee culture, which was later embraced more widely in the 1980s. For decades Australians enjoyed a variation of the ‘lifestyle coffee experience’ that Starbucks created from scratch in the US. Australians did not need to be introduced to the concept of coffee as many other countries did. Savouring a morning cup of coffee was already a ritual for many consumers. It is fair to describe Australia’s coffee culture as mature and sophisticated, so when Starbucks entered Australia in 2000, a thriving urban cafe culture was already in place. This established culture saw Australians typically patronise smaller boutique style coffee shops, with people willing to travel out of their way for a favoured cup of coffee, especially in Melbourne where coffee has developed an almost cult-like following. For Australians, coffee is as much about relationships as it is about the product, suggesting that an impersonal, global chain experience would have trouble replicating the intimacy, personalisation and familiarity of a suburban boutique cafe. Furthermore, through years of coffee drinking, many Australians, unlike American or Asian consumers, have developed a sophisticated palate, enjoying their coffee straighter and stronger, and without the need to disguise the taste with ? avoured, syrupy shots. This love of coffee is easily quanti? ed. The Australian market is worth $3 billion, of which $1. 8 billion relates to the coffee retailing market. For every cup of coffee consumed out of home, two cups are consumed at home (AustralAsian Specialty Coffee Association, 2006). Per capita consumption is now estimated at 2. kg-twice as much as 30 years ago. Whilst Australians are among the highest consumers of instant coffee in the world, they are increasingly buying coffee out of the home (Euromonitor, 2008c). More than 1 billion cups of coffee are consumed in cafes, restaurants and other outlets each year, representing an increase of 65% over the last 10 years. Even between 2000 and 2005, trade sales of coffee have increased about 18%. In 2007, the growth in popularity of the cafe culture resulted in trade volume sales growing at an annual rate of 5%. Some 31% of the coffee sold through foodservice is takeaway, and it is thought that ‘fast coffee’ will be a growth area in future years (Euromonitor, 2008d). There is also a trend towards larger takeaway sizes, with 400 ml cups increasing in popularity (Euromonitor, 2008d). One might argue that Starbucks drove these trends, especially in regards to larger sizes. There are almost 14,000 cafes and restaurants serving a variety of coffee types in Australia, and during 2006/07, they generated $9. 7 billion in income (Australian Bureau of Statistics, 2008). However, despite these statistics, the coffee business does not guarantee success. As Paul Irvine, co-founder of Gloria Jean’s notes, ‘‘Australia is a tough retail market and coffee retailing is particularly tough†. According to of? cial statistics, the cafe business is not always pro? table, with the net pro? tability of cafes falling to about 4%. For a cafe to be successful, it has to offer marginally better coffee than local competitors, and do so consistently. Coffee drinkers in Australia are discerning, and they will go out of their way to purchase a good cup of coffee. They are not as easily persuaded as people from other countries simply to visit their nearest cafe. Secondly, for a cafe to make a pro? t, it needs to turn over 15 kg of coffee a week. The national average is 11 kg, so a cafe has to be above average to begin with to even make a pro? t. Any newcomer needs to understand this before entering the market. The other signi? cant constraint on pro? tability is the cost of hiring baristas, with a good one costing between $1000 and $1500 a week (Charles, 2007). However, it seems that this is a necessary cost in order to deliver a superior product. The question that then begs to be asked is: How well did Starbucks understand this existing coffee culture? Did they under-estimate the relational aspect of coffee purchasing in Australia, as well as the importance of the quality of ingredients and the skills of the person making each cup? Did they overestimate the value consumers attach to the in-store experience and the ‘third place’ concept? Or did they just look at the statistics regarding coffee consumption and think that operating in Australia was a license to print money? Did they simply see Australia as the next logical step to global domination? Starbucks has 87% of the US specialty coffee shop market, and only now is it beginning to feel pressure from non-traditional competitors such as Dunkin Donut, 7 Eleven, McCafe and Krispy Kreme (Burritt, 2007). However, in Australia, the competitive landscape is different. Gloria Jean’s dominates the high-street part of the coffee retailing market and McCafe dominates the convenience end (Shoebridge, 2008). Other signi? cant competitors include The Coffee Club and Wild Bean Cafe (an add-on to BP petrol stations) and Hudson’s Coffee (see Table 3). All offer a similar in-store experience to Starbucks, with McCafe from 2007 onwards refurbishing many McDonald’s stores to imitate the Starbucks’ experience, albeit at the economy end of the market. 5. Growth grinds to a halt . . . store closures In recent times however things have started to go wrong for Starbucks. Internationally, company earnings declined as cashstrapped consumers faced record petrol prices and rising interest rates meaning they have had to pull back on gourmet coffee and other luxuries. Sales fell 50% in the last 2 years, the US share price fell more than 40% over the past year and pro? s dropped 28% (Bawden, 2008; Coleman-Lochner and Stanford, 2008; Mintz, 2008). Consequently, Howard Schultz, the founder and chairman of Starbucks, resumed the position of CEO in 2008 with the aim of revitalising the business. He slowed the pace at which stores were opened (and in fact closed more stores than he will open in the coming year), introduced key performan ce targets (KPTs) and an employee rewards system in the US, and simultaneously shut down every store in America for three and a half hours of staff training (Muthukumar and Jain, 2008). Customer-oriented initiatives have included the addition of more food, the launch of the Starbucks card and Starbucks express, and the provision of highspeed wi-? internet access (Hota, 2008). Notably, Schultz acknowledges that the company’s focus has been more on expansion than on customer service – the very thing that was at the heart of its unique value proposition. 44 P. G. Patterson et al. / Australasian Marketing Journal 18 (2010) 41–47 Table 3 Competition in the Australian specialty coffee chain market (chains arranged in order of the number of stores operating in Australia). Number of stores in Australia Gloria Jean’s 500 Year established in Australia 1996 Business model Price of an espresso coffee (e. g. , ? at white, cappuccino) Regular $3. 25 Small $3. 25 Standard $3. 40 Regular $3. 40 Small $3. 10 Tall $3. 60 Performance highlights and lowlights Franchise Overall Winner, 2005 Franchisor of the Year Sales rose 18% to an estimated $240 m for 07/08 driven by new stores and growth from existing stores The fastest growing cafe brand in Australia and NZ Number of stores up from 60 in 2002 Winner, 2008 Food Franchisor of the Year The number of stores reported here includes NZ Plans to open more sites McCafe Coffee Club Wild Bean Cafe 488 220 105 1993 1989 2004 Some store-owned, some franchise Franchise Part of a franchise with Wild Bean Cafe (BP) Connect Franchise Store-owned Hudson’s Starbucks 45 23 1998 2000 Plans to expand store numbers by 20–30% 08/09 Prior to closures in August 2008 there were 84 stores had a perceived lower quality product Sources: Various company reports as at the end of 2008. However, it seems that these measures were too late for the Australian operation. On 29th July 2008, Starbucks announced that it would be closing 61 of its 84 Australian stores (i. . , 73%) by August 2008, resulting in a loss of 685 jobs. All of these stores had been under-performing (8 were in SA, ACT and Tasmania, 28 in NSW, 17 in Victoria and 8 in Queensland). This decline of Starbucks in Australia was not as sudden as many would have us believe and in fact some reports (Edwards and Sainsbury, 2008; Shoebridge, 2008) indicated that by late 2007 Starbucks already had: accumulated losses of $143 million; a loss of $36 million for that ? nancial year; lost $27. 6 million the previous ? nancial year; loans of $72. million from Starbucks in the US; was only surviving because of its US parent’s support. Whilst the troubled economy might seem an easy scapegoat, with people tightening their belts and eating out less, it is unlikely that this was the core problem as evidenced by the continuing growth of their competitors. Indeed, coffee is no longer considered a luxury item by many Australians, but rather an affordable part of their daily routine. Instead, there is substantial evidence to suggest a number of factors combined to bring about Starbucks’ demise. . 1. Starbucks overestimated their points of differentiation and customer perceived value of their supplementary services ‘‘I just think the whole system, the way they serve, just didn’t appeal to the culture we have here† Andrew Mackay, VP of the Australian Coffee Traders Association, in Martin (2008) Whilst there was initial curiosity and hype about Starbucks, after trying it, many Australians quickly found that it failed to offer a particularly unique experience that was not offered by other chains or cafes. Given the strong established coffee culture and discerning palates of Australians, the core product – coffee – was not seen as particularly different from, say, a latte or short black from a good suburban barista, Gloria Jean’s or Coffee Club. Its point of difference in Australia, where a coffee culture already existed, had to be in its supplementary or value-adding services – i. e. , its unique servicescape, engaging customer service, brand image and so on (Lovelock et al. , 2007). But was this worth a premium price, especially as the competition began replicating Starbucks in-store experience? Starbucks has since been harshly criticised by Australian consumers and the media. Their coffee has been variously described as ‘a watered down product’, ‘gimmicky’, and consisting of ‘buckets of milk’. These are not the labels you would choose to describe a coffee that aspires to be seen as a ‘gourmet’ product. It has also been criticised for its uncompetitive pricing, even being described as ‘‘one of the most over-priced products the world has ever seen† (Martin, 2008). Even the idea of the third place has come under criticism – ‘‘why would you want to sit around a pretend lounge room drinking a weak and expensive coffee when you can go around the corner and have the real thing? † (Wailes, 2008). It seems that Starbucks’ rapid expansion, its omnipresence, somewhat standardised store design and recent insistence on staff achieving various sales KPTs (key performance targets) such as serving ‘x’ customers per hour, all combined to diminish the instore experience. The introduction of sales targets for front-line These closures saw 23 stores kept open in prime locations in Sydney, Melbourne and Brisbane. But this begs the question: can a 23-store chain be viable for the brand in the long-term? Based on the approximate numbers in Table 3, Starbucks had a 6% share of stores in Australia before the closures; this has now fallen to a share below 2%. Even before the closures, Australasia represented only 1% of company sales (Table 2) and now the ? gure is expected to be much lower. This may not make much commercial sense as it will be dif? cult to achieve economies of scale in terms of marketing and purchasing, and such small numbers are totally out of step with the clustering strategy adopted in its strongest markets – the US, Japan and China. However, it could also be argued that with Starbucks’ strategy of global domination, it is unlikely that it will ever close its Australian business entirely. Whilst Starbucks’ management have been keen to suggest that ‘‘this decision represents business challenges unique to the Australian market and in no way re? ects the state of the Starbucks business in countries outside of the United States†, the US market has also suffered. By September 2008, 600 stores had closed (or were due for closure), with about 12,000 workers, or 7% of Starbucks’ global workforce affected (Mintz, 2008). It should be noted that the situation in the US has only worsened as a result of the global ? nancial crisis. 6. So what went wrong? Opinions abound as to why Starbucks failed in Australia. Our research suggests there is some truth to many of these opinions. P. G. Patterson et al. / Australasian Marketing Journal 18 (2010) 41–47 45 employees, for example, meant staff and baristas had less time to engage with customers. It began to stray too far from its roots and the very values upon which the brand was built. Some of these actions were forced upon Starbucks by emerging competitors seeking to imitate the brand, and thus gain a slice of the ever growing lifestyle coffee market. Starbucks’ points of differentiation were systematically being eroded and, in a sense, the brand that taught the world that coffee is not a commodity was itself becoming one. 6. 2. Declining service quality The brand has also come under ? re for declining customer service as it continued to expand. For example, the quality of baristas is said to have declined as Starbucks widened its pool of applicants in order to meet demand at new stores. Can a 17 year old high school student really compete with a boutique trained barista with a passion for coffee? By not offering a better experience and product than emerging direct competitors, Starbucks found itself undermined by countless high street cafes and other chains that were selling stronger brews at lower prices and often offering better or equal hospitality. Whilst they may have pioneered the idea of a ‘third place’, it was an easy idea to copy, and even easier to better by offering superior coffee, ambience and service. Now, with so many coffee chains around, Starbucks have little point of differentiation, even wi-? internet access has become commonplace across all types of cafe. Furthermore, while customers were offered promotional rewards for returning to Starbucks, the card-based scheme is no more sophisticated than equivalent me-too cards at Gloria Jean’s, Coffee Club, Hudson’s and many independent cafes. And as noted earlier, one of the things that set Starbucks apart from the competition – i. e. , acknowledging customers (often by name for regulars) within a few seconds of entering the store and eriously engaging with them, began to unravel when Starbucks imposed both customer service and sales targets for its cafes. The imposition of these targets plus an ever widening range and complexity of coffees to remember and make to perfection, meant staff morale and inevitably customer service levels declined. In fact in the USA some staff were so disillusioned with the impositio n of sales targets (because it meant they simply didn’t have time to engage with customers) they posted blogs openly stating that Starbucks had lost its way. Finally, it appears that Starbucks were not even delivering on their core promise of serving superior coffee in comfortable surroundings, thus justifying its premium price. By switching to vacuum packaged coffee, consumers are denied the store-? lling aroma of the coffee beans. The switching of traditional coffee machines to automated espresso machines (which can make coffees 40% faster and move customers through the lines more quickly), has also resulted in a loss of ‘theatre’ (Grove et al. , 2000) for people wanting to see their coffee made that way and has also had implications for taste. In-store, it has been noted that there are fewer soft chairs and less carpeting, and Starbucks recently lost ground in the ‘service and surroundings’ category of the Brand Keys 2007 Customer Loyalty Engagement Index (Cebrzynski, 2008). It seems that Starbucks is now less about the quality of the coffee, and is more about the convenience of faster service and being on every corner – whilst still charging a premium. 6. 3. Starbucks ignored some golden rules of international marketing Ironically, it seems that the very thing that made Starbucks successful in the ? st place, its ability to adjust the original (European) business model and coffee tradition to local (US) conditions, is the thing that let it down. Whilst Starbucks has made minor changes to its menu in countries such as Japan and Saudi Arabia, it generally offers the same products all around the world. When the company came to Australia, it brought its ‘American’ offering, simply bringing wha t worked in the US and applying it here, without really understanding the local market. But with more than 235 ethnicities speaking more than 270 languages and dialects, companies wanting to get ahead in Australia need to be aware that they are not dealing with one homogeneous market. Unfortunately what worked in the US was ‘‘bitter, weak coffee augmented by huge quantities of milk and sweet ? avoured syrups. Not so much coffee, as hot coffee-based smoothies†. For the Australian consumer raised on a diet of real espresso, this was always going to be a tough sell (Mescall, 2008) As McDonald’s Australia chief executive Peter Bush noted, US retailers that have had trouble making it work in Australia (e. . , Starbucks, Denny’s, Arby’s, Taco Bell) are those that have ‘‘introduced formulae developed for US palates and for the US way of doing business . . . These formulae have, at best, modest relevance in Australia†. Peter Irvine, co-founder of Gloria Jean’s, also noted that ‘‘US retailers often arriv e in Australia thinking the size of their overseas chains and the strength of their brands in other markets will make it easy for them to crack the local market. Their focus is on global domination rather than the needs of the local consumers†. Further, there is a strong sense in Australia of buying local, supporting the community, having relationships with the people you buy from, and supporting ethically-minded businesses. Starbucks clashed completely with that, whereas local stores can differentiate themselves as being local and non-corporate. Furthermore, some would argue that Starbucks has become a caricature of the American way of life and many Australians reject that iconography. Many are simply not interested in the ‘super-size’ culture of the extra-large cups, nor want to be associated with a product that is constantly in the hands of movie stars. . 4. Expanding too quickly and forcing themselves upon an unwilling public In the US, Starbucks started in Seattle as a single store. In a nation bereft of a genuine cafe culture, that single store captured people’s imagination, and soon became a second store, quickly followed by a third. Before long, Starbucks had become a demand-driven phenomenon, wi th everyone wanting a Starbucks in their local area. McDonald’s grew exactly the same way in Australia, opening just one or two stores in each city – nowhere near enough to meet demand – thus creating an almost arti? ial scarcity, which created huge buzz around the brand experience. Krispy Kreme did the same. But when Starbucks opened in Australia, they immediately tried to impose themselves with multiple store openings in every city – adopting the US-model of expansion through store clusters. Australians were not given a chance to ‘discover’ it. As Mescall (2008) points out ‘‘they took key sites, hung huge signs, made us order coffee in sizes and gave the coffees weird names. Starbucks said to us – ‘that’s not how you drink coffee. This s how you drink coffee’†. They took the Coca-Cola strategy of being available wherever people looked, but this quickly led to market saturation. Their expansion di d not hurt their competitors so much as themselves, and they found themselves cannibalising their own stores. Furthermore, by becoming too common, the company violated the economic principles of cultural scarcity and the novelty wore off. By having too many outlets, becoming too commercial and too widely used, it began to lose its initial appeal of status and exclusivity. It began to have a mass brand feel, certainly not the warm feeling of a neighbourhood cafe. Furthermore, they became more reliant 46 P. G. Patterson et al. / Australasian Marketing Journal 18 (2010) 41–47 on less af? uent consumers who now, with a worsening economy, are spending less, making Starbucks more vulnerable to economic ? uctuations. 6. 5. Entering late into a highly competitive market ‘‘In America, Starbucks is a state of mind. In Australia, it was simply another player. † Barry Urquhart, quoted in Delaney (2008) From Day 1, Starbucks got off on the back foot. They lacked the ? rst-mover advantage they had in the US and Asia, ? nding themselves the late entrant in an already very developed, sophisticated and competitive market. Indeed, the competitive landscape in the Australian retail coffee market is very different to that of other countries. Here, Starbucks found themselves competing with hundreds of independent cafes and speciality coffee chains (see Table 3), where the coffee was generally better and the staff knew their customers by name. Signi? cantly, they were also the last of the major chains to gain a presence in Australia. 6. 6. Failing to communicate the brand Worldwide, Starbucks rarely employs above-the-line promotion, and this was also the case in Australia. Instead, they maintained that their stores are the core of the business and that they do not need to build the brand through advertising or promotion. Howard Shultz often preached, ‘‘Build the (Starbucks’) brand one cup at a time,† that is, rely on the customer experience to generate word-of-mouth, loyalty and new business. But in a market as competitive as Australia, with a consumer whose palate is discerning and whose loyalty often lies with a speci? barista, advertising and promotion was essential to communicate the Starbucks message. The issue is not so much about building awareness – which, at 90%, is high – but to communicate what the brand means and to give consumers reasons for patronising Starbucks. Their lack of advertising made this branding issue even worse, with many people unable to articulate why they should be loyal to Starbucks. At the same time, competitors were communicating their messages very effectively – McDonald’s, for instance, is a heavy spending, award-winning, advertiser in the Australian market. Added to which, more subversive counter-messages were coming from those who saw in Starbucks a ‘brand bully’ riding rough shod over the nuanced tastes and preferences of local cultures (Klein, 2000; Clark, 2008). In other words, a range of strong contrary messages were undermining Starbucks’ own very limited communications. 6. 7. Unsustainable business model Starbucks’ product line is limited primarily to coffee. Sometimes a new product idea will be developed, such as the Frappucino, but these tend to have limited product life cycles and/or are seasonal. For example, the Frappucino has traditionally made up 15% of (summer) sales, but recently sales have been down, suggesting that customers are already bored with it (Kiviat, 2008). Furthermore, in the instance where other products were offered, people failed to purchase them as they only really associate Starbucks with coffee and generally seek food elsewhere. This is a very different model to The Coffee Club which has much more of a cafe feel to it, or McDonald’s which has a full range of breakfast and lunch/dinner items that can be complemented by a McCafe latte. Hence the average transaction value at Starbucks is lower than its competitors, and therefore more customers must pass through its doors to reach the sales and pro? t levels of its competitors. It also creates con? ict with the Starbucks ethos of the third place (and allowing people to sit around for 30 minutes sipping lattes and reading, talking or sur? ng) versus the need to get people in and out quickly and not take up valuable ‘real estate’ (which in itself means that the average Starbucks store needs to be much bigger than the average cafe). Unlike most of the other retail coffee chains, Starbucks does not use a franchise model, preferring to lease and ? t-out its own outlets. This means more cash is being spent upfront, and in Starbucks’ case, more debt accrued. But adopting a franchise model would have numerous other advantages than just minimising this. It would mean that local investors, with a good sense of the local market, put their own money into the business and take an active role in running it and shaping its direction. 7. What are the main lessons from this case study? Several key lessons emerge that should be of interest to both domestic and international marketers. 7. 1. Crossing international borders is risky and clearly Starbucks did not do their homework, or ignored their homework Well conceived market research involving both primary and secondary data, including qualitative and quantitative approaches, would have uncovered the extent of the ‘coffee culture’ that existed in 2000 when Starbucks entered the Australian market. It seems inconceivable that Starbucks management, or at least its Australian representatives, were not suf? iently apprised of the extent to which many consumers were already well acculturated in terms of buying and consuming European styles of coffees such as short black, lattes and cappuccinos, nor the extent to which many customers were in fact loyal to their suburban cafe or competitive brands such as Gloria Jean’s. As a late market entrant, Starbucks clearly failed to do thorough homework on the mar ket before entry – this is a failure in terms of due diligence. Alternatively, they chose to ignore the messages that were coming from any due diligence that they had undertaken. This may or may not have been due to some arrogance on the part of Starbucks, or due to the fact that they considered they had a strong global brand which would meet with universal acceptance. An example of where Starbucks did do its homework, and act on it, was in France when it entered that market in 2006, establishing a cafe in the middle of Paris. Research had clearly shown the American way of consuming and socialising over a coffee was an anathema to many French, so Starbucks held back from entering the French market and when they ? ally entered it was with great trepidation, expanding at a very slow pace and testing the market at every step. 7. 2. ‘‘Think global but act local† This familiar maxim in international marketing should be well understood. While Starbucks had brand awareness as a major global brand, it failed to adapt the product and the customer experience to many mature coffee drinkers in Australia. As noted earlier, all the evidence suggests that it simply tried to transplant the American experience into the Australian market without any adaptation. In particular, it failed to adapt either its core product or its supplementary services to create the intimacy, personalisation and familiarity that is associated with established boutique cafes in Australia. 7. 3. Establish a differential advantage and then strive to sustain it A question of strategy that Starbucks perhaps failed to address was, ‘‘Is our product differentiation sustainable in the long term P. G. Patterson et al. / Australasian Marketing Journal 18 (2010) 41–47 47 and does it continue to justify a price premium? As noted earlier, it can be argued that the core product in this case, that is the coffee itself, is essentially a commodity, and that Starbucks’ coffee, according to many consumers, was no different to the competition, and in some cases inferior. Then Starbucks’ points of difference clearly revolved around its brand image and supplementary services. It was these supplementary services, such as its unique servicescape and exce llent customer service, that they used to justify a premium price. However, as competitors (e. g. , The Coffee Club) quickly imitated the ‘Starbucks experience’ (i. . , their supplementary services, ambiance, etc. ), by providing premium coffee and an intimate casual experience, Starbucks’ value proposition began to fade. In other words, their key points of difference could be easily imitated and were not sustainable. Faced with this scenario, the onus was on management to re-fresh and evolve any lingering differential advantage that Starbucks might have had or, at the very least, give customers reasons to continue patronising Starbucks through its communications. 7. 4. Don’t lose sight of what made you successful in the ? st place As more and more competitors emerged, both individual cafes and chains such as Gloria Jean’s and The Coffee Club, competitive pressures forced Starbucks to impose rigid sales targets on their frontline staff including bar istas to increase store productivity. However, the imposition of these KPTs and the pressure to serve more customers more quickly meant that Starbucks forgot the very thing that made it unique in the early days, namely, to provide a customer experience in an intimate casual setting that set it aside from competitors. As more pressure was placed on staff to have higher throughput, this meant that baristas and other employees had little time to engage with customers. In other words, Starbucks forgot about the very things that made it unique in the ? rst place. This is akin to the Wheel of Retailing hypothesis (Hollander, 1960) where a no-frills retailer gradually moves upmarket in terms of variety of product, price and more services and within several years ? nds itself competing with the more established premium supermarkets that were the very competitors that they tried to distance themselves from in the ? st place. The only difference with Starbucks is that it reversed the direction of the Wheel – by gradually moving downmarket it brought itself into direct competition with cheaper operators and lost sight of what made it successful in the ? rst place. 7. 5. Consider the viability of the business model It has to be questioned whether the Starbucks’ business model is viable in the l ong term, or even the medium term. A business model that uses a premium price to justify the excessive ? or space and elaborate servicescape, and allows customers to sit in this environment for an hour sipping one latte, has to be questioned. Given that Starbucks do not have the array of products that, say, a McDonald’s might have and, as documented earlier in this case, therefore do not generate the same sales volumes and revenues, it is hard to see how the Starbucks’ model is ? nancially viable. 8. Conclusion In summary, it appears on all the evidence that Starbucks not only misjudged the Australian coffee culture but also misjudged the extent of the competition, and failed to adapt its offering to the local market. Furthermore, with the advent of high quality barista training, the availability of premium coffee beans and the technology to produce a high quality cup of coffee (at a modest cost), sole operators who knew their customers by name, were able to set up business as viable competitors. Starbucks may have been responsible for growing the premium coffee category, but the emergence of Gloria Jean’s and the Coffee Club (and McCafe, a premium coffee shop embedded in McDonald’s restaurants) turned out to be serious competitors. Finally, questions have to be raised about Starbucks fundamental business model in a market where many small niche players can easily replicate the ‘Starbucks Experience’. References AustralAsian Specialty Coffee Association, 2006. Australian Coffee Market: Key Facts for 2006. Australian Bureau of Statistics, 2008. Cafes, Restaurants and Catering Services, Australia, Report 8655. 0 for 2006–07. Bawden, T. , 2008. Starbucks reports ? rst loss in 16 years. Times Online, 31 July. (accessed 15. 08. 08. ). BBC News, 2006. China central to Starbucks growth. BBC News, 14 February. (accessed 29. 08. 08. ). Browning, E. 2008. Starbucks hopes growth abroad will save its bottom line. ABC News, 31 July. (accessed 29. 08. 08. ). Burritt, C. , 2007. McDonald’s challenges Starbucks with cheaper lattes. Bloomberg, 11 September. (accessed 29. 08. 08. ). Cebrzynski, G. , 2008. Starbucks-dominated category wakes up and smells McD’s espresso rollout. Nation’s Res taurant News 42 (3), 1–6. Charles, E. , 2007. In the trenches: Coffee. In the Black, May, 28–31. Clark, N. , 2008. Starbucks: The brand we love to hate. Marketing, 2 April. Coleman-Lochner, L. , Stanford, D. D. , 2008. Starbucks reports ? rst loss since 1992, predicts slower growth. Bloomberg, 30 July. (accessed 29. 08. 08. ). Delaney, B. , 2008. Starbucks to go. Guardian, 30 July. (accessed 29. 08. 08. ). Edwards, V. , Sainsbury, M. , 2008. Weak coffee and large debt stir Starbucks’ troubles in Australia. The Australian, 31 July. Euromonitor, 2006. Starbucks Ups Expansion Plans. Euromonitor International. Euromonitor, 2007. Starbucks Corp – Consumer Foodservice – World. Euromonitor International. Euromonitor, 2008a. On-trade Watch: Identifying Key Growth Markets to 2012. Euromonitor International. Euromonitor, 2008b. Company Watch: Starbucks Wakes Up and Smells the Coffee. Euromonitor International. Euromonitor, 2008c. Coffee – Australia. Euromonitor International. Euromonitor, 2008d. Impulse Food and Drink Channels – Coffee – Australia. Euromonitor International. Grove, S. , Fisk, R. , John, J. , 2000. Services as theater. In: Swartz, T. , Iacobucci, D. (Eds. ), Handbook of Services Marketing and Management. Sage Publications, CA, pp. 21–35. Hollander, S. , 1960. The wheel of retailing. Journal of Marketing 25 (1), 37–42. Hota, M. , 2008. Starbucks: brewing more than just coffee. European Case Clearing House (ECCC), 508-025-1. Karolefski, J. , 2002. Conquering new grounds. BrandChannel, 11 February. (accessed 29. 08. 08. ). Kiviat, B. , 2008. Wake up and sell the coffee. Time South Paci? c (Australia/New Zealand edition) 7 (13), 52–56. Klein, N. , 2000. No Logo. Flamingo, London. Lee, H. , 2003. Japan: a nation of coffee lovers. Euromonitor International. Lee, H. , 2004. Coffee brews a future in China? Euromonitor International. Lindhe, J. , 2008. One skinny cap to go. Business Review Weekly, 7 August. (accessed 15. 08. 08. ). Lovelock, C. , Patterson, P. G. , Walker, R. , 2007. Services Marketing: An Asia Paci? c and Australian Perspective. Pearson Education, Singapore. Martin, S. , 2008. Starbucks: a study in liberal failure, Part II. Conservatism Today, 29 July. (accessed 29. 08. 08. ). Mescall, J. , 2008. Starbucks in Australia: where did it go wrong? Unleashed, 7 August. (accessed 29. 08. 08. ). Mintz, J. , 2008. Starbucks closing 600 stores in the US. International Business Times, 1 July. (accessed 14. 09. 08. ). Muthukumar, R. , Jain, S. , 2008. Starbucks suffers: Schultz returns. European Case Clearing House (ECCC), 308-152-1. Palmer, D. , 2008. Starbucks: what went wrong? AFN Thought for Food, 31 July. (accessed 29. 08. 08. ). Schultz, H. , Yang, D. J. , 1997. Pour Your Heart into It: How Starbucks Build a Company One Cup at a Time. Hyperia Publishing, New York. Shoebridge, N. , 2008. Local palate bucks another US retailer. The Australian Financial Review, 4 August. (accessed 15. 08. 08. ). Uncles, M. D. , 2008. Aroma Australia Pty Ltd goes to Japan. In: Schiffman, L. , Bednall, D. , O’Cass, A. , Paladino, A. , Ward, S. , Kanuk, L. (Eds. ), Consumer Behaviour, fourth ed. Pearson Education Australia, Australia, pp. 584–588. Wailes, N. , 2008. Taste of defeat for the mugs from Starbucks. Sydney Morning Herald 31 (July).

Moon Jellyfish Facts

Moon Jellyfish Facts The moon jellyfish (Aurelia aurita) is a common jelly that is easily recognized by its four horseshoe-shaped gonads, which are visible through the top of its translucent bell. The species gets its common name for the way its pale bell resembles a full moon. Fast Facts: Moon Jellyfish Scientific Name: Aurelia auritaCommon Names: Moon jellyfish, moon jelly, common jellyfish, saucer jellyBasic Animal Group: InvertebrateSize: 10-16 inchesLifespan: 6 months as an adultDiet: CarnivoreHabitat: Tropical and subtropical oceansPopulation: AbundantConservation Status: Not Evaluated Description The moon jellyfish has a translucent 10 to 16 inch bell with a fringe of short tentacles. The tentacles are lined with nematocysts (stinging cells). Most moon jellies have four horseshoe-shaped gonads (reproductive organs), but a few have three or five. The bell and gonads may be translucent white, pink, blue, or purple, depending on the animals diet. The jellyfish has four fringed oral arms that are longer than its tentacles. Habitat and Range The species lives in tropical and subtropical oceans worldwide. It is common along the Atlantic coast of North America and Europe. Moon jellyfish frequent coastal and epipelagic areas (top layer of the ocean) and can survive the lower salinity of estuaries and bays. Diet and Behavior The moon jellyfish is a carnivore that feeds on zooplankton, including protozoa, diatoms, eggs, crustaceans, mollusks, and worms. The jelly is not a strong swimmer, mainly using its short tentacles to stay near the water surface. Plankton get trapped in the mucus coating the animal and passed via cilia into its oral cavity for digestion. Moon jellyfish absorb their own tissue and shrink if they are starved. They grow to their normal size when food becomes available. Although water currents group jellyfish together, they live solitary lives. Scientists believe jellyfish may communicate with one another using chemicals released into the water. The jellyfish life cycle includes both sexual and asexual phases. Dorling Kindersley / Getty Images Reproduction and Offspring The jellyfish life cycle has a sexual and asexual component. Each adult (called a medusa) is either male or female. In the open ocean, jellyfish release sperm and eggs into the water. Fertilized eggs develop and grow in the water as planula for a few days before attaching to the sea floor and growing into polyps. The polyp resembles an upside down medusa. Polyps asexually bud off clones that develop into mature medusae. In the wild, Aurelia jellyfish reproduce for several months. Near the end of summer, they become susceptible to disease and tissue damage from the exertion of reproduction and diminishing food supplies. Most moon jellyfish probably live about six months, although captive specimens may live many years. Like the immortal jellyfish (Turritopsis dohrnii), the moon jellyfish can undergo lifecycle reversal, essentially growing younger rather than older. Conservation Status The IUCN has not evaluated the moon jelly for a conservation status. The jellyfish are abundant, with adult populations spiking or blooming in July and August. The moon jellyfish thrives in water containing a lower than normal concentration of dissolved oxygen. Dissolved oxygen drops in response to increased temperature or pollution. Jellyfish predators (leatherback turtles and ocean sunfish) cannot tolerate the same conditions, are subject to overfishing and climate change, and may die when they mistakenly eat floating plastic bags that resemble jellies.Thus, jellyfish numbers are expected to grow. Moon jellyfish blooms in summer have environmental causes and consequences. Michael Nolan / Getty Images Moon Jellyfish and Humans Moon jellyfish are consumed as food, especially in China. The species is of concern because an overabundance of the jellies significantly decreases plankton levels. People frequently encounter moon jellyfish because of their abundance and preference for coastal waters. These jellyfish do sting, but their venom is mild and considered harmless. Any clinging tentacles may be rinsed off with salt water. The venom may then be deactivated with heat, vinegar, or baking soda. Sources Arai, M. N. A Functional Biology of Scyphozoa. London: Chapman and Hall. pp. 68–206, 1997. ISBN 978-0-412-45110-2.He, J.; Zheng, L.; Zhang, W.; Lin, Y. Life Cycle Reversal in Aurelia sp.1 (Cnidaria, Scyphozoa). PLoS ONE. 10 (12): e0145314, 2015. doi:10.1371/journal.pone.0145314Hernroth, L. and F. Grondahl. On the Biology of Aurelia Aurita. Ophelia. 22(2):189-199, 1983.Shoji, J.; Yamashita, R.; Tanaka, M. Effect of low dissolved oxygen concentrations on behavior and predation rates on fish larvae by moon jellyfish Aurelia aurita and by a juvenile piscivore, Spanish mackerel Scomberomorus niphonius. Marine Biology. 147 (4): 863–868, 2005. doi:10.1007/s00227-005-1579-8Solomon, E. P.; Berg, L. R.; Martin, W. W. Biology (6th ed.). London: Brooks/Cole. pp. 602–608, 2002. ISBN 978-0-534-39175-1.

ISLAMIC JIHAD UNION (IJU)---Terrorist Group Research Paper

ISLAMIC JIHAD UNION (IJU)---Terrorist Group - Research Paper Example This Uzbeki based organization is thus now acclaimed as a banned organization by the UK, US and some other nations, also actively condemned on the UN forum. Introduction Islamic Jihadi Union (IJU), which was previously known as the Islamic Jihad Group, is an organized terrorist group which has often seen conducting attacks on Uzbekistan and even Germany. Being one of the most widely studied terrorist organizations; it is also referred to as Jamiyat, Jamaay Mojahidin, Islomi Jihad and the Kazakh Jammat. The organization was founded in 2002, and the origin of Islamic Jihadi Union stems from Pakistan. Analyzing the ethnic origins of the organization, most of the members have Uzbek ethnicity, while Tajik, Kyrgyz and Turks are also found amongst the ethnic group members. Since the basis of the organization is religious in nature, it is also significant to identify the religious roots of IJU, and thus, IJU has a Sunni Muslim inclination (Asal 2007). The organization includes about 100-150 people as active participants who incorporate the main body of the organization. Though Uzbekistan is the sole focus of IJU, it is also found executing activities in other states like Pakistan, Iran, Kazakhstan, Tajikistan and Kyrgyzstan. Also, the organization doesn’t entirely base its operations in isolation, rather it has also found to have associations with IMU, Al-Qaeda, the Haqqani Network and the Uighur and the Chechen Groups. Ideology of IJU Mainly implementing the true Islamic Ideology and executing the fundamental Islamic principles as interpreted by the founding fathers of IJU comprises the philosophical basis of the organization. However, strategically speaking, the main goal of the organization was the overthrow the Uzbek government in favor of IJU governing body. However, as the organization gained momentum, and also, the organizational setup matured in 2007, IJU`s mission became global in nature. The transnational agenda of IJU is similar to that of Al-Qaeda, w hich includes the advocacy for a free Palestine and supporting the coalition forces in Afghanistan. In 2009, IJU was focused upon the goal of overthrowing Karimov from power in Uzbekistan. (Inbar and Frisch 2008) Background IMU (Islamic Movement of Uzbekistan) is the parent organization of IJU; however a group of militants split apart from the organization in 2002, and this group of organization is what now comprises Islamic Jihadi Union. Amongst the most massive attacks accredited to IJI was the bombing executed in Tashkent in April 2004. This was a suicide attack executed in a crowded market, and though the intelligence agencies were initially putting the blame on other terrorist organizations, IJU claimed responsibility for the attacks. Another attack which was executed targeted Uzbeki Prosecutor General`s Office alongside the Israeli Embassy and the US Embassy. This attack, held in June 2004, was quite a sophisticated one, which indicated the maturity of the organization over ti me. Another attack held in October 2004, which is also accredited to the IJU is the attack in Rawalpindi, Pakistan. Also, further attacks were executed in 2007 to support the Al-Qaeda and the Taliban factions of Afghanistan. Major Tactics Like other terrorist organizations of similar nature, IJU uses a variety of tactics to execute its mission plans and leave an impact on the intended actors. Small arms

THE EVOLUTION OF MACROECONOMICS IN THE UK Essay

THE EVOLUTION OF MACROECONOMICS IN THE UK - Essay Example In this sense, it can be implied that only in times of market failures are governments are justified to intervene. This paper will explore the different viewpoints of classical and Keynesian economic principles and concludes how prevailing economic policies are only transient and evolutionary. II. Fundamental Policy Issues A. Classical Economics The classical economic thought resides on the simple concept that the market can work effectively even without any form of human intervention. The market, as Adam Smith puts it, possesses an invisible hand that automatically puts the economy back into plump shape when otherwise with the guiding advocacy to let the government leave market activity into the interests of individuals (2009z: 400). Smith states that the â€Å"governments that intervene in the market activity only represent the wealthy and the powerful† rather than a mass (as cited in Sowell 1994: 23). Even to classical liberals such as Frederic Bastiat, state interference o n any activity which goes beyond its functions (i.e. maintaining order and justice) is a â€Å"usurpation upon conscience, upon intelligence, upon industry; in a word upon human liberty† (as cited in Haney 1911: 257). ... From this standpoint stemmed the principle of laissez-faire which would eventually resolve deficiencies in employment and output levels. B. Keynesian Economics According to the brainchild of Keynesian economics, John Maynard Keynes, the government is the only fundamental societal structure that can manage the aggregate demand from households, businesses, and the government itself to ensure price stability (Korten 2010). Keynesian economics assume the opposite of what classical economists theorise -- that a free market is not self-correcting so that it would result in unemployment in the process (the Great Depression, being the proof). Furthermore, market forces will consume a long period to bring back full employment because in the real -time market, demand is not sufficient to maintain full employment (Cowling & Sugden 1990: 108). Keynesian economists say that in order to efficiently sustain employment at full level, the government must push through monetary and fiscal policies (i.e . increase government spending and decrease taxation) in order to stimulate the aggregate demand for commodities, hence creating additional employment opportunities (Cowling & Sugden 1990: 108). When there is a right level of demand, the supply-side would look after itself (Cowling & Sugden 1990: 108). This would result in an increase of budget deficit (Cowling & Sugden 1990). However, Keynesian economists sustain that this is only justifiable. III. Theory A. Market Equilibrium: On Fluctuating Prices a.1. Classical Perspective Market clearing in both the labor and commodities markets is entirely possible because of equilibrium forces (Free 2010: 73). For instance, when the supply exceeds demand, the market reaches equilibrium if prices decrease which is only an inevitable

Identity Regulation as a Form of Organizational Control

Identity Regulation as a Form of Organizational Control Introduction I have decided to opted â€Å"Identity regulation in organisations is a form of control that needs to be acknowledged in order to encourage the emancipation of workers†. But before starting my assignment i would like to go through that what Organization is and what’s the real truth behind Organizational Behaviour. Organizations are inescapable features of modern social experience for all human beings. From the remotest village high in the Himalayan foothills to life in a lager metropolis, organizations impact on all aspect of human experience. Now we come to that what organizational behaviour actually is:- Organizational behaviour provides one of the mainstream approaches to the study of management and organizations. Its main sphere of interest is anything relevant to the design, management and effectiveness of an organization, together with the dynamic and interactive relationships that exist within them. Hawthorne studies This theory was directed by Elton Mayo during the late 1920s and early 1930s. These studies first highlighted the complexity of human behaviour in an organizational setting. This on turn led to recognition of the importance of the social context within which work occurred and of the ways in which groups become a significant influence on individual behaviour. Ref: organizational behaviour and management john martin third edition The Meaning of Organizational Behaviour Organizational behaviour is one of the most complex and perhaps least understood academic elements of modern general management, but since it concerns the behaviour of people within organizations it is also one of the most central, its concern with invidual and group patterns of behaviour makes it an essential element in dealing with the complex behaviour issues thrown up in the modern business world. Ref: (Financial times Mastering management series) First we are going to start with the Management as an integrating activity;- Management as an integrating activity Management is the cornerstone of organizational effectiveness, and is concerned with arrangement for the carrying out of organizational processes and the execution of work. According to Drucker, it is the management that enables the organization to contribute a needed result to society, the economy and the invidual. Ref:-management and organizational behaviour 5th edition â€Å"The fact is that management ultimately depend on an understanding of human nature.I suggets it goes much further than that. In the first place, good management depends upon the acceptance of certain basic values. It cannot be achieved without honesty and integrity, or without consideration for the interests of others. Secondly, it is the understanding of human foibles that we all share, such as jealousy, envy, status, prejudice, perception, temperament, motivation and talent which provides the greatest challenge to managers. Ref: HRH The Duke of Edinburgh, Institute of Management Patron. The psychological contract One significant aspects of the relationship between the invidual and the organization is the concept of the psychological contract. This is not a written document, but implies a series of mutual expectations and satisfaction of needs arising from the people-organization relationship. It involves a process of giving and receiving by the invidual and by the organization. The psychological contract covers a range of expectations of rights and privileges, duties and obligations, which donot form part of a formal agreement but still have an important influence on people behaviour. Invidual`s Expectations Provide safe and hygienic working conditions Make every reasonable effort to provide job security Attempt to provide challenging and satisfying jobs and reduce alienating aspects of work. Adopt equitable personnel policies and procedures. Treat member staff with respect. These expectations are notwithstanding any statutory requirement placed upon the organization. Instead they relate more to the idea of social responsibilities of management. The organization will also have implicit expectations of its member, for example:- To accept the ideology of the organization To work diligently in pursuit of organizational objectives Not to abuse goodwill shown by the management To uphold the image of the organization To show loyalty. The organization side of the psychological contract places emphasis on expectations, requirement and constraints which often differ from, and may be in conflict with ,an Invidual`s expectations. Ref:-Laurie j Mullins management and behaviour The case study below shows the true picture of the psychological contract and it s nature:- Case study: Disgruntled mice turn on fat cats Rhetoric about employee being vital corporate assets is sounding increasingly hollow writes John Plender. After years of downsizing, delaying and re-engineering, a punch-drunk British workforce hardly looks ready for a return to confrontational industrial relation. Yet the strike at British Airways, complete with management pressure and inter-union rivalry, raises question. Is this the first sign of a shift in power back to the workers as labour market condition tightens? And have managers become complacement in their attitudes to the workforce? The British Airways saga admittedly looks more of a throwback than a forward indicator. Most occupants of British boardrooms would vehemently reject charges of complacency or macho management. Yet there is evidence that business leaders are failing to carry employee with them as they continue to restructure. The standard rhetoric about `empowered` employee being vital corporate assets rings increasingly hollow. Consider recent data from International Survey Research (ISR), a leading consultant whose employee opinion survey covers 450 companies in 18 countries. Some finding in its survey, such as the free –fall in feelings of employment security throughout Europe, are predictable enough. Nor is it surprising that stakeholders-type economics like Switzerland, Norway and the Netherlands tend to have the the most contented workforces. The UK`S ignominious position- second only to Hungary at the bottom of the league for employee satisfaction- will no doubt be dismissed as British workers enjoying a moan. And the fact that UK management is judged less favourably by employee than managers are rated elsewhere will prompt a similar response. Yet when ISR`s work is looked at over a period of years, it is easily brushed aside. Take the progressive year-on-year collapse in the morale of the UK workforce since 1990. The trend is odd because it defies the logic of the economic cycle. Recovery has brought deterioration, not improvement. Also odd is the workforce’s view of management, at the depths of the recession earlier in the decade, UK employee, though generally dissatisfied, were still taking quite a favourable view of the managers compared with the rest of the Europe. Today, despite a marked increased in the rate of UK earning growth, disillusionment appears total. The clue with the ISR survey published at the end of 1995.This revealed that workers attitudes had suffered `the most prepitate decline` of any European country over the previous 10 years. Motivation and commitment to the company were lower than in the strife-torn days of the mid-1970s. The timing is significant because this was the first survey after the notorious British Gas Annual General Meeting at which the investment institute sanctioned a much increased pay-package for Mr.Cedric Brown-this when profits were substantially below their five years earlier, customer service was deteriorating and employee were being shed in larger numbers. The message is clear enough. Far from being a little local difficulty in the privatised utilities, the `fat cat` pay saga had a much wider demoralising impact which is still being felt. It does not follow that British workers are about to the picket lines en masse. As long as insecurity is endemic, and the main legislative reforms of the past 18 years remain intact, the union will not resume their former mantle. Nor does the government of Mr Tony Blair, a personal friend of BA chief Executive , Mr Bob Ayling, appear keen to take an active role in the dispute at BA. There is also a wide spread view that employee satisfactions a key performance indicator. Yet survey feels dimishing loyalty. In effect a contract which views the employee as assets and a cost has an innate tension. If it operate operates against the back ground of ever widening pay differentials between shop floor and board, or runs into the BA style of management, it may become untenable. There is a growing recognition among economist that trust is a valuable commodity. At national level- as in the stakeholder’s economics metioned earlier- it can enhance growth. When it exists between the various stakeholders in a business it reduces transaction costs and enhances competitive advantage. If British business wants to achieve the highest standards of quality in internationally tradable products and services on a sustainable basis, it badly needs to absorb this lesson. Source-Financial times, 12 July 1997. Critically Analysing the meaning of Work, Motivation and Commitment Work organizations can be understood not only as environments in which people produce work, but also â€Å"places where work produces people†. Hence, any discussion of what people want or need out of work (particularly paid employment) cannot be isolated from the context of that work environment. The experience of working in a particular organization can itself produce wants and needs in the worker. Unfortunately, the personality and the motivation theories described everywhere are based on much simpler models of human behaviour. These tend to view the person as possessing a certain set of psychological characteristics which are brought into work each day. The idea that these change through interaction with others in the organization is rarely touched on. Another aspect of the two-pronged approach to the analysis of Invidual`s behaviour by organizational psychological is a tendency to restrict the subject matter to more less quantifiable elements of behaviour and to those aspects of behaviour which are predictable and controllable from a managerial point of view. Ref: J martin Corbett Baritz,1960 and Hollway , 1991 and indeed, Thompson and McHugh (1990) argue that â€Å"the true paradigm of the organizational psychologist is that of ensuring `effective resource use`: supplying advice, recourses and training which are aimed at assisting organization in efficiency managing the conflict and resistance which is a predictable consequence of hierarchically organised production.† Ref: Baritz, L (1960) Servants of power, Middletown: Wesleyan University Press Hollway, W (1991) Work Psychology and Organizational Behaviour, London: sage Thompson, P. and McHugh, D. (1990) Work organizations: A Critical Introduction. London: Macmillan Employee Commitment: on becoming a torturer What kind of person becomes a torturer? For many people it would seem obvious that only psychopaths and cranks would wish to pursue such a career. Yet, torture is currently practised by one government in three and these governments experience little or difficulty in recruting torturers. Are there really sufficient numbers of sadist ready, able and willing to take on such a job, or are there other factors which contribute to the creation of a torturer? There is no hard evidence that torturers are psychopaths or sadist. On the contrary, there is evidence that such people are usually screened out during the selection and recruitment process. Thus, to some extent at least, torturers are selected and recruited from ordinary people: â€Å"A deranged person who receives gratification primilary from feeling of power or from personally inflicting pain on other is usually too unreliable to be counted on by authorities to follow orders†. Ref: J. Martin Corbett Based on the studies of torturers employed by the State during 1967-74 military dictatorship of Greece, the psychologist Haritos-Fatoutos argues that three situational factor foster the creation of a torturer, namely: training, incremental participation and socialisation, and economic and symbolic reward. Training The first phase of training involves group bonding and isolation from the outside world. In case of the torture, this is achieved by placing recruits in remote training camps and putting them through numerous initiation rites. Haritos- Fatoutos describe how the use of euphemism by the trainers helped Greek recruits reinterpret their behaviour. For example, â€Å"tea party† referred to a â€Å"beating with fists and â€Å"tea party with toast† described a â€Å"beating with heavy wooden clubs†. The use of such euphemistic language is , of course, common practice in organizations to put a gloss on unpleasant reality- from the Nazi Party’s â€Å"Final Solution† , through the CIA’s `executive action`, to the `downsizing ` and ` rationalisation` of contemporary business organizations. Training also requires the recruit to develop a world view that divides people into torturable and non-torturable. Through a programme of seminars the recruits comes to believe that the act of tortures is a defence of â€Å"good â€Å"values against the â€Å"bad† values. Recruits are trained to be loyal not only to the state but to the organization, which is semi-secret and will protect them. Ref: Haritos- Fatoutos, M. (1988) The official tortures: A learning model of obedience to authority of violence. Journal of applied social psychology, 18, 1107-1120. Incremental Socialisation Such a moral shift, or disengagement, is made easier by the gradual introduction of the recruits to the brutal act of torture. A typical process of incremental socialisation and desensitisation goes through the following chronological sequences: Recruits act as guards while other carry out torture. Recruits carry food to the prisoners in there cells Recruits fully participate fully in torture. Hence the recruits are pulled inexorably into the torturing process. Having gone through the first two steps in the socialisation process recruits find it very difficult to protest about the use of full torture as there have been corrupted by tacit acceptance of earlier (less extreme) examples of torture. Rewards Once fully socialised, obedient torturers benefit in both symbolic and economic ways. Training fosters in-group bias. The finding of numerous social psychological studies suggested that participation in strenuous initiation rites makes group membership more desirable. Ref: Haritos- Fatoutos, M. (1988) The official tortures: A learning model of obedience to authority of violence. Journal of applied social psychology, 18, 1107-1120. There are some more aspects which really effect of employee performance. Inter-group relations Individual’s allegiances to, and identification with, various social groups can have an important influences on their attitudes and behaviour. The notion of employee commitment can over-generalise the nature of such allegiances and hence overlook the fact that you can be committed to your work, to your collegues, to your department, to your occupation or to the company you work for. But these commitments will vary and will often conflict with each other. There are many groups within even the smallest of organizations. It is not only the varying degrees of commitment each group commands amongst its members that can have a significant impact on organizational functioning. The relations between these groups and the relative power each commands can be more curial in shaping organizational behaviour. Hence, a psychological analysis alone is insufficient to understand fully the complexities of inter-group relations. Organizational design and design The variety of ways in which organizational are structured and managed and how they change over time, provides the basis of much organizational behaviour research. Also it is the domain of almost all so-called â€Å"Management Gurus†. For instance, Salaman (1983) observes that â€Å"organizations are structure of control†. Given that organizational structures include management and worker organization, control and reward systems, and job design, they clearly involve political issues, as well as decisions and strategic choices. Despite this, much of the conventional organizational behaviour literature on organizational structure and design concentrates, somewhat uncritically, on information flows, work structure, job design and cultures as entities designed and controlled by a management elite. Ref:-Salaman, G (1983) Class and the Corporation. London: Fontana. Technology and organization Scarborough and Corbett (1992) describes technology and organization as â€Å"far from containing or controlling the technology process, the formal boundaries and managerial hierarchies of organization may themselves restructure by it†. Similarly, sole resources to a unilateral deskilling process (at a societal level), in which technology developed under capitalism inevitably leads to the deskilling and control of labour, does little to convey the uncertainties and interaction of the technology process, nor account for the key role played by Invidual`s and groups: Indeed, on occasion the transformational power of technological knowledge may escape the intentions of the powerful and undermines, and not simply reproduce, existing social and economic structures. To better understand technology and organization I think its good to go through this case study. Ref: Scarborough, H. and Corbett, J.M. (1992) Technology and Organization: Power, Meaning and Design. London: Routledge. Case study: New technology and the Skolt Lapplanders Introduced in the early 1960s, the snowmobile was adopted by the Skolt Lapp people to replace reindeer sleds as a means of transportation. This technology brought easier access to trading posts, more sophisticated health care and a more varied diet and recreation. Yet, within a few years the introduction of this technology had made a profound impact on the Skolt Lapp community. The Skolt Lapp community, like many traditional communities, was organised around a patriarchal power structure, so that the old man held all the positions of status and authority. However, unlike the younger members of the community, these man lacked the muscular strength and dexterity to ride and maintain the heavy snowmobiles. Given that the new technology symbolised progress and the promise of economic prosperity to many Lapps, this result in a decline in the status of the elders relative to the younger, stronger men. Of even greater significance, and as the snowmobiles replaced the reindeer sled as the dominant means of transportation, this status shift was accompanied by the decline in the importance of the `elders` knowledge and wisdom concerning the care and use of reindeer herds. Such a shift was encouraged all the more by the rapid drops in calf births that resulted from the effects of the frightening noise of the snowmobiles` engines on pregnant reindeers. Indeed, within 3 years, a majority of the domesticated reindeers herd had returned to the wild. The impact of this should not be under-estimated as for generations; the reindeers had been of great symbolic and cultural significance of the Skolt Lapps. Most important of all, the Skolt Lapplanders quickly found themselves dependent on outside suppliers of imported petroleum and spare parts for the snowmobiles. Also, many of the physically ill Lapps became psychologically (and sometimes physically) dependent on the constant supply of non-introduction of the snowmobiles. Thus, an apparently neutral technology brought about significant (and largely irreversible) cultural changes to a community. Ref: Scarborough, H. and Corbett, J.M. (1992) Technology and Organization: Power, Meaning and Design. London: Routledge. Egan, G. (1993) Quarantine. London: Legend Books Organizational Culture Culture as a concept has had a long and checked history. It has been used by the lay person as a word to indicate sophistication, as when we say that someone is very â€Å"Cultured†. It has been used by anthropologists to refer to the customs and rituals that societies develop over the course of their history. In the last decade or so it has been used by some organizational researchers and managers to indicate the climate and practices that organizations develop around their handling of people or to refer to the espoused values and credo of an organization. A deeper understanding of cultural issues in groups and organizations is necessary to decipher what goes on in them but, even more important, to identify what may be the priority issues for leaders and leadership. Organizational cultures are created in part by leaders, and one of the most decisive functions of leadership is the creation, the management, and sometimes evens the destruction of culture. Ref:-Edgar H. Schein (1997) Organizational Culture and Leadership. John Wiley sons, Inc. A cross- cultural comparison of work values Numerous motivation theorist outline the importance of certain characteristics of work and the work environment in promoting job satisfication. But to what extend do the motivation theories of Maslow, Herzbed, Mc Clelland, Hackman and Oldham, etc. reflect what motivates a particular, possibly unique, sample of the working population, namely the average â€Å"American employee†. Can we really generalise such theories to the global working population? Mainstream organisational behaviour textbooks certainly imply as much. But if we cannot generalise from the US experience there are obvious implications for the human resources management policies of multi- national corporations and for international post-merger management. Ref: Maslow, A. (1971) The further reaches of human Nature. New York: Viking Press. Herzbed, P.G. (1976) Non- hierarchical organization vol-2. Harmondsworth: Penguin. In 1989, Don Elizur and colleagues was to collect data by questionnaire from samples of managers and employee from a variety of countries. The average sample size was 285. The author owns UK sample comprised 148 respondents. The age range and gender mix of the samples were similar. The questionnaire was designed to represent the major perspectives outlined by basic theories of motivation. 24 items were selected and respondents were asked to indicate for each item the extent to which it is important. (using response categories ranging from â€Å"very unimportant† to â€Å"very important†). The items included the following. Job interest, to do work which is interesting to you. Achievements in work. Advancement, opportunities for promotion Self-esteem, that you are valued as a person Use of ability and knowledge in your work Job security, permanent job Autonomy, independence in work. Supervisor, a fair and considerate boss. Pay, the amount of money you receive Co-workers, fellow workers who are pleasant and agreeable. This selection of items is listed in tables. They also indicate the survey results from the US, the UK, Germany, the Netherlands, Taiwan, Korea, Hungary and China. The major similarities and difference between these work population samples can be more clearly comprehended by considering the rank order of the item based on the managerial distributions as represented in table. So we see, for example, that interesting work was considered to be the most important work values by respondents from the US, Germany, and the Netherlands. Yet the same items were considered to be much less important from the point of the Hungarian and Chinese respondents. Also, interesting cross-cultural disparities are in evidence for the last three items; good boss, good pay and friendly co-workers. Table: Rank ordering of work values for a sample of eight countries USA UK Germany Netherland Taiwan Korea Hungary China Interesting work 1 2 1 1 2 3 6 5 Achievements 2 6 7 2 1 1 2 1 Advancements 3 7 10 5 4 7 10 6 Self-esteem 4 5 9 9 3 9 7 3 Use abilities 5 4 6 6 8 4 5 2 Autonomy 6 9 5 4 7 10 9 4 Job security 7 8 4 8 5 2 8 10 Good boss 8 10 3 7 6 6 1 7 Good pay 9 3 8 10 10 8 4 9 Co-workers 10 1 2 3 9 5 3 8 Ref:- Elizur , D.,Borg, I., Hunt, R. and Beck, I. K. (1989) The structure of work values: A cross-cultural comparasion.`journal of Organizational Behaviour, 12,21-30 Conclusion It is a truism to claim that people are an organisational resource -indeed, for some organisations, they are the key resource, without which the organisation would be unable to deliver any meaningful product or service to its customers. Like any resource, however, people may be used wastefully: they may be employed at well below their potential, performing tasks which do not stretch their capabilities and which are ultimately alienating in their psychological impact on the employees involved. Alternatively, people may be managed and led in ways which inspire them to be highly motivated and to demonstrate long-term commitment to both their roles and the organisation which employs them. When this is achieved, the performance of its people becomes a major differentiator for the organisation and a source of long-term competitive strength. Identity Regulation as a Form of Organizational Control Identity Regulation as a Form of Organizational Control Introduction I have decided to opted â€Å"Identity regulation in organisations is a form of control that needs to be acknowledged in order to encourage the emancipation of workers†. But before starting my assignment i would like to go through that what Organization is and what’s the real truth behind Organizational Behaviour. Organizations are inescapable features of modern social experience for all human beings. From the remotest village high in the Himalayan foothills to life in a lager metropolis, organizations impact on all aspect of human experience. Now we come to that what organizational behaviour actually is:- Organizational behaviour provides one of the mainstream approaches to the study of management and organizations. Its main sphere of interest is anything relevant to the design, management and effectiveness of an organization, together with the dynamic and interactive relationships that exist within them. Hawthorne studies This theory was directed by Elton Mayo during the late 1920s and early 1930s. These studies first highlighted the complexity of human behaviour in an organizational setting. This on turn led to recognition of the importance of the social context within which work occurred and of the ways in which groups become a significant influence on individual behaviour. Ref: organizational behaviour and management john martin third edition The Meaning of Organizational Behaviour Organizational behaviour is one of the most complex and perhaps least understood academic elements of modern general management, but since it concerns the behaviour of people within organizations it is also one of the most central, its concern with invidual and group patterns of behaviour makes it an essential element in dealing with the complex behaviour issues thrown up in the modern business world. Ref: (Financial times Mastering management series) First we are going to start with the Management as an integrating activity;- Management as an integrating activity Management is the cornerstone of organizational effectiveness, and is concerned with arrangement for the carrying out of organizational processes and the execution of work. According to Drucker, it is the management that enables the organization to contribute a needed result to society, the economy and the invidual. Ref:-management and organizational behaviour 5th edition â€Å"The fact is that management ultimately depend on an understanding of human nature.I suggets it goes much further than that. In the first place, good management depends upon the acceptance of certain basic values. It cannot be achieved without honesty and integrity, or without consideration for the interests of others. Secondly, it is the understanding of human foibles that we all share, such as jealousy, envy, status, prejudice, perception, temperament, motivation and talent which provides the greatest challenge to managers. Ref: HRH The Duke of Edinburgh, Institute of Management Patron. The psychological contract One significant aspects of the relationship between the invidual and the organization is the concept of the psychological contract. This is not a written document, but implies a series of mutual expectations and satisfaction of needs arising from the people-organization relationship. It involves a process of giving and receiving by the invidual and by the organization. The psychological contract covers a range of expectations of rights and privileges, duties and obligations, which donot form part of a formal agreement but still have an important influence on people behaviour. Invidual`s Expectations Provide safe and hygienic working conditions Make every reasonable effort to provide job security Attempt to provide challenging and satisfying jobs and reduce alienating aspects of work. Adopt equitable personnel policies and procedures. Treat member staff with respect. These expectations are notwithstanding any statutory requirement placed upon the organization. Instead they relate more to the idea of social responsibilities of management. The organization will also have implicit expectations of its member, for example:- To accept the ideology of the organization To work diligently in pursuit of organizational objectives Not to abuse goodwill shown by the management To uphold the image of the organization To show loyalty. The organization side of the psychological contract places emphasis on expectations, requirement and constraints which often differ from, and may be in conflict with ,an Invidual`s expectations. Ref:-Laurie j Mullins management and behaviour The case study below shows the true picture of the psychological contract and it s nature:- Case study: Disgruntled mice turn on fat cats Rhetoric about employee being vital corporate assets is sounding increasingly hollow writes John Plender. After years of downsizing, delaying and re-engineering, a punch-drunk British workforce hardly looks ready for a return to confrontational industrial relation. Yet the strike at British Airways, complete with management pressure and inter-union rivalry, raises question. Is this the first sign of a shift in power back to the workers as labour market condition tightens? And have managers become complacement in their attitudes to the workforce? The British Airways saga admittedly looks more of a throwback than a forward indicator. Most occupants of British boardrooms would vehemently reject charges of complacency or macho management. Yet there is evidence that business leaders are failing to carry employee with them as they continue to restructure. The standard rhetoric about `empowered` employee being vital corporate assets rings increasingly hollow. Consider recent data from International Survey Research (ISR), a leading consultant whose employee opinion survey covers 450 companies in 18 countries. Some finding in its survey, such as the free –fall in feelings of employment security throughout Europe, are predictable enough. Nor is it surprising that stakeholders-type economics like Switzerland, Norway and the Netherlands tend to have the the most contented workforces. The UK`S ignominious position- second only to Hungary at the bottom of the league for employee satisfaction- will no doubt be dismissed as British workers enjoying a moan. And the fact that UK management is judged less favourably by employee than managers are rated elsewhere will prompt a similar response. Yet when ISR`s work is looked at over a period of years, it is easily brushed aside. Take the progressive year-on-year collapse in the morale of the UK workforce since 1990. The trend is odd because it defies the logic of the economic cycle. Recovery has brought deterioration, not improvement. Also odd is the workforce’s view of management, at the depths of the recession earlier in the decade, UK employee, though generally dissatisfied, were still taking quite a favourable view of the managers compared with the rest of the Europe. Today, despite a marked increased in the rate of UK earning growth, disillusionment appears total. The clue with the ISR survey published at the end of 1995.This revealed that workers attitudes had suffered `the most prepitate decline` of any European country over the previous 10 years. Motivation and commitment to the company were lower than in the strife-torn days of the mid-1970s. The timing is significant because this was the first survey after the notorious British Gas Annual General Meeting at which the investment institute sanctioned a much increased pay-package for Mr.Cedric Brown-this when profits were substantially below their five years earlier, customer service was deteriorating and employee were being shed in larger numbers. The message is clear enough. Far from being a little local difficulty in the privatised utilities, the `fat cat` pay saga had a much wider demoralising impact which is still being felt. It does not follow that British workers are about to the picket lines en masse. As long as insecurity is endemic, and the main legislative reforms of the past 18 years remain intact, the union will not resume their former mantle. Nor does the government of Mr Tony Blair, a personal friend of BA chief Executive , Mr Bob Ayling, appear keen to take an active role in the dispute at BA. There is also a wide spread view that employee satisfactions a key performance indicator. Yet survey feels dimishing loyalty. In effect a contract which views the employee as assets and a cost has an innate tension. If it operate operates against the back ground of ever widening pay differentials between shop floor and board, or runs into the BA style of management, it may become untenable. There is a growing recognition among economist that trust is a valuable commodity. At national level- as in the stakeholder’s economics metioned earlier- it can enhance growth. When it exists between the various stakeholders in a business it reduces transaction costs and enhances competitive advantage. If British business wants to achieve the highest standards of quality in internationally tradable products and services on a sustainable basis, it badly needs to absorb this lesson. Source-Financial times, 12 July 1997. Critically Analysing the meaning of Work, Motivation and Commitment Work organizations can be understood not only as environments in which people produce work, but also â€Å"places where work produces people†. Hence, any discussion of what people want or need out of work (particularly paid employment) cannot be isolated from the context of that work environment. The experience of working in a particular organization can itself produce wants and needs in the worker. Unfortunately, the personality and the motivation theories described everywhere are based on much simpler models of human behaviour. These tend to view the person as possessing a certain set of psychological characteristics which are brought into work each day. The idea that these change through interaction with others in the organization is rarely touched on. Another aspect of the two-pronged approach to the analysis of Invidual`s behaviour by organizational psychological is a tendency to restrict the subject matter to more less quantifiable elements of behaviour and to those aspects of behaviour which are predictable and controllable from a managerial point of view. Ref: J martin Corbett Baritz,1960 and Hollway , 1991 and indeed, Thompson and McHugh (1990) argue that â€Å"the true paradigm of the organizational psychologist is that of ensuring `effective resource use`: supplying advice, recourses and training which are aimed at assisting organization in efficiency managing the conflict and resistance which is a predictable consequence of hierarchically organised production.† Ref: Baritz, L (1960) Servants of power, Middletown: Wesleyan University Press Hollway, W (1991) Work Psychology and Organizational Behaviour, London: sage Thompson, P. and McHugh, D. (1990) Work organizations: A Critical Introduction. London: Macmillan Employee Commitment: on becoming a torturer What kind of person becomes a torturer? For many people it would seem obvious that only psychopaths and cranks would wish to pursue such a career. Yet, torture is currently practised by one government in three and these governments experience little or difficulty in recruting torturers. Are there really sufficient numbers of sadist ready, able and willing to take on such a job, or are there other factors which contribute to the creation of a torturer? There is no hard evidence that torturers are psychopaths or sadist. On the contrary, there is evidence that such people are usually screened out during the selection and recruitment process. Thus, to some extent at least, torturers are selected and recruited from ordinary people: â€Å"A deranged person who receives gratification primilary from feeling of power or from personally inflicting pain on other is usually too unreliable to be counted on by authorities to follow orders†. Ref: J. Martin Corbett Based on the studies of torturers employed by the State during 1967-74 military dictatorship of Greece, the psychologist Haritos-Fatoutos argues that three situational factor foster the creation of a torturer, namely: training, incremental participation and socialisation, and economic and symbolic reward. Training The first phase of training involves group bonding and isolation from the outside world. In case of the torture, this is achieved by placing recruits in remote training camps and putting them through numerous initiation rites. Haritos- Fatoutos describe how the use of euphemism by the trainers helped Greek recruits reinterpret their behaviour. For example, â€Å"tea party† referred to a â€Å"beating with fists and â€Å"tea party with toast† described a â€Å"beating with heavy wooden clubs†. The use of such euphemistic language is , of course, common practice in organizations to put a gloss on unpleasant reality- from the Nazi Party’s â€Å"Final Solution† , through the CIA’s `executive action`, to the `downsizing ` and ` rationalisation` of contemporary business organizations. Training also requires the recruit to develop a world view that divides people into torturable and non-torturable. Through a programme of seminars the recruits comes to believe that the act of tortures is a defence of â€Å"good â€Å"values against the â€Å"bad† values. Recruits are trained to be loyal not only to the state but to the organization, which is semi-secret and will protect them. Ref: Haritos- Fatoutos, M. (1988) The official tortures: A learning model of obedience to authority of violence. Journal of applied social psychology, 18, 1107-1120. Incremental Socialisation Such a moral shift, or disengagement, is made easier by the gradual introduction of the recruits to the brutal act of torture. A typical process of incremental socialisation and desensitisation goes through the following chronological sequences: Recruits act as guards while other carry out torture. Recruits carry food to the prisoners in there cells Recruits fully participate fully in torture. Hence the recruits are pulled inexorably into the torturing process. Having gone through the first two steps in the socialisation process recruits find it very difficult to protest about the use of full torture as there have been corrupted by tacit acceptance of earlier (less extreme) examples of torture. Rewards Once fully socialised, obedient torturers benefit in both symbolic and economic ways. Training fosters in-group bias. The finding of numerous social psychological studies suggested that participation in strenuous initiation rites makes group membership more desirable. Ref: Haritos- Fatoutos, M. (1988) The official tortures: A learning model of obedience to authority of violence. Journal of applied social psychology, 18, 1107-1120. There are some more aspects which really effect of employee performance. Inter-group relations Individual’s allegiances to, and identification with, various social groups can have an important influences on their attitudes and behaviour. The notion of employee commitment can over-generalise the nature of such allegiances and hence overlook the fact that you can be committed to your work, to your collegues, to your department, to your occupation or to the company you work for. But these commitments will vary and will often conflict with each other. There are many groups within even the smallest of organizations. It is not only the varying degrees of commitment each group commands amongst its members that can have a significant impact on organizational functioning. The relations between these groups and the relative power each commands can be more curial in shaping organizational behaviour. Hence, a psychological analysis alone is insufficient to understand fully the complexities of inter-group relations. Organizational design and design The variety of ways in which organizational are structured and managed and how they change over time, provides the basis of much organizational behaviour research. Also it is the domain of almost all so-called â€Å"Management Gurus†. For instance, Salaman (1983) observes that â€Å"organizations are structure of control†. Given that organizational structures include management and worker organization, control and reward systems, and job design, they clearly involve political issues, as well as decisions and strategic choices. Despite this, much of the conventional organizational behaviour literature on organizational structure and design concentrates, somewhat uncritically, on information flows, work structure, job design and cultures as entities designed and controlled by a management elite. Ref:-Salaman, G (1983) Class and the Corporation. London: Fontana. Technology and organization Scarborough and Corbett (1992) describes technology and organization as â€Å"far from containing or controlling the technology process, the formal boundaries and managerial hierarchies of organization may themselves restructure by it†. Similarly, sole resources to a unilateral deskilling process (at a societal level), in which technology developed under capitalism inevitably leads to the deskilling and control of labour, does little to convey the uncertainties and interaction of the technology process, nor account for the key role played by Invidual`s and groups: Indeed, on occasion the transformational power of technological knowledge may escape the intentions of the powerful and undermines, and not simply reproduce, existing social and economic structures. To better understand technology and organization I think its good to go through this case study. Ref: Scarborough, H. and Corbett, J.M. (1992) Technology and Organization: Power, Meaning and Design. London: Routledge. Case study: New technology and the Skolt Lapplanders Introduced in the early 1960s, the snowmobile was adopted by the Skolt Lapp people to replace reindeer sleds as a means of transportation. This technology brought easier access to trading posts, more sophisticated health care and a more varied diet and recreation. Yet, within a few years the introduction of this technology had made a profound impact on the Skolt Lapp community. The Skolt Lapp community, like many traditional communities, was organised around a patriarchal power structure, so that the old man held all the positions of status and authority. However, unlike the younger members of the community, these man lacked the muscular strength and dexterity to ride and maintain the heavy snowmobiles. Given that the new technology symbolised progress and the promise of economic prosperity to many Lapps, this result in a decline in the status of the elders relative to the younger, stronger men. Of even greater significance, and as the snowmobiles replaced the reindeer sled as the dominant means of transportation, this status shift was accompanied by the decline in the importance of the `elders` knowledge and wisdom concerning the care and use of reindeer herds. Such a shift was encouraged all the more by the rapid drops in calf births that resulted from the effects of the frightening noise of the snowmobiles` engines on pregnant reindeers. Indeed, within 3 years, a majority of the domesticated reindeers herd had returned to the wild. The impact of this should not be under-estimated as for generations; the reindeers had been of great symbolic and cultural significance of the Skolt Lapps. Most important of all, the Skolt Lapplanders quickly found themselves dependent on outside suppliers of imported petroleum and spare parts for the snowmobiles. Also, many of the physically ill Lapps became psychologically (and sometimes physically) dependent on the constant supply of non-introduction of the snowmobiles. Thus, an apparently neutral technology brought about significant (and largely irreversible) cultural changes to a community. Ref: Scarborough, H. and Corbett, J.M. (1992) Technology and Organization: Power, Meaning and Design. London: Routledge. Egan, G. (1993) Quarantine. London: Legend Books Organizational Culture Culture as a concept has had a long and checked history. It has been used by the lay person as a word to indicate sophistication, as when we say that someone is very â€Å"Cultured†. It has been used by anthropologists to refer to the customs and rituals that societies develop over the course of their history. In the last decade or so it has been used by some organizational researchers and managers to indicate the climate and practices that organizations develop around their handling of people or to refer to the espoused values and credo of an organization. A deeper understanding of cultural issues in groups and organizations is necessary to decipher what goes on in them but, even more important, to identify what may be the priority issues for leaders and leadership. Organizational cultures are created in part by leaders, and one of the most decisive functions of leadership is the creation, the management, and sometimes evens the destruction of culture. Ref:-Edgar H. Schein (1997) Organizational Culture and Leadership. John Wiley sons, Inc. A cross- cultural comparison of work values Numerous motivation theorist outline the importance of certain characteristics of work and the work environment in promoting job satisfication. But to what extend do the motivation theories of Maslow, Herzbed, Mc Clelland, Hackman and Oldham, etc. reflect what motivates a particular, possibly unique, sample of the working population, namely the average â€Å"American employee†. Can we really generalise such theories to the global working population? Mainstream organisational behaviour textbooks certainly imply as much. But if we cannot generalise from the US experience there are obvious implications for the human resources management policies of multi- national corporations and for international post-merger management. Ref: Maslow, A. (1971) The further reaches of human Nature. New York: Viking Press. Herzbed, P.G. (1976) Non- hierarchical organization vol-2. Harmondsworth: Penguin. In 1989, Don Elizur and colleagues was to collect data by questionnaire from samples of managers and employee from a variety of countries. The average sample size was 285. The author owns UK sample comprised 148 respondents. The age range and gender mix of the samples were similar. The questionnaire was designed to represent the major perspectives outlined by basic theories of motivation. 24 items were selected and respondents were asked to indicate for each item the extent to which it is important. (using response categories ranging from â€Å"very unimportant† to â€Å"very important†). The items included the following. Job interest, to do work which is interesting to you. Achievements in work. Advancement, opportunities for promotion Self-esteem, that you are valued as a person Use of ability and knowledge in your work Job security, permanent job Autonomy, independence in work. Supervisor, a fair and considerate boss. Pay, the amount of money you receive Co-workers, fellow workers who are pleasant and agreeable. This selection of items is listed in tables. They also indicate the survey results from the US, the UK, Germany, the Netherlands, Taiwan, Korea, Hungary and China. The major similarities and difference between these work population samples can be more clearly comprehended by considering the rank order of the item based on the managerial distributions as represented in table. So we see, for example, that interesting work was considered to be the most important work values by respondents from the US, Germany, and the Netherlands. Yet the same items were considered to be much less important from the point of the Hungarian and Chinese respondents. Also, interesting cross-cultural disparities are in evidence for the last three items; good boss, good pay and friendly co-workers. Table: Rank ordering of work values for a sample of eight countries USA UK Germany Netherland Taiwan Korea Hungary China Interesting work 1 2 1 1 2 3 6 5 Achievements 2 6 7 2 1 1 2 1 Advancements 3 7 10 5 4 7 10 6 Self-esteem 4 5 9 9 3 9 7 3 Use abilities 5 4 6 6 8 4 5 2 Autonomy 6 9 5 4 7 10 9 4 Job security 7 8 4 8 5 2 8 10 Good boss 8 10 3 7 6 6 1 7 Good pay 9 3 8 10 10 8 4 9 Co-workers 10 1 2 3 9 5 3 8 Ref:- Elizur , D.,Borg, I., Hunt, R. and Beck, I. K. (1989) The structure of work values: A cross-cultural comparasion.`journal of Organizational Behaviour, 12,21-30 Conclusion It is a truism to claim that people are an organisational resource -indeed, for some organisations, they are the key resource, without which the organisation would be unable to deliver any meaningful product or service to its customers. Like any resource, however, people may be used wastefully: they may be employed at well below their potential, performing tasks which do not stretch their capabilities and which are ultimately alienating in their psychological impact on the employees involved. Alternatively, people may be managed and led in ways which inspire them to be highly motivated and to demonstrate long-term commitment to both their roles and the organisation which employs them. When this is achieved, the performance of its people becomes a major differentiator for the organisation and a source of long-term competitive strength.